AGREEMENT AND PLAN OF MERGER
Exhibit 2.1
THIS AGREEMENT AND PLAN OF MERGER, (this “Agreement”) is made on June 20, 2011, by and
among PDC 2002-D LIMITED PARTNERSHIP, a West Virginia limited partnership (the
“Partnership”), PETROLEUM DEVELOPMENT CORPORATION, a Nevada corporation (“PDC”),
and DP 2004 MERGER SUB, LLC, a Delaware limited liability company (“LLC”).
RECITALS
A. The Partnership is engaged in the business of oil and gas development and production. The
Partnership is comprised of PDC as the general partner (sometimes referred to herein as the
“Managing General Partner”) and a limited partner, and various investors in the
Partnership, other than PDC and any of its affiliates, as limited partners (the
“Investors”).
B. LLC is a wholly owned subsidiary of PDC.
C. PDC, as the Managing General Partner of the Partnership, for itself, and as the sole member
of LLC, has approved this Agreement, has deemed this Agreement to be advisable and has approved the
merger of the Partnership with and into LLC (the “Merger”) in accordance with the terms of
this Agreement, the Delaware Limited Liability Act (the “LLC Act”) and the West Virginia
Limited Partnership Act, W. Va. Code § 47-9-1 et seq. (the “LP Act”), as contemplated
hereby.
D. PDC, as Managing General Partner, intends to solicit the vote of the holders of a majority
of outstanding partnership interests of the Partnership held by Investors. Subject to certain
limitations, upon consummation of the merger, the Investors will have the right to receive an
amount in cash subject to the terms and conditions described herein.
NOW, THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of this
Agreement and in accordance with the LLC Act and the LP Act, at the Effective Date (as defined in
Section 1.3 hereof) (i) the Partnership shall be merged with and into LLC, (ii) the separate
existence of the Partnership shall cease and LLC shall continue as the surviving entity (sometimes
hereinafter referred to as the “Surviving Entity”), (iii) all the rights, privileges,
immunities, powers and franchises of the Partnership shall vest in the Surviving Entity, and (iv)
the liabilities of the Partnership shall be the obligations, duties, debts and liabilities of the
Surviving Entity.
Section 1.2 Closing. Unless this Agreement shall have been terminated and the
transactions contemplated herein abandoned, and subject to the satisfaction or waiver of the
conditions set forth in Article VII, the closing of the Merger (the “Closing”) will take
place at the offices of PDC, or such other place as PDC determines, on a date to be specified by
the parties, which date shall be the date on which the Certificate of Merger described in Section
1.3 is to be filed with the West Virginia Secretary of State and the Delaware Secretary of State
(the “Closing Date”).
Section 1.3 Effective Date. Subject to the provisions of this Agreement, on the
Closing Date, LLC and the Partnership shall cause an appropriate Certificate of Merger (the
“Certificate of Merger”) to be executed and filed with the Secretary of State of the State
of West Virginia (the “West Virginia Secretary of State”) and the Secretary of State of the
State of Delaware (the “Delaware Secretary of State”) in such form as required by the LLC
Act and the LP Act. The Merger shall become effective as of the Closing Date, and such time is
hereinafter referred to as the “Effective Date.”
Section 1.4 Certificate of Limited Partnership; Limited Partnership Agreement; LLC
Agreement. Upon the Effective Date, the Certificate of Limited Partnership, as amended (the
“Certificate of Limited Partnership”) and the
Limited Partnership Agreement of the Partnership (the “Limited Partnership
Agreement”), as in effect immediately prior to the Merger, shall be deemed cancelled and of no
further force and effect. The Surviving Entity shall be governed according to and consistent with
the LLC Act, the Limited Liability Company Agreement of LLC in effect as of the Closing Date, as
that agreement may be amended from time to time (the “LLC Agreement”) and the Certificate
of Formation for LLC filed with the Delaware Secretary of State on May 7, 2010 (the
“Certificate of Formation”).
Section 1.5 Sole Member and Principal Office of the Surviving Entity. PDC shall be
the sole member of the Surviving Entity with all powers granted to PDC under the LLC Agreement and
the LLC Act. The Principal Office of the surviving entity shall be 0000 Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxx 00000.
ARTICLE II
EFFECT OF MERGER AND LIQUIDATION OF INVESTOR UNITS
Section 2.1 Termination of Partnership. On the Effective Date, by virtue of the
Merger and without any action on the part of the Partnership, PDC or LLC, the Partnership shall
cease to exist as a separate legal entity.
Section 2.2 Liquidation of Investor Partnership Units. On the Effective Date, the
Partnership shall liquidate all of the units of interest in the Partnership (each a “Unit”
and collectively the “Units”) held by the Investors as of the Effective Date and each Unit
held by an Investor shall automatically be converted into the right to receive $4,024 per Unit,
plus the sum of amounts withheld from per Unit cash distributions by the Partnership from October
1, 2010 through August 31, 2011 for the Partnership’s additional development plan in the Codell
formation, less the sum of the per Unit cash distributions made after August 31, 2011 and before
the Closing Date, and subject to any adjustments made pursuant to Section 2.3 herein (the
“Per Unit Price,” which shall be proportionally adjusted for partial Units). PDC shall
deliver to each Investor the cash payment for such Investor’s liquidated Units within 30 days after
completion of the Merger.
Section 2.3 Adjustments.
(a) On the Adjustment Date, the Per Unit Price will be increased by the sum of the Oil Price
Adjustment (as defined below), if any, and the Gas Price Adjustment (as defined below), if any. For
purposes hereof, the “Adjustment Date” means at 5:00 p.m. (New York City time) on the date
one day before the date the Proxy Statement relating to the Special Meeting is filed with the
Securities and Exchange Commission.
(b) For each increment of $5.00 per Bbl by which (x) the arithmetic average of the five-year
NYMEX futures price per Bbl for oil as of the Adjustment Date exceeds (y) the arithmetic average of
the five-year NYMEX futures price per Bbl for oil as of March 31, 2011, there will be a preliminary
increase of $275 per Unit (the sum of all such incremental increases, the “Positive Oil Price
Adjustment”). For avoidance of doubt, if (x) the arithmetic average of the five-year NYMEX
futures price per Bbl for oil as of the Adjustment Date does not exceed (y) the arithmetic average
of the five-year NYMEX futures price per Bbl for oil as of March 31, 2011 by at least $5.00 per
Bbl, there will be no preliminary increase of $275 per Unit and the Positive Oil Price Adjustment
and the Oil Price Adjustment (as defined below) will be equal to $0.
(c) For each increment of $0.50 per Mcf by which (x) the arithmetic average of the five-year
NYMEX futures price per Mcf for gas as of March 31, 2011 exceeds (y) the arithmetic average of the
five-year NYMEX futures price for gas as of the Adjustment Date, there will be a preliminary
decrease of $200 per Unit (the sum of all such incremental decreases, the “Negative Gas Price
Adjustment”). For avoidance of doubt, if (x) the arithmetic average of the five-year NYMEX
futures price per Mcf for gas as of March 31, 2011 does not exceed (y) the arithmetic average of
the five-year NYMEX futures price for gas as of the Adjustment Date by at least $0.50 per Mcf,
there will be no preliminary decrease of $200 per Unit and the Negative Gas Price Adjustment will
be equal to $0.
(d) The “Oil Price Adjustment” will be equal to the cash amount in dollars that the
Positive Oil Price Adjustment exceeds the absolute value of the Negative Gas Price Adjustment. For
avoidance of doubt, if the absolute value of the Negative Gas Price Adjustment exceeds the Positive
Oil Price Adjustment on the Adjustment Date, the Oil Price Adjustment will be an amount equal to
$0.
(e) For each increment of $0.50 per Mcf by which (x) the arithmetic average of the five-year
NYMEX futures price per Mcf for gas as of the Adjustment Date exceeds (y) the arithmetic average of
the five-year NYMEX futures price per Mcf for gas as of March 31, 2011, there will be a preliminary
increase of $200 per Unit (the sum of all such incremental increases, the “Positive Gas Price
Adjustment”). For avoidance of doubt, if the arithmetic average of the five-year NYMEX futures
price per Mcf for gas as of the Adjustment Date does not exceed the arithmetic average of the
five-year NYMEX futures price per Mcf for gas as of March 31, 2011 by at least $0.50 per Mcf, there
will be no preliminary increase of $200 per Unit and the Positive Gas Price Adjustment and the Gas
Price Adjustment (as defined below) will be equal to $0.
(f) For each increment of $5.00 per Bbl by which (x) the arithmetic average of the five-year
NYMEX futures price per Bbl for oil as of March 31, 2011 exceeds (y) the arithmetic average of the
five-year NYMEX futures price per Bbl for oil as of the Adjustment Date, there will be a
preliminary decrease of $275 per Unit (the sum of all such incremental decreases, the “Negative
Oil Price Adjustment”). For avoidance of doubt, if (x) the arithmetic average of the five-year
NYMEX futures price per Bbl for oil as of March 31, 2011 does not exceed (y) the arithmetic average
of the five-year NYMEX futures price per Bbl for oil as of the Adjustment Date by at least $5.00
per Bbl, there will be no preliminary decrease of $275 per Unit and the Negative Oil Price
Adjustment will be equal to $0.
(g) The “Gas Price Adjustment” will be equal to the cash amount in dollars that the
Positive Gas Price Adjustment exceeds the absolute value of the Negative Oil Price Adjustment. For
avoidance of doubt, if the absolute value of the Negative Oil Price Adjustment exceeds the Positive
Gas Price Adjustment on the Adjustment Date, the Gas Price Adjustment will be an amount equal to
$0.
(h) As used in this Section 2.3, the following terms have the respective meanings set forth
below:
“Bbl” means one barrel, or 42 U.S. gallons, of liquid volume.
“Mcf” means one thousand cubic feet.
“NYMEX”
means the New York Mercantile Exchange.
Section 2.4 Appraisal. Notwithstanding anything in this Agreement to the contrary,
Units that are outstanding immediately prior to the Closing Date and that are held by any Investor
who is entitled to demand, and properly demands, appraisal of such Units (“Appraisal
Units”) pursuant to, and who complies in all respects with, the West Virginia Business
Corporations Act (the “WVBCA”) shall not be converted into the right to receive the Per
Unit Price as provided in Section 2.2, but rather the holders of such Appraisal Units shall be
entitled to payment of the “fair value” (as defined in the WVBCA) of such Appraisal Units in
accordance with the Act (and at the Closing Date, such Appraisal Units shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist, and the holders thereof
shall cease to have any right with respect thereto, except the right to receive the fair value of
such Appraisal Unit in accordance with the WVBCA); provided, however, that if any such holder shall
fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal under the WVBCA,
then the right of such holder to be paid the fair value of such holder’s Appraisal Units shall
cease and such Appraisal Units shall be deemed to have been converted as of the Closing Date into
the right to receive the Per Unit Price as provided in Section 2.2. The Partnership shall give PDC
(i) prompt notice of any demands for appraisal received by the Partnership, withdrawals of such
demands, and any other instruments served pursuant to the WVBCA and received by the Partnership and
(ii) the opportunity to direct all negotiations and proceedings with respect to demands for
appraisal under the WVBCA.
Section 2.5 Extinguishment of PDC’s Partnership Interests. On the Effective Date,
all of PDC’s interest in the Partnership (including, without limitation, its Managing General
Partner Interest and all Units owned by PDC or any of its affiliates) shall be extinguished.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
The Partnership represents and warrants to PDC and LLC that:
Section 3.1 Organization. The Partnership is a limited partnership, duly formed and
validly existing under the laws of the State of West Virginia, and has all requisite power and
authority and all necessary governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted.
Section 3.2 Authorization; Validity of Agreement.
(a) The Partnership has the requisite power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
(b) The execution and delivery by the Partnership of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized in accordance with the Certificate
of Limited Partnership and the Limited Partnership Agreement, and no other proceedings on the part
of the Partnership are necessary to authorize the execution and delivery of this Agreement by the
Partnership and the consummation of the transactions contemplated hereby.
(c) This Agreement has been duly executed and delivered by the Partnership and, assuming due
authorization, execution and delivery of this Agreement by PDC and LLC, is a legal, valid and
binding obligation of the Partnership, enforceable against the Partnership in accordance with its
terms, except that such enforcement may be subject to or limited by (i) bankruptcy, insolvency or
other similar laws, now or hereafter in effect, affecting creditors’ rights generally, and (ii) the
effect of general principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
Section 3.3 Opinion of the Committee’s Financial Advisor. The Committee has
received a written opinion from Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Financial Advisors, Inc. to the
effect that, subject to certain assumptions, qualifications, limitations and other matters, as of
the date of such opinion, the consideration to be received by the Investors in the Merger pursuant
to this Agreement is fair to such Investors from a financial point of view.
Section 3.4 Required Consent. On June 11, 2011, a special committee (the
“Committee”) of the Board of Directors of PDC, the Managing General Partner of the
Partnership, at a meeting duly called and held, by the vote of the Committee members present at
such meeting, a quorum of the Committee having been satisfied in accordance with the bylaws of PDC,
(i) determined that this Agreement and the Merger are advisable and in the best interests of the
Partnership, (ii) approved this Agreement, the Merger and the other transactions contemplated
hereby, and (iii) resolved to recommend that the Investors of the Partnership vote to approve this
Agreement.
Section 3.5 No Violations or Consents.
(a) Neither the execution and delivery of this Agreement by the Partnership nor the
consummation by the Partnership of the transactions contemplated hereby will (i) violate any
provision of the Certificate of Limited Partnership or the Limited Partnership Agreement, (ii)
result in a violation or breach of, or constitute (with or without due notice or lapse of time or
both) a default or give rise to any right of termination, cancellation or acceleration under, any
of the terms, conditions or provisions of any material note, bond, mortgage, indenture, guarantee,
other evidence of indebtedness, license, lease, contract, agreement or other instrument or
obligation to which the Partnership is a party or by which any of its assets may be bound or (iii)
violate any order, writ, injunction, decree, statute, rule or regulation applicable to the
Partnership.
(b) No filing or registration with, notification to, or authorization, consent or approval of,
any governmental entity is required in connection with the execution and delivery of this Agreement
by the Partnership or the consummation by the Partnership of the transactions contemplated hereby,
except (i) the filing of the Certificate of Merger with the West Virginia Secretary of State and
the Delaware Secretary of State and (ii) any filing required to be made with the Securities and
Exchange Commission related to the proxy materials provided in connection with this Agreement or
the transactions contemplated thereby.
Section 3.6 No Other Representations or Warranties. Except for the representations
and warranties contained in this Article III, neither the Partnership nor any other person makes
any other express or implied representation or warranty on behalf of the Partnership.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PDC AND LLC
Each of PDC and LLC represents and warrants to the Partnership as follows:
Section 4.1 Organization. PDC and LLC are each entities, duly formed, validly
existing, and in good standing under the laws of the State of Nevada and the State of Delaware,
respectively, and each has all requisite corporate or limited liability company (as appropriate)
power and authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its respective business as it is now being conducted.
Section 4.2 Authorization; Validity of Agreement.
(a) Each of PDC and LLC has the requisite corporate and limited liability company (as
appropriate) power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.
(b) The execution and delivery by each of PDC and LLC of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by the Board of Directors of PDC
and the Board of Managers of LLC and no other proceedings on the part of PDC or LLC are necessary
to authorize the execution and delivery of this Agreement by PDC or LLC and the consummation of the
transactions contemplated hereby.
(c) This Agreement has been duly executed and delivered by each of PDC and LLC and, assuming
due authorization, execution and delivery of this Agreement by the Partnership, is a legal, valid
and binding obligation of PDC and LLC, enforceable against PDC and LLC in accordance with its
terms, except that such enforcement may be subject to or limited by (i) bankruptcy, insolvency or
other similar laws, now or hereafter in effect, affecting creditors’ rights generally, and (ii) the
effect of general principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
Section 4.3 Required Consent.
(a) On April 15, 2011, the Board of Directors of PDC (without the Committee members
participating), at a meeting duly called and held, by the vote of the directors present at such
meeting, a quorum of the Board of Directors having been satisfied in accordance with the bylaws of
PDC, approved this Agreement, the Merger and the other transactions contemplated hereby.
Subsequently, PDC approved the Merger and adopted this Agreement.
(b) On June 20, 2011, the sole member of LLC, by written consent, (i) determined that this
Agreement and the Merger are advisable and (ii) approved this Agreement, the Merger and the other
transactions contemplated hereby. Subsequently, LLC approved the Merger and adopted this Agreement.
Section 4.4 No Violations or Consents.
(a) Neither the execution and delivery of this Agreement by PDC or LLC nor the consummation by
PDC or LLC of the transactions contemplated hereby will (i) violate any provision of PDC’s Second
Amended and Restated Certificate of Incorporation or Bylaws, as amended and restated, or LLC’s
Certificate of Formation or LLC Agreement, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default or give rise to any right of
termination, cancellation or acceleration under, any of the terms, conditions or provisions of any
material note, bond, mortgage, indenture, guarantee, other evidence of indebtedness, license,
lease, contract, agreement or other instrument or obligation to which PDC or LLC is a party or by
which any of its assets may be bound or (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to PDC or LLC.
(b) No filing or registration with, notification to, or authorization, consent or approval of,
any governmental entity is required in connection with the execution and delivery of this Agreement
by PDC or LLC or the consummation by PDC or LLC of the transactions contemplated hereby, except (i)
the filing of the Certificate of Merger with the West Virginia Secretary of State and the Delaware
Secretary of State and (ii) any filing required to be made with the
Securities and Exchange Commission related to the proxy materials provided in connection with
the Agreement or the transactions contemplated thereby.
Section 4.5 No Other Representations or Warranties. Except for the representations
and warranties contained in this Article IV, neither PDC, LLC nor any other person makes any other
express or implied representation or warranty on behalf of PDC or LLC.
ARTICLE V
CLOSING CONDITIONS
Section 5.1 Conditions to Each Party’s Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the satisfaction on or
prior to the Closing Date of each of the following conditions:
(a) The holders of at least a majority of the issued and outstanding Units held by
Investors shall have approved, at a special meeting of the Partnership held for that purpose
(the “Special Meeting”), (i) an amendment to the Limited Partnership Agreement in a
form that is reasonably acceptable to the Committee that expressly permits the Investors to
approve this Agreement, the Merger and the transactions contemplated thereby and (ii) this
Agreement, the Merger and the transactions contemplated thereby;
(b) No provision of any applicable law, rule or regulation and no judgment, order or
decree shall make the Merger illegal or prohibit the consummation of the Merger and the
transactions related thereto;
(c) No suit, action or proceeding shall have been filed or otherwise be pending against
PDC, LLC or any officer, director (including any member of the Committee), manager, member or
affiliate of PDC or LLC challenging the legality or any aspect of this Agreement, the Merger or
the transactions related thereto; and
(d) The parties to the Merger shall have made all filings and registrations with, and
notifications to, all third parties, including, without limitation, lenders and all appropriate
regulatory authorities, required for consummation of the transactions contemplated by this
Agreement (other than the filing and recordation of appropriate merger documents required by
the LLC Act or LLP Act, as applicable), and all approvals and authorizations and consents of
all third parties, including, without limitation, lenders and all regulatory authorities,
required for consummation of the transactions contemplated by this Agreement shall have been
received and shall be in full force and effect, except for such filings, registrations,
notifications, approvals, authorizations and consents, the failure of which to make or obtain
would not have a material adverse effect on the business or financial condition of PDC, LLC or
the Partnership or the ability of PDC, LLC or the Partnership to consummate the transactions
contemplated by this Agreement.
Section 5.2 Conditions to the Obligation of the Partnership to Effect the Merger.
The obligation of the Partnership to effect the Merger is further subject to the satisfaction or
waiver at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of PDC and LLC set forth in this Agreement shall be
true and correct as of the Closing Date; and
(b) PDC and LLC shall have each performed in all material respects all of their respective
obligations required to be performed by them under this Agreement at or prior to the Closing
Date.
Section 5.3 Conditions to Obligations of PDC and LLC to Effect the Merger. The
obligation of PDC and LLC to effect the Merger is further subject to the satisfaction or waiver at
or prior to the Closing Date of the following condition:
(a) Since the date hereof, no event, circumstance, condition, development or occurrence
causing, resulting in or having, or reasonably expected to cause, result in or have, a material
adverse effect on the Partnership’s
business, operations, properties (in all cases taken as a whole), condition (financial or
otherwise), results of operations, assets (in all cases taken as a whole), liabilities, or cash
flows.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Special Meetings; Proxies. As soon as reasonably practicable after the
execution of this Agreement, PDC will take all action necessary to duly call, give notice of,
convene and hold the Special Meeting to consider and vote upon approval of this Agreement and the
amendment to the Limited Partnership Agreement. PDC will use its commercially reasonable efforts to
solicit from the Investors proxies in favor of this Agreement and the amendment to the Limited
Partnership Agreement, and to take all other action necessary or advisable to secure any vote or
consent of the Investors required by the Limited Partnership Agreement, this Agreement or
applicable law to effect the Merger.
Section 6.2 Proxy Statement. PDC will file with the Securities and Exchange
Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended, a preliminary
proxy statement (the “Preliminary Proxy”) and a definitive proxy statement (the “Proxy
Statement”) relating to the Special Meeting, and any amendments or supplements thereto as PDC
may deem to be required or appropriate. PDC shall cause the Proxy Statement to be mailed to the
Investors as soon as practicable in accordance with applicable federal and state law. PDC shall
provide to the Committee, prior to filing, drafts of the Preliminary Proxy, the Proxy Statement and
any amendments or supplements thereto, give the Committee and its counsel reasonable opportunity to
comment on the same, and provide the Committee and its counsel with any other documents reasonably
related to the Proxy Statement (including any correspondence from or to the SEC or its staff
concerning the Preliminary Proxy, the Proxy Statement, or any supplement or amendment thereto).
Section 6.3 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its commercially reasonable efforts to obtain in
a timely manner all waivers, consents and approvals and to effect all registrations and filings,
and to use its commercially reasonable efforts to take, or cause to be taken, all other actions and
to do, or cause to be done, all other things, necessary, proper or advisable under applicable laws
and regulations to consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned, in whole or in part, with respect to the Partnership, at any
time prior to the Effective Time, whether before or after approval of the Merger by the Investors:
(a) By mutual written consent of all the parties hereto (with the Committee required to
approve any matter for the Partnership);
(b) By any party hereto (with the Committee required to approve any matter for the
Partnership), if:
(i) the Closing shall not have occurred by December 15, 2011;
(ii) there shall be any applicable law, rule or regulation that makes consummation
of the Merger illegal or otherwise prohibited or if any judgment, injunction, order or
decree enjoining any party from consummating the Merger is entered and such judgment,
injunction, order or decree shall have become final and non-appealable; or
(iii) there shall be filed or pending any suit, action or proceeding against PDC,
LLC or any officer, director, manager, member or affiliate of PDC or LLC challenging the
legality or any aspect of the Merger or the transactions related thereto;
(c) By the Partnership (with the Committee required to approve any matter for the
Partnership), if PDC or LLC shall have failed to perform its agreements and covenants contained
herein, and such failure has a material adverse effect on PDC or LLC, or materially and
adversely affects the transactions contemplated by this Agreement, and is either incapable of
being cured or is not cured by PDC or LLC within 30 days following written notice thereof from
the Committee;
(d) By PDC, if the Partnership shall have failed to perform its agreements and covenants
contained herein, and such failure has a material adverse effect on the Partnership, or
materially and adversely affects the transactions contemplated by this Agreement, and is either
incapable of being cured or is not cured by the Partnership within 30 days following written
notice thereof from PDC; and
(e) Prior to obtaining the required vote of the Investors, by the Committee on behalf of
the Partnership, if the Partnership (A) has materially complied with its obligations under this
Agreement and (B) has entered into a definitive acquisition agreement providing for a Superior
Proposal (as defined below); provided that the Partnership may not enter into any such
definitive acquisition agreement or terminate this Agreement pursuant to this Section 7.1(e)
until at least five days have passed after the Committee informs PDC of its intention to accept
a Superior Proposal (during which time PDC may respond to any Superior Proposal). “Superior
Proposal” means a bona fide written offer, obtained after the date hereof and not in breach of
this Agreement, made by a third party to the Committee to acquire, directly or indirectly, for
consideration consisting of cash, all of the Investors’ interests in the Partnership (i) which
is not subject to a financing contingency, (ii) which is otherwise on terms and conditions
which the Committee determines in its good faith judgment (after consultation with outside
counsel and a financial advisor of national reputation) to be more favorable to the Investors
from a financial point of view than the Merger and this Agreement and the other transactions
contemplated hereby, taking into account at the time of determination any changes to the terms
of this Agreement that as of that time had been agreed to by PDC and LLC in writing, and (iii)
which is reasonably capable of being completed, taking into account any approval requirements
and all financial, legal, operational (e.g., related to drilling, gathering, production,
transportation and other relevant matters), regulatory and other aspects of such proposal.
Section 7.2 Effect of Termination. In the event of termination of this Agreement by
a party as provided in Section 7.1, written notice thereof shall promptly be given to the other
party or parties and this Agreement shall forthwith terminate without further action by any of the
parties hereto. If this Agreement is terminated as provided, however, there shall be no liabilities
or obligations hereunder on the part of any party hereto except as provided in Section 8.1 and
except that nothing herein shall relieve any party hereto from liability for any breach of this
Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred by PDC, the Partnership and LLC in connection with this Agreement and the
transactions contemplated hereby (including without limitation the solicitation of proxies in
connection therewith) shall be paid by PDC.
Section 8.2 Amendment. The parties may amend or cancel this Agreement prior to the
Effective Date, by action taken or authorized by their Board of Directors, managers, members or
Managing General Partner (through the Committee), as appropriate. This Agreement may not be
amended, supplemented or modified except by an instrument in writing signed on behalf of each of
the parties hereto.
Section 8.3 Waiver. At any time prior to the Closing Date, the parties hereto may,
to the extent provided by applicable law, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered pursuant hereto, and
(c) waive compliance with any of the agreements or conditions contained herein; provided, however,
that the parties may not waive the condition set forth in Section 5.1(a). Any such extension or
waiver shall not operate as an extension or waiver of, or estoppel with respect to, any subsequent
failure of
compliance or other failure. Any agreement on the part of a party hereto to any such extension
or waiver shall be valid against such party if set forth in an instrument in writing signed by such
party.
Section 8.4 Survival. The respective representations and warranties of the parties
hereto contained herein shall not survive beyond the Effective Date. The covenants and agreements
of the parties hereto shall survive the Effective Date without limitation (except for those that,
by their terms, contemplate a shorter survival period).
Section 8.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon (a) transmitter’s confirmation of a receipt of a facsimile
transmission, (b) confirmed delivery by a standard overnight carrier or when delivered by hand or
(c) the expiration of five business days after the day when mailed in the United States by
certified or registered mail, postage prepaid, addressed to the principal offices of the recipient.
Section 8.6 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
Section 8.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall be considered one
and the same agreement.
Section 8.8 Entire Agreement. This Agreement constitutes the entire agreement, and
supersedes all prior agreements and understandings (written and oral), among the parties with
respect to the subject matter hereof.
Section 8.9 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
Section 8.10 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void,
unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 8.11 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without giving effect to the principles of
conflicts of law thereof.
Section 8.12 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either of the parties hereto without the prior written
consent of the other party.
Section 8.13 Further Assurances. Each party hereto covenants and agrees to promptly
execute and deliver to the requesting party such other documents, instruments of transfer, etc. as
may be requested by any other party to effectuate the terms and conditions of this Agreement.
[Signature page follows]
IN WITNESS WHEREOF, the Partnership, PDC and LLC have each caused this Agreement to be signed
by their respective representatives hereunto duly authorized as of the date first written above.
| PDC 2002-D LIMITED PARTNERSHIP | ||||||
| By: | PETROLEUM DEVELOPMENT CORPORATION, its Managing General Partner |
|||||
| By: | /s/ Xxxxx X. Xxxxxxx
|
|||||
| Xxxxx X. Xxxxxxx | ||||||
| Chief Financial Officer | ||||||
| PETROLEUM DEVELOPMENT CORPORATION | ||||||
| By: | /s/ Xxxxx X. Xxxxxxx
|
|||||
| Xxxxx X. Xxxxxxx | ||||||
| Chief Financial Officer | ||||||
| DP 2004 MERGER SUB, LLC | ||||||
| By: | PETROLEUM DEVELOPMENT CORPORATION, its Sole Member |
|||||
| By: | /s/ Xxxxx X. Xxxxxxx
|
|||||
| Xxxxx X. Xxxxxxx | ||||||
| Chief Financial Officer | ||||||
