450,000 Common Shares
Common Stock, Par Value $0.10 Per Share
Double Eagle Petroleum Co.
FERRIS, BAKER
WATTS, INCORPORATED
100 Light Street
Baltimore, Maryland 21202
Introductory. Double Eagle Petroleum Co., a Maryland
corporation (the “ Company ”), proposes to issue
and sell to Ferris, Baker Watts, 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 (“ EDGAR ”) 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 EDGAR (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 — Hein &
Associates LLP . The accountants, Hein & 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,
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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, Sewell & Associates, an independent
petroleum engineering consulting firm (“ Netherland
Sewell ”), 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
Sewell 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 Sewell dated April 7, 2006; Netherland
Sewell 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)
Sarbanes-Oxley . The principal executive officer and
principal financial officer of the Company have made all
certifications required by the Sarbanes-Oxley 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
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