EXHIBIT (1) (a)
Dealer-Manager Agreement
PDC 2000 Drilling Program
DEALER/MANAGER AGREEMENT
, 1997
PDC Securities Incorporated
000 X. Xxxx Xxxxxx
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Dear Sirs:
The undersigned, Petroleum Development Corporation, a Nevada
corporation ("PDC"), the Managing General Partner of PDC 2000 Drilling
Program, a series of limited partnerships to be organized under the laws
of West Virginia (the "Partnership"), hereby confirms and agrees as
follows:
1. General. This Agreement sets forth the understandings and
agreements between PDC and you whereby, subject to the terms and
conditions contained herein, you will offer to sell, on a best efforts
basis, preformation partnership interests in the Partnership (the "Units")
which are described more fully in a Prospectus (the "Prospectus"). The
date as of which you are notified by PDC that Units may be offered and
sold shall constitute the "Effective Date" of the offering of Units under
this Agreement. The "Termination Date" of such offering shall be (a)
December 31, 1998 with respect to the 1998 partnerships and December 31,
1999 with respect to the 1999 partnerships and December 31, 2000 with
respect to 2000 partnerships or (b) such earlier date on which
Subscriptions (as hereinafter defined) for all of the Units have been sold
in accordance with the procedures and the minimums set forth in the
Prospectus. The period from the Effective Date through the Termination
Date shall constitute the "Offering Period" for the offering and sale of
Units by you pursuant to this Agreement. During the Offering Period, you,
the Soliciting Dealers (hereinafter designated) and PDC shall designate a
date, which date shall not be more than ten business days after the
Termination Date, which shall constitute the "Closing Date" under this
Agreement.
2. Representations and Warranties of PDC. PDC represents and
warrants to you that:
(a) PDC has prepared and reviewed the Prospectus, and the
Prospectus does not include and will not include during the Offering
Period any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that no
representations or warranties are made with respect to statements or
omissions made in reliance upon and in conformity with written
information furnished to PDC with respect to you, by you or on your
behalf expressly for use in the Prospectus or any amendment or
supplement thereof;
(b) The Partnership, upon the due execution of the
Partnership Agreement in the Prospectus (the "Partnership
Agreement") and the filing of a certificate of limited partnership
as required under the laws of the State of West Virginia, will be a
limited partnership duly formed and validly existing pursuant to the
Uniform Limited Partnership Act of the State of West Virginia (the
"West Virginia Act"), with all authority necessary to acquire, own
and manage the investments which are
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described as proposed investments of the Partnership in the Prospectus and
to conduct the business which it proposes to conduct, all as described in
the Prospectus; the Partnership Agreement pursuant to which the
partnership will be organized provides for the issuance and sale of the
Units; all action required to be taken by PDC or the Partnership as a
condition to the offering or sale of the Units to qualified subscribers
has been or, prior to the Effective Date, will have been taken; upon
payment of the consideration therefor specified in the Subscription
Agreement contained in the Prospectus and the due execution and delivery
to PDC of the Subscription Documents (as hereinafter described) by each
subscriber for the Units (the "Subscription"), acceptance of such
Subscription by PDC, the execution of the Partnership Agreement by PDC as
managing general partner and on behalf of such subscribers pursuant to the
terms of the Partnership Agreement and execution and filing for record of
a certificate of limited partnership of the Partnership (the
"Certificate") as shall be required or appropriate to organize the
Partnership with the accepted subscribers for the Units as additional
general or limited partners in accordance with the requirements of the
West Virginia Act, such subscribers will become additional general or
limited partners of the Partnership (the " Partners") entitled to all the
benefits of Partners under the Partnership Agreement and the West Virginia
Act;
(c) The Units, when issued, will constitute valid
partnership interests in accordance with the terms of, and shall be
entitled to the rights provided in, the Partnership Agreement and
the West Virginia Act, will be fully paid upon payment in cash of
the consideration therefor specified in the Subscription Agreement
contained in the Prospectus, and the liability of a Partner to make
payments to the Partnership or on behalf of the Partnership may or
may not be limited to the amount which such Partner has agreed to
pay in accordance with the terms of his Subscription and the
Partnership Agreement depending on whether he chooses to be an
additional general or limited partner;
(d) PDC has been, and on the Closing Date will be, duly and
validly organized and validly existing as a corporation in good
standing under the laws of the State of Nevada; has all requisite
power and authority to act as a Managing General Partner of the
Partnership; is or will be qualified to do business and in good
standing as a foreign corporation in each other jurisdiction in
which its acting in such capacity requires or may require such
qualification if the failure to so qualify might result in material
adverse consequences to the Partnership; has the requisite power and
authority and all necessary authorization, approvals and orders
required as of the date hereof to enter into this Agreement and the
Limited Partnership Agreement and to be bound by the provisions and
conditions hereof and thereof; and its audited balance sheet
included in the Prospectus presents fairly its financial position as
at the date indicated; said balance sheet has been prepared in
conformity with generally accepted accounting principles applied on
a consistent basis; and the certified public accountants whose
report thereon is included in the Prospectus are independent
accountants as required by the Securities Act of 1933, as amended
(the "Act");
(e) Except to the extent disclosed in the Prospectus there
is no litigation or governmental proceeding pending or, to PDC's
knowledge, threatened against, or involving the business or
proposed business of, the Partnership or PDC, which might materially
and adversely affect the proposed operations and business of the
Partnership;
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(f) The condition, financial or otherwise, of PDC, and the
proposed business of the Partnership, conform in all material
respects to the descriptions thereof contained in the Prospectus;
(g) Neither the execution and delivery of this Agreement and
the Partnership Agreement, the incurrence of the obligations herein
and therein set forth, the consummation of the transactions herein
and therein contemplated, nor compliance with the terms and
provisions hereof or thereof, will conflict with or result in a
breach or violation of any of the terms, provisions or conditions of
any agreement or instrument to which PDC is a party or by which it
is bound, or any order, rule or regulation applicable to PDC of any
court or any governmental body or administrative agency having
jurisdiction over PDC;
(h) The Units, when issued, will conform to the descriptions
thereof contained in the Prospectus; and the Prospects (as defined
in the Prospectus) as proposed to be owned by the Partnership
conform in all material respects to the description thereof in the
Prospectus;
(i) This Agreement has been duly and validly authorized,
executed and delivered by or on behalf of PDC and constitutes the
valid and binding agreement of PDC;
(j) The Partnership Agreement, upon its execution by PDC
will have been duly and validly authorized, executed and delivered
by or on behalf of PDC as the Managing General Partner and will
constitute the valid and binding agreement of the Managing General
Partner; and
(k) Neither PDC nor any of its affiliates has offered for
sale or sold any Units or interests in the Partnership or other
securities (collectively referred to herein as "Prior Offerings")
which, under present applicable law, would result in the integration
of Prior Offerings with the offering and sale of the Units by you as
contemplated in this Agreement.
3. Offering and Sale of Units.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions
herein set forth, PDC hereby appoints you as the Dealer Manager
during the Offering Period to offer all of the Units to potential
investors in the Partnership in accordance with the terms of the
Prospectus, and you agree to use your best efforts as Dealer
Manager, promptly following the Effective Date, to offer the Units
to suitable investors at the price and in accordance with the terms
stated in the Prospectus.
(b) The offering of Units by you and the Soliciting Dealers
will only be made to potential investors residing in the states
listed on Exhibit A to this Agreement without the prior consent of
PDC.
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(c) All sales of Units will be conditioned upon receipt of
Subscriptions from suitable investors acceptable to PDC for a
minimum of 75 Units ($1,500,000); $2,500,000 representing 125 units
with respect to PDC 1998-D Limited Partnership, PDC 1999-D Limited
Partnership and PDC 2000-D Limited Partnership (the "Minimum
Offering") on or before the Termination Date. All checks received
with Subscription Documents shall be made payable to "PNC Bank N.A.
as Escrow Agent for PDC 199 - [2000] Limited Partnership" and shall
be transferred to the Escrow Agent by noon of the next business day
after receipt for deposit in the Escrow Account established pursuant
to the Prospectus.
(d) All sales of Units will be conditioned upon acceptance
by PDC of the Subscription Documents of each subscriber (consisting
of the Subscription Agreement, all in the form as may be approved by
you, the Soliciting Dealers and PDC, or as may be required by the
Prospectus and the Partnership Agreement), which shall be duly
executed by each subscriber and be accompanied by payment in cash of
the purchase price of Units subscribed to by each such subscriber.
PDC shall have the right, in its sole discretion, to reject the
Subscription of any potential purchaser of Units.
(e) The Units will be sold only to persons who warrant or
represent that they or their beneficiaries meet the financial
suitability requirements as set forth in the Prospectus and such
other requirements may be required by the states in which the Units
are sold.
(f) In consideration of your execution of this Agreement,
and the performance of your obligations hereunder, and in further
consideration of your supervising the offering of Units, PDC agrees
to cause the Partnership to pay to you, within ten (10) business
days after the filing of the Certificate, 10-1/2% of the Partnership
Subscriptions (as defined in the Partnership Agreement) received and
accepted by PDC as of the Closing Date, out of which you may pay
commissions totaling not more than 8% to the Soliciting Dealer and
reimbursement of due diligence expenses, marketing support fees, and
other compensation, totaling no more than 2% to the Soliciting
Dealer as provided in the Soliciting Dealers Agreement, and from
which you may retain 0.5% of the Partnership Subscriptions as a
wholesaling fee, provided, however, that in the event the Minimum
Offering is not achieved on or before the Termination Date and this
Agreement is terminated, neither you nor the Soliciting Dealers
shall receive any sales commissions or fees. Total compensation to
NASD members under this agreement shall not exceed 10% of
Subscriptions and reimbursement of bona fide due diligence expenses
shall not exceed 0.5% of Subscriptions. Prior to the time any
partnership had reached the Minimum Offering, the Managing General
Partner shall advance from its own funds sales commissions and due
diligence expenses which would otherwise be payable in connection
with subscription funds received and cleared from subscribers that
the Managing General Partner deems suitable to be Investor Partners.
4. Suitability.
(a) As Dealer-Manager, you are aware of the suitability
standards, as set forth in the Prospectus, that an offeree must meet
and represent. As such, you will make reasonable inquiry and cause
the Soliciting Dealers to make reasonable inquiry to assure that
there is compliance with such standards.
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(b) In recommending the purchase of Units in the
Partnership, you shall (and you shall cause the Soliciting Dealers
to):
(1) Have reasonable grounds to believe, on the basis of
information obtained from the offeree concerning his investment
objectives, other investments, financial situation and needs, and
any other information known by you or any associated person, that:
(i) the offeree is or will be in a financial position
appropriate to enable him to realize to a significant extent
the benefits described in the Prospectus;
(ii) the offeree has a fair market net worth
sufficient to sustain the risks inherent in the program,
including loss of investment and lack of liquidity;
(iii) the program is otherwise suitable for the
offeree; and
(2) Maintain in your file documents disclosing the basis
upon which the determination of suitability was reached as to each
offeree.
(c) Notwithstanding the provisions of subsection (b)
above, you shall not execute any transaction of Units of the
Partnership in any discretionary account without prior written
approval of the transaction by the offeree.
(d) Prior to executing a purchase transaction of
Units of the Partnership, you shall inform the offeree of all
the pertinent facts relating to the liquidity and
marketability of the Units during the term of the Partnership.
5. Disclosure.
(a) Prior to participating in the offering, you shall have
reasonable grounds to believe, based on information made available
to you by PDC through a prospectus or other materials, that all
material facts are adequately and accurately disclosed and provide
a basis for evaluating the program.
(b) In determining the adequacy of disclosed facts pursuant
to subsection (a) hereof, you shall obtain information on material
facts relating at a minimum to the following, if relevant in view of
the nature of the program:
(1) items of compensation;
(2) physical properties;
(3) tax aspects;
(4) financial stability and experience of PDC;
(5) the program's conflicts and risk factors; and
(6) appraisals and other pertinent reports.
(c) For the purposes of subsections (a) or (b) hereof, you
may rely upon the results of an inquiry conducted by another NASD
member or members, provided that:
(1) the member or persons associated with a member
has reasonable grounds to believe that such inquiry was
conducted with due care;
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(2) the results of the inquiry were provided to you
with the consent of the member or members conducting or
directing the inquiry; and
(3) no member that participated in the inquiry is a
sponsor of the program or an affiliate of such sponsor.
6. Covenants of PDC. PDC covenants that it will:
(a) During the Offering Period and prior to the Closing
Date, notify you and the Soliciting Dealers immediately, and
confirm the notice in writing, of any event relating to or
affecting the Partnership or PDC which might reasonably result
in the Prospectus containing an untrue statement of a material
fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances
existing at the time they were made, not misleading; and if in
the opinion of counsel to PDC, the content of such disclosure
to you requires an amendment or supplement to the Prospectus,
PDC will forthwith prepare and furnish to you and the
Soliciting Dealers, at PDC's expense, a reasonable number of
copies of such amendment or amendments, or supplement or
supplements, to the Prospectus so as to render it not
misleading prior to the consummation of any sale of Units to
an Investor or any prospective investor;
(b) Qualify or register the Units for offering and sale or make
filings under the securities laws of the states listed in Exhibit A to
this Agreement and such additional states as you or the Soliciting Dealers
may reasonably designate; provided, however, neither the Partnership nor
PDC shall be obligated to file any general consent to service of process
under the laws of any such jurisdiction or subject themselves to taxation
as doing business in such jurisdiction;
(c) File registration statements with the Securities and Exchange
Commission and applicable regulatory authorities of the States, as and
when such filings are required under the securities laws of those States,
and promptly furnish to you two signed or conformed copies thereof;
(d) Deliver promptly to you and the Soliciting Dealers, upon
request, true and complete copies of such contracts, notes, mortgages,
commitments, loan agreements and other documents relating to the formation
of the Partnership, the acquisition, ownership, operation and management
of any oil and gas properties or interests acquired or to be acquired by
the Partnership, the business experience and financial condition of PDC,
and such other information, financial or otherwise, relating to the
business, assets and liabilities of the Partnership or PDC, as you or the
Soliciting Dealers may reasonably request prior to the Closing Date;
(e) Deliver to you and the Soliciting Dealers one copy of each
report, letter, statement or other written information furnished by the
Partnership to the Partners during the term of the Partnership;
(f) Apply the proceeds of the sale of the Units substantially as
set forth in the Prospectus;
(g) From and after the Closing Date, not offer or sell interests
in the Partnership or other securities which offers or sales, in the
opinion of counsel to PDC, would be integrated with offers and sales of
interest in the Partnership pursuant to this Agreement.
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7. Covenants of PDC Securities. PDC Securities Incorporated
agrees:
(a) To offer the Units for sale and to sell the Units solely
on the basis of the information furnished to prospective investors
in the Prospectus. If you prepare any materials or presentations
supplementary to the Prospectus, you assume complete responsibility
for such materials and presentations and agree to deliver no written
information other than the Prospectus to any potential subscriber
unless authorized to do so in writing by the Partnership;
(b) To obtain written evidence sufficient to permit you and
PDC to reasonably determine that a subscriber purporting to qualify
is, in fact, so qualified;
(c) Prior to obtaining a Subscription from any potential
subscriber to obtain evidence satisfactory to you and PDC that each
subscriber meets the financial suitability requirements established
in the Prospectus;
(d) Not to commence the offer or sale of Units in any State
until you have received advice from PDC or its counsel that the
Units may be offered and sold in such state; and
(e) To furnish to PDC or its designee at PDC's request
during the Offering Period, and in any event within five (5) days
after the Termination Date, the Subscription Documents (or true
copies thereof) of subscribers solicited by you to permit PDC or its
designee to review such Subscription Documents and to evaluate the
qualifications of such subscribers as potential Partners.
8. Payment of Expenses. PDC will pay all expenses incident to
the performance of its obligations under this Agreement, including (a) the
preparation of the Prospectus, (b) the preparation of this Agreement, (c)
the fees and disbursements of PDC's counsel, accountants and consultants
related to the preparation of the Prospectus, (d) the qualification of the
Units for the offer and sale thereof under the securities laws of the
States and you or the Soliciting Dealers may reasonably designate,
including filing fees and the fees and disbursements of counsel in
connection therewith, and (e) the printing and delivery to you of such
quantities of the Prospectus as you may reasonably request and all
amendments or supplements thereto.
9. Closing Conditions. Your obligation to deliver the
Subscriptions Documents to PDC for acceptance by it and funds received for
Subscriptions is subject to the satisfaction on or before the Closing Date
(as above defined) of the following conditions:
(a) You and the Soliciting Dealers shall have received the
favorable opinion of one or more of the special counsel or general
counsel for the Partnership or PDC, dated as of the Closing Date, to
the effect that
(i) the Partnership Agreement provides for the
issuance and sale of the Units; all action required to be
taken by PDC or the Partnership as a condition to the offering
or sale of Units to subscribers has been taken; subscribers
purchasing Units will become Additional General Partners or
Limited Partners in the Partnership entitled to all the
benefits of Additional General Partners or Limited Partners
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under the Partnership Agreement upon the occurrence of the
following events: the acceptance by the Managing General
Partner of such Partners, the payment of the consideration
therefor provided in the Subscription Documents, the execution
of the Partnership Agreement by PDC as Managing General
Partner and on behalf of the Partners as provided in the
Limited Partnership Agreement, and the execution and
recordation by the Partnership of the Certificate as shall be
required or appropriate to organize the Partnership with
Investors as Additional General Partners or Limited Partners
in accordance with the requirements of the West Virginia Act;
(ii) the Partnership Agreement has been duly and
validly authorized and executed by PDC and constitutes the
valid and binding obligation of PDC;
(iii) this Agreement has been duly and validly
authorized, executed and delivered by PDC and constitutes the
valid and binding agreement of PDC;
(iv) to the best of their knowledge, there are no
legal or governmental proceedings pending or threatened
against the Partnership or PDC (or its Affiliates) of a
character required to be disclosed in the Prospectus which
have not been so disclosed and no consent, approval,
authorization or order of any governmental agency or body is
required in connection with the consummation of the
transactions contemplated by this Agreement, the Prospectus,
or the Partnership Agreement, except such as have been
heretofore obtained and such as may be necessary under state
"Blue Sky" or securities laws;
(v) the Partnership will be classified as a
partnership and not as an association taxable as a corporation
for Federal income tax purposes.
(b) On the Effective Date and during the Offering no order
suspending the offering or sale of the Units shall have been issued,
and on the Effective Date and during the Offering Period no
proceedings for that purpose shall have been instituted, or to your
knowledge or that of PDC, shall be contemplated.
(c) You and the Soliciting Dealers shall have received a
sworn certificate, dated the Closing Date, signed by the President
of PDC, to the effect that he has carefully read the Prospectus and
that:
(i) as of its date, the Prospectus did not contain
an untrue statement of a material fact and, to the best of his
knowledge after reasonable inquiry, did not omit to state a
material fact necessary to make the statements made therein,
in light of the circumstances under which they were made, not
misleading;
(ii) since the date of the Prospectus, no event has
occurred which should have been set forth in an amendment or
supplement to the Prospectus which has not been so set forth;
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(iii) since the date of the Prospectus, there has not
been any adverse change in the business or proposed business,
interests, oil and gas properties or proposed oil and gas
properties or condition, financial or otherwise, of the
Partnership or PDC, whether or not arising from transactions
in the ordinary course of business, which might materially and
adversely affect the properties or operations or proposed
properties and operations of the Partnership or PDC or the
ability of PDC to perform the services proposed to be
performed by it as described in the Prospectus; and
(iv) to the best of his knowledge, based upon
reasonable investigation, the representations and warranties
of PDC in Section 2 of this Agreement are true and correct as
if made at and as of the Closing Date.
If any condition to your obligations hereunder shall not have been
fulfilled when and as required by this Agreement to be fulfilled, you may
waive any such condition which has not been fulfilled, extend the time for
its fulfillment or terminate this Agreement. In the event that you elect
to terminate this Agreement, all Subscription Documents, checks and other
documents and instruments delivered to you for the purchase of the Units
shall be returned to the subscribers solicited by you, accompanied by a
notice from you of the cancellation and termination of the offering of the
Units.
10. Representations and Agreements to Survive. Except as the
context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall remain operative and in full force and
effect and shall survive the Closing Date.
11. Effective Date, Term and Termination of this Agreement.
(a) This Agreement shall become effective on the Effective
Date.
You or PDC may elect to prevent this Agreement from becoming
effective without liability of any party to any other party by
giving notice of such election to the other parties hereto before
the time this Agreement otherwise would become effective.
(b) You shall have the right to terminate this Agreement at
any time during the Offering Period if any representation or
warranty hereunder shall be found to have been incorrect or
misleading or PDC shall fail, refuse or be unable to perform any of
its agreements hereunder or to fulfill any condition of your
obligations hereunder or if the Prospectus shall have been amended
or supplemented despite your objection to such amendment or
supplement or (i) if all trading on the New York Stock Exchange or
the American Stock Exchange (in this Section collectively called
"Exchange') shall have been suspended, or minimum or maximum prices
for trading generally shall have been fixed, or maximum ranges for
prices for all securities shall have been required on the Exchange
by the Exchange or by order of the Securities and Exchange
Commission or any other governmental authority having jurisdiction
or (ii) if the United States shall have become involved in a war or
major hostilities or (iii) if a banking moratorium has been declared
by a state or Federal authority or (iv) if PDC or its properties
shall have sustained a material or substantial loss by fire, flood,
accident, earthquake or other calamity or malicious act which,
whether or not said loss shall have been insured, will in your
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opinion make it inadvisable to proceed with the offering and sale of
the Units; or if there shall have been such change in the condition
or prospects of the Partnership or PDC or in the levels of the prime
interest rate or long-term mortgage rate or in the condition of
securities markets generally as in your judgement would make it
inadvisable to proceed with the offering and sale of the Units.
12. Notices.
(a) All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to you shall
be mailed, delivered, or telegraphed and confirmed to you at PDC
Securities Incorporated, 000 Xxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxx
Xxxxxxxx 00000, Attention: Xxxx X. Xxxxxxxxx; if sent to PDC and/or
the Partnership shall be mailed, delivered or telegraphed and
confirmed to PDC at 000 Xxxx Xxxx Xxxxxx, P. O. Xxx 00, Xxxxxxxxxx,
Xxxx Xxxxxxxx 00000.
(b) Notice shall be deemed to be given by you to PDC or the
Partnership or by PDC or the Partnership to you as of the third
business day after it is mailed or telegraphed as provided and
confirmed to you at PDC Securities Incorporated, 000 Xxxx Xxxx
Xxxxxx, Xxxxxxxxxx, Xxxx Xxxxxxxx 00000.
13. Parties. This Agreement shall inure solely to the benefit of
you and shall be binding upon you and PDC and your respective successors
and assigns. Nothing expressed or mentioned in this Agreement is intended
or shall be construed to give any person or corporation, other than the
parties hereto and their respective successors and assigns any legal or
equitable right, remedy or claim under or in respect of this Agreement or
any provision herein contained. No purchaser of any of the Units from you
or PDC shall be construed a successor or assign by reason merely of such
purchase.
14. Construction. This Agreement shall be construed in accordance
with the laws of the State of West Virginia.
If the foregoing correctly sets forth the understanding between us, please
so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement between us.
Very truly yours,
PETROLEUM DEVELOPMENT CORPORATION
By
Title: President
Accepted as of the date first above written.
PDC SECURITIES INCORPORATED
By
Title President
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