APPROACH RESOURCES INC. 5,750,000 Shares of Common Stock UNDERWRITING AGREEMENT
Exhibit 1.1
5,750,000 Shares of Common Stock
November 10, 2010
X.X. Xxxxxx Securities LLC
As Representative of the
several Underwriters listed
in Schedule 1 hereto
c/o X.X. Xxxxxx Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
As Representative of the
several Underwriters listed
in Schedule 1 hereto
c/o X.X. Xxxxxx Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Approach Resources Inc., a Delaware corporation (the “Company”), proposes to issue and sell to
the several Underwriters listed in Schedule 1 hereto (the “Underwriters”), for whom X.X. Xxxxxx
Securities LLC is acting as representative (the “Representative”), an aggregate of 5,750,000 shares
(the “Underwritten Shares”) of common stock, par value $0.01 per share, of the Company (“Common
Stock”). At the option of the Underwriters, the Company proposes to issue and sell up to an
additional 862,500 shares of Common Stock (the “Option Shares”). The Underwritten Shares and the
Option Shares are herein referred to as the “Shares.” The shares of Common Stock of the Company to
be outstanding after giving effect to the sale of the Shares are herein referred to as the “Stock.”
The Company hereby confirms its agreement with the several Underwriters concerning the
purchase and sale of the Shares, as follows:
1. Registration Statement. The Company has prepared and filed with the Securities and
Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder (collectively, the “Securities Act”), a registration
statement on Form S-3 (File No. 333-164371) including a prospectus, relating to the Shares. Such
registration statement, as amended at the time it became effective, including the information, if
any, deemed pursuant to Rule 430A, 430B or 430C under the Securities Act to be part of the
registration statement at the time of its effectiveness (“Rule 430 Information”), is referred to
herein as the “Registration Statement.” As used herein, the term “Preliminary Prospectus” means
each prospectus included in such registration statement (and any amendments thereto) before it
becomes effective, any prospectus filed with the Commission pursuant to Rule 424(a) under the
Securities Act and the prospectus included in the Registration Statement at the time of its
effectiveness that omits Rule 430 Information, and the term “Prospectus” means the prospectus in
the form first used (or made available upon request of purchasers pursuant to Rule 173 under the
Securities Act) in connection with confirmation of sales of the Shares. If the Company has filed an
abbreviated registration statement pursuant to Rule 462(b) under the Securities Act (the “Rule 462
Registration Statement”), then any
reference herein to the term “Registration Statement” shall be deemed to include such Rule 462
Registration Statement. Capitalized terms used but not defined herein shall have the meanings given
to such terms in the Registration Statement and the Prospectus.
At the Time of Sale (as defined below), the Company had prepared the following information
(collectively with the pricing information set forth on Annex B hereto, the “Time of Sale
Information”): a Preliminary Prospectus dated November 8, 2010 (the “Marketing Preliminary
Prospectus”), and each “free-writing prospectus” (as defined pursuant to Rule 405 under the
Securities Act), if any, listed on Annex B hereto. “Time of Sale” means 5:15 P.M. (New York, New
York time), on the date of this Agreement.
Any reference herein to the Registration Statement, the Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents that are or are deemed to be
incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act prior to
the Time of Sale. All references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” (or other references of like import) in
the Registration Statement, the Preliminary Prospectus or the Prospectus shall be deemed to mean
and include all such financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement, the Preliminary Prospectus or the
Prospectus, as the case may be, prior to the Time of Sale; and all references in this Agreement to
amendments or supplements to the Registration Statement, the Preliminary Prospectus or the
Prospectus shall be deemed to include the filing of any document under the Exchange Act, which is
or is deemed to be incorporated by reference in the Registration Statement, the Preliminary
Prospectus or the Prospectus, as the case may be, after the Time of Sale.
2. Purchase of the Shares by the Underwriters.
(a) (i) The Company agrees to issue and sell the Underwritten Shares to the
several Underwriters as provided in this Agreement, and each Underwriter, on the basis of
the representations, warranties and agreements set forth herein and subject to the
conditions set forth herein, agrees, severally and not jointly, to purchase from the Company
at a price per share of $15.4375 (the “Purchase Price”) the respective number of
Underwritten Shares set forth opposite such Underwriters’ name in Schedule 1 hereto.
(ii) In addition, the Company agrees to issue and sell the Option Shares to the
several Underwriters as provided in this Agreement, and each Underwriter, on the
basis of the representations, warranties and agreements herein contained and subject
to the conditions set forth herein, shall have the option to purchase, severally and
not jointly, from the Company at the Purchase Price the number of Option Shares
which bears the same ratio to the aggregate number of Option Shares being purchased
as the number of Underwritten Shares set forth opposite the name of such Underwriter
in Schedule 1 hereto (or such number increased as set forth in Section 10 hereof)
bears to the aggregate number of Underwritten Shares being purchased from the
Company by the several Underwriters, subject, however, to such adjustments to
eliminate any fractional Shares as the Representative in its sole discretion shall
make.
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(iii) The Underwriters may exercise the option to purchase the Option Shares at
any time in whole, or from time to time in part, on or before the thirtieth day
following the date of the Prospectus, by written notice from the Representative to
the Company; provided, however, that such option may be exercised only for the
purpose of covering any over-allotments that may be made by the Underwriters in the
sale of the Underwritten Shares. No Option Shares shall be sold or delivered unless
the Underwritten Shares previously have been, or simultaneously are, sold and
delivered. Such notice shall set forth the aggregate number of Option Shares as to
which the option is being exercised and the date and time when the Option Shares are
to be delivered and paid for, which may be the same date and time as the Closing
Date (as hereinafter defined) but shall not be earlier than the Closing Date nor
later than the tenth full business day (as hereinafter defined) after the date of
such notice (unless such time and date are postponed in accordance with the
provisions of Section 10 hereof). Any such notice shall be given at least two
business days prior to the date and time of delivery specified therein.
(b) The Company understands that the Underwriters intend to make a public offering of
the Shares as soon after the effectiveness of this Agreement as in the judgment of the
Representative is advisable, and initially to offer the Shares on the terms set forth in the
Prospectus. The Company acknowledges and agrees that the Underwriters may offer and sell
Shares to or through any affiliate of an Underwriter and that any such affiliate may offer
and sell Shares purchased by it to or through any Underwriter.
(c) (i) Payment for the Shares shall be made by wire transfer in immediately
available funds to the account specified by the Company to the Representative (A) in the
case of the Underwritten Shares, at the offices of Xxxxxxxx & Knight LLP, 0000 Xxxxx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxx 00000 at 9:00 A.M., Dallas, Texas time, on November 17, 2010, or
at such other time or place on the same or such other date, not later than the fifth
business day thereafter, as the Representative and the Company may agree upon in writing or
(B) in the case of the Option Shares, on the date and at the time and place specified by the
Representative in the written notice of the Underwriters’ election to purchase such Option
Shares. The time and date of such payment for the Underwritten Shares is referred to herein
as the “Closing Date,” and the time and date for such payment for the Option Shares, if
other than the Closing Date, is herein referred to as the “Additional Closing Date.”
(ii) Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery through
the facilities of the Depository Trust Company (“DTC”) to the Representative for the
respective accounts of the several Underwriters of the Shares to be purchased on
such date in definitive form registered in such names and in such denominations as
the Representative shall request in writing not later than two full business days
prior to the Closing Date or the Additional Closing Date, as the case may be, with
any transfer taxes payable in connection with the sale of the Shares duly paid by
the Company. Any certificates for the Shares will be made available for inspection
and packaging by the Representative at the office
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of DTC or its designated custodian not later than 1:00 P.M., Dallas time, on
the business day prior to the Closing Date or the Additional Closing Date, as the
case may be.
(d) The Company acknowledges and agrees that the Underwriters are acting solely in the
capacity of an arm’s length contractual counterparty to the Company with respect to the
offering of Shares contemplated hereby (including in connection with determining the terms
of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the
Company or any other person. Additionally, neither the Representative nor any other
Underwriter is advising the Company or any other person as to any legal, tax, investment,
accounting or regulatory matters in any jurisdiction. The Company shall consult with its own
advisors concerning such matters and shall be responsible for making its own independent
investigation and appraisal of the transactions contemplated hereby, and the Underwriters
shall have no responsibility or liability to the Company with respect thereto. Any review by
the Underwriters of the Company, the transactions contemplated hereby or other matters
relating to such transactions will be performed solely for the benefit of the Underwriters
and shall not be on behalf of the Company.
3. Representations and Warranties of the Company. The Company represents and warrants to
each Underwriter that:
(a) Preliminary Prospectus. No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and the Marketing Preliminary
Prospectus, at the time of filing thereof, complied in all material respects with the
Securities Act and did 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 Company makes no
representation and warranty with respect to any statements or omissions made in reliance
upon and in conformity with information relating to any Underwriter furnished to the Company
in writing by such Underwriter through the Representative expressly for use in any
Preliminary Prospectus, it being understood and agreed that the only such information
furnished by any Underwriter consists of the information described as such in Section 7(b)
hereof.
(b) Time of Sale Information. The Time of Sale Information, at the Time of Sale, did
not, and at the Closing Date and as of the Additional 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 Company makes no representation and
warranty with respect to any statements or omissions made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representative expressly for use in such Time of Sale Information,
it being understood and agreed that the only such information furnished by any Underwriter
consists of the information described as such in Section 7(b).
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(c) Issuer Free Writing Prospectus. Other than the Registration Statement, the
Preliminary Prospectus and the Prospectus, the Company (including its agents and
representatives, other than the Underwriters in their capacity as such) has not prepared,
made, used, authorized, approved or referred to and will not prepare, make, use, authorize,
approve or refer to any “written communication” (as defined in Rule 405 under the Securities
Act) that constitutes an offer to sell or solicitation of an offer to buy the Shares (each
such communication by the Company or its agents and representatives (other than a
communication referred to in clause (i) below), an “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 Annex B
hereto, each electronic road show and any other written communications approved in writing
in advance by the Representative. Each such Issuer Free Writing Prospectus complied in all
material respects with the Securities Act, has been filed in accordance with the Securities
Act (to the extent required thereby) and, when taken together with the Preliminary
Prospectus accompanying, or delivered prior to delivery of, such Issuer Free Writing
Prospectus, did not, and at the Closing Date and at the Additional 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 Company 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 Company in writing by such Underwriter through the
Representative expressly for use in any 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 7(b) hereof. Each such Issuer Free Writing
Prospectus, as of its issue date and at all subsequent times through the completion of the
public offer and sale of the Shares or until any earlier date that the issuer notified or
notifies the Representative as described in Section 4(e), 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.
(d) Registration Statement and Prospectus. The Registration Statement has been
declared effective by the Commission. No order suspending the effectiveness of the
Registration Statement has been issued by the Commission and no proceeding for that purpose
or pursuant to Section 8A of the Securities Act against the Company or related to the
offering of the Shares has been initiated or threatened by the Commission; as of the
applicable effective date of the Registration Statement and any post-effective amendment
thereto, the Registration Statement complied and will comply in all material respects with
the Securities Act, and did not and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in order to make
the statements therein not misleading; and as of the date of the Prospectus and any
amendment or supplement thereto and as of the Closing Date and as of the Additional Closing
Date, as the case may be, the Prospectus does not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or
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necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that the Company makes no
representation and warranty with respect to any statements or omissions made in reliance
upon and in conformity with information relating to any Underwriter furnished to the Company
in writing by such Underwriter through the Representative expressly for use in the
Registration Statement and the Prospectus and any amendment or supplement thereto, it being
understood and agreed that the only such information furnished by any Underwriter consists
of the information described as such in Section 7(b) hereof.
(e) Incorporated Documents. The documents incorporated by reference in the
Registration Statement, the Prospectus and the Time of Sale Information, when they were
filed with the Commission conformed in all material respects to the requirements of the
Securities Exchange Act of 1934, as amended (collectively with the rules and regulations of
the Commission thereunder, the “Exchange Act”), and none of such documents contained any
untrue statement of a material fact or omitted 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 any further documents so filed and incorporated by reference in the
Registration Statement, the Prospectus or the Time of Sale Information, when such documents
are filed with the Commission, will conform in all material respects to the requirements of
the Exchange Act and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading
(f) Financial Statements. The financial statements and the related notes thereto of
the Company and its consolidated subsidiaries included or incorporated by reference in the
Registration Statement, the Time of Sale Information and the Prospectus comply in all
material respects with the applicable requirements of the Securities Act and the Exchange
Act, as applicable, and present fairly in all material respects the financial position of
the Company and its consolidated subsidiaries as of the dates indicated and the results of
their operations and the changes in their cash flows for the periods specified; such
financial statements have been prepared in all material respects in accordance with United
States generally accepted accounting principles (“U.S. GAAP”) applied on a consistent basis
throughout the periods covered thereby, and the supporting schedules included or
incorporated by reference in the Registration Statement present fairly the information
required to be stated therein; the other financial information included or incorporated by
reference in the Registration Statement, the Time of Sale Information and the Prospectus has
been derived from the accounting records of the Company and its consolidated subsidiaries
and presents fairly in all material respects the information shown thereby.
(g) No Material Adverse Change. Since the date of the most recent financial statements
of the Company included or incorporated by reference in the Registration Statement, the Time
of Sale Information and the Prospectus, except, in each case, as otherwise disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus, (i) there has not
been any change in the capital stock (other than the issuance of shares of Common Stock upon
exercise of stock options described as outstanding in,
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and the grant of options and awards under the Company’s existing stock incentive plan
described in, the Registration Statement, the Time of Sale Information and the Prospectus)
or material change in the long-term debt of the Company or any of its subsidiaries, or any
dividend or distribution of any kind declared, set aside for payment, paid or made by the
Company on any class of capital stock, or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the business, properties,
management, financial position, stockholders’ equity, results of operations or prospects of
the Company and its subsidiaries taken as a whole; (ii) neither the Company nor any of its
subsidiaries has entered into any transaction or agreement that is material to the Company
and its subsidiaries taken as a whole or incurred any liability or obligation, direct or
contingent, that is material to the Company and its subsidiaries taken as a whole; and (iii)
neither the Company nor any of its subsidiaries has sustained any material loss or
interference with its business from fire, explosion, flood, tornado or other calamity,
whether or not covered by insurance, or from any labor disturbance or dispute or any action,
order or decree of any court or arbitrator or governmental or regulatory authority.
(h) Organization and Good Standing. The Company and each of its subsidiaries have been
duly organized and are validly existing and in good standing under the laws of their
respective jurisdictions of organization, are duly qualified to do business and are in good
standing in each jurisdiction in which their respective ownership or lease of property or
the conduct of their respective businesses requires such qualification, and have all power
and authority necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged, except where the failure to be so qualified or in good
standing or have such power or authority would not, individually or in the aggregate, have a
material adverse effect on the business, properties, management, financial position,
stockholders’ equity, results of operations or prospects of the Company and its subsidiaries
taken as a whole or on the performance by the Company of its obligations under this
Agreement (a “Material Adverse Effect”). The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the subsidiaries listed
in Exhibit 21.1 to its Annual Report on Form 10-K for the year ended December 31, 2009.
(i) Capitalization. The Company has authorized capital stock as set forth in the
Registration Statement, the Time of Sale Information and the Prospectus; all the shares of
capital stock of the Company that will be outstanding immediately prior to the Closing Date
will have been duly and validly authorized and issued and will be fully paid and
non-assessable and will not be subject to any preemptive or similar rights; except as
described in or expressly contemplated by the Time of Sale Information and the Prospectus,
immediately prior to the Closing Date there will be no outstanding rights (including,
without limitation, preemptive rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock or other equity interest
in the Company or any of its subsidiaries, or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance of any capital stock of
the Company or any such subsidiary, any such convertible or exchangeable securities or any
such rights, warrants or options; the capital stock of the Company conforms in all material
respects to the description thereof contained in the
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Registration Statement, the Time of Sale Information and the Prospectus; and all the
outstanding shares of capital stock or other equity interests of each subsidiary owned
directly or indirectly, the Company have been duly and validly authorized and issued, are
fully paid and non-assessable (except as otherwise described in the Registration Statement,
the Time of Sale Information and the Prospectus) and are owned directly or indirectly by the
Company, free and clear of any lien, charge, encumbrance, security interest, restriction on
voting or transfer or any other claim of any third party other than those arising under the
Company’s Revolving Credit Agreement, dated as of January 18, 2008, by and among the
Company, the guarantors named therein, The Frost National Bank, as administrative agent and
lender, and the other lenders named therein (as amended and in effect on the date hereof,
the “Credit Agreement”).
(j) Stock Options. With respect to the stock options (the “Stock Options”) granted
pursuant to the stock-based compensation plans of the Company and its subsidiaries (the
“Company Stock Plans”), each such grant was made in accordance with the terms of the Company
Stock Plans, and all other applicable laws and regulatory rules or requirements.
(k) Due Authorization. This Agreement has been duly authorized and validly executed
and delivered by the Company. The Company has full right, power and authority to execute and
deliver this Agreement and to perform its obligations hereunder; and all action required to
be taken for the due and proper authorization, execution and delivery by it of this
Agreement and the consummation by it of the transactions contemplated hereby or by the Time
of Sale Information and the Prospectus has been duly and validly taken.
(l) The Shares. The Shares to be issued and sold by the Company hereunder have been
duly authorized by the Company and, when issued and delivered and paid for as provided
herein, will be duly and validly issued and will be fully paid and non-assessable and will
conform to the description thereof in the Registration Statement, the Time of Sale
Information and the Prospectus; and the issuance of the Shares to be sold by the Company is
not subject to any preemptive or similar rights.
(m) Description of Underwriting Agreement. This Agreement conforms in all material
respects to the description thereof contained in the Registration Statement, the Time of
Sale Information and the Prospectus.
(n) No Violation or Default. Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws or similar organizational documents; (ii) in default,
and no event has occurred that, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement 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 is bound or to which any of the property or assets of the Company or any of
its subsidiaries is subject; or (iii) in violation of any law or statute or any judgment,
order, rule or regulation of any court or arbitrator or governmental or regulatory
authority, except, in the case of clauses (ii) and (iii) above,
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for any such default or violation that would not, individually or in the
aggregate, have a Material Adverse Effect.
(o) No Conflicts. The execution, delivery and performance by the Company of this
Agreement, the issuance and sale of the Shares by the Company (including the use of proceeds
therefrom) and the consummation by the Company of the transactions contemplated hereby will
not (i) conflict with or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its subsidiaries
pursuant to, any indenture, mortgage, deed of trust, loan agreement 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 is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, (ii) result in any violation of the
provisions of the charter or by-laws or similar organizational documents of the Company or
any of its subsidiaries or (iii) result in the violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory
authority, except in the cases of clauses (i) and (iii) above, for such conflicts, breaches
or violations that would not, individually or in the aggregate, have a Material Adverse
Effect.
(p) No Consents Required. No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory authority is
required for the execution, delivery and performance by the Company of this Agreements, the
issuance and sale of the Shares (including the use of proceeds therefrom) and the
consummation of the transactions contemplated hereby, except for the registration of the
Shares under the Securities Act and such consents, approvals, authorizations, orders and
registrations or qualifications as may be required by The Nasdaq Global Market (the “Nasdaq
Global Market”) in regards to the listing of the Shares and under applicable state
securities laws in connection with the purchase and distribution of the Shares by the
Underwriters and any consent, approval, authorization, order, registration or qualification
that either has been, or prior to the Closing Date will have been, obtained or made, or
which if not obtained or made, would not, individually or in the aggregate, have a Material
Adverse Effect and would not adversely affect the Company’s ability to fulfill its
obligations hereunder.
(q) Legal Proceedings. Except as described in the Registration Statement, the Time of
Sale Information and the Prospectus, there are no legal, governmental or regulatory
investigations, actions, suits or proceedings pending to which the Company or any of its
subsidiaries is or may be a party or to which any property of the Company or any of its
subsidiaries is or may be the subject that, individually or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, could reasonably be expected to have a
Material Adverse Effect or materially and adversely affect the ability of the Company to
perform its obligations hereunder; to the knowledge of the Company, no such investigations,
actions, suits or proceedings are threatened or contemplated by any governmental or
regulatory authority or others; and (i) there are no current or pending legal, governmental
or regulatory actions, suits or proceedings that are required under the Securities Act to be
described in the Registration Statement that are not so
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described in the Registration Statement, the Time of Sale Information and the
Prospectus and (ii) there are no statutes, regulations or contracts or other documents that
are required under the Securities Act to be filed as exhibits to the Registration Statement
or described in the Registration Statement, the Time of Sale Information or the Prospectus
that are not so filed as exhibits to the Registration Statement or described in the
Registration Statement, the Time of Sale Information and the Prospectus.
(r) Independent Accountants. Xxxx & Associates LLP, who has audited certain financial
statements of the Company and its subsidiaries, is an independent registered public
accounting firm with respect to the Company and its subsidiaries within the applicable rules
and regulations adopted by the Commission and the Public Company Accounting Oversight Board
(United States) and as required by the Securities Act.
(s) Title to Real and Personal Property. The Company and its subsidiaries have good
and marketable title to all real and other property they own, in each case free and clear of
all liens, encumbrances, and defects except those (i) described in the Registration
Statement, the Time of Sale Information and the Prospectus or (ii) that would not,
individually or in the aggregate, have a Material Adverse Effect. Except as described in the
Registration Statement, the Time of Sale Information and the Prospectus, all items of real
and other property leased by the Company and its subsidiaries are leased under valid and
enforceable leases, except as would not, individually or in the aggregate, have a Material
Adverse Effect.
(t) Title to Intellectual Property. The Company and its subsidiaries own or possess
adequate rights to use all material patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service xxxx registrations, copyrights, licenses and
know-how (including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct of their
respective businesses; and the Company and its subsidiaries have not received any notice of
any claim of infringement or conflict with any such rights of others.
(u) No Undisclosed Relationships. 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, that is required by the Securities Act to be described in the Registration
Statement and the Prospectus and that is not so described in such documents and in the Time
of Sale Information.
(v) Investment Company Act. The Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds thereof as described in
the Registration Statement, the Time of Sale Information and the Prospectus, will not be
required to register as an “investment company” or an entity “controlled” by 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, “Investment Company Act”).
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(w) Taxes. 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; and except as otherwise disclosed in the Registration Statement, the Time of Sale
Information and the Prospectus or as would not, individually or in the aggregate, have a
Material Adverse Effect, there is no tax deficiency that has been, or could reasonably be
expected to be, asserted against the Company or any of its subsidiaries or any of their
respective properties or assets.
(x) Licenses and Permits. The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations 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 the Registration Statement, the
Time of Sale Information and the Prospectus, except where the failure to possess or make the
same would not, individually or in the aggregate, have a Material Adverse Effect; and except
as described in the Registration Statement, the Time of Sale Information and the Prospectus
or as would not, individually or in the aggregate, have a Material Adverse Effect, neither
the Company nor any of its subsidiaries has received written notice of any revocation or
modification of any such license, certificate, permit or authorization or has any reason to
believe that any such license, certificate, permit or authorization will not be renewed in
the ordinary course.
(y) No Labor Disputes. No labor disturbance by or dispute with employees of the
Company or any of its subsidiaries exists or, to the knowledge of the Company, is
contemplated or threatened and the Company is not aware of any existing or imminent labor
disturbance by, or dispute with, the employees of any of its or its subsidiaries’ principal
suppliers, contractors or customers, except as would not have a Material Adverse Effect.
(z) Compliance With Environmental Laws. (i) The Company and its subsidiaries (x) are
in compliance with any and all applicable federal, state, local and foreign laws, rules,
regulations, requirements, decisions and orders relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, “Environmental Laws”); (y) have received and are in compliance
with all permits, licenses, certificates or other authorizations or approvals required of
them under applicable Environmental Laws to conduct their respective businesses; and (z)
except as described in the Registration Statement, the Time of Sale Information and the
Prospectus, have not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, and (ii) there are no costs or liabilities associated
with Environmental Laws of or relating to the Company or its subsidiaries, except in the
case of each of (i) and (ii) above, for any such failure to comply, or failure to receive
required permits, licenses or approvals, or cost or liability, as would not, individually or
in the aggregate, have a Material Adverse Effect.
(aa) Hazardous Substances. There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission, or other release of any
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kind of toxic wastes or hazardous substances, including, but not limited to, any
naturally occurring radioactive materials, brine, drilling mud, crude oil, natural gas
liquids and other petroleum materials, by, due to or caused by the Company or any of its
subsidiaries upon any of the property now owned or leased by the Company or any of its
subsidiaries, in violation of any Environmental Laws, except for any violation or liability
which would not, individually or in the aggregate, have a Material Adverse Effect.
(bb) Compliance with ERISA. Each employee benefit plan, within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is
maintained, administered or contributed to by the Company or any of its affiliates for
employees or former employees of the Company and its affiliates has been maintained in
compliance, in all material respects, with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to ERISA and the Internal
Revenue Code of 1986, as amended (the “Code”); no prohibited transaction, within the meaning
of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any such
plan excluding transactions effected pursuant to a statutory or administrative exemption,
and transactions which, individually or in the aggregate, would not have a Material Adverse
Effect, and no such plan is subject to the funding rules of Section 412 of the Code or
Section 302 of ERISA.
(cc) Disclosure Controls. The Company and its subsidiaries maintain an effective system
of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act)
that complies with the requirements of the Exchange Act and that has been designed to ensure
that information required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms, including controls and procedures
designed to ensure that such information is accumulated and communicated to the Company’s
management as appropriate to allow timely decisions regarding required disclosure. The
Company and its subsidiaries have carried out evaluations of the effectiveness of their
disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act.
(dd) Accounting Controls. The Company 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, the Company’s 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 U.S. GAAP, including those policies and procedures that
(i) pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles and that
receipts and expenditures of the Company are being made in accordance with and
authorizations of management and directors of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a
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material effect on the Company’s financial statements. Except as disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus, there are no
material weaknesses in the Company’s internal control over financial reporting. The
Company’s auditors and the Audit Committee of the Board of Directors of the Company have
been advised of 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 Company’s ability to record, process, summarize and report financial
information.
(ee) Insurance. The Company and its subsidiaries have insurance covering their
respective properties, operations, personnel and businesses, which insurance is in
reasonable amounts and insures against such losses and risks as are reasonably adequate to
protect the Company and its subsidiaries and their respective businesses; 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.
(ff) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or other person associated
with or acting on behalf of the Company or any of its subsidiaries has (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii) violated or
is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv) made
any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.
(gg) Compliance with Money Laundering Laws. The operations of the Company 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 any court or governmental
agency, authority or body or any arbitrator involving the Company or any of its subsidiaries
with respect to the Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.
(hh) Compliance with OFAC. None of the Company, any of its subsidiaries or, to the
knowledge of the Company, any director, officer, agent, employee or Affiliate of the Company
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
Company will not directly or indirectly use the proceeds of the offering of the Shares
hereunder, or lend, contribute or otherwise make available such
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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) No Restrictions on Subsidiaries. Other than pursuant to the Credit Agreement, 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 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.
(jj) No Broker’s Fees. Neither the Company 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 Company 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.
(kk) No Registration Rights. Except as disclosed in the Registration Statement, the
Time of Sale Information and the Prospectus, no person has the right to require the Company
or any of its subsidiaries to register any securities for sale under the Securities Act by
reason of the filing of the Registration Statement with the Commission or the issuance and
sale of the Shares.
(ll) No Stabilization. The Company has not taken, directly or indirectly, any action
designed to or that could reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Shares.
(mm) Margin Rules. The application of the proceeds from the sale of the Shares to be
sold by the Company pursuant to this Agreement as described in the Registration Statement,
the Time of Sale Information and the Prospectus will not violate Regulation T, U or X of the
Board of Governors of the Federal Reserve System or any other regulation of such Board of
Governors.
(nn) Forward-Looking Statements. No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the
Registration Statement, the Time of Sale Information and the Prospectus has been made or
reaffirmed without a reasonable basis or has been disclosed other than in good faith.
(oo) Statistical and Market 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
in the Registration Statement, the Time of Sale Information and the Prospectus is not based
on or derived from sources that are reliable and accurate in all material respects.
(pp) Xxxxxxxx-Xxxxx Act. There is and has been no failure on the part of the Company
or, to the knowledge of the Company, any of its directors and officers, in their
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capacity as such, to comply with any applicable provision of the Xxxxxxxx-Xxxxx Act of 2002 and any
applicable rules and regulations promulgated in connection therewith (the “Xxxxxxxx-Xxxxx
Act”) including Section 402 related to loans.
(qq) Status under the Securities Act. The Company is not an ineligible issuer as
defined under the Securities Act, at the times specified in the Securities Act in connection
with the offering of the Shares.
(rr) Reserve Data. (i) (A) The oil and natural gas reserve estimates of the Company
and its subsidiaries as of December 31, 2009, 2008 and 2007 contained in the Registration
Statement, the Time of Sale Information and the Prospectus are derived from reports that
have been prepared by, or have been audited by, XxXxxxxx & XxxXxxxxxxx, as set forth and to
the extent indicated therein, and (B) such estimates fairly reflect the oil and natural gas
reserves of the Company and its subsidiaries, as applicable, at the dates indicated therein
and are in accordance, in all material respects, with Commission guidelines applied on a
consistent basis throughout the periods involved; and
(ss) Independent Petroleum Engineers. XxXxxxxx & XxxXxxxxxxx has represented to the
Company that they are, and the Company believes them to be, independent petroleum engineers
with respect to the Company and its subsidiaries and for the periods set forth in the
Registration Statement, the Time of Sale Information and the Prospectus.
(tt) No Ratings. There are no securities or preferred stock of or guaranteed by the
Company or any of its subsidiaries that are rated by a “nationally recognized statistical
rating organization,” as such term is defined by the Commission for purposes of Rule
436(g)(2) under the Securities Act.
4. Further Agreements of the Company. The Company covenants and agrees with each
Underwriter that:
(a) Required Filings. The Company will file the final Prospectus with the Commission
within the time periods specified by Rule 424(b) and Rule 430A, 430B or 430C under the
Securities Act, will file any Issuer Free Writing Prospectus (to the extent not previously
delivered) to the extent required by Rule 433 under the Securities Act. The Company will
furnish copies of the Prospectus and each Issuer Free Writing Prospectus (to the extent not
previously delivered) to the Underwriters in New York City prior to 10:00 A.M., New York
City time, on the business day next succeeding the date of this Agreement in such quantities
as the Representative may reasonably request.
(b) Delivery of Copies. The Company will deliver, without charge, (i) to the
Representative, three signed copies of the Registration Statement as originally filed and
each amendment thereto, in each case including all exhibits and consents filed therewith;
and (ii) to each Underwriter (A) a conformed copy of the Registration Statement as
originally filed and each amendment thereto (without exhibits) and (B) during the
Prospectus Delivery Period (as defined below), as many copies of the Prospectus
(including all amendments and supplements thereto) and each Issuer Free Writing
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Prospectus as the Representative may reasonably request. As used herein, the term “Prospectus Delivery
Period” means such period of time after the first date of the public offering of the Shares
as in the opinion of counsel for the Underwriters a prospectus relating to the Shares is
required by law to be delivered (or required to be delivered but for Rule 172 under the
Securities Act) in connection with sales of the Shares by any Underwriter or dealer.
(c) Amendments or Supplements, Issuer Free Writing Prospectuses. Before preparing,
using, authorizing, approving, referring to or filing any Issuer Free Writing Prospectus,
and before filing any amendment or supplement to the Registration Statement or the
Prospectus, the Company will furnish to the Representative and counsel for the Underwriters
a copy of the proposed Issuer Free Writing Prospectus, amendment or supplement for review
and will not prepare, use, authorize, approve, refer to or file any such Issuer Free Writing
Prospectus or file any such proposed amendment or supplement to which the Representative
reasonably objects.
(d) Notice to the Representative. The Company will advise the Representative promptly,
and confirm such advice in writing, (i) when any amendment to the Registration Statement has
been filed or becomes effective; (ii) when any supplement to the Prospectus or any amendment
to the Prospectus or any Issuer Free Writing Prospectus has been filed; (iii) of any request
by the Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or the receipt of any comments from the Commission relating to
the Registration Statement or any other request by the Commission for any additional
information; (iv) of the issuance by the Commission of any order suspending the
effectiveness of the Registration Statement or preventing or suspending the use of any
Preliminary Prospectus, any of the Time of Sale Information or the Prospectus or the
initiation or threatening of any proceeding for that purpose or pursuant to Section 8A of
the Securities Act; (v) of the occurrence of any event within the Prospectus Delivery Period
as a result of which the Prospectus, the Time of Sale Information or any Issuer Free Writing
Prospectus as then amended or supplemented would include any untrue statement of a material
fact or omit 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 existing when the Prospectus,
the Time of Sale Information or any such Issuer Free Writing Prospectus is delivered to a
purchaser, not misleading; and (vi) of the receipt by the Company of any notice with respect
to any suspension of the qualification of the Shares for offer and sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose; and the Company will
use its best efforts to prevent the issuance of any such order suspending the effectiveness
of the Registration Statement, preventing or suspending the use of any Preliminary
Prospectus, any of the Time of Sale Information or the Prospectus or suspending any such
qualification of the Shares and, if any such order is issued, will obtain as soon as
possible the withdrawal thereof.
(e) Ongoing Compliance. (1) If during the Prospectus Delivery Period (i) any event
shall occur or condition shall exist as a result of which the Prospectus as then
amended or supplemented would include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order to make the
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statements therein, in the light of the circumstances existing when the Prospectus is
delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement the
Prospectus to comply with law, the Company will immediately notify the Underwriters thereof
and forthwith prepare and, subject to Section 4(c) hereof, file with the Commission and
furnish to the Underwriters and to such dealers as the Representative may designate, such
amendments or supplements to the Prospectus as may be necessary so that the statements in
the Prospectus as so amended or supplemented will not, in the light of the circumstances
existing when the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with law and (2) if at any time prior to the Closing Date (i) any
event shall occur or condition shall exist as a result of which the Time of Sale Information
as then amended or supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements therein, in the
light of the circumstances existing when the Time of Sale Information is delivered to a
purchaser, not misleading or (ii) it is necessary to amend or supplement the Time of Sale
Information to comply with law, the Company will immediately notify the Underwriters thereof
and forthwith prepare and, subject to Section 4(c) hereof, file with the Commission (to the
extent required) and furnish to the Underwriters and to such dealers as the Representative
may designate, such amendments or supplements to the Time of Sale Information as may be
necessary so that the statements in the Time of Sale Information as so amended or
supplemented will not, in the light of the circumstances existing when the Time of Sale
Information is delivered to a purchaser, be misleading or so that the Time of Sale
Information will comply with law.
(f) Blue Sky Compliance. The Company will qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Representative shall reasonably
request and will continue such qualifications in effect so long as required for distribution
of the Shares; provided that the Company shall not be required to (i) qualify as a foreign
corporation or other entity or as a dealer in securities in any such jurisdiction which it
would not otherwise be required to so qualify, (ii) file any general consent to service of
process in any such jurisdiction or (iii) subject itself to taxation in any such
jurisdiction if it is not otherwise so subject.
(g) Earning Statement. The Company will make generally available to its security
holders and the Representative as soon as practicable an earning statement that satisfies
the provisions of Section 11(a) of the Securities Act and Rule 158 of the Commission
promulgated thereunder covering a period of at least twelve months beginning with the first
fiscal quarter of the Company occurring after the “effective date” (as defined in Rule 158)
of the Registration Statement.
(h) Clear Market. For a period of 90 days after the date of this Agreement, the
Company will not (i) offer, pledge, announce the intention to sell, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of Stock or any securities convertible into or exercisable or
exchangeable for Stock or (ii) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences of ownership of the Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by delivery of
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Stock or such other securities, in cash or otherwise, without the prior written consent of
the Representative, other than the Shares to be sold hereunder and any shares of Stock of
the Company issued upon the exercise of options granted under existing employee stock option
plans, grants by the Company of any Award (as defined in the Plan) in accordance with the
terms of the Company’s 2007 Stock Incentive Plan, as amended and in effect on the date
hereof (the “Plan”) and the filing by the Company of any registration statement with the
Commission on Form S-8 relating to the offering of securities pursuant to the terms of the
Plan.
(i) Use of Proceeds. The Company will apply the net proceeds from the sale of the
Shares as described in the Registration Statement, the Time of Sale Information and the
Prospectus under the heading “Use of Proceeds.”
(j) No Stabilization. The Company will not take, directly or indirectly, any action
designed to or that could reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Shares.
(k) Exchange Listing. The Company will use its best efforts to list for quotation the
Shares on the Nasdaq Global Market subject to official notice of issuance.
(l) Reports. So long as the Shares are outstanding, the Company will furnish to the
Representative, as soon as they are available, copies of all reports or other communications
(financial or other) furnished to holders of the Shares, and copies of any reports and
financial statements furnished to or filed with the Commission or any national securities
exchange or automatic quotation system; provided the Company will be deemed to have
furnished such reports and financial statements to the Representative to the extent they are
filed on the Commission’s Electronic Data Gathering, Analysis, and Retrieval system.
(m) Record Retention. The Company will, pursuant to reasonable procedures developed in
good faith, retain copies of each Issuer Free Writing Prospectus that is not filed with the
Commission in accordance with Rule 433 under the Securities Act.
(n) Filings. The Company will file with the Commission such reports as may be required
by Rule 463 under the Securities Act.
5. Certain Agreements of the Underwriters. Each Underwriter hereby represents and agrees
that:
(a) It has not and will not use, authorize use of, refer to, or participate in the
planning for use of, any “free writing prospectus,” as defined in Rule 405 under the
Securities Act (which term includes use of any written information furnished to the
Commission by the Company and not incorporated by reference into the Registration Statement
and any press release issued by the Company), other than (i) a free writing prospectus that
contains no “issuer information” (as defined in Rule 433(h)(2) under the
Securities Act) that was not included (including through incorporation by reference) in
the Preliminary Prospectus or a previously filed Issuer Free Writing Prospectus, (ii) any
Issuer Free Writing Prospectus listed on Annex B or prepared pursuant to Section 3(c) or
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Section 4(c) above or (iii) any free writing prospectus prepared by such Underwriter and
approved by the Company in advance in writing (each such free writing prospectus referred to
in clauses (i) or (iii), an “Underwriter Free Writing Prospectus”).
(b) It has not and will not use, without the prior written consent of the Company, any
free writing prospectus that contains the final terms of the Shares unless such terms have
previously been included in a free writing prospectus filed with the Commission; provided
that Underwriters may use a term sheet substantially in the form of Annex C hereto without
the consent of the Company; provided further that any Underwriter using such term sheet
shall notify the Company, and provide a copy of such term sheet to the Company, prior to, or
substantially concurrently with, the first use of such term sheet.
(c) It is not subject to any pending proceeding under Section 8A of the Securities Act
with respect to the offering (and will promptly notify the Company if any such proceeding
against it is initiated during the Prospectus Delivery Period).
6. Conditions of Underwriters’ Obligations. The obligation of each Underwriter to purchase
the Underwritten Shares on the Closing Date or the Option Shares on the Additional Closing Date, as
the case may be, as provided herein is subject to the performance by the Company of its covenants
and other obligations hereunder and to the following additional conditions:
(a) Registration Compliance; No Stop Order. No order suspending the effectiveness of
the Registration Statement shall be in effect, and no proceeding for such purpose or
pursuant to Section 8A under the Securities Act shall be pending before or threatened by the
Commission; the Prospectus and each Issuer Free Writing Prospectus shall have been timely
filed with the Commission under the Securities Act (in the case of an Issuer Free Writing
Prospectus, to the extent required by Rule 433 under the Securities Act) and in accordance
with Section 4(a) hereof; and all requests by the Commission for additional information
shall have been complied with to the reasonable satisfaction of the Representative.
(b) Representations and Warranties. The representations and warranties of the Company
contained herein shall be true and correct on the date hereof and on and as of the Closing
Date or the Additional Closing Date, as the case may be; and the statements of the Company
and its officers made in any certificates delivered pursuant to this Agreement shall be true
and correct on and as of the Closing Date or the Additional Closing Date, as the case may
be.
(c) No Material Adverse Change. No event or condition of a type described in Section
3(g) hereof shall have occurred or shall exist, which event or condition is not described in
the Time of Sale Information (excluding any amendment or supplement thereto) and the
Prospectus (excluding any amendment or supplement thereto) and the effect of which in the
judgment of the Representative makes it impracticable or
inadvisable to proceed with the offering, sale or delivery of the Shares on the Closing
Date or the Additional Closing Date, as the case may be, on the terms and in the manner
contemplated by this Agreement, the Time of Sale Information and the Prospectus.
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(d) Officer’s Certificate. The Representative shall have received on and as of the
Closing Date or the Additional Closing Date, as the case may be, a certificate of each of
the chief financial officer or chief accounting officer of the Company and one additional
senior executive officer of the Company who is satisfactory to the Representative (i)
confirming that such officers have carefully reviewed the Registration Statement, the Time
of Sale Information and the Prospectus and, to the knowledge of such officers, the
representations set forth in Sections 3(b) and 3(c) hereof are true and correct, (ii)
confirming that the other representations and warranties of the Company in this Agreement
are true and correct and that the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to such Closing
Date and (iii) to the effect set forth in Sections 6(a) and 6(c) hereof.
(e) Comfort Letters. On the date of this Agreement and on the Closing Date or the
Additional Closing Date, as the case may be, Xxxx & Associates LLP shall have furnished to
the Representative, at the request of the Company, letters, dated the respective dates of
delivery thereof and addressed to the Underwriters, in form and substance reasonably
satisfactory to the Representative, containing statements and information of the type
customarily included in accountants’ “comfort letters” to underwriters with respect to the
financial statements and certain financial information contained or incorporated by
reference in the Registration Statement, the Time of Sale Information and the Prospectus;
provided, that the letter delivered on the Closing Date or the Additional Closing Date, as
the case may be, shall use a “cut-off” date no more than three business days prior to such
Closing Date or such Additional Closing Date, as the case may be.
(f) Opinion of Counsel for the Company. Each of (i) Xxxxxxxx & Knight LLP, counsel for
the Company, (ii) Xxxxxxx Xxxxx LLP, Canadian counsel for the Company, and (iii) J. Xxxxxx
Xxxxxxxxx, General Counsel of the Company, shall have furnished to the Representative, at
the request of the Company, their respective written opinion, dated the Closing Date or the
Additional Closing Date, as the case may be, and addressed to the Underwriters, in form and
substance reasonably satisfactory to the Representative, to the effect set forth in Annex
X-0, Xxxxx X-0 and Annex A-3, respectively, hereto.
(g) Opinion of Counsel for the Underwriters. The Representative shall have received on
and as of the Closing Date or the Additional Closing Date, as the case may be, an opinion of
Xxxxxx & Xxxxxx L.L.P., counsel for the Underwriters, with respect to such matters as the
Representative may reasonably request, and such counsel shall have received such documents
and information as they may reasonably request to enable them to pass upon such matters.
(h) Reserve Letters. On the date of this Agreement and on the Closing Date or the
Additional Closing Date, as the case may be, XxXxxxxx & XxxXxxxxxxx shall have furnished to
the Representative, at the request of the Company, reserve report confirmation letters,
dated the respective dates of delivery thereof and addressed to the Underwriters, in form
and substance reasonably satisfactory to the Representative,
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containing statements and information of the type customarily included in such letters
to underwriters with respect to the reserve and other operational information contained in
the Registration Statement, the Time of Sale Information and the Prospectus.
(i) No Legal Impediment to Issuance. No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or issued by any federal, state
or foreign governmental or regulatory authority that would, as of the Closing Date or the
Additional Closing Date, as the case may be, prevent the issuance or sale of the Shares; and
no injunction or order of any federal, state or foreign court shall have been issued that
would, as of the Closing Date or the Additional Closing Date, as the case may be, prevent
the issuance or sale of the Shares.
(j) Good Standing. The Representative shall have received on and as of the Closing
Date or the Additional Closing Date, as the case may be, satisfactory evidence of the good
standing of the Company and its subsidiaries in their respective jurisdictions of
organization and their good standing as foreign entities in such other jurisdictions as the
Representative may reasonably request, in each case in writing or any standard form of
telecommunication from the appropriate Governmental Authorities of such jurisdictions.
(k) Exchange Listing. The Shares to be delivered on the Closing Date or Additional
Closing Date, as the case may be, shall have been approved for listing on the Nasdaq Global
Market, subject to official notice of issuance.
(l) Lock-up Agreements. The “lock-up” agreements, each substantially in the form of
Exhibit A hereto, between the Representative and certain stockholders, officers and
directors of the Company, as set forth in Exhibit A-1 hereto, relating to sales and certain
other dispositions of shares of Stock or certain other securities, delivered to the
Representative on or before the date hereof, shall be full force and effect on the Closing
Date or Additional Closing Date, as the case may be.
(m) Additional Documents. On or prior to the Closing Date or the Additional Closing
Date, as the case may be, the Company shall have furnished to the Representative such
further certificates and documents as the Representative may reasonably request.
All opinions, letters, certificates and evidence mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in
form and substance reasonably satisfactory to counsel for the Underwriters.
7. Indemnification and Contribution.
(a) Indemnification of the Underwriters by the Company. The Company agrees to
indemnify and hold harmless each Underwriter, its affiliates, directors and officers and
each person, if any, who controls such Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages and liabilities (including, without limitation, legal fees and other
expenses incurred in connection with any suit, action or proceeding or any claim asserted,
as such fees and expenses are incurred), joint or several, that arise out of,
-21-
or are based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or caused by any omission or alleged omission
to state therein a material fact required to be stated therein or necessary in order to make
the statements therein, not misleading, or (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (or any amendment or supplement
thereto), any Issuer Free Writing Prospectus or any Time of Sale Information (including any
Time of Sale Information that has been subsequently amended), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were
made, not misleading, in each case except insofar as such losses, claims, damages or
liabilities arise out of, or are based upon, any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with any information
relating to any Underwriter furnished to the Company in writing by such Underwriter through
the Representative expressly for use therein, it being understood and agreed that the only
such information furnished by any Underwriter consists of the information described as such
in Section 7(b) hereof.
(b) Indemnification of the Company. Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors, its officers who signed
the Registration Statement and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the indemnity set forth in Section 7(a) hereof, but only with respect to any
losses, claims, damages or liabilities that arise out of, or are based upon, any untrue
statement or omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to such Underwriter furnished to the Company in
writing by such Underwriter through the Representative expressly for use in the Registration
Statement, the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing
Prospectus or any Time of Sale Information, it being understood and agreed upon that the
only such information furnished by any Underwriter consists of the following information in
the Prospectus furnished on behalf of each Underwriter: the third paragraph under the
caption “Underwriting” (relating to concessions) and the information concerning stabilizing
transactions and other information appearing under the caption “Underwriting” in the two
paragraphs beginning with the words “In connection with this offering, the underwriters may
engage in stabilizing transactions . . .” and “The underwriters have advised us that,
pursuant to Regulation M . . .”
(c) Notice and Procedures. If any suit, action, proceeding (including any governmental
or regulatory investigation), claim or demand shall be brought or asserted against any
person in respect of which indemnification may be sought pursuant to the Sections 7(a) and
7(b), such person (the “Indemnified Person”) shall promptly notify the person against whom
such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the
failure to notify the Indemnifying Person shall not relieve it from any liability that it
may have under Sections 7(a) or 7(b) hereof except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and
provided further, that the failure to notify the Indemnifying Person shall not relieve it
from any liability that it may have to an Indemnified Person
-22-
otherwise than under Sections 7(a) or 7(b) hereof. If any such proceeding shall be
brought or asserted against an Indemnified Person and it shall have notified the
Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person (who shall not, without the consent of the
Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified
Person in such proceeding and shall pay the fees and expenses of such counsel related to
such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed to the contrary or (ii) the Indemnifying Person has failed
within a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person. It is understood and agreed that the Indemnifying Person shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable for the fees
and expenses of more than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be paid or reimbursed as they
are incurred. Any such separate firm for any Underwriter, its affiliates, directors and
officers and any control persons of such Underwriter shall be designated in writing by the
Representative and any such separate firm for the Company, its directors, its officers who
signed the Registration Statement and any control persons of the Company shall be designated
in writing by the Company. The Indemnifying Person shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such consent or
if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify
each Indemnified Person from and against any loss or liability by reason of such settlement
or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees
and expenses of counsel as contemplated by this Section 7(c), the Indemnifying Person shall
be liable for any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by the Indemnifying Person
of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified
Person in accordance with such request prior to the date of such settlement. No Indemnifying
Person shall, without the written consent of the Indemnified Person, effect any settlement
of any pending or threatened proceeding in respect of which any Indemnified Person is or
could have been a party and indemnification could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an unconditional release of such
Indemnified Person, in form and substance reasonably satisfactory to such Indemnified
Person, from all liability on claims that are the subject matter of such proceeding and (y)
does not include any statement as to or any admission of fault, culpability or a failure to
act by or on behalf of any Indemnified Person.
(d) Contribution. If the indemnification provided for in Sections 7(a) or 7(b) hereof
is unavailable to an Indemnified Person or insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under such
section, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriters, on the
-23-
other, from the offering of the Shares or (ii) if the allocation provided by clause (i)
is not permitted by applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) but also the relative fault of the Company,
on the one hand, and the Underwriters, on the other, in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company, on the one
hand, and the Underwriters, on the other, shall be deemed to be in the same respective
proportions as the net proceeds (before deducting expenses) received by the Company from the
sale of the Shares and the total underwriting discounts and commissions received by the
Underwriters in connection therewith, in each case as set forth in the table on the cover of
the Prospectus, bear to the aggregate offering price of the Shares. The relative fault of
the Company, on the one hand, and the Underwriters on the other, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriter, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or
omission.
(e) Limitation on Liability. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable considerations
referred to in Section 7(d) hereof. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in Section 7(d) hereof
shall be deemed to include, subject to the limitations set forth above, any legal or other
expenses incurred by such Indemnified Person in connection with any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an Underwriter be
required to contribute any amount in excess of the amount by which the total underwriting
discounts and commissions received by such Underwriter with respect to the offering of the
Shares exceeds the amount of any damages that such Underwriter has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant to
this Section 7 are several in proportion to their respective purchase obligations hereunder
and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not
exclusive and shall not limit any rights or remedies which may otherwise be available to any
Indemnified Person at law or in equity.
8. Effectiveness of Agreement. This Agreement shall become effective upon the execution
and delivery hereof by the parties hereto.
9. Termination. This Agreement may be terminated in the absolute discretion of the
Representative, by notice to the Company, if after the execution and delivery of this Agreement and
prior to the Closing Date or, in the case of the Option Shares, prior to the Additional Closing
-24-
Date (i) trading generally shall have been suspended or materially limited on or by any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq Global Market, the Chicago Board
Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade; (ii) trading of
any securities issued or guaranteed by the Company shall have been suspended on any exchange or in
any over-the-counter market; (iii) a general moratorium on commercial banking activities shall have
been declared by federal or New York State authorities; or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis,
either within or outside the United States, that, in the judgment of the Representative, is
material and adverse and makes it impracticable or inadvisable to proceed with the offering, sale
or delivery of the Shares on the Closing Date or the Additional Closing Date, as the case may be,
on the terms and in the manner contemplated by this Agreement, the Time of Sale Information and the
Prospectus.
10. Defaulting Underwriter.
(a) If, on the Closing Date or the Additional Closing Date, as the case may be, any
Underwriter defaults on its obligation to purchase the Shares that it has agreed to purchase
hereunder on such date, the non-defaulting Underwriters may in their discretion arrange for
the purchase of such Shares by other persons satisfactory to the Company on the terms
contained in this Agreement. If, within 36 hours after any such default by any Underwriter,
the non-defaulting Underwriters do not arrange for the purchase of such Shares, then the
Company shall be entitled to a further period of 36 hours within which to procure other
persons satisfactory to the non-defaulting Underwriters to purchase such Shares on such
terms. If other persons become obligated or agree to purchase the Shares of a defaulting
Underwriter, either the non-defaulting Underwriters or the Company may postpone the Closing
Date or the Additional Closing Date, as the case may be, for up to five full business days
in order to effect any changes that in the opinion of counsel for the Company or counsel for
the Underwriters may be necessary in the Registration Statement and the Prospectus or in any
other document or arrangement, and the Company agrees to promptly prepare any amendment or
supplement to the Registration Statement and the Prospectus that effects any such changes.
As used in this Agreement, the term “Underwriter” includes, for all purposes of this
Agreement unless the context otherwise requires, any person not listed in Schedule 1 hereto
that, pursuant to this Section 10, purchases Shares that a defaulting Underwriter agreed but
failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of the Shares of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as
provided in Section 10(a) hereof, the aggregate number of Shares that remain unpurchased on
the Closing Date or the Additional Closing Date, as the case may be, does not exceed
one-eleventh of the aggregate number of Shares to be purchased on such date, then the
Company shall have the right to require each non-defaulting Underwriter to purchase the
number of Shares that such Underwriter agreed to purchase hereunder on such date plus such
Underwriter’s pro rata share (based on the number of Shares that such Underwriter agreed to
purchase on such date) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made.
-25-
(c) If, after giving effect to any arrangements for the purchase of the Shares of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as
provided in Section 10(a) hereof, the aggregate number of Shares that remain unpurchased on
the Closing Date or the Additional Closing Date, as the case may be, exceeds one-eleventh of
the aggregate amount of Shares to be purchased on such date, or if the Company shall not
exercise the right described in Section 10(b) hereof, then this Agreement or, with respect
to any Additional Closing Date, the obligation of the Underwriters to purchase Shares on the
Additional Closing Date, as the case may be, shall terminate without liability on the part
of the non-defaulting Underwriters. Any termination of this Agreement pursuant to this
Section 10 shall be without liability on the part of the Company, except that the Company
will continue to be liable for the payment of expenses as set forth in Section 11 hereof and
except that the provisions of Section 7 hereof shall not terminate and shall remain in
effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of any liability it
may have to the Company or any non-defaulting Underwriter for damages caused by its default.
11. Payment of Expenses.
(a) Whether or not the transactions contemplated by this Agreement are consummated or
this Agreement is terminated, the Company will pay or cause to be paid all costs and
expenses incident to the performance of its obligations hereunder, including without
limitation, (i) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Shares and any taxes payable in that connection; (ii) the costs (other than
the fees and expenses of underwriters’ counsel related thereto) incident to the preparation,
printing and filing under the Securities Act of the Registration Statement, the Preliminary
Prospectus, any Issuer Free Writing Prospectus, any Time of Sale Information and the
Prospectus (including all exhibits, amendments and supplements thereto) and the distribution
thereof; (iii) the costs of reproducing and distributing this Agreement; (iv) the fees and
expenses of the Company’s counsel and independent accountants; (v) the fees and expenses
incurred in connection with the registration or qualification of the Shares under the laws
of such jurisdictions as the Representative may designate (including the related fees and
expenses reasonably incurred of counsel for the Underwriters); (vi) the cost of preparing
stock certificates; (vii) the costs and charges of any transfer agent and any registrar;
(viii) all expenses and application fees incurred in connection with any filing with, and
clearance of the offering by, the Financial Industry Regulatory Authority; (ix) all expenses
incurred by the Company in connection with any “road show” presentation to potential
investors; and (x) all expenses and application fees related to the listing of the Shares on
the Nasdaq Global Market.
(b) If (i) the Company for any reason fails to tender the Shares for delivery to the
Underwriters or (ii) the Underwriters decline to purchase the Shares for any reason
permitted under this Agreement (other than Section 9), the Company agrees to reimburse the
Underwriters for all out-of-pocket costs and expenses (including the fees and expenses of
their counsel) reasonably incurred by the Underwriters in connection with this Agreement and
the offering contemplated hereby.
-26-
12. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and the officers and
directors and any controlling persons referred to in Section 7 hereof. Nothing in this Agreement
is intended or shall be construed to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein. No purchaser of
Shares from any Underwriter shall be deemed to be a successor merely by reason of such purchase.
13. Survival. The respective indemnities, rights of contribution, representations,
warranties and agreements of the Company and the Underwriters contained in this Agreement or made
by or on behalf of the Company or the Underwriters pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment for the Shares and shall remain
in full force and effect, regardless of any termination of this Agreement or any investigation made
by or on behalf of the Company or the Underwriters.
14. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise
expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities
Act; (b) the term “business day” means any day other than a day on which banks are permitted or
required to be closed in New York City; and (c) the term “subsidiary” has the meaning set forth in
Rule 405 under the Securities Act.
15. Miscellaneous.
(a) Authority of the Representative. Any action by the Underwriters hereunder may be
taken by the Representative on behalf of the Underwriters, and any such action taken by the
Representative shall be binding upon the Underwriters.
(b) Notices. All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted and confirmed by any
standard form of telecommunication. Notices to the Underwriters shall be given to the
Representative c/o X.X. Xxxxxx Securities LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(fax: (000) 000-0000); Attention: Equity Syndicate Desk. Notices to the Company shall be
given to it at Approach Resources Inc., One Ridgmar Centre, 0000 Xxxx Xxxxxxx, Xxxxx 000,
Xxxx Xxxxx, Xxxxx 00000, (fax: (000) 000-0000); Attention: J. Xxxxxx Xxxxxxxxx, Executive
Vice President and General Counsel.
(c) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which may include
counterparts delivered by any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of this Agreement,
nor any consent or approval to any departure therefrom, shall in any event be effective
unless the same shall be in writing and signed by the parties hereto.
-27-
(f) Headings. The headings herein are included for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of, this
Agreement.
[Remainder of Page Left Intentionally Blank]
-28-
If the foregoing is in accordance with your understanding, please indicate your acceptance of
this Agreement by signing in the space provided below.
Very truly yours, APPROACH RESOURCES INC. |
||||
By: | /s/ X. Xxxx Craft | |||
Name: | X. Xxxx Craft | |||
Title: | President and CEO | |||
Signature Page to Underwriting Agreement
Accepted as of the date first
written above
written above
X.X. XXXXXX SECURITIES LLC
For itself and on behalf of the
several Underwriters listed in
Schedule 1 hereto.
For itself and on behalf of the
several Underwriters listed in
Schedule 1 hereto.
By:
|
/s/ Xxxxxxxx Xxxx
|
|||
Name:
|
Xxxxxxxx Xxxx | |||
Title:
|
Vice President |
Signature Page to Underwriting Agreement
SCHEDULE 1
Number of | ||||
Underwriter | Underwritten Shares | |||
X.X. Xxxxxx Securities LLC |
3,450,000 | |||
KeyBanc
Capital Markets Inc. |
1,150,000 | |||
Canaccord
Genuity Inc. |
575,000 | |||
RBC Capital Markets LLC |
575,000 | |||
Total |
5,750,000 |
Schedule 1-1
ANNEX A-1
Form of Opinion of Xxxxxxxx & Knight LLP
ANNEX A-2
Form of Opinion of Xxxxxxx Xxxxx LLP
ANNEX A-3
Form of Opinion of General Counsel of the Company
ANNEX B
a. Time of Sale Information
None.
b. Pricing Information Provided Orally by Underwriters
Price per share to public: $16.25
Shares offered: 5,750,000
Annex B-1
ANNEX C
Pricing Term Sheet
Issuer (Symbol):
|
Approach Resources Inc. (AREX) | |
Total Shares of Common Stock Offered:
|
5,750,000 shares | |
Total Option Shares Offered:
|
862,500 shares | |
Public Offering Price:
|
$16.25 per share | |
Gross Proceeds to Issuer:
|
$93.44 million (or $107.45 million if the underwriters exercise their over-allotment option in full) | |
Underwriting Discounts and Commissions:
|
$0.8125 per share | |
Net Proceeds to Issuer (before expenses):
|
$88.76 million | |
Trade Date:
|
November 10, 2010 | |
Settlement Date:
|
November 17, 2010 | |
CUSIP No.:
|
03834A 10 3 | |
Sole book-running manager:
|
X.X. Xxxxxx Securities LLC | |
Co-managers:
|
KeyBanc Capital Markets Inc.
Canaccord Genuity Inc. RBC Capital Markets LLC |
Annex C-1
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
November 10, 2010
X.X. XXXXXX SECURITIES LLC
As Representative of the
several Underwriters listed in
Schedule 1 to the Underwriting
Agreement referred to below
c/o X.X. Xxxxxx Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
As Representative of the
several Underwriters listed in
Schedule 1 to the Underwriting
Agreement referred to below
c/o X.X. Xxxxxx Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Approach Resources Inc. — Public Offering of Common Stock
Ladies and Gentlemen:
The undersigned understands that you, as Representative of the several Underwriters, propose
to enter into an Underwriting Agreement (the “Underwriting Agreement”) with Approach Resources
Inc., a Delaware corporation (the “Company”), providing for the public offering (the “Public
Offering”) by the several Underwriters to be named in Schedule 1 to the Underwriting Agreement (the
“Underwriters”) of common stock, par value $0.01 per share (the “Common Stock”) of the Company (the
“Securities”).
In consideration of the Underwriters’ agreement to purchase and make the Public Offering of
the Securities, and for other good and valuable consideration receipt of which is hereby
acknowledged, the undersigned hereby agrees that, without the prior written consent of X.X. Xxxxxx
Securities LLC (“JPMorgan”) on behalf of the Underwriters, the undersigned will not, during the
period ending 90 days after the date of the prospectus relating to the Public Offering (the
“Prospectus”), (1) offer, pledge, announce the intention to sell, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock
(including, without limitation, Common Stock which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations of the Securities and Exchange Commission
(the “SEC”) and securities which may be issued upon exercise of a stock option or warrant), (2)
enter into any swap or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction described in clause (1)
or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or
otherwise, or (3) make any demand for, or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or exchangeable for
Common Stock, in each case other than (A) the transfer of shares of Common Stock as a bona fide
gift or gifts; (B) the distribution
Exhibit A-1
of shares of Common Stock to members, partners or stockholders of the undersigned; (C) the
transfer of shares of Common Stock to any trust or family limited partnership for the direct or
indirect benefit of the undersigned or the immediate family of the undersigned, provided that any
such transfer shall not involve a disposition for value; (D) the transfer of shares of Common Stock
issued upon the “cashless” exercise of options to purchase Common Stock for any withholding taxes
on the exercise price thereof or to pay the exercise price thereof pursuant to the Company’s
existing stock incentive plan (the “Incentive Plan”) described in the Annual Report on Form 10-K of
the Company for the year ended December 31, 2009 filed with the SEC (the “Annual Report”); and (E)
the transfer of shares of Common Stock withheld by the Company upon the vesting of stock awards
under the Company’s Incentive Plan; provided that (a) in the case of any transfer or distribution
pursuant to clause (A), (B) or (C), each donee, distributee or transferee shall execute and deliver
to JPMorgan a lock-up letter in the form of this paragraph; and (b) no filing by any party (donor,
donee, transferor or transferee) under the Securities Exchange Act of 1934, as amended, or other
public announcement (other than a filing on a Form 5 made after the expiration of the 90-day period
referred to above) shall be made voluntarily in connection with any transfer or distribution under
any of such clauses, or shall be required in connection with any transfer or distribution under
clauses (A), (B) or (C).
The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Letter Agreement. All authority herein conferred or agreed to be
conferred and any obligations of the undersigned shall be binding upon the successors, assigns,
heirs or personal representatives of the undersigned.
The undersigned understands that, if the Underwriting Agreement does not become effective, or
if the Underwriting Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Common Stock to be sold
thereunder, the undersigned shall be released from all obligations under this Letter Agreement.
The undersigned understands that the Underwriters are entering into the Underwriting Agreement
and proceeding with the Public Offering in reliance upon this Letter Agreement.
In addition, the undersigned hereby waives any rights the undersigned may have, if any, to
require registration of Common Stock in connection with the filing of a registrations statement
relating to the Public Offering.
This Letter Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the conflict of laws principles thereof.
Exhibit A-2
Very truly yours, | ||||||||
By: | ||||||||
Name: | ||||||||
Title: | ||||||||
Signature Page to Lock-Up Agreement
EXHIBIT A-1
PARTIES TO LOCK-UP AGREEMENT
1.
|
X. Xxxx Craft | |
2.
|
Xxxxxx X. Xxxxx | |
3.
|
J. Xxxxxx Xxxxxxxxx | |
4.
|
Xxxxx X. Xxxxxxxxxxxx | |
5.
|
Xxxxxxxx Xxxx | |
6.
|
Xxxxx X. Xxxxxxxx | |
7.
|
Xxxxx X. Xxxxxx | |
8.
|
Xxxxx X. Xxxxx | |
9.
|
Xxxxxxx X. Xxxxx | |
10.
|
Xxxxxxxxxxx X. Xxxxx | |
11.
|
Xxxx X. Xxxx | |
12.
|
Yorktown Energy Partners V, L.P. | |
13.
|
Yorktown Energy Partners VI, L.P. | |
14.
|
Yorktown Energy Partners VII, L.P. |
Exhibit A-1-1