EXHIBIT 1.1
KODIAK OIL & GAS
CORP.
10,500,000 Shares of Common Stock
UNDERWRITING
AGREEMENT
December 18, 2006
KeyBanc Capital Markets, a division
of
McDonald Investments Inc.
As Representative of the several
Underwriters
McDonald Investment
Center
800 Superior Avenue
Cleveland, Ohio 44114
Ladies and Gentlemen:
Kodiak Oil & Gas Corp., a Yukon
Territory corporation (the “Company”), proposes,
subject to the terms and conditions stated herein, to issue and
sell 10,500,000 shares (the “Firm Securities”) of
common stock of the Company, no par value (the “Common
Stock”), to the several underwriters named in Schedule
A hereto (the “Underwriters”), for whom you are
acting as Representative (the “Representative”). In
addition, the Company also proposes to grant the Underwriters an
option to purchase up to 1,575,000 additional shares of Common
Stock (the “Optional Securities”). The Firm Securities
and the Optional Securities are hereinafter collectively referred
to as the “Securities.” The Company hereby confirms the
agreement with you, acting as the Representative of the
Underwriters.
1.
Representations and Warranties of
the Company . The Company
represents and warrants to, and agrees with, each of the
Underwriters that:
(a)
The Company has prepared and filed
with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form F-1 (No.
333-138932) covering the registration of the Securities under the
Securities Act of 1933, as amended (the “Securities
Act”), including the preliminary prospectus relating to the
Securities. Such registration statement, including the exhibits
thereto and schedules thereto, at the time it became effective, is
herein called the “Registration Statement.” Any
registration statement filed pursuant to Rule 462(b) of the rules
and regulations of the Commission under the Securities Act (the
“Securities Act Regulations”) is herein referred to as
a “Rule 462(b) Registration Statement,” and, after such
filing, the term “Registration Statement” shall be
deemed to include the Rule 462(b) Registration Statement. Any
preliminary prospectus included in such registration statement or
filed with the Commission pursuant to Rule 424(a) of the Securities
Act Regulations before a prospectus in final form is filed with the
Commission pursuant to Rule 424(b) of the Securities Act
Regulations is herein called a “Preliminary
Prospectus.” The Preliminary Prospectus relating to the
Securities that was included in the Registration
Statement
immediately prior to the Applicable
Time (as defined below) is herein called the “Time of Sale
Prospectus.” The final prospectus, in the form first filed
with the Commission pursuant to Rule 424(b) of the Securities Act
Regulations, is herein called the “Prospectus.” Any
“issuer free writing prospectus” (as defined in Rule
433 of the Securities Act Regulations) is herein called an
“Issuer Free Writing Prospectus.” For purposes of this
Agreement, all references to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or
supplement to any of the foregoing shall be deemed to refer to and
include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system
(“EDGAR”). For purposes of this Agreement, the
“Applicable Time” is 8:00 a.m. (Eastern time) on the
date of this Agreement.
All references in this Agreement to
financial statements and schedules and other information that is
“contained,” “included” or
“stated” in the Registration Statement, the Rule 462(b)
Registration Statement, any Preliminary Prospectus, the Time of
Sale Prospectus or the Prospectus (or other references of like
import) shall be deemed to mean and include all such financial
statements and schedules and other information that is contained in
the Registration Statement, the Rule 462(b) Registration Statement,
any Preliminary Prospectus, the Time of Sale Prospectus or the
Prospectus, as the case may be.
(b)
No order preventing or suspending
the use of any Preliminary Prospectus or any Issuer Free Writing
Prospectus has been issued by the Commission. Each Preliminary
Prospectus, at the time of filing thereof, complied, and any
further amendments or supplements thereto will comply, in all
material respects, with the Securities Act and the Securities Act
Regulations, and did not contain an untrue statement of a material
fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading. The representation and
warranty set forth in the immediately preceding sentence does not
apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Company by an
Underwriter expressly for inclusion therein, which information
consists solely of the information in the letter referred to in
Section 7(e).
(c)
The Time of Sale Prospectus, as
supplemented by those Issuer Free Writing Prospectuses and the
other documents and information listed in Schedule D hereto,
taken together (collectively, the “Disclosure Package”)
as of the Applicable Time, did not include any untrue statement of
a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Each
Issuer Free Writing Prospectus listed in Schedule D hereto
does not conflict with the information contained in the
Registration Statement, the Time of Sale Prospectus or the
Prospectus, and each such Issuer Free Writing Prospectus, as
supplemented by and taken together with the Disclosure Package as
of the Applicable Time, did not include any untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The representation and
warranty set forth in the immediately preceding sentence does not
apply to statements or
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omissions made in reliance upon and
in conformity with written information furnished to the Company by
an Underwriter expressly for inclusion therein, which information
consists solely of the information in the letter referred to in
Section 7(e). Except for the free writing prospectuses identified
in Schedule D hereto, the Company has not prepared, used or
referred to, and will not, without the prior written consent of the
Representative, prepare, use or refer to any free writing
prospectuses.
(d)
Each of the Registration Statement
and any Rule 462(b) Registration Statement has been declared
effective by the Commission under the Securities Act. The Company
has complied to the Commission’s satisfaction with all
requests of the Commission for additional or supplemental
information. No stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement is
in effect, and no proceedings for such purpose have been initiated
or are pending or, to the Company’s knowledge, are
contemplated by the Commission.
(e)
The Time of Sale Prospectus and the
Registration Statement comply, and the Prospectus and any further
amendments or supplements thereto will comply, in all material
respects with the Securities Act and the Securities Act
Regulations. The Registration Statement, as amended and
supplemented by the Prospectus, and any post-effective amendment
thereto do not and will not contain, as of the applicable effective
date and at all subsequent times, 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, in the
light of the circumstances under which they were made, not
misleading. The Prospectus and any supplements thereto, as of its
date or the date of such supplement, and on each Delivery Date,
does not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading. The representations and
warranties set forth in the two immediately preceding sentences do
not apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Company by an
Underwriter expressly for inclusion therein, which information
consists solely of the information in the letter referred to in
Section 7(e). There are no contracts or other documents required to
be described in the Time of Sale Prospectus or the Prospectus or
filed as exhibits to the Registration Statement that have not been
described or filed as required.
(f)
The Time of Sale Prospectus was, and
the Prospectus delivered to the Underwriters for use in connection
with this offering will be, identical to the versions of the Time
of Sale Prospectus and Prospectus created to be transmitted to the
Commission for filing via EDGAR, except to the extent permitted by
Regulation S-T.
(g)
At the time of filing the
Registration Statement and at the date of this Agreement, the
Company was not and is not an “ineligible issuer” (as
defined in Rule 405 of the Securities Act Regulations).
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(h)
The Company has been duly continued
and is validly existing and in good standing as a corporation under
the Business Corporations Act (Yukon Territory) (the
“YBCA”), with the requisite power and authority to own
and lease its properties and conduct its business as described in
the Time of Sale Prospectus and the Prospectus. The Company is duly
qualified to do business as a foreign corporation in good standing
in all jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification, except
where the failure to be so qualified and in good standing would
not, individually or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), business,
properties, business prospects (other than as a result of an event,
circumstance or condition applicable to the oil and natural gas
industries as a whole) or results of operations of the Company and
the Subsidiary (as defined below) taken as a whole (a
“Material Adverse Effect”).
(i)
The Company does not own or control,
directly or indirectly, any corporation, association or other
entity other than the subsidiary listed in Exhibit 21.1 to the
Registration Statement (the “Subsidiary”). All of the
issued and outstanding shares of capital stock of the Subsidiary
have been duly authorized and validly issued, are fully paid and
nonassessable and are owned by the Company directly, free and clear
of all liens, encumbrances, equities and claims.
(j)
The Subsidiary has been duly
incorporated and is validly existing and in good standing as a
corporation under the laws of the State of Colorado with the
requisite power and authority to own and lease its properties and
conduct its business as described in the Time of Sale Prospectus
and the Prospectus. The Subsidiary is duly qualified to do business
as a foreign corporation in good standing in all jurisdictions in
which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to
be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect.
(k)
This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a
valid and binding obligation of the Company enforceable in
accordance with its terms, except as enforceability of this
Agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting enforcement of
creditors’ rights or by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(l)
The duly authorized, issued and
outstanding capitalization of the Company is as set forth under the
caption “Capitalization and Indebtedness” in the Time
of Sale Prospectus and the Prospectus as of the date set forth
therein; all of the issued and outstanding shares of capital stock
of the Company are duly authorized and validly issued, fully paid
and nonassessable, are free of any preemptive rights, rights of
first refusal or similar rights, were issued and sold in compliance
with applicable federal and state securities laws and conform in
all material respects to the description thereof in the Time of
Sale Prospectus and the Prospectus; except as described in the Time
of Sale Prospectus and the Prospectus, there are no outstanding
options, warrants or other rights calling for the issuance of, and
there are no commitments, plans or arrangements to issue
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any shares of capital stock of the
Company or any security convertible or exchangeable or exercisable
for capital stock of the Company.
(m)
The Common Stock conforms in substance in all
material respects to all statements in relation thereto contained
in the Registration Statement, the Time of Sale Prospectus and the
Prospectus; the Common Stock to be sold by the Company pursuant to
this Agreement have been duly authorized and (i) when issued and
delivered against payment therefor pursuant to this Agreement, will
be validly issued, fully paid and nonassessable and (ii) will
conform to the description thereof contained in the Time of Sale
Prospectus and the Prospectus. All corporate action required to be
taken for the issuance of the Common Stock by the Company pursuant
to this Agreement has been validly taken. No preemptive rights of
security holders of the Company exist with respect to the issuance
and sale of the Common Stock by the Company pursuant to this
Agreement. The certificates for the Common Stock of the Company
will be in due and legal form under the laws of the Yukon
Territory.
(n)
Other than as described in the Time
of Sale Prospectus and the Prospectus, there are no contracts,
agreements or understandings between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
shares of Common Stock or any other securities of the Company owned
or to be owned by such person or to require the Company to include
such Common Stock or other securities in the Registration
Statement. To the extent any person has such registration or offer
similar rights, such rights have been waived with respect to the
registration of securities in connection with the Registration
Statement.
(o)
No consent, approval, authorization
or order of, or filing or registration with, any foreign or
domestic governmental agency or body or any court is required for
the consummation of the transactions contemplated by this
Agreement, except such as has been obtained or made under the
Securities Act or the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and as may be required by the
YBCA, the British Columbia Securities Act and state securities or
“blue sky” laws.
(p)
The issuance and sale of the
Securities and the compliance by the Company with all of the
provisions of this Agreement and the consummation of the
transactions contemplated herein will not conflict with, or result
in a breach or violation of any of the terms and provisions of, or
constitute a default under (i) the articles of continuation,
articles of incorporation, by-laws or similar organizational
documents of the Company or the Subsidiary, as applicable, (ii) any
indenture, mortgage, deed of trust, lease, loan agreement or other
agreement or instrument to which the Company or the Subsidiary is a
party or by which the Company or the Subsidiary is bound or to
which any of the property or assets of the Company or the
Subsidiary is subject, or (iii) any statute, law, order, rule or
regulation of any governmental agency or body or any court
applicable to the Company or the Subsidiary or any of their
property, assets or operations, except, with respect to clause
(ii), for such conflicts, breaches, violations or defaults that
have been waived or as would not, individually or in the aggregate,
have a Material Adverse Effect.
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(q)
Neither the Company nor the
Subsidiary is (i) in violation of its articles of continuation,
articles of incorporation, by-laws or similar organizational
documents, as applicable, (ii) in default (or, with the giving of
notice or lapse of time or both, would be in default) under any
indenture, mortgage, deed of trust, lease, loan agreement or other
agreement or instrument to which the Company or the Subsidiary is a
party or by which the Company or the Subsidiary is bound or to
which any of the property or assets of the Company or the
Subsidiary is subject, or (iii) in violation of any statute, law,
order, rule or regulation of any governmental agency or body or any
court applicable to the Company or the Subsidiary or any of their
property assets or operations, except for such violations or
defaults that have been waived or as would not, individually or in
the aggregate, have a Material Adverse Effect.
(r)
The Company and the Subsidiary do
not own any real property and have good and marketable title to all
other property owned by them, including, without limitation, all
assets and facilities used by them in the production and marketing
of oil and natural gas, in each case free from mortgages, pledges,
liens, security interests, claims, restrictions, encumbrances and
defects of any kind, except as (i) are described in the Time of
Sale Prospectus and the Prospectus or (ii) such would not,
individually or in the aggregate, materially affect the value of
such property or materially interfere with the use made or to be
made of such property by them. All of the leases and subleases
material to the business of the Company and the Subsidiary, and
under which the Company or the Subsidiary hold the properties
described in the Time of Sale Prospectus and the Prospectus,
including, without limitation, all oil and natural gas producing
properties of the Company and the Subsidiary and all assets and
facilities used by the Company and the Subsidiary in the production
and marketing of oil and natural gas, are in full force and effect,
and neither the Company nor the Subsidiary has any notice of any
material claim of any sort that has been asserted by anyone adverse
to the rights of the Company or the Subsidiary under any such
leases or subleases, or affecting or questioning the rights of the
Company or the Subsidiary to the continued possession of the leased
or subleased property under any such leases or
subleases.
(s)
The Company and the Subsidiary
possess adequate certificates, permits, licenses, approvals,
consents and other authorizations (collectively,
“Governmental Licenses”) issued by appropriate federal,
state or local governmental or regulatory agencies or bodies
necessary to conduct the businesses now operated by them, except
for such Governmental Licenses, the failure of which to obtain or
make could not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect; the Company and the
Subsidiary are in compliance with the terms and conditions of all
such Governmental Licenses, except for such failures to be in
compliance that could not reasonably be expected to, individually
or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid in full force and effect, except
where the invalidity of such Governmental Licenses or the failure
of such Governmental Licenses to be in full force and effect would
not have a Material Adverse Effect; and neither the Company nor the
Subsidiary have received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses that,
if determined adversely to the Company or the Subsidiary, would,
individually or in the aggregate, have a Material Adverse
Effect.
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(t)
Except as disclosed in the Time of
Sale Prospectus and the Prospectus, there are no legal or
governmental actions, suits, arbitrations or other proceedings
pending as to which the Company or the Subsidiary is a party or of
which any property of the Company or the Subsidiary is the subject
that, if determined adversely to the Company or the Subsidiary,
could reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect or could reasonably be expected to
materially and adversely affect the ability of the Company to
perform its obligations under this Agreement; and no such actions,
suits, arbitrations or proceedings are threatened or, to the
Company’s knowledge, contemplated. No labor dispute with the
employees of the Company or the Subsidiary exists or, to the
knowledge of the Company, is threatened or imminent that could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(u)
The Company and the Subsidiary 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 businesses now operated by them, or
presently employed by them, and have not received any notice of
infringement of or conflict with asserted rights of others with
respect to any intellectual property rights that, if determined
adversely to the Company or the Subsidiary, could reasonably be
expected to, individually or in the aggregate, have a Material
Adverse Effect.
(v)
The information set forth in the
Registration Statement, the Time of Sale Prospectus and the
Prospectus relating to oil and natural gas reserves, oil and
natural gas wells and any other oil and natural gas related
information required to be disclosed in such Registration
Statement, Time of Sale Prospectus and Prospectus pursuant to the
Securities Act and the Securities Act Regulations has been prepared
by the Company in accordance with methods generally applied in the
oil and natural gas industry and conforms, in all material
respects, to the requirements of the Securities Act and the
Securities Act Regulations.
(w)
The participation, joint development, joint
operating, farm-out and other agreements relating to rights of the
Company and the Subsidiary with respect to the ownership, lease or
operation of oil and natural gas properties or the exploration for,
development of or production of oil and natural gas reserves
thereon, constitute valid and binding agreements of and are
enforceable against the Company and the Subsidiary and, to the best
knowledge of the Company, the other parties thereto, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable
principles.
(x)
Except as would not, individually or
in the aggregate, have a Material Adverse Effect, (i) neither the
Company nor the Subsidiary is in violation of any federal, state or
local statute, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent,
decree or judgment, of any governmental agency or body or any court
relating to the pollution or protection of human health, the
environment
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(including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of
chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products
(collectively, “Hazardous Materials”) or to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials
(collectively, “Environmental Laws”) and (ii) the
Company and the Subsidiary have all permits, authorizations and
approvals required under any applicable Environmental Laws and are
each in compliance with their material requirements, except to the
extent that failure to so comply or to hold such permits,
authorizations and approvals could not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
There are no pending or, to the knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigations or proceedings relating to any
Environmental Law against the Company or the Subsidiary. To the
knowledge of the Company, there are no events or circumstances that
might reasonably be expected to form the basis of an order for
clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting
the Company or the Subsidiary relating to any Hazardous Materials
or the violation of any Environmental Laws that would, individually
or in the aggregate, have a Material Adverse Effect.
(y)
The Company and the Subsidiary have
(i) filed on a timely basis all necessary federal, state, local and
foreign income and franchise tax returns required to be filed
through the date of this Agreement or have duly requested
extensions thereof; and (ii) paid all taxes shown as due on
such tax returns and, if due and payable, any related or similar
assessments, fines or penalties levied against any of them, except
for taxes being contested in good faith for which reserves in
accordance with generally accepted accounting principles have been
provided. No tax deficiency has been asserted against the Company
or the Subsidiary which has had, nor does the Company know of any
tax deficiency that is likely to be asserted against the Company or
the Subsidiary which, if determined adversely to the Company or the
Subsidiary, would have, a Material Adverse Effect. All tax
liabilities are adequately provided for on the books of the
Company.
(z)
The Company and the Subsidiary
maintain insurance of the types and in the amounts generally deemed
adequate for their respective businesses and, to the
Company’s knowledge, consistent with insurance coverage
maintained by similar companies in similar businesses.
(aa)
The Company and the Subsidiary are in compliance
in all respects with all applicable provisions of the Occupational
Safety and Health Act of 1970, as amended, including all applicable
regulations thereunder, except for such noncompliance as would not,
individually or in the aggregate, have a Material Adverse
Effect.
(bb)
Except as described in the Time of Sale
Prospectus and the Prospectus, the Subsidiary is not currently
restricted, directly or indirectly, from (i) paying any
dividends or distributions to the Company, (ii) repaying to the
Company
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any loans or advances to the
Subsidiary from the Company or (iii) transferring any property or
assets to the Company or any other subsidiary of the
Company.
(cc)
The consolidated financial statements of the
Company (including its predecessors) filed with the Commission and
included in the Registration Statement, the Time of Sale Prospectus
and the Prospectus, together with the related schedules and notes,
fairly present in all material respects the financial condition of
the Company and the Subsidiary as of the respective dates indicated
and the consolidated statements of operations, cash flows and
changes in stockholders’ equity of the Company and the
Subsidiary for the periods specified, in each case for the
respective periods to which they apply, in each case in conformity
with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as
otherwise indicated in the notes thereto) and in accordance with
Regulation S-X promulgated by the Commission. No other financial
statements or supporting schedules are required to be included in
the Registration Statement. The selected consolidated interim and
audited financial data of the Company (including its predecessors)
included in the Registration Statement, the Time of Sale Prospectus
and the Prospectus fairly present in all material respects the
information shown therein and have been compiled on a basis
consistent with that of the consolidated financial statements of
the Company included in the Registration Statement, the Time of
Sale Prospectus and the Prospectus. The other financial information
included in the Registration Statement, the Time of Sale Prospectus
and the Prospectus has been derived from the accounting records of
the Company and the Subsidiary and present fairly, in all material
respects, the information shown thereby. The Registration
Statement, the Time of Sale Prospectus, the Disclosure Package and
the Prospectus include all financial and other information required
to be included in connection with the presentation of
“non-GAAP financial measures” (as defined in Item 10 of
Regulation S-K) therein, and the presentation of such non-GAAP
financial measures therein complies with Regulation G and Item 10
of Regulation S-K, as applicable. The Company and the Subsidiary do
not have any material liabilities or obligations, direct or
contingent (including any off-balance sheet obligations), not
disclosed in the Registration Statement, the Time of Sale
Prospectus and the Prospectus.
(dd)
Neither the Company nor the Subsidiary has
sustained since the date of the last audited financial statements
included in the Registration Statement, the Time of Sale Prospectus
and the Prospectus any loss or interference with its business
material to the Company and the Subsidiary considered as a whole,
otherwise than as set forth or contemplated in the Time of Sale
Prospectus and the Prospectus. Since the respective dates as of
which information is given in the Registration Statement, the Time
of Sale Prospectus and the Prospectus, there has not been any
(i) material change in the capitalization of the Company or
the Subsidiary, (ii) material increase in the aggregate in the
consolidated short-term or long-term debt of the Company,
(iii) material adverse change, nor any development or event
involving a prospective material adverse change, on the condition
(financial or otherwise), business properties, business prospects
or results of operations of the Company and the Subsidiary,
(iv) transaction that is material to the Company and the
Subsidiary contemplated or entered into by the Company or the
Subsidiary, (v) obligation, contingent or otherwise, directly
or indirectly incurred by the Company or the Subsidiary that is
material to the Company and the Subsidiary taken as a
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whole or (vi) dividend or
distribution of any kind declared, paid or made by the Company on
any class of its capital stock, in each case otherwise than as set
forth or contemplated in the Registration Statement, the Time of
Sale Prospectus and the Prospectus.
(ee)
Hein & Associates LLP were, as of December
31, 2005 and during the periods covered by the consolidated
financial statements of the Company (including its predecessors)
and the related schedules and notes thereto included in the
Registration Statement, the Time of Sale Prospectus and the
Prospectus on which they reported, and are independent registered
public accountants as required by the Securities Act and the
Securities Act Regulations. Hein & Associates LLP is registered
with the Public Company Accounting Oversight Board.
(ff)
Amisano Hanson were, during the periods covered
by the consolidated financial statements of the Company (including
its predecessors) and the related schedules and notes thereto
included in the Registration Statement, the Time of Sale Prospectus
and the Prospectus on which they reported, and are independent
registered public accountants as required by the Securities Act and
the Securities Act Regulations. Amisano Hanson is registered with
the Public Company Accounting Oversight Board.
(gg)
The Company and the Subsidiary maintain a system
of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance
with management’s general or specific authorization,
(ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles and to maintain accountability for
assets, (iii) access to its assets is permitted only in
accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(hh)
The Company has established and maintains
disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act) that comply with the
requirements of the Exchange Act, which controls and procedures
(i) are designed to ensure that material information relating
to the Company, including the Subsidiary, is made known to the
Company’s principal executive officer and its principal
financial officer by others within the Company and the Subsidiary,
particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared and
(ii) are effective in all material respects to perform the
functions for which they were established.
(ii)
Neither the Company nor the
Subsidiary, nor any of their respective directors, managers or
partners, as applicable, or officers, in their capacities as such,
is in material breach or violation of any provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith.
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(jj)
The statistical and market-related
data included in the Registration Statement, the Time of Sale
Prospectus and the Prospectus are based on or derived from sources
that the Company believes to be reliable and accurate or represent
the Company’s good faith estimates that are made on the basis
of data derived from such sources.
(kk)
Sproule Associates Inc., whose report is
referenced in the Registration Statement, the Time of Sale
Prospectus and the Prospectus, was, as of the date of such report,
and is, as of the date of this Agreement, an independent petroleum
engineer with respect to the Company and the Subsidiary; the
information underlying the estimates of reserves of the Company and
the Subsidiary that was supplied by the Company to Sproule
Associates Inc. for purposes of auditing the reserve reports and
estimates of the Company and the Subsidiary, 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 and correct in all
material respects on the dates of such estimates were made and such
information was supplied and was prepared in accordance with
customary industry practices; other than normal production of the
reserves and intervening spot market product price fluctuations
described in the Registration Statement, the Time of Sale
Prospectus and the Prospectus, the Company is not aware of any
facts or circumstances that would result in an adverse change in
the reserves, or the present value of future net cash flows
therefrom, as described in the Registration Statement, the Time of
Sale Prospectus and the Prospectus, that could result in a Material
Adverse Effect; estimates of such reserves and present values as
described in the Registration Statement and the Time of Sale
Prospectus comply, and in the Prospectus will comply, in all
material respects with the applicable requirements of Regulation
S-K and Industry Guide 2 under the Securities Act.
(ll)
The Common Stock has been registered
under Section 12(b) of the Exchange Act, and the Securities have
been authorized for trading on the American Stock Exchange
(“AMEX”) and the TSX Ventures Exchange
(“TSX-V”). The Company has taken no action designed to,
or likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act or delisting the Common
Stock from AMEX or TSX-V, nor has the Company received any
notification that the Commission, AMEX or TSX-V is contemplating
such registration or delisting.
(mm)
Neither the Company, the Subsidiary nor any of
their respective officers or directors has taken or will take,
directly or indirectly, any action designed to cause or result in,
or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the
Securities in order to facilitate the sale or resale of the
Securities or otherwise.
(nn)
The Company is not, and after giving effect to
the offering and sale of the Securities and the application of the
proceeds thereof as described in the Time of Sale Prospectus and
the Prospectus will not be, required to register as an
“investment company” as such term is defined under the
Investment Company Act of 1940, as amended (the “Investment
Company Act”).
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2.
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Sale, Purchase and Delivery of
Securities .
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(a)
On the basis of the representations,
warranties and agreements contained herein, but subject to the
terms and conditions set forth herein, (i) the Company agrees
to issue and sell 10,500,000 Firm Securities to the several
Underwriters, and each Underwriter agrees, severally and not
jointly, to purchase from the Company the respective number of Firm
Securities set forth opposite the Underwriter’s name in
Schedule A hereto, at a purchase price per share of $3.901,
and (ii) in the event and to the extent that the Underwriters
shall exercise their option to purchase Optional Securities as
provided in Section 2(b) below, the Company agrees to issue
and sell up to 1,575,000 Optional Securities. The number of
Optional Securities to be purchased by each Underwriter shall be
the same percentage of the total number of Optional Securities to
be purchased by the several Underwriters as the number of Firm
Securities to be purchased by such Underwriter is of the total
number of Firm Securities to be purchased by the several
Underwriters, as adjusted by the Representative in such manner as
the Representative deems advisable to avoid fractional shares. The
purchase price per share of the Optional Securities shall be the
same as that of the Firm Securities.
(b)
The Company hereby grants to the
Underwriters the right to purchase, at their election, the number
of Optional Securities indicated with respect to the Company in
Section 2(a) above, at a purchase price per share equal to the
purchase price per share of the Firm Securities, for the sole
purpose of covering any over-allotments in connection with the sale
and distribution of the Firm Securities. Any such election to
purchase Optional Securities may be exercised only by written
notice from the Representative to the Company given within a period
of 30 calendar days after the date of this Agreement and setting
forth the aggregate number of Optional Securities to be purchased
and the date on which such Optional Securities are to be delivered,
as determined by the Representative but in no event earlier than
the First Delivery Date (as defined below) or, unless the
Representative and the Company otherwise agree in writing, no
earlier than two or later than ten business days after the date of
such notice.
(c)
The several Underwriters propose to
offer the Securities for sale upon the terms and conditions and in
the manner set forth in the Prospectus.
(d)
The Securities to be purchased by
each Underwriter hereunder, in definitive form, and in such
authorized denominations and registered in such names as the
Representative may request upon at least forty-eight hours’
prior notice to the Company, shall be delivered by or on behalf of
the Company to the Underwriters, through the facilities of the
Depository Trust Company (“DTC”), for the accounts of
such Underwriters, against payment by or on behalf of the
Underwriter of the purchase price therefor by wire transfer of
federal (same-day) funds to the account specified by the Company to
McDonald Investments Inc. at least forty-eight hours in advance.
The Company will cause the certificates representing the Securities
to be made available for checking and packaging at least
twenty-four hours prior to the Delivery Date (as defined below)
with respect thereto at a location in New York, New York as may be
designated by you or at the office of DTC or its designated
custodian. The date of such delivery and payment shall be, with
respect to the Firm Securities, December 21, 2006 or such
other
12
time and date as the Representative
and the Company may agree upon in writing and, with respect to the
Optional Securities, on the date specified by the Representative in
the written notice given by the Representative of its election to
purchase such Optional Securities or such date as the
Representative and the Company may agree upon in writing. Such date
for delivery of the Common Stock is herein called the “First
Delivery Date,” such date for delivery of the Optional
Securities, if not the First Delivery Date, is herein called an
“Optional Delivery Date,” and each such date for
delivery is herein called a “Delivery Date.”
(e)
Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligations of the Underwriters
hereunder.
3.
Certain Agreements of the
Company . The Company
covenants and agrees with each of the Underwriters:
(a)
To furnish such information as may
be required and otherwise to cooperate in qualifying the Securities
for offering and sale under the securities or blue sky laws of such
jurisdictions (both domestic and foreign) as the Representative may
designate and to maintain such qualifications in effect as long as
requested by the Representative for the distribution of the
Securities, provided that the Company shall not be required to
qualify as a foreign corporation or to consent to the service of
process under the laws of any such state (except service of process
with respect to the offering and sale of the
Securities).
(b)
If, after the time this Agreement is
executed and delivered, it is necessary for a post-effective
amendment to the Registration Statement to be declared effective
before the offering of the Securities may commence, to endeavor to
cause such post-effective amendment to become effective as soon as
possible and to advise the Representative promptly and, if
requested by the Representative, to confirm such advice in writing,
when such post-effective amendment has become effective.
(c)
To prepare the Prospectus in a form
approved by the Representative and to file such Prospectus pursuant
to Rule 424(b) under the Securities Act Regulations not later than
the Commission’s close of business on the second business day
following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Securities Act Regulations; during the period beginning
on the date of this Agreement and ending on the date, which in the
opinion of counsel for the Underwriters, a prospectus is no longer
required by law to be delivered in connection with the offering and
sales of the Securities, to make no further amendment or any
supplement to the Registration Statement or Prospectus, which shall
be disapproved by the Representative promptly after reasonable
notice thereof; to advise the Representative, promptly after it
receives notice thereof, of the time when any amendment to the
Registration Statement has been file
