Execution Copy
Underwriting Agreement
2,250,000 Shares
Carrizo Oil & Gas, Inc.
Common
Stock
($.01
Par Value)
UNDERWRITING AGREEMENT
February 14, 2008
RBC
Capital Markets Corporation
J.P. Morgan Securities Inc.
As the Representatives of the several underwriters named in
Schedule I hereto
c/o RBC Capital Markets Corporation
One Liberty Plaza, 165 Broadway
New York, NY 10006-1404
Ladies
and Gentlemen:
Carrizo
Oil & Gas, Inc., a Texas corporation (the
“Issuer”), proposes to sell to the several underwriters
(the “Underwriters”) named in Schedule I hereto,
for whom RBC Capital Markets Corporation (“RBC”) and
J.P. Morgan Securities Inc. (“JPMorgan”) are acting as
Representatives (the “Representatives”), an aggregate
of 2,250,000 (the “Firm Securities”) shares of the
Issuer’s common stock, $.01 par value per share (the
“Common Stock”). The respective amounts of the Firm
Securities to be so purchased by the several Underwriters are set
forth opposite their names in Schedule I hereto. The Issuer
also proposes to sell to the Underwriters at the
Underwriters’ option an aggregate of up to 337,500 additional
shares of the Common Stock (the “Option Securities”) as
set forth below.
As the
Representatives, RBC and JPMorgan have advised the Issuer that
(a) they are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) the several Underwriters
are willing, acting severally and not jointly, to purchase the
numbers of Firm Securities set forth opposite their respective
names in Schedule I, plus their pro rata portion of the Option
Securities if the Representatives elect to exercise the
over-allotment option in whole or in part for the accounts of the
several Underwriters. The Firm Securities and the Option Securities
(to the extent the aforementioned option is exercised) are herein
collectively called the “Shares.”
The
Issuer has filed a registration statement on Form S-3 (File
No. 333-142346) with respect to the Shares, including a base
prospectus (the “Base Prospectus”) to be used in
connection with the public offering and sale of the Shares,
pursuant to the Securities Act of 1933, as amended (the
“Securities Act”), and the rules and regulations (the
“Rules and Regulations”) of the United States
Securities and Exchange Commission (the “Commission”)
thereunder. As used in this Agreement, “Effective Time”
means the date and the time as of which such registration
statement, or the most recent post-effective amendment thereto, if
any, became effective; “Effective Date” means the date
of the Effective Time; “Registration Statement” means
such registration statement, as amended at the Effective Time,
including all information deemed to be a part of the registration
statement pursuant to Rule 430A, 430B or 430C under the
Securities Act and the Rules and Regulations; “Preliminary
Prospectus” means any preliminary prospectus relating to the
Shares included in such registration statement or filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations,
including any preliminary prospectus supplement thereto relating to
the Shares; “Prospectus Supplement” means the
prospectus supplement to be filed promptly after the date hereof
pursuant to Rule 424 and describing the Shares and the
offering thereof (the “Prospectus Supplement”);
“Prospectus” means the Prospectus Supplement, together
with the Base Prospectus, in the form first used by the
Underwriters to confirm sales of the Shares or in the form first
made available to the Underwriters by the Issuer to meet requests
of purchasers pursuant to Rule 173 under the Securities Act;
“Free Writing Prospectus” means any “free writing
prospectus” as defined in Rule 405 under the Securities
Act relating to the Shares; “Issuer Free Writing
Prospectus” means any “issuer free writing
prospectus” as defined in Rule 433 under the Securities
Act relating to the Shares; and “Disclosure Package”
means the Base Prospectus, as amended or supplemented immediately
prior to the Applicable Time, including the most recent Preliminary
Prospectus, together with the Issuer Free Writing Prospectuses
identified on Schedule II hereto, if any, and the information
agreed to by the Issuer and the Representatives as the information
to be conveyed orally by the Underwriters to purchasers of the
Shares at the Applicable Time, as set forth on Schedule III.
For purposes of clarity, any free writing prospectus, as defined in
Rule 405 under the Securities Act, relating to the Issuer or
the Shares that was prepared by or on behalf of or used by an
offering participant other than the Issuer (without regard to
whether the conditions set forth in Rule 433 are satisfied
with respect thereto) (each, an “Offering Participant Free
Writing Prospectus”) shall be excluded from the definitions
of Registration Statement, Base Prospectus, Prospectus Supplement,
Preliminary Prospectus, Prospectus, Free Writing Prospectus, Issuer
Free Writing Prospectus and Disclosure Package. For the purposes of
this Agreement, the “Applicable Time” is 8:30 a.m.
(Eastern time) on the date of this Agreement. Any reference herein
to the Registration Statement, any Preliminary Prospectus, the Base
Prospectus, the Prospectus Supplement or the Prospectus shall be
deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were
filed under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), on or before the Effective Date of the
Registration Statement, the date of such Preliminary Prospectus,
the date of such Base Prospectus, the date of such Prospectus
Supplement or the date of the Prospectus, as the case may be, and
any reference herein to the terms “amend,”
“amendment” or “supplement” with respect to
the Registration Statement, the Base Prospectus, the Prospectus
Supplement or the Prospectus shall be deemed to refer to and
include (i) the filing of any document under the Exchange Act
after the Effective Date of the Registration Statement, the date of
such Preliminary Prospectus, the date of such Base Prospectus, the
date of such Prospectus Supplement or the date of the Prospectus,
as the case may be, which is incorporated therein by reference and
(ii) any such document so filed. For purposes of this
Agreement, all
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references to the Registration Statement, any Preliminary
Prospectus, the Base Prospectus, the Prospectus Supplement, the
Prospectus or Issuer Free Writing Prospectus or to any amendment or
supplement thereto shall be deemed to include any copy filed with
the Electronic Data Gathering Analysis and Retrieval System, or
EDGAR.
In
consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby,
the parties hereto agree as follows:
1. Representations and Warranties of the
Issuer.
The
Issuer represents and warrants to each of the Underwriters as
follows:
(a) The
Registration Statement has been filed with the Commission under the
Securities Act and has become effective under the Securities Act.
The Registration Statement is an “automatic shelf
registration statement” as defined under Rule 405 of the
Securities Act that has been filed with the Commission not earlier
than three years prior to the date hereof; and no notice of
objection of the Commission to the use of such registration
statement or any post-effective amendment thereto pursuant to
Rule 401(g)(2) under the Securities Act has been received by
the Issuer. No stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such
purpose are pending before or, to the knowledge of the Issuer,
threatened by the Commission. The Commission has not issued any
order preventing or suspending the use of the Prospectus or any
Issuer Free Writing Prospectus. Copies of the Registration
Statement and each of the amendments thereto have been delivered by
the Issuer to the Representatives (provided that availability of
the Registration Statement and each amendment on EDGAR shall
constitute delivery so long as the EDGAR copy is substantially
identical except as permitted by Regulation S-T). The
Registration Statement conforms, and any further amendments or
supplements to the Registration Statement will conform at the time
they become effective or are filed with the Commission, in all
material respects to the requirements of the Securities Act and the
Rules and Regulations. The Prospectus, as of its date, will conform
and, as it may be further supplemented by filings with the
Commission, will conform, on the Closing Date (as defined below)
and each Option Closing Date (as defined below), in all material
respects to the requirements of the Securities Act and the Rules
and Regulations. As of the Effective Date, the date hereof, the
Closing Date (as defined below) and each Option Closing Date (as
defined below), if any, the Registration Statement, and any
post-effective amendments, do not 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; the Prospectus, as of its date, will not,
and, on the Closing Date and each Option Closing Date, as amended
or supplemented by filings with the Commission, will not, contain
an 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; and 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 to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Notwithstanding the foregoing, none of the representations and
warranties set forth in this Section 1(a) shall apply to statements
or omissions in the Registration Statement, or the Prospectus, or
any amendment or supplement in reliance upon and in conformity with
written information furnished to the Issuer by any Underwriter
through RBC or JPMorgan expressly for use therein, such information
being listed in Section 13 below.
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(b) Other
than the Registration Statement, the Prospectus and the Disclosure
Package, the Issuer (including its agents and representatives,
other than the Underwriters in their capacity as such) has not
made, used, prepared, authorized, approved or referred to and will
not prepare, make, use, authorize, approve or refer to any Issuer
Free Writing Prospectus other than (i) any document not
constituting a prospectus pursuant to Section 2(a)(10)(a) of
the Securities Act or Rule 134 under the Securities Act or
(ii) the documents listed on Schedule II hereto, any
Issuer Free Writing Prospectus that constitutes a “road
show” (within the meaning specified in Rule 433 of the
Rules and Regulations) or any other written communications approved
in writing in advance by the Representatives. Each such Issuer Free
Writing Prospectus complied in all material respects with the
Securities Act, has been or will be (within the time period
specified in Rule 433) filed in accordance with the Securities
Act (to the extent required thereby) and, when taken together with
the most recent Preliminary Prospectus, the other Issuer Free
Writing Prospectuses identified on Schedule II and the
information to be conveyed orally as set forth on
Schedule III, such Issuer Free Writing Prospectus, did not,
and, when taken together with the Prospectus, the other Issuer Free
Writing Prospectuses identified on Schedule II and the
information to be conveyed orally as set forth on
Schedule III, at the Closing Date and as of the Option Closing
Date, as the case may be, 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; provided that
the Issuer makes no representation and warranty with respect to any
statements or omissions made in each such Issuer Free Writing
Prospectus in reliance upon and in conformity with information
relating to any Underwriter furnished to the Issuer in writing by
such Underwriter through the Representatives expressly for use in
such Issuer Free Writing Prospectus, it being understood and agreed
that the only such information furnished by any Underwriter
consists of the information described as such in Section 13 hereof;
provided , further , that the Issuer makes no
representation and warranty with respect to any statements or
omissions made in any Offering Participant Free Writing Prospectus,
including any issuer information (as defined in Rule 433 under
the Securities Act) therein. Each such Issuer Free Writing
Prospectus, as of its issue date and at all subsequent times
through the completion of the public offering and sale of the
Shares did not, does not and will not include any information that
conflicted, conflicts or will conflict with the information
contained in the Registration Statement or the Prospectus,
including any document incorporated by reference therein and any
Preliminary Prospectus deemed to be a part thereof that has not
been superseded or modified.
(c) The
documents incorporated by reference in the Registration Statement,
the most recent Preliminary Prospectus, the Prospectus and the
Disclosure Package, at the time they became effective or were filed
with the Commission, as the case may be, complied in all material
respects with the requirements of the Securities Act or the
Exchange Act, as applicable, and the Rules and Regulations
thereunder, and none of such documents, when read together with the
other information in the Disclosure Package, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or 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, the
Prospectus and the Disclosure Package, 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
Securities Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder and will not, when
read together with the other information in the Disclosure Package,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated
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therein
or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(d) The
financial statements of the Issuer (including all notes and
schedules thereto) included or incorporated by reference in the
Registration Statement, the Prospectus and the Disclosure Package
present fairly in all material respects the financial position of
the Issuer and its consolidated subsidiaries at the dates indicated
and the statement of operations, shareholders’ equity and
cash flows of the Issuer and its consolidated subsidiaries for the
periods specified; and such financial statements and related
schedules and notes thereto, have been prepared in conformity with
U.S. generally accepted accounting principles, consistently applied
throughout the periods involved. The summary and selected financial
data included in the Prospectus and the Disclosure Package present
fairly in all material respects the information shown therein as at
the respective dates and for the respective periods specified and
have been presented on a basis consistent with the consolidated
financial statements set forth in the Prospectus and the Disclosure
Package and other financial information.
(e) Pannell
Kerr Forster of Texas, P.C., which has certified certain financial
statements of the Issuer and delivered its opinion with respect to
the audited financial statements and schedules included or
incorporated by reference in the Registration Statement and the
Prospectus, is an independent registered public accounting firm
with respect to the Issuer within the meaning of the Securities
Act, the Exchange Act and the rules and regulations of the
Commission thereunder.
(f) The
Issuer and each of the subsidiaries of the Issuer listed in
Exhibit A hereto, which list includes all “significant
subsidiaries” as defined in Rule 405 of the Rules and
Regulations, (collectively, the “Subsidiaries”), is
duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation or
organization. The Issuer and each of its Subsidiaries is duly
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the
business conducted by it or location of the assets or properties
owned, leased or licensed by it requires such qualification, except
for such jurisdictions where the failure to so qualify individually
or in the aggregate would not have a material adverse effect on the
assets, properties, condition, financial or otherwise, or in the
results of operations, business affairs or business prospects of
the Issuer and its Subsidiaries considered as a whole (a
“Material Adverse Effect”); and to the Issuer’s
knowledge, no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or
qualification. Other than the Subsidiaries and as disclosed in the
Registration Statement, the Issuer does not own, directly or
indirectly, any shares of capital stock and does not have any other
equity or ownership or proprietary interest in any corporation,
partnership, association, trust, limited liability company, joint
venture or other entity.
(g) The
Issuer and each of its Subsidiaries has all requisite corporate
power and authority, and all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits of and from
all governmental or regulatory bodies or any other person or entity
(collectively, the “Permits”), to own, lease and
license its assets and properties and conduct its business, all of
which are valid and in full force and effect, except where the lack
of such Permits, individually or in the aggregate, would not have a
Material Adverse Effect. The Issuer and each of its Subsidiaries
has fulfilled and performed in all material respects all of its
material obligations with
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respect
to such Permits and no event has occurred that allows, or after
notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights
of the Issuer thereunder. Neither the Issuer nor any of its
Subsidiaries has received notice of any reservation or modification
of any such Permits or has any reason to believe that any such
Permits will not be reserved in the ordinary course, except as
would not have a Material Adverse Effect.
(h) Except
as disclosed in the Registration Statement, the Prospectus and the
Disclosure Package, the Issuer and each of its Subsidiaries has
(i) defensible title to all their interests in the oil and gas
properties described in the Registration Statement, the Prospectus
and the Disclosure Package as being owned or leased by them, title
investigations having been carried out by the Issuer in accordance
with customary practice in the oil and gas industry, and
(ii) good and marketable title to all other real property and
all personal property described in the Registration Statement, the
Prospectus and the Disclosure Package as being owned by them, in
each case free and clear of all liens, encumbrances, claims,
security interests and defects, except (A) such as would not
have a Material Adverse Effect, (B) security interests
securing loans under the Issuer’s senior secured revolving
credit facility and second lien credit facility,
(C) royalties, overriding royalties and other similar burdens
under oil and gas leases, (D) easements, restrictions,
rights-of-way and other matters that commonly affect oil and gas
properties and (E) liens and encumbrances under gas sales
contracts, geophysical exploration agreements, operating
agreements, farmout agreements, participation agreements,
unitization, pooling and commutation agreements, declarations and
orders 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. All property held under lease by the Issuer and its
Subsidiaries is held by them under valid, existing and enforceable
leases, free and clear of all liens, encumbrances, claims, security
interests and defects, except such as would not have a Material
Adverse Effect.
(i) There
are no legal governmental or regulatory proceedings or
investigations to which the Issuer or any of its Subsidiaries are
subject or which is pending or, to the knowledge of the Issuer,
threatened, against the Issuer or any of its Subsidiaries, which,
individually or in the aggregate, might have a Material Adverse
Effect, affect the consummation of this Agreement or which are
required to be disclosed in the Registration Statement, the
Prospectus and the Disclosure Package that are not so
disclosed.
(j) Subsequent
to the respective dates as of which information is given in the
Registration Statement, the Prospectus or the Disclosure Package,
except as described therein, (i) there has not been any
Material Adverse Effect; (ii) neither the Issuer nor any of
its Subsidiaries has sustained any loss or interference with its
assets, businesses or properties (whether owned or leased) from
fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree which
would have a Material Adverse Effect; and (iii) since the date
of the latest balance sheet included or incorporated by reference
in the Registration Statement, the Prospectus and the Disclosure
Package, neither the Issuer nor its Subsidiaries has
(A) issued any securities, other than shares issued pursuant
to employee benefit plans, qualified stock options plans or other
employee compensation plans or pursuant to outstanding options,
rights or warrants or incurred any liability or obligation, direct
or contingent, for borrowed money, except such liabilities or
obligations incurred in the ordinary course of business,
(B) entered into any transaction or incurred any liability or
obligation, direct or contingent that were not in the ordinary
course of business or (C) declared or
6
paid any
dividend or made any distribution on any shares of its stock or
redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or otherwise acquire any shares of its capital stock,
other than with respect to the acquisition of shares of its Common
Stock in connection with payment of taxes required in connection
with the exercise of options for the purchase of Common Stock or
the vesting of restricted stock.
(k) There
is no document, contract or other agreement required to be
described in the Registration Statement, Prospectus or the
Disclosure Package or to be filed as an exhibit to the Registration
Statement which is not described or filed as required by the
Securities Act or the Rules and Regulations. Each description of a
contract, document or other agreement in the Registration
Statement, the Prospectus and the Disclosure Package accurately
reflects in all material respects the terms of the underlying
contract, document or other agreement. Each contract, document or
other agreement described in the Registration Statement, the
Prospectus or the Disclosure Package or listed in the Exhibits to
the Registration Statement is in full force and effect and is valid
and enforceable by and against the Issuer or its Subsidiary, as the
case may be, in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar
laws relating to or affecting the enforcement of creditors’
rights generally and by general principles of equity or public
policy (regardless of whether enforcement is sought in a proceeding
at law or in equity). Neither the Issuer nor any of its
Subsidiaries, if a Subsidiary is a party, nor to the Issuer’s
knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under
any such agreement, and no event has occurred which with notice or
lapse of time or both would constitute such a default, in any such
case which default or event, individually or in the aggregate,
would have a Material Adverse Effect. No default exists, and no
event has occurred which with notice or lapse of time or both would
constitute a default, in the due performance and observance of any
term, covenant or condition, by the Issuer or its Subsidiary, if a
Subsidiary is a party thereto, of any other agreement or instrument
to which the Issuer or any of its Subsidiaries is a party or by
which Issuer or its properties or business or a Subsidiary or its
properties or business may be bound or affected which default or
event, individually or in the aggregate, would have a Material
Adverse Effect.
(l) Neither
the Issuer nor any of its Subsidiaries is (i) in violation of
any term or provision of its charter or Bylaws or similar
organizational documents or (ii) in violation of any
franchise, license, permit, judgment, decree, order, statute, rule
or regulation, where the consequences of such violation in this
subsection (ii), individually or in the aggregate, would have a
Material Adverse Effect.
(m) Neither
the execution, delivery and performance of this Agreement by the
Issuer nor the consummation of any of the transactions contemplated
hereby (including, without limitation, the issuance and sale by the
Issuer of the Shares) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with
or result in the breach of any term or provision of, or constitute
a default (or an event which with notice or lapse of time or both
would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge
or encumbrance upon any properties or assets of the Issuer or its
Subsidiaries pursuant to the terms of, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Issuer
or any of its Subsidiaries is a party or by which either the Issuer
or its Subsidiaries or any of their properties or businesses is
bound, or any franchise, license, permit,
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judgment, decree, order, statute, rule or regulation applicable to
the Issuer or any of its Subsidiaries or violate any provision of
the charter or Bylaws of the Issuer or any of its Subsidiaries,
except for such consents or waivers which have already been
obtained and are in full force and effect and except as would not
have a Material Adverse Effect.
(n) The
Issuer has authorized and outstanding capital stock as set forth
under the captions “Capitalization” and
“Description of Capital Stock” in the Prospectus and
the Disclosure Package. The certificates evidencing the Shares are
in due and proper legal form and have been duly authorized for
issuance by the Issuer. All of the issued and outstanding shares of
Common Stock have been duly and validly issued and are fully paid
and nonassessable. There are no statutory preemptive or other
similar rights to subscribe for or to purchase or acquire any of
the Shares or any such rights pursuant to its articles of
incorporation or Bylaws or any agreement or instrument to or by
which the Issuer or any of its Subsidiaries is a party or bound.
The Shares have been duly authorized by the Issuer and when issued
and sold pursuant to this Agreement will be duly and validly
issued, fully paid and nonassessable and none of them will be
issued in violation of any preemptive or other similar right.
Except as disclosed in the Registration Statement, the Prospectus
and the Disclosure Package, there is no outstanding option, warrant
or other right calling for the issuance of, and there is no
commitment, plan or arrangement to issue, any share of stock of the
Issuer or any of its Subsidiaries or any security convertible into,
or exercisable or exchangeable for, such stock. The Common Stock
and the Shares conform in all material respects to all statements
in relation thereto contained in the Registration Statement, the
Prospectus and the Disclosure Package. All outstanding shares of
capital stock of each of the Issuer’s Subsidiaries have been
duly authorized by all necessary corporate action and validly
issued, and are fully paid and nonassessable and are owned directly
by the Issuer or by another wholly-owned Subsidiary of the Issuer
free and clear of any security interests, liens, encumbrances,
equities or claims, other than those described in the Registration
Statement, the Prospectus and the Disclosure Package.
(o) No
holder of any security of the Issuer has any right, which has not
been waived or satisfied, to have any security owned by such holder
included in the Registration Statement or to demand registration of
any security owned by such holder. Each director and executive
officer of the Issuer has delivered to the Representatives his
enforceable written lock-up agreement in the form attached to this
Agreement as Exhibit B hereto (each, a “Lock-Up
Agreement”).
(p) All
necessary corporate action has been duly and validly taken by the
Issuer to authorize the execution, delivery and performance of this
Agreement and the issuance and sale of the Shares by the Issuer.
This Agreement has been duly and validly authorized by all
necessary corporate action, executed and delivered by the Issuer
and constitutes and will constitute legal, valid and binding
obligations of the Issuer enforceable against the Issuer in
accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws relating to or
affecting the enforcement of creditors’ rights generally and
by general principles of equity or public policy (regardless of
whether enforcement is sought in a proceeding at law or in
equity).
(q) Neither
the Issuer nor any of its Subsidiaries is involved in any labor
dispute nor, to the knowledge of the Issuer, is any such dispute
threatened, which dispute would have a Material Adverse Effect. The
Issuer is not aware of any existing or imminent labor disturbance
by
8
the
employees of any of its principal suppliers or contractors which
would have a Material Adverse Effect. The Issuer is not aware of
any threatened or pending litigation between the Issuer or its
Subsidiaries and any of its executive officers which, if adversely
determined, could have a Material Adverse Effect and has no reason
to believe that such officers will not remain in the employment of
the Issuer.
(r) No
transaction has occurred between or among the Issuer and any of its
officers or directors, shareholders or any affiliate or affiliates
of any such officer or director or shareholder that is required to
be described in and is not described in the Registration Statement,
the Prospectus and the Disclosure Package.
(s) The
Issuer has not taken, nor will it take, directly or indirectly, any
action designed to or which might reasonably be expected 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 Common Stock or any security of the Issuer to
facilitate the sale or resale of any of the Shares.
(t) The
Issuer and each of its Subsidiaries has filed all federal, state,
local and foreign tax returns which are required to be filed
through the date hereof, except where the failure to so file would
not have a Material Adverse Effect, which returns are true and
correct in all material respects or has received timely extensions
thereof, and has paid all taxes shown on such returns and all
assessments received by it to the extent that the same are material
and have become due, except for such taxes as are being contested
in good faith and except as would not result in a Material Adverse
Effect. There are no tax audits or investigations pending, which if
adversely determined would have a Material Adverse Effect; nor are
there any material proposed additional tax assessments against the
Issuer or any of its Subsidiaries.
(u) The
Issuer 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 the listing of the Common Stock on The Nasdaq
Stock Market, nor has the Issuer received any notification that the
Commission or The Nasdaq Stock Market is contemplating terminating
such registration or listing.
(v) The
books, records and accounts of the Issuer and its Subsidiaries
accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the
results of operations of, the Issuer and its Subsidiaries. The
Issuer and each of its Subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with
management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset
accountability, (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 the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(w) The
written engineering reports prepared by (i) Ryder Scott
Company, L.P., (ii) Fairchild & Wells, Inc. and
(iii) LaRoche Petroleum Consultants, Ltd. (together, the
“Independent Petroleum Engineers”), as of
December 31, 2006 and 2007, respectively, setting forth the
engineering values attributed to the oil and gas properties of the
Issuer and its Subsidiaries accurately reflect in all material
respects the ownership interests of the Issuer and its subsidiaries
in
9
the
properties therein as of December 31, 2006 and 2007,
respectively, except as otherwise disclosed in the Registration
Statement, the Prospectus and the Disclosure Package. The
information furnished by the Issuer to the Independent Petroleum
Engineers for purposes of preparing their reports, 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; each of
the Independent Petroleum Engineers, who prepared estimates of the
extent and value of proved oil and natural gas reserves, are
independent with respect to the Issuer.
(x) The
Issuer and its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are customary in the businesses in which they are
engaged or propose to engage after giving effect to the
transactions described in the Prospectus and the Disclosure
Package; all policies of insurance and fidelity or surety bonds
insuring the Issuer or any of its Subsidiaries or the
Issuer’s or its Subsidiaries’ respective businesses,
assets, employees, officers and directors are in full force and
effect; the Issuer and each of its Subsidiaries are in compliance
with the terms of such policies and instruments in all material
respects; and neither the Issuer nor any Subsidiary of the Issuer
has 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 from similar insurers as may be necessary
to continue its business at a cost that is not materially greater
than the current cost, except as would not have a Material Adverse
Effect.
(y) Each
approval, consent, order, authorization, designation, declaration
or filing of, by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and
delivery by the Issuer of this Agreement and the consummation of
the transactions herein contemplated required to be obtained or
performed by the Issuer (except such additional steps as may be
necessary to qualify the Shares for public offering by the
Underwriters under the state securities or blue sky laws and except
for the filing of any issuer information contained in any Offering
Participant Free Writing Prospectus) has been obtained or made and
is in full force and effect, except as would not have a Material
Adverse Effect.
(z) There
are no affiliations with the NASD among the Issuer’s
officers, directors or, to the knowledge of the Issuer, any five
percent or greater shareholder of the Issuer, except as set forth
in the Prospectus or the Disclosure Package or otherwise disclosed
in writing to the Representatives.
(aa) Except
as described in the Registration Statement, the Prospectus and the
Disclosure Package, (i) each of the Issuer and each of its
Subsidiaries is in compliance in all material respects with all
rules, laws and regulations relating to the use, treatment, storage
and disposal of toxic substances and protection of health or the
environment (“Environmental Law”) which are applicable
to its business; (ii) neither the Issuer nor its Subsidiaries
has received any notice from any governmental authority or third
party of an asserted claim under Environmental Laws, which claim if
determined adverse to the Issuer or any Subsidiary could have a
Material Adverse Effect; (iii) each of the Issuer and each of
its Subsidiaries has received all material permits, licenses or
other approvals required of it under applicable Environmental Laws
to conduct its business and is in compliance with all terms and
conditions of any such permit, license or approval,
10
except
where the absence of such permit, license, approval or compliance
would not result in a Material Adverse Effect; (iv) to the
Issuer’s knowledge, no facts currently exist that will
require the Issuer or any of its Subsidiaries to make future
material capital expenditures to comply with Environmental Laws;
(v) no property which is or has been owned, leased or occupied
by the Issuer or its Subsidiaries has been designated as a
Superfund site pursuant to the Comprehensive Environmental
Response, Compensation of Liability Act of 1980, as amended (42
U.S.C. Section 9601, et. seq.) (“CERCLA”) or
otherwise designated as a contaminated site under applicable state
or local law; (vi) neither the Issuer nor any of its
Subsidiaries has been named as a “potentially responsible
party” under CERCLA; (vii) there has been no storage,
disposal, generation, transportation, handling or treatment of
hazardous substances or solid wastes by the Issuer (or to the
knowledge of the Issuer, any of its predecessors in interest) at,
upon or from any of the property now or previously owned or leased
by the Issuer in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would
require remedial action by the Issuer under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit,
except for any violation or remedial action which would not result
in, or which would not be reasonably likely to result in,
singularly or in the aggregate with all such violations and
remedial actions, a Material Adverse Effect; and (viii) there
has been no spill, discharge, leak, emission, injection, escape,
dumping or release of any kind onto such property or into the
environment surrounding such property of any solid wastes or
hazardous substances due to or caused by the Issuer, except for any
spill, discharge, leak, emission, injection, escape, dumping or
release which would not result in or would not be reasonably likely
to result in, singularly or in the aggregate will all such spills,
discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms “hazardous
substances” and “solid wastes” shall have the
meanings specified in any applicable local, state and federal laws
or regulations with respect to environmental protection.
(bb) In
the ordinary course of its business, the Issuer periodically
reviews the effect of Environmental Laws on the business,
operations and properties of the Issuer and its Subsidiaries, in
the course of which the Issuer identifies and evaluates associated
costs and liabilities (including, without limitation, any capital
or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws, or any permit,
license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the
basis of such review, the Issuer has reasonably concluded that such
associated costs and liabilities would not, singly or in the
aggregate, have a Material Adverse Effect.
(cc) The
Issuer is not and, after giving effect to the offering and sale of
the Shares and the application of proceeds thereof as described in
the Prospectus and the Disclosure Package, will not be an
“investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder (collectively, the
“1940 Act”).
(dd) The
principal executive officer and principal financial officer of the
Issuer have made all certifications required by the Sarbanes-Oxley
Act of 2002 (the “Sarbanes-Oxley Act”) or any related
rules and regulations promulgated by the Commission, and the
statements contained in any such certification are true and correct
in all material respects. The Issuer maintains “disclosure
controls and procedures” (as defined in Rules 13a-15(e)
and 15d-15(e) of the Exchange Act), and such controls and
procedures are designed (i) to ensure that information
required to be disclosed by the Issuer in the reports that it files
or submits under the Exchange Act is recorded,
11
processed, summarized and reported, within the time periods
specified in the Commission’s rules and forms and
(ii) to ensure that information required to be disclosed by
the Issuer in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Issuer’s
management, including its principal executive officer and principal
financial officer, as appropriate to allow timely decisions
regarding required disclosure. Except as set forth in the
Preliminary Prospectus and the Prospectus, the Issuer does not have
any material weaknesses in internal controls, and there has been no
material fraud that involves management or other employees who have
a significant role in the Issuer’s internal controls. The
Issuer is otherwise in compliance in all material respects with all
applicable effective provisions of the Sarbanes-Oxley Act and the
rules and regulations promulgated by the Commission (and intends to
comply with all applicable provisions that are not yet effective
upon effectiveness). The Issuer’s auditors and the Audit
Committee of the Board of Directors of the Issuer have been advised
of: (i) all significant deficiencies and material weaknesses
in the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect the
Issuer’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 Issuer’s internal controls over
financial reporting.
(ee) The
Issuer and its Subsidiaries maintain systems of “internal
control over financial reporting” (as defined in
Rule 13a-15(f) of the Exchange Act) that comply with the
requirements of the Exchange Act and have been designed by, or
under the supervision of, their respective principal executive and
principal financial officers, or persons performing similar
functions, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles, including, but not limited to
internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset
accountability; (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 the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(ff) The
Issuer or any other person associated with or acting on behalf of
the Issuer including, without limitation, any director, officer,
agent or employee of the Issuer or its Subsidiaries, has not,
directly or indirectly, while acting on behalf of the Issuer or its
Subsidiaries (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
relating to political activity; (ii) made any unlawful payment
to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from corporate
funds; (iii) violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any other
unlawful payment.
(gg) The
operations of the Issuer and its Subsidiaries are and have been
conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental
agency (collectively, the “Money Laundering Laws”) and
no action, suit or proceeding by or before
12
any
court or governmental agency, authority or body or any arbitrator
involving the Issuer or any of its subsidiaries with respect to the
Money Laundering Laws is pending or, to the best knowledge of the
Issuer, threatened.
(hh) None
of the Issuer, any of its Subsidiaries or, to the knowledge of the
Issuer, any director, officer, agent, employee or Affiliate of the
Issuer or any of its subsidiaries is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of
the U.S. Department of the Treasury (“OFAC”); and the
Issuer will not directly or indirectly use the proceeds of the
offering of the Shares hereunder, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture
partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions
administered by OFAC.
(ii) Neither
the Issuer nor any of its Subsidiaries is a party to any contract,
agreement or understanding with any person (other than this
Agreement) that would give rise to a valid claim against the Issuer
or any of its Subsidiaries or any Underwriter for a brokerage
commission, finder’s fee or like payment in connection with
the offering and sale of the Shares.
(jj) Except
as described in the Prospectus and the Disclosure Package or in the
documents incorporated by reference into the Prospectus and the
Disclosure Package, the Issuer 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, qualified stock options
plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants.
(kk) The
Issuer has fulfilled its obligations, if any, under the minimum
funding standards of Section 302 of the U.S. Employee
Retirement Income Security Act of 1974 (“ERISA”) and
the regulations and published interpretations thereunder with
respect to each “plan” as defined i
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