exv10w1



 




Exhibit 10.1



EXECUTION COPY




Basic Energy Services, Inc.




$225,000,000 7.125% Senior Notes due 2016




PURCHASE AGREEMENT




April 7, 2006

New York, New York




UBS Securities LLC

Banc of America Securities LLC

Lehman Brothers Inc.

Credit Suisse Securities (USA) LLC

Goldman, Sachs & Co.




c/o UBS Securities LLC

299 Park Avenue

New York, New York 10171




Ladies and Gentlemen:




          Basic Energy Services, Inc., a Delaware corporation (the “Company”), and each of the other
Guarantors (as defined herein) agree with you as follows:



          1. Issuance of Notes. The Company proposes to issue and sell to UBS Securities LLC
(the “Representative”) and Banc of America Securities LLC, Lehman Brothers, Inc., Credit Suisse
Securities (USA) LLC and Goldman, Sachs & Co. (together with the Representative, the “Initial
Purchasers”) $225,000,000 aggregate principal amount of 7.125% Senior Notes due 2016 (the “Original
Notes”). The Company’s obligations under the Original Notes and the Indenture (as defined below)
will be, jointly and severally, unconditionally guaranteed (the “Guarantees”), on a senior basis,
by each of the Subsidiaries (as defined below) listed on the signature pages hereto (collectively,
the “Guarantors,” and, together with the Company, the “Issuers”). The Original Notes and the
Guarantees are referred to herein as the “Securities.” The Securities will be issued pursuant to
an indenture (the “Indenture”), to be dated the Closing Date (as defined herein), by and between
the Issuers and The Bank of New York Trust Company, National Association, as trustee (the
"Trustee”).



          The Securities will be offered and sold to the Initial Purchasers pursuant to an exemption
from the registration requirements under the Securities Act of 1933, as amended (the “Act”). The
Issuers have prepared a preliminary offering memorandum, dated as of March 29, 2006, the
"Preliminary Offering Memorandum”), and a pricing supplement thereto dated the date hereof (the
"Pricing Supplement”). The Preliminary Offering Memorandum and the Pricing Supplement are herein
referred to as the “Pricing Disclosure Package.” Promptly after the execution of this Purchase
Agreement (this “Agreement”), the Issuers will prepare a final offering memorandum dated the date
hereof (the “Final Offering Memorandum”).



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          The Initial Purchasers have advised the Issuers that the Initial Purchasers intend, as soon as
they deem practicable after this Agreement has been executed and delivered, to resell (the “Exempt
Resales”) the Securities in private sales exempt from registration under the Act on the terms set
forth in the Pricing Disclosure Package, solely to (i) persons whom the Initial Purchasers
reasonably believe to be “qualified institutional buyers” (“QIBs”), as defined in Rule 144A under
the Act (“Rule 144A”), in accordance with Rule 144A and (ii) other eligible purchasers pursuant to
offers and sales that occur outside the United States within the meaning of Regulation S under the
Act (“Regulation S”) in accordance with Regulations S (the persons specified in clauses (i) and
(ii), the “Eligible Purchasers”).



          Holders (including subsequent transferees) of the Securities will have the registration rights
under the registration rights agreement (the “Registration Rights Agreement”), between the Issuers
and the Initial Purchasers, to be dated the Closing Date, substantially in the form attached hereto
as Exhibit A. Under the Registration Rights Agreement, the Issuers will agree to (i) file
with the Securities and Exchange Commission (the “Commission”) (a) a registration statement under
the Act (the “Exchange Offer Registration Statement”) relating to a new issue of debt securities
(collectively with the Private Exchange Notes (as defined in the Registration Rights Agreement),
the “Exchange Notes” and, together with the Original Notes, the “Notes”), guaranteed by the
guarantors under the Indenture, to be offered in exchange for the Original Notes and the Guarantees
thereof (the “Exchange Offer”) and issued under the Indenture or an indenture substantially
identical to the Indenture and/or (b) under certain circumstances set forth in the Registration
Rights Agreement, a shelf registration statement pursuant to Rule 415 under the Act (the “Shelf
Registration Statement” relating to the resale by certain holders of the Original Notes and the
Guarantees thereof, (ii) to use its reasonable best efforts to cause the Exchange Offer
Registration Statement and, if applicable, the Shelf Registration Statement to be declared
effective and (iii) to consummate the Exchange Offer, all within the time periods specified in the
Registration Rights Agreement.



          This Agreement, the Notes, the Guarantees, the Indenture and the Registration Rights Agreement
are hereinafter sometimes referred to collectively as the “Note Documents.”



          2. Agreements to Sell and Purchase. On the basis of the representations, warranties
and covenants contained in this Agreement, the Issuers agree to issue and sell to the Initial
Purchasers, and on the basis of the representations, warranties and covenants contained in this
Agreement, and subject to the terms and conditions contained in this Agreement, each of the Initial
Purchasers, severally and not jointly, agrees to purchase from the Issuers, the aggregate principal
amount of the Securities set forth opposite its name on Schedule I attached hereto. The
purchase price for the Securities shall be 98.25% of their principal amount.



          3. Delivery and Payment. Delivery of, and payment of the purchase price (via wire
transfer) for, the Securities shall be made at 10:00 a.m., New York time, on April 12, 2006 (such
date and time, the “Closing Date”) at the offices of Cahill Gordon & Reindel llp, 80 Pine
Street, New York, New York 10005. The Closing Date and the location of delivery of and the form of
payment for the Securities may be varied by mutual agreement between the Initial Purchasers and the
Company.



          The Securities shall be delivered by the Issuers to the Initial Purchasers (or as the Initial
Purchasers direct) through the facilities of The Depository Trust Company against payment by the
Initial Purchasers of the purchase price therefor by means of wire transfer of immediately
available funds to such account or accounts specified by the Company in accordance with Section
8(h) on or prior to the Closing Date, or by such means as the parties hereto shall agree prior to
the Closing Date. The Securities shall be evidenced by one or more certificates in global form
registered in such names as the Initial Purchasers



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may request upon at least one business day’s notice prior to the Closing Date and
having an aggregate principal amount corresponding to the aggregate principal amount of the
Securities.



          4. Agreements of the Issuers. The Issuers jointly and severally, covenant and agree
with the Initial Purchasers as follows:




          (a) To furnish the Initial Purchasers and those persons identified by the Initial
Purchasers, without charge, as many copies of the Preliminary Offering Memorandum, the
Pricing Supplement and the Final Offering Memorandum, and any amendments or supplements
thereto, as the Initial Purchasers may reasonably request. The Issuers consent to the use
of the Preliminary Offering Memorandum, the Pricing Supplement and the Final Offering
Memorandum, and any amendments or supplements thereto, by the Initial Purchasers in
connection with Exempt Resales.




          (b) As promptly as practicable following the execution and delivery of this Agreement
and in any event not later than the second business day following the date hereof, to
prepare and deliver to the Initial Purchasers the Final Offering Memorandum, which shall
consist of the Preliminary Offering Memorandum as modified only by the information contained
in the Pricing Supplement. Not to amend or supplement the Preliminary Offering Memorandum
or the Pricing Supplement. Not to amend or supplement the Final Offering Memorandum prior
to the Closing Date unless the Initial Purchasers shall previously have been advised of such
proposed amendment or supplement at least two business days prior to the proposed use, and
shall not have objected to such amendment or supplement.




          (c) If, prior to the later of (x) the Closing Date and (y) the time that the Initial
Purchasers have completed their distribution of the Securities, any event shall occur that,
in the judgment of the Issuers or in the judgment of counsel to the Initial Purchasers,
makes any statement of a material fact in the Final Offering Memorandum, as then amended or
supplemented, untrue or that requires the making of any additions to or changes in the Final
Offering Memorandum in order to make the statements in the Final Offering Memorandum, as
then amended or supplemented, in the light of the circumstances under which they are made,
not misleading, or if it is necessary to amend or supplement the Final Offering Memorandum
to comply with all applicable laws, the Issuers shall promptly notify the Initial Purchasers
of such event and (subject to Section 4(b)) prepare an appropriate amendment or supplement
to the Final Offering Memorandum so that (i) the statements in the Final Offering
Memorandum, as amended or supplemented, will not contain 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 at the Closing Date and at the time of sale of Securities,
not misleading and (ii) the Final Offering Memorandum will comply with applicable law.




          (d) To qualify or register the Securities under the securities laws of such
jurisdictions as the Initial Purchasers may request and to continue such qualification in
effect so long as required for the Exempt Resales. Notwithstanding the foregoing, no Issuer
shall be required to qualify as a foreign corporation in any jurisdiction in which it is not
so qualified or to execute a general consent to service of process in any such jurisdiction
or subject itself to taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.




          (e) To advise the Initial Purchasers promptly, and if requested by the Initial
Purchasers, to confirm such advice in writing, of the issuance by any securities commission
of any stop order suspending the qualification or exemption from qualification of any of the
Securities for offering



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or sale in any jurisdiction, or the initiation of any proceeding for such
purpose by any securities commission or other regulatory authority. The Issuers shall use
their reasonable best efforts to prevent the issuance of any stop order or order suspending
the qualification or exemption of any of the Securities under any securities laws, and if at
any time any securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption of any of the Securities under any securities
laws, the Issuers shall use their reasonable best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time.




          (f) Whether or not the transactions contemplated by this Agreement are consummated, to
pay all costs, expenses, fees and disbursements (including fees and disbursements of counsel
and accountants for the Issuers) incurred and stamp, documentary or similar taxes incident
to and in connection with: (i) the preparation, printing and distribution of the
Preliminary Offering Memorandum, the Pricing Supplement and the Final Offering Memorandum
and any amendments and supplements thereto, (ii) all expenses (including travel expenses) of
the Issuers and the Initial Purchasers in connection with any meetings with prospective
investors in the Securities, (iii) the preparation, notarization (if necessary) and delivery
of the Note Documents and all other agreements, memoranda, correspondence and documents
prepared and delivered in connection with this Agreement and with the Exempt Resales, (iv)
the issuance, transfer and delivery of the Securities by the Issuers to the Initial
Purchasers, (v) the qualification or registration of the Securities for offer and sale under
the securities laws of the several states of the United States or provinces of Canada
(including, without limitation, the cost of printing and mailing preliminary and final Blue
Sky or legal investment memoranda and fees and disbursements of counsel (including local
counsel) to the Initial Purchasers relating thereto), (vi) the application for quotation of
the Securities in The Portal Market (“Portal”) of the National Association of Securities
Dealers, Inc. (“NASD”), (vii) the inclusion of the Securities in the book-entry system of
The Depository Trust Company (“DTC”), (viii) the rating of the Securities by rating
agencies, (ix) the fees and expenses of the Trustee and its counsel and (x) the performance
by the Company of its other obligations under the Note Documents; provided, notwithstanding
the foregoing, the Issuers shall pay the first $110,000 of expenses in connection with
chartered aircraft and the Initial Purchasers shall pay all such expenses in excess of such
amount.




          (g) To use the proceeds from the sale of the Original Notes in the manner described in
the Pricing Disclosure Package under the caption “Use of proceeds.”




          (h) To do and perform all things required to be done and performed under this Agreement
by it prior them or after the Closing Date and to satisfy all conditions precedent on their
part to the delivery of the Securities.




          (i) Not to, and not to permit any Subsidiary to, sell, offer for sale or solicit offers
to buy any security (as defined in the Act) that would be integrated with the sale of the
Securities in a manner that would require the registration under the Act of the sale of the
Securities to the Initial Purchasers or any Eligible Purchasers.




          (j) Not to, and to cause its affiliates (as defined in Rule 144 under the Act) not to,
resell any of the Securities that have been reacquired by any of them.




          (k) Not to engage, not to allow any Subsidiary to engage, and to cause its other
affiliates and any person acting on their behalf (other than, in any case, the Initial
Purchasers and any of their affiliates, as to whom the Company makes no covenant) not to
engage, in any form of



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general solicitation or general advertising (within the meaning of Regulation D under
the Act) in connection with any offer or sale of the Securities in the United States.




          (l) Not to engage, not to allow any Subsidiary to engage, and to cause its other
affiliates and any person acting on their behalf (other than, in any case, the Initial
Purchasers and any of their affiliates, as to whom the Company makes no covenant) not to
engage, in any directed selling effort with respect to the Securities, and to comply with
the offering restrictions requirement of Regulation S. Terms used in this paragraph have
the meanings given to them by Regulation S.




          (m) From and after the Closing Date, for so long as any of the Securities remain
outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the
Act and during any period in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), to make available upon
request the information required by Rule 144A(d)(4) under the Act to (i) any holder or
beneficial owner of Securities in connection with any sale of such Securities and (ii) any
prospective purchaser of such Securities from any such holder or beneficial owner designated
by the holder or beneficial owner. The Company will pay the expenses of preparing, printing
and distributing such documents.




          (n) To comply with their obligations under the Registration Rights Agreement.




          (o) To cooperate with and assist the Initial Purchasers to obtain approval of the
Securities to be eligible for clearance and settlement through DTC.




          (p) Prior to the Closing Date, to furnish without charge to the Initial Purchasers, (i)
as soon as they have been prepared by the Company, a copy of any regularly prepared internal
financial statements of the Company and the Subsidiaries for any period subsequent to the
period covered by the financial statements appearing in the Pricing Disclosure Package, (ii)
all other reports and other communications (financial or otherwise) that the Company mails
or otherwise makes available to its security holders and (iii) such other information as the
Initial Purchasers shall reasonably request.




          (q) Not to, and not to permit any of its affiliates or anyone acting on its or its
affiliates’ behalf to (other than the Initial Purchasers and their affiliates), distribute
prior to the Closing Date any offering material in connection with the offer and sale of the
Securities other than the Preliminary Offering Memorandum, the Pricing Supplement, press
releases pursuant to Rule 135 under the Act and the Final Offering Memorandum.




          (r) During the period of two years after the Closing Date or, if earlier, until such
time as the Securities are no longer restricted securities (as defined in Rule 144 under the
Act), not to be or become a closed-end investment company required to be registered, but not
registered, under the Investment Company Act of 1940.




          (s) In connection with the offering, until the Initial Purchasers shall have notified
the Company of the completion of the distribution of the Securities, not to, and not to
permit any of its affiliates (as such term is defined in Rule 501(b) of Regulation D under
the Act) to, either alone or with one or more other persons, bid for or purchase for any
account in which it or any of its affiliates has a beneficial interest, for the purpose of
creating actual or apparent active trading in, or of raising the price of, the Securities.



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          (t) During the period from the date hereof through and including the date that is 30
days after the date hereof, without the prior written consent of the Representative, offer,
sell, contract to sell or otherwise dispose of any debt securities issued or guaranteed by
the Company or any Subsidiary and having a tenor of more than one year.



          5. Representations and Warranties.



          (a) The Issuers represent and warrant to the Initial Purchasers that, as of the date hereof
and as of the Closing Date (references in this Section 5 to the “Offering Memorandum” are to (x)
the Pricing Disclosure Package in the case of representations and warranties made as of the date
hereof and (y) the Final Offering Memorandum in the case of representations and warranties made as
of the Closing Date):




          (ii) Neither the Pricing Disclosure Package, as of the date hereof, nor the Final
Offering Memorandum, as of its date or (as amended or supplemented in accordance with
Section 4(b), if applicable) as of the Closing Date, contains or represents any untrue
statement of a material fact or omits 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; provided, however, that the Issuers make no representation or warranty with
respect to information relating to the Initial Purchasers contained in or omitted from the
Pricing Disclosure Package, the Final Offering Memorandum or any amendment or supplement
thereto in reliance upon and in conformity with information furnished to the Company in
writing by or on behalf of any Initial Purchaser through the Representative expressly for
inclusion in the Pricing Disclosure Package, the Final Offering Memorandum or amendment or
supplement thereto, as the case may be. No order preventing the use of the Preliminary
Offering Memorandum, the Pricing Supplement or the Final Offering Memorandum, or any
amendment or supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration requirements of the Act, has
been issued or, to the knowledge of the Issuers, has been threatened.




          (iii) There are no securities of the Issuers that are listed on a national securities
exchange registered under Section 6 of the Exchange Act or that are quoted in a United
States automated interdealer quotation system of the same class within the meaning of Rule
144A as the Securities.




          (iv) The capitalization of the Company as of the Closing Date will be as set forth in
the “As adjusted” column under the heading “Capitalization” in the Offering Memorandum,
other than changes since December 31, 2005 in (i) cash and cash equivalents in the ordinary
course of business, (ii) other debt and obligations under capital leases in the ordinary
course of business, and (iii) items of stockholders’ equity for shares issued upon the
exercise of options (including treasury stock) and shares repurchased by the Company, and
for retained earnings. All of the issued and outstanding equity interests of the Company
have been duly authorized and validly issued, are fully paid and nonassessable and were not
issued in violation of any preemptive or similar right. Attached as Schedule II is
a true and complete list of each entity in which the Company has a direct or indirect
majority equity or voting interest (each, a “Subsidiary” and, together, the “Subsidiaries”),
their jurisdictions of organization, name of its equityholder(s) and percentage of
outstanding equity owned of record by each equityholder. All of the issued and outstanding
equity interests of each Subsidiary have been duly and validly authorized and issued, are
fully paid (to the extent required under the applicable limited liability company agreement
or limited partnership agreement of the Subsidiary, as applicable) and nonassessable (except
as such nonassessability may be affected by Section 18-607 of the Delaware Limited Liability
Company Act (the



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"Delaware LLC Act”), in the case of limited liability company interests in a Delaware
limited liability company, and Section 17-607 of the Delaware Revised Uniform Limited
Partnership Act (the “Delaware LP Act”), in the case of any partnership interests in a
Delaware limited partnership, and Section 17-403 of the Delaware LP Act with respect to
general partner interests in a Delaware limited partnership), and, except for directors’
qualifying shares and as set forth in the Offering Memorandum, are owned, directly or
indirectly through Subsidiaries, by the Company free and clear of all liens (other than
transfer restrictions imposed by the Act, the securities or Blue Sky laws of certain
jurisdictions and security interests granted pursuant to the Third Amended and Restated
Credit Agreement, dated as of October 3, 2003, as amended (the “Credit Agreement”)). Except
as set forth in the Offering Memorandum, there are no outstanding options, warrants or other
rights to acquire or purchase, or instruments convertible into or exchangeable for, any
equity interests of the Company or any of the Subsidiaries. No holder of any securities of
the Company or any of the Subsidiaries is entitled to have such securities (other than the
Securities) registered under any registration statement contemplated by the Registration
Rights Agreement.




          (v) Each of the Company and each Subsidiary (A) is a corporation, limited liability
company, partnership or other entity duly organized and validly existing under the laws of
the jurisdiction of its organization; (B) has all requisite corporate or other power and
authority necessary to own its property and carry on its business as now being conducted and
(C) is qualified to do business and is in good standing in all jurisdictions in which the
nature of the business conducted by it or its ownership of property makes such qualification
necessary, except where the failure to be so qualified and be in good standing, individually
or in the aggregate, would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. A “Material Adverse Effect” means (x) a material
adverse effect on, or any development involving a prospective material adverse change in,
the business, condition (financial or other), results of operations, performance or
properties of the Company and the Subsidiaries, taken as a whole or (y) an adverse effect on
the ability to consummate the Transactions on a timely basis.




          (vi) Each Issuer has all requisite corporate or other power and authority to execute,
deliver and perform all of its obligations under the Note Documents to which it is a party
and to consummate the transactions contemplated hereby, and, without limitation, the Company
has all requisite corporate power and authority to issue, sell and deliver and perform its
obligations under the Notes.




          (vii) This Agreement has been duly and validly authorized, executed and delivered by
each Issuer.




          (viii) The execution and delivery of, and the performance by each Issuer of their
respective obligations under the Indenture have been duly and validly authorized by each
Issuer and, when duly executed and delivered by the Issuers (assuming the due authorization,
execution and delivery thereof by the Trustee), will be a legally binding and valid
obligation of each such Issuer, enforceable against it in accordance with its terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity (regardless of whether considered at
equity or at law) and the discretion of the court before which any proceeding therefor may
be brought (the “Enforceability Exceptions”). The Indenture, when executed and delivered,
will conform in all material respects to the description thereof in the Offering Memorandum.



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          (ix) The Original Notes have been duly and validly authorized for issuance and sale to
the Initial Purchasers by the Company, and when issued, authenticated by the Trustee in
accordance with the provisions of the Indenture, and delivered by the Company against
payment therefor by the Initial Purchasers in accordance with the terms of this Agreement
and the Indenture, the Original Notes will be legally binding and valid obligations of the
Company, entitled to the benefits of the Indenture and enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited by the
Enforceability Exceptions. The Original Notes, when issued, authenticated by the Trustee in
accordance with the provisions of the Indenture and delivered, will conform in all material
respects to the description thereof in the Offering Memorandum.




          (x) The Exchange Notes have been, or on or before the Closing Date will be, duly and
validly authorized for issuance by the Company, and when issued, authenticated and delivered
by the Company in accordance with the terms of the Registration Rights Agreement, the
Exchange Offer and the Indenture, the Exchange Notes will be legally binding and valid
obligations of the Company, entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, except as the enforcement thereof may be
limited by the Enforceability Exceptions.




          (xi) The Guarantees have been duly and validly authorized by each of the Guarantors and
when the Original Notes are issued, authenticated by the Trustee in accordance with the
provisions of the Indenture, and delivered by the Company against payment by the Initial
Purchasers in accordance with the terms of this Agreement and the Indenture, will be legally
binding and valid obligations of the Guarantors, enforceable against each of them in
accordance with their terms, except that enforceability thereof may be limited by the
Enforceability Exceptions. The guarantees of the Exchange Notes have been duly and validly
authorized by each of the Guarantors and, when the Exchange Notes are issued, authenticated
by the Trustee in accordance with the provisions of the Indenture, and delivered in
accordance with the terms of the Registration Rights Agreement, the Exchange Offer and the
Indenture, will be legally binding and valid obligations of the Guarantors, enforceable
against each of them in accordance with their terms, except that enforceability thereof may
be limited by the Enforceability Exceptions.




          (xii) The Registration Rights Agreement has been duly and validly authorized by each
Issuer and, when duly executed and delivered by the Issuers (assuming the due authorization,
execution and delivery thereof by the Initial Purchasers), will constitute a valid and
legally binding obligation of each such Issuer, enforceable against it in accordance with
its terms, except that (A) the enforcement thereof may be limited by the Enforceability
Exceptions and (B) any rights to indemnity or contribution thereunder may be limited by
federal and state securities laws and public policy considerations. The Registration Rights
Agreement, when executed and delivered, will conform in all material respects to the
description thereof in the Offering Memorandum.




          (xiii) Neither the Company nor any Subsidiary is (A) in violation of its charter,
bylaws or other constitutive documents, (B) in default (or, with notice or lapse of time or
both, would be in default) in the performance or observance of any obligation, agreement,
covenant or condition contained in any bond, debenture, note, indenture, mortgage, deed of
trust, loan or credit agreement, lease, license, franchise agreement, authorization, permit,
certificate or other agreement or instrument to which the Company or any Subsidiary is a
party or by which any of them is bound or to which any of their assets or properties is
subject (collectively, “Agreements and Instruments”), or (C) in violation of any law,
statute (including, without limitation, rule or regulation or any judgment, order or decree
of any domestic or foreign court or other governmental or regulatory



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authority, agency or other body with jurisdiction over any of them or any of their
assets or properties (“Governmental Authority”), except, in the case of clauses (B) and (C),
for such defaults or violations as could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.




          (xiv) The execution, delivery and performance of the Note Documents and the issuance
and sale of the Securities does not and will not (i) violate the charter, bylaws or other
constitutive documents of the Company or any Subsidiary, (ii) conflict with or constitute a
breach of or a default under (or an event that with notice or the lapse of time, or both,
would constitute a default), or require consent under, or result in a Repayment Event (as
defined below), other than a Repayment Event that will be satisfied at the Closing Date as
contemplated by the Offering Memorandum, or the creation or imposition of a lien, charge or
encumbrance on any property or assets of the Company or any Subsidiary under any of the
Agreements and Instruments or (iii) violate any law, statute, rule or regulation, including,
without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve
System, or any judgment, order or decree of any Governmental Authority, except for such
conflicts, violations, breaches or defaults in the cases of clauses (ii) and (iii) that
would not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Assuming the accuracy of the representations and warranties of the Initial
Purchasers in Section 5(b) of this Agreement, no consent, approval, authorization or order
of, or filing, registration, qualification, license or permit of or with, any Governmental
Authority is required to be obtained or made by the Company or any Subsidiary for the
execution, delivery and performance by the Company or any Subsidiary of the Transaction
Documents and the consummation of the Transactions, except (A) such as have been or will be
obtained or made on or prior to the Closing Date and (B) registration of the Exchange Offer
or resale of the Notes under the Act pursuant to the Registration Rights Agreement, and
qualification of the Indenture under the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”), in connection with the issuance of the Exchange Notes. No consents or
waivers from any other person or entity are required for the execution, delivery and
performance of the Note Documents and the issuance and sale of the Securities, other than
such consents and waivers as have been obtained or will be obtained prior to the Closing
Date and will be in full force and effect. 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 Subsidiary.




          (xv) The public accountants whose report is included in the Offering Memorandum are
independent within the meaning of the Act. The historical financial statements (including
the notes thereto) included in the Offering Memorandum present fairly in all material
respects the consolidated financial position, results of operations, cash flows and changes
in stockholder’s equity of the Company at the respective dates and for the respective
periods indicated. All such financial statements have been prepared in accordance with
generally accepted accounting principles in the United States (“GAAP”) applied on a
consistent basis throughout the periods presented (except as disclosed therein) and in
compliance with Regulation S-X (“Regulation S-X”) under the Exchange Act. The information
set forth under the captions “Offering memorandum summary — Summary financial data” and
“Selected historical consolidated financial data” included in the Offering Memorandum have
been prepared on a basis consistent with that of the audited financial statements of the
Company. The ratio of earnings to fixed charges has been calculated in compliance with Item
503(d) of Regulation S-K. Since the date as of which information is given in the Offering
Memorandum, except as set forth or contemplated in the Offering Memorandum, (A) neither the
Company or any Subsidiary has (1) incurred any liabilities or obligations,



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direct or contingent, that would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, or (2) entered into any material transaction not
in the ordinary course of business, (B) there has not been any event or development in
respect of the business or condition (financial or other) of the Company or any Subsidiary
that, either individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, (C) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any of its equity interests and (D) there has not
been any change in the long-term debt of the Company or any Subsidiary other than changes
due to ordinary course of business capital leases .




          (xvi) The statistical and market-related data and forward-looking statements included
in the Offering Memorandum are based on or derived from sources that the Issuers believe to
be reliable and accurate in all material respects and represent their good faith estimates
that are made on the basis of data derived from such sources. The Company has obtained the
written consent to the use of such data from such sources to the extent required.




          (xvii) As of the date hereof and as of the Closing Date, immediately prior to and
immediately following the issuance and sale of the Securities, each Issuer is and will be
Solvent. As used herein, “Solvent” shall mean, for any person on a particular date, that on
such date (A) the fair value of the property of such person is greater than the total amount
of liabilities, including, without limitation, contingent liabilities, of such person, (B)
the present fair salable value of the assets of such person is not less than the amount that
will be required to pay the probable liability of such person on its debts as they become
absolute and matured, (C) such person does not intend to, and does not believe that it will,
incur debts and liabilities beyond such person’s ability to pay as such debts and
liabilities mature, (D) such person is not engaged in a business or a transaction, and is
not about to engage in a business or a transaction, for which such person’s property would
constitute an unreasonably small capital and (E) such person is able to pay its debts as
they become due and payable.




          (xviii) Except as set forth in the Offering Memorandum, there is (A) no action, suit or
proceeding before or by any Governmental Authority or arbitrator, now pending or, to the
knowledge of the Issuers, threatened or contemplated, to which the Company or any Subsidiary
is or may be a party or to which the business, assets or property of the Company or any
Subsidiary is or may be subject and (B) no judgment, decree or order of any Governmental
Authority that, in either of clause (A) or (B), could reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect.




          (xix) Except as could not reasonably be expected to have a Material Adverse Effect, no
labor disturbance by the employees of the Company or any Subsidiary exists or, to the
knowledge of the Issuers, is imminent.




          (xx) Except as described in the Offering Memorandum and except for such matters as
would not individually or in the aggregate have a Material Adverse Effect (1) none of the
Company or any of its Subsidiaries is in violation of any federal, state, local or foreign
statute, law, 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, relating to 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, asbestos-containing materials or mold (collectively, “Hazardous Materials”)



10









 






or to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”),
(2) 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,
(3) 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, and (4) to the knowledge of the Company,
there are no events or circumstances that would 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 Hazardous Materials or any Environmental Laws.




          (xxi) The Company and its Subsidiaries possess adequate certificates, authorities or
permits issued by appropriate governmental agencies or bodies necessary to conduct the
business now operated by them and have not received any notice of proceedings relating to
the revocation or modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its Subsidiaries, would individually or in the
aggregate have a Material Adverse Effect.




          (xxii) The Company and the Subsidiaries have good and indefeasible title in fee simple
to all items of owned real property, and good and marketable title to all personal property
owned by each of them in each case free and clear of any pledge, lien, encumbrance, security
interest or other defect or claim of any third party, except (A) such as would not
reasonably be expected a Material Adverse Effect, (B) liens described in the Offering
Memorandum and (C) liens permitted by the Indenture. Any real property, personal property
and buildings held under lease by the Company or any such Subsidiary are held under valid,
subsisting and enforceable leases, with such exceptions as would not reasonably be expected
a Material Adverse Effect.




          (xxiii) All tax returns required to be filed by the Company or any Subsidiary have been
filed (or extensions have been obtained) in all jurisdictions where such returns are
required to be filed; and all taxes, including withholding taxes, value added and franchise
taxes, penalties and interest, assessments, fees and other charges due or claimed to be due
from such entities or that are due and payable have been paid, other than those being
contested in good faith and for which reserves have been provided in accordance with GAAP or
those currently payable without penalty or interest and except where the failure to make
such required filings or payments could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.




          (xxiv) Neither the Company nor any Subsidiary is, or after giving effect to the
Transactions will be, required to be registered as an “investment company” or a company
“controlled” by an “investment company” within the meaning of the Investment Company Act of
1940, as amended.




          (xxv) The Company and the Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that: (A) transactions are executed in
accordance with management’s general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of their financial statements in conformity with
GAAP and to maintain accountability for assets; (C) access to assets is permitted only in
accordance with management’s general or specific authorization; and (D) the recorded
accountability for their assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.



11









 






          (xxvi) The Company has established and maintains disclosure controls and procedures (as
such term is defined in Rules 13a-15 and 15d-14 under the Exchange Act); such disclosure
controls and procedures are designed to ensure that material information relating to the
Company and the Subsidiaries is made known to the chief executive officer and chief
financial officer of the Company by others within the Company or any Subsidiary, and such
disclosure controls and procedures are reasonably effective to perform the functions for
which they were established subject to the limitations of any such control system; the
Company’s auditors and the audit committee of the board of directors of the Company have
been advised of: (A) any significant deficiencies in the design or operation of internal
controls which could adversely affect the Company’s ability to record, process, summarize,
and report financial data; and (B) any fraud, whether or not material, that involves
management or other employees who have a role in the Company’s internal controls; and since
the date of the most recent evaluation of such disclosure controls and procedures, there
have been no significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.




          (xxvii) Neither the Company nor any of its affiliates (as defined in Rule 501(b) of
Regulation D under the Act) has, directly or through any person acting on its or their
behalf (other than any Initial Purchaser, as to which no representation is made), (A) taken,
directly or indirectly, any action designed to, or that might reasonably be expected to,
cause or result in stabilization or manipulation of the price of any security of any Issuer
to facilitate the sale or resale of the Securities, (B) sold, bid for, purchased or paid any
person any compensation for soliciting purchases of the Securities in a manner that would
require registration of the Securities under the Act or paid or agreed to pay to any person
any compensation for soliciting another to purchase any other securities of any Issuer in a
manner that would require registration of the Securities under the Act, (C) sold, offered
for sale, contracted to sell, pledged, solicited offers to buy or otherwise disposed of or
negotiated in respect of any security (as defined in the Act) that is currently or will be
integrated with the sale of the Securities in a manner that would require the registration
of the Securities under the Act or (D) engaged in any directed selling effort (as defined by
Regulation S) with respect to the Securities, and each of them has complied with the
offering restrictions requirement of Regulation S.




          (xxviii) No form of general solicitation or general advertising (prohibited by the Act
in connection with offers or sales such as the Exempt Resales) was used by the Company or
any person acting on its behalf (other than any Initial Purchaser, as to which no
representation is made) in connection with the offer and sale of any of the Securities or in
connection with Exempt Resales, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium or broadcast over
television or radio or the Internet, or any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising within the meaning of Regulation
D under the Act. Neither the Company nor any of its affiliates has entered into, or will
enter into, any contractual arrangement with respect to the distribution of the Securities
except for this Agreement.




          (xxix) Except as described in the section entitled “Plan of distribution” in the
Offering Memorandum, there are no contracts, agreements or understandings between the
Company or any Subsidiary and any other person other than the Initial Purchasers pursuant to
this Agreement that would give rise to a valid claim against the Company, any Subsidiary or
any of the Initial Purchasers for a brokerage commission, finder’s fee or like payment in
connection with the issuance, purchase and sale of the Securities.



12









 






          (xxx) The principal executive officer and principal financial officer of the Company
have made all certifications required by the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith (the “Sarbanes Oxley Act”). The Company is
otherwise in compliance in all material respects with all applicable provisions of the
Sarbanes-Oxley Act that are effective.



          Each certificate signed by any officer of any Issuer and delivered to the Initial Purchasers
or counsel for the Initial Purchasers pursuant to, or in connection with, this Agreement shall be
deemed to be a representation and warranty by the Issuers to the Initial Purchasers as to the
matters covered by such certificate.



          The Company acknowledges that the Initial Purchasers and, for purposes of the opinions to be
delivered to the Initial Purchasers pursuant to Section 8 of this Agreement, counsel to the Company
and counsel to the Initial Purchasers will rely upon the accuracy and truth of the foregoing
representations and the Company hereby consents to such reliance.



          (b) Each Initial Purchaser represents to the Issuers that it is a QIB and acknowledges that it
is purchasing the Securities pursuant to a private sale exemption from registration under the Act,
and that the Securities have not been registered under the Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons except pursuant to
an exemption from the registration requirements of the Act. Each Initial Purchaser, severally and
not jointly, represents, warrants and covenants to the Issuers that:




          (xxxi) Neither it, nor any person acting on its behalf, has or will solicit offers for,
or offer or sell, any Securities by any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Act, and it has and will solicit offers
for the Securities only from, and will offer and sell the Securities only to, (1) persons
whom such Initial Purchaser reasonably believes to be QIBs or, if any such person is buying
for one or more institutional accounts for which such person is acting as fiduciary or
agent, only when such person has represented to such Initial Purchaser that each such
account is a QIB to whom notice has been given that such sale or delivery is being made in
reliance on Rule 144A, and, in each case, in accordance with and reliance on the exemption
from the registration requirements of the Act pursuant to Rule 144A, or (2) persons other
than U.S. persons outside the United States in reliance on, and in compliance with, the
exemption from the registration requirements of the Act provided by Regulation S.




          (xxxii) With respect to offers and sales outside the United States, such Initial
Purchaser has offered the Securities and will offer and sell the Securities (1) as part of
its distribution at any time and (2) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the Closing Date, only in accordance with
Rule 903 of Regulation S or another exemption from the registration requirements of the Act.
Accordingly, neither such Initial Purchasers nor any person acting on their behalf has
engaged or will engage in any directed selling efforts (within the meaning of Regulation S)
with respect to the Securities, and any such persons have complied and will comply with the
offering restrictions requirements of Regulation S. Terms used in this Section 5(b)(ii)
have the meanings given to them by Regulation S.




          Each Initial Purchaser severally agrees that, at or prior to confirmation of a sale of
Securities pursuant to Regulation S it will have sent to each distributor, dealer or person
receiving a selling



13









 






concession, fee or other remuneration that purchases Securities from it or through it
during the restricted period a confirmation or notice to substantially the following effect:




          “The Securities covered hereby have not been registered under the
United States Securities Act of 1933, as amended (the “Securities Act”), and
may not be offered or sold within the United States or to or for the account
or benefit of, U.S. persons (i) as part of their distribution at any time
and (ii) otherwise until forty days after the later of the date upon which
the offering of the Securities commenced and the date of closing, except in
either case in accordance with Regulation S or Rule 144A under the
Securities Act. Terms used above have the meaning given to them by
Regulation S.”



          The Initial Purchasers understand that the Issuers and, for purposes of the opinions to be
delivered to them pursuant to Section 8 hereof, counsel to the Issuers and counsel to the Initial
Purchasers will rely upon the accuracy and truth of the foregoing representations, and each Initial
Purchaser hereby consents to such reliance.



          6. Indemnification.



          (a) The Issuers, jointly and severally, agree to indemnify and hold harmless the Initial
Purchasers, each person, if any, who controls any Initial Purchaser within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, the agents, employees, officers and directors
of any Initial Purchaser and the agents, employees, officers and directors of any such controlling
person from and against any and all losses, liabilities, claims, damages and expenses whatsoever
(including, but not limited, to reasonable attorneys’ fees and any and all reasonable expenses
whatsoever incurred in investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all reasonable amounts paid in settlement of any
claim or litigation) (collectively, “Losses”) to which they or any of them may become subject under
the Act, the Exchange Act or otherwise insofar as such Losses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a material fact
contained in the Pricing Disclosure Package or the Final Offering Memorandum, or in any amendment
or supplement thereto, or arise out of or are based upon the omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that none of the Issuers will be liable in any
such case to the extent, but only to the extent, that any such Loss arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged omission relating to
an Initial Purchaser made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Initial Purchaser through the Representative
expressly for use therein. This indemnity agreement will be in addition to any liability that the
Issuers may otherwise have, including, but not limited to, liability under this Agreement.



          (b) Each Initial Purchaser agrees to indemnify and hold harmless the Issuers, and each person,
if any, who controls any of the Issuers within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, the agents, employees, officers and directors and the agents, employees,
officers and directors of any of the Issuers of any such controlling person from and against any
and all Losses to which they or any of them may become subject under the Act, the Exchange Act or
otherwise insofar as such Losses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the Pricing Disclosure
Package or the Final Offering Memorandum, or in any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a material fact necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading, in each case to the extent, but




14









 







only to the extent, that any such Loss arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission relating to such Initial Purchaser made
therein in reliance upon and in conformity with information furnished in writing to the Company by
or on behalf of such Initial Purchaser through the Representative expressly for use therein. The
Issuers and the Initial Purchasers severally acknowledge that, for all purposes (including Section
5(a)(i) and this Section 6), the statements set forth in the first sentence of the fourth
paragraph, the first sentence of the sixth paragraph and eighth, tenth and twelfth paragraphs under
“Plan of distribution” in the Preliminary Offering Memorandum and the Final Offering Memorandum
constitute the only information furnished in writing by or behalf of any Initial Purchaser
expressly for use in the Pricing Disclosure Package or the Final Offering Memorandum.




          (c) Promptly after receipt by an indemnified party under subsection 6(a) or 6(b) above of
notice of the commencement of any action, suit or proceeding (collectively, an “action”), such
indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party
under such subsection, notify each party against whom indemnification is to be sought in writing of
the commencement of such action (but the failure so to notify an indemnifying party shall not
relieve such indemnifying party from any liability that it may have under this Section 6 except to
the extent that it has been prejudiced in any material respect by such failure). In case any such
action is brought against any indemnified party, and it notifies an indemnifying party of the
commencement of such action, the indemnifying party will be entitled to participate in such action,
and to the extent it may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the defense of such action
with counsel satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own counsel in any such
action, but the reasonable fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall have been authorized
in writing by the indemnifying parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii) the named parties to
such action (including any impleaded parties) include such indemnified party and the indemnifying
parties (or such indemnifying parties have assumed the defense of such action), and such
indemnified party or parties shall have reasonably concluded that there may be defenses available
to it or them that are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of which events such
reasonable fees and expenses of counsel shall be borne by the indemnifying parties. In no event
shall the indemnifying parties be liable for the fees and expenses of more than one counsel
(together with appropriate local counsel) at any time for all indemnified parties in connection
with any one action or separate but substantially similar or related actions arising in the same
jurisdiction out of the same general allegations or circumstances. An indemnifying party shall not
be liable for any settlement of any claim or action effected without its written consent, which
consent may not be unreasonably withheld. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by paragraph (a) or (b) of this Section 6, then
the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying party at least 45
days’ prior notice of its intention to settle. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such settlement (x) includes an
unconditional release of such indemnified party from all liability on claims that are the subject
matter of such proceeding and (y) does not



15









 




include a statement as to or an admission of fault, culpability or a failure to act by or on
behalf of any indemnified party.




          7. Contribution. In order to provide for contribution in circumstances in which the
indemnification provided for in Section 6 of this Agreement is for any reason held to be
unavailable from the indemnifying party, or is insufficient to hold harmless a party indemnified
under Section 6 of this Agreement, each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such aggregate Losses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Issuers, on the one hand, and the
Initial Purchasers, on the other hand, from the offering of the Securities or (ii) if such
allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the Issuers, on the one
hand, and the Initial Purchasers, on the other hand, in connection with the statements or omissions
that resulted in such Losses, as well as any other relevant equitable considerations. The relative
benefits received by the Issuers, on the one hand, and the Initial Purchasers, on the other hand,
shall be deemed to be in the same proportion as (x) the total proceeds from the offering of
Securities (net of discounts and commissions but before deducting expenses) received by the Issuers
are to (y) the total discount and commissions received by the Initial Purchasers. The relative
fault of the Issuers, on the one hand, and the Initial Purchasers, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact relates to information
supplied by an Issuer or the Initial Purchasers and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission or alleged
statement or omission.



          The Issuers and the Initial Purchasers agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable considerations referred to
above. Notwithstanding the provisions of this Section 7, (i) in no case shall any Initial
Purchaser be required to contribute any amount in excess of the amount by which the total discount
and commissions applicable to the Securities purchased by such Initial Purchaser pursuant to this
Agreement exceeds the amount of any damages that such Initial Purchaser has otherwise been required
to pay by reason of any untrue or alleged untrue statement or omission or alleged omission and (ii)
no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who controls any Initial
Purchaser within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall
have the same rights to contribution as the Initial Purchasers, and each person, if any, who
controls an Issuer within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
and each director, officer, employee and agent of an Issuer shall have the same rights to
contribution as the Issuers. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 7, notify such party
or parties from whom contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be sought from any
obligation it or they may have under this Section 7 or otherwise, except to the extent that it has
been prejudiced in any material respect by such failure; provided, however, that no additional
notice shall be required with respect to any action for which notice has been given under Section 6
for purposes of indemnification. Anything in this section to the contrary notwithstanding, no
party shall be liable for contribution with respect to any action or claim settled without its
written consent; provided, however, that such written consent was not unreasonably withheld.



16









 





          8. Conditions of Initial Purchasers’ Obligations. The obligations of the Initial
Purchasers to purchase and pay for the Securities, as provided for in this Agreement, shall be
subject to satisfaction of the following conditions prior to or concurrently with such purchase:




          (a) All of the representations and warranties of the Issuers contained in this
Agreement shall be true and correct on the date of this Agreement and on the Closing Date.
The Issuers shall have performed or complied with all of the agreements and covenants
contained in this Agreement and required to be performed or complied with by them at or
prior to the Closing Date. The Initial Purchasers shall have received a certificate, dated
the Closing Date, signed by the chief executive officer and chief financial officer of the
Company, certifying as to the foregoing and to the effect in Section 8(c).




          (b) The Final Offering Memorandum shall have been printed and copies distributed to the
Initial Purchasers as required by Section 5(b). No stop order suspending the qualification
or exemption from qualification of the Securities in any jurisdiction shall have been issued
and no proceeding for that purpose shall have been commenced or shall be pending or
threatened.




          (c) Since the execution of this Agreement, there shall not have been any decrease in
the rating of any debt or preferred stock of the Company or any Subsidiary by any
“nationally recognized statistical rating organization” (as defined for purposes of Rule
436(g) under the Act), or any notice given of any intended or potential decrease in any such
rating or of a possible change in any such rating that does not indicate the direction of
the possible change.




          (d) The Initial Purchasers shall have received on the Closing Date opinions dated the
Closing Date, addressed to the Initial Purchasers, of (i) Andrews Kurth LLP, counsel to the
Company, substantially in the form of Exhibit B attached hereto, including with
respect to Guarantors organized under the laws of the states of Delaware and Texas and (ii)
counsel to the Guarantor organized under the laws of the State of Oklahoma substantially in
the form of Exhibit C and, in each case, in form and substance satisfactory to the
Representative and counsel to the Initial Purchasers.




          (e) The Initial Purchasers shall have received on the Closing Date an opinion dated the
Closing Date of Cahill Gordon & Reindel llp, counsel to the Initial Purchasers, in
form and substance satisfactory to the Representative. Such counsel shall have been
furnished with such certificates and documents as they may reasonably request to enable them
to review or pass upon the matters referred to in this Section 8 and in order to evidence
the accuracy, completeness or satisfaction in all material respects of any of the
representations, warranties or conditions contained in this Agreement.




          (f) On the date hereof, the Initial Purchasers shall have received a “comfort letter”
from KPMG LLP, the independent public accountants for the Company, dated the date of this
Agreement, addressed to the Initial Purchasers and in form and substance satisfactory to the
Representative and counsel to the Initial Purchasers, covering the financial and accounting
information in the Preliminary Offering Memorandum and the Pricing Supplement. In addition,
the Initial Purchasers shall have received a “bring-down comfort letter” from the
independent public accountants for the Company, dated as of the Closing Date, addressed to
the Initial Purchasers and in the form of the “comfort letter” delivered on the date hereof,
except that (i) it shall cover the financial and accounting information in the Final
Offering Memorandum and any amendment or supplement thereto and (ii) procedures shall be
brought down to a date no more than 5 days prior



17









 






to the Closing Date, and otherwise in form and substance satisfactory to the
Representative and counsel to the Initial Purchasers.




          (g) The Issuers and the Trustee shall have executed and delivered the Indenture and the
Initial Purchasers shall have received copies thereof. The Issuers shall have executed and
delivered the Registration Rights Agreement and the Initial Purchasers shall have received
executed counterparts thereof.




          (h) The Initial Purchasers shall have been furnished with wiring instructions for the
application of the proceeds of the Securities in accordance with this Agreement and such
other information as they may reasonably request.




          (i) The Securities shall be eligible for trading in Portal upon issuance. All
agreements set forth in the blanket representation letter of the Company to DTC relating to
eligibility of the Securities for clearance and settlement through DTC shall have been
complied with.



          If any of the conditions specified in this Section 8 shall not have been fulfilled when and as
required by this Agreement to be fulfilled (or waived by the Initial Purchasers), this Agreement
may be terminated by the Initial Purchasers on notice to the Company at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to any other party.



          The documents required to be delivered by this Section 8 will be delivered at the office of
counsel for the Initial Purchasers on the Closing Date.



          9. Survival of Representations and Agreements. All representations and warranties,
covenants and agreements contained in this Agreement, including the agreements contained in
Sections 4(f) and 10(d), the indemnity agreements contained in Section 6 and the contribution
agreements contained in Section 7, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of the Initial Purchasers or any controlling person
thereof or by or on behalf of the Company or any controlling person thereof, and shall survive
delivery of and payment for the Original Notes to and by the Initial Purchasers. The agreements
contained in Sections 4(f), 6, 7, and 10(d) shall survive the termination of this Agreement,
including pursuant to Section 10.



18









 





          10. Effective Date of Agreement; Termination.



          (a) This Agreement shall become effective upon execution and delivery of a counterpart hereof
by each of the parties hereto.



          (b) The Initial Purchasers shall have the right to terminate this Agreement at any time prior
to the Closing Date by notice to the Company from the Initial Purchasers, without liability (other
than with respect to Sections 6 and 7) on the Initial Purchasers’ part to the Company or any
affiliate thereof if, on or prior to such date, (i) the Company shall have failed, refused or been
unable to perform any agreement on its part to be performed under this Agreement when and as
required; (ii) any other condition to the obligations of the Initial Purchasers under this
Agreement to be fulfilled by the Issuers pursuant to Section 8 is not fulfilled when and as
required in any material respect; (iii) trading in any securities of the Company shall be suspended
or limited by the Commission or the New York Stock Exchange, or trading in securities generally on
the New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market shall have
been suspended or materially limited, or minimum prices shall have been established thereon by the
Commission, or by such exchange or other regulatory body or governmental authority having
jurisdiction; (iv) a general moratorium shall have been declared by either Federal or New York or
Texas State authorities or a material disruption in commercial banking or securities settlement or
clearance services in the United States shall have occurred; (v) there is an outbreak or escalation
of hostilities or national or international calamity in any case involving the United States, on or
after the date of this Agreement, or if there has been a declaration by the United States of a
national emergency or war or other national or international calamity or crisis (economic,
political, financial or otherwise) which affects the U.S. and international markets, making it, in
the Representative’s judgment, impracticable to proceed with the offering or delivery of the
Securities on the terms and in the manner contemplated in the Pricing Disclosure Package; or (vi)
there shall have been such a material adverse change in general economic, political or financial
conditions or the effect (or potential effect if the financial markets in the United States have
not yet opened) of international conditions on the financial markets in the United States shall be
such as, in the Representative’s judgment, to make it inadvisable or impracticable to proceed with
the offering or delivery of the Securities on the terms and in the manner contemplated in the
Pricing Disclosure Package.



          (c) Any notice of termination pursuant to this Section 10 shall be given at the address
specified in Section 11 below by telephone or facsimile, confirmed in writing by letter.



          (d) If this Agreement shall be terminated pursuant to Section 10(b), or if the sale of the
Securities provided for in this Agreement is not consummated because of any refusal, inability or
failure on the part of the Issuers to satisfy any condition to the obligations of the Initial
Purchasers set forth in this Agreement to be satisfied or because of any refusal, inability or
failure on the part of the Issuers to perform any agreement in this Agreement or comply with any
provision of this Agreement, the Issuers, jointly and severally, will reimburse the Initial
Purchasers for all of their reasonable out-of-pocket expenses (including, without limitation, the
fees and expenses of the Initial Purchasers’ counsel) incurred in connection with this Agreement
and the transactions contemplated hereby.



          (e) If any one or more Initial Purchasers shall fail to purchase and pay for any of the
Securities agreed to be purchased by such Initial Purchaser hereunder and such failure to purchase
shall constitute a default in the performance of its or their obligations under this Agreement, the
remaining Initial Purchasers shall be obligated severally to take up and pay for (in the respective
proportions which the principal amount of Securities set forth opposite their names in Schedule I
hereto bears to the aggregate principal amount of Securities set forth opposite the names of all
the remaining Initial Purchasers) the Securities which the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase;



19









 




provided, however, that in the event that the aggregate principal amount of Securities which the
defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase shall exceed 10%
of the aggregate principal amount of Securities set forth in Schedule I hereto, the remaining
Initial Purchasers shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the Securities, and if such nondefaulting Initial Purchasers do not purchase all
the Securities, this Agreement will terminate without liability to any nondefaulting Initial
Purchaser or the Company. In the event of a default by any Initial Purchaser as set forth in this
Section 10(e), the Closing Date shall be postponed for such period, not exceeding seven Business
Days, as the Representative shall determine in order that the required changes in the Final
Offering Memorandum or in any other documents or arrangements may be effected. Nothing contained
in this Agreement shall relieve any defaulting Initial Purchaser of its liability, if any, to the
Company or any nondefaulting Initial Purchaser for damages occasioned by its default hereunder.




          11. Notice. All communications with respect to or under this Agreement, except as may
be otherwise specifically provided in this Agreement, shall be in writing and, if sent to the
Initial Purchasers, shall be mailed, delivered or telecopied and confirmed in writing to c/o UBS
Securities LLC, 677 Washington Blvd., Stamford, CT 06901 (fax number: 203-719-1075), Attention:
High Yield Syndicate Department, with a copy for information purposes only to (i) UBS Securities
LLC, 677 Washington Blvd., Stamford, CT 06901 (fax number: 203-719-0680), Attention: Legal and
Compliance Department and (ii) Cahill Gordon & Reindel llp, 80 Pine Street, New York, NY
10005 (fax number: 212-269-5420), Attention: Michael E. Michetti; and if sent to the Issuers,
shall be mailed, delivered or telecopied and confirmed in writing to (i) Basic Energy Services,
Inc., 400 W. Illinois, Midland, TX 79701 (telephone: 432-620-5500, fax: 432-620-5501, Attention:
Kenneth V. Huseman and (ii) Andrews Kurth LLP, 600 Travis, Suite 4200, Houston, TX 77002,
Attention: David C. Buck, Esq. (fax number: 713-220-4285).



          All such notices and communications shall be deemed to have been duly given: when delivered
by hand, if personally delivered; five business days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged by telecopier machine, if telecopied; and one
business day after being timely delivered to a next-day air courier.



          12. Parties. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Initial Purchasers, the Issuers and the other indemnified parties referred to in
Sections 6 and 7, and their respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue
of this Agreement or any provision herein contained. The term “successors and assigns” shall not
include a purchaser, in its capacity as such, of Notes from the Initial Purchasers.



          13. Construction. This Agreement shall be construed in accordance with the laws of
the State of New York applicable to contracts made and to be performed within the State of New
York.



          14. Submission to Jurisdiction; Waiver of Jury Trial. The Issuers hereby waive all
right to trial by jury in any proceeding (whether based upon contract, tort or otherwise) in any
way arising out of or relating to this Agreement. The Issuers agree that a final judgment in any
such proceeding brought in any such court shall be conclusive and binding upon the Issuers and may
be enforced in any other courts in the jurisdiction of which the Issuers are or may be subject, by
suit upon such judgment.



          15. Captions. The captions included in this Agreement are included solely for
convenience of reference and are not to be considered a part of this Agreement.



20









 






          16. Counterparts. This Agreement may be executed in various counterparts that
together shall constitute one and the same instrument.




          17. No Fiduciary Relationship. The Issuers hereby acknowledge that the Initial
Purchasers are acting solely as initial purchasers in connection with the purchase and sale of the
Securities. The Issuers further acknowledge that each of the Initial Purchasers is acting pursuant
to a contractual relationship created solely by this Agreement entered into on an arm’s length
basis and in no event do the parties intend that any Initial Purchaser act or be responsible as a
fiduciary to the Issuers, their management, stockholders, creditors or any other person in
connection with any activity that such Initial Purchaser may undertake or has undertaken in
furtherance of the purchase and sale of the Securities, either before or after the date hereof.
The Initial Purchasers hereby expressly disclaim any fiduciary or similar obligations to the
Issuers, either in connection with the transactions contemplated by this Agreement or any matters
leading up to such transactions, and the Issuers hereby confirm their understanding and agreement
to that effect. The Issuers and each Initial Purchaser agree that they are each responsible for
making their own independent judgments with respect to any such transactions, and that any opinions
or views expressed by any Initial Purchaser to the Issuers regarding such transactions, including
but not limited to any opinions or views with respect to the price or market for the Securities, do
not constitute advice or recommendations to the Issuers. The Issuers hereby waive and release, to
the fullest extent permitted by law, any claims that such Issuers may have against the Initial
Purchasers with respect to any breach or alleged breach of any fiduciary or similar duty to the
Issuers in connection with the transactions contemplated by this Agreement or any matters leading
up to such transactions.



[Signature Pages Follow]




21









 





          If the foregoing Purchase Agreement correctly sets forth the understanding among the Issuers
and the Initial Purchasers, please so indicate in the space provided below for the purpose,
whereupon this letter and your acceptance shall constitute a binding agreement among the Issuers
and the Initial Purchasers.



	 	 	 	 	 
	 	 	BASIC ENERGY SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth V. Huseman
	 

	 	 	 	 
	 

	 	 	 	Name: Kenneth V. Huseman
	 

	 	 	 	Title: President and Chief Executive Officer
	 
	 	 	 	 
	 	 	FIRST ENERGY SERVICES COMPANY
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth V. Huseman
	 

	 	 	 	 
	 

	 	 	 	Name: Kenneth V. Huseman
	 

	 	 	 	Title: President
	 
	 	 	 	 
	 	 	H.B.& R., INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth V. Huseman
	 

	 	 	 	 
	 

	 	 	 	Name: Kenneth V. Huseman
	 

	 	 	 	Title: President
	 
	 	 	 	 
	 	 	FESCO ALASKA, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth V. Huseman
	 

	 	 	 	 
	 

	 	 	 	Name: Kenneth V. Huseman
	 

	 	 	 	Title: President
	 
	 	 	 	 
	 	 	BASIC ENERGY SERVICES, L.P.
	 
	 	 	 	 
	 

	 	By:
	 	BASIC ENERGY SERVICES GP, LLC,

its General Partner
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth V. Huseman
	 

	 	 	 	 
	 

	 	 	 	Name: Kenneth V. Huseman
	 

	 	 	 	Title: President






S-1




 









 








	 	 	 	 	 
	 	 	BASIC ENERGY SERVICES GP, LLC
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth V. Huseman
	 

	 	 	 	 
	 

	 	 	 	Name: Kenneth V. Huseman
	 

	 	 	 	Title: President
	 
	 	 	 	 
	 	 	BASIC ENERGY SERVICES LP, LLC
	 
	 	 	 	 
	 

	 	By:	 	/s/ Scott Kinnamon
	 

	 	 	 	 
	 

	 	 	 	Name: Scott Kinnamon
	 

	 	 	 	Title: President
	 
	 	 	 	 
	 	 	BASIC ESA, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth V. Huseman
	 

	 	 	 	 
	 

	 	 	 	Name: Kenneth V. Huseman
	 

	 	 	 	Title: President
	 
	 	 	 	 
	 	 	WESTERN OIL WELL SERVICE CO.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth V. Huseman
	 

	 	 	 	 
	 

	 	 	 	Name: Kenneth V. Huseman
	 

	 	 	 	Title: President
	 
	 	 	 	 
	 	 	BASIC MARINE SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth V. Huseman
	 

	 	 	 	 
	 

	 	 	 	Name: Kenneth V. Huseman
	 

	 	 	 	Title: President
	 
	 	 	 	 
	 	 	ENERGY AIR DRILLING SERVICE CO.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth V. Huseman
	 

	 	 	 	 
	 

	 	 	 	Name: Kenneth V. Huseman
	 

	 	 	 	Title: President






S-2




 









 








	 	 	 	 	 
	 	 	R&R HOT OIL SERVICE INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth V. Huseman
	 

	 	 	 	 
	 

	 	 	 	Name:  Kenneth V. Huseman
	 

	 	 	 	Title:    President
	 
	 	 	 	 
	 	 	OILWELL FRACTURING SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth V. Huseman
	 

	 	 	 	 
	 

	 	 	 	Name:  Kenneth V. Huseman
	 

	 	 	 	Title:    President
	 
	 	 	 	 
	 	 	LEBUS OIL FIELD SERVICE CO.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth V. Huseman
	 

	 	 	 	 
	 

	 	 	 	Name:  Kenneth V. Huseman
	 

	 	 	 	Title:    President






S-3




 









 








Confirmed and accepted as of the date first above written:




UBS SECURITIES LLC

BANC OF AMERICA SECURITIES LLC

LEHMAN BROTHERS INC.

CREDIT SUISSE SECURITIES (USA) LLC

GOLDMAN, SACHS & CO.




	 	 	 	 	 
	By: UBS SECURITIES LLC	 	 
	as Representative of the several Initial Purchasers	 	 
	 
	 	 	 	 
	By:
	 	/s/ Chris Bradshaw
	 

	 	 	 	 
	 

	 	Name: Chris Bradshaw	 	
	 

	 	Title: Director	 	
	 
	 	 	 	 
	By:
	 	/s/ Michael Jamieson
	 

	 	 	 	 
	 

	 	Name: Michael Jamieson	 	
	 

	 	Title: Managing Director	 	






S-4





 









 








Schedule I




	 	 	 	 	 
	Principal Amount of
	Initial Purchaser	Notes to Be Purchased
	UBS Securities LLC
	 	$	90,000,000	 
	Banc of America Securities LLC
	 	 	45,000,000	 
	Lehman Brothers Inc.
	 	 	45,000,000	 
	Credit Suisse Securities (USA) LLC
	 	 	22,500,000	 
	Goldman, Sachs & Co.
	 	 	22,500,000	 
	 
	 	 	 	 
	Total
	 	$	225,000,000	 






I-1




 









 








Schedule II




	 	 	 	 	 
	 	 	Jurisdiction	 	Equity Holder and
	Subsidiary	 	of Organization	 	% Held by Each
	Basic Energy Services GP, LLC

	 	Delaware
	 	Basic Energy Services Inc. — 100%
	Basic Energy Services LP, LLC

	 	Delaware
	 	Basic Energy Services Inc. — 100%
	 

	 	 	 	Basic Energy Services GP, LLC. — 0.01%
	Basic Energy Services L.P.

	 	Delaware
	 	Basic Energy Services LP, LLC — 99.99%
	Basic ESA, Inc.*

	 	Texas
	 	Basic Energy Services L.P. — 100%
	Energy Air Drilling Services Co., Inc.*

	 	Colorado
	 	Basic Energy Services L.P. — 100%
	R&R Hot Oil Service Inc.*

	 	North Dakota
	 	Basic Energy Services L.P. — 100%
	Basic Marine Services, Inc.

	 	Delaware
	 	Basic Energy Services L.P. — 100%
	First Energy Services Company

	 	Delaware
	 	Basic Energy Services L.P. — 100%
	Oilwell Fracturing Services, Inc.

	 	Oklahoma
	 	Basic Energy Services L.P. — 100%
	Western Oil Well Service Co.*

	 	Montana
	 	First Energy Services Company — 100%
	FESCO Alaska, Inc.*

	 	Alaska
	 	First Energy Services Company — 100%
	H.B.&R., Inc.*

	 	Montana
	 	FESCO Alaska — 100%
	LeBus Oil Field Service Co.

	 	Texas
	 	Basic Energy Services Inc. — 100%






* Not a “Significant Subsidiary” as defined in Rule 1-02(w) of Regulation S-X




II-1



 









 








Exhibit A




[FORM OF REGISTRATION RIGHTS AGREEMENT]




A-1