EXHIBIT 4.1
$150,000,000
DELTA PETROLEUM
CORPORATION
7% Senior Notes due
2015
Purchase
Agreement
March 9, 2005
J.P. Morgan Securities Inc.
As Representative
of the
several Initial
Purchasers listed
in Schedule 1
hereto
c/o J.P. Morgan Securities Inc.
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
Delta Petroleum Corporation, a
Colorado corporation (the “Company”), proposes to issue
and sell to the several Initial Purchasers listed in Schedule 1
hereto (the “Initial Purchasers”), for whom you are
acting as representative (the “Representative”),
$150,000,000 principal amount of its 7% Senior Notes due 2015 (the
“Securities”). The Securities will be issued pursuant
to an Indenture to be dated as of March 15, 2005 (the
“Indenture”) among the Company, the guarantors listed
in Schedule 2 hereto (the “Guarantors”) and U.S. Bank
National Association, as trustee (the “Trustee”), and
will be guaranteed on an unsecured senior basis by each of the
Guarantors (the “Guarantees”).
The Securities will be sold to the
Initial Purchasers without being registered under the Securities
Act of 1933, as amended (the “Securities Act”), in
reliance upon an exemption therefrom. J.P. Morgan Securities Inc.
and Citigroup Global Markets Inc. are acting as joint book-running
managers (together, the “Book-Running Managers”) in
connection with the offering and sale of the Securities
contemplated herein. The Company has prepared a preliminary
offering memorandum dated February 28, 2005 (the “Preliminary
Offering Memorandum”) and will prepare an offering memorandum
dated the date hereof (the “Offering Memorandum”)
setting forth information concerning the Company and the
Securities. Copies of the Preliminary Offering Memorandum have
been, and copies of the Offering Memorandum will be, delivered by
the Company to the Initial Purchasers pursuant to the terms of this
Agreement. The Company hereby confirms that it has authorized the
use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and resale of
the
Securities by the Initial Purchasers in the
manner contemplated by this Agreement. Capitalized terms used but
not defined herein shall have the meanings given to such terms in
the Offering Memorandum.
Holders of the Securities (including
each Initial Purchaser and its direct and indirect transferees)
will be entitled to the benefits of a Registration Rights
Agreement, to be dated the Closing Date (as defined below) and
substantially in the form attached hereto as Exhibit A (the
“Registration Rights Agreement”), pursuant to which the
Company and the Guarantors will agree to file one or more
registration statements with the Securities and Exchange Commission
(the “Commission”) providing for the registration under
the Securities Act of the Securities or the Exchange Securities
referred to (and as defined) in the Registration Rights
Agreement.
The Company hereby confirms its
agreement with the several Initial Purchasers concerning the
purchase and resale of the Securities, as follows:
1. Purchase and Resale of the
Securities . (a) The Company agrees to issue and sell the
Securities to the several Initial Purchasers as provided in this
Agreement, and each Initial Purchaser, on the basis of the
representations, warranties and agreements set forth herein and
subject to the conditions set forth herein, agrees, severally and
not jointly, to purchase from the Company the respective principal
amount of Securities set forth opposite such Initial
Purchaser’s name in Schedule 1 hereto at a price equal to
96.5% of the principal amount thereof plus accrued interest, if
any, from March 15, 2005 to the Closing Date. The Company will not
be obligated to deliver any of the Securities except upon payment
for all the Securities to be purchased as provided
herein.
(b) The Company understands that the
Initial Purchasers intend to offer the Securities for resale on the
terms set forth in the Offering Memorandum. Each Initial Purchaser,
severally and not jointly, represents, warrants and agrees
that:
(i) it is a qualified institutional
buyer within the meaning of Rule 144A under the Securities Act (a
“QIB”) and an accredited investor within the meaning of
Rule 501(a) under the Securities Act;
(ii) it has not solicited offers
for, or offered or sold, and will not solicit offers for, or offer
or sell, the Securities by means of any form of general
solicitation or general advertising within the meaning of Rule
502(c) of Regulation D under the Securities Act (“Regulation
D”) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and
(iii) it has not solicited offers
for, or offered or sold, and will not solicit offers for, or offer
or sell, the Securities as part of their initial offering
except:
(A) within the United States to
persons whom it reasonably believes to be QIBs in transactions
pursuant to Rule 144A under the Securities Act (“Rule
144A”) and in connection with each such sale, it has taken or
will take reasonable steps to ensure that the purchaser of the
Securities is aware that such sale is being made in reliance on
Rule 144A; or
(B) in accordance with the
restrictions set forth in Annex A hereto.
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(c) Each Initial Purchaser
acknowledges and agrees that the Company and, for purposes of the
opinions to be delivered to the Initial Purchasers pursuant to
Sections 5(g) and 5(h), counsel for the Company and counsel for the
Initial Purchasers, respectively, may rely upon the accuracy of the
representations and warranties of the Initial Purchasers, and
compliance by the Initial Purchasers with their agreements,
contained in paragraph (b) above (including Annex A hereto), and
each Initial Purchaser hereby consents to such reliance.
(d) The Company acknowledges and
agrees that the Initial Purchasers may offer and sell Securities to
or through any affiliate of an Initial Purchaser and that any such
affiliate may offer and sell Securities purchased by it to or
through any Initial Purchaser.
2. Payment and Delivery . (a)
Payment for and delivery of the Securities will be made at the
offices of Simpson Thacher & Bartlett LLP at 10:00 A.M., New
York City time, on March 15, 2005, or at such other time or place
on the same or such other date, not later than the fifth business
day thereafter, as the Representative and the Company may agree
upon in writing. The time and date of such payment and delivery is
referred to herein as the “Closing Date”.
(b) Payment for the Securities shall
be made by wire transfer in immediately available funds to the
account(s) specified by the Company to the Representative against
delivery to the nominee of The Depository Trust Company, for the
account of the Initial Purchasers, of one or more global notes
representing the Securities (collectively, the “Global
Note”), with any transfer taxes payable in connection with
the sale of the Securities duly paid by the Company. The Global
Note will be made available for inspection by the Representative
not later than 1:00 P.M., New York City time, on the business day
prior to the Closing Date.
3. Representations and Warranties
of the Company and the Guarantors . The Company and the
Guarantors jointly and severally represent and warrant to each
Initial Purchaser that:
(a) Offering Memorandum . The
Preliminary Offering Memorandum, as of its date, did not, and the
Offering Memorandum, in the form first used by the Initial
Purchasers to confirm sales of the Securities and as of the Closing
Date, will not, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company
and the Guarantors make no representation or warranty with respect
to any statements or omissions made in reliance upon and in
conformity with information relating to any Initial Purchaser
furnished to the Company in writing by such Initial Purchaser
through the Representative expressly for use in the Preliminary
Offering Memorandum and the Offering Memorandum, which information
is specified in Section 6(b).
(b) Financial Statements .
The financial statements and the related notes thereto included in
the Preliminary Offering Memorandum and the Offering Memorandum
present fairly the financial position of the Company and its
subsidiaries as of the dates indicated and the results of their
operations and the changes in their cash flows for the periods
specified; the financial statements and the related notes thereto
included in the Preliminary Offering Memorandum and
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the Offering Memorandum relating to the oil and
gas assets acquired from Alpine Resources, Inc. (the “Alpine
Properties”) present fairly the results of operations of the
Alpine Properties for the periods specified; all such financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the
periods covered thereby; the other financial information included
in the Preliminary Offering Memorandum and the Offering Memorandum
has been derived from the accounting records of the Company and its
subsidiaries, or the accounting records relating to the Alpine
Properties or to the oil and gas assets acquired from Manti
Resources, Inc., as the case may be, and presents fairly the
information shown thereby; and the pro forma financial
information and the related notes thereto included in the
Preliminary Offering Memorandum and the Offering Memorandum has
been prepared in accordance with the Commission’s rules and
guidance with respect to pro forma financial information,
and the assumptions underlying such pro forma financial
information are reasonable and are set forth in the Preliminary
Offering Memorandum and the Offering Memorandum.
(c) No Material Adverse
Change . Since the date of the most recent financial statements
of the Company included in the Preliminary Offering Memorandum and
the Offering Memorandum, (i) there has not been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries, or any dividend or distribution of any kind declared,
set aside for payment, paid or made by the Company on any class of
capital stock, or any material adverse change, or any development
involving a prospective material adverse change, in or affecting
the business, properties, management, financial position, results
of operations or prospects of the Company and its subsidiaries
taken as a whole; (ii) neither the Company nor any of its
subsidiaries has entered into any transaction or agreement that is
material to the Company and its subsidiaries taken as a whole or
incurred any liability or obligation, direct or contingent, that is
material to the Company and its subsidiaries taken as a whole; and
(iii) neither the Company nor any of its subsidiaries has sustained
any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor disturbance or dispute or any action,
order or decree of any court or arbitrator or governmental or
regulatory authority, except in each case as otherwise disclosed in
the Preliminary Offering Memorandum and the Offering
Memorandum.
(d) Organization and Good
Standing . The Company and each of its subsidiaries have been
duly organized and are validly existing and in good standing under
the laws of their respective jurisdictions of organization, are
duly qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires
such qualification, and have all power and authority necessary to
own or hold their respective properties and to conduct the
businesses in which they are engaged, except where the failure to
be so qualified or have such power or authority would not,
individually or in the aggregate, have a material adverse effect on
the business, properties, management, financial position, results
of operations or prospects of the Company and its subsidiaries
taken as a whole or on the performance by the Company and the
Guarantors of their obligations under the Securities and the
Guarantees (a “Material Adverse Effect”). The Company
does not own or control, directly or indirectly, any corporation,
association or other entity other than the subsidiaries listed in
Schedule 3 to this Agreement.
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(e) Capitalization . The
Company has an authorized capitalization as set forth in the
Preliminary Offering Memorandum and the Offering Memorandum under
the heading “Capitalization”; and all the outstanding
shares of capital stock or other equity interests of each
subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly or
indirectly by the Company (except as set forth in Schedule 3 and
described in the Preliminary Offering Memorandum and the Offering
Memorandum), free and clear of any lien, charge, encumbrance,
security interest, restriction on voting or transfer or any other
claim of any third party, except for such pledges existing under
the Credit Agreement dated as of November 5, 2004 (the
“Credit Agreement”) among the Company, JPMorgan Chase
Bank, N.A., successor by merger to Bank One, NA (Main Office
Chicago), as administrative agent, and each of the lenders thereto
on the date hereof as set forth in the Preliminary Offering
Memorandum and the Offering Memorandum.
(f) Due Authorization . The
Company and each of the Guarantors have full right, power and
authority to execute and deliver this Agreement, the Securities,
the Indenture (including each Guarantee set forth therein), the
Exchange Securities and the Registration Rights Agreement
(collectively, the “Transaction Documents”) and to
perform their respective obligations hereunder and thereunder; and
all action required to be taken for the due and proper
authorization, execution and delivery of each of the Transaction
Documents and the consummation of the transactions contemplated
thereby has been duly and validly taken.
(g) The Indenture . The
Indenture has been duly authorized by the Company and each of the
Guarantors and, when duly executed and delivered in accordance with
its terms by each of the parties thereto, will constitute a valid
and legally binding agreement of the Company and each of the
Guarantors enforceable against the Company and each of the
Guarantors in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally or
by equitable principles relating to enforceability (collectively,
the “Enforceability Exceptions”); and on the Closing
Date, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the
“Trust Indenture Act”), and the rules and regulations
of the Commission applicable to an indenture that is qualified
thereunder.
(h) The Securities and the
Guarantees . The Securities have been duly authorized by the
Company and, when duly executed, authenticated, issued and
delivered as provided in the Indenture and paid for as provided
herein, will be duly and validly issued and outstanding and will
constitute valid and legally binding obligations of the Company
enforceable against the Company in accordance with their terms,
subject to the Enforceability Exceptions, and will be entitled to
the benefits of the Indenture; and the Guarantees have been duly
authorized by each of the Guarantors and, when the Securities have
been duly executed, authenticated, issued and delivered as provided
in the Indenture and paid for as provided herein, will be valid and
legally binding obligations of each of the Guarantors, enforceable
against each of the Guarantors in accordance with their terms,
subject to the Enforceability Exceptions, and will be entitled to
the benefits of the Indenture.
(i) The Exchange Securities .
On the Closing Date, the Exchange Securities (including the related
guarantees) will have been duly authorized by the Company and each
of the Guarantors and, when duly executed, authenticated, issued
and delivered as contemplated by the
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Registration Rights Agreement, will be duly and
validly issued and outstanding and will constitute valid and
legally binding obligations of the Company, as issuer, and each of
the Guarantors, as guarantor, enforceable against the Company and
each of the Guarantors in accordance with their terms, subject to
the Enforceability Exceptions, and will be entitled to the benefits
of the Indenture.
(j) Purchase and Registration
Rights Agreements . This Agreement has been duly authorized,
executed and delivered by the Company and each of the Guarantors;
and the Registration Rights Agreement has been duly authorized by
the Company and each of the Guarantors and, when duly executed and
delivered in accordance with its terms by each of the parties
thereto, will constitute a valid and legally binding agreement of
the Company and each of the Guarantors enforceable against the
Company and each of the Guarantors in accordance with its terms,
subject to the Enforceability Exceptions, and except that rights to
indemnity and contribution thereunder may be limited by applicable
law and public policy.
(k) Descriptions of the
Transaction Documents . Each Transaction Document conforms in
all material respects to the description thereof contained in the
Preliminary Offering Memorandum and the Offering
Memorandum.
(l) No Violation or Default .
Neither the Company nor any of its subsidiaries is (i) in violation
of its charter or by-laws or similar organizational documents; (ii)
in default, and no event has occurred that, with notice or lapse of
time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject; or (iii) in
violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory
authority, except, in the case of clauses (ii) and (iii) above, for
any such default or violation that would not, individually or in
the aggregate, have a Material Adverse Effect.
(m) No Conflicts . The
execution, delivery and performance by the Company and each of the
Guarantors of each of the Transaction Documents to which each is a
party, the issuance and sale of the Securities (including the
Guarantees) and compliance by the Company and each of the
Guarantors with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents will not (i)
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its subsidiaries
pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, (ii) result in
any violation of the provisions of the charter or by-laws or
similar organizational documents of the Company or any of its
subsidiaries or (iii) result in the violation of any law or statute
or any judgment, order, rule or regulation of any court or
arbitrator or governmental or regulatory authority, except, in the
case of clauses (i) and (iii) above, for any such conflict, breach
or violation that would not, individually or in the aggregate, have
a Material Adverse Effect.
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(n) No Consents Required . No
consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or
regulatory authority is required for the execution, delivery and
performance by the Company and each of the Guarantors of each of
the Transaction Documents to which each is a party, the issuance
and sale of the Securities (including the Guarantees) and
compliance by the Company and each of the Guarantors with the terms
thereof and the consummation of the transactions contemplated by
the Transaction Documents, except for such consents, approvals,
authorizations, orders and registrations or qualifications as may
be required (i) under applicable state securities laws in
connection with the purchase and resale of the Securities by the
Initial Purchasers and (ii) with respect to the Exchange Securities
(including the related guarantees) under the Securities Act, the
Trust Indenture Act and applicable state securities laws as
contemplated by the Registration Rights Agreement.
(o) Legal Proceedings .
Except as described in the Preliminary Offering Memorandum and the
Offering Memorandum, there are no legal, governmental or regulatory
investigations, actions, suits or proceedings pending to which the
Company or any of its subsidiaries is or may be a party or to which
any property of the Company or any of its subsidiaries is or may be
the subject that, individually or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, could
reasonably be expected to have a Material Adverse Effect; and no
such investigations, actions, suits or proceedings are threatened
or, to the best knowledge of the Company and each of the
Guarantors, contemplated by any governmental or regulatory
authority or threatened by others.
(p) Independent Accountants.
KPMG LLC, who has certified certain financial statements of the
Company and its subsidiaries and who have certified certain
financial statements relating to the Alpine Properties, are an
independent registered public accounting firm with respect to the
Company and its subsidiaries and with respect to the Alpine
Properties as required by the Securities Act and the rules and
regulations of the Commission thereunder and within the meaning of
the applicable rules and regulations adopted by the Public Company
Accounting Oversight Board (United States).
(q) Title to Real and Personal
Property . The Company and its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property that are
material to the respective businesses of the Company and its
subsidiaries, in each case free and clear of all liens,
encumbrances, claims and defects and imperfections of title except
those that (i) do not materially interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries or (ii) could not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect.
(r) Title to Intellectual
Property . The Company and its subsidiaries own or possess
adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures)
necessary for the conduct of their respective businesses; and the
conduct of their respective businesses will not conflict in any
material respect with any such rights of others, and the Company
and its subsidiaries have not received any notice of any claim of
infringement of or conflict with any such rights of
others.
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(s) Investment Company Act .
Neither the Company nor any of its subsidiaries is, and after
giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Offering
Memorandum none of them will be, an “investment
company” or an entity “controlled” by an
“investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder (collectively,
“Investment Company Act”).
(t) Public Utility Holding
Company Act . Neither the Company nor any of its subsidiaries
is a “holding company” or a “subsidiary
company” of a holding company or an “affiliate”
thereof within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
(u) Taxes. The Company and
its subsidiaries have paid all federal, state, local and foreign
taxes and filed all tax returns required to be paid or filed
through the date hereof; and except as otherwise disclosed in the
Preliminary Offering Memorandum and the Offering Memorandum, there
is no tax deficiency that has been, or could reasonably be expected
to be, asserted against the Company or any of its subsidiaries or
any of their respective properties or assets.
(v) Licenses and Permits .
The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by, and have
made all declarations and filings with, the appropriate federal,
state, local or foreign governmental or regulatory authorities that
are necessary for the ownership or lease of their respective
properties or the conduct of their respective businesses as
described in the Preliminary Offering Memorandum and the Offering
Memorandum, except where the failure to possess or make the same
would not, individually or in the aggregate, have a Material
Adverse Effect; and except as described in the Preliminary Offering
Memorandum and the Offering Memorandum, neither the Company nor any
of its subsidiaries has received notice of any revocation or
modification of any such license, certificate, permit or
authorization or has any reason to believe that any such license,
certificate, permit or authorization will not be renewed in the
ordinary course.
(w) No Labor Disputes . No
labor disturbance by or dispute with employees of the Company or
any of its subsidiaries exists or, to the best knowledge of the
Company and each of the Guarantors, is contemplated or
threatened.
(x) Compliance With Environmental
Laws . The Company and its subsidiaries (i) are, and at all
times prior to the date hereof have been, in compliance with any
and all applicable federal, state, local and foreign laws, rules,
regulations, decisions and orders relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively,
“Environmental Laws”); (ii) have received and are in
compliance with all permits, licenses or other approvals required
of them under applicable Environmental Laws to conduct their
respective businesses; and (iii) have not received notice of any
actual or potential liability for the investigation or remediation
of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except in any such case for any
such failure to comply with, or failure to receive required
permits, licenses or approvals, or liability, as would not,
individually or in the aggregate, have a Material Adverse
Effect.
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(y) Hazardous Substances .
There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission, or other release of any
kind of toxic wastes or hazardous substances, including, but not
limited to, any naturally occurring radioactive materials, brine,
drilling mud, crude oil, natural gas liquids and other petroleum
materials, by, due to or caused by the Company or any of its
subsidiaries (or, to the best of the Company’s knowledge, any
other entity (including any predecessor) for whose acts or
omissions the Company or any of its subsidiaries is or could
reasonably be expected to be liable) upon any of the property now
or previously owned or leased by the Company or any of its
subsidiaries, or upon any other property, in violation of any
Environmental Laws or in a manner or to a location that could
reasonably be expected to give rise to any liability under any
Environmental Laws, except for any violation or liability which
would not, individually or in the aggregate, have a Material
Adverse Effect.
(z) Compliance With ERISA .
Each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), that is maintained, administered or
contributed to by the Company or any of its affiliates for
employees or former employees of the Company and its affiliates has
been maintained in compliance with its terms and the requirements
of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of
1986, as amended (the “Code”); no prohibited
transaction, within the meaning of Section 406 of ERISA or Section
4975 of the Code, has occurred with respect to any such plan
excluding transactions effected pursuant to a statutory or
administrative exemption; and for each such plan that is subject to
the funding rules of Section 412 of the Code or Section 302 of
ERISA, no “accumulated funding deficiency” as defined
in Section 412 of the Code has been incurred, whether or not
waived, and the fair market value of the assets of each such plan
(excluding for these purposes accrued but unpaid contributions)
exceeds the present value of all benefits accrued under such plan
determined using reasonable actuarial assumptions.
(aa) Accounting Controls .
The Company and its subsidiaries maintain systems of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s
general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted
only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(bb) Disclosure Controls and
Procedures; Internal Control over Financial Reporting . The
Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e)
under the Exchange Act) and internal control over financial
reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f)
under the Exchange Act); such disclosure controls and procedures
have been designed to ensure that material information relating to
the Company is made known to the Company’s Chief Executive
Officer and its Chief Financial Officer by others within those
entities and to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles; and such disclosure controls and
procedures have been evaluated and are effective to perform
the
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functions for which they were established; the
Company’s auditors and the Audit Committee of the Board of
Directors have been advised of: (i) all significant deficiencies
and material weaknesses in the design or operation of internal
controls over financial reporting which are reasonably likely to
adversely affect the Company’s ability to record, process,
summarize, and report financial information; and (ii) any fraud,
whether or not material, that involves management or other
employees who have a significant role in the Company’s
internal controls over financial reporting;
(cc) Insurance . The Company
and its subsidiaries have insurance covering their respective
properties, operations, personnel and businesses, including
business interruption insurance, which insurance is in amounts and
insures against such losses and risks as are customary in the oil
and gas business and adequate to protect the Company and its
subsidiaries and their respective businesses; and neither the
Company nor any of its subsidiaries has (i) received notice from
any insurer or agent of such insurer that capital improvements or
other expenditures are required or necessary to be made in order to
continue such insurance or (ii) any reason to believe that it will
not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage at reasonable
cost from similar insurers as may be necessary to continue its
business.
(dd) No Unlawful Payments .
Neither the Company nor any of its subsidiaries nor, to the best
knowledge of the Company and each of the Guarantors, any director,
officer, agent, employee or other person associated with or acting
on behalf of the Company or any of its subsidiaries has (i) used
any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political
activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate
funds; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful
payment.
(ee) Solvency . On and
immediately after the Closing Date, the Company (after giving
effect to the issuance of the Securities and the other transactions
related thereto as described in the Offering Memorandum) will be
Solvent. As used in this paragraph, the term “Solvent”
means, with respect to a particular date, that on such date (i) the
present fair market value (or present fair saleable value) of the
assets of the Company is not less than the total amount required to
pay the liabilities of the Company on its total existing debts and
liabilities (including contingent liabilities) as they become
absolute and matured; (ii) the Company is able to realize upon its
assets and pay its debts and other liabilities, contingent
obligations and commitments as they mature and become due in the
normal course of business; (iii) assuming consummation of the
issuance of the Securities as contemplated by this Agreement and
the Offering Memorandum, the Company is not incurring debts or
liabilities beyond its ability to pay as such debts and liabilities
mature; (iv) the Company is not engaged in any business or
transaction, and does not propose to engage in any business or
transaction, for which its property would constitute unreasonably
small capital after giving due consideration to the prevailing
practice in the industry in which the Company is engaged; and (v)
the Company is not a defendant in any civil action that would
result in a judgment that the Company is or would become unable to
satisfy.
(ff) No Restrictions on
Subsidiaries . No subsidiary of the Company is currently
prohibited, directly or indirectly, under any agreement or other
instrument to which it is a party
10
or is subject, from paying any dividends to the
Company, from making any other distribution on such
subsidiary’s capital stock, from repaying to the Company any
loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary’s properties or assets to
the Company or any other subsidiary of the Company.
(gg) No Broker’s Fees .
Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person (other than
this Agreement) that would give rise to a valid claim against any
of them or any Initial Purchaser for a brokerage commission,
finder’s fee or like payment in connection with the offering
and sale of the Securities.
(hh) Rule 144A Eligibility .
On the Closing Date, the Securities will not be of the same class
as securities listed on a national securities exchange registered
under Section 6 of the Exchange Act or quoted in an automated
inter-dealer quotation system; and each of the Preliminary Offering
Memorandum and the Offering Memorandum, as of its respective date,
contains or will contain all the information that, if requested by
a prospective purchaser of the Securities, would be required to be
provided to such prospective purchaser pursuant to Rule 144A(d)(4)
under the Securities Act.
(ii) No Integration . Neither
the Company nor any of its affiliates (as defined in Rule 501(b) of
Regulation D) has, directly or through any agent, sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect
of, any security (as defined in the Securities Act), that is or
will be integrated with the sale of the Securities in a manner that
would require registration of the Securities under the Securities
Act.
(jj) No General Solicitation or
Directed Selling Efforts . None of the Company or any of its
affiliates or any other person acting on its or their behalf (other
than the Initial Purchasers, as to which no representation is made)
has (i) solicited offers for, or offered or sold, the Securities by
means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D or in any manner
involving a public offering within the meaning of Section 4(2) of
the Securities Act or (ii) engaged in any directed selling efforts
within the meaning of Regulation S under the Securities Act
(“Regulation S”), and all such persons have complied
with the offering restrictions requirement of Regulation
S.
(kk) Securities Law
Exemptions . Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 1(b)
(including Annex A hereto) and their compliance with their
agreements set forth therein, it is not necessary, in connection
with the issuance and sale of the Securities to the Initial
Purchasers and the offer, resale and delivery of the Securities by
the Initial Purchasers in the manner contemplated by this Agreement
and the Offering Memorandum, to register the Securities under the
Securities Act or to qualify the Indenture under the Trust
Indenture Act.
(ll) No Stabilization .
Neither the Company nor any of the Guarantors has taken, directly
or indirectly, any action designed to or that could reasonably be
expected to cause or result in any stabilization or manipulation of
the price of the Securities.
11
(mm) Margin Rules . Neither
the issuance, sale and delivery of the Securities nor the
application of the proceeds thereof by the Company as described in
the Offering Memorandum will violate Regulation T, U or X of the
Board of Governors of the Federal Reserve System or any other
regulation of such Board of Governors.
(nn) Forward-Looking
Statements . No forward-looking statement (within the meaning
of Section 27A of the Securities Act and Section 21E of the
Exchange Act) contained in the Preliminary Offering Memorandum and
the Offering Memorandum has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good
faith.
(oo) Statistical and Market
Data . Nothing has come to the attention of the C
