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EXHIBIT 10.1
$203,000,000
12% SENIOR NOTES DUE
2018
PETROLEUM DEVELOPMENT
CORPORATION
PURCHASE AGREEMENT
February 1, 2008
February 1,
2008
Morgan Stanley & Co.
Incorporated
J.P. Morgan Securities Inc.
As Representatives of the
several
Initial
Purchasers named in Schedule I attached hereto
c/o Morgan Stanley & Co.
Incorporated
1585
Broadway
New York, New
York 10036
Ladies and Gentlemen:
Petroleum Development
Corporation, a Nevada corporation (the “ Company
”), proposes to issue and sell to the several purchasers
named in Schedule I hereto (the “ Initial
Purchasers ”), for whom you are acting as representatives
(the “ Representatives ”), $203,000,000
principal amount of its 12% Senior Notes due 2018 (the “
Notes ”) to be issued pursuant to the provisions of an
indenture between the Company and The Bank of New York, as trustee
(the “ Trustee ”), as supplemented by a
supplemental indenture between the Company and the Trustee, dated
as of February 8, 2008 (the “ Indenture
”).
The Notes will be offered and
sold without registration under the Securities Act of 1933, as
amended (the “ Securities Act ”), to qualified
institutional buyers in compliance with the exemption from
registration provided by Rule 144A under the Securities Act
(“ Rule 144A ”) and in offshore transactions in
reliance on Regulation S under the Securities Act (“
Regulation S ”). The Initial Purchasers and their
direct and indirect transferees will be entitled to the benefits of
a Registration Rights Agreement dated the date hereof among the
Company and the Initial Purchasers (the “ Registration
Rights Agreement ”).
In connection with the sale
of the Notes, the Company has prepared a preliminary offering
memorandum, dated January 14, 2008 (the “ Preliminary
Memorandum ”), and will prepare a final offering
memorandum (the “ Final Memorandum ”), each
including a description of the terms of the Notes, the terms of the
offering and a description of the Company. For purposes of this
Agreement, “ Additional Written Offering Communication
” means any written communication (as defined in Rule 405
under the Securities Act) that constitutes an offer to sell or a
solicitation of an offer to buy the Notes, including without
limitation, any electronic roadshow relating to the Notes, other
than the Preliminary Memorandum or the Final Memorandum, and
“ Time of Sale Memorandum ” means the
Preliminary Memorandum together with the Additional Written
Offering Communications, if any, each identified in Schedule II
hereto.
1. Representations and
Warranties . The Company represents and warrants to, and agrees
with, you that:
(a) (i) The Time of Sale
Memorandum does not, and at the time of each sale of the Notes in
connection with the offering when the Final Memorandum is not yet
available to prospective purchasers and at the Closing Date (as
defined in Section 4), the Time of Sale Memorandum, as then
amended or supplemented by the Company, if applicable, will not,
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading and (ii) the Preliminary Memorandum does not
contain and the Final Memorandum, in the form used by the Initial
Purchasers to confirm sales and on the Closing Date, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, except that the representations and warranties set
forth in this paragraph do not apply to statements or omissions in
the Preliminary Memorandum, the Time of Sale Memorandum or the
Final Memorandum based upon information relating to any Initial
Purchaser furnished to the Company in writing by such Initial
Purchaser through you expressly for use therein.
(b) Except for the Additional
Written Offering Communications, if any, identified in Schedule II
hereto, and electronic road shows, if any, furnished to you before
first use, the Company has not prepared, used or referred to, and
will not, without your prior consent, prepare, use or refer to, any
Additional Written Offering Communication.
(c) The Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct
its business as described in the Time of Sale Memorandum and the
Final Memorandum and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not, individually or in the
aggregate, have a material adverse effect on the general affairs,
management, assets, consolidated financial position,
stockholders’ equity, results of operations or business of
the Company and its Subsidiaries (as defined in Section 1(d)
below), taken as a whole (each a “ Material Adverse
Effect ”).
(d) Each subsidiary of the
Company is listed on Schedule III hereto (collectively, the “
Subsidiaries ”); provided that none of the
Drilling Partnerships (as defined on Schedule IV hereto) shall, for
purposes of this Agreement, constitute a subsidiary of the Company.
Each Subsidiary and each Drilling
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Partnership, has been duly
incorporated or formed, is validly existing as a corporation,
limited partnership or limited liability company in good standing
under the laws of the jurisdiction of its incorporation or
formation, has the corporate or other requisite power and authority
to own its property and to conduct its business as described in the
Time of Sale Memorandum and the Final Memorandum and is duly
qualified to transact business and is in good standing or
equivalent status in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing or equivalent status would not,
individually or in the aggregate, result in a Material Adverse
Effect; all of the issued shares of capital stock or other equity
interests of each Subsidiary and, to the best knowledge of the
Company after due inquiry, each Drilling Partnership, have been
duly and validly authorized and issued, are fully paid and
non-assessable. All of the issued shares of capital stock or other
equity interests of each Subsidiary, and all of the issued equity
interests of each Drilling Partnership held of record by the
Company, are owned by the Company, free and clear of all liens,
encumbrances, equities or claims, except for liens and encumbrances
pursuant to the Company’s Credit Facility (as defined below).
The Company does not own, directly or indirectly, any capital
stock, membership interest, partnership interest, joint venture
interest or other equity or ownership interest in any person or
entity, other than the Subsidiaries listed on Schedule III and the
general partner interests and limited partner interests in the
Drilling Partnerships as listed on Schedule IV. As used in this
Agreement, “ Credit Facility ” means the Amended
and Restated Credit Agreement made as of November 4, 2005, as
amended to date by and among the Company, the guarantor parties
thereto, the lender parties thereto and JPMorgan Chase Bank, N.A.,
as administrative agent.
(e) The Company has all
requisite power and authority to execute and deliver this Agreement
and to otherwise perform its obligations under this Agreement. This
Agreement has been duly authorized, executed and delivered by the
Company.
(f) The table under the
caption “Capitalization” in the Time of Sale Memorandum
and in the Final Memorandum (including footnotes thereto) sets
forth, as of the date of such table, (i) the actual cash and
cash equivalents and capitalization of (x) the Company and its
Subsidiaries on a consolidated basis and (ii) the pro forma
cash and cash equivalents and capitalization of the Company and its
Subsidiaries on a consolidated basis, after giving effect to the
offer and sale of the Notes and the application of the net proceeds
therefrom as described in the Time of Sale Memorandum and in the
Final Memorandum under the section entitled “Use of
Proceeds.”
(g) No “nationally
recognized statistical rating organization” (as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act)
(i) has
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imposed (or has informed the
Company that it is considering imposing) any condition (financial
or otherwise) on the Company or any Subsidiary relating to any
rating assigned to the Company or any Subsidiary or to any
securities of the Company or any Subsidiary, or (ii) has
indicated to the Company or any Subsidiary that it is considering
(A) the downgrading, suspension, or withdrawal of, or any
review for a possible change that does not indicate the direction
of the possible change in, any rating so assigned, or (B) any
change in the outlook for any rating of the Company or any
Subsidiary or any securities of the Company or any
Subsidiary.
(h) The Company shall use the
proceeds of the offering and sale of the Notes in the manner
described in the Time of Sale Memorandum and the Final Memorandum
under the caption “Use of Proceeds.”
(i) The Notes have been duly
authorized by the Company and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to
and paid for by the Initial Purchasers in accordance with the terms
of this Agreement, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and equitable principles of
general applicability, and will be entitled to the benefits of the
Indenture pursuant to which such Notes are to be issued and the
Registration Rights Agreement.
(j) Each of the Indenture and
the Registration Rights Agreement has been duly authorized by the
Company, and when executed and delivered by the Company (assuming
due authorization, execution and delivery by the Trustee) will
constitute a valid and binding agreement of the Company,
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and equitable principles of
general applicability.
(k) No holder of securities
of the Company will be entitled to have offers and sales of such
securities registered under the registration statements required to
be filed by the Company pursuant to the Registration Rights
Agreement.
(l) The statements set forth
in the Time of Sale Memorandum and the Final Memorandum under the
captions “Description of Notes” and “Material
United States Federal Income Tax Considerations,” to the
extent that they constitute descriptions or summaries of the legal
matters, documents or proceedings referred to therein, including
United States federal income tax law or legal conclusions with
respect thereto, are accurate in all material respects.
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(m) (i) The Notes are
eligible for resale pursuant to Rule 144A under the Securities Act
and (ii) no other securities of the Company are of the same
class (within the meaning of Rule 144A under the Securities Act) as
the Notes and listed on a national securities exchange registered
under Section 6 of the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”), or quoted in a
U.S. automated inter-dealer quotation system.
(n) Neither the Company nor
any of its Affiliates (as defined in Rule 501(d) of Regulation D
under the Securities Act) has directly, or through any agent,
(i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the
Notes in a manner that would require the registration under the
Securities Act of the Notes or (ii) offered, solicited offers
to buy or sell the Notes by any form of general solicitation or
general advertising (as those terms are used in Regulation D under
the Securities Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities
Act.
(o) None of the Company, its
Affiliates or any person acting on its or their behalf has engaged
or will engage in any directed selling efforts (within the meaning
of Regulation S) with respect to the Notes and the Company and its
Affiliates and any person acting on its or their behalf have
complied and will comply with the offering restrictions requirement
of Regulation S, except no representation, warranty or agreement is
made by the Company in this paragraph with respect to the Initial
Purchasers. The sale of the Notes pursuant to Regulation S is not
part of a plan or scheme to evade the registration provisions of
the Securities Act.
(p) The execution and
delivery by the Company of, and the performance by the Company of
its obligations under, this Agreement, the Indenture, the
Registration Rights Agreement and the Notes will not violate or
constitute a breach of any provision of applicable law, code,
statute, rule or regulation or the certificate of incorporation or
formation or other governing documents or by-laws, as applicable,
of the Company, or any agreement or other instrument binding upon
the Company or any of its Subsidiaries that are individually or in
the aggregate material to the Company and its Subsidiaries (other
than the Company’s Credit Facility), taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any Subsidiary, and no
consent, approval, authorization, waiver or order of, notice or
filing or qualification with, any governmental body or agency is
required for the performance by the Company of its obligations
under this Agreement, the Indenture, the Registration Rights
Agreement or the Notes, except such as may be required by the
securities or Blue Sky laws of the various states in connection
with the offer and sale of the Notes and by federal and state
securities laws with respect to the Company’s obligations
under the Registration Rights Agreement.
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(q) The historical financial
statements (including the related notes and supporting schedules)
set forth on pages F-1 through F-62 included in the Time of Sale
Memorandum and the Final Memorandum comply in all material respects
with the applicable requirements under the Securities Act, and such
financial statements present fairly in all material respects the
financial condition, results of operations and cash flows of the
entities purported to be shown thereby, at the dates and for the
periods indicated, and have been prepared in conformity, in all
material respects, with generally accepted accounting principles
applied on a consistent basis (“ GAAP ”)
throughout the periods indicated. The financial information
contained in the Time of Sale Memorandum and the Final Memorandum
under the captions “Offering Memorandum Summary–Summary
Consolidated Historical Financial Information” and
“Selected Consolidated Historical Financial
Information” with respect to the Company is derived from the
accounting records of the Company and its Subsidiaries and fairly
presents the information purported to be shown thereby, and, to the
knowledge of the Company, such financial information fairly
presents the information purported to be shown thereby. The other
historical financial and statistical information and data included
in the Time of Sale Memorandum and the Final Memorandum are, in all
material respects, fairly presented.
(r) There has not occurred
any change involving a Material Adverse Effect, or any development
involving a prospective Material Adverse Effect, compared to the
information set forth in the Preliminary Memorandum provided to
prospective purchasers of the Notes.
(s) Other than proceedings
accurately described in all material respects in the Time of Sale
Memorandum and the Final Memorandum, there are no legal or
governmental proceedings (including, but not limited to, actions,
arbitrations or investigations) pending or, to the Company’s
best knowledge after due inquiry, threatened to which the Company,
any of its Subsidiaries or any of the Drilling Partnerships is a
party or to which any of the properties of the Company, any of its
Subsidiaries or the Drilling Partnerships is subject that would
have a Material Adverse Effect on the Company and its Subsidiaries,
taken as a whole, or, to the Company’s best knowledge after
due inquiry, on the Drilling Partnerships, or on the power or
ability of the Company to perform its obligations under this
Agreement, the Indenture, the Registration Rights Agreement or the
Notes or to consummate the transactions contemplated by this
Agreement, the Indenture, the Registration Rights Agreement or the
Notes.
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(t) The Company, its
Subsidiaries and, to the best knowledge of the Company after due
inquiry, the Drilling Partnerships (i) are in compliance with
any and all applicable foreign, federal, state and local laws,
including common law, and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or other wastes, pollutants or contaminants (“
Environmental Laws ”), (ii) have received all
permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where
such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a Material
Adverse Effect.
(u) There are no costs or
liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a Material
Adverse Effect.
(v) There has been no
storage, disposal, generation, manufacture, refinement,
transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company,
any of its Subsidiaries or, to the best knowledge of the Company
after due inquiry, the Drilling Partnerships, or any of their
predecessors in interest, at, upon or from any of the property now
or previously owned or leased by the Company, its Subsidiaries or,
to the best knowledge of the Company after due inquiry, the
Drilling Partnerships, or any of their predecessors in interest in
violation of any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit or which would require remedial
action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or
remedial action which would not have, or would not be reasonably
likely to have, singly or in the aggregate with all such violations
and remedial actions, a Material Adverse Effect; there has been no
material spill, discharge, leak, emission, injection, escape,
dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances for
which the Company, any of its Subsidiaries or, to the best
knowledge of the Company after due inquiry, the Drilling
Partnerships, would be liable, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release
which would not have or would not be reasonably likely to have,
singly or in the aggregate with all such spills, discharges, leaks,
emissions, injections, escapes, dumpings and releases, a Material
Adverse Effect; and the terms “hazardous wastes”,
“toxic wastes”, “hazardous substances” and
“medical wastes” shall have the meanings specified in
any applicable local, state, federal and foreign laws, including
common law, or regulations with respect to environmental
protection.
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(w) PricewaterhouseCoopers
LLP, which has delivered (or, as applicable, will deliver upon the
Closing Date) the letters referred to in Section 5(g)(i)
hereof, are currently the Company’s independent public
accountants as required by the Securities Act and the rules and
regulations thereunder and the rules and regulations of the Public
Company Accounting Oversight Board (United States) (the “
PCAOB ”).
(x) KPMG LLP, which has
certified certain financial statements of the Company, provided
reports which appear in the Time of Sale Memorandum and the Final
Memorandum and has delivered (or, as applicable, will deliver upon
the Closing Date) the letters referred to in Section 5(g)(ii)
hereof, were, at the time of each such report, the Company’s
independent public accountants as required by the Securities Act
and the rules and regulations thereunder and the rules and
regulations of the PCAOB at the time of each such
report.
(y) The Company, each of its
Subsidiaries and, to the best knowledge of the Company after due
inquiry, the Drilling Partnerships, have (i) valid and
defensible title to all their respective interests in their natural
gas and oil properties leased or owned by them, (ii) good and
marketable title to all real property owned by them (other than the
oil and gas properties described in clause (i) above) and
(iii) good and marketable title to all personal property owned
by them, in each case free and clear of all liens, encumbrances and
defects, except as encumbered by the Credit Facility as described
in the Time of Sale Memorandum and the Final Memorandum or such as
do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of
such property in the aggregate by the Company, its Subsidiaries
and, to the best knowledge of the Company after due inquiry, the
Drilling Partnerships; and all assets held under lease by the
Company, its Subsidiaries and, to the best knowledge of the Company
after due inquiry, the Drilling Partnerships, are held by them
under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the use
made of such properties and proposed to be made of such property
and buildings by the Company, any of its Subsidiaries or, to the
best knowledge of the Company after due inquiry, the Drilling
Partnerships.
(z) The Company, each of its
Subsidiaries and, to the best knowledge of the Company after due
inquiry, the Drilling Partnerships, carry, or are covered by,
insurance by reputable insurers in such amounts and covering such
risks as is adequate for the conduct of their respective businesses
and the value of their respective properties and as is customary
for companies engaged in similar businesses in similar industries.
Neither the Company nor any of its Subsidiaries
8
or, to the best knowledge of
the Company after due inquiry, the Drilling Partnerships, has
received written notice from any insurer or agent of such insurer
that substantial capital improvements or other expenditures will
have to be made in order to continue such insurance; and all such
insurance is outstanding and duly in force on the date hereof and
will be outstanding and duly in force on the Closing
Date.
(aa) The Company, its
Subsidiaries and, to the best knowledge of the Company after due
inquiry, the Drilling Partnerships, own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights
to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively, “
Intellectual Property Rights ”) necessary to conduct
the business now operated by them, or presently used by them, and
have not received any notice of infringement of or conflict with
asserted rights of others with respect to any Intellectual Property
Rights.
(bb) Ryder Scott Company L.P.
and Wright & Company, Inc., the Company’s
independent petroleum and natural gas engineers, whose reports
regarding the oil and natural gas reserves of the Company, its
Subsidiaries and the Drilling Partnerships, are referred to in the
Time of Sale Memorandum and the Final Memorandum (the “
Company Reserve Reports ”), and who have delivered the
letters regarding the Company referred to in Section 5(h)
hereof, were, as of the date of such reports, and are, as of the
date hereof, independent petroleum engineers with respect to the
Company. The information underlying the estimates of oil and
natural gas reserves of the Company, its Subsidiaries and, to the
best knowledge of the Company after due inquiry, the Drilling
Partnerships, which the Company prepared and supplied to each of
Ryder Scott Company L.P. and Wright & Company, Inc. for
the purpose of preparing the Company Reserve Reports was true and
correct in all material respects on the dates such estimates were
made and such information was supplied and was prepared in
accordance with customary industry practices; other than normal
production of the reserves and intervening product price
fluctuations as described in the Time of Sale Memorandum and the
Final Memorandum, the Company is not aware of any facts or
circumstances that would result in an adverse change in the
reserves, or the present value of future net cash flows therefrom,
as described in the Time of Sale Memorandum and the Final
Memorandum and as reflected in the Company Reserve Reports, that
would reasonably be expected to result in a Material Adverse
Effect; estimates of such reserves and present values as described
in the Time of Sale Memorandum and the Final Memorandum and
reflected in the Company Reserve Reports comply in all material
respects with applicable requirements of Regulation S-X and
Industry Guide 2 under the Securities Act.
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(cc) Except as described in
the Time of Sale Memorandum and the Final Memorandum, (i) the
Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the
Exchange Act); (ii) such disclosure controls and procedures
are designed to ensure that information required to be disclosed by
the Company in the reports that the Company will file or submit
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and
Exchange Commission’s (the “ Commission ”)
rules and forms, and are designed to ensure that information
required to be disclosed by the Company in the reports that it will
file or submit under the Exchange Act is accumulated and
communicated to the Company’s management, including the
Company’s principal executive and principal financial
officers, or persons performing similar functions, as appropriate
to allow timely decisions regarding required disclosure; and
(iii) such disclosure controls and procedures are not
effective to perform the functions for which they were established
solely because of the three material weaknesses identified in the
caption “Risk Factors—Risks Related to Our Business and
the Natural Gas and Oil Industry—Material weaknesses in our
internal control over financial reporting and disclosure controls
and procedures could have a material adverse effect on the
reliability of our financial statements, our ability to timely file
reports with the SEC, our ability to raise capital for our
operations and our ability to meet our obligations under the
notes” in the Time of Sale Memorandum and the Final
Memorandum.
(dd) Except as described in
the Time of Sale Memorandum and the Final Memorandum, the Company
maintains a system of internal accounting controls over financial
reporting (as such term is defined in Rule 13a-15(f) of the
Exchange Act) that is designed to provide reasonable assurance that
(i) material transactions are executed in accordance with
management’s general or specific authorization,
(ii) material transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP, 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
material differences. Except as disclosed in the Time of Sale
Memorandum and the Final Memorandum, there are no material
weaknesses in the Company’s internal controls.
(ee) Since the date of the
latest audited financial statements included in the Time of Sale
Memorandum, there has been no change in the Company’s
internal control over financial reporting that has materially
adversely affected, or is reasonably likely to materially adversely
affect the Company’s internal control over financial
reporting.
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(ff) Except as described in
the Time of Sale Memorandum and the Final Memorandum, the Company
is in compliance in all material respects with applicable
provisions of the Sarbanes-Oxley Act of 2002 and the rules and
regulations of the Commission and NASDAQ Global Select Market
(“ NASDAQ ”) that pertain thereto that are
effective. The Company is actively taking steps to ensure that it
will be in compliance in all material respects with other
applicable provisions of the Sarbanes-Oxley Act of 2002 and the
rules and regulations of the Commission and NASDAQ that pertain
thereto upon the effectiveness of such provisions.
(gg) The Company maintains a
listing for its common stock on the NASDAQ and is in compliance in
all material respects with the applicable requirements of the
NASDAQ pertaining to such listing. Except as described in the Time
of Sale Memorandum and the Final Memorandum, the Company has not
received any notice of non-compliance or other notice indicating a
risk of delisting or other adverse consequence from the
NASDAQ.
(hh) The Company is not, and
after giving effect to the offering and sale of the Notes and the
application of the proceeds thereof as described in the Final
Memorandum will not be, required to register as an
“investment company” as such term is defined in the
Investment Company Act of 1940, as amended.
(ii) It is not necessary in
connection with the offer, sale and delivery of the Notes to the
Initial Purchasers in the manner contemplated by this Agreement to
register offers and sales of the Notes under the Securities Act or
to qualify the Indenture under the Trust Indenture Act of 1939, as
amended.
(jj) There are no contracts,
agreements or understandings between the Company or any of its
Subsidiaries and any person that would give rise to a valid claim
for a brokerage commission, finder’s fee or other like
payment in connection with the offering and sale of the
Notes.
(kk) All tax returns,
declarations of estimated tax and tax reports (collectively,
“ Tax Returns ”) required to be filed on or
before (after considerations of any allowable extensions of time to
file) the Closing Date with respect to all federal, state, local or
foreign income, gross receipts, severance, property, productions,
sales, use, license, excise, franchise, employment, withholding or
similar taxes (collectively, together with any interest, additions
or penalties, “ Taxes ”) by the Company, the
Subsidiaries or, to the best knowledge of the Company after due
inquiry, the Drilling Partnerships, have been filed, other than
those which, if not filed, could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. All Taxes due or claimed to be due from the Company, the
Subsidiaries or, to the best knowledge of the Company after due
inquiry, the Drilling Partnerships, have been paid in full other
than those (i) which, if not paid in full, could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect and (ii) being
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contested in good faith in
appropriate proceedings and for which adequate reserves have been
provided for in accordance with GAAP. There is no action, suit,
proceeding, investigation, audit, or claim now pending or, to the
best knowledge of the Company and the Subsidiaries, threatened by
any authority regarding any Taxes relating to the Company, the
Subsidiaries or the Drilling Partnerships that could give rise to
any material Tax assessment or additional Tax liability except
those Tax assessments or Tax liabilities for which adequate reserve
in accordance with GAAP have been established.
(ll) Neither the Company nor
any of its Subsidiaries or, to the best knowledge of the Company
after due inquiry, the Drilling Partnerships, (i) is in
violation of its articles of incorporation, bylaws or other
governing documents, (ii) is in default (and no event has
occurred which, 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 material
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument, including the Credit Facility (except as
described in the Time of Sale Memorandum and the Final Memorandum),
to which it is a party or by which it is bound or to which any of
its properties or assets is subject or (iii) is in violation
in any material respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its property or assets
may be subject or has failed to obtain any material license,
permit, certificate, franchise or other governmental authorization
or permit necessary to the ownership of its property or to the
conduct of its business, except, in the case of each of clauses
(ii) and (iii) above, for any such defaults and/or
violations that would not (and would not reasonably be expected
to), individually or in the aggregate, have a Material Adverse
Effect. To the best knowledge of the Company and its Subsidiaries
after due inquiry, no third party to any indenture, mortgage, deed
of trust, loan agreement or other material agreement or instrument
to which the Company, its Subsidiaries or the Drilling Partnerships
is a party or by which it is bound or to which any of its
properties are subject is in material default under any such
agreement.
(mm) Eac
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