Exhibit
10.63


 


[·] Shares


 


Resaca Exploitation, Inc.


 


Common Stock


 


($0.01 Par Value)


 


EQUITY UNDERWRITING
AGREEMENT


 


                  ,
2010


 


RBC Capital Markets Corporation


As the Representative of the


     several underwriters named in Schedule I
hereto


c/o RBC Capital Markets


One Liberty Plaza, 165 Broadway


New York, NY 10006-1404


 


Ladies and Gentlemen:


 


Resaca Exploitation, Inc., a Texas corporation (the “Issuer”),
proposes to sell to the several underwriters (the “Underwriters”) named
in Schedule I hereto for whom you are acting as Representative (the “Representative”)
an aggregate of [·] shares of the
Issuer’s common stock, $0.01 par value (the “Firm Securities”).  The respective amounts of the Firm Securities
to be so purchased by the several Underwriters are set forth opposite their
names in Schedule I hereto.  The
Issuer also proposes to sell at the Underwriters’ option an aggregate of up to
[·] additional
shares of the Issuer’s common stock (the “Option Securities”) as set
forth in Section 2 below.


 


As the Representative, you have advised the Issuer (a)  that you
are authorized to enter into this Equity Underwriting Agreement (this “Agreement”)
on behalf of the several Underwriters, and (b) that the several
Underwriters are willing, acting severally and not jointly, to purchase the
numbers of Firm Securities set forth opposite their respective names in Schedule
I, plus their pro rata portion of the Option Securities if you elect to
exercise the over-allotment option in whole or in part for the accounts of the
several Underwriters.  The Firm
Securities and the Option Securities (to the extent the aforementioned option
is exercised) are herein collectively called the “Shares.”


 


The Issuer has prepared a registration statement on Form S-1 (File
No. 333-164551) with respect to the Shares pursuant to the Securities Act
of 1933, as amended (the “Securities Act”), 


 

















 


and the rules and regulations (the “Rules and Regulations”)
of the United States Securities and Exchange Commission (the “Commission”)
thereunder.  As used in this Agreement, “Effective
Time” means the date and the time as of which such registration statement,
or the most recent post-effective amendment thereto, if any, was declared
effective by the Commission; “Effective Date” means the date of the
Effective Time; “Preliminary Prospectus” means each prospectus included
in such registration statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus filed with the Commission
by the Issuer with the consent of the Underwriters pursuant to Rule 424(a) of
the Rules and Regulations; “Pricing
Prospectus” means the Preliminary Prospectus that was included in
the Registration Statement immediately prior to the Applicable Time (as defined
below);  “Prospectus” means the prospectus in
the form first used to confirm sales of Shares; “Registration Statement” means such registration
statement, as amended at the Effective Time, including all information deemed
to be a part of the registration statement as of the Effective Time pursuant to
Rule 430A of the Rules and Regulations; “Free Writing Prospectus”
means any “free writing prospectus” as
defined in Rule 405 under the Securities Act relating to the Shares; and “Issuer Free Writing Prospectus”
means any “issuer free writing
prospectus” as defined in Rule 433 under the Securities Act relating to
the Shares.  If the Issuer has
filed an abbreviated registration statement to register additional Common
Securities 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.  For the purposes of this Agreement, the “Applicable
Time” is
      :      
    m (Eastern time) on the date of this Agreement.


 


In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:


 


1.                                       REPRESENTATIONS
AND WARRANTIES OF THE ISSUER.


 


The Issuer represents and warrants to each of the Underwriters as
follows:


 


(a)           The Registration Statement has been
filed with the Commission under the Securities Act and has become effective
under the Securities Act.  No stop order
suspending the effectiveness of such registration statement is in effect, and
no proceedings for such purpose are pending before or, to the knowledge of the
Issuer, threatened by the Commission. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus or any Issuer
Free Writing Prospectus.  Copies of such
registration statement and each of the amendments thereto have been delivered
by the Issuer to you.  The Registration
Statement conforms, and any further amendments or supplements to the
Registration Statement will conform, in all material respects to the
requirements of the Securities Act and the Rules and Regulations.  The Prospectus and the Pricing Prospectus
each conforms and, as amended or supplemented, will conform, in all material
respects to the requirements of the Securities Act and the Rules and
Regulations.  As of the Effective Date,
the date hereof, the Closing Date (as defined below) and each Option Closing
Date (as defined below), if any, the Registration Statement does not and will
not, and any further amendments to the Registration Statement will not, when
they become effective, contain an untrue statement of a material fact or omit
to state a 


 


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material
fact required to be stated therein or necessary to make the statements therein
not misleading; as of its date and the date hereof, the Prospectus does not,
and as amended or supplemented on the Closing Date and each Option Closing
Date, if any, will not, contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; the Pricing Prospectus, as supplemented by the
Issuer Free Writing Prospectuses and other documents listed in Schedule II(a) hereto,
taken together with the final pricing information included on the cover page of
the Prospectus (collectively, the “Disclosure Package”), as of the
Applicable Time did not 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 under which they were made, not misleading;
each Issuer Free Writing Prospectus listed on Schedule II(a) or Schedule
II(b) hereto does not conflict with the information contained in the
Registration Statement; and each such Issuer Free Writing Prospectus listed on
Schedule II(b), as supplemented by and taken together with the Disclosure
Package as of the Applicable Time, did not 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 under which they were
made, not misleading; provided, however,
that the representations and warranties set forth in this sentence do not apply
to statements or omissions in the Registration Statement, the Prospectus, the
Pricing Prospectus or any Issuer Free Writing Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Issuer by any Underwriter through RBC Capital Markets
Corporation expressly for use therein, such information being listed in Section 15
below.  The Issuer filed the Registration
Statement with the Commission before using any Issuer Free Writing Prospectus
and each Issuer Free Writing Prospectus was preceded or accompanied by the most
recent Preliminary Prospectus satisfying the requirements of Section 10
under the Securities Act, which Preliminary Prospectus included an estimated
price range.


 


(b)           Each of the statements made by the
Issuer in such documents within the coverage of Rule 175(b) of the Rules and
Regulations, including (but not limited to) any projections, results of
operations or statements with respect to future available cash or future cash
distributions of the Issuer or the anticipated ratio of taxable income to
distributions, was made or will be made with a reasonable basis and in good
faith.  Notwithstanding the foregoing,
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with written information concerning the
Underwriters furnished to the Issuer by or on behalf of any Underwriter
specifically for inclusion in the Registration Statement, the Pricing Prospectus or the Prospectus.


 


(c)           This
Agreement has been duly authorized, executed and delivered by the Issuer, and
constitutes a valid, legal, and binding obligation of the Issuer, enforceable
in accordance with its terms, except as rights to indemnity hereunder may be
limited by federal or state securities laws and except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally, and subject to general principles
of equity.  The Issuer has full power and
authority to enter into this Agreement and to authorize, issue and sell the
Shares as contemplated by this Agreement.


 


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(d)           The
Issuer has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Texas with corporate power and
authority to own or lease its properties and conduct its business as described
in the Prospectus and the Disclosure Package. 
Each of the subsidiaries of the Issuer, as listed in Exhibit A
hereto (collectively, the “Subsidiaries”), has been duly organized and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority to own or
lease its properties and conduct its business as described in the Prospectus
and the Disclosure Package.  The
Subsidiaries are the only subsidiaries, direct or indirect, of the Issuer.  The Issuer and each of the Subsidiaries are
duly qualified to transact business and are in good standing in all
jurisdictions in which the conduct of their business requires such
qualification; except where the failure to be so qualified or to be in good
standing would not have a material adverse effect on the condition (financial
or otherwise), properties, assets, liabilities, rights, operations, earnings,
business, management or prospects of the Issuer and its Subsidiaries taken as a
whole, whether or not arising from transactions in the ordinary course of
business (a “Material Adverse Effect”). 
The outstanding shares of capital stock of each of the Subsidiaries have
been duly authorized and validly issued, are fully paid and non-assessable and,
except as otherwise provided in the New Facility (as defined in the Prospectus)
and as disclosed in the Prospectus and the Disclosure Package, are wholly owned
by the Issuer or another Subsidiary free and clear of all liens, encumbrances
and equities and claims; and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in the
Subsidiaries are outstanding.


 


(e)           The
outstanding shares of common stock of the Issuer have been duly authorized and
validly issued and are fully paid and non-assessable; the Shares to be issued
and sold by the Issuer have been duly authorized and when issued and paid for
as contemplated herein will be validly issued, fully paid and non-assessable;
and, except as disclosed in the Prospectus and the Disclosure Package, no
preemptive rights of shareholders of the Issuer exist with respect to any of
the outstanding shares of common stock of the Issuer, the Shares or the issue
and sale of the Shares.  Except as
disclosed in the Prospectus and the Disclosure Package, neither the filing of
the Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights, other than those which
have been waived or satisfied, for or relating to the registration of any
shares of common stock of the Issuer.


 


(f)            The information set
forth under the caption “Capitalization” in the Prospectus and the Disclosure
Package is true and correct.  All of the
Shares conform to the description thereof contained in the Prospectus and the
Disclosure Package.  The form of
certificates for the Shares conforms to the corporate law of the jurisdiction
of the Issuer’s incorporation.  Except as
fully and accurately described in the Prospectus and the Disclosure Package,
immediately after the issuance and sale of the Shares to the Underwriters, no
shares of the preferred stock of the Issuer shall be issued and outstanding and
no holder of any shares of capital stock, securities convertible into or
exchangeable or exercisable for capital stock or options, warrants or other
rights to purchase capital stock or any other securities of the Issuer shall
have any existing or future right to acquire any shares of Preferred Stock of
the Issuer.  No holders of 


 


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securities
of the Issuer have rights to the registration of such securities under the
Registration Statement that have not been waived.


 


(g)           The consolidated
financial statements of the Issuer and the Subsidiaries, together with related
notes and schedules as set forth in the Registration Statement, the Prospectus
and the Disclosure Package, present fairly the financial position and the
results of operations and cash flows of the entities purported to be shown
therein, at the indicated dates and for the indicated periods; provided, however, that as to the consolidated financial
statements of Cano Petroleum, Inc., a Delaware corporation (“Cano”),
such foregoing representation is made to the knowledge of the executive
officers of the Issuer.  Such financial
statements and related schedules have been prepared in accordance with U.S.
generally accepted principles of accounting, consistently applied throughout
the periods involved, except as disclosed therein, and all adjustments
necessary for a fair presentation of results for such periods have been made; provided, however, that as to the consolidated financial
statements of Cano such foregoing representation is made to the knowledge of the
executive officers of the Issuer. The summary financial and statistical data
included in the Registration Statement, the Prospectus and the Disclosure
Package presents fairly the information shown therein and such data has been
compiled on a basis consistent with the financial statements presented therein
and the books and records of the entities purported to be shown therein; provided, however, that as to the summary financial and
statistical data of Cano, such foregoing representation is made to the knowledge
of the executive officers of the Issuer. 
The pro forma financial statements and other pro forma financial
information included in the Registration Statement, Prospectus and the
Disclosure Package present fairly the information shown therein, have been
prepared in accordance with the Commission’s rules and guidelines with
respect to pro forma financial statements, have been properly compiled on the
pro forma bases described therein, and, in the opinion of the Issuer, the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions or
circumstances referred to therein.  The
statistical, industry-related and market-related data included in
the Registration Statement, the Prospectus and the Disclosure Package are based
on or derived from sources which the Issuer reasonably and in good faith
believes are reliable and accurate.


 


(h)           The Issuer maintains
a system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles as applied in the
United States and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.


 


(i)            UHY LLP and Hein &
Associates LLP, which each has certified certain financial statements of the
Issuer and Cano, respectively, contained in the Registration Statement or the
Prospectus and delivered its opinion with respect to its respective audited
financial statements and schedules included in the Registration Statement and
included or incorporated by reference in the Prospectus, is an independent
registered public accounting firm with respect to 


 


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the entity purported to be shown in such audited financial statements
and schedules within the meaning Regulation S-X under of the Securities Act and
the Exchange Act.


 


(j)            Haas Petroleum
Engineering Services, Inc., whose reports dated January 22, 2010 and March 24,
2010 are referenced in the Registration and Prospectus, and Miller &
Lents, Ltd., whose report dated July 14 is referenced in the Registration
Statement and Prospectus, were, as of the date of such reports, and are, as of
the date hereof, independent petroleum engineers with respect to the Issuer and
Cano, respectively.


 


(k)           The oil and natural gas reserve
estimates contained or incorporated by reference into the Registration
Statement and included in the Prospectus have been prepared by independent
reserve engineers in accordance with Commission guidelines applied on a
consistent basis throughout the periods involved, and the Issuer and the
Subsidiaries have no reason to believe that such estimates do not fairly
reflect the oil and natural gas reserves of the Issuer and the Subsidiaries as
of the dates indicated; provided, however,
that as to the oil and natural gas reserve estimates of Cano, such foregoing
representation is made to the knowledge of the executive officers of the
Issuer.  Other than production of the
reserves in the ordinary course of business and intervening product price
fluctuations described in the Registration Statement and the Prospectus, the
Issuer and the Subsidiaries are not aware of any facts or circumstances that
would cause a Material Adverse Effect in the reserves or the present value of
future net cash flows therefrom as described in the Registration Statement or
the Prospectus.


 


(l)            There are no legal or governmental
actions, suits or proceedings pending or, to the the Issuer’s knowledge,
threatened (i) against or affecting the Issuer or any of the Subsidiaries
or (ii) which has as the subject thereof any property owned or leased by,
the Issuer or any of the Subsidiaries, where in any such case any such action,
suit or proceeding, if so determined adversely, would reasonably be expected to
result in a Material Adverse Effect or adversely affect the consummation of the
transactions contemplated by this Agreement..


 


(m)          No labor problem or
dispute with the employees of the Issuer or the Subsidiaries exists or, to the
Issuer’s knowledge, is threatened or imminent, and the Issuer is not aware of
any existing or imminent labor disturbance by the employees of any of its or
its Subsidiaries’ principal suppliers, contractors or customers, that could
have a Material Adverse Effect.


 


(n)           The Issuer and the Subsidiaries have
satisfactory or good and defensible title to substantially all of its interests
in its oil and gas properties, title investigations having been carried out by
or on behalf of such persons in accordance with standards generally accepted in
the oil and gas industry in the areas in which the Issuer and the Subsidiaries
operate and good and defensible title to all other real property and other
natural properties and assets owned by the Issuer and the Subsidiaries as reflected
in the financial statements (or as described in the Prospectus and the
Disclosure Package) hereinabove described, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except those reflected in such
financial statements (or as described in the Prospectus and the Disclosure
Package) or which are not material in amount. 
The Issuer and the 


 


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Subsidiaries
occupy their leased properties under valid and binding leases conforming in all
material respects to the description thereof set forth in the Prospectus and
the Disclosure Package.


 


(o)           The Issuer and the
Subsidiaries have filed all Federal, State, local and foreign tax returns which
have been required to be filed and have paid all taxes indicated by said
returns 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 and for
which an adequate reserve for accrual has been established in accordance with
U.S. generally accepted accounting principles applied in the United
States.  All tax liabilities have been
adequately provided for in the financial statements of the Issuer, and the
Issuer has no knowledge of any actual or proposed additional material tax
assessments.  There are no transfer taxes
or other similar fees or charges under Federal law or the laws of any state, or
any political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance by the Issuer or sale
by the Issuer of the Shares.


 


(p)           Since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, as it may be amended or supplemented, there has not been any
material adverse change or any development involving a prospective change which
has had or is reasonably likely to have a Material Adverse Effect, whether or
not occurring in the ordinary course of business, and there has not been any
material transaction entered into or any material transaction that is probable
of being entered into by the Issuer or the Subsidiaries, other than
transactions in the ordinary course of business and changes and transactions
described in the Prospectus and the Disclosure Package.  The Issuer and the Subsidiaries have no
material contingent obligations that are not disclosed in the Issuer’s
financial statements in the Registration Statement and the Prospectus.


 


(q)           Neither the Issuer
nor any of the Subsidiaries is or with the giving of notice or lapse of time or
both, will be, in violation of or in default under its Certificate of
Formation, Certificate of Incorporation or equivalent charter document (“Charter”)
or By-Laws or under any agreement, lease, contract, indenture or other
instrument or obligation to which it is a party or by which it, or any of its
properties, is bound and which default has had or is reasonably likely to have
a Material Adverse Effect.  The execution
and delivery of this Agreement and the consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, any contract, indenture, mortgage, deed of trust or other
agreement or instrument to which the Issuer or any of the Subsidiaries is a
party, or of the Charter or By-Laws of the Issuer or any order, rule or
regulation applicable to the Issuer or any of the Subsidiaries of any court or
of any regulatory body or administrative agency or other governmental body
having jurisdiction.


 


(r)            No consent,
approval, authorization or other order of, or registration or filing with, any
court or other governmental or regulatory authority or agency, is required for
the Issuer’s execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby, by the Disclosure Package
and by the Prospectus, except such as have been 


 


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obtained or made by the Issuer and are in full force and effect under
the Securities Act, and applicable state securities or blue sky laws.


 


(s)           The Issuer and each of the
Subsidiaries has all material licenses, certifications, permits, franchises,
approvals, clearances and other regulatory authorizations (“Permits”)
from governmental authorities as are necessary to conduct its businesses as
currently conducted and to own, lease and operate its properties in the manner
described in the Prospectus and the Disclosure Package.  There is no claim, proceeding or controversy,
pending or, to the knowledge of the Issuer or any of the Subsidiaries,
threatened, involving the status of or sanctions under any of the Permits.  The Issuer and each of the Subsidiaries has
fulfilled and performed all of its material obligations with respect to the
Permits, and, to the knowledge of the Issuer and each of the Subsidiaries, no
event has occurred which allows, or after notice or lapse of time would allow,
the revocation, termination, modification or other impairment of the rights of
the Issuer or any of the Subsidiaries under such Permit.  None of the Permits contains any restriction
that is materially burdensome on the Issuer or any of its Subsidiaries.


 


(t)            To the Issuer’s
knowledge, there are no affiliations or associations between any member of the
FINRA and any of the Issuer’s officers, directors or 5% or greater security
holders, except as set forth in the Registration Statement.


 


(u)           Neither
the Issuer, nor to the Issuer’s knowledge, any of its affiliates, has taken or
may take, directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of common stock of the
Issuer to facilitate the sale or resale of the Shares.  The Issuer acknowledges that the Underwriters
may engage in passive market making transactions in the Shares on the NYSE Amex
in accordance with Regulation M under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”).


 


(v)           Neither the Issuer
nor any of the Subsidiaries is an “investment company” within the meaning of
such term under the Investment Issuer Act of 1940, as amended, and the rules and
regulations of the Commission thereunder (collectively, the “1940 Act”).


 


(w)          The Issuer and each
of the Subsidiaries carry, or are covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of their respective
businesses and the value of their respective properties, to the Issuer’s
knowledge, and as is customary for companies engaged in similar
industries.  All policies of insurance
insuring the Issuer or any Subsidiary or any of their respective businesses,
assets, employees, officers and directors are in full force and effect, and the
Issuer and the Subsidiaries are in compliance with the terms of such policies
in all material respects. There are no claims by the Issuer or any Subsidiary
under any such policy or instrument as to which an insurance company is denying
liability or defending under a reservation of rights clause.


 


(x)            The Issuer is in
compliance in all material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended, 


 


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including the regulations and published interpretations thereunder (“ERISA”);
no “reportable event” (as defined in ERISA) has occurred with respect to any “pension
plan” (as defined in ERISA) for which the Issuer would have any liability; the
Issuer 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) Sections 412 or 4971 of the Internal Revenue Code of 1986,
as amended, including the regulations and published interpretations thereunder
(the “Code”); and each “pension plan” for which the Issuer would have
any liability that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification.


 


(y)           Other than as contemplated by this
Agreement or disclosed in the Registration Statement, the Issuer has not
incurred any liability for any finder’s or broker’s fee, or agent’s commission
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.


 


(z)            The Issuer’s merger with Cano (the “Merger”)
has been approved by the Board of Directors and the shareholders of the Issuer
and Cano in accordance with applicable law and complies in all respects with
all applicable laws of the States of Texas and Delaware and the U.S. federal
securities laws. The Issuer has received all necessary consents, authorizations
and approvals of third parties necessary to effect the Merger and the Issuer is
aware of no impediments to the scheduled closing of the Merger on [·], 2010.


 


(aa)         Other than the
Subsidiaries, the Issuer does not own, directly or indirectly, any shares of
capital stock and does not have any other equity or ownership or proprietary
interest in any corporation, partnership, association, trust, limited liability
company, joint venture or other entity.


 


(bb)         There are no statutes, regulations,
contracts or other documents (including, without limitation, any voting
agreement) that are required to be described in the Registration Statement, the
Prospectus or the Disclosure Package or to be filed as exhibits to the
Registration Statement that are not described or filed as required.  Neither the Issuer nor any of the
Subsidiaries has sent or received any notice indicating the termination of or
intention to terminate any of the contracts or agreements referred to or described
in the Registration Statement, Prospectus or the Disclosure Package, or filed
as an exhibit to the Registration Statement, and no such termination has been
threatened by the Issuer, any Subsidiary or any other party to any such
contract or agreement.


 


(cc)         To the Knowledge of the Issuer, neither
the Issuer nor any Subsidiary is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of hazardous
chemicals, toxic substances or radioactive and biological materials or relating
to the protection or restoration of the environment or human exposure to
hazardous chemicals, toxic substances or radioactive and biological materials
(collectively, “Environmental Laws”). 
To the knowledge of the Issuer, neither the Issuer nor the Subsidiaries
own or operate any real property contaminated 


 


9

















 


with
any substance that is subject to any Environmental Laws, is liable for any
off-site disposal or contamination pursuant to any Environmental Laws, or is
subject to any claim relating to any Environmental Laws, which violation,
contamination, liability or claim would individually or in the aggregate have a
Material Adverse Effect; and the Issuer is not aware of any pending
investigation which might lead to such a claim.


 


(dd)         Neither the Issuer
nor any of the Subsidiaries, nor, to the knowledge of the Issuer, any of its
directors, officers, agents, employees, affiliates or other persons acting on
behalf of the Issuer or the Subsidiaries is aware of or has taken any action,
directly or indirectly, that would result in a violation by such persons of the
Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder (the “FCPA”), including, without limitation,
making use of the mails or any means or instrumentality of interstate commerce
corruptly in the furtherance of any offer, payment, promise to pay or
authorization of the payment of any money, or other property, gift, promise to
give, or authorization of the giving of anything of value to any “foreign
official” (as such term is defined in the FCPA) or any foreign political party
or official thereof or any candidate for foreign political office, in
contravention of the FCPA and the Issuer and, to the knowledge of the Issuer,
its affiliates have conducted their business in compliance with the CPA and
have instituted and maintain policies and procedures designated to ensure, and
which are reasonably expected to continue to ensure, continued compliance
therewith.


 


(ee)         No forward-looking statement (within
the meanings of Section 27A of the Act and Section 21E under the
Exchange Act) or presentation of market related or statistical related
contained in either the Disclosure Package or Prospectus has been made or
reaffirmed without a reasonable basis or has been disclosed in other than good
faith.


 


(ff)           Any certificate signed by any officer
of the Issuer and delivered to the Representative or counsel for the
Underwriters in connection with the offering of the Shares contemplated hereby
shall be deemed a representation and warranty by the Issuer to each Underwriter
and shall be deemed to be a part of this Section 1 and incorporated herein
by this reference.


 


(gg)         To the knowledge of the executive
officers of the Issuer, Cano is in compliance with all applicable provisions of
the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley
Act”).


 


(hh)         The Issuer is actively taking steps so
that it will be in compliance with the Sarbanes-Oxley Act that will become applicable
to the Issuer following the completion of the Merger and the offering of the
Shares.


 


(ii)           The Issuer has established and
maintains “disclosure controls and procedures” (as defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act) as are applicable to it; the Issuer’s
“disclosure controls and procedures” are reasonably designed to ensure that all
information (both financial and non-financial) required to be disclosed
by the Issuer in the reports that it will file or furnish under the Exchange
Act is recorded, processed,


 


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summarized
and reported within the time periods specified in the rules and
regulations of the Commission, and that all such information is accumulated and
communicated to the Issuer’s management as appropriate to allow timely
decisions regarding required disclosure and to make the certifications of the
Chief Executive Officer and Chief Financial Officer of the Issuer required
under the Exchange Act with respect to such reports.


 


(jj)                                  There are no
outstanding loans, advances (except normal advances for business expenses in
the ordinary course of business) or guarantees of indebtedness by the Issuer to
or for the benefit of any of the officers or directors of the Issuer or any of
their respective family members, except as disclosed in the Prospectus and the
Disclosure Package. The Issuer has not directly or indirectly extended or
maintained credit, arranged for the extension of credit, or renewed an
extension of credit, in the form of a personal loan to or for any director or
executive officer of the Issuer.


 


(kk)                            The section
entitled “Management’s Discussion and Analysis of Financial Condition and
Results of Operation — Critical Accounting Policies and Estimates” in the
Registration Statement, the Prospectus and the Disclosure Package accurately
and fully describes accounting policies which the Issuer believes are the most
important in the portrayal of the financial condition and results of operations
of the Issuer and its Subsidiaries and which require management’s most
difficult, subjective or complex judgments.


 


(ll)                                  Neither the
Issuer nor any of its affiliates has, prior to the date hereof, made any offer
or sale of any securities which could be “integrated” for purposes of the
Securities Act or the rules and regulations promulgated thereunder with
the offer and sale of the Shares pursuant to the Registration Statement. Except
as disclosed in the Prospectus and the Disclosure Package, neither the Issuer
nor any of its affiliates has sold or issued any security during the
six-month period preceding the date of the Prospectus, including but not
limited to any sales pursuant to Rule 144A or Regulation D or S under the
Securities Act, other than shares of common stock of the Issuer issued pursuant
to employee benefit plans, qualified stock option plans or the employee
compensation plans or pursuant to outstanding options, rights or warrants as
described in the Prospectus and the Disclosure Package.


 


2.                                       PURCHASE, SALE
AND DELIVERY OF THE FIRM SECURITIES.


 


(a)                                  On the basis of the representations, warranties and covenants herein
contained, and subject to the conditions herein set forth, the Issuer agrees to
sell to the Underwriters and each Underwriter agrees, severally and not
jointly, to purchase, at a price of $[ ] per share, the number of Firm Securities set forth opposite the name of
each Underwriter in Schedule I hereof, subject to adjustments in
accordance with Section 8 hereof.


 


(b)                                 Payment for the
Firm Securities to be sold hereunder is to be made in New York Clearing House
funds by Federal (same day) against delivery of certificates therefor to the
Representative for the several accounts of the Underwriters.  Such payment and delivery are to be made
through the facilities of the Depository Trust Issuer, New York, New York at
10:00 a.m., 


 


11

















 


New York time, on the third business day after the date of this
Agreement or at such other time and date not later than five business days
thereafter as you and the Issuer shall agree upon, such time and date being
herein referred to as the “Closing Date.”  As used herein, “business day” means a day on
which the New York Stock Exchange is open for trading and on which banks in New
York are open for business and are not permitted by law or executive order to
be closed.


 


(c)                                  In addition, on
the basis of the representations and warranties herein contained and subject to
the terms and conditions herein set forth, the Issuer hereby grants an option
to the several Underwriters to purchase the Option Securities at the price per
share as set forth in the paragraph (a) of this Section.  The option granted hereby may be exercised in
whole or in part by giving written notice within 30 days after the date of this
Agreement, by you, as the Representative of the several Underwriters, to the
Issuer setting forth the number of Option Securities as to which the several
Underwriters are exercising the option, the names and denominations in which
the Option Securities are to be registered and the time and date at which such
certificates are to be delivered.  The
time and date at which certificates for Option Securities are to be delivered
shall be determined by the Representative but shall not be earlier than three
nor later than 5 full business days after the exercise of such option, nor in
any event prior to the Closing Date (such time and date being herein referred
to as the “Option Closing Date”). 
If the date of exercise of the option is three or more days before the
Closing Date, the notice of exercise shall set the Closing Date as the Option
Closing Date.  The number of Option
Securities to be purchased by each Underwriter shall be in the same proportion
to the total number of Option Securities being purchased as the number of Firm
Securities being purchased by such Underwriter bears to the total number of
Firm Securities, adjusted by you in such manner as to avoid fractional
shares.  The option with respect to the
Option Securities granted hereunder may be exercised only to cover
over-allotments in the sale of the Firm Securities by the Underwriters.  To the extent, if any, that the option is
exercised, payment for the Option Securities shall be made on the Option
Closing Date in Federal (same day funds) through the facilities of the
Depository Trust Issuer in New York, New York drawn to the order of the Issuer.


 


3.                                       OFFERING BY THE
UNDERWRITERS.


 


It is
understood that the several Underwriters are to make a public offering of the
Firm Securities as soon as the Representative deems it advisable to do so.  The Firm Securities are to be initially offered
to the public at the initial public offering price set forth in the
Prospectus.  To the extent, if at all,
that any Option Securities are purchased pursuant to Section 2 hereof, the
Underwriters will offer them to the public on the foregoing terms.


 


It is further understood that you will act as the Representative for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.


 


12

















 


4.                                       COVENANTS.


 


(a)                                  The Issuer -
covenants and agrees with the several Underwriters that it will (i) prepare
and timely file with the Commission under Rule 424(b) of the Rules and
Regulations a Prospectus in a form approved by the Representative containing
information previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rule 430A of the Rules and Regulations; (ii) not
file any amendment to the Registration Statement or supplement to the
Prospectus, any Preliminary Prospectus or any Issuer Free Writing Prospectus of
which RBC Capital Markets Corporation shall not previously have been advised
and furnished with a copy or to which the Representative shall have reasonably
objected in writing or which is not in compliance with the Rules and
Regulations; and (iii) file on a timely basis all reports and any
definitive proxy or information statements required to be filed by the Issuer
with the Commission subsequent to the date of the Prospectus and prior to the
termination of the offering of the Shares by the Underwriters.


 


(b)                                 The Issuer has not distributed and without the prior consent of RBC Capital Markets
Corporation, it will not distribute any prospectus or other offering
material (including, without limitation, any offer relating to the Shares that would
constitute a Free Writing Prospectus and content on the Issuer’s website
that may be deemed to be a prospectus or other offering material) in connection
with the offering and sale of the Shares, other than the materials referred to
in Section 1(a).   Each Underwriter represents
and agrees that it has not made and, without the prior consent of the Issuer
and RBC Capital Markets Corporation, it will not make, any offer relating to
the Offered Securities that would constitute an Issuer Free Writing
Prospectus.  Any such Issuer Free Writing
Prospectus the use of which has been consented to by the Issuer and RBC Capital
Markets Corporation, is listed on Schedule II(a) or Schedule II(b) hereto.  The
Issuer has complied and will comply with the requirements of Rule 433
under the Securities Act applicable to any Issuer Free Writing Prospectus,
including timely filing with the Commission or retention where required and
legending.  The Issuer represents that it
has satisfied and agrees that it will satisfy the conditions under Rule 433
under the Securities Act to avoid a requirement to file with the Commission any
electronic road show.  The Issuer agrees
that if at any time following issuance of an Issuer Free Writing Prospectus any
event occurred or occurs as a result of which such Issuer Free Writing
Prospectus would conflict with the information in the Registration Statement,
the Pricing Prospectus or the Prospectus or would include an untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances then prevailing, not
misleading, the Issuer will give prompt notice thereof to RBC Capital Markets
Corporation and, if requested by RBC Capital Markets Corporation, will prepare
and furnish without charge to each Underwriter an Issuer Free Writing
Prospectus or other document which will correct such conflict, statement or
omission.


 


(c)                                  The Issuer will
not take, directly or indirectly, any action designed to cause or result in, or
that has constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any securities of the Issuer.


 


13

















 


(d)                                 The Issuer will advise the Representative promptly (i) when the
Registration Statement or any post-effective amendment thereto shall have
become effective; (ii) of receipt of any comments from the Commission; (iii) of
any request of the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information; and (iv) of
the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the use of the Prospectus or of the
institution of any proceedings for that purpose.  The Issuer will use its commercially
reasonable efforts to prevent the issuance of any such stop order preventing or
suspending the use of the Prospectus and to obtain as soon as possible the
lifting thereof, if issued.


 


(e)                                  The Issuer will
cooperate with the Representative in endeavoring to qualify the Shares for sale
under the securities laws of such jurisdictions as the Representative may
reasonably have designated in writing and will make such applications, file
such documents, and furnish such information as may be reasonably required for
that purpose, provided the Issuer shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so qualified or
required to file such a consent.  The
Issuer will, from time to time, prepare and file such statements, reports, and
other documents, as are or may be required to continue such qualifications in
effect for so long a period as the Representative may reasonably request for
distribution of the Shares.


 


(f)                                    The Issuer will
deliver to, or upon the order of, the Representative, from time to time, as
many copies of any Preliminary Prospectus as the Representative may reasonably
request.  The Issuer will deliver to, or
upon the order of, the Representative during the period when delivery of a
Prospectus is required under the Securities Act, as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representative may reasonably request. 
The Issuer will deliver to the Representative at or before the Closing
Date, four signed copies of the Registration Statement and all amendments
thereto including all exhibits filed therewith, and will deliver to the
Representative such number of copies of the Registration Statement (including
such number of copies of the exhibits filed therewith that may reasonably be
requested) and of all amendments thereto, as the Representative may reasonably
request.


 


(g)                                 The Issuer will
comply with the Securities Act and the Rules and Regulations, and the
Exchange Act, and the rules and regulations of the Commission thereunder,
so as to permit the completion of the distribution of the Shares as
contemplated in this Agreement and the Prospectus.  If during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Issuer or in the reasonable
opinion of the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Issuer promptly will prepare and file
with the Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not, in the light of the 


 


14

















 


circumstances when it is so delivered, be misleading, or so that the
Prospectus will comply with the law.


 


(h)                                 The Issuer will
make generally available to its security holders, as soon as it is practicable
to do so, but in any event not later than 15 months after the effective date of
the Registration Statement, an earning statement (which need not be audited) in
reasonable detail, covering a period of at least 12 consecutive months
beginning after the effective date of the Registration Statement, which earning
statement shall satisfy the requirements of Section 11(a) of the
Securities Act and Rule 158 of the Rules and Regulations.


 


(i)                                     Prior to the
Closing Date, the Issuer will furnish to the Underwriters, as soon as they have
been prepared by or are available to the Issuer, a copy of any unaudited
interim financial statements of the Issuer for any period subsequent to the
period covered by the most recent financial statements appearing in the
Registration Statement and the Prospectus.


 


(j)                                     Without the
prior written consent of the Representative on behalf of the Underwriters, the
Issuer will not, during the period ending 180 days after the date of the
Prospectus relating to the offering of the Shares, which shall be reduced to120
days in connection with an acquisition of assets or merger (such period, as it
may be extended below, the “Lock-Up Period”), (1) offer, pledge,
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,
lend, or otherwise transfer or dispose of, directly or indirectly, any shares
of common stock of the Issuer or any securities convertible into or exercisable
or exchangeable for shares of common stock of the Issuer or (2) enter into
any swap or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of the shares of common stock of
the Issuer, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of shares of common stock of the Issuer or such
other securities, in cash or otherwise or (3) file any registration
statement with the Commission relating to the offering of any shares of common
stock of the Issuer or any securities convertible into or exercisable or
exchangeable for shares of common stock of the Issuer; provided,
however, that the Issuer may, without the prior written consent of
the Representative on behalf of the Underwriters, (A) issue shares of
common stock of the Issuer or securities convertible into or exercisable or
exchangeable for shares of common stock of the Issuer pursuant to the exercise
of the warrants or options, in each case outstanding on the date hereof and
described in the Prospectus and the Disclosure Package, and provided that such
issued shares shall be subject to the Lock-Up Period as described above; (B) grant
restricted stock of the Issuer, stock options to acquire shares of common stock
of the Issuer or restricted common stock of the Issuer to employees, officers,
directors, advisors and consultants of the Issuer, the Subsidiaries or Cano
pursuant to the terms of a plan in effect on the date hereof and described in
the Prospectus and the Disclosure Package and issue shares of common stock of
the Issuer pursuant to the exercise of any such stock options, and provided
that such issued shares shall be subject to the Lock-Up Period as described
above; (C) file with the Commission a registration statement under the
Securities Act of Form S-8 with respect to securities of the Issuer issued
pursuant to an employee stock purchase plan as described in the Prospectus and
the Disclosure Package; and (D) file with the Commission a shelf
registration statement under the Securities Act on Form S-1 with respect
to the shares of 


 


15

















 


common stock of the Issuer which may be issued upon the conversion of
the preferred stock of the Issuer.  Notwithstanding
the foregoing, if (1) during the last 17 days of the 180-day restricted
period, the Issuer issues an earnings release or material news or a material
event relating to the Issuer occurs; or (2) prior to the expiration of the
180-day restricted period, the Issuer announces that it will release earnings
results during the 16-day period following the last day of the 180-day
restricted period, then in each case the restrictions imposed by this Lock-Up
Letter Agreement shall continue to apply until the expiration of the 18-day
period beginning on the date of the release of the earnings results or the
occurrence of material news or a material event relating to the Issuer, as the
case may be, unless the Representative waives, in writing, such extension.


 


(k)                                  The Issuer will
use its commercially reasonable efforts to list, subject to notice of issuance,
the Shares on the NYSE AMEX.


 


(l)                                     The Issuer has
caused each of the officers, directors and specific shareholders of the Issuer
listed on Schedule III hereto to furnish to the Underwriters, on or prior to
the date of this agreement, a letter or letters, in the form attached hereto as
Exhibit B and with only such changes as are satisfactory to the
Representative (the “Lockup Agreements”).


 


(m)                               The Issuer shall
apply the net proceeds of its sale of the Shares as described under the heading
“Use of Proceeds” in the Prospectus and the Disclosure Package and shall report
with the Commission with respect to the sale of the Shares and the application
of the proceeds therefrom as may be required in accordance with Rule 463
under the Securities Act.


 


(n)                                 The Issuer
shall not invest, or otherwise use the proceeds received by the Issuer from its
sale of the Shares in such a manner as would require the Issuer or any of the
Subsidiaries to register as an investment company under the 1940 Act.


 


(o)                                 The Issuer will
maintain a transfer agent and, if necessary under the jurisdiction of
incorporation of the Issuer, a registrar for the Common Stock.


 


5.                                       COSTS AND
EXPENSES.


 


The Issuer
will pay all costs, expenses and fees incident to the performance of the
obligations of the Issuer under this Agreement, including, without limiting the
generality of the foregoing, the following: 
accounting fees of the Issuer; the fees and disbursements of counsel for
the Issuer; the cost of printing and delivering to, or as requested by, the
Underwriters copies of the Registration Statement, Preliminary Prospectuses,
the Pricing Prospectus, any Issuer Free Writing Prospectus, the Prospectus, the
Underwriters’ Selling Memorandum and the Underwriters’ Invitation Letter, if
any, the Listing Application, the Blue Sky Survey and any supplements or
amendments thereto; the filing fees of the Commission; and the filing fees and
expenses (including legal fees and disbursements) incident to securing any
required review by the FINRA of the terms of the sale of the Shares; the
Listing Fee of FINRA.


 


16

















 


The
Issuer shall not, however, be required to pay for any of the Underwriters
expenses (other than those related to qualification under FINRA regulation and
State securities or Blue Sky laws) except that, if this Agreement shall not be
consummated because the conditions in Section 5 hereof are not satisfied,
or because this Agreement is terminated by the Representative pursuant to Section 10
hereof, or by reason of any failure, refusal or inability on the part of the
Issuer to perform any undertaking or satisfy any condition of this Agreement or
to comply with any of the terms hereof on its part to be performed, unless such
failure to satisfy said condition or to comply with said terms be due to the
default or omission of any Underwriter, then the Issuer shall reimburse the
several Underwriters for reasonable out-of-pocket expenses, including all fees
and disbursements of counsel, reasonably incurred in connection with
investigating, marketing and proposing to market the Shares or in contemplation
of performing their obligations hereunder; but the Issuer shall not in any
event be liable to any of the several Underwriters for damages on account of
loss of anticipated profits from the sale by them of the Shares and, further,
in no event shall the Issuer be responsible for expenses of the Underwriters in
excess of $250,000.


 


6.                                       CONDITIONS OF
OBLIGATIONS OF THE UNDERWRITERS.


 


The several obligations of the Underwriters to purchase the Firm
Securities on the Closing Date and the Option Securities, if any, on the Option
Closing Date are subject to the accuracy, as of the Closing Date and the Option
Closing Date, if any, of the representations and warranties of the Issuer
contained herein, and to the performance by the Issuer of its covenants and
obligations hereunder and to the following additional conditions:


 


(a)                                  The Registration Statement and all post-effective amendments thereto shall
have become effective and any and all filings required by Rule 424 and Rule 430A
of the Rules and Regulations shall have been made, and any request of the
Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representative and
complied with to their reasonable satisfaction. 
All material
required to be filed by the Issuer pursuant to Rule 433(d) under the
Securities Act shall have been filed with the Commission within the applicable
time period prescribed for such filing by Rule 433 under the Securities
Act; if the Issuer has elected to rely upon Rule 462(b) under the
Securities Act, the Rule 462(b) Registration Statement shall have
become effective by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement.  No stop order
suspending the effectiveness of the Registration Statement, as amended from
time to time, shall have been issued and no proceedings for that purpose shall
have been taken or, to the knowledge of the Issuer, shall be contemplated by
the Commission; no stop order suspending or preventing the use of the Pricing
Prospectus, the Prospectus or any Issuer Free Writing Prospectus shall have
been initiated or, to the knowledge of the Issuer, shall be contemplated by the
Commission; all requests for additional information on the part of the
Commission shall have been complied with to the Representative’s reasonable
satisfaction; and no injunction, restraining order, or order of any nature by a
Federal or state court of competent jurisdiction shall have been issued as of
the Closing Date which would prevent the issuance of the Shares.


 


17

















 


(b)                                 The
Representative shall have received on the Closing Date and each Option Closing
Date, if any, the opinions of Haynes and Boone, LLP, counsel for the Issuer
dated the Closing Date or the Option Closing Date, if any, addressed to the
Underwriters substantially in the form and substance as set forth on Exhibit [•]
hereto.


 


(c)                                  The
Representative shall have received from Vinson & Elkins L.L.P.,
counsel for the Underwriters, an opinion dated the Closing Date and the Option
Closing Date, if any, with respect to the formation of the Issuer, the validity
of the Shares and other related matters as the Representative reasonably may
request, and such counsel shall have received such papers and information as
they request to enable them to pass upon such matters.


 


(d)                                 The
Representative shall have received at or prior to the Closing Date from Vinson &
Elkins L.L.P. a memorandum or summary, in form and substance satisfactory to
the Representative, with respect to the qualification for offering and sale by
the Underwriters of the Shares under the State securities or Blue Sky laws of
such jurisdictions as the Representative may reasonably have designated to the
Issuer.


 


(e)                                  The
Representative shall have received, on each of the dates hereof, the Closing
Date and the Option Closing Date, if any, a letter dated the date hereof, the
Closing Date or the Option Closing Date, if any, in form and substance
satisfactory to you, of each of UHY LLP and Hein & Associates LLP
confirming that they are independent public accountants within the meaning of
the Securities Act and the applicable published Rules and Regulations
thereunder and stating that in their opinion the financial statements and
schedules examined by them and included in the Registration Statement comply in
form in all material respects with the applicable accounting requirements of
the Securities Act and the related published Rules and Regulations; and
containing such other statements and information as is ordinarily included in
accountants’ “comfort letters” to Underwriters with respect to the financial
statements and certain financial and statistical information contained in the
Registration Statement and the Prospectus.


 


(f)                                    The
Representative shall have received, on each of the dates hereof, the Closing
Date and the Option Closing Date, if any, letters dated the date hereof, the
Closing Date or the Option Closing Date, if any, in form and substance
satisfactory to the Representative, of Haas Petroleum Engineering Services, Inc.
and Miller and Lents, Ltd., stating the conclusions and findings of such firms
with respect to the oil and natural gas reserves of the Issuer and Cano,
respectively.


 


(g)                                 The
Representative shall have received on the Closing Date and the Option Closing
Date, if any, a certificate or certificates of the Issuer’s Chief Executive
Officer and Chief Financial Officer to the effect that, as of the Closing Date
or the Option Closing Date, if any, each of them severally represents as
follows:


 


(i)                                     The
Registration Statement has become effective under the Securities Act and, to
his knowledge, no stop order suspending the effectiveness of the 


 


18

















 


Registrations Statement has been issued, and, to his knowledge, no
proceedings for such purpose have been taken or are contemplated by the
Commission;


 


(ii)                                  The representations
and warranties of the Issuer contained in Section 1 hereof are true and
correct as of the Closing Date or the Option Closing Date, if any;


 


(iii)                               All filings
required to have been made pursuant to Rules 424 or 430A under the
Securities Act have been made;


 


(iv)                              They have
carefully examined the Registration Statement and the Prospectus and, in their
opinion, as of the effective date of the Registration Statement, the statements
contained in the Registration Statement were true and correct, and such Registration
Statement and Prospectus did not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, and since the effective date of the Registration Statement, no
event has occurred which should have been set forth in a supplement to or an
amendment of the Prospectus which has not been so set forth in such supplement
or amendment; and


 


(v)                                 Since the
respective dates as of which information is given in the Disclosure Package, (1) there
has not been any material adverse change or any development involving a
prospective change, which has had or is reasonably likely to have a Material
Adverse Effect, whether or not arising in the ordinary course of business; (2) neither
the Issuer nor any of its subsidiaries shall have sustained any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Disclosure Package, and (3) except as set forth or
contemplated in the Disclosure Package, there shall not have been any change in
the capital stock (other than issuances of capital stock in the ordinary course
of business pursuant to the Issuer’s employee benefit plans) or long-term debt
of the Issuer or any of the Subsidiaries.


 


(h)                                 The Issuer
shall have furnished to the Representative such further certificates and
documents confirming the representations and warranties, covenants and
conditions contained herein and related matters as the Representative may
reasonably have requested.


 


(i)                                     The Firm
Securities and Option Securities, if any, shall have been approved for
designation upon notice of issuance on the NYSE AMEX.


 


(j)                                     The Lockup
Agreements described in Section 4(k) shall be in full force and
effect.


 


The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representative and to Vinson &
Elkins L.L.P., counsel for the Underwriters.


 


19














 


If any of the conditions hereinabove provided for in this Section shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representative.


 


In such event, the Issuer and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).


 


7.                                       CONDITIONS OF
THE OBLIGATIONS OF THE ISSUER.


 


The
obligations of the Issuer to sell and deliver the portion of the Shares
required to be delivered as and when specified in this Agreement are subject to
the conditions that at the Closing Date or the Option Closing Date, if any, no
stop order suspending the effectiveness of the Registration Statement shall
have been issued and in effect or proceedings therefor initiated or threatened.


 


8.                                       INDEMNIFICATION.


 


(a)                                  The Issuer
agrees:


 


(i)                                     to indemnify
and hold harmless each Underwriter and
each person, if any, who controls such Underwriter within the meaning of Section 15
of the Securities Act, against any losses, claims, damages or
liabilities to which such Underwriter or any such controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement
of any material fact contained in (A) the Registration Statement, any
Preliminary Prospectus, the Pricing Prospectus, the Prospectus or any amendment
or supplement thereto, (B) any Issuer Free Writing Prospectus or any “issuer
information” filed or required to be filed pursuant to Rule 433(d) under
the Securities Act,  (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or (iii) any
alleged act or failure to act by any Underwriter in connection with, or
relating in any manner to, the Shares or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by clause (i) or
(ii) above (provided, however, that
the Issuer shall not be liable under this clause (iii) to the extent that
it is determined in a final judgment by a court of competent jurisdiction that
such loss, claim, damage, liability or action resulted directly from any such
acts or failures to act undertaken or omitted to be taken by such Underwriter
through its gross negligence or willful misconduct); provided,
however, that the Issuer will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement, or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus,
Pricing Prospectus, the Prospectus, or such amendment or supplement, or any
Issuer Free Writing Prospectus or any “issuer information” filed or required to
be filed pursuant to Rule 433(d) under the Securities Act in reliance
upon and in conformity with written information furnished to the


 


20

















 


Issuer by or through the Representative specifically for use in the
preparation thereof, such information being listed in Section 15
below.


 


(ii)                                  to reimburse each Underwriter and each such controlling person upon demand
for any legal or other out-of-pocket expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage or liability, action or proceeding or in
responding to a subpoena or governmental inquiry related to the offering of the
Shares, whether or not such Underwriter or controlling person is a party to any
action or proceeding.  In the event that
it is finally judicially determined that the Underwriters were not entitled to
receive payments for legal and other expenses pursuant to this subparagraph,
the Underwriters will promptly return all sums that had been advanced pursuant
hereto.


 


(b)                                 Each
Underwriter severally and not jointly will indemnify and hold harmless the
Issuer, each of its directors, each of its officers who have signed the
Registration Statement and each person, if any, who controls the Issuer within
the meaning of Section 15 of
the Securities Act, against any losses, claims, damages or liabilities to which
the Issuer or any such director, officer, or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i)  any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Pricing Prospectus, the Prospectus or any amendment or
supplement thereto, or in any Issuer Free Writing Prospectus (ii) the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made; and will reimburse
any legal or other expenses reasonably incurred by the Issuer or any such
director, officer, or controlling person in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding; provided, however, that each Underwriter will be liable in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Pricing Prospectus, the
Prospectus or any amendment or supplement thereto, or in any Issuer Free
Writing Prospectus in reliance upon and in conformity with written information
furnished to the Issuer by or through the Representative specifically for use
in the preparation thereof, such
information being listed in Section 15 below.


 


(c)                                  In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
this Section, such person (the “indemnified party”) shall promptly
notify the person against whom such indemnity may be sought (the “indemnifying
party”) in writing.  No
indemnification provided for in Section 10(a) or (b) shall be
available to any party who shall fail to give notice as provided in this
Subsection if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was materially
prejudiced by the failure to give such notice, but the failure to give such
notice shall not relieve the indemnifying party or parties from any liability
which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 10(a) or
(b).  In case any such proceeding shall
be brought against any


 


21

















 


indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party and shall pay as incurred the
fees and disbursements of such counsel related to such proceeding.  In any such proceeding, any indemnified party
shall have the right to retain its own counsel at its own expense.  Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of presentation)
the fees and expenses of the counsel retained by the indemnified party in the
event (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel,  (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them or (iii) the indemnifying party shall have failed to assume
the defense and employ counsel acceptable to the indemnified party within a
reasonable period of time after notice of commencement of the action.


 


It is understood that the indemnifying party shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees and expenses of more than one separate firm for all
such indemnified parties.  Such firm
shall be designated in writing by you in the case of parties indemnified
pursuant to Section 8(a) and by the Issuer in the case of parties
indemnified pursuant to Section 8(b). 
The indemnifying party 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
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.  In addition, the indemnifying party will not,
without the prior written consent of the indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding of which indemnification may be sought hereunder
(whether or not any indemnified party is an actual or potential party to such
claim, action or proceeding) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action or proceeding.


 


(d)                                 If the
indemnification provided for in this Section is unavailable to or
insufficient to hold harmless an indemnified party under Section 8(a) or
(b) above in respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Issuer on the one
hand and the Underwriters on the other from the offering of the Shares.  If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Issuer on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations.  The relative benefits
received by the Issuer on the one hand and the Underwriters


 


22

















 


on the other shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by the
Issuer bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of
the Prospectus.  The relative fault 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 Issuer on the one
hand or the Underwriters on the other and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.


 


The Issuer and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Subsection were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Subsection.  The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to above in this Subsection shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim.  Notwithstanding the provisions
of this Subsection, (i) no Underwriter shall be required to contribute any
amount in excess of the underwriting discounts and commissions applicable to
the Shares purchased by such Underwriter and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.  The Underwriters’ obligations in this
Subsection to contribute are several in proportion to their respective
underwriting obligations and not joint.


 


(e)                                  In any
proceeding relating to the Registration Statement, any Preliminary Prospectus,
the Pricing Prospectus, the Prospectus or any supplement or amendment thereto,
or any Issuer Free Writing Prospectus, each party against whom contribution may
be sought under this Section hereby consents to the jurisdiction of any
court having jurisdiction over any other contributing party, agrees that
process issuing from such court may be served upon him or it by any other
contributing party and consents to the service of such process and agrees that
any other contributing party may join him or it as an additional defendant in
any such proceeding in which such other contributing party is a party.


 


(f)                                    Any losses,
claims, damages, liabilities or expenses for which an indemnified party is
entitled to indemnification or contribution under this Section shall be
paid by the indemnifying party to the indemnified party as such losses, claims,
damages, liabilities or expenses are incurred. 
The indemnity and contribution agreements contained in this Section and
the representations and warranties of the Issuer set forth in this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Issuer, its directors or officers or any persons
controlling the Issuer, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement.  A successor to any Underwriter, or to the
Issuer, its directors or officers, or any person controlling the Issuer, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section.


 


23

















 


9.                                       DEFAULT BY
UNDERWRITERS.


 


If on the
Closing Date or the Option Closing Date, if any, any Underwriter shall fail to
purchase and pay for the portion of the Shares which such Underwriter has
agreed to purchase and pay for on such date (otherwise than by reason of any
default on the part of the Issuer), you, as the Representative of the
Underwriters, shall use your reasonable efforts to procure within 36 hours
thereafter one or more of the other Underwriters, or any others, to purchase
from the Issuer such amounts as may be agreed upon and upon the terms set forth
herein, the Firm Securities or Option Securities, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase.  If during such 36 hours you, as such
Representative, shall not have procured such other Underwriters, or any others,
to purchase the Firm Securities or Option Securities, as the case may be,
agreed to be purchased by the defaulting Underwriter or Underwriters, then (a) if
the aggregate number of shares with respect to which such default shall occur
does not exceed 10% of the Firm Securities or Option Securities, as the case
may be, covered hereby, the other Underwriters shall be obligated, severally,
in proportion to the respective numbers of Firm Securities or Option
Securities, as the case may be, which they are obligated to purchase hereunder,
to purchase the Firm Securities or Option Securities, as the case may be, which
such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Securities or Option Securities, as the
case may be, with respect to which such default shall occur exceeds 10% of the
Firm Securities or Option Securities, as the case may be, covered hereby, the
Issuer or you as the Representative of the Underwriters will have the right to
terminate this Agreement without liability on the part of the non-defaulting
Underwriters or of the Issuer except to the extent provided in Section 8
hereof.  In the event of a default by any
Underwriter or Underwriters, as set forth in this Section, the Closing Date or
Option Closing Date, if any, may be postponed for such period, not exceeding
seven days, as you, as Representative, may determine in order that the required
changes in the Registration Statement or in the Prospectus or in any other documents
or arrangements may be effected.  The
term “Underwriter” includes any person substituted for a defaulting
Underwriter.  Any action taken under this
Section shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.


 


24

















 


10.                                 NOTICES.


 


All communications hereunder shall be in writing
and, except as otherwise provided herein, will be mailed, delivered, or faxed
and confirmed as follows:


 


	
  if to the Underwriters, to

  	
   

  	
  RBC Capital Markets
  Corporation

  
	
   

  	
   

  	
  c/o RBC Capital Markets

  
	
   

  	
   

  	
  One Liberty Plaza, 165
  Broadway

  
	
   

  	
   

  	
  New York, NY 10006-1404

  
	
   

  	
   

  	
  Attention:

  	
  Joe Morea

  
	
   

  	
   

  	
   

  	
  Syndicate Director

  
	
   

  	
   

  	
  Fax: (212) 428-6260

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Vinson & Elkins L.L.P.

  
	
  (which shall not

  	
   

  	
  First City Tower

  
	
  constitute notice)

  	
   

  	
  1001 Fannin Street, Suite 2300

  
	
   

  	
   

  	
  Houston, TX 77002

  
	
   

  	
   

  	
  Attention: T. Mark Kelly

  
	
   

  	
   

  	
  Fax: (713) 615-5531

  
	
   

  	
   

  	
   

  
	
  if
  to the Issuer to

  	
   

  	
  Resaca
  Exploitation, Inc.

  
	
   

  	
   

  	
  1331
  Lamar, Suite 1450

  
	
   

  	
   

  	
  Houston, TX 77010

  
	
   

  	
   

  	
  Attention:

  	
  John J. Lendrum, III

  
	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
  Fax:
  (      )

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Haynes and Boone, LLP

  
	
  (which shall not

  	
   

  	
  One Houston Center

  
	
  constitute notice)

  	
   

  	
  1221 McKinney, Suite 2100

  
	
   

  	
   

  	
  Houston, TX 77010

  
	
   

  	
   

  	
  Attention: Bryce D. Linsenmayer

  
	
   

  	
   

  	
  Fax: (713) 236-5540

  



 


11.                                 TERMINATION.


 


(a)                                  Prior to the
Closing Date and, with respect to the Option Securities, the Option Closing
Date, this Agreement may be terminated by the Representative by notice given to
the Issuer if at any time: (i) trading or quotation in any of the Issuer’s
securities shall have been suspended or limited by the Commission, NYSE Amex or
the AIM market of the London Stock Exchange, or minimum or maximum prices shall
have been generally established on any of such stock exchanges by the
Commission or FINRA; (ii) a general banking moratorium shall have been
declared by any of federal or New York authorities; (iii) there has been a
material disruption


 


25

















 


in commercial banking or
securities settlement, payment or clearance services in the United States; (iv) there
shall have occurred any outbreak or escalation of national or international
financial markets, or any substantial change or development involving a prospective
substantial change in the United Sates’ or international political, financial
or economic conditions, as in the judgment of the Representative is material
and adverse and makes it impracticable to market the Shares in the manner and
on the terms described in the Prospectus or to enforce contracts for the sale
of securities; (v) in the judgment of the Representative there shall have
occurred any Material Adverse Effect; or (vi) the Issuer shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character as in the judgment of the Representative would reasonably be
expected to result in a Material Adverse Effect.  Any termination pursuant to this Section 11
shall be without liability on the part of (i) the Issuer to any
Underwriter, except that the Issuer shall be obligated to reimburse the
expenses of the Representative and the Underwriters pursuant to Section 5
and 11(b) hereof, (ii) any Underwriter to the Issuer or (iii) any
party hereto to any other party except that the provisions of Section 8
shall at all times be effective and shall survive such termination.


 


(b)                                 If this
Agreement is terminated by the Representative pursuant to Section 5 or Section 11,
or if the sale to the Underwriters of the Shares on the Closing Date or any
Option Closing Date is not consummated because of any refusal, inability or
failure on the part of the Issuer to perform any agreement herein or to comply
with any provision hereof, the Issuer agrees to reimburse the Representative and
the other Underwriters (or such Underwriters as have terminated this Agreement
with respect to themselves), severally, upon demand for all out-of-pocket
expenses up to an amount equal to $250,000 that shall have been actually
incurred by the Representative and the Underwriters in connection with the
proposed purchase and the offering and sale of the Shares, including but not
limited to fees and disbursements of counsel, printing expenses, travel
expenses, postage, facsimile and telephone charges.


 


12.                                 SUCCESSORS.


 


This
Agreement has been and is made solely for the benefit of the Issuer and
Underwriters and their respective successors, executors, administrators, heirs
and assigns, and the officers, directors and controlling persons referred to
herein, and no other person will have any right or obligation hereunder.  No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign merely because of such
purchase.


 


13.                                 INFORMATION
PROVIDED BY UNDERWRITERS.


 


The
Issuer and the Underwriters acknowledge and agree that the only information
furnished or to be furnished by any Underwriter to the Issuer for inclusion in
any Preliminary Prospectus, Prospectus, Issuer Free Writing Prospectus or the
Registration Statement consists of the information contained under the caption “Underwriting”
in the Prospectus.


 


26

















 


14.                              RESEARCH
INDEPENDENCE


 


In addition, the Issuer acknowledges that the
Underwriters’ research analysts and research departments are required to be
independent from their respective investment banking divisions and are subject
to certain regulations and internal policies, and that such Underwriters’
research analysts may hold and make statements or investment recommendations
and/or publish research reports with respect to the Issuer and/or the offering
that differ from the views of its investment bankers.  The Issuer hereby waives and releases, to the
fullest extent permitted by law, any claims that the Issuer may have against
the Underwriters with respect to any conflict of interest that may arise from
the fact that the views expressed by their independent research analysts and
research departments may be different from or inconsistent with the views or
advice communicated to the Issuer by such Underwriters’ investment banking
divisions.  The Issuer acknowledges that
each of the Underwriters is a full service securities firm and as such from
time to time, subject to applicable securities laws, may effect transactions for
its own account or the account of its customers and hold long or short position
in debt or equity securities of the companies which may be the subject to the
transactions contemplated by this Agreement.


 


15.                              NO FIDUCIARY
DUTY


 


Notwithstanding any preexisting relationship, advisory or otherwise,
between the parties or any oral representations or assurances previously or
subsequently made by the underwriters, the Issuer acknowledges and agrees that:


 


(a)                                  nothing herein shall create a fiduciary or agency relationship between the
Issuer and the Underwriters;


 


(b)                                 the
Underwriters are not acting as advisors, expert or otherwise, to the Issuer in
connection with this offering, sale of the Shares or any other services the
Underwriters may be deemed to be providing hereunder, including, without
limitation, with respect to the public offering price of the Shares;


 


(c)                                  the relationship between the Issuer and the Underwriters is entirely
and solely commercial, based on arms-length negotiations;


 


(d)                                 any duties and obligations that the Underwriters may have to the Issuer
shall be limited to those duties and obligations specifically stated herein;
and


 


(e)                                     notwithstanding anything in this Underwriting Agreement to the contrary,
the Issuer acknowledges that the Underwriters may have financial interests in
the success of the Offering that are not limited to the difference between the
price to the public and the purchase price paid to the Issuer by the
Underwriters for the shares and the Underwriters have no obligation to
disclose, or account to the Issuer for, any of such additional financial
interests.


 


The Issuer hereby waives and releases, to the
fullest extent permitted by law, any claims that the Issuer may have against
the Underwriters with respect to any breach or alleged breach of fiduciary
duty.


 


27

















 


16.                                 MISCELLANEOUS.


 


The
reimbursement, indemnification and contribution agreements contained in this
Agreement and the representations, warranties and covenants in this Agreement
shall remain in full force and effect regardless of (a) any termination of
this Agreement,  (b) any
investigation made by or on behalf of any Underwriter or controlling person
thereof, or by or on behalf of the Issuer or its directors or officers and (c) delivery
of and payment for the Shares under this Agreement.


 


This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.


 


This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.


 


This
Agreement constitutes the entire agreement of the parties to this Agreement and
supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof.


 


This Agreement may only be amended or modified in writing, signed by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit.


 


[remainder of page intentionally
blank]


 


28














 


If
the foregoing letter is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Issuer and the several Underwriters in
accordance with its terms.


 


 




	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RESACA
  EXPLOITATION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  John
  J. Lendrum, III

  
	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  






 


 


The foregoing Underwriting Agreement is hereby confirmed


and accepted as of the date first above written.


 


RBC CAPITAL MARKETS CORPORATION


 


 


As the Representative of the several


Underwriters listed on Schedule I


 


	
  By:
   RBC Capital Markets Corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 

















 


SCHEDULE I


 


SCHEDULE
OF UNDERWRITERS


 


	
   

  	
   

  	
  Number
  of Firm Securities

  
	
  Underwriter

  	
   

  	
  to be Purchased

  
	
   

  	
   

  	
   

  
	
  RBC
  Capital Markets Corporation

  	
   

  	
   

  
	
  Seymour
  Pierce Limited

  	
   

  	
   

  
	
  Canaccord
  Adams Inc.

  	
   

  	
   

  
	
  Madison
  Williams and Company

  	
   

  	
   

  
	
  Morgan
  Keegan & Company, Inc.

  	
   

  	
   

  
	
  Natixis
  Bleichroeder LLC

  	
   

  	
   

  
	
  Pritchard
  Capital Partners, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  



 

















 


SCHEDULE II(a)


 


Materials Other than the
Pricing Prospectus that Comprise the Pricing Disclosure Package:


 

















 


SCHEDULE II(b)


 


Issuer Free Writing
Prospectuses Not Included in the Pricing Disclosure Package


 

















 


Schedule III


 


Parties Entering Into
Lock-Up Agreements:


 


[To Come]


 

















 


EXHIBIT A


 


List of Subsidiaries


 




	
  Subsidiary

  	
   

  	
  Jurisdiction

  
	
  Resaca Operating Company

  	
   

  	
  Texas

  
	
  Resaca Acquisition Sub, Inc.

  	
   

  	
  Delaware

  






 

















 


EXHIBIT B


 


Form of Lock-up
Agreement


 


RBC Capital Markets Corporation


As the Representative of the several underwriters,


c/o RBC Capital Markets


One Liberty Plaza, 165
Broadway


New York, New York
10006-1404


 


Ladies and Gentlemen:


 


The undersigned understands that RBC Capital Markets
Corporation Inc. (the “Representative”),
as representative of the several underwriters (the “Underwriters”),
proposes to enter into an Underwriting Agreement (the “Underwriting
Agreement”) providing for the purchase of shares (the “Shares”) of the Common Stock, $[ ] par value per
share (the “Common Shares”), of
Resaca Exploitation, Inc., a corporation incorporated under the laws of
the State of Texas(the “Issuer”), and
that the Underwriters propose to reoffer the Shares to the public (the “Offering”).


 


In consideration of the execution of the
Underwriting Agreement by the Representative, and for other good and valuable
consideration, the undersigned hereby irrevocably agrees that, without the
prior written consent of the Representative on behalf of the Underwriters, the
undersigned will not, during the period ending
180 days after the date of the Prospectus relating to the Offering (such
180-day period, as it may be extended below, the “Lock-Up
Period”), (1) offer, pledge, 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, lend, or otherwise transfer or
dispose of, directly or indirectly, any Common Shares or any securities
convertible into or exercisable or exchangeable for Common Shares or (2) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Shares,
whether any such transaction described in clause (1) or (2) above is
to be settled by delivery of Common Shares or such other securities, in cash or
otherwise or (3) file any registration statement with the Commission
relating to the offering of any Common Shares or any securities convertible
into or exercisable or exchangeable for Common Shares.  Notwithstanding the foregoing, if (1) during
the last 17 days of the 180-day restricted period, the Issuer issues an
earnings release or material news or a material event relating to the Issuer
occurs; or (2) prior to the expiration of the 180-day restricted period,
the Issuer announces that it will release earnings results during the 16-day
period following the last day of the 180-day restricted period, then in each
case the restrictions imposed by this Lock-Up Letter Agreement shall continue
to apply until the expiration of the 18-day period beginning on the date of the
release of the earnings results or the occurrence of material news or a
material event relating to the Issuer, as the case may be, unless the
Representative waives, in writing, such extension.


 

















 


The undersigned hereby further agrees that, prior to
engaging in any transaction or taking any other action that is subject to the
terms of this Lock-Up Letter Agreement during the period from the date of this
Lock-Up Letter Agreement to and including the 34th day following the expiration
of the Lock-Up Period, it will give notice thereof to the Issuer and will not
consummate such transaction or take any such action unless it has received
written confirmation from the Issuer that the Lock-Up Period has expired.


 


In furtherance of the foregoing, the Issuer and its
transfer agent are hereby authorized to decline to make any transfer of
securities if such transfer would constitute a violation or breach of this
Lock-Up Letter Agreement.


 


It is understood that, if the Issuer notifies the
Representative that it does not intend to proceed with the Offering, if the
Underwriting Agreement does not become effective, or if the Underwriting
Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Shares, the
undersigned will be released from its obligations under this Lock-Up Letter
Agreement.


 


The undersigned understands that the Issuer and the
Representative will proceed with the Offering in reliance on this Lock-Up Letter
Agreement.


 


Whether or not the Offering actually occurs depends
on a number of factors, including market conditions.  Any Offering will only be made pursuant to an
Underwriting Agreement, the terms of which are subject to negotiation between
the Issuer and the Representative.


 


[Signature
page follows]


 

















 


The undersigned hereby represents and warrants that
the undersigned has full power and authority to enter into this Lock-Up Letter
Agreement and that, upon request, the undersigned will execute any additional
documents necessary in connection with the enforcement hereof.  Any obligations of the undersigned shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned.


 




	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
  Dated: