ENCORE ACQUISITION
COMPANY
Barclays
Capital Inc.
745 Seventh Avenue
New York, New York 10019
Introductory . Encore Acquisition Company, a Delaware
corporation (the “ Company ”), proposes to issue
and sell to Barclays Capital Inc. (the “ Underwriter
”) the number of shares of Common Stock, $0.01 par value
(“ Common Stock ”), of the Company set forth in
Exhibit A hereto (said shares of Common Stock being
hereinafter referred to as the “ Securities ”).
The Company is not granting to the Underwriter any option to
purchase any additional shares of Common Stock in connection with
this offering. The use of the neuter in this Underwriting Agreement
(the “ Agreement ”) shall include the feminine
and masculine wherever appropriate.
1.
Representations and Warranties . The Company represents and
warrants to, and agrees and covenants with, the Underwriter
that:
(a) General for
Registration Statement, Prospectus and Disclosure Package . An
automatic shelf registration statement on Form S-3 (File
No. 333-158680) (the “ Initial Registration
Statement ”), including a base prospectus in respect of
the Securities, has been filed with the Securities and Exchange
Commission (the “ Commission ”) and became
effective upon filing under Rule 462(e) under the Securities Act of
1933, as amended (the “ Securities Act ”); the
base prospectus included in the Initial Registration Statement at
the time the Initial Registration Statement became effective is
hereinafter called the “ Base Prospectus ”; no
other document with respect to the Initial Registration Statement
or document incorporated by reference therein has heretofore been
filed or transmitted for filing with the Commission (other than
prospectuses and prospectus supplements filed pursuant to Rule
424(b) of the rules and regulations of the Commission under the
Securities Act, each in the form heretofore delivered or made
available to you); and no stop order suspending the effectiveness
of the Initial Registration Statement or any post-effective
amendment thereto has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission; the
various parts of the Initial Registration Statement as amended at
the Applicable Time (as defined below), including all exhibits
thereto (other than Form T-1), the documents incorporated by
reference in the Base Prospectus contained therein and any
information included in any prospectus supplement that is filed
with the Commission pursuant to Rule 424(b) under the Securities
Act and deemed a part of the Initial Registration
Statement
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pursuant to
Rule 430B under the Securities Act, are hereinafter
collectively called the “ Registration Statement
”; the final prospectus supplement specifically relating to
the Securities, in the form first filed, or transmitted for filing,
with the Commission pursuant to Rule 424(b) under the Securities
Act, together with the Base Prospectus, is hereinafter called the
“ Prospectus ”; any reference herein to the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant Item 12 of Form S-3
under the Securities Act, as of the date of such Prospectus or as
of the Applicable Time, as the case may be; any reference to any
amendment or supplement to the Prospectus shall be deemed to refer
to and include any documents filed after the date of such
Prospectus under the Securities Exchange Act of 1934, as amended
(the “ Exchange Act ”), and incorporated by
reference in such Prospectus.
The term “
Disclosure Package ,” as used herein, shall mean
(i) the Base Prospectus used most recently prior to the
Applicable Time, as amended or supplemented at the Applicable Time,
(ii) any issuer free writing prospectuses as defined in
Rule 433 of the Securities Act (each, an “ Issuer
Free Writing Prospectus ”) identified in
Exhibit B hereto, (iii) any other “free writing
prospectus” (as defined in Rule 405 under the Securities
Act) that the parties hereto shall hereafter expressly agree in
writing to treat as part of the Disclosure Package (such Issuer
Free Writing Prospectus in clause (ii) and such other
“free writing prospectus” in clause (iii) referred
to herein as a “ Permitted Free Writing Prospectus
”) and (iv) the final pricing information identified in
Exhibit D hereto. The Company represents that it has
not made, and agrees that, unless it obtains the prior written
consent of the Underwriter, it will not make, any offer relating to
the Securities that constitutes or would constitute an Issuer Free
Writing Prospectus or that otherwise constitutes or would
constitute a “free writing prospectus” (as defined in
Rule 405 of the Securities Act) or a portion thereof required
to be filed by the Company with the Commission or retained by the
Company under Rule 433 of the Securities Act; provided that
the prior written consent of the Underwriter shall be deemed to
have been given in respect of the Free Writing Prospectuses
included in Exhibit B hereto and any electronic road
show. The Company agrees that (i) it has treated and will
treat, as the case may be, each Permitted Free Writing Prospectus
as an Issuer Free Writing Prospectus, and (ii) has complied
and will comply, as the case may be, with the requirements of
Rules 164 and 433 of the Securities Act applicable to any
Permitted Free Writing Prospectus, including in respect of timely
filing with the Commission, legending and record keeping. The
Company consents to the use by the Underwriter of a free writing
prospectus that (a) is not an “issuer free writing
prospectus” as defined in Rule 433, and
(b) contains only (i) information describing the
preliminary terms of the Securities or their offering,
(ii) information that describes the final terms of the
offering included in the final pricing information set forth on
Exhibit D hereto, or (iii) information permitted
under Rule 134 under the Securities Act; provided that the
Underwriter covenants with the Company not to take any action
without the Company’s prior written consent that would result
in the Company being required to file with the Commission under
Rule 433(d) under the Securities Act a free writing prospectus
prepared by or on behalf of such Underwriter or any other
“issuer information” (as defined in Rule 433 under
the Securities Act) contained in a free writing prospectus that
otherwise would not be required to be filed by the Company
thereunder, but for the action of the Underwriter;
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(b) S-3
Eligibility; Well-Known Seasoned Issuer and Not an Ineligible
Issuer. The Company meets and as of the effective date of the
Initial Registration Statement met, the requirements for use of
Form S-3 under the Securities Act. No order preventing or
suspending the use of the Registration Statement has been issued by
the Commission, and the Registration Statement, when it became
effective, conformed in all material respects to the requirements
of the Securities Act, and the rules and regulations of the
Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to the Company by you expressly for use therein. The
Company was at the time of the initial filing of the Registration
Statement and at the time the Company or any person acting on its
behalf (within the meaning, for this clause only, of Rule 163(c)
under the Securities Act) made any offer relating to the Securities
in reliance on the exemption of Rule 163 under the Securities
Act, and continues to be, a “well-known seasoned
issuer” (as defined in Rule 405 under the Securities
Act) eligible to use an “automatic shelf registration
statement” (as defined in Rule 405 under the Securities
Act) for the registration of the Securities, including not having
been an “ineligible issuer” (as defined in
Rule 405 under the Securities Act) at any such time or date.
The Company has not received from the Commission any notice
pursuant to Rule 401(g)(2) under the Securities Act objecting
to the use of the automatic shelf registration statement form. The
Registration Statement is not the subject of a pending proceeding
or examination under Section 8(d) or 8(e) of the Securities Act,
and the Company is not the subject of a pending proceeding under
Section 8A of the Securities Act in connection with the
offering of the Securities;
(c) Documents
Incorporated by Reference . The documents incorporated by
reference in the Disclosure Package and the Prospectus, when they
became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the
Exchange Act and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become
effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the
Exchange Act and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by you
expressly for use therein;
(d)
Registration Statement and Prospectus; No Material Misstatements
or Omissions . The Registration Statement and the Prospectus
conform or will conform, and any further amendments or supplements
thereto will conform, in all material respects to
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the
requirements of the Securities Act and the rules and regulations of
the Commission thereunder and do not and will not, as of the latest
effective date as to the Registration Statement and any amendment
thereto and as of its date, the date that it is filed with the
Commission and as of the Closing Date as to the Prospectus and any
amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein (in the
case of the Prospectus and any amendment or supplement thereto, in
the light of the circumstances under which they were made) not
misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to the Company by you expressly for use therein;
(e) Disclosure
Package . The Disclosure Package did not, as of 6:30 p.m.
(Eastern time) on the date of this Agreement (the “
Applicable Time ”), contain an untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that
this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by you expressly
for use therein;
(f) Issuer Free
Writing Prospectus and Disclosure Package . Each Issuer Free
Writing Prospectus (including, without limitation, any road show
that is a free writing prospectus under Rule 433), when
considered together with the Disclosure Package as of the
Applicable Time, did not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by you expressly for use
therein;
(g) Each Issuer
Free Writing Prospectus . Each Issuer Free Writing Prospectus
conformed or will conform in all material respects to the
requirements of the Securities Act and the rules and regulations of
the Commission thereunder on the date of first use, and the Company
has complied or will comply (within the time period specified in
Rule 433) with any filing requirements applicable to such
Issuer Free Writing Prospectus pursuant to such rules and
regulations. The Company has not made any offer relating to the
Securities that would constitute an Issuer Free Writing Prospectus
without the prior written consent of the Underwriter, except as set
forth on Exhibit B hereto. Each Issuer Free Writing
Prospectus does not and will not include any information that
conflicts with the information contained in the Registration
Statement or the Disclosure Package, including any document
incorporated therein and any prospectus supplement deemed to be a
part thereof that has not been superseded or modified; provided,
however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by you
expressly for use therein;
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(h) No Material
Loss or Interference . Neither the Company nor any of its
subsidiaries has sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Base Prospectus or the Prospectus any material loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as
set forth or contemplated in the Disclosure Package; and, since the
respective dates as of which information is given in the
Registration Statement, the Disclosure Package and the Prospectus,
there has not been any change in the capital stock or any material
increase in the long-term debt of the Company or any of its
subsidiaries (other than shares of Common Stock or common units of
Encore Energy Partners LP, a Delaware limited partnership (“
ENP ”), issued under equity incentive plans existing
as of the Applicable Time or common units of ENP issued in
registered public offerings) or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders’ equity or results of operations of the Company
and its subsidiaries, otherwise than as set forth or contemplated
in the Disclosure Package;
(i)
Incorporation and Good Standing of the Company . The Company
has been duly incorporated and is an existing corporation in good
standing under the laws of the State of Delaware, with power and
authority (corporate and other) to own its properties and conduct
its business as described in the Disclosure Package and the
Prospectus; and the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to
be so qualified would, individually or in the aggregate, not have a
material adverse effect on the condition (financial or other),
business, properties, earnings, assets, stockholders’ equity,
prospects or results of operations of the Company and its
subsidiaries taken as a whole (a “ Material Adverse
Effect ”);
(j)
Organization and Good Standing of Subsidiaries of the
Company . Each subsidiary of the Company has been duly
incorporated or organized and is an existing corporation, limited
partnership or limited liability company in good standing under the
laws of the jurisdiction of its incorporation or organization, with
power and authority (corporate and other) to own its properties and
conduct its business as described in the Disclosure Package and the
Prospectus; and each subsidiary of the Company is duly qualified to
do business as a foreign corporation, limited partnership or
limited liability company in good standing in all other
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where
the failure to be so qualified would not have a Material Adverse
Effect; all outstanding shares of capital stock of each subsidiary
that is a corporation have been duly and validly authorized and
issued and are fully paid and non-assessable, and the limited
partnership agreements or limited liability company agreements
governing all outstanding limited partnership interests or limited
liability company interests of each subsidiary that is a limited
partnership or limited liability company, as the case may be, have
been validly executed and delivered, and all capital contributions
required to be paid by the Company or an affiliate of the Company
under such limited partnership agreements or limited liability
company agreements have been paid in full (to the extent required
in the
5
applicable
limited partnership agreement or limited liability company
agreement); and each subsidiary’s capital stock, limited
partnership interests or limited liability company interests owned
by the Company, directly or through subsidiaries, is owned free
from liens, encumbrances and defects, except for liens under or
permitted by the Company’s Amended and Restated Credit
Agreement dated as of March 7, 2007, as amended (the “
EAC Credit Facility ”), among the Company, Encore
Operating, L.P., Bank of America, N.A., as Administrative Agent and
L/C Issuer, Fortis Capital Corp. and Wachovia Bank, N.A., as
Co-Syndication Agents, BNP Paribas and Caylon New York Branch, as
Co-Documentation Agents, and the other lenders party thereto and
the Credit Agreement dated as of March 7, 2007, as amended
(the “ OLLC Credit Facility ” and together with
the EAC Credit Facility, the “ Credit Facilities
”) by and among Encore Energy Partners Operating LLC, ENP,
Bank of America, N.A., as administrative agent and L/C Issuer, Banc
of America Securities LLC, as sole lead arranger and sole book
manager, and other lenders party thereto;
(k)
Authorization, Execution and Delivery of this Agreement .
This Agreement has been duly authorized, executed and delivered by
the Company;
(l)
Capitalization. As of September 4, 2009, the Company
has 52,794,207 shares of Common Stock issued and outstanding; all
the outstanding shares of capital stock of the Company have been
duly and validly authorized and issued and are fully paid and
nonassessable and are not subject to any pre-emptive or similar
rights; except as described in or expressly contemplated by the
Disclosure Package and the Prospectus, there are no outstanding
rights (including, without limitation, pre-emptive rights),
warrants or options (other than restricted stock and any options
granted or shares of Common Stock of the Company issued upon
exercise of options granted or to be granted under the
Company’s employee stock option plans existing as of the
Applicable Time) to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock or other equity
interest in the Company, or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance
of any capital stock of the Company, any such convertible or
exchangeable securities or any such rights, warrants or options
(other than restricted stock and any options granted or shares of
Common Stock of the Company issued upon exercise of options granted
or to be granted under the Company’s employee stock option
plans existing as of the Applicable Time); the capital stock of the
Company conforms in all material respects to the description
thereof contained in the Disclosure Package;
(m) Description
of the Securities. The statements set forth in the Base
Prospectus and the Prospectus under the captions “Description
of Capital Stock,” insofar as they purport to constitute a
summary of the terms of the Securities, and under the caption
“Underwriting,” insofar as it purports to describe the
provisions of the laws and documents referred to therein, are
accurate, complete and fair;
(n)
Non-Contravention of Existing Instruments. The execution,
delivery and performance by the Company of this Agreement, the
issuance and sale of the Securities, and the consummation of the
transactions contemplated herein and in the Disclosure Package and
the Prospectus (including the use of proceeds from the sale of the
Securities
6
as described in
the Disclosure Package and the Prospectus), and compliance with the
terms and provisions thereof do not and will not (i) conflict
with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any
rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or
any subsidiary of the Company or any of their properties, or any
agreement or instrument to which the Company or any such subsidiary
is a party or by which the Company or any such subsidiary is bound
or to which any of the properties of the Company or any such
subsidiary is subject, except for such breaches, violations and
defaults as would not have a Material Adverse Effect, or
(ii) result in any violation of the charter or by-laws of the
Company or any such subsidiary;
(o) No Further
Authorizations or Approvals Required. No consent, approval,
authorization, or order of, or registration or filing with, any
governmental agency or body or any court is required for the
consummation of the transactions contemplated by (i) this
Agreement in connection with the issuance and sale of the
Securities, or (ii) the issuance of the Securities, except
such as have been, or will have been prior to the Closing Date,
obtained under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the
Underwriter;
(p)
Commissions . Except as disclosed in the Disclosure Package
and the Prospectus, there are no contracts, agreements or
understandings between the Company or any subsidiary of the Company
and any person that would give rise to a valid claim against the
Company, any subsidiary of the Company or the Underwriter for a
brokerage commission, finder’s fee or other like payment with
respect to the offer and sale of the Securities;
(q) No
Violation of Charter, By-Laws or Other Agreement. Neither the
Company nor any of its subsidiaries is in violation of its
respective charter or by-laws or in default in the performance of
any obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or their
respective property is bound except where such violations or
defaults would not have a Material Adverse Effect;
(r) Title to
Properties. The Company and its subsidiaries have (1) good
and indefeasible title to all of their interests in the oil and gas
properties described in the Disclosure Package and the Prospectus,
(2) good and indefeasible title in fee simple to all other
real property owned by the Company or any of its subsidiaries and
(3) good title to all personal property owned by the Company
or any of its subsidiaries, in each case, free and clear of all
liens, encumbrances and defects, except (i) as described in
the Disclosure Package and the Prospectus, (ii) liens securing
taxes and other governmental charges, or claims of materialmen,
mechanics and similar persons, not yet due and payable,
(iii) liens and encumbrances under oil and gas leases, options
to lease, operating agreements, utilization and pooling agreements,
participation and drilling concessions agreements and gas sales
contracts, securing payment of amounts not yet due and payable and
of a scope
7
and nature
customary in the oil and gas industry, (iv) liens arising
under or permitted by the Credit Facilities or (v) liens,
encumbrances and defects that do not, individually or in the
aggregate, materially affect the value of such properties or
materially interfere with the use made or proposed to be made of
such properties by the Company or its subsidiaries; except as
described in the Disclosure Package and the Prospectus, the leases,
options to lease, drilling concessions or other arrangements held
by the Company and its subsidiaries reflect in all material
respects the right of the Company and its subsidiaries to explore
the unexplored and undeveloped acreage described in the Disclosure
Package and the Prospectus, and the care taken by the Company and
its subsidiaries with respect to acquiring or otherwise procuring
such leases, options to lease, drilling concessions and other
arrangements was generally consistent with standard industry
practices for acquiring or procuring leases to explore acreage for
hydrocarbons; and any real property and buildings held under lease
by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made or proposed to be
made of such real property and buildings by the Company or its
subsidiaries;
(s)
Insurance. The Company and its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their business and the value of their
respective properties as is customary for companies engaged in
similar businesses in similar industries; and neither the Company
nor any of its subsidiaries has (i) received notice from any
insurer or agent of such insurer that capital improvements or other
expenditures are required or necessary to be made in order to
continue such insurance or (ii) any reason to believe that it
will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage at
reasonable cost from similar insurers as may be necessary to
continue its business;
(t) Disclosure
of Relationships. Except as disclosed in the Disclosure Package
and the Prospectus, no relationship, direct or indirect, exists
between or among the Company or any of its subsidiaries on the one
hand, and the directors, officers, stockholders, customers or
suppliers of the Company or any of its subsidiaries on the other
hand, that are required by the Securities Act to be described in
the Disclosure Package and the Prospectus;
(u) All
Necessary Permits, etc. The Company and its subsidiaries
possess all licenses, franchises, certificates, permits, approvals,
consents and other authorizations (collectively, “
Governmental Licenses ”) issued by and have made all
declarations and filings with, the appropriate federal, state,
local or foreign governmental or regulatory authorities that are
necessary for the ownership or lease of their respective properties
or the conduct of their respective businesses as described in
Disclosure Package and the Prospectus except where the failure to
possess such Governmental Licenses or make such declaration and
filings would not, individually or in the aggregate, have a
Material Adverse Effect. The Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses except where the failure to so comply would not,
individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect; all of such Governmental Licenses are
valid and in full force and effect,
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except where
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not,
individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received notice of any revocation or modification
of any such license, certificate, permit or authorization or has
any reason to believe that any such Governmental Licenses will not
be renewed in the ordinary course, except for notices,
modifications or non-renewals as would not, individually or in the
aggregate, have a Material Adverse Effect;
(v) No Labor
Disturbances or Disputes . No labor disturbance or dispute with
employees of the Company or any of its subsidiaries exists or, to
the best knowledge of the Company, is contemplated or threatened,
which disturbance or dispute would have a Material Adverse
Effect;
(w)
Intellectual Property Rights . The Company and its
subsidiaries own, possess or can acquire on reasonable terms
adequate trademarks, trade names and other rights to inventions,
know-how, patents, copyrights, confidential information and other
intellectual property (collectively, “ intellectual
property rights ”) necessary to conduct the business now
operated by them, or presently employed by them, except where the
failure to own, possess or acquire such intellectual property
rights would not, individually or in the aggregate, have a Material
Adverse Effect, and have not received any notice of infringement of
or conflict with asserted rights of others with respect to any
intellectual property rights that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect;
(x)
Environmental Laws . Except as disclosed in the Disclosure
Package and the Prospectus, neither the Company nor any of its
subsidiaries is in violation of any statute, any rule, regulation,
decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “ environmental laws
”), owns or operates any real property contaminated with any
substance that is subject to any environmental laws, is liable for
any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material
Adverse Effect; and the Company is not aware of any pending
investigation which might lead to such a claim. Except as disclosed
in the Disclosure Package and the Prospectus, to the knowledge of
the Company, neither the Company nor any of its subsidiaries is
currently named as a “potentially responsible party”
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (“ CERCLA
”);
(y) No Material
Actions or Proceedings. Except as disclosed in the Disclosure
Package and the Prospectus, there are no pending actions, suits or
proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a Material Adverse
Effect, or would materially and
9
adversely
affect the ability of the Company to perform its obligations under
this Agreement, or which are otherwise material in the context of
the sale of the Securities; and no such actions, suits or
proceedings are, to the Company’s knowledge, threatened or
contemplated;
(z) Preparation
of Financial Statements. The financial statements and the notes
related thereto of the Company and its consolidated subsidiaries
included or incorporated by reference in the Disclosure Package and
the Prospectus present fairly in all material respects the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates shown and their results of operations
and changes in their consolidated cash flows for the periods shown,
and such financial statements have been prepared in conformity with
the generally accepted accounting principles in the United States
applied on a consistent basis; the assumptions used in preparing
any pro forma financial data included or incorporated by reference
in the Disclosure Package and the Prospectus provide a reasonable
basis for presenting the significant effects directly attributable
to the transactions or events described therein, the related pro
forma adjustments give appropriate effect to those assumptions, and
the pro forma data therein reflect the proper application of those
adjustments to the corresponding historical financial statement
amounts; and the other financial information included or
incorporated by reference in the Disclosure Package and the
Prospectus, including oil and gas production information, has been
derived from the accounting records of the Company and its
subsidiaries and presents fairly in all material respects the
information shown thereby;
(aa)
Independent Accountants. Ernst & Young LLP, who has
certified certain financial statements of the Company, is the
independent registered public accounting firm with respect to the
Company within the meaning of the Securities Act and the applicable
rules and regulations thereunder adopted by the Commission and the
Public Company Accounting Oversight Board;
(bb) Reserve
Engineer; Reserve Reports . Miller and Lents, Ltd. (the “
Engineer ”), whose reserve evaluations are referenced
or appear, as the case may be, in the Disclosure Package and the
Prospectus were, as of December 31, 2006, December 31,
2007 and December 31, 2008, and are, as of the date hereof,
independent engineers with respect to the Company; and the
historical information underlying the estimates of the reserves of
the Company supplied by the Company to the Engineer for the
purposes of preparing the reserve reports of the Company referenced
in the Disclosure Package and the Prospectus (the “
Reserve Reports ”), including, without limitation,
production volumes, sales prices for production, contractual
pricing provisions under oil or gas sales or marketing contracts or
under hedging arrangements, costs of operations and development,
and working interest and net revenue information relating to the
Company’s ownership interests in properties, was true and
correct on the date that each such Reserve Report was prepared in
all material respects in accordance with Commission rules and
customary industry practices; the reserve estimates relating to oil
and gas properties acquired by the Company from EXCO Resources,
Inc. and its subsidiaries on August 11, 2009 included in the
Disclosure Package and the Prospectus
10
have been
prepared by the Company in all material respects in accordance with
Commission rules and customary industry practices;
(cc) Company
Not an “Investment Company”. The Company is not an
open-end investment company, unit investment trust or face-amount
certificate company that is or is required to be registered under
Section 8 of the United States Investment Company Act of 1940
(the “ Investment Company Act ”); and the
Company is not, nor after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as
described in the Disclosure Package and the Prospectus will be, an
“investment company” or an entity
“controlled” by an “investment company,” as
such terms are defined in the Investment Company Act;
(dd)
Ratings . No “nationally recognized statistical rating
organization” as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act has notified the
Company that it is considering (i) the downgrading, suspension
or withdrawal of, or any review for a possible change that does not
indicate the direction of the possible change in, any rating
assigned to the Company or any securities of the Company or
(ii) any change with negative implications in the outlook for
any rating of the Company or any securities of the
Company;
(ee) Internal
Controls . The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance
with management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(ff)
Statistical and Market-Related Data . Nothing has come to
the attention of the Company that has caused the Company to believe
that the statistical and market-related data included or
incorporated by reference in the Disclosure Package and the
Prospectus is not based on or derived from sources that are
reliable and accurate in all material respects.
(gg) Internal
Controls and Procedures. The Company has established and
maintains disclosure controls and procedures (as such term is
defined in Rule 13a-15 and 15d-15 under the Exchange Act);
such disclosure controls and procedures are designed to ensure that
material information relating to the Company, including its
consolidated subsidiaries, is made known to the Company’s
principal executive officer and its principal financial officer by
others within those entities, and such disclosure controls and
procedures are effective at the reasonable assurance level to
perform the functions for which they were established; the
Company’s auditors and the Audit Committee of the Board of
Directors have been advised of: (i) any significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably
likely to adversely affect the Company’s ability to record,
process,
11
summarize, and
report financial information; and (ii) any fraud, whether or
not material, that involves management or other employees who have
a significant role in the Company’s internal control over
financial reporting; since the date of the most recent evaluation
of such disclosure controls and procedures, there has not been any
change in the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over
financial reporting; the principal executive officer and principal
financial officer of the Company have made all certifications
required by the Sarbanes-Oxley Act of 2002 (the “
Sarbanes-Oxley Act ”) and any related rules and
regulations promulgated by the Commission, and the statements
contained in any such certification are complete and correct; and
the Company is otherwise in compliance with all applicable
provisions of the Sarbanes-Oxley Act that are effective;
(hh) No
Preemptive Rights, Registration Rights, Options or Other
Rights. Except as disclosed in the Disclosure Package,
(i) no person has the right, contractual or otherwise, to
cause the Company to issue or sell to it the Securities or other
equity interests of the Company, (ii) no person has any
preemptive rights, rights of first refusal or other rights to
purchase any Securities or other equity interests of the Company,
(iii) there are no contracts, agreements or understandings
between the Company or any subsidiary 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 to require the Company to include such securities
with the Securities registered pursuant to the Registration
Statement;
(ii) Tax Law
Compliance. The Company and its subsidiaries have paid all
federal, state, local and foreign taxes and filed all tax returns
required to be paid or filed through the date hereof to the extent
that such taxes have become due and are not being contested in good
faith with such exceptions as would not singly or in the aggregate
result in a Material Adverse Effect; and except as otherwise
disclosed in the Disclosure Package and the Prospectus, there is no
tax deficiency that has been asserted against the Company or any of
its subsidiaries or any of their respective properties or assets
which has had, nor does the Company have any knowledge of any tax
deficiency, which if determined adversely to the Company or its
subsidiaries might have, a Material Adverse Effect;
(jj) No
Restrictions on Dividends. Except as described in the
Disclosure Package and the Prospectus, no subsidiary of the Company
is currently prohibited, directly or indirectly, under any
agreement or other instrument to which it is a party or is subject,
from paying any dividends to the Company, from making any other
distribution to the Company on such subsidiary’s capital
stock, from repaying to the Company any loans or advances to such
subsidiary from the Company or from transferring any of such
subsidiary’s properties or assets to the Company or any other
subsidiary of the Company;
(kk) Related
Party Transactions . The Company has not, directly or
indirectly, including through any subsidiary, extended credit,
arranged to extend credit, or renewed any extension of credit, in
the form of a personal loan, to or for any director or
executive
12
officer of the
Company or to or for any family member or affiliate of any director
or executive officer of the Company.
(ll) No
Stabilizing Transactions . Neither the Company nor any of its
Affiliates (as such term in defined in Rule 405 promulgated
under the Securities Act) has taken, directly or indirectly, any
action designed, or which has constituted or could reasonably be
expected to cause or result in the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Securities.
(mm) FINRA
Affiliations . To the knowledge of the Company, other than as
disclosed in the Disclosure Package and the Prospectus, there are
no affiliations or associations between (i) any member of the
Financial Industry Regulatory Authority (“ FINRA
”) and (ii) the Company, any of the Company’s
officers or directors, any 5% or greater securityholders of the
Company, or any beneficial owner of the Company’s
unregistered equity securities that were acquired at any time on or
after the 180th day immediately preceding the date the Registration
Statement was initially filed with the Commission.
2.
Purchase and Sale . Subject to the terms and conditions and
in reliance upon the representations and warranties herein set
forth, the Company agrees to sell to the Underwriter, and the
Underwriter agrees to purchase from the Company, the Securities set
forth opposite such Underwriter’s name on
Exhibit B , at a purchase price (the “
Purchase Price ”) of $36.66 per share of Common
Stock.
The Company will
deliver against payment of the Purchase Price the S
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