EXHIBIT 1.1
UNDERWRITING AGREEMENT DATED APRIL 9, 2007,
BETWEEN GASCO ENERGY, INC. AND J.P. MORGAN SECURITIES INC.
GASCO ENERGY, INC.
10,000,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
April 9, 2007
J.P. Morgan Securities Inc.
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Gasco Energy, Inc., a Nevada corporation (the "COMPANY"), proposes to
issue and sell to you as the underwriter (the "UNDERWRITER"), an aggregate of
10,000,000 shares of its common stock, par value $0.0001 per share (the
"SHARES"). The shares of common stock, par value $0.0001 per share, of the
Company to be outstanding after giving effect to the sales contemplated hereby
are hereinafter referred to as the "STOCK."
The Company hereby confirms its agreement with the Underwriter
concerning the purchase and sale of the Shares, as follows:
SECTION 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. 333-128547) including a prospectus relating to
certain shares of Stock, including the Shares, and certain debt and other
securities to be sold from time to time by the Company. Such registration
statement, as amended at the time it became effective, including the
information, if any, deemed pursuant to Rule 430A, Rule 430B or Rule 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"; the term "BASIC PROSPECTUS" means the prospectus
included in the Registration Statement at the time of its effectiveness that
omits Rule 430 Information, and the term "PROSPECTUS" means the Basic Prospectus
as supplemented by the prospectus supplement specifically relating to the Shares
in the form first used (or made available upon request of purchasers pursuant to
Rule 173 under the Securities Act) to confirm 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. Any reference in this Agreement to the
Registration Statement, the Prospectus or the Time of Sale Information (as
herein defined) shall be deemed to
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refer to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act, as of the effective date of the
Registration Statement or the date of the Basic Prospectus or the Prospectus, as
the case may be and any reference to "amend", "amendment" or "supplement" with
respect to the Registration Statement, the Basic Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after such date
under the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "EXCHANGE ACT") that
are deemed to be incorporated by reference therein. Capitalized terms used but
not defined herein shall have the meanings given to such terms in the
Registration Statement and the Prospectus.
At or prior to the time when sales of the Shares were first made (the
"TIME OF SALE"), the Company had prepared the "TIME OF SALE INFORMATION", which
means (i) the Basic Prospectus, as amended or supplemented as of the Time of
Sale and (ii) the orally communicated pricing information identified in Annex A
hereto.
SECTION 2 . PURCHASE OF THE SHARES BY THE UNDERWRITER. (a) The Company
agrees to issue and sell the Shares to the Underwriter as provided in this
Agreement, and the Underwriter, on the basis of the representations, warranties
and agreements set forth herein and subject to the conditions set forth herein,
agrees to purchase from the Company the Shares at a price per share of $1.93
(the "PURCHASE PRICE").
(b) The Company understands that the Underwriter intends to make a
public offering of the Shares as soon after the effectiveness of this Agreement
as in the judgment of the Underwriter is advisable, and initially to offer the
Shares on the terms set forth in the Prospectus. The Company acknowledges and
agrees that the Underwriter may offer and sell Shares to or through any
affiliate of the Underwriter and that any such affiliate may offer and sell
Shares purchased by it to or through the Underwriter.
(c) Payment for the Shares shall be made by wire transfer in
immediately available funds to the account specified by the Company to the
Underwriter at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017 at 10:00 A.M. New York City time on April 13, 2007, or at
such other time or place on the same or such other date, not later than the
fifth business day thereafter, as the Underwriter and the Company may agree upon
in writing. The time and date of such payment for the Shares is referred to
herein as the "CLOSING DATE."
Payment for the Shares to be purchased on the Closing Date shall be
made against delivery through the facilities of The Depository Trust Company to
the Underwriter of the Shares to be purchased on such date in definitive form
registered in such names and in such denominations as the Underwriter shall
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request in writing not later than two full business days prior to the Closing
Date with any transfer taxes payable in connection with the sale of the Shares
duly paid by the Company. The certificates for the Shares will be made available
for inspection and packaging by the Underwriter at the office of J.P. Morgan
Securities Inc. set forth above not later than 1:00 P.M., New York City time, on
the business day prior to the Closing Date.
(d) The Company acknowledges and agrees that the Underwriter is 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, the Underwriter is not 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 their own independent investigation
and appraisal of the transactions contemplated hereby, and the Underwriter shall
have no responsibility or liability to the Company with respect thereto. Any
review by the Underwriter of the Company, the transactions contemplated hereby
or other matters relating to such transactions will be performed solely for the
benefit of the Underwriter and shall not be on behalf of the Company.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Underwriter that:
(a) TIME OF SALE INFORMATION. The Time of Sale Information at the Time
of Sale did not, and at the Closing Date will not, contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary 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
the Underwriter furnished to the Company in writing by the Underwriter expressly
for use in such Time of Sale Information. No statement of material fact included
in the Prospectus has been omitted from the Time of Sale Information and no
statement of material fact included in the Time of Sale Information that is
required to be included in the Prospectus has been omitted therefrom.
(b) ISSUER FREE WRITING PROSPECTUS. The Company (including its agents
and representatives, other than the Underwriter in its capacity as such) has not
made, used, prepared, authorized, approved or referred to and will not prepare,
make, use, authorize, approve or refer to any "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 the following clause), an "ISSUER FREE WRITING PROSPECTUS") other than any
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document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the
Securities Act or Rule 134 under the Securities Act.
(c) 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 has been initiated or
threatened by the Commission; as of the applicable effective date of the
Registration Statement and any 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, the
Prospectus 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, 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 the Underwriter furnished to the
Company in writing by the Underwriter expressly for use in the Registration
Statement and the Prospectus and any amendment or supplement thereto.
(d) INCORPORATED DOCUMENTS. The documents incorporated by reference in
the Registration Statement, the Prospectus and the Time of Sale Information,
when they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and none of such documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in the Registration Statement,
the Prospectus and the Time of Sale Information, when such documents become
effective or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(e) 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 Prospectus and the
Time of Sale Information comply in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as applicable, and
present fairly the
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financial position of the Company and its 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 conformity
with generally accepted accounting principles 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; and the other financial and
statistical information and any other financial data included or incorporated by
reference in the Registration Statement, the Prospectus and the Time of Sale
Information present fairly, in all material respects, the information purported
to be shown thereby at the respective dates or for the respective periods to
which they apply and, to the extent that such information is set forth in or has
been derived from the financial statements and accounting books and records of
the Company, have been prepared on a basis consistent with such financial
statements and the books and records of the Company.
(f) 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 Prospectus and the Time of Sale Information, there
has not been any change in the capital stock or long-term debt of the Company or
any of its subsidiaries which are "significant subsidiaries" within the meaning
of Regulation S-X promulgated under the Securities Act (each, a "SIGNIFICANT
SUBSIDIARY" and collectively, the "SIGNIFICANT Subsidiaries"), or any issuance
of any options, warrants, convertible securities or rights to purchase capital
stock of the Company or any of the Significant Subsidiaries, or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the business, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries, taken as a whole
(a "MATERIAL ADVERSE EFFECT"), otherwise than as set forth or contemplated in
the Registration Statement, the Prospectus and the Time of Sale Information; the
Company has not declared or paid any dividends or made any distribution of any
kind with respect to its capital stock; and except as set forth, incorporated by
reference or contemplated in the Registration Statement and the Prospectus,
neither the Company nor any of its Significant Subsidiaries has entered into any
transaction or agreement (whether or not in the ordinary course of business)
material to the Company and its subsidiaries, taken as a whole.
(g) ORGANIZATION AND GOOD STANDING OF THE COMPANY. The Company has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Registration Statement, the Prospectus and the Time of Sale
Information, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any business, so
as
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to require such qualification, other than where the failure to be so qualified
or in good standing would not have a Material Adverse Effect.
(h) ORGANIZATION AND GOOD STANDING OF SIGNIFICANT SUBSIDIARIES. Each of
the Company's Significant Subsidiaries has been duly incorporated and is validly
existing as a corporation under the laws of its jurisdiction of incorporation,
with power and authority (corporate and other) to own its properties and conduct
its business as described in the Registration Statement, the Prospectus and the
Time of Sale Information, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of each
jurisdiction in which it owns or leases properties or conducts any business, so
as to require such qualification, other than where the failure to be so
qualified or in good standing would not have a Material Adverse Effect; and all
the outstanding shares of capital stock of each Significant Subsidiary of the
Company have been duly authorized and validly issued, are fully paid and non
assessable, and are owned by the Company, directly or indirectly, free and clear
of all liens, encumbrances, security interests and claims.
(i) CAPITALIZATION. The Company had at the date indicated in the
Prospectus and the Time of Sale Information, as the case may be, a duly
authorized, issued and outstanding capitalization as set forth in the Prospectus
and Time of Sale Information, as the case may be, under the caption
"Capitalization" and such authorized capital stock of the Company conforms as to
legal matters in all material respects to the description thereof contained in
the Registration Statement, the Prospectus and the Time of Sale Information;
there are no outstanding options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any shares of Stock, any shares of
capital stock of any subsidiary, or any such warrants, convertible securities or
obligations, except as set forth or incorporated by reference in the
Registration Statement, the Prospectus and the Time of Sale Information and
except for options granted under, or contracts or commitments pursuant to, the
Company's previous or currently existing stock option and other similar officer,
director or employee benefit plans; except for the Registration Rights Agreement
dated as of October 20, 2004 among the Company and J.P. Morgan Securities Inc.
and First Albany Capital Inc. or stock purchase plans or in connection with the
Company's proposed acquisition of Brek Energy Corporation, there are no
contracts, commitments, agreements, arrangements, understandings or undertakings
of any kind to which the Company is a party, or by which it is bound, granting
to any person the right to require either the Company to file a registration
statement under the Securities Act with respect to any securities of the Company
or requiring the Company to include such securities with the Shares registered
pursuant to any registration statement except with respect to shares of stock
registered under the Company's existing resale shelf registration statement.
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(j) DUE AUTHORIZATION. 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 of this Agreement and the consummation of the
transactions contemplated thereby has been duly and validly taken.
(k) UNDERWRITING AGREEMENT. This Agreement has been duly authorized,
executed and delivered by the Company.
(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 nonassessable and will conform to the descriptions
thereof in the Time of Sale Information and the Prospectus; and the issuance of
the Shares is not subject to any preemptive or similar rights.
(m) DESCRIPTIONS OF THE UNDERWRITING AGREEMENT. This Agreement conforms
in all material respects to the description thereof contained in the
Registration Statement, the Prospectus and the Time of Sale Information.
(n) NO VIOLATION OR DEFAULT, NO CONFLICTS AND NO CONSENTS REQUIRED.
Neither the Company nor any of its Significant Subsidiaries is, or with the
giving of notice or lapse of time or both would be, in violation of or in
default under, its Articles of Incorporation or Bylaws or under any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its Significant Subsidiaries is a party or by which
it or any of them or any of their respective properties is bound, except for
violations and defaults which individually or in the aggregate would not have a
Material Adverse Effect. The issue and sale of the Shares and the consummation
of the transactions herein will not conflict with or result in a breach 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 Significant Subsidiaries under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its Significant Subsidiaries is a
party or by which the Company or any of its Significant Subsidiaries is bound or
to which any of the property or assets of the Company or any of its Significant
Subsidiaries is subject, nor will any such action result in any violation of the
provisions of the Articles of Incorporation or the Bylaws of the Company or any
applicable law or statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, its
Significant Subsidiaries or any of their respective properties; and no consent,
approval, authorization, order, license, registration or qualification of or
with any such court or governmental agency or body is required for the issue and
sale of the Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except such consents, approvals, authorizations,
orders, licenses, registrations or qualifications as may
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be required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriter.
(o) LEGAL PROCEEDINGS. Other than as set forth or contemplated or
incorporated by reference in the Registration Statement, the Prospectus and the
Time of Sale Information, there are no legal or governmental investigations,
actions, suits or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries or any of
their respective properties or 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 which, if determined adversely to the
Company or any of its subsidiaries, could individually or in the aggregate have,
or reasonably be expected to have, (i) a Material Adverse Effect, or (ii) a
material adverse effect on the consummation of the transactions contemplated in
this Agreement; the aggregate of all pending legal and governmental proceedings
that are not described in the Registration Statement, the Prospectus and the
Time of Sale Information to which the Company or any of its subsidiaries is a
party or which affect any of their respective properties and in which there is a
reasonable possibility of an adverse decision, including ordinary routine
litigation incidental to the business of the Company or any Significant
Subsidiary, would not have a Material Adverse Effect; and, to the best of
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(p) INDEPENDENT ACCOUNTANT. Hein & Associates LLP, who have certified
the consolidated financial statements of the Company as of December 31, 2004,
2005 and 2006, are independent registered public accountants 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 under the Securities Act.
(q) TITLE TO REAL AND PERSONAL PROPERTY. The Company and its
subsidiaries have good and indefeasible title or, with respect to oil and gas
properties, defensible title to all real property and good and marketable title
to all personal property owned by them which is material to the business of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Registration
Statement and the Prospectus or such as do not interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries and
would not have a Material Adverse Effect; and any real property and buildings
held under lease by the Company and its subsidiaries are held by them under
valid and subsisting leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries, in each case except as described
in or contemplated by the Registration Statement and the Prospectus.
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(r) TITLE TO INTELLECTUAL PROPERTY. Each of the Company and its
Significant Subsidiaries owns or possesses the right to use the patents, patent
licenses, trademarks, service marks, trade names, copyrights and know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) (collectively, the
"INTELLECTUAL PROPERTY") reasonably necessary to carry on the business conducted
by each as conducted on the date hereof, except to the extent that the failure
to own or possess the right to use such Intellectual Property could not, singly
or in the aggregate, reasonably be expected to have a Material Adverse Effect,
and, except as set forth or incorporated by reference in the Registration
Statement, the Prospectus and the Time of Sale Information, neither the Company
nor any Significant Subsidiary has received any notice of infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property, except for notices the content of which if accurate could not, singly
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(s) 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.
(t) 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 Prospectus and the Time
of Sale Information, will not be required to register as an "investment company"
as such term is defined in the Investment Company Act of 1940, as amended.
(u) PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Company nor any of
its subsidiaries is a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" thereof within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(v) TAXES. The Company and its Significant Subsidiaries have filed all
federal, state, local and foreign tax returns which have been required to be
filed and have paid all taxes shown thereon and all assessments received by them
or any of them to the extent that such taxes have become due and are not being
contested in good faith, except where the failure to do so would not have a
Material Adverse Effect; and, except as disclosed in the Registration Statement,
the Prospectus and the Time of Sale Information, there is no tax deficiency
which has been or might reasonably be expected to be asserted or threatened
against the Company or any subsidiary.
(w) LICENSES AND PERMITS. The Company and each of its Significant
Subsidiaries have all licenses, franchises, permits, authorizations, approvals
and
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orders of and from all governmental and regulatory officials and bodies that
are necessary to own or lease and operate their properties and conduct their
businesses as currently conducted and as described in the Registration
Statement, the Prospectus and the Time of Sale Information and that are material
in relation to the business of the Company and its subsidiaries, taken as a
whole; and except as described in the Registration Statement, the Time of Sale
Information and the Prospectus, neither the Company nor any of its subsidiaries
has received notice of any revocation or modification of any such license,
certificate, permit or authorization or has any reason to believe that any such
license, certificate, permit or authorization will not be renewed in the
ordinary course.
(x) NO LABOR DISPUTES. No labor disputes exist with employees of the
Company or of its Significant Subsidiaries which are likely to have a Material
Adverse Effect.
(y) COMPLIANCE WITH ENVIRONMENTAL LAWS. Each of the Company and its
subsidiaries is in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of human health
or the environment or imposing liability or standards of conduct concerning any
Hazardous Material (collectively, "ENVIRONMENTAL LAWS"), except where such
non-compliance with Environmental Laws could not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The term "HAZARDOUS
MATERIAL" means (i) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, (ii)
any "hazardous waste" as defined by the Resource Conservation and Recovery Act,
as amended, (iii) any petroleum or petroleum product, (iv) any polychlorinated
biphenyl, and (v) any pollutant or contaminant or hazardous, dangerous, or toxic
chemical, material, waste or substance regulated under or within the meaning of
any other Environmental Law.
(z) COMPLIANCE WITH ERISA. The Company is in compliance with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"), except where the failure to be in such compliance would
not, individually or in the aggregate, have a Material Adverse Effect; no
"reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company would have any
liability, except where such liability would not, individually or in the
aggregate, have a Material Adverse Effect; except for matters that would not,
individually or in the aggregate, have a Material Adverse Effect, the Company
has not incurred and does not expect to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "pension plan" or
(ii) Section 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder ("CODE"); and
each "pension plan" for which the Company and each of its subsidiaries would
have any liability that is intended to be qualified under Section 401(a) of the
Code is so qualified in all
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material respects and nothing has occurred, whether by action or by failure to
act, which would reasonably be expected cause the loss of such qualification;
and no "prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of Code or "accumulated funding deficiency" (as defined in section 302 of
ERISA) has occurred.
(aa) DISCLOSURE CONTROLS. The Company and each of its Significant
Subsidiaries maintain an effective system of "disclosure controls and
procedures" (as defined in Rule 13a-15(e) of the Exchange Act) that is 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 Significant Subsidiaries have carried out evaluations of the
effectiveness of their disclosure controls and procedures as required by Rule
13a-15 of the Exchange Act.
(bb) ACCOUNTING CONTROLS. The Company and each of its Significant
Subsidiaries maintain systems of "internal control over financial reporting" (as
defined in Rule 13a-15(f) of the Exchange Act) that comply with the requirements
of the Exchange Act and have been designed by, or under the supervision of,
their respective principal executive and principal financial officers, or
persons performing similar functions, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles, including, but not limited to internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
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
controls.
(cc) DISCLOSURE OF LEGAL PROCEEDINGS. The information incorporated by
reference in the Registration Statement and the Prospectus from Item 3 of Part I
of the Company's Annual Report on Form 10-K for the year ended December 31, 2006
is correct in all material respects and fairly and correctly presents the
information called for with respect thereto in all material respects.
(dd) COMPLIANCE WITH OFAC. None of the Company, any of its subsidiaries
or, to the knowledge of the Company, any director, officer, agent,
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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 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.
(ee) NO RESTRICTIONS ON SUBSIDIARIES. 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.
(ff) 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.
(gg) 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 or incorporated by reference in the Registration Statement, the
Prospectus and the Time of Sale Information has been made or reaffirmed without
a reasonable basis therefor or has been disclosed other than in good faith.
(hh) STATISTICAL, MARKET AND OIL AND GAS RESERVES DATA. Nothing has
come to the attention of the Company that has caused the Company to believe that
the statistical, market-related and oil and gas reserves data included or
incorporated by reference in the Registration Statement, the Prospectus and the
Time of Sale Information is not based on or derived from sources that are
reliable and accurate in all material respects.
(ii) SARBANES-OXLEY ACT. The Company is in substantial compliance with
the applicable provisions of the Sarbanes-Oxley Act of 2002 that are effective
with respect to the Company and its subsidiaries on the date of this Agreement.
(jj) NO REGISTRATION RIGHTS. No person has the right to require the
Company or any of its subsidiaries to register any Shares for sale under the
Securities Act by reason of the filing of the Registration Statement with the
Commission or the issuance of the Shares.
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(kk) INDEPENDENT PETROLEUM ENGINEERING FIRM. Netherland, Sewell and
Associates, Inc. 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 Prospectus and Time of
Sale Information.
SECTION 4 . FURTHER AGREEMENTS OF THE COMPANY. The Company covenants
and agrees with Underwriter that:
(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Company will file
the final Prospectus with the Commission within the time periods specified by
Rule 424(b) and the Rule 430 Information under the Securities Act and will file
promptly any Issuer Free Writing Prospectus to the extent required under the
Securities Act and all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
the Prospectus and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Shares; and the Company will furnish
copies of the Prospectus and each Issuer Free Writing Prospectus (to the extent
not previously delivered) to the Underwriter 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 Underwriter may reasonably request.
(b) DELIVERY OF COPIES. The Company will deliver, without charge, (i)
to the Underwriter, two signed copies of the Registration Statement as
originally filed and each amendment thereto, in each case including all exhibits
and consents filed therewith and documents incorporated by reference therein;
and (ii) to 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 documents
incorporated by reference therein) and each Issuer Free Writing Prospectus as
the Underwriter 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 Underwriter 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 the Underwriter or any dealer.
(c) AMENDMENTS OR SUPPLEMENTS; ISSUER FREE WRITING PROSPECTUS. 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, whether before or after the time that
the Registration Statement becomes effective, the Company will furnish to the
Underwriter and counsel for the Underwriter a copy of the proposed Issuer Free
Writing Prospectus, amendment or supplement for review and will not prepare,
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use, authorize, approve refer to or file any such Issuer Free Writing Prospectus
or file any such proposed amendment or supplement to which the Underwriter
reasonably objects.
(d) NOTICE TO THE UNDERWRITER. The Company will advise the Underwriter
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 the Basic Prospectus 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
the Basic Prospectus 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 OF THE PROSPECTUS. (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 an 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 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
Underwriter thereof and forthwith prepare and, subject to paragraph (c) above,
file with the Commission and furnish to the Underwriter and to such dealers as
the Underwriter 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
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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, 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 Underwriter thereof and
forthwith prepare and, subject to paragraph (c) above, file with the Commission
(to the extent required) and furnish to the Underwriter and to such dealers as
the Underwriter 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, 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
Underwriter shall reasonably request and will continue such qualifications in
effect so long as reasonably required for distribution of the Shares and to pay
all fees and expenses (including fees and disbursements of counsel to the
Underwriter) reasonably incurred in connection with such qualification and in
connection with the determination of the eligibility of the Shares for
investment under the laws of such jurisdictions as the Underwriter may
designate; PROVIDED that the Company shall not be required to file a general
consent to service of process in any jurisdiction or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified.
(g) EARNING STATEMENT. The Company will make generally available to its
security holders and the Underwriter 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 the
offering, the Company will not 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, enter
into any swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Stock, or file with the Commission a
registration statement under the Securities Act relating to any additional
shares of its Stock or securities convertible into, or exchangeable for, any
shares of Stock, or publicly disclose the intention to effect any transaction
described in clause (i), (ii) or (iii), whether any such transaction described
in clause (i) or (ii) above is to
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be settled by delivery of Stock or such other securities, in cash or otherwise,
without the prior written consent of the Underwriter. The foregoing sentence
shall not apply to (A) the sale of the Shares under this Agreement, (B) the
issuance of options and shares of restricted Stock and the issuance and sale of
Stock by the Company pursuant to the Company's stock option agreements, stock
option plan and restricted stock plan, in each case existing on the date hereof,
(C) the issuance of shares of Stock upon conversion of the Company's outstanding
shares of Series B Convertible Preferred Stock or outstanding 5.50% Convertible
Senior Notes due 2011, and (D) any registration statement filed in connection
with the Company's proposed acquisition of Brek Energy Corporation, and (E) any
post-effective amendment which may be required to be filed with respect to the
Company's existing resale shelf registration statement. Notwithstanding the
foregoing, if (1) during the last 17 days of the 90-day restricted period, the
Company issues an earnings release or material news or a material event relating
to the Company occurs; or (2) prior to the expiration of the 90-day restricted
period, the Company announces that it will release earnings results during the
16-day period beginning on the last day of the 90-day period, the restrictions
imposed by this Agreement shall continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release or the
occurrence of the material news or material event.
(i) USE OF PROCEEDS. The Company will apply the net proceeds from the
sale of the Shares as described in the Registration Statement, the Prospectus
and the Time of Sale Information 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,
subject to notice of issuance, the Shares on the American Stock Exchange (the
"EXCHANGE").
(l) REPORTS. So long as the Shares are outstanding, the Company will
furnish to the Underwriter, 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, HOWEVER, that any document filed by the Company with the
Commission that is publicly available on the Commission's EDGAR system shall be
deemed furnished to the Underwriter at the time of such filing.
(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.
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SECTION 5 . CERTAIN AGREEMENTS OF THE UNDERWRITER. The 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 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 Time
of Sale Information or a previously filed Issuer Free Writing Prospectus, (ii)
any Issuer Free Writing Prospectus prepared pursuant to Section 4(c) above, or
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 distribute any Underwriter Free Writing
Prospectus referred to in clause (a)(i) in a manner reasonably designed to lead
to its broad unrestricted dissemination.
(c) It has not and will not, without the prior written consent of the
Company, use 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 Underwriter may use a term
sheet substantially in the form of Annex D 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.
(d) 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).
SECTION 6 . CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The obligation of
the Underwriter to purchase the Shares on the Closing Date 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. The Registration Statement
(or if a post-effective amendment thereto is required to be filed under the
Securities Act, such post-effective amendment) shall have become effective, and
the Underwriter shall have received notice thereof, not later than 5:00 P.M.,
New York City time, on the date hereof; no order suspending the effectiveness of
the Registration Statement shall be in effect, and no proceeding for such
purpose
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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 Underwriter.
(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; 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.
(c) NO DOWNGRADE. Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating accorded any
securities or preferred stock of or guaranteed by the Company or any of its
subsidiaries by any "nationally recognized statistical rating organization", as
such term is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act and (ii) no such organization shall have publicly announced that
it has under surveillance or review, or has changed its outlook with respect to,
its rating of any securities or preferred stock of or guaranteed by the Company
or any of its subsidiaries (other than an announcement with positive
implications of a possible upgrading).
(d) NO MATERIAL ADVERSE CHANGE. Since the respective dates as of which
information is given in the Registration Statement, the Prospectus and the Time
of Sale Information, there shall not have been any (i) change in the capital
stock or long-term debt of the Company or any of the Significant Subsidiaries
(other than in connection with any possible conversion of the Company's
outstanding 5.50% Convertible Senior Notes due 2011 and Series B Convertible
Preferred Stock or the exercise of outstanding stock options) or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the business, financial condition, management or results
of operations of the Company and its subsidiaries, taken as a whole, otherwise
than as set forth, incorporated by reference or contemplated in the in the Time
of Sale Information (excluding any amendment or supplement thereto) and the
Prospectus (excluding any amendment or supplement thereto); or (ii) any
suspension or material limitation of trading in the capital stock of the Company
on the Exchange, the effect of which, in the judgment of the Underwriter. makes
it impracticable or inadvisable to proceed with the offering, sale or the
delivery of the Shares on the Closing Date on the terms and in the manner
contemplated by this Agreement, the Time of Sale Information and the Prospectus.
(e) OFFICER'S CERTIFICATE. The Underwriter shall have received on and
as of the Closing Date a certificate of an executive officer of the Company with
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specific knowledge about the Company's financial matters, satisfactory to the
Underwriter (i) confirming that such officers have carefully reviewed the
Registration Statement, the Prospectus and the Time of Sale Information and, to
the best knowledge of such officers, the representations set forth in Sections
3(b) and 3(d) 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, (iii) confirming that there has not occurred any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the business, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries, taken as a whole
from that set forth or contemplated in the Registration Statement, the
Prospectus and the Time of Sale Information and (iv) to the effect set forth in
paragraphs (a), (c) and (d) above.
(f) COMFORT LETTERS. On the Closing Date, Hein & Associates LLP shall
have furnished to the Underwriter, at the request of the Company, a letter,
dated the dates of delivery thereof and addressed to the Underwriter, in form
and substance reasonably satisfactory to the Underwriter, 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 such
letters shall use a "cut-off" date no more than three business days prior to
such Closing Date.
(g) OPINION OF COUNSEL FOR THE COMPANY. Dill, Dill, Carr, Stonbraker &
Hutchings P.C., counsel for the Company, shall have furnished to the
Underwriter, at the request of the Company, their written opinion, dated the
Closing Date and addressed to the Underwriter, in form and substance reasonably
satisfactory to the Underwriter, to the effect set forth in Annex C hereto.
(h) OPINION OF COUNSEL FOR THE UNDERWRITER. The Underwriter shall have
received on and as of the Closing Date an opinion of Davis Polk & Wardwell,
counsel for the Underwriter, with respect to such matters as the Underwriter 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.
(i) COMFORT LETTER OF INDEPENDENT PETROLEUM ENGINEERS. On or prior to
the Closing Date, the Underwriter shall have received from Netherland, Sewell
and Associates, Inc. a letter dated such date, in form and substance
satisfactory to the Underwriter stating the conclusions and findings of such
firm with respect to the oil and gas reserves of the Company addressed to the
Underwriter.
(j) 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
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by any federal, state or foreign governmental or regulatory authority that
would, as of the Closing Date, 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, prevent the issuance or sale of
the Shares.
(k) GOOD STANDING. The Underwriter shall have received on and as of the
Closing Date 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 Underwriter may
reasonably request, in each case in writing or any standard form of
telecommunication from the appropriate Governmental Authorities of such
jurisdictions.
(l) EXCHANGE LISTING. The Shares to be delivered on the Closing Date
shall have been approved for listing on the American Stock Exchange, subject to
official notice of issuance.
(m) LOCK-UP AGREEMENTS. The "lock-up" agreements, each substantially in
the form of Exhibit A hereto, between the Underwriter and the officers and
directors of the Company identified on Exhibit A-1 hereto relating to sales and
certain other dispositions of shares of Stock or certain other securities,
delivered to the Underwriter on or before the date hereof, shall be full force
and effect on the Closing Date.
(n) ADDITIONAL DOCUMENTS. On or prior to the Closing Date the Company
shall have furnished to the Underwriter such further certificates and documents
as the Underwriter 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 Underwriter.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION OF THE UNDERWRITER. The Company agrees to indemnify
and hold harmless the Underwriter, its affiliates, directors and officers and
each person, if any, who controls the 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, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement 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 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 subsequently been 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
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the statements therein, in the light of the circumstances under which they were
made, not misleading, in each of clauses (i) and (ii) 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 the Underwriter
furnished to the Company in writing by the Underwriter expressly for use
therein, it being understood and agreed that the only such information furnished
by the Underwriter consists of the information described as such in subsection
(b) below.
(b) INDEMNIFICATION OF THE COMPANY. The Underwriter agrees 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 paragraph (a) above, 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 the Underwriter furnished to the Company in writing by
the Underwriter 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 the Underwriter consists of the following
information in the Prospectus furnished on behalf of the Underwriter: the ninth
paragraph regarding stabilizing transactions and the tenth paragraph regarding
compliance with Regulation M, both under the caption "Underwriting" in the
Prospectus.
(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 either paragraph (a) or (b) above, 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 this Section 7 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 otherwise than under this Section 7. 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, upon request
of the Indemnified Person,
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shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others entitled to indemnification
pursuant to this Section 7 that the Indemnifying Person may designate 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; (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those
available to the Indemnifying Person; or (iv) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall
not, in connection with any proceeding or related proceeding 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 the Underwriter, its affiliates, directors and officers
and any control persons of the Underwriter shall be designated in writing by
J.P. Morgan Securities Inc. 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 paragraph, 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
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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 paragraphs (a)
and (b) above 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 paragraph, 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 in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriter on the
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 Underwriter
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 Underwriter 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 Underwriter 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 Underwriter 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 Underwriter agree that
it would not be just and equitable if contribution pursuant to this Section 7
were determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an Indemnified Person as a result of
the losses, claims, damages and liabilities referred to in paragraph (d) above
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
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, in no event shall the Underwriter be required to
contribute any amount in excess of the amount by which the total underwriting
discounts and commissions received by the Underwriter with respect to the
offering of the Shares exceeds the amount of any damages that the 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
23
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contribution from any person who was not guilty of such fraudulent
misrepresentation.
(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.
SECTION 8. EFFECTIVENESS OF AGREEMENT. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
SECTION 9. TERMINATION. This Agreement may be terminated in the
absolute discretion of the Underwriter, by notice to the Company, if after the
execution and delivery of this Agreement and prior to the Closing 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 National
Association of Securities Dealers, Inc., 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 in New York shall have been declared by federal or
New York State authorities; (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
Underwriter, 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
on the terms and in the manner contemplated by this Agreement, the Time of Sale
Information and the Prospectus; or (v) the representation in Section 3(b) is
incorrect in any respect.
SECTION 10. 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 incident to
the preparation, printing and filing under the Securities Act of the
Registration Statement, the Prospectus (including all exhibits, amendments and
supplements thereto), any Issuer Free Writing Prospectus, any Time of Sale
Information and the distribution thereof; (iii) the costs of reproducing and
distributing this Agreement; (iv) the fees and expenses of the Company's
counsel, independent accountants and independent petroleum engineers; (v) the
fees and expenses incurred in connection with the registration or qualification
and determination of eligibility for investment of the Shares under the laws of
such jurisdictions as the Underwriter may designate and the preparation,
printing and distribution of a Blue Sky Memorandum (including the related fees
and expenses of counsel for the Underwriter); (vi) the cost of preparing stock
certificates; (vii) the costs and charges of any transfer agent and any
registrar; (viii) all expenses
24
(NY) 27961/057/UA/ua.doc
and application fees incurred in connection with any filing with, and clearance
of the offering by, the National Association of Securities Dealers, Inc.; (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 American Stock Exchange.
(b) If (i) this Agreement is terminated pursuant to Section 9, (ii) the
Company for any reason fails to tender the Shares for delivery to the
Underwriter or (iii) the Underwriter declines to purchase the Shares for any
reason permitted under this Agreement, the Company agrees to reimburse the
Underwriter for all out-of-pocket costs and expenses (including the fees and
expenses of their counsel) reasonably incurred by the Underwriter in connection
with this Agreement and the offering contemplated hereby.
SECTION 11. 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 the Underwriter shall be deemed to be a successor
merely by reason of such purchase.
SECTION 12. SURVIVAL. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company and the
Underwriter contained in this Agreement or made by or on behalf of the Company
or the Underwriter 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
Underwriter.
SECTION 13. 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.
SECTION 14. MISCELLANEOUS. (a) 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 Underwriter shall be given to the Underwriter
at 277 Park Avenue, New York, New York 10172 (fax: (212) 622-8358); Attention:
Scott Skidmore. Notices to the Company shall be given to it at Gasco Energy,
Inc., 8 Inverness Drive East, Suite 100, Englewood, CO 80112 (telefax: (303)
483-0011); Attention: Chief Financial Officer.
25
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(b) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(c) 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.
(d) 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.
(e) 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.
26
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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,
GASCO ENERGY, INC.
By: /s/ W. KING GRANT
--------------------------------------------
Name: W. King Grant
Title: EVP & CFO
(NY) 27961/057/UA/ua.doc
Accepted: April 9, 2007
J.P. MORGAN SECURITIES INC.
By: /s/ SCOTT SKIDMORE
--------------------------------------------
Name: Scott Skidmore
Title: Vice President
(NY) 27961/057/UA/ua.doc
ANNEX A
ORALLY-CONVEYED PRICING INFORMATION
The price paid by the investor per share and 10,000,000 shares
A-1
(NY) 27961/057/UA/ua.doc
ANNEX C
FORM OF OPINION OF
DILL, DILL, CARR, STONBRAKER & HUTCHINGS P.C.
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Registration Statement,
the Prospectus and the Time of Sale Information.
(2) The Company has all requisite corporate power and authority to
execute and deliver the Underwriting Agreement and to perform its obligations
thereunder. The execution, delivery and performance of the Underwriting
Agreement by the Company have been duly authorized by all necessary corporate
action on the part of the Company. The Underwriting Agreement has been duly and
validly executed and delivered by the Company.
(3) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Time of Sale Information and
the Prospectus.
(4) The shares of Stock outstanding on the Closing Date have been duly
authorized and are validly issued, fully paid and non-assessable.
(5) The Shares to be sold by the Company under the Underwriting
Agreement have been duly authorized by the Company, and when issued and
delivered and paid for as provided therein, will be validly issued, fully paid
and non-assessable and will conform to the description thereof contained in the
Time of Sale Information and the Prospectus, and the issuance of the Shares will
not be subject to any preemptive or similar rights under the Company's Articles
of Incorporation or Bylaws or under the laws of the State of Nevada.
(6) The Company has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any business, so
as to require such qualification, other than where the failure to be so
qualified or in good standing would not have a Material Adverse Effect.
(7) Each of the Company's Significant Subsidiaries has been duly
incorporated and is validly existing as a corporation under the laws of its
jurisdiction of incorporation with power and authority (corporate and other) to
own its properties and conduct its business as described in the Registration
Statement, the Prospectus and the Time of Sale Information and has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases
B-1
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properties, or conducts any business, so as to require such qualification, other
than where the failure to be so qualified and in good standing would not have a
Material Adverse Effect; and all of the outstanding shares of capital stock of
each Significant Subsidiary have been duly and validly authorized and issued,
are fully paid and non assessable, and are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims.
(8) To such counsel's knowledge, after due inquiry, other than as set
forth, incorporated by reference or contemplated in the Registration Statement,
the Prospectus or the Time of Sale Information, there are no legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is or may be a party or to which any property of the Company or
its subsidiaries is or may be the subject which, if determined adversely to the
Company or such subsidiaries, could individually or in the aggregate reasonably
be expected to have a Material Adverse Effect. To such counsel's knowledge, no
such proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(9) Neither the Company nor any of its Significant Subsidiaries is, or
with the giving of notice or lapse of time or both would be, in violation of or
in default under, its Articles of Incorporation or Bylaws or any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument known
to such counsel to which the Company or any of its Significant Subsidiaries is a
party or by which it or any of them or any of their respective properties is
bound, except for violations and defaults which individually and in the
aggregate would not have a Material Adverse Effect. The issue and sale of the
Shares and the execution, delivery and performance by the Company of the
Underwriting Agreement and the consummation of the transactions therein
contemplated will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument known to such
counsel to which the Company or any of its Significant Subsidiaries is a party
or by which the Company or any of its Significant Subsidiaries is bound or to
which any of the property or assets of the Company or any of its Significant
Subsidiaries is subject, nor will any such action result in any violation of the
provisions of the Articles of Incorporation, or the Bylaws of the Company or any
applicable law or statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, its
Significant Subsidiaries or any of their respective properties.
(10) The Registration Statement was declared effective under the
Securities Act as of the date specified in such opinion; the Prospectus was
filed with the Commission pursuant to the subparagraph of Rule 424(b) under the
Securities Act specified in such opinion on the date specified therein; and no
order suspending the effectiveness of the Registration Statement has been issued
and no proceeding for that purpose or pursuant to Section 8A of the Securities
Act
B-2
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against the Company or in connection with the offering is pending or, to the
best knowledge of such counsel, threatened by the Commission.
(11) The Registration Statement, the Prospectus and the Basic
Prospectus contained in the Time of Sale Information (other than the financial
statements and schedules and other financial, accounting and statistical data
and the oil and gas reserve data, in each case contained or incorporated by
reference (including the notes thereto and auditor's report thereon) therein, as
to which such counsel need express no opinion) appeared on their face to comply
as to form in all material respects with the requirements of the Securities Act
as of the effective date thereof, as of the effective date of any amendment
thereto and as of the date of the Underwriting Agreement.
(12) No consent, approval, authorization or qualification of or with
any federal or state court, governmental agency or body is required for the
issue and sale of the Shares or the consummation by the Company of the
transactions contemplated by the Underwriting Agreement (other than federal
securities laws, as to which such counsel expresses no opinion in this
paragraph, and state securities or Blue Sky laws, as to which such counsel
expresses no opinion).
(13) 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 Prospectus, will not be required to register as an "investment company" as
defined in the Investment Company Act of 1940, as amended.
(14) The statements in the Registration Statement, the Prospectus and
the Basic Prospectus included in the Time of Sale Information, under the
caption(s) "Description of Capital Stock," and the statements incorporated by
reference in the Registration Statement and the Prospectus from Item 3 of Part I
of the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2006, insofar as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly present the information
called for with respect to such legal matters, documents or proceedings.
(15) Each document incorporated by reference in the Registration
Statement, the Prospectus and the Basic Prospectus contained in the Time of Sale
Information (other than the financial statements and schedules and other
financial, accounting and statistical data and the oil and gas reserve data, in
each case contained or incorporated by reference (including the notes thereto
and auditor's report thereon) therein, as to which such counsel need express no
opinion) appeared on its face to comply as to form when it was filed with the
Commission in all material respects with the Securities Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission thereunder;
In addition, such counsel shall state that because the primary purpose
of their engagement was not to establish or confirm factual matters or oil and
gas
B-3
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reserve or financial or statistical data and because of the wholly or partially
non-legal character of many of the statements contained or incorporated by
reference in the Registration Statement, the Prospectus and the Time of Sale
Information, they are not passing upon and do not assume any responsibility for
the accuracy, completeness or fairness of the statements contained or
incorporated by reference in the Registration Statement, the Prospectus and the
Time of Sale Information (except to the extent stated in paragraphs (3), (5),
(10) and (14)), and that they (i) have not independently verified the accuracy,
completeness or fairness of such statements and (ii) assume no responsibility
for and have not independently verified the accuracy, completeness or fairness
of the oil and gas reserve or financial statements and schedules and other
financial, accounting and statistical data included or incorporated by reference
in the Registration Statement, the Prospectus and the Time of Sale Information
and (iii) have not examined the production, financial, accounting or other
records from which such oil and gas reserves or financial statements and other
oil and gas reserve and financial and statistical data are derived. However,
such counsel shall state that they have participated in conferences with
officers and other representatives of the Company, representatives of the
independent registered public accountants of the Company, representatives of the
Underwriter and counsel for the Underwriter, at which conferences, the contents
of the Registration Statement, the Prospectus, the Time of Sale Information and
any amendment and supplement thereto and related matters were discussed. Such
counsel shall further state that, based on the participation described above in
the course of acting as counsel to the Company, no information has come to their
attention that has caused such counsel to believe that, (A) the Registration
Statement, at the time of its effective date (including the information, if any,
deemed pursuant to Rule 430A or Rule 430B to be part of the Registration
Statement at the time of effectiveness) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; (B) the Time of Sale
Information, at the Time of Sale, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (C) that the
Prospectus or any amendment or supplement thereto as of its date and the Closing
Date contained or contains any untrue statement of a material fact or omitted or
omits 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 (other than the financial statements and schedules and other
financial, accounting and statistical data and the oil and gas reserve data, in
each case contained or incorporated by reference (including the notes thereto
and auditor's report thereon) therein, as to which such counsel need not express
any belief).
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
the States of Colorado and Nevada, to the extent such counsel deems proper and
to the extent specified in such opinion, if at all, upon an opinion or opinions
B-4
(NY) 27961/057/UA/ua.doc
(reasonably satisfactory to Underwriter's counsel) of other counsel reasonably
acceptable to the Underwriter's counsel, familiar with the applicable laws; and
(B) as to matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and certificates or other
written statements of officials of jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company. The opinion
of such counsel for the Company shall state that the opinion of any such other
counsel is in form satisfactory to such counsel and, in such counsel's opinion,
the Underwriter and they are justified in relying thereon.
The opinion of Dill Dill Carr Stonbraker & Hutchings P.C. described
above shall be rendered to the Underwriter at the request of the Company and
shall so that therein.
B-5
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ANNEX D
PRICING TERM SHEET
None
C-1
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EXHIBIT A
FORM OF LOCK-UP AGREEMENT
April , 2007
J.P. Morgan Securities Inc.
277 Park Avenue
New York, NY 10172
Re: Gasco Energy, Inc. -- Public Offering
Ladies and Gentlemen:
The undersigned understands that you, as underwriter (the
"UNDERWRITER"), propose to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with Gasco Energy, Inc., a Nevada corporation (the
"COMPANY"), providing for the public offering (the "PUBLIC OFFERING") of common
stock, par value $0.0001 per share, of the Company (the "SECURITIES").
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Underwriting Agreement.
In consideration of the Underwriter's 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 the Underwriter, the
undersigned will not, during the period commencing on the date hereof and ending
90 days after the date of the prospectus supplement 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, par value $0.0001 per share par value, of the Company (the "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 and securities which may
be issued upon exercise of a stock option or warrant) or (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. In addition, the
undersigned agrees that, without the prior written consent of the Underwriter,
it will not, during the period commencing on the date hereof and ending 90 days
after the date of the Prospectus, 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
Exhibit A-1
(NY) 27961/057/UA/ua.doc
for Common Stock. Notwithstanding the foregoing, if (1) during the last 17 days
of the 90-day restricted period, the Company issues an earnings release or
material news or a material event relating to the Company occurs; or (2) prior
to the expiration of the 90-day restricted period, the Company announces that it
will release earnings results during the 16-day period beginning on the last day
of the 90-day period, the restrictions imposed by this Letter Agreement shall
continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the occurrence of the material news or
material event.
The foregoing restrictions shall not apply to (a) transfers of Common
Stock by gift, will or intestacy, including without limitation transfers by
gift, will or intestacy to family members of the undersigned or to a settlement
or trust established under the laws of any country or (b) sale of Stock acquired
upon exercise of options outstanding under the Company's stock option agreements
and stock option plan, in each case existing on the date of the Prospectus or
(c) a pledge of shares of Common Stock by the undersigned under an agreement
existing prior to the date of this Lock-Up Agreement PROVIDED that in the event
of any transfer pursuant to clause (a), the transferee shall enter into a
lock-up agreement substantially in the form of this Lock-Up Agreement covering
the remainder of the 90-day period referred to herein.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
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 within 10 days following the date hereof, 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
form all obligations under this Letter Agreement.
The undersigned understands that the Underwriter is entering into the
Underwriting Agreement and proceeding with the Public Offering in reliance upon
this Letter Agreement.
Exhibit A-2
(NY) 27961/057/UA/ua.doc
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.
Very truly yours,
------------------------------------------
(Name)
------------------------------------------
(Address)
Exhibit A-3
(NY) 27961/057/UA/ua.doc
EXHIBIT A-1
PERSONS SUBJECT TO LOCK-UP
Marc Bruner
Mark A. Erickson
Michael K. Decker
W. King Grant
Richard J. Burgess
Charles B. Crowell
Carmen J. Lotito
Carl Stadelhofer
John A. Schmit
Richard S. Langdon
Exhibit A1-1
(NY) 27961/057/UA/ua.doc