ENCORE ACQUISITION
COMPANY
9.50% Senior Subordinated Notes
Due 2016
BANC OF AMERICA
SECURITIES LLC
WACHOVIA CAPITAL MARKETS, LLC,
As Representatives of the several
Underwriters
c/o Banc of
America Securities LLC
One Bryant Park, 10th Floor
New York, New York 10039
Introductory . Encore Acquisition Company, a Delaware
corporation (the “ Company ”), proposes to issue
and sell to Banc of America Securities LLC and Wachovia Capital
Markets, LLC, as representatives (the “
Representatives ”) of the several underwriters named
on Schedule A hereto (the “ Underwriters
”) $225,000,000 aggregate principal amount of its 9.50%
Senior Subordinated Notes Due 2016 (the “ Notes
”). The Notes will be guaranteed (collectively, the “
Guarantees ”) by each of the subsidiary guarantors
named in Schedule B hereto (the “ Notes
Guarantors ”, and the Company and the Notes Guarantors
collectively, the “ EAC Parties ”). The Notes
and the Guarantees are collectively referred to herein as the
“ Securities .” The Securities are to be issued
under an Indenture dated as of November 16, 2005 (the “
Original Indenture ”) between the Company, as issuer,
and Wells Fargo Bank, National Association, as trustee (“
Trustee ”), and a Third Supplemental Indenture
relating to the Notes (the “ Supplemental Indenture
” and, together with the Original Indenture and the Second
Supplemental Indenture dated as of January 2, 2008, the
“ Indenture ”) to be dated the Closing Date (as
defined in Section 2 hereof), between the Company, the Trustee
and the Notes Guarantors. The use of the neuter in this
Underwriting Agreement (the “ Agreement ”) shall
include the feminine and masculine wherever appropriate.
1.
Representations and Warranties . The EAC Parties, jointly
and severally, each represent and warrant to, and agree and
covenant with, the Underwriters that:
(a) General for
Registration Statement, Preliminary Prospectus, Prospectus and
Disclosure Package . An automatic shelf registration statement
on Form S-3 (File No. 333-158680) (the “ Initial
Registration Statement ”), including a base prospectus in
respect of the Securities, has been filed with the Securities and
Exchange Commission (the “ Commission ”) and
became effective upon filing under Rule 462(e) under the Securities
Act of 1933, as amended (the “ Securities Act
”); the base prospectus included in the Initial Registration
Statement at the time the Initial Registration Statement
became
effective is
hereinafter called the “ Base Prospectus ”; no
other document with respect to the Initial Registration Statement
or document incorporated by reference therein has heretofore been
filed or transmitted for filing with the Commission (other than
prospectuses and prospectus supplements filed pursuant to Rule
424(b) of the rules and regulations of the Commission under the
Securities Act, each in the form heretofore delivered to you); and
no stop order suspending the effectiveness of the Initial
Registration Statement or any post-effective amendment thereto has
been issued and no proceeding for that purpose has been initiated
or threatened by the Commission; any preliminary prospectus
supplement specifically relating to the Securities, together with
the Base Prospectus, included in the Initial Registration Statement
or otherwise filed with the Commission pursuant to Rule 424(b)
under the Securities Act, is hereinafter called a “
Preliminary Prospectus ”; the various parts of the
Initial Registration Statement as amended at the Applicable Time
(as defined below), including all exhibits thereto (other than Form
T-1), the documents incorporated by reference in the Base
Prospectus contained therein and any information included in any
prospectus supplement that is filed with the Commission pursuant to
Rule 424(b) under the Securities Act and deemed a part of the
Initial Registration Statement pursuant to Rule 430B under the
Securities Act, are hereinafter collectively called the “
Registration Statement ”; the final prospectus
supplement specifically relating to the Securities, in the form
first filed, or transmitted for filing, with the Commission
pursuant to Rule 424(b) under the Securities Act, together with the
Base Prospectus, is hereinafter called the “
Prospectus ”; any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant
Item 12 of Form S-3 under the Securities Act, as of the date
of such Preliminary Prospectus or Prospectus or as of the
Applicable Time, as the case may be; any reference to any amendment
or supplement to any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include any documents filed after the
date of such Preliminary Prospectus or Prospectus, as the case may
be, under the Securities Exchange Act of 1934, as amended (the
“ Exchange Act ”), and incorporated by reference
in such Preliminary Prospectus or Prospectus, as the case may be;
any reference to any amendment to the Initial Registration
Statement shall be deemed to refer to and include any annual report
of the Company filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act after the effective date of the Initial Registration
Statement that is incorporated by reference in the Registration
Statement.
The term “
Disclosure Package ,” as used herein, shall mean
(i) the Preliminary Prospectus used most recently prior to the
Applicable Time, as amended or supplemented at the Applicable Time,
(ii) any issuer free writing prospectuses as defined in
Rule 433 of the Securities Act (each, an “ Issuer
Free Writing Prospectus ”) identified in
Schedule C hereto, (iii) any other “free
writing prospectus” (as defined in Rule 405 under the
Securities Act) that the parties hereto shall hereafter expressly
agree in writing to treat as part of the Disclosure Package (such
Issuer Free Writing Prospectus in clause (ii) and such other
“free writing prospectus” in clause (iii) referred
to herein as a “ Permitted Free Writing Prospectus
”), and (iv) the Final Term Sheet (as defined herein),
which also shall be identified in Schedule D hereto.
The Company represents that it has not made, and agrees that,
unless it obtains the prior written consent of the Representatives,
it will not make, any offer relating to the Notes that constitutes
or would constitute an Issuer Free Writing Prospectus or that
otherwise constitutes or would constitute a “free
2
writing
prospectus” (as defined in Rule 405 of the Securities
Act) or a portion thereof required to be filed by the Company with
the Commission or retained by the Company under Rule 433 of
the Securities Act; provided that the prior written consent of the
Representatives hereto shall be deemed to have been given in
respect of the Free Writing Prospectuses included in
Schedule C hereto, the Final Term Sheet and any
electronic road show. The Company agrees that (i) it has
treated and will treat, as the case may be, each Permitted Free
Writing Prospectus as an Issuer Free Writing Prospectus, and
(ii) has complied and will comply, as the case may be, with
the requirements of Rules 164 and 433 of the Securities Act
applicable to any Permitted Free Writing Prospectus, including in
respect of timely filing with the Commission, legending and record
keeping. The Company consents to the use by any Underwriter of a
free writing prospectus that (a) is not an “issuer free
writing prospectus” as defined in Rule 433, and
(b) contains only (i) information describing the
preliminary terms of the Securities or their offering,
(ii) information that describes the final terms of the
Securities or their offering and that is included in the Final Term
Sheet of the Company set forth on Schedule D or
(iii) information permitted under Rule 134 under the
Securities Act; provided that each Underwriter severally covenants
with the Company not to take any action without the Company’s
prior written consent that would result in the Company being
required to file with the Commission under Rule 433(d) under the
Securities Act a free writing prospectus prepared by or on behalf
of such Underwriter or any other “issuer information”
(as defined in Rule 433 under the Securities Act) contained in
a free writing prospectus that otherwise would not be required to
be filed by the Company thereunder, but for the action of the
Underwriters;
(b) S-3
Eligibility; Trust Indenture Act; Well-Known Seasoned Issuer and
Not an Ineligible Issuer. The EAC Parties meet, and as of the
effective date of the Initial Registration Statement met, the
requirements for use of Form S-3 under the Securities Act. No order
preventing or suspending the use of the Registration Statement or
any Preliminary Prospectus has been issued by the Commission, and
the Registration Statement, when it became effective, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Securities Act and
the Trust Indenture Act of 1939, as amended (the “ Trust
Indenture Act ”), and the rules and regulations of the
Commission thereunder, and did 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; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to the Company by you expressly for use therein. Each of
the EAC Parties was at the time of the initial filing of the
Registration Statement and at the time such EAC Party or any person
acting on its behalf (within the meaning, for this clause only, of
Rule 163(c) under the Securities Act) made any offer relating to
the Securities in reliance on the exemption of Rule 163 under
the Securities Act, and continues to be, a “well-known
seasoned issuer” (as defined in Rule 405 under the
Securities Act) eligible to use an “automatic shelf
registration statement” (as defined in Rule 405 under
the Securities Act) for the registration of the Securities,
including not having been an “ineligible issuer” (as
defined in Rule 405 under the Securities Act) at any such time
or date. No EAC Party has received from the Commission any notice
pursuant to Rule 401(g)(2) under the Securities Act objecting
to
3
the use of the
automatic shelf registration statement form. The Registration
Statement is not the subject of a pending proceeding or examination
under Section 8(d) or 8(e) of the Securities Act, and no EAC Party
is the subject of a pending proceeding under Section 8A of the
Securities Act in connection with the offering of the
Securities;
(c) Documents
Incorporated by Reference . The documents incorporated by
reference in the Preliminary Prospectus and the Prospectus, when
they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements
of the Exchange Act and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary 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 Prospectus or any further
amendment or supplement thereto, when such documents become
effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the
Exchange Act and the rules and regulations of the Commission
thereunder 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, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by you
expressly for use therein;
(d)
Registration Statement, Preliminary Prospectus and Prospectus;
No Material Misstatements or Omissions . The Registration
Statement, the Preliminary Prospectus and the Prospectus conform or
will conform, and any further amendments or supplements thereto
will conform, in all material respects to the requirements of the
Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder and do not and will not,
as of the latest effective date as to the Registration Statement
and any amendment thereto as of the applicable filing date as to
the Preliminary Prospectus and any amendment or supplement thereto,
as of its date, the date that it is filed with the Commission and
as of the Closing Date as to the Prospectus and any amendment or
supplement thereto, 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 (in the case of the
Preliminary Prospectus, the Prospectus and any amendment or
supplement thereto, in the light of the circumstances under which
they were made) not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by you expressly for use
therein;
(e) Disclosure
Package . The Disclosure Package did not, as of 5:00 p.m.
(Eastern time) on the date of this Agreement (the “
Applicable Time ”), contain an untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that
this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by you expressly
for use therein;
4
(f) Issuer Free
Writing Prospectus and Disclosure Package . Each Issuer Free
Writing Prospectus (including, without limitation, any road show
that is a free writing prospectus under Rule 433), when
considered together with the Disclosure Package as of the
Applicable Time, did not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by you expressly for use
therein;
(g) Each Issuer
Free Writing Prospectus . Each Issuer Free Writing Prospectus
conformed or will conform in all material respects to the
requirements of the Securities Act and the rules and regulations of
the Commission thereunder on the date of first use, and the Company
has complied or will comply (within the time period specified in
Rule 433) with any filing requirements applicable to such
Issuer Free Writing Prospectus pursuant to such rules and
regulations. The Company has not made any offer relating to the
Notes that would constitute an Issuer Free Writing Prospectus
without the prior written consent of the Representatives, except as
set forth on Schedule C hereto and the Final Term
Sheet. Each Issuer Free Writing Prospectus does not and will not
include any information that conflicts with the information
contained in the Registration Statement or the Disclosure Package,
including any document incorporated therein and any prospectus
supplement deemed to be a part thereof that has not been superseded
or modified; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to the Company by you expressly for use therein;
(h) No Material
Loss or Interference . Neither the Company nor any of its
subsidiaries has sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Preliminary Prospectus and the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Disclosure Package; and,
since the respective dates as of which information is given in the
Registration Statement, any Preliminary Prospectus, the Disclosure
Package and the Prospectus, there has not been any change in the
capital stock or any material increase in the long-term debt of the
Company or any of its subsidiaries (other than shares of the
Company’s common stock or common units of Encore Energy
Partners LP, Delaware limited partnership (“ENP”),
issued under equity incentive plans existing on the date of the
Preliminary Prospectus) or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders’ equity or results of operations of the Company
and its subsidiaries, otherwise than as set forth or contemplated
in the Disclosure Package;
(i)
Incorporation and Good Standing of the Company . The Company
has been duly incorporated and is an existing corporation in good
standing under the laws of the State of Delaware, with power and
authority (corporate and other) to own its
5
properties and
conduct its business as described in the Disclosure Package and the
Prospectus; and the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to
be so qualified would, individually or in the aggregate, not have a
material adverse effect on the condition (financial or other),
business, properties, earnings, assets, stockholders’ equity,
prospects or results of operations of the Company and its
subsidiaries taken as a whole (a “ Material Adverse
Effect ”);
(j)
Organization and Good Standing of Subsidiaries of the
Company . Each subsidiary of the Company has been duly
incorporated or organized and is an existing corporation, limited
partnership or limited liability company in good standing under the
laws of the jurisdiction of its incorporation or organization, with
power and authority (corporate and other) to own its properties and
conduct its business as described in the Disclosure Package and the
Prospectus; and each subsidiary of the Company is duly qualified to
do business as a foreign corporation, limited partnership or
limited liability company in good standing in all other
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where
the failure to be so qualified would not have a Material Adverse
Effect; all outstanding shares of capital stock of each Notes
Guarantor that is a corporation have been duly and validly
authorized and issued and are fully paid and non-assessable, and
the limited partnership agreements or limited liability company
agreements governing all outstanding limited partnership interests
or limited liability company interests of each Notes Guarantor that
is a limited partnership or limited liability company, as the case
may be, have been validly executed and delivered, and all capital
contributions required under such limited partnership agreements or
limited liability company agreements have been paid in full (to the
extent required in the applicable limited partnership agreement or
limited liability company agreement); and the capital stock,
limited partnership interests or limited liability company
interests of each subsidiary owned by the Company, directly or
through subsidiaries, is owned free from liens, encumbrances and
defects, except for liens under or permitted by the Company’s
Amended and Restated Credit Agreement dated as of March 7,
2007, as amended (the “ EAC Credit Facility ”),
among the Company, Encore Operating, L.P., Bank of America, N.A.,
as Administrative Agent and L/C Issuer, Fortis Capital Corp. and
Wachovia Bank, N.A., as Co-Syndication Agents, BNP Paribas and
Caylon New York Branch, as Co-Documentation Agents, and the other
lenders party thereto and the Credit Agreement dated as of
March 7, 2007, as amended (the “ OLLC Credit
Facility ” and together with the EAC Credit Facility, the
“ Credit Facilities ”) by and among Encore
Energy Partners Operating LLC, ENP, Bank of America, N.A., as
administrative agent and L/C Issuer, Banc of America Securities
LLC, as sole lead arranger and sole book manager, and other lenders
party thereto. The Notes Guarantors are the only “Restricted
Subsidiaries” of the Company, as such term is defined in the
Indenture;
(k)
Authorization, Execution and Delivery of this Agreement .
This Agreement has been duly authorized, executed and delivered by
the EAC Parties;
6
(l)
Authorization, Execution and Delivery of the Indenture. The
Indenture has been duly authorized by the Company and each Notes
Guarantor; the Notes have been duly authorized by the Company; each
Guarantee has been duly authorized by each respective Notes
Guarantor; and when the Securities are delivered and paid for
pursuant to this Agreement, and executed and authenticated by the
trustee in accordance with the provisions of the Indenture, at the
Closing Date, (i) the Indenture will have been duly executed
and delivered by the Company and will conform in all material
respects to the description thereof contained in the Disclosure
Package and the Prospectus, (ii) such Securities will have
been duly executed, authenticated, issued and delivered and will
conform in all material respects to the description thereof
contained in the Disclosure Package and the Prospectus and
substantially in the form filed or incorporated by reference as an
exhibit to the Registration Statement, (iii) the Indenture
will have been duly qualified under the Trust Indenture Act, and
will conform in all material respects to the requirements thereof,
and (iv) the Indenture and such Securities will constitute
valid and legally binding obligations of the EAC Parties, as the
case may be, enforceable against the Company or the Notes
Guarantors, as the case may be, in accordance with their respective
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and
to general equitable principles regardless of whether enforcement
is sought in law or equity;
(m) Description
of the Securities. The statements set forth in the Preliminary
Prospectus and the Prospectus under the captions “Description
of Debt Securities” and “Description of the
Notes,” insofar as they purport to constitute a summary of
the terms of the Securities, and under the caption
“Underwriting,” insofar as it purports to describe the
provisions of the laws and documents referred to therein, are
accurate, complete and fair;
(n)
Non-Contravention of Existing Instruments. The execution,
delivery and performance by the EAC Parties of the Indenture, and
this Agreement, the issuance and sale of the Securities, and the
consummation of the transactions contemplated herein and in the
Disclosure Package and the Prospectus (including the use of
proceeds from the sale of the Securities as described in the
Disclosure Package and the Prospectus), and compliance with the
terms and provisions thereof do not and will not (i) conflict
with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any
rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or
any subsidiary of the Company or any of their properties, or any
agreement or instrument to which the Company or any such subsidiary
is a party or by which the Company or any such subsidiary is bound
or to which any of the properties of the Company or any such
subsidiary is subject, except for such breaches, violations and
defaults as would not have a Material Adverse Effect, or (ii)
result in any violation of the charter or by-laws of the Company or
any such subsidiary, and the Company has full power and authority
to authorize, issue and sell the Notes, and each Notes Guarantor
has full power and authority to authorize, offer and sell its
respective Guarantee;
7
(o) No Further
Authorizations or Approvals Required. No consent, approval,
authorization, or order of, or registration or filing with, any
governmental agency or body or any court is required for the
consummation of the transactions contemplated by (i) this
Agreement in connection with the issuance and sale of the Notes, or
(ii) the issuance of the Guarantees by the Notes Guarantors,
except such as have been, or will have been prior to the Closing
Date, obtained under the Securities Act and the Trust Indenture Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Securities by the Underwriters;
(p)
Commissions . Except as disclosed in the Disclosure Package
and the Prospectus, there are no contracts, agreements or
understandings between the Company or any Notes Guarantor and any
person that would give rise to a valid claim against the Company,
any Notes Guarantor or any Underwriter for a brokerage commission,
finder’s fee or other like payment with respect to the offer
and sale of the Securities;
(q) No
Violation of Charter, By-Laws or Other Agreement. Neither the
Company nor any of its subsidiaries is in violation of its
respective charter or by-laws or in default in the performance of
any obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or their
respective property is bound except where such violations or
defaults would not have a Material Adverse Effect;
(r) Title to
Properties. The Company and its subsidiaries have (1) good
and indefeasible title to all of their interests in the oil and gas
properties described in the Disclosure Package and the Prospectus,
(2) good and indefeasible title in fee simple to all other
real property owned by the Company or any of its subsidiaries and
(3) good title to all personal property owned by the Company
or any of its subsidiaries, in each case, free and clear of all
liens, encumbrances and defects, except (i) as described in
the Disclosure Package and the Prospectus, (ii) liens securing
taxes and other governmental charges, or claims of materialmen,
mechanics and similar persons, not yet due and payable,
(iii) liens and encumbrances under oil and gas leases, options
to lease, operating agreements, utilization and pooling agreements,
participation and drilling concessions agreements and gas sales
contracts, securing payment of amounts not yet due and payable and
of a scope and nature customary in the oil and gas industry,
(iv) liens arising under or permitted by the Credit Facilities
or (v) liens, encumbrances and defects that do not,
individually or in the aggregate, materially affect the value of
such properties or materially interfere with the use made or
proposed to be made of such properties by the Company or the Notes
Guarantors; except as described in the Disclosure Package and the
Prospectus, the leases, options to lease, drilling concessions or
other arrangements held by the Company and its subsidiaries reflect
in all material respects the right of the Company and its
subsidiaries to explore the unexplored and undeveloped acreage
described in the Disclosure Package and the Prospectus, and the
care taken by the Company and its subsidiaries with respect to
acquiring or otherwise procuring such leases, options to lease,
drilling concessions and other arrangements was generally
consistent with standard industry practices for acquiring or
procuring leases to explore acreage for hydrocarbons; and any real
property
8
and buildings
held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use
made or proposed to be made of such real property and buildings by
the Company or its subsidiaries;
(s)
Insurance. The Company and its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their business and the value of their
respective properties as is customary for companies engaged in
similar businesses in similar industries; and neither the Company
nor any of its subsidiaries has (i) received notice from any
insurer or agent of such insurer that capital improvements or other
expenditures are required or necessary to be made in order to
continue such insurance or (ii) any reason to believe that it
will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage at
reasonable cost from similar insurers as may be necessary to
continue its business;
(t) Disclosure
of Relationships. Except as disclosed in the Disclosure Package
and the Prospectus, no relationship, direct or indirect, exists
between or among the Company or any of its subsidiaries on the one
hand, and the directors, officers, stockholders, customers or
suppliers of the Company or any of its subsidiaries on the other
hand, that are required by the Securities Act to be described in
the Disclosure Package and the Prospectus;
(u) All
Necessary Permits, etc. The Company and its subsidiaries
possess all licenses, franchises, certificates, permits, approvals,
consents and other authorizations (collectively, “
Governmental Licenses ”) issued by and have made all
declarations and filings with, the appropriate federal, state,
local or foreign governmental or regulatory authorities that are
necessary for the ownership or lease of their respective properties
or the conduct of their respective businesses as described in
Disclosure Package and the Prospectus except where the failure to
possess such Governmental Licenses or make such declaration and
filings would not, individually or in the aggregate, have a
Material Adverse Effect. The Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses except where the failure to so comply would not,
individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect; all of such Governmental Licenses are
valid and in full force and effect, except where the invalidity of
such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not, individually or
in the aggregate, be reasonably expected to have a Material Adverse
Effect; and neither the Company nor any of its subsidiaries has
received notice of any revocation or modification of any such
license, certificate, permit or authorization or has any reason to
believe that any such Governmental Licenses will not be renewed in
the ordinary course, except for notices, modifications or
non-renewals as would not, individually or in the aggregate, have a
Material Adverse Effect;
(v) No Labor
Disturbances or Disputes . No labor disturbance or dispute with
employees of the Company or any of its subsidiaries exists or, to
the best knowledge of
9
the Company, is
contemplated or threatened, which disturbance or dispute would have
a Material Adverse Effect;
(w)
Intellectual Property Rights . The Company and its
subsidiaries own, possess or can acquire on reasonable terms
adequate trademarks, trade names and other rights to inventions,
know-how, patents, copyrights, confidential information and other
intellectual property (collectively, “ intellectual
property rights ”) necessary to conduct the business now
operated by them, or presently employed by them, except where the
failure to own, possess or acquire such intellectual property
rights would not, individually or in the aggregate, have a Material
Adverse Effect, and have not received any notice of infringement of
or conflict with asserted rights of others with respect to any
intellectual property rights that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect;
(x)
Environmental Laws . Except as disclosed in the Disclosure
Package and the Prospectus, neither the Company nor any of its
subsidiaries is in violation of any statute, any rule, regulation,
decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “ environmental laws
”), owns or operates any real property contaminated with any
substance that is subject to any environmental laws, is liable for
any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material
Adverse Effect; and the Company is not aware of any pending
investigation which might lead to such a claim;
(y) No Material
Actions or Proceedings. Except as disclosed in the Disclosure
Package and the Prospectus, there are no pending actions, suits or
proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a Material Adverse
Effect, or would materially and adversely affect the ability of the
Company to perform its obligations under the Indenture this
Agreement, or which are otherwise material in the context of the
sale of the Securities; and no such actions, suits or proceedings
are, to the Company’s knowledge, threatened or
contemplated;
(z) Preparation
of Financial Statements. The financial statements and the notes
related thereto of the Company and its consolidated subsidiaries
included or incorporated by reference in the Disclosure Package and
the Prospectus present fairly in all material respects the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates shown and their results of operations
and changes in their consolidated cash flows for the periods shown,
and such financial statements have been prepared in conformity with
the generally accepted accounting principles in the United States
applied on a consistent basis; the assumptions used in preparing
any pro forma financial data included or incorporated by reference
in the Disclosure Package and the Prospectus provide a reasonable
basis for presenting the
10
significant
effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma data
therein reflect the proper application of those adjustments to the
corresponding historical financial statement amounts; and the other
financial information included or incorporated by reference in the
Disclosure Package and the Prospectus, including oil and gas
production information, has been derived from the accounting
records of the Company and its subsidiaries and presents fairly in
all material respects the information shown thereby;
(aa)
Independent Accountants. Ernst & Young LLP, who has
certified certain financial statements of the Company, is the
independent registered public accounting firm with respect to the
Company within the meaning of the Securities Act and the applicable
rules and regulations thereunder adopted by the Commission and the
Public Company Accounting Oversight Board;
(bb) Reserve
Engineer . Miller and Lents, Ltd. (the “ Engineer
”), whose reserve evaluations are referenced or appear, as
the case may be, in the Disclosure Package and the Prospectus were,
as of December 31, 2006, December 31, 2007 and
December 31, 2008, and are, as of the date hereof, independent
engineers with respect to the Company; and the historical
information underlying the estimates of the reserves of the Company
supplied by the Company to the Engineer for the purposes of
preparing the reserve reports of the Company referenced in the
Disclosure Package and the Prospectus (the “ Reserve
Reports ”), including, without limitation, production
volumes, sales prices for production, contractual pricing
provisions under oil or gas sales or marketing contracts or under
hedging arrangements, costs of operations and development, and
working interest and net revenue information relating to the
Company’s ownership interests in properties, was true and
correct on the date that each such Reserve Report was prepared in
all material respects in accordance with customary industry
practices;
(cc) Company
Not an “Investment Company”. Neither the Company
nor any Notes Guarantor is an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the United States
Investment Company Act of 1940 (the “ Investment Company
Act ”); and neither the Company nor any Notes Guarantor
is or, after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described
in the Disclosure Package and the Prospectus, will be an
“investment company” or an entity
“controlled” by an “investment company,” as
such terms are defined in the Investment Company Act;
(dd)
Ratings . No “nationally recognized statistical rating
organization” as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act has notified the
Company that it is considering (i) the downgrading, suspension
or withdrawal of, or any review for a possible change that does not
indicate the direction of the possible change in, any rating
assigned to the Company or any securities of the Company or
(ii) any change with negative implications in the outlook for
any rating of the Company or any securities of the
Company;
11
(ee) Internal
Controls . The EAC Parties 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 generally
accepted accounting principles 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.
(ff)
Statistical and Market-Related Data . Nothing has come to
the attention of the Company that has caused the Company to believe
that the statistical and market-related data included or
incorporated by reference in the Disclosure Package and the
Prospectus is not based on or derived from sources that are
reliable and accurate in all material respects.
(gg) Internal
Controls and Procedures. The Company has established and
maintains disclosure controls and procedures (as such term is
defined in Rule 13a-15 and 15d-15 under the Exchange Act);
such disclosure controls and procedures 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, and such disclosure controls and
procedures are effective at the reasonable assurance level to
perform the functions for which they were established; the
Company’s auditors and the Audit Committee of the Board of
Directors have been advised of: (i) any significant
deficiencies and 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; and
(ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Company’s internal control over financial reporting; since
the date of the most recent evaluation of such disclosure controls
and procedures, there has not been any 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; the
principal executive officer and principal financial officer of the
Company have made all certifications required by the Sarbanes-Oxley
Act of 2002 (the “ Sarbanes-Oxley Act ”) and any
related rules and regulations promulgated by the Commission, and
the statements contained in any such certification are complete and
correct; and the Company is otherwise in compliance with all
applicable provisions of the Sarbanes-Oxley Act that are
effective;
(hh) Compliance
with Regulations. Neither the Company nor any of its
subsidiaries has taken, and none of them will take, any action that
might cause this Agreement or the issuance or sale of the Notes to
violate Regulation T, Regulation U or Regulation X
of the Board of Governors of the Federal Reserve System. The
Company does not own, and none of the proceeds from the offering of
the Securities will be used directly or indirectly to purchase or
carry any “margin stock” as defined in
Regulation U;
12
(ii) Tax Law
Compliance. The Company and its subsidiaries have paid all
federal, state, local and foreign taxes and filed all tax returns
required to be paid or filed through the date hereof to the extent
that such taxes have become due and are not being contested in good
faith with such exceptions as would not singly or in the aggregate
result in a Material Adverse Effect; and except as otherwise
disclosed in the Disclosure Package and the Prospectus, there is no
tax deficiency that has been asserted against the Company or any of
its subsidiaries or any of their respective properties or assets
which has had, nor does the Company have any knowledge of any tax
deficiency, which if determined adversely to the Company or its
subsidiaries might have, a Material Adverse Effect; and
(jj) No
Restrictions on Dividends. Except as described in the
Disclosure Package and the Prospectus, no subsidiary of the Company
is currently prohibited, directly or indirectly, under any
agreement or other instrument to which it is a party or is subject,
from paying any dividends to the Company, from making any other
distribution to the Company on such subsidiary’s capital
stock, from repaying to the Company any loans or advances to such
subsidiary from the Company or from transferring any of such
subsidiary’s properties or assets to the Company or any other
subsidiary of the Company.
2.
Purchase and Sale . Subject to the terms and conditions and
in reliance upon the representations and warranties herein set
forth, the Company agrees to sell to the Underwriters, and each of
the Underwriters agree to purchase from the Company, the Securities
set forth opposite such Underwriter’s name on
Schedule A , at a purchase price (the “
Purchase Price ”) of 90.228% of the principal amount
thereof, plus accrued interest, if any, on the Securities from
April 27, 2009 to the Closing Date.
The Company
will deliver against payment of the Purchase Price the Securities
in the form of one or more permanent global securities in
definitive form (the “ Global Securities ”)
deposited with the Trustee as custodian for The Depository Trust
Company (“ DTC ”) and registered in the name of
Cede & Co., as nominee for DTC. Interests in any permanent
global Securities will be held only in book-entry form through DTC.
The Underwriters shall make payment of the Purchase Price for the
Securities in Federal (same day) funds by wire transfer to the
account or accounts designated by the Company at the office of
Baker Botts L.L.P. at 9:00 A.M. (Houston, Texas time), on
April 27, 2009 or at such other time not later than seven full
business days thereafter as the Representative and the Company
determine, such time being herein referred to as the “
Closing Date ”, against delivery to the Trustee as
custodian for DTC of the Global Securities representing all of the
Securities. The Global Securities will be made available for
checking at the above office of Baker Botts L.L.P. at least 24
hours prior to the Closing Date.
3. The
Company agrees with the Underwriters:
(a) Compliance
with the Securities Act and the Exchange Act. To prepare the
Prospectus in the form approved by you and to file such Prospectus
pursuant to Rule 424(b) under the Securities Act not later than the
Commission’s close of business on the second business day
following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by
Rule 424(b); to make no further amendment or any supplement to
the Registration Statement or Prospectus prior
|
