UNDERWRITING AGREEMENT
Exhibit 1.1
EXECUTION COPY
January 18, 2007
XXXXXX, XXXXX XXXXX, INCORPORATED
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Introductory. Double Eagle Petroleum Co., a Maryland corporation (the “Company”), proposes to
issue and sell to Xxxxxx, Xxxxx Xxxxx, Incorporated, as sole underwriter (the “Underwriter”), an
aggregate of 450,000 shares (the “Firm Shares”) of its common stock, par value $.10 per share (the
“Shares”). In addition, the Company has granted to the Underwriter an option to purchase up to an
additional 50,000 Shares (the “Option Shares”), as provided in Section 2. The Firm Shares and, if
and to the extent such option is exercised, the Option Shares are collectively called the “Offered
Shares.”
The Company has prepared and filed with the Securities and Exchange Commission (the
“Commission”) a shelf registration statement on Form S-3 (File No. 333-139012), which contains a
form of base prospectus dated December 15, 2006 (the “Base Prospectus”) to be used in connection
with the public offering and sale of the Offered Shares. Such registration statement, as amended,
including the financial statements, exhibits and schedules thereto, in the form in which it was
declared effective by the Commission under the Securities Act of 1933, as amended (the “Securities
Act”), and the rules and regulations promulgated thereunder (the “Securities Act Regulations”),
including all documents incorporated or deemed to be incorporated by reference therein and any
information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430B under
the Securities Act or the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (collectively, the “Exchange Act”), is called the “Registration
Statement.” The preliminary prospectus supplement dated January 16, 2007, describing the Offered
Shares and the offering thereof, together with the Base Prospectus, is called the “Preliminary
Prospectus,” and the Preliminary Prospectus and any other preliminary prospectus supplement to the
Base Prospectus that describes the Offered Shares and the offering thereof and is used prior to the
filing of the Prospectus (as defined below), together with the Base Prospectus, is called a
“preliminary prospectus.” As used herein, the term “Prospectus” shall mean the final prospectus
supplement to the Base Prospectus that describes the Offered Shares and the offering thereof (the
“Final Prospectus Supplement”), together with the Base Prospectus, in the form first used by the
Underwriter to confirm sales of the Offered Shares or in the form first made available to the
Underwriter by the Company to meet requests of purchasers pursuant to Rule 173 under the Securities
Act. As used herein, “Applicable Time” is Noon (New York time) on the date of this
Agreement. As used herein, “free writing prospectus” has the meaning set forth in Rule 405 under
the Securities Act, and “Time of Sale Prospectus” means the Preliminary Prospectus together with
the free writing prospectuses identified in Schedule A hereto, and each “road show” (as
defined in Rule 433 under the Securities Act), if any, related to the offering of the Offered
Shares contemplated hereby that is a “written communication” (as defined in Rule 405 under the
Securities Act) (each such road show, a “Road Show”). As used herein, the terms “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 amendments or supplements to the Registration Statement, the Preliminary Prospectus,
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 Exchange Act which is or is deemed to be
incorporated by reference in the Registration Statement, the Preliminary Prospectus, any
preliminary prospectus, the Base Prospectus, the Time of Sale Prospectus or the Prospectus, as the
case may be. All references in this Agreement to (i) the Registration Statement, any Preliminary
Prospectus, a preliminary prospectus or the Prospectus, or any amendments or supplements to any of
the foregoing, shall include any copy thereof filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System (“XXXXX”) and (ii) the Prospectus shall be deemed to
include the “electronic Prospectus” provided for use in connection with the offering of the Offered
Shares as contemplated by Section 3(A)(k) of this Agreement.
All references in this Agreement to financial statements and schedules and other information
which are “contained,” “included” or “stated” in the Registration Statement, the Preliminary
Prospectus, any preliminary prospectus, the Base Prospectus, the Time of Sale Prospectus or the
Prospectus (and all other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed to be incorporated
by reference in the Registration Statement or the Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the Registration Statement, the
Preliminary Prospectus, any preliminary prospectus, the Base 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 Preliminary Prospectus, any
preliminary prospectus, the Base Prospectus, the Time of Sale Prospectus or the Prospectus shall be
deemed to mean and include the filing of any document under the Exchange Act which is or is deemed
to be incorporated by reference in the Registration Statement, the Preliminary Prospectus, any
preliminary prospectus, the Base Prospectus, the Time of Sale Prospectus or the Prospectus, as the
case may be.
The Company hereby confirms its agreement with the Underwriter as follows:
Section 1. Representations and Warranties of the Company.
The Company hereby represents, warrants and covenants to the Underwriter, as of the date of
this Agreement and as of each Closing Date (as hereinafter defined) and covenants with the
Underwriter, as follows:
(a) Compliance with Registration Requirements. The Registration Statement has
2
been declared effective by the Commission under the Securities Act. The Company has complied with
all requests of the Commission for additional or supplemental information, if applicable. No stop
order suspending the effectiveness of the Registration Statement is in effect and no proceedings
for such purpose have been instituted or are pending or, to the knowledge of the Company, are
contemplated or threatened by the Commission.
Each preliminary prospectus when filed complied and the Prospectus when filed will comply in
all material respects with the Securities Act and, if filed by electronic transmission pursuant to
XXXXX (except as may be permitted by Regulation S-T under the Securities Act), was or will be
identical to the copy thereof delivered to the Underwriter for use in connection with the offer and
sale of the Offered Shares. Each of the Registration Statement and any post-effective amendment
thereto, at the time it became effective and each Closing Date, complied and, as of each Closing
Date, will comply in all material respects with the Securities Act and did not and, as of each
Closing Date, will not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading. As
of the Applicable Time, the Time of Sale Prospectus did not, and at the time of each sale of the
Offered Shares prior to the availability of the Prospectus, will not, as then amended or
supplemented by the Company, if applicable, contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Prospectus, as amended or
supplemented and at the First Closing Date and at any Option Date, did not and, as of each Closing
Date, will not contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties set forth in the three
immediately preceding sentences do not apply to (i) that part of the Registration Statement that
constitutes the Statement of Eligibility and Qualification (“Form T-1”) of a trustee under the
Trust Indenture Act; and (ii) statements in or omissions from the Registration Statement, or any
post-effective amendment thereto, or the Prospectus or the Time of Sale Prospectus, or any
amendments or supplements thereto, made in reliance upon and in conformity with information
relating to the Underwriter furnished to the Company in writing by the Underwriter expressly for
use therein, it being understood and agreed that the only such information furnished by the
Underwriter to the Company consists of the information described in Section 9(b) below. There are
no contracts or other documents required to be described in the Time of Sale Prospectus or the
Prospectus or to be filed as exhibits to the Registration Statement which have not been described
or filed as required.
The Company is not an “ineligible issuer” in connection with the offering of the Offered
Shares pursuant to Rules 164, 405 and 433 under the Securities Act. Any free writing prospectus
that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or
will be, filed with the Commission in accordance with the requirements of the Securities Act. Each
free writing prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d)
under the Securities Act or that was prepared by or on behalf of or used or referred to by the
Company complies or will comply in all material respects with the requirements of Rule 433 under
the Securities Act including timely filing with the Commission or retention where required and
legending, and each such free writing prospectus, as of its issue date and at all subsequent times
through the completion of the public offer and sale of the Offered Shares or until any
3
earlier date that the Company notified or notifies the Underwriter as described in Section 3(e)
below did not, does not and will not include any information that conflicted, conflicts with or
will conflict with the information contained in the Registration Statement or the Prospectus,
including any document incorporated by reference therein. The foregoing sentence does not apply to
statements in or omissions from any free writing prospectus in reliance upon and in conformity with
information relating to the Underwriter furnished to the Company in writing by the Underwriter
expressly for use therein, it being understood and agreed that the only such information furnished
by the Underwriter to the Company consists of the information described in Section 9(b) below.
Except for the free writing prospectuses, if any, identified in Schedule A hereto, and
electronic road shows, if any, furnished to you before first use, the Company has not prepared,
used or referred to, and will not, without your prior consent, prepare, use or refer to, any free
writing prospectus.
(b) Offering Materials Furnished to Underwriter. The Company has delivered to the Underwriter
a complete copy of the Registration Statement, each amendment thereto and of each consent and
certificate of experts filed as a part thereof, and conformed copies of the Registration Statement,
each amendment thereto and preliminary prospectuses, the Time of Sale Prospectus, the Prospectus,
as amended or supplemented, and any free writing prospectus reviewed and consented to by the
Underwriter, in such quantities and at such places as the Underwriter has reasonably requested.
(c) Distribution of Offering Materials By the Company. The Company has not distributed and
will not distribute, prior to the later of (i) the expiration or termination of the option granted
to the Underwriter in Section 2 and (ii) the completion of the Underwriter’s distribution of the
Offered Shares, any offering material in connection with the offering and sale of the Offered
Shares other than a preliminary prospectus, the Time of Sale Prospectus, the Prospectus, any free
writing prospectus reviewed and consented to by the Underwriter, or the Registration Statement.
(d) The Underwriting Agreement. This Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company, enforceable in accordance with
its terms, except as rights to indemnification hereunder may be limited by applicable law and
except as the enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and remedies of creditors or
by general equitable principles.
(e) Authorization of the Offered Shares. The Offered Shares have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered by the Company pursuant
to this Agreement against payment of the consideration set forth herein, will be validly issued,
fully paid and nonassessable, and the issuance and sale of the Offered Shares is not subject to any
preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase the
Offered Shares. The statements set forth in the Prospectus under the caption “Description of
Capital Stock—Common Stock,” insofar as it purports to constitute a summary of the terms of the
Common Stock, are accurate and complete in all respects; no holder of the Shares will be subject to
personal liability under the Maryland General Corporation Law by reason of being such a holder.
4
(f) Intentionally Omitted.
(g) Incorporated Documents. Each document incorporated or deemed to be incorporated by
reference in the Registration Statement and the Prospectus, at the time they were or hereafter are
filed with the Commission, complied and will comply when filed with the requirements of the
Exchange Act, and, when read together with the other information in the Prospectus, at the date of
the Prospectus and at each Closing Date, did not and will not include 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 in the Registration Statement or Prospectus, when
such documents become effective or are filed with the Commission, as the case may be, will conform
to the requirements of the Securities Act or the Exchange Act, as applicable, and will not contain
an 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.
(h) Independent Registered Public Accounting Firm — Xxxx & Associates LLP. The accountants,
Xxxx & Associates LLP, who have certified certain audited financial statements (which term as used
in this Agreement includes the related notes thereto) contained or incorporated by reference in the
Registration Statement and included in the Prospectus and the Time of Sale Prospectus (or any
amendment or supplement thereto), are (A) an independent registered public accounting firm with
respect to the Company, as required by the Securities Act and the Securities Act Regulations and
the Exchange Act, (B) in compliance with the applicable requirements relating to qualification of
accountants under Rule 2-01 of Regulation S-X and (C) a registered public accounting firm as
defined by the Public Company Accounting Oversight Board (the “PCAOB”) whose registration has not
been suspended or revoked and who has not requested such registration to be withdrawn.
(i) Financial Statements. The historical financial statements of the Company, including any
amendments, filed as part of the Registration Statement or included or incorporated by reference in
the Time of Sale Prospectus or the Prospectus, together with the related schedules and notes
thereto, present fairly the financial condition and results of operation of the Company and its
consolidated subsidiaries at the dates indicated and the statement of operations, stockholders’
equity and cash flows of the Company and its consolidated subsidiaries for the periods specified.
Such financial statements, including any amendments, have been prepared in conformity with
accounting principles generally accepted in the United States of America (“GAAP”) applied, except
as disclosed therein, on a consistent basis throughout the periods involved. The supporting
schedules, if any, included in the Registration Statement, the Time of Sale Prospectus or the
Prospectus present fairly in accordance with GAAP the information required to be stated therein.
All financial statements, including any amendments, required to be included in the Time of Sale
Prospectus or the Prospectus, or incorporated by reference in the Registration Statement, under
Item 11 of Form S-3 have been so included or incorporated, and to the extent such financial
statements are required by Rule 3-05 of Regulation S-X, present fairly the financial information
contained therein as of the dates and periods specified in conformity with GAAP, and to the extent
such financial statements constitute pro
5
forma financial statements, such financial statements present fairly the information contained
therein, have been prepared in accordance with the Commission’s rules and guidelines with respect
to pro forma financial statements and have been properly presented on the bases described therein,
and the assumptions used in the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances referred to therein. No other
financial statements or supporting schedules are required to be included in the Registration
Statement, the Time of Sale Prospectus or any applicable Prospectus. To the Company’s knowledge, no
person who has been suspended or barred from being associated with a registered public accounting
firm, or who has failed to comply with any sanction pursuant to Rule 5300 promulgated by the PCAOB,
has participated in or otherwise aided the preparation of, or audited, the financial statements,
supporting schedules or other financial data filed with the Commission as a part of the
Registration Statement and included in the Time of Sale Prospectus or any applicable Prospectus.
(j) No Material Adverse Change in Business. Except as otherwise disclosed in the Time of Sale
Prospectus and the Prospectus, subsequent to the respective dates as of which information is given
in the Time of Sale Prospectus: (A) there has been no material adverse change, or any development
that would reasonably be expected to result in a material adverse change, in the condition,
financial or otherwise, or in the earnings, business affairs or business prospects, whether or not
arising in the ordinary course of business, of the Company and its Subsidiaries (as defined
herein), considered as one entity (a “Material Adverse Change”); (B) the Company and its
Subsidiaries, considered as one entity, have not incurred any material liability or obligation,
indirect, direct or contingent, not in the ordinary course of business, nor entered into any
material transaction or agreement (except for this Agreement) not in the ordinary course of
business; (C) there has been no dividend or distribution of any kind declared, paid or made by the
Company or, except for dividends paid to the Company or other Subsidiaries, any of its
Subsidiaries, on any class of capital stock; and (D) there has not been any material adverse change
in the capital stock, short-term debt or long-term debt of the Company or any of its Subsidiaries.
(k) Incorporation and Good Standing of the Company and its Subsidiaries. Each of the Company
and its subsidiaries (individually a “Subsidiary” and collectively, the “Subsidiaries”) has been
duly incorporated and is validly existing as a corporation, partnership or limited liability
company, as applicable, in good standing under the laws of the jurisdiction of its incorporation or
organization and has the power and authority (corporate or other) to own, lease and operate its
properties and to conduct its business as described in the Registration Statement, the Time of Sale
Prospectus and the Prospectus and, in the case of the Company, to enter into and perform its
obligations under this Agreement. Each of the Company and its Subsidiaries is duly qualified as a
foreign corporation, partnership or limited liability company, as applicable, to transact business
and is in good standing in each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business, except where the failure
to be so qualified or in good standing would not, individually or in the aggregate, result in a
Material Adverse Change. All of the issued and outstanding capital stock or other equity or
ownership interest of each Subsidiary has been duly authorized and validly issued, is fully paid
and nonassessable and is owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien,
6
encumbrance or adverse claim. The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than (i) the subsidiaries listed in Exhibit 21 to
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005; and (ii) such
other entities omitted from Exhibit 21 which, when such omitted entities are considered in the
aggregate as a single subsidiary, would not constitute a “significant subsidiary” within the
meaning of Rule 1-02(w) of Regulation S-X.
(l) Capitalization. The authorized, issued and outstanding shares of capital stock of the
Company are as set forth in the Registration Statement, the Time of Sale Prospectus and the
Prospectus. All of the shares of issued and outstanding capital stock of the Company have been duly
authorized and validly issued, were issued in compliance with federal and state securities laws,
are fully paid and non assessable and conform to the description thereof contained in the
Registration Statement, the Time of Sale Prospectus and the Prospectus. All of the Company’s
options, warrants and other rights to purchase or exchange any securities for shares of the
Company’s capital stock have been duly and validly authorized and issued, were issued in compliance
with federal and state securities laws, and conform to the description thereof contained in the
Registration Statement, the Time of Sale Prospectus and the Prospectus. None of the outstanding
shares of capital stock of the Company were issued in violation of preemptive or other similar
rights of any securityholder of the Company.
(m) Authorization and Description of Shares. The Offered Shares have been duly authorized for
issuance and sale to the Underwriter pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement against payment of the consideration set forth herein, will
be validly issued, fully paid and nonassessable. The Shares (including the Offered Shares) conform
in all material respects to the descriptions thereof contained in the Time of Sale Prospectus and
the Prospectus.
(n) Absence of Defaults and Conflicts. Neither the Company nor any of its Subsidiaries is in
violation of its charter, bylaws, partnership agreement or other governing documents or in default
in the performance or observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of its Subsidiaries is a party
or by which it or any of them may be bound, or to which any of the property or assets of the
Company or any Subsidiary is subject (collectively including without limitation the credit
agreements and any “Loan Documents” as such term is defined under each of the credit agreements,
“Agreements and Instruments”) that would reasonably be expected to result in a Material Adverse
Change. The execution, delivery and performance by the Company of its obligations under this
Agreement and the consummation of the transactions contemplated herein and in the Registration
Statement, the Time of Sale Prospectus and the Prospectus (including the issuance and sale of the
Offered Shares and the use of the proceeds from the sale of the Offered Shares as described in the
Prospectus in the “Use of Proceeds” section of the Prospectus) and compliance by the Company with
its obligations hereunder have been duly authorized by all necessary corporate action and do not
and will not, whether with or without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as defined below) under, or result
in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its Subsidiaries
7
pursuant to, the Agreements and Instruments, nor will such action result in any violation of (A)
the provisions of any charter, bylaws, partnership agreement, limited liability company agreement
or other governing documents of the Company or any of its Subsidiaries or (B) any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its
Subsidiaries or any of their assets, properties or operations, which violations, in the case of
clause (B), would, individually or in the aggregate, cause a Material Adverse Change. As used
herein, a “Repayment Event” means any event or condition that gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any of its Subsidiaries. Except for permits, consents, approvals and similar
authorizations required under the securities or “Blue Sky” laws of certain jurisdictions, and
except for such permits, consents, approvals and authorizations which have been obtained, no
permit, consent, approval, authorization or order of any court, governmental agency or body or
financial institution is required in connection with the consummation of the transactions
contemplated by this Agreement.
(o) Absence of Labor Dispute. No labor dispute with the employees of the Company or any of
its Subsidiaries exists or, to the knowledge of the Company, is imminent that could reasonably be
expected to result in a Material Adverse Change.
(p) Absence of Proceedings. There is no action, suit, proceeding, inquiry or investigation
before or brought by any court or governmental agency or body, domestic or foreign now pending, or,
to the Company’s knowledge, threatened against or directly affecting the Company or any of its
Subsidiaries which could reasonably be expected to result in a Material Adverse Change, or that
might reasonably be expected to materially and adversely affect the consummation of the
transactions contemplated in this Agreement or the performance by the Company of its obligations
hereunder; and to the Company’s knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others. The aggregate of all pending legal or
governmental proceedings to which the Company or any of its Subsidiaries is a party or of which any
of their respective properties or assets is the subject that are not described in the Registration
Statement, the Time of Sale Prospectus and the Prospectus, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result in a Material Adverse
Change.
(q) Accuracy of Exhibits. There are no contracts or documents that are required to be
described in the Registration Statement, the Time of Sale Prospectus, the Prospectus or the
documents incorporated by reference therein or to be filed as exhibits thereto that have not been
so described and filed as required.
(r) Absence of Further Requirements. No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Offered Shares hereunder or the consummation
of the transactions contemplated by this Agreement, except (A) for such required under the
Securities Act, the Securities Act Regulations, the Exchange Act and
8
state securities or “Blue Sky” laws, (B) for such which have been, or prior to the applicable date
of delivery of the Offered Shares will be, obtained or (C) for such which, if not obtained, would
not, individually or in the aggregate, cause a Material Adverse Change.
(s) Possession of Intellectual Property. The Company and its Subsidiaries own or possess
adequate rights, adequate know-how (including unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) or other intellectual property (collectively,
“Intellectual Property”) necessary to carry on the business now operated by them, and neither the
Company nor any of its Subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances that could reasonably be expected to render any
Intellectual Property invalid or inadequate to protect the interests of the Company or any of its
Subsidiaries therein.
(t) Possession of Licenses and Permits. The Company and its Subsidiaries possess all such
permits, licenses, approvals, consents and other authorizations (collectively, “Governmental
Licenses”) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business in the manner described in the Registration Statement, the Time
of Sale Prospectus and the Prospectus, subject to such qualifications as may be set forth in the
Registration Statement, the Time of Sale Prospectus and the Prospectus and except for such permits
which, if not obtained, would not, individually or in the aggregate, cause Material Adverse Change;
the Company and its Subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, subject to such qualifications as may be set forth in the Registration
Statement, the Time of Sale Prospectus and Prospectus and except for such noncompliance which would
not, individually or in the aggregate, cause a Material Adverse Change; all of the Governmental
Licenses are valid and in full force and effect, subject to such qualifications as may be set forth
in the Registration Statement, the Time of Sale Prospectus and the Prospectus. Neither the Company
nor any of its Subsidiaries has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses.
(u) Title to Property. The Company and its Subsidiaries have good and indefeasible title to
all of their interests in oil and gas properties (other than interests earned under farm-out,
participation or similar agreements in which an assignment or transfer is pending) and all other
real property owned by the Company and its Subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind, except such as (A) are described in the Time of
Sale Prospectus and the Prospectus, (B) liens and encumbrances under the Credit Agreements, (C)
liens and encumbrances under operating agreements, unitization and pooling agreements, production
sales contracts, farm-out agreements and other oil and gas exploration participation, production
and transportation agreements, in each case that secure payment of amounts not yet due and payable
for the performance of other inchoate obligations and are of a scope and nature customary in the
oil and gas industry or arise in connection with drilling and production operations, or (D) do not,
singly or in the aggregate, materially affect the value of the affected property and do not
interfere with the use made and proposed to be made of such property by the Company or its
Subsidiaries, as the case may be. All of the leases and subleases of real property that are
material to the business of the Company or any of its Subsidiaries and under which the
9
Company or any of its Subsidiaries holds properties described in the Registration Statement, the
Time of Sale Prospectus or the Prospectus, are in full force and effect, and neither the Company
nor any of its Subsidiaries has received notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any of its Subsidiaries under any of
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 premises under any such lease or sublease.
(v) Certain Oil and Gas Matters. Except as described in the Time of Sale Prospectus and the
Prospectus, as of the date hereof and each Closing Date, (A) all royalties, rentals, deposits and
other amounts owed under the oil and gas leases constituting the oil and gas properties of the
Company and its Subsidiaries have been properly and timely paid (other than amounts held in routine
suspense accounts pending payments), and no material amount of proceeds from the sale or production
attributable to the oil and gas properties of the Company and its Subsidiaries are currently being
held in suspense by any purchaser thereof, except where such amounts due could not, singly or in
the aggregate, have a Material Adverse Change on the Company or any of its Subsidiaries; and (B)
there are no claims under take-or-pay contracts pursuant to which natural gas purchasers have any
make-up rights affecting the interests of the Company or its Subsidiaries in their oil and gas
properties, except where such claims could not, singly or in the aggregate, cause a Material
Adverse Change to the Company or any of its Subsidiaries.
(w) Investment Company Act. The Company is not, and upon the issuance and sale of the Offered
Shares as herein contemplated and the application of the net proceeds therefrom as described in the
Prospectus will not be, an “investment company” or an entity “controlled” by an “investment
company” as such terms are defined in the Investment Company Act of 1940, as amended.
(x) Environmental Laws. Except in the case of clauses (A), (B), (C) or (D) below where a
violation, failure to receive required permits, authorizations and approvals or failure to comply
with the requirements of such permits, authorizations and approvals, action or liabilities related
to Hazardous Materials or any Environmental Laws would not, individually or in the aggregate, would
cause a Material Adverse Change: (A) neither the Company nor 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
(collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials (collectively,
“Environmental Laws”), (B) the Company and its Subsidiaries have all permits, authorizations and
approvals required under any applicable Environmental Laws for their business and operations and
are each in compliance with their requirements, (C) to the knowledge of the Company, there are no
pending or threatened administrative, regulatory or judicial actions, suits,
10
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
(D) there are no events or circumstances (including any spill, discharge, leak, emission or release
of Hazardous Materials) that could 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,
(y) Registration Rights. 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 securities of the Company or any of its
Subsidiaries, owned or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement filed by the Company under the
Securities Act.
(z) Stabilizing Transactions. The Company has not taken, directly or indirectly, any action
designed to or that might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Shares or any other “reference security” (as defined in Rule 100
of Regulation M under the Exchange Act (“Regulation M”)) whether to facilitate the sale or resale
of the Offered Shares or otherwise (other than stabilization and other activities that may be taken
by the Underwriter and that are described under the caption “Underwriting” in the Prospectus), and
has taken no action which would directly or indirectly violate Regulation M.
(aa) Statistical and Market Data. The statistical and market related data included or
incorporated by reference 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.
(bb) Finders’ Fee. The Company knows of no outstanding claims for services, in the nature of
a finder’s fee or origination fee or other similar claim, with respect to the transactions
contemplated hereby, other than the underwriting fees and compensation to be paid to the
Underwriter in accordance with this Agreement.
(cc) Payment of Taxes. All United States federal income tax returns of the Company and its
Subsidiaries required by law to be filed have been filed (or extensions with respect to such tax
returns have been obtained). All taxes shown by such filed tax returns or otherwise assessed, that
are due and payable, have been paid, except those which are being contested in good faith and as to
which adequate reserves have been provided in accordance with GAAP. The Company has not received
any notice from the Internal Revenue Service that it intends to audit the Company’s federal income
tax returns for any year during the three-year period ended December 31, 2005 and no audit
proceeding by the Internal Revenue Service has been conducted during such period. The Company and
its Subsidiaries have filed all other tax returns (or obtained extensions with respect to such tax
returns) that are required to have been filed by them pursuant to applicable foreign, state, local
or other law, and have paid all taxes due pursuant to
11
such returns or pursuant to any assessment received by the Company and its Subsidiaries, except
those which are being contested in good faith and as to which adequate reserves have been provided
in accordance with generally accepted accounting principles. The charges, accruals and reserves on
the books of the Company and each of its Subsidiaries in respect of any income and corporation tax
liability for any years not finally determined are adequate in all material respects to meet any
assessments or reassessments for additional income tax for any years not finally determined.
(dd) Company’s Accounting System. The Company and each of its Subsidiaries make and keep
accurate books and records and maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance with management’s
general or specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to any differences.
There has not been and is no material weakness in the Company’s internal control over financial
reporting (whether or not remediated) and since December 31, 2005, there has been no change in the
Company’s internal control over financial reporting that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial reporting.
(ee) Insurance. The Company and each of its Subsidiaries carry, or are covered by, insurance
with financially sound and reputable insurers, in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the volume of their respective
properties as is generally maintained by companies similar to the Company engaged in the same or
similar business, and all such insurance is in full force and effect.
(ff) Related Party Transactions. No relationship, direct or indirect, exists between or among
any of the Company or any affiliate of the Company, on the one hand, and any director, officer,
stockholder, customer or supplier of any of them, on the other hand, which is required by the
Securities Act or by the Securities Act Regulations to be described in the Registration Statement
or the Prospectus which is not so described or is not described as required.
(gg) Reserve Reports. The written engineering reserve reports prepared by Netherland, Xxxxxx
& Associates, an independent petroleum engineering consulting firm (“Netherland Xxxxxx”), as of
December 31, 2005, setting forth the engineering values attributed to the oil and gas properties of
the Company and its Subsidiaries accurately reflects in all material respects the ownership
interests of the Company and its Subsidiaries in the properties included therein as of December 31,
2005, except as otherwise disclosed in the Registration Statement, the Time of Sale Prospectus and
the Prospectus. The information furnished by the Company to Netherland Xxxxxx for purposes of
preparing its report, including, without limitation, production, costs of operation and
development, current prices for production, agreements relating to current and future operations
and sales of production, was true, correct and complete in all material respects on the date
supplied and was prepared in accordance with customary industry practices, as indicated in the
letter of Netherland Xxxxxx dated April 7, 2006; Netherland Xxxxxx is
12
independent with respect to the Company.
(hh) No Integration. Except as described in the Prospectus or in the documents incorporated
by reference into the Prospectus, the Company has not sold or issued any shares of Common Stock
during the six-month period preceding the date of the Prospectus, including any sales pursuant to
Rule 144A under, or Regulations D or S of, the Securities Act, other than shares issued pursuant to
employee benefit plans, stock options plans or other officer, director or employee compensation
plans or pursuant to outstanding options, convertible preferred stock, rights or warrants.
(ii) Xxxxxxxx-Xxxxx. The principal executive officer and principal financial officer of the
Company have made all certifications required by the Xxxxxxxx-Xxxxx Act or any related rules and
regulations promulgated by the Commission, and the statements contained in any such certification
are complete and correct. The Company has established and maintains disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), which (A) 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
required under the Exchange Act are being prepared; (B) have been evaluated by management of the
Company for effectiveness as of a date within 90 days prior to the earlier of the date that the
Company filed its most recent annual or quarterly report with the Commission and the date of the
Time of Sale Prospectus and the Prospectus; and (C) are effective in all material respects to
perform the functions for which they were established. Based on the most recent evaluation of its
disclosure controls and procedures, the Company is not aware of (i) any significant deficiencies or
material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the Company’s ability to record, process, summarize and
report financial information 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. The Company is not aware of any change in its internal control over financial reporting
that has occurred during its most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial reporting.
The Company is otherwise in compliance in all material respects with all applicable effective
provisions of the Xxxxxxxx-Xxxxx Act and the rules and regulations promulgated by the Commission.
(jj) Corrupt Practices. Neither the Company nor any of its Subsidiaries, nor any director,
officer, agent, employee or other person acting on behalf of the Company or any of its
Subsidiaries, has used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; made any direct or indirect unlawful payment
to any foreign or domestic government official or employee from corporate funds; violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977; or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(kk) Money Laundering Laws. The operations of the Company and its subsidiaries are, and have
been conducted at all times, in compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
13
amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations
thereunder and any related or similar applicable rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and
no action, suit or proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company, threatened.
(ll) OFAC. Neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee, affiliate or person acting on behalf of the
Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of this offering, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any U.S. sanctions
administered by OFAC.
(mm) Exchange Act Reporting. The Company has been subject to the requirements of Section 12
or 15(d) of the Exchange Act and has filed all the material required to be filed pursuant to
Section 13, 14, or 15(d) for a period of at least thirty-six (36) calendar months immediately
preceding the filing of the Registration Statement.
(nn) ERISA Compliance. The Company and its subsidiaries and any “employee benefit plan” (as
defined under the Employee Retirement Income Security Act of 1974, as amended, and the regulations
and published interpretations thereunder (collectively, “ERISA”)) established or maintained by the
Company, its subsidiaries or their “ERISA Affiliates” (as defined below) are in compliance in all
material respects with ERISA. “ERISA Affiliate” means, with respect to the Company or a subsidiary,
any member of any group of organizations described in Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended, and the regulations and published interpretations
thereunder (the “Code”) of which the Company or such subsidiary is a member. No “reportable event”
(as defined under ERISA) has occurred or is reasonably expected to occur with respect to any
“employee benefit plan” established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates. No “employee benefit plan” established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates, if such “employee benefit plan” were terminated,
would have any “amount of unfunded benefit liabilities” (as defined under ERISA). Neither the
Company, its subsidiaries nor any of their ERISA Affiliates has incurred or reasonably expects to
incur any liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any “employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee
benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is so qualified and
nothing has occurred, whether by action or failure to act, which would cause the loss of such
qualification.
(oo) Certain Operating Agreements. The participation, joint development, joint operating,
farm-out and other agreements relating to rights of the Company and its Subsidiaries with respect
to the ownership, lease or operation of oil and gas properties or the exploration for development
of, or production of oil and gas reserves thereon, constitute valid and binding
14
obligations of the Company and its Subsidiaries that are parties thereto and, to the knowledge of
the Company, of the other parties thereto, enforceable in accordance with their respective terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and remedies of creditors or
by general equitable principles.
(pp) Oil and Gas Data. The information set forth in the Registration Statement, the Time of
Sale Prospectus and the Prospectus relating to oil and gas reserves, oil and gas xxxxx and any
other oil and gas related information required to be disclosed in such Registration Statement, Time
of Sale Prospectus and Prospectus pursuant to the Securities Act has been prepared by the Company
in accordance with methods generally applied in the oil and gas industry and conforms, in all
material respects, to the requirements of the Securities Act.
Any certificate signed by any officer of the Company or any of its subsidiaries and delivered
to the Underwriter or to counsel for the Underwriter shall be deemed a representation and warranty
by the Company to the Underwriter as to the matters covered thereby.
The Company acknowledges that the Underwriter and, for purposes of the opinions to be
delivered pursuant to Section 6 hereof, counsel to the Company and counsel to the Underwriter, will
rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to
such reliance.
Section 2. Purchase, Sale and Delivery of the Offered Shares.
(a) The Offered Shares. Upon the terms herein set forth, the Company agrees to issue and sell
to the Underwriter the Firm Shares. On the basis of the representations, warranties and agreements
herein contained, and upon the terms but subject to the conditions herein set forth, the
Underwriter agrees to purchase from the Company the Firm Shares. The purchase price per Firm Share
to be paid by the Underwriter to the Company shall be $20.4725 per share.
(b) The First Closing Date. Delivery of certificates for the Firm Shares to be purchased by
the Underwriter and payment therefor shall be made at the offices of Underwriter, 000 Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000 (or such other place as may be agreed to by the Company and the
Underwriter) at 9:00 a.m. Eastern time, on January 23, 2007, or such other time and date not later
than 1:30 p.m. Eastern time, on January 24, 2007 (the time and date of such closing are called the
“First Closing Date”). The Company hereby acknowledges that circumstances under which the
Underwriter may provide notice to postpone the First Closing Date as originally scheduled include,
but are in no way limited to, any determination by the Company, or the Underwriter to recirculate
to the public copies of an amended or supplemented Prospectus.
(c) The Option Shares; Option Closing Date. In addition, on the basis of the representations,
warranties and agreements herein contained, and upon the terms but subject to the conditions herein
set forth, the Company hereby grants an option to the Underwriter to purchase up to an aggregate of
50,000 Option Shares from the Company at the purchase price per share to be paid by the
Underwriters for the Firm Shares. The option granted hereunder is for
15
use by the Underwriters solely in covering any over-allotments in connection with the sale and
distribution of the Firm Shares. The option granted hereunder may be exercised at any time and from
time to time in whole or in part upon notice by the Underwriter to the Company, which notice may be
given at any time within 30 days from the date of this Agreement. Such notice shall set forth (i)
the aggregate number of Option Shares as to which the Underwriter is exercising the option, (ii)
the names and denominations in which the certificates for the Option Shares are to be registered
and (iii) the time, date and place at which such certificates will be delivered (which time and
date may be simultaneous with, but not earlier than, the First Closing Date; and in such case the
term “First Closing Date” shall refer to the time and date of delivery of certificates for the Firm
Shares and such Option Shares). Such time and date of delivery, if subsequent to the First Closing
Date, is called an “Option Closing Date” and shall be determined by the Underwriter and shall not
be earlier than three nor later than five full business days after delivery of such notice of
exercise. Together with the First Closing Date, each Option Closing Date may each be referred to
herein as a “Closing Date.” The Underwriter may cancel the option at any time prior to its
expiration by giving written notice of such cancellation to the Company.
(d) Public Offering of the Offered Shares. The Underwriter hereby advises the Company that
the Underwriter intends to offer for sale to the public, initially on the terms set forth in the
Time of Sale Prospectus and the Prospectus, the portions of the Offered Shares as soon after this
Agreement has been executed as the Underwriter, in its sole judgment, has determined is advisable
and practicable.
(e) Payment for the Offered Shares. Payment for the Offered Shares to be sold by the Company
shall be made at each Closing Date by wire transfer of immediately available funds to the order of
the Company.
(f) Delivery of the Offered Shares. The Offered Shares to be purchased by the Underwriter
hereunder shall be represented by one or more definitive global certificates in book-entry form
which will deposited by or on behalf of the Company with The Depository Trust Company (“DTC”) or
its designated custodian. The Company shall deliver, or cause to be delivered, the Firm Shares to
the Underwriter at the First Closing Date, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price therefor, by causing DTC to credit
the Firm Shares to the account of the Underwriter at DTC. The Company shall also deliver, or cause
to be delivered, the Option Shares the Underwriter has agreed to purchase at the First Closing Date
or an Option Closing Date, as the case may be, to the Underwriter, against the irrevocable release
of a wire transfer of immediately available funds for the amount of the purchase price therefor, by
causing DTC to credit the Option Shares to the account of the Underwriter at DTC. The certificates
for the Offered Shares shall be registered in such names and denominations as the Underwriter shall
have requested at least two full business days prior to the First Closing Date (or the applicable
Option Closing Date, as the case may be) and shall be made available for inspection on the business
day preceding the First Closing Date (or the applicable Option Closing Date, as the case may be) at
a location in New York City as the Underwriter may designate. Time shall be of the essence, and
delivery at the time and place specified in this Agreement is a further condition to the
obligations of the Underwriter.
16
Section 3. Additional Covenants of the Company.
The Company further covenants and agrees with the Underwriter as follows:
(a) Delivery of Registration Statement, Time of Sale Prospectus and Prospectus. The Company
shall furnish to you, without charge, copies of the Registration Statement, any amendments thereto
and shall furnish to you in Baltimore, Maryland, without charge, prior to 10:00 a.m. Eastern time
on the business day next succeeding the date of this Agreement and during the period mentioned in
Section 3(e) or 3(f) below, as many copies of the Time of Sale Prospectus, the Prospectus and any
supplements and amendments thereto or to the Registration Statement as you may reasonably request.
(b) Underwriter’s Review of Proposed Amendments and Supplements. During the period beginning
on the Applicable Time and ending on the later of the First Closing Date or such date as the
Prospectus is no longer required by law to be delivered in connection with sales of the Offered
Shares by the Underwriter, prior to amending or supplementing the Registration Statement, any
preliminary prospectus, the Time of Sale Prospectus or the Prospectus (including any amendment or
supplement through incorporation of any report filed under the Exchange Act), the Company shall
furnish to the Underwriter for review, a reasonable amount of time prior to the proposed time of
filing or use thereof, a copy of each such proposed amendment or supplement, and the Company shall
not file or use any such proposed amendment or supplement without the Underwriter’s consent, and to
file with the Commission within the applicable period specified in Rule 424(b) under the Securities
Act any prospectus required to be filed pursuant to such Rule.
(c) Free Writing Prospectuses. The Company shall furnish to the Underwriter for review, a
reasonable amount of time prior to the proposed time of filing or use thereof, a copy of each
proposed free writing prospectus or any amendment or supplement thereto to be prepared by or on
behalf of, used by, or referred to by the Company and the Company shall not file, use or refer to
any proposed free writing prospectus or any amendment or supplement thereto without the
Underwriter’s consent. The Company shall furnish to the Underwriter, without charge, as many copies
of any free writing prospectus prepared by or on behalf of, or used by the Company, as such
Underwriter may reasonably request. If at any time when a prospectus is required by the Securities
Act (including, without limitation, pursuant to Rule 173(d)) to be delivered in connection with
sales of the Offered Shares (but in any event if at any time through and including each Closing
Date) there occurred or occurs an event or development as a result of which any free writing
prospectus prepared by or on behalf of, used by, or referred to by the Company conflicted or would
conflict with the information contained in the Registration Statement or included or would include
an untrue statement of a material fact or omitted or would omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances prevailing at that
subsequent time, not misleading, the Company shall promptly amend or supplement such free writing
prospectus to eliminate or correct such conflict so that the statements in such free writing
prospectus as so amended or supplemented will not include 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 prevailing at such subsequent time, not misleading, as the case may be; provided,
however, that prior to amending or supplementing
17
any such free writing prospectus, the Company shall furnish to the Underwriter for review, a
reasonable amount of time prior to the proposed time of filing or use thereof, a copy of such
proposed amended or supplemented free writing prospectus and the Company shall not file, use or
refer to any such amended or supplemented free writing prospectus without the Underwriter’s
consent.
(d) Filing of Underwriter Free Writing Prospectuses. The Company shall not take any action
that would result in the Underwriter or the Company being required to file with the Commission
pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf
of the Underwriter that the Underwriter otherwise would not have been required to file thereunder.
(e) Amendments and Supplements to Time of Sale Prospectus. If the Time of Sale Prospectus is
being used to solicit offers to buy the Shares at a time when the Prospectus is not yet available
to prospective purchasers and any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Time of Sale Prospectus so that the Time of Sale Prospectus
does not include 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 when delivered to a
prospective purchaser, not misleading, or if any event shall occur or condition exist as a result
of which the Time of Sale Prospectus conflicts with the information contained in the Registration
Statement, or if, in the opinion of counsel for the Underwriter, it is necessary to amend or
supplement the Time of Sale Prospectus to comply with applicable law, including the Securities Act,
the Company shall (subject to Sections 3(b) and 3(c)) forthwith prepare, file with the Commission
and furnish, at its own expense, to the Underwriter and to any dealer upon request, either
amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale
Prospectus as so amended or supplemented will not include 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 when delivered to a prospective purchaser, not misleading or so that the Time of
Sale Prospectus, as amended or supplemented, will no longer conflict with the Registration
Statement, or so that the Time of Sale Prospectus, as amended or supplemented, will comply with
applicable law including the Securities Act.
(f) Securities Act Compliance. After the date of this Agreement, the Company shall promptly
advise the Underwriter in writing (i) of the receipt of any comments of, or requests for additional
or supplemental information from, the Commission, (ii) of the time and date of any filing of any
post-effective amendment to the Registration Statement, or any amendment or supplement to the
Preliminary Prospectus, the Time of Sale Prospectus, any free writing prospectus or the Prospectus,
(iii) of the time and date that any post-effective amendment to the Registration Statement becomes
effective and (iv) of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereto, or any amendment or
supplement to any preliminary prospectus, the Time of Sale Prospectus or the Prospectus or of any
order preventing or suspending the use of any preliminary prospectus, the Time of Sale Prospectus,
any free writing prospectus or the Prospectus, or of any proceedings to remove, suspend or
terminate from listing or quotation the Shares from any securities exchange upon which they are
listed for trading or included or designated for quotation, or of the threatening or initiation of
any proceedings for any of such
18
purposes. If the Commission shall enter any such stop order at any time, the Company will use its
best efforts to obtain the lifting of such order at the earliest possible moment. Additionally, the
Company agrees that it shall comply with the provisions of Rule 424(b), Rule 433 and Rule 430A, as
applicable, under the Securities Act and will use its reasonable efforts to confirm that any
filings made by the Company under such Rule 424(b) or Rule 433 were received in a timely manner by
the Commission.
(g) Amendments and Supplements to the Prospectus and Other Securities Act Matters. If any
event shall occur or condition exist as a result of which it is necessary to amend or supplement
the Prospectus so that the Prospectus does not include 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 when the Prospectus is delivered to a purchaser, not misleading, or if in the
opinion of the Underwriter or counsel for the Underwriter it is otherwise necessary to amend or
supplement the Prospectus to comply with applicable law, including the Securities Act, the Company
agrees (subject to Section 3(b) and 3(c)) to promptly prepare, file with the Commission and furnish
at its own expense to the Underwriter and to dealers, amendments or supplements to the Prospectus
so that the statements in the Prospectus as so amended or supplemented will not include 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 when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with
applicable law including the Securities Act. Neither the Underwriter’s consent to, nor delivery of,
any such amendment or supplement shall constitute a waiver of any of the Company’s obligations
under Sections 3(b) or (c).
(h) Blue Sky Compliance. The Company shall cooperate with the Underwriter and counsel for the
Underwriter to qualify or register the Offered Shares for sale under (or obtain exemptions from the
application of) those jurisdictions designated by the Underwriter, and shall comply with such laws
and shall continue such qualifications, registrations and exemptions in effect so long as required
for the distribution of the Offered Shares. The Company shall not be required to qualify as a
foreign corporation or to take any action that would subject it to general service of process in
any such jurisdiction where it is not presently qualified or where it would be subject to taxation
as a foreign corporation. The Company will advise the Underwriter promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the Offered Shares for
offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any
such purpose, and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the withdrawal thereof
at the earliest possible moment.
(i) Use of Proceeds. The Company shall apply the net proceeds from the sale of the Offered
Shares sold by it in the manner described under the caption “Use of Proceeds” in the Prospectus.
(j) Transfer Agent. The Company shall engage and maintain, at its expense, a registrar and
transfer agent for the Shares.
(k) Earnings Statement. As soon as practicable, but in any event no later than sixteen
19
months after the date of this Agreement, the Company will make generally available to its security
holders and to the Underwriter an earnings statement (which need not be audited) covering a period
of at least twelve months beginning with the first fiscal quarter of the Company occurring after
the date of this Agreement which shall satisfy the provisions of Section 11(a) of the Securities
Act and the rules and regulations of the Commission thereunder.
(l) Periodic Reporting Obligations. The Company shall file, on a timely basis, with the
Commission and the Nasdaq Global Select Market all reports and documents required to be filed under
the Exchange Act.
(m) Listing. The Company will use its best efforts to maintain the listing of the Offered
Shares and the Shares on the Nasdaq Global Select Market.
(n) Company to Provide Copy of the Prospectus in Form That May be Downloaded from the
Internet. The Company shall cause to be prepared and delivered, at its expense, within one
business day from the effective date of this Agreement, to the Underwriter an “electronic
Prospectus” to be used by the Underwriter in connection with the offering and sale of the Offered
Shares. As used herein, the term “electronic Prospectus” means a form of Time of Sale Prospectus,
and any amendment or supplement thereto, that meets each of the following conditions: (i) it shall
be encoded in an electronic format, satisfactory to the Underwriter, that may be transmitted
electronically by the Underwriter to offerees and purchasers of the Offered Shares; (ii) it shall
disclose the same information as the paper Time of Sale Prospectus, except to the extent that
graphic and image material cannot be disseminated electronically, in which case such graphic and
image material shall be replaced in the electronic Prospectus with a fair and accurate narrative
description or tabular representation of such material, as appropriate; and (iii) it shall be in or
convertible into a paper format or an electronic format, satisfactory to the Underwriter, that will
allow investors to store and have continuously ready access to the Time of Sale Prospectus at any
future time, without charge to investors (other than any fee charged for subscription to the
Internet as a whole and for on-line time). The Company hereby confirms that it has included or will
include in the Prospectus filed pursuant to XXXXX or otherwise with the Commission and in the
Registration Statement at the time it was declared effective an undertaking that, upon receipt of a
request by an investor or his or her representative, the Company shall transmit or cause to be
transmitted promptly, without charge, a paper copy of the Time of Sale Prospectus.
(o) Agreement Not to Offer or Sell Additional Shares. During the period commencing on and
including the date hereof and ending on and including the 60th day following the date of this
Agreement (as the same may be extended as described below, the “Lock-up Period”), the Company will
not, without the prior written consent of the Underwriter (which consent may be withheld at the
sole discretion of the Underwriter), directly or indirectly, sell (including, without limitation,
any short sale), offer, contract or grant any option to sell, pledge, transfer or establish an open
“put equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise
dispose of or transfer, or announce the offering of, or file any registration statement under the
Securities Act in respect of, any Shares, options, rights or warrants to acquire Shares or
securities exchangeable or exercisable for or convertible into Shares (other than as contemplated
by this Agreement with respect to the Offered Shares) or
20
publicly announce the intention to do any of the foregoing; provided, however, that the Company may
issue Shares or options to purchase Shares upon exercise of options, pursuant to any stock option,
stock bonus or other stock plan or arrangement described in the Prospectus, but only if the holders
of such shares, options, or shares issued upon exercise of such options, agree in writing not to
sell, offer, dispose of or otherwise transfer any such shares or options during such Lock-up Period
without the prior written consent the Underwriter (which consent may be withheld at the sole
discretion of the Underwriter). Notwithstanding the foregoing, if (i) during the last 17 days of
the Lock-up Period, the Company issues an earnings release or material news or a material event
relating to the Company occurs or (ii) prior to the expiration of the Lock-up Period, the Company
announces that it will release earnings results during the 16-day period beginning on the last day
of the Lock-up Period, then in each case the Lock-up Period will be extended until the expiration
of the 18-day period beginning on the date of the issuance of the earnings release or the
occurrence of the material news or material event, as applicable, unless the Underwriter waives, in
writing, such extension (which waiver may be withheld at the sole discretion of the Underwriter),
except that such extension will not apply if, (i) within three business days prior to the 15th
calendar day before the last day of the Lock-up Period, the Company delivers a certificate, signed
by the Chief Financial Officer or Chief Executive Officer of the Company, certifying on behalf of
the Company that (i) the Shares are “actively traded securities” (as defined in Regulation M), (ii)
the Company meets the applicable requirements of paragraph (a)(1) of Rule 139 under the Securities
Act in the manner contemplated by NASD Conduct Rule 2711(f)(4), and (iii) the provisions of NASD
Conduct Rule 2711(f)(4) are not applicable to any research reports relating to the Company
published or distributed by the Underwriter during the 15 days before or after the last day of the
Lock-up Period (before giving effect to such extension). The Company will provide the Underwriter
with prior notice of any such announcement that gives rise to an extension of the Lock-up Period.
(p) Investment Company Act. The Company will take such steps as shall be necessary to ensure
that neither the Company nor any of its Subsidiaries shall become an “investment company” as
defined in the Investment Company Act.
(q) No Stabilization or Manipulation; Compliance with Regulation M. The Company will not
take, directly or indirectly, any action designed to or that might be reasonably expected to cause
or result in stabilization or manipulation of the price of the Shares or any other reference
security, whether to facilitate the sale or resale of the Offered Shares or otherwise, and the
Company will, and shall cause each of its affiliates to, comply with all applicable provisions of
Regulation M. If the limitations of Rule 102 of Regulation M (“Rule 102”) do not apply with respect
to the Offered Shares or any other reference security pursuant to any exception set forth in
Section (d) of Rule 102, then promptly upon notice from the Underwriter (or, if later, at the time
stated in the notice), the Company will, and shall cause each of its affiliates to, comply with
Rule 102 as though such exception were not available but the other provisions of Rule 102 (as
interpreted by the Commission) did apply.
(r) Existing Lock-Up Agreements. During the Lock-Up period, the Company will enforce all
existing agreements between the Company and any of its security holders that prohibit the sale,
transfer, assignment, pledge or hypothecation of any of the Company’s securities. In addition, the
Company will direct the transfer agent to place stop transfer
21
restrictions upon any such securities of the Company that are bound by such existing “lock-up”
agreements for the duration of the periods contemplated in such agreements, including, without
limitation “lock-up” agreements entered into by the Company’s officers and directors pursuant to
Section 6(h).
The Underwriter may, in its sole discretion, waive in writing the performance by the Company
of any one or more of the foregoing covenants or extend the time for their performance.
Section 4. Payment of Expenses.
The Company agrees to pay for itself all costs, fees and expenses incurred in connection with
the performance of their obligations hereunder and in connection with the transactions contemplated
hereby, including without limitation (i) all expenses incident to the issuance and delivery of the
Offered Shares (including all printing and engraving costs); (ii) all fees and expenses of the
registrar and transfer agent of the Shares; (iii) all necessary issue, transfer and other stamp
taxes in connection with the issuance and sale of the Offered Shares to the Underwriter; (iv) all
fees and expenses of the Company’s counsel, independent public or certified public accountants and
other advisors; (v) all costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), the Time of Sale Prospectus, the
Prospectus, any free writing prospectus prepared by or on behalf of, used by, or referred to by the
Company, each preliminary prospectus, and all amendments and supplements thereto, and this
Agreement; (vi) all filing fees, attorneys’ fees and expenses incurred by the Company or the
Underwriter in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Offered Shares for offer and sale under
the state securities or blue sky laws or the provincial securities laws of Canada, and, if
requested by the Underwriter, preparing and printing a “Blue Sky Survey” or memorandum and a
“Canadian wrapper”, and any supplements thereto, advising the Underwriter of such qualifications,
registrations, determinations and exemptions; (vii) the filing fees incident to, and the reasonable
fees and expenses of counsel for the Underwriter in connection with, the NASD’s review, if any, and
approval of the Underwriter’s participation in the offering and distribution of the Offered Shares;
(viii) the costs and expenses of the Company relating to investor presentations on any “road show”
undertaken in connection with the marketing of the offering of the Offered Shares, including,
without limitation, expenses associated with the preparation or dissemination of any electronic
roadshow, expenses associated with the production of roadshow slides and graphics, fees and
expenses of any consultants engaged in connection with the roadshow presentations with the prior
approval of the Company, travel and lodging expenses of the representatives, employees and officers
of the Company and of the Underwriter and any such consultants, and the cost of any aircraft
chartered in connection with the roadshow; (ix) the fees and expenses associated with including the
Offered Shares on the NASDAQ Global Select Market; and (ix) all other fees, costs and expenses of
the nature referred to in Item 14 of Part II of the Registration Statement. Except as provided in
this Section 4, Section 7, Section 9 and Section 10 hereof, the Underwriter shall pay its own
expenses, including the fees and disbursements of its counsel.
22
Section 5. Covenant of the Underwriter. The Underwriter covenants with the Company not to
take any action that would result in the Company being required to file with the Commission
pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf
of such Underwriter that otherwise would not be required to be filed by the Company thereunder, but
for the action of the Underwriter.
Section 6. Conditions of the Obligations of the Underwriter. The obligations of the
Underwriter to purchase and pay for the Offered Shares as provided herein on the First Closing Date
and, with respect to the Option Shares, each Option Closing Date, shall be subject to the accuracy
of the representations and warranties on the part of the Company set forth in Section 1 hereof as
of the date hereof and as of the First Closing Date as though then made and, with respect to the
Option Shares, as of each Option Closing Date as though then made, to the timely performance by the
Company of its covenants and other obligations hereunder, and to each of the following additional
conditions:
(a) Accountants’ Comfort Letter. On the date hereof, the Underwriter shall have received from
Xxxx & Associates LLP, independent public or certified public accountants for the Company, (i) a
letter dated the date hereof addressed to the Underwriter, in form and substance satisfactory to
the Underwriter, containing statements and information of the type ordinarily included in
accountant’s “comfort letters” to underwriters, delivered according to Statement of Auditing
Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited financial
statements and certain financial information contained in the Registration Statement, the
Preliminary Prospectus, Time of Sale Prospectus, and each free writing prospectus, if any, and the
Prospectus; and (ii) confirming that they are (A) independent public or certified public
accountants as required by the Securities Act and the Exchange Act and (B) in compliance with the
applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation
S-X.
(b) Compliance with Registration Requirements; No Stop Order; No Objection from NASD. For the
period from and after effectiveness of this Agreement and prior to each Closing Date:
(i) the Company shall have filed the Prospectus with the Commission (including the final
pricing and any other information previously omitted pursuant to Rule 430B under the Securities
Act) in the manner and within the time period required by Rule 424(b) under the Securities Act;
(ii) no stop order suspending the effectiveness of the Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in effect and no proceedings for
such purpose shall have been instituted or threatened by the Commission and any request on the part
of the Commission for additional information shall have been complied with; and
(iii) the NASD shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
23
(c) No Material Adverse Change or Ratings Agency Change. For the period from and after the
date of this Agreement and prior to the First Closing Date and, with respect to the Option Shares,
each Option Closing Date:
(i) in the judgment of the Underwriter there shall not have occurred any Material Adverse
Change; and
(ii) there shall not have occurred any downgrading, nor shall any notice have been given of
any intended or potential downgrading or of any review for a possible change that does not indicate
the direction of the possible change, in the rating accorded any securities of the Company or any
of its subsidiaries by any “nationally recognized statistical rating organization” as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act.
(d) Opinion of Counsel for the Company. On each of the First Closing Date and each Option
Closing Date the Underwriter shall have received the opinion of Xxxxxx Xxxxx LLP, counsel for the
Company, dated as of such Closing Date, the form of which is attached as Exhibit A.
(e) Opinion of Counsel for the Underwriters. On each of the First Closing Date and each
Option Closing Date the Underwriter shall have received the opinion of Xxxxxxx LLP, counsel for the
Underwriter, in form and substance satisfactory to the Underwriter, dated as of such Closing Date.
(f) Officers’ Certificate. On each of the First Closing Date and each Option Closing Date,
the Underwriter shall have received a written certificate executed by the Chief Executive Officer
of the Company and the Chief Financial Officer of the Company, dated as of such Closing Date, to
the effect set forth in subsections (b)(ii) and (c)(ii) of this Section 6, and further to the
effect that:
(i) for the period from and after the date of this Agreement through and prior to such Closing
Date, there has not occurred any Material Adverse Change;
(ii) the representations, warranties and covenants of the Company set forth in Section 1 of
this Agreement are true and correct with the same force and effect as though expressly made on and
as of such Closing Date; and
(iii) the Company has complied with all the agreements hereunder and satisfied all the
conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date.
(g) Bring-down Comfort Letter. On each of the First Closing Date and each Option Closing
Date, the Underwriter shall have received from Xxxx & Associates LLP, independent public or
certified public accountants for the Company, a letter dated such date, in form and substance
satisfactory to the Underwriter, to the effect that they reaffirm the statements made in the letter
furnished by them pursuant to subsection (a) of this Section 6, except that the specified date
referred to therein for the carrying out of procedures shall be no more than three business
24
days prior to the First Closing Date or the applicable Option Closing Date, as the case may be.
(h) Lock-Up Agreement from Certain Securityholders of the Company. On or prior to the date
hereof, the Company shall have furnished to the Underwriter an agreement in the form of Exhibit
B hereto from each director and executive officer of the Company, and such agreement shall be
in full force and effect on each of the First Closing Date and each Option Closing Date.
(i) Misstatement or Omission. The Underwriter shall not have discovered and disclosed to the
Company on or prior to each Closing Date that the Registration Statement or the Prospectus, or any
amendment or supplement thereto, contains an untrue statement of a fact which, in the opinion of
counsel for the Underwriter, is material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to make the statements
therein not misleading.
(j) Reserve Engineer’s Letter. At the time of execution of this Agreement, the Underwriter
shall have received from Netherland, Xxxxxx & Associates, Inc., independent petroleum engineers, a
letter, in form and substance satisfactory to the Underwriter and its counsel with respect to the
Company, confirming that they are independent petroleum engineers and confirming certain reserve
information included in the Registration Statement and Prospectus.
(k) Bring-Down Reserve Engineer’s Letter. On each of the First Closing Date and each Option
Closing Date, the Underwriter shall have received from Netherland, Xxxxxx & Associates, Inc. a
letter, dated as of such Closing Date, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (j) of this Section, except that the specified date
referred to shall be such Closing Date.
(l) Maintenance of Listing. At the First Closing Date and each Option Closing Date, the
Company shall have maintained a listing of the Company’s common stock on the Nasdaq Global Select
Market.
(m) Additional Documents. On or before each of the First Closing Date and each Option Closing
Date, the Underwriter and counsel for the Underwriter shall have received such information,
documents and opinions as they may reasonably request for the purposes of enabling them to pass
upon the issuance and sale of the Offered Shares as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction of any of the
conditions or agreements, herein contained; and all proceedings taken by the Company in connection
with the issuance and sale of the Offered Shares as contemplated herein and in connection with the
other transactions contemplated by this Agreement shall be satisfactory in form and substance to
the Underwriter and counsel to the Underwriter.
If any condition specified in this Section 6 is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Underwriter by notice to the Company at any time
on or prior to the First Closing Date and, with respect to the Option Shares, at any time prior to
the applicable Option Closing Date, which termination shall be without liability on the
25
part of any party to any other party, except that Section 4, Section 6, Section 8 and Section 9
shall at all times be effective and shall survive such termination.
Section 7. Reimbursement of Underwriter Expenses. If this Agreement is terminated by the
Underwriter pursuant to Section 6, Section 8 or Section 11, or if the sale to the Underwriter of
the Offered Shares on the First Closing Date is not consummated because of any refusal, inability
or failure on the part of the Company to perform any agreement herein or to comply with any
provision hereof (other than the failure of any of the conditions herein to be satisfied as a
result of the breach by the Underwriter of its representations or agreements hereunder), the
Company agrees to reimburse the Underwriter upon demand for all out-of-pocket expenses that shall
have been reasonably incurred by the Underwriter in connection with the proposed purchase and the
offering and sale of the Offered Shares, including but not limited to reasonable fees and
disbursements of counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges.
Section 8. Effectiveness of this Agreement. This Agreement shall become effective upon the
execution of this Agreement by the parties hereto.
Section 9. Indemnification.
(a) Indemnification of the Underwriter. The Company agrees to indemnify and hold harmless the
Underwriter, its officers and employees, and each person, if any, who controls the Underwriter
within the meaning of the Securities Act or the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which such Underwriter or such officer, employee or
controlling person may become subject, under the Securities Act, the Exchange Act, other federal or
state statutory law or regulation, or the laws or regulations of foreign jurisdictions where
Offered Shares have been offered or sold or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent of the Company, such
consent not to be unreasonable withheld), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the Registration Statement,
or any amendment thereto, including any information deemed to be a part thereof pursuant to Rule
430A under the Securities Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not misleading; or (ii)
any untrue statement or alleged untrue statement of a material fact contained in any preliminary
prospectus, the Time of Sale Prospectus, any free writing prospectus that the Company has used,
referred to or filed, or is required to file, pursuant to Rule 433(d) of the Securities Act or the
Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) any act or failure to act or any
alleged act or failure to act by any Underwriter in connection with, or relating in any manner to,
the Offered Shares or the offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out of or based upon any matter
covered by clause (i) or (ii) above, provided that the Company shall not be liable under this
clause (iii) to the extent that a court of competent jurisdiction shall have determined by a final
judgment that such loss, claim, damage, liability or
26
action resulted directly from any such acts or failures to act undertaken or omitted to be taken by
such Underwriter through its gross negligence, bad faith or willful misconduct; and to reimburse
the Underwriter and each such officer, employee and controlling person for any and all expenses
(including the fees and disbursements of counsel chosen by the Underwriter) as such expenses are
reasonably incurred by such Underwriter or such officer, employee or controlling person in
connection with investigating, defending, settling, compromising or paying (subject to paragraph
(d) below) any such loss, claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Underwriter expressly for use
in the Registration Statement, the Time of Sale Prospectus, any such free writing prospectus or the
Prospectus (or any amendment or supplement thereto), it being understood and agreed that the only
such information furnished by the Underwriter to the Company consists of the information described
in subsection (b) below. The indemnity agreement set forth in this Section 9(a) shall be in
addition to any liabilities that the Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. The Underwriter agrees to
indemnify and hold harmless the Company, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company, or any such director, officer or controlling person may become
subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter, such consent not to be
unreasonably withheld), insofar as such loss, claim, damage, liability or expense (or actions in
respect thereof as contemplated below) arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration Statement, any
preliminary prospectus, the Time of Sale Prospectus, any free writing prospectus that the Company
has used, referred to or filed, or is required to file, pursuant to Rule 433(d) of the Securities
Act or the Prospectus (or such amendment or supplement thereto), or arises out of or is based upon
the omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission or alleged omission
was made in the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus,
such free writing prospectus that the Company has used, referred to or filed, or is required to
file, pursuant to Rule 433(d) of the Securities Act, the Prospectus (or such amendment or
supplement thereto), in reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Underwriter expressly for use therein; and to reimburse the Company,
or any such director, officer or controlling person for any legal and other expense reasonably
incurred by the Company, or any such director, officer or controlling person in connection with
investigating, defending, settling, compromising or paying (subject to paragraph (d) below) any
such loss, claim, damage, liability, expense or action. The Company hereby acknowledges that the
only information that the Underwriter has furnished to the Company expressly for use in the
Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, any free
27
writing prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) of
the Securities Act or the Prospectus (or any amendment or supplement thereto) are the statements
set forth in the first paragraph under the caption “Underwriting — Underwriting Discount and
Expenses” and those statements concerning stabilization by the Underwriter in the Prospectus. The
indemnity agreement set forth in this Section 9(b) shall be in addition to any liabilities that
each Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after receipt by an
indemnified party under this Section 9 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 9, notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any liability which it may
have to any indemnified party for contribution or otherwise under the indemnity agreement contained
in this Section 9 to the extent it is not materially prejudiced as a proximate result of such
failure. In case any such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it shall elect, jointly with all other
indemnifying parties similarly notified, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that a conflict may arise between the positions
of the indemnifying party and the indemnified party in conducting the defense of any such action or
that there may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the indemnified party or
parties shall have the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such indemnified party or parties.
Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying
party’s election so to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party under this Section 9
for any legal or other expenses subsequently incurred by such indemnified party in connection with
the defense thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the fees and expenses of more than one separate counsel
(together with local counsel), representing the indemnified parties who are parties to such
action), which counsel (together with any local counsel) for the indemnified parties shall be
selected by the Underwriter (in the case of counsel for the indemnified parties referred to in
Section 9(a) above) or by the Company (in the case of counsel for the indemnified parties referred
to in Section 9(b) above)), (ii) the indemnifying party shall not have assumed the defense of such
action within a reasonable time after notice of commencement of the action or (iii) the
indemnifying party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall be at the expense of the
indemnifying party and shall be paid as they are incurred.
28
(d) Settlements. The indemnifying party under this Section 9 shall not be liable for any
settlement of any proceeding effected without its written consent, but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. 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 Section 9(c) hereof, 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 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party
in accordance with such request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any settlement, compromise or
consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect
of which any indemnified party is or could have been a party and indemnity was or could have been
sought hereunder by such indemnified party, unless such settlement, compromise or consent includes
an unconditional release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
Section 10. Contribution. If the indemnification provided for in Section 9 is for any reason
held to be unavailable to or otherwise insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified
party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Underwriter, on the other hand, from the offering of the Offered
Shares pursuant to this Agreement or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the Company, on the one
hand, and the Underwriter, on the other hand, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the one hand, and the
Underwriter, on the other hand, in connection with the offering of the Offered Shares pursuant to
this Agreement shall be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Offered Shares pursuant to this Agreement (before deducting expenses)
received by the Company, and the total underwriting discounts and commissions received by the
Underwriter, in each case as set forth on the front cover page of the Prospectus bear to the
aggregate public offering price of the Offered Shares as set forth on such cover. The relative
fault of the Company, on the one hand, and the Underwriter, on the other hand, shall be determined
by reference to, among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or the Underwriter, on the other hand, and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages,
29
liabilities and expenses referred to above shall be deemed to include, subject to the limitations
set forth in Section 9(c), any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. The provisions set forth in Section
9(c) with respect to notice of commencement of any action shall apply if a claim for contribution
is to be made under this Section 10; provided, however, that no additional notice shall be required
with respect to any action for which notice has been given under Section 9(c) for purposes of
indemnification.
The Company and the Underwriter agree that it would not be just and equitable if contribution
pursuant to this Section 10 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred to in this Section
10.
Notwithstanding the provisions of this Section 10, the Underwriter shall not be required to
contribute any amount in excess of the underwriting [discounts and commissions] received by it in
connection with the Offered Shares underwritten by it and distributed to the public. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 10, each officer and employee of the Underwriter
and each person, if any, who controls the Underwriter within the meaning of the Securities Act or
the Exchange Act shall have the same rights to contribution as such Underwriter, and each director
of the Company, each officer of the Company who signed the Registration Statement, and each person,
if any, who controls the Company with the meaning of the Securities Act and the Exchange Act shall
have the same rights to contribution as the Company.
Section 11. Termination of this Agreement. Prior to the First Closing Date, this Agreement
may be terminated by the Underwriter by notice given to the Company if at any time (i) trading or
quotation in any of the Company’s securities shall have been suspended or limited by the Commission
or by the Nasdaq Global Select Market, or trading in securities generally on either the Nasdaq
Global Select Market or the New York Stock Exchange shall have been suspended or limited, or
minimum or maximum prices shall have been generally established on any of such stock exchanges by
the Commission or the NASD; (ii) a general banking moratorium shall have been declared by any of
federal, New York or Maryland authorities; (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or calamity, or any change in the
United States or international financial markets, or any substantial change or development
involving a prospective substantial change in United States’ or international political, financial
or economic conditions, as in the judgment of the Underwriter is material and adverse and makes it
impracticable or inadvisable to market the Offered Shares in the manner and on the terms described
in the Time of Sale Prospectus or the Prospectus or to enforce contracts for the sale of
securities; (iv) in the judgment of the Underwriter there shall have occurred any Material Adverse
Change; or (v) the Company shall have sustained a loss by strike, fire, flood, earthquake, accident
or other calamity of such character as in the judgment of the Underwriter may interfere materially
with the conduct of the business and operations of the Company regardless of whether or not such
loss shall have been insured. Any termination pursuant to this Section 11 shall be without
liability on the part of (a) the Company to any
30
Underwriter, except that the Company shall be obligated to reimburse the expenses of the
Underwriter pursuant to Sections 4 and 7 hereof, (b) the Underwriter to the Company, or (c) of any
party hereto to any other party except that the provisions of Section 9 and Section 10 shall at all
times be effective and shall survive such termination.
Section 12. No Advisory or Fiduciary Relationship. The Company acknowledges and agrees that
(a) the purchase and sale of the Offered Shares pursuant to this Agreement, including the
determination of the public offering price of the Offered Shares and any related discounts and
commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and
the Underwriter, on the other hand, (b) in connection with the offering contemplated hereby and the
process leading to such transaction the Underwriter is and has been acting solely as a principal
and is not the agent or fiduciary of the Company, or its stockholders, creditors, employees or any
other party, (c) the Underwriter has not assumed or will not assume an advisory or fiduciary
responsibility in favor of the Company with respect to the offering contemplated hereby or the
process leading thereto (irrespective of whether the Underwriter has advised or is currently
advising the Company on other matters) and the Underwriter has no obligation to the Company with
respect to the offering contemplated hereby except the obligations expressly set forth in this
Agreement, (d) the Underwriter and its affiliates may be engaged in a broad range of transactions
that involve interests that differ from those of the Company, and (e) the Underwriter has not
provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated
hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the
extent it deemed appropriate.
Section 13. Representations and Indemnities to Survive Delivery. The respective indemnities,
agreements, representations, warranties and other statements of the Company, of its officers and of
the Underwriter set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of the Underwriter or the Company or
any of its partners, officers or directors or any controlling person, as the case may be, and,
anything herein to the contrary notwithstanding, will survive delivery of and payment for the
Offered Shares sold hereunder and any termination of this Agreement.
Section 14. Notices. All communications hereunder shall be in writing and shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Underwriter:
Xxxxxx, Xxxxx Xxxxx, Incorporated
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx Xxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx Xxxxxxx
with a copy to:
Xxxxxxx LLP
Two Xxxxxxx Plaza, Suite 1800
Two Xxxxxxx Plaza, Suite 1800
31
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Xx., Esq.
Attention: Xxxxxx X. Xxxxxxxxx, Xx., Esq.
If to the Company:
Double Eagle Petroleum Co.
000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
with a copy to:
Xxxxxx Xxxxx LLP
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx
Any party hereto may change the address for receipt of communications by giving written notice
to the others.
Section 15. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto and to the benefit of the employees, officers and directors and controlling persons
referred to in Section 9 and Section 10, and in each case their respective successors, and no other
person will have any right or obligation hereunder. The term “successors” shall not include any
purchaser of the Offered Shares as such from the Underwriter merely by reason of such purchase.
Section 16. Partial Unenforceability. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or enforceability of any
other Section, paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be
made such minor changes (and only such minor changes) as are necessary to make it valid and
enforceable.
Section 17. Governing Law Provisions. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Maryland applicable to agreements made and to be
performed in such state. Any legal suit, action or proceeding arising out of or based upon this
Agreement or the transactions contemplated hereby may be instituted in the federal courts of the
United States of America located in Baltimore, Maryland or the courts of the State of Maryland in
each case located in the city of Baltimore (collectively, the “Specified Courts”), and each party
irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to
the enforcement of a judgment of any such court, as to which such jurisdiction is non-exclusive) of
such courts in any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party’s address set forth above
32
shall be effective service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such suit, action or other
proceeding brought in any such court has been brought in an inconvenient forum.
Section 18. General Provisions. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter hereof. This
Agreement may be executed in two or more counterparts, each one of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same instrument. This
Agreement may not be amended or modified unless in writing by all of the parties hereto, and no
condition herein (express or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. The Table of Contents and the Section headings herein are for the
convenience of the parties only and shall not affect the construction or interpretation of this
Agreement.
Each of the parties hereto acknowledges that it is a sophisticated business person who was
adequately represented by counsel during negotiations regarding the provisions hereof, including,
without limitation, the indemnification provisions of Section 9 and the contribution provisions of
Section 10, and is fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Sections 9 and 10 hereto fairly allocate the risks in light of
the ability of the parties to investigate the Company, its affairs and its business in order to
assure that adequate disclosure has been made in the Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus, each free writing prospectus and the Prospectus (and any
amendments and supplements thereto), as required by the Securities Act and the Exchange Act.
[Signature page follows.]
33
If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to the Company the enclosed copies hereof, whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its terms.
| Very truly yours, Double Eagle Petroleum Co. |
||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Name: | Xxxxxx X. Xxxxx | |||
| Title: | Chief Financial Officer | |||
The foregoing Underwriting Agreement is hereby confirmed and accepted by the Underwriter in as
of the date first above written.
| Xxxxxx, Xxxxx Xxxxx, Incorporated |
||||
| By: | /s/ Xxxxxxxxxxx Xxxxxxx | |||
| Name: | Xxxxxxxxxxx Xxxxxxx | |||
| Title: | Vice President | |||
Signature page to Underwriting Agreement
S-1
