EXHIBIT 2.1
AGREEMENT FOR PURCHASE AND SALE
dated September 19, 2000
by and between
APACHE CANYON GAS, L.L.C.,
a Delaware limited liability company
as Seller
and
EVERGREEN RESOURCES, INC.
a Colorado corporation
as Buyer
EXECUTION VERSION
AGREEMENT FOR PURCHASE AND SALE
THIS AGREEMENT dated as of the 19th day of September, 2000, between Apache
Canyon Gas, L.L.C., a Delaware limited liability company ("Seller"), and
Evergreen Resources, Inc., a Colorado corporation (herein referred to as
"Buyer").
W I T N E S S E T H:
WHEREAS, Seller owns certain real estate oil and gas leasehold and mineral
interests and related equipment situated in the State of Colorado, all of which
it holds in connection with its business of petroleum exploration and
production; and
WHEREAS, Seller desires to sell and Buyer desires to acquire these
interests and related assets on the terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms, as used herein, shall have the following meanings:
1.1 "Agreement" means this Agreement for Purchase and Sale between Seller
and Buyer.
1.2 "Assets" means the following described assets and properties (except
to the extent constituting Excluded Assets):
(a) "Real Property Assets" which consist of the following:
(1) the Subject Interests;
(2) the Lands;
(3) the Incidental Rights;
(4) the Claims; and
(5) all Hydrocarbons produced from or attributable to the
Subject Interests with respect to all periods subsequent to
the Effective Time, together with all proceeds from or of
such Hydrocarbons.
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1.3 "Assumed Obligations" means (i) all liabilities and obligations of
Seller with respect to the Claims, (ii) all liabilities and obligations of
Seller arising or accruing under or with respect to the Assets from and after
the Effective Time, (iii) all liabilities and obligations of Seller, whether
accrued or not, with respect to plugging and abandoning any ▇▇▇▇▇, removing
structures and facilities and the restoration of the surface pertaining to the
Assets, (iv) a pro-rata share of Property Taxes with respect to the Assets for
the Tax Period in which Closing occurs and all Transfer Taxes, (v) all
liabilities and obligations of Seller arising or accruing under or with respect
to the Material Contracts from and after the Effective Time, (vi) all
liabilities and obligations under the Basic Documents from and after the
Effective Time except to the extent that a particular obligation is otherwise
expressly retained by Seller hereunder, and (vii) all other liabilities and
obligations assumed by Buyer under this Agreement, including but not limited to
liabilities and obligations assumed by Buyer under Article XIII.
1.4 "Basic Documents" means all Material Contracts, agreements, and other
legally binding rights and obligations to which the Assets may be subject, or
that may relate to the Assets including, without limitation, leases, assignments
in the chain of title, overriding royalty assignments, farmout and farmin
agreements, option agreements, pooling and unitization agreements, operating
agreements. production sales and marketing agreements, processing agreements,
transportation agreements, production purchasing agreements, permits, licenses
and orders.
1.5 "Buyer's Credits" is defined in Section 3.2.
1.6 "Claims" means all obligations and benefits with respect to gas
production, pipeline, transportation or processing imbalances, all of which are
to be assumed or received by Buyer pursuant to this Agreement.
1.7 "Closing" is defined in Section 10.1.
1.8 "Closing Date" is defined in Section 10.1.
1.9 "Conveyance" mean the Assignment, ▇▇▇▇ of Sale and Conveyance of the
Real Property Assets a form of which is set out in EXHIBIT C.
1.10 "Defensible Title" means such title to a Subject Interest that,
subject to and except for Permitted Encumbrances, (a) entitles Seller to receive
not less than the net revenue interest of Seller for the well or unit as set
forth in EXHIBIT A of all Hydrocarbons produced, saved and marketed from or
attributable to such well or unit and (b) obligates Seller to bear the costs and
expenses relating to the maintenance, development and operation of such well or
unit in an amount not greater than the working interest of Seller for such well
or unit as set forth in EXHIBIT A (unless Seller's net revenue interest therein
is proportionately increased) it being understood that the existence of
Permitted Encumbrances affecting any Asset shall not form the basis for a claim
that Seller does not have Defensible Title to such Asset.
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1.11 "Effective Time" means either: (i) 7:00 a.m. Mountain Time on
September 1, 2000 if the Closing Date occurs on or before September 22, 2000; or
(ii) 7:00 a.m. Mountain Time on September 30, 2000 if the Closing Date is after
September 22, 2000.
1.12. "Excluded Assets" mean the following:
(a) all rights, interests, assets and properties of Seller which are
expressly excluded from this sale under other provisions of this Agreement or
which are set forth in Exhibit D;
(b) (i) except to the extent constituting or attributable to Claims,
all trade credits, accounts receivable, notes receivable and other receivables
attributable to Seller's interest in the Assets with respect to any period of
time prior to the Effective Time, and (ii) all deposits, cash, checks in process
of collection, cash equivalents and funds attributable to Seller's interest in
the Assets with respect to any period of time prior to the Effective Time;
(c) all corporate, financial, tax and legal (other than title)
records of Seller, however, Buyer shall be entitled to receive copies of any
financial, tax (subject to Section 11.2(d) of this Agreement) or legal records
which directly relate to the Assets; PROVIDED, HOWEVER, that Buyer's said
entitlement shall not extend to any records whose disclosure may expose Seller
to any possible claim of breach of privilege or confidentiality under any
agreement or under federal or state laws;
(d) except to the extent constituting Claims and except as otherwise
provided in this Agreement, all claims and causes of action of Seller (i)
arising from acts, omissions or events, or damage to or destruction of property,
occurring prior to the Effective Time, or (ii) with respect to any of the
Excluded Assets;
(e) except as otherwise provided in clause (vi) of the definition of
Incidental Rights or in Article XV hereof, all rights, titles, claims and
interests of Seller (i) under any policy or agreement of insurance or indemnity,
(ii) under any bond or (iii) to any insurance or condemnation proceeds or
awards;
(f) all (i) Hydrocarbons produced from or attributable to the Assets
with respect to all periods prior to the Effective Time, together with all
proceeds from or of such Hydrocarbons, and (ii) Hydrocarbons which, at the
Effective Time, are owned by Seller or to which Seller has title and are in
storage, within processing plants, or in pipelines;
(g) Seller's share of any and all claims, as well as Seller's claims,
for refund of or loss carry forwards with respect to (i) federal, state and
local, sales and use, ad valorem, property, excise, production, severance, gross
receipts, payroll, withholding or other taxes attributable to any period prior
to the Effective Time; (ii) federal, state and local income or franchise taxes;
or (iii) any taxes attributable to the Excluded Assets;
(h) all amounts due or payable to Seller as adjustments or refunds
under any audit pertaining to periods prior to the Effective Time;
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(i) all amounts due or payable to Seller as adjustments or refunds
under any contracts or agreements respecting periods prior to the Effective
Time, other than Claims;
(j) all amounts due or payable to Seller as adjustments to insurance
premiums related to the Assets with respect to any period prior to the Effective
Time;
(k) except to the extent included in the Claims, all proceeds,
benefits, income or revenues accruing (and any security or other deposits made)
with respect to (i) the Assets prior to the Effective Time or (ii) any Excluded
Assets;
(l) any logo, service ▇▇▇▇, copyright, trade name or trademark
associated with Seller or any business of Seller; and
(m) all files, information and data expressly excluded from the
definition of Incidental Rights.
(n) all interests in the firm transportation contracts as follows:
(1) CIG contract number 33053000, and (2) CIG contract number 33257000.
(o) all vehicles, tractors, trailers and similar equipment owned by
Seller.
1.13 "GAAP" means Generally accepted accounting principles, consistently
applied.
1.14 "Hydrocarbons" means crude oil, natural gas, casinghead gas,
condensate, sulphur, natural gas liquids and other liquid or gaseous
hydrocarbons (including C02), and also refers to all other minerals of every
kind and character which may be covered by or included in the Subject Interests.
1.15 "Incidental Rights" shall mean all right, title and interest of Seller
in and to or derived from the following insofar as the same directly relate to
the Subject Interests: (i) all unitization, communitization and pooling
designations, declarations, agreements and orders covering Hydrocarbons in or
under the Lands or any portion thereof and the units and pooled or communitized
areas created thereby; (ii) all easements, rights-of-way, surface leases,
permits, licenses, servitudes or other interests, including; (iii) all equipment
and other personal property, fixtures and improvements situated upon the Lands
and used or held for use in connection with the exploration, development or
operation of the Subject Interests or Lands or the production, treatment,
storage, compression, processing or transportation of Hydrocarbons from or in
the Subject Interests or Lands; (iv) the following Hydrocarbon sales, purchase
and exchange contracts: 33160000 and 33195000 both with CIG, along with all
Material Contracts; (v) originals of all lease files, land files, well files,
gas and oil sales contract files, gas processing files, division order files,
abstracts, title opinions, and all other books, files and records, information
and data (including copies of engineering, geological and geophysical data to
the extent same may be transferred, but subject in all events to any and all
consents concerning ownership and transfer), and all rights thereto, of Seller
insofar as the same are directly related to and necessary to the realization of
value by Buyer of any of the Subject Interests
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or Lands and to the extent the transfer thereof is not prohibited by existing
contractual obligations with third parties; and (vi) to the extent transferable
and subject to Article XV hereof, all interest of Seller in and to all claims
and causes of action which Seller may have against insurance companies and
others by reason of injury or damage to or destruction or loss of all or any
part of the Assets by reason of events occurring subsequent to the Effective
Time.
1.16 "Lands" mean, except to the extent constituting Excluded Assets, each
and every kind and character of right, title, claim or interest which Seller has
in and to the lands covered by the Subject Interests.
1.17 "Material Contracts" means all contracts related to the Assets the
absence of which would cause a material change either in the operations of the
Assets or their value, as set forth on Exhibit E.
1.18 "Permitted Encumbrances" shall mean any of the following matters:
(a) the terms, conditions, restrictions, exceptions, reservations,
limitations and other matters contained in the agreements, instruments and
documents which create or reserve to Seller its interests in any of the Assets
provided they do not operate to reduce the net revenue interest, nor increase
the working interest (unless Seller's net revenue interest therein is
proportionately increased) of Seller in the Subject Interests as reflected in
EXHIBIT A hereto;
(b) encumbrances that arise under operating agreements to secure
payment of amounts not yet delinquent and are of a type and nature customary in
the oil and gas industry;
(c) encumbrances that arise as a result of pooling and unitization
agreements, declarations, orders or laws to secure payment of amounts not yet
delinquent;
(d) any materialman's, mechanics', repairman's, employees',
contractors', operators' or other similar liens or charges for liquidated
amounts arising in the ordinary course of business, (w) which are inchoate, (x)
which Seller has agreed to assume or pay pursuant to the terms hereof, or (y)
for which Seller is responsible for paying or releasing at Closing;
(e) any liens for taxes, tax assessments not yet delinquent, or tax
assessments that are being contested in good faith, and other assessments not
yet delinquent, or if delinquent, that are being contested in good faith;
(f) any liens or security interests created by law or reserved in oil
and gas leases for royalty, bonus or rental or for compliance with the terms of
the Subject Interests;
(g) any obligations or duties affecting the Assets to any
municipality or public authority with respect to any franchise, grant, license
or permit, and all applicable laws, rules and orders of governmental authority;
(h) any (i) easements, rights-of-way, servitudes, permits, surface
leases and other rights in respect of surface operations, pipelines, grazing,
hunting, fishing, logging, canals, ditches,
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reservoirs, or the like, or (ii) easements for streets, alleys, highways,
pipelines, telephone lines, power lines, railways and other similar
rights-of-way, on, over, or in respect of property owned or leased by Seller or
over which Seller owns rights-of-way, easements, permits, or licenses, to the
extent such matters, individually or in the aggregate, do not interfere
materially with oil and gas operations currently conducted on the Subject
Interests;
(i) all lessors' royalties, overriding royalties, net profits
interests, carried interests, reversionary interests and other burdens to the
extent that the net cumulative effect of such burdens does not operate to reduce
the net revenue interest of Seller in any of the Subject Interests to below the
applicable net revenue interest set forth in EXHIBIT A hereto;
(j) all defects and irregularities affecting title to the Subject
Interests which individually or in the aggregate do not operate to reduce the
net revenue interest, nor increase the working interest (unless Seller's net
revenue interest is increased proportionately) of Seller in the Subject
Interests as reflected in Exhibit A hereto or otherwise interfere materially
with the operation, value or use of the Subject Interests;
(k) preferential rights to purchase and required third party consents
to assignments and similar agreements with respect to which waivers or consents
are obtained from the appropriate parties with respect to the sale contemplated
hereunder or following the furnishing, by Seller to the appropriate party, of
all requisite notices and information, the applicable time period for asserting
such rights has expired without an exercise of such rights with respect to such
sale;
(l) all rights to consent by, required notices to, filings with, or
other actions by governmental entities in connection with the sale or conveyance
of oil and gas leases or interests therein if the same are customarily obtained
contemporaneously with or subsequent to such sale or conveyance;
(m) (i) Material Contracts, division orders, unitization and pooling
designations, declarations, orders and agreements, and (ii) contracts and
agreements with affiliates of Seller of the kind enumerated in subclause (i) of
this clause (m) that have been disclosed to Buyer in EXHIBIT H hereto;
(n) any encumbrance, title defect or matter (whether or not
constituting a Title Defect) waived or deemed waived by Buyer pursuant to
Article VII hereof;
(o) any agreement, contract, lease, instrument, permit, amendment or
extension entered into by Seller in accordance with Article VIII hereof;
(p) the Oil and Gas Purchase and Processing Agreements; and
(q) that certain eight inch gathering line found in the southwest
part of "Lease ▇▇. ▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇," also known as the Weston Tract, as
described in EXHIBIT A hereto, servicing ▇▇▇▇▇ on the west-adjacent tract
commonly known as the "Golden Eagle Tract" and connecting, through compression
facilities, to the CIG pipeline, and all associated equipment related
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thereto or necessary for the operation thereof, along with a surface
right-of-way, twenty feet in width running the length of said gathering line
with the gathering line, as nearly as possible, down the middle.
1.19 "Property Taxes" is defined in Section 11.2.
1.20 "Purchase Price" is defined in Section 3.1.
1.21 "Seller's Credits" is defined in Section 3.2.
1.22 "Subject Interests" means, except to the extent constituting Excluded
Assets, any and all interests owned by Seller and set forth in EXHIBIT A-1 or
which Seller is now entitled to receive by reason of any existing participation,
joint venture, farm-in or other agreement, in and to the oil, gas and/or mineral
leases, permits, licenses, concessions, leasehold estates, fee, royalty and
overriding royalty interests described in EXHIBIT A-1 attached hereto including,
without limitation, Seller's minerals, mineral fee and reversionary interests
in, on and under the lands described in EXHIBIT A.
1.23 "Tax Period" is defined in Section 11.2.
1.24 "Title Defect" is defined in Section 7.3.
1.25 "Transfer Taxes" is defined in Section 11.2.
ARTICLE II
SALE AND PURCHASE
Subject to the terms and conditions of this Agreement and the Permitted
Encumbrances, Seller agrees to sell and convey to Buyer and Buyer agrees to
purchase and pay for the Assets.
ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 PURCHASE PRICE. (a) The total consideration for the sale and
conveyance of the Assets to Buyer is Buyer's payment of One Hundred Forty-One
Million Dollars ($U.S.141,000,000.00), as adjusted in Section 3.1(c) below, (the
"Purchase Price"). The cash portion of the Purchase Price, together with and
subject to such adjustments, if any, as are expressly provided for elsewhere in
this Agreement, shall be paid by Buyer to Seller by means of completed Federal
Funds transfers to Seller's account in Apache Canyon Gas, L.L.C., routing number
▇▇▇▇▇▇▇▇▇, account number 9870964996 as follows: (i) Thirty-five Million Dollars
($U.S. 35,000,000.00) and (ii) subject to Section 10.4, Shares of Redeemable
Preferred Stock of Buyer with a face value of One Hundred Million Dollars
($U.S.100,000,000.00) pursuant to the provisions set out in EXHIBIT I,
("Preferred Stock"). Also at Closing, subject to Section 10.4, and as a credit
to the payment of the Purchase Price, Buyer shall deliver to Seller a
certificate or certificates, registered in the name of the Seller
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or its designee, evidencing ownership of shares of common stock of the Buyer
aggregating Six Million Dollars ($US6,000,000.00) of Buyer's common stock (the
"Evergreen Stock") calculated as provided in (b) below. The $6,000,000.00 in
Evergreen Stock, the Preferred Stock, and the $35,000,000.00 cash paid at
Closing, together, constitute the "Initial Payment."
(b) The amount of Evergreen Stock to be included in the Initial
Payment shall be calculated based on a per-share price equal to the average
closing price of the Evergreen Stock for the fifteen trading day period ending
the day prior to the Closing. The Evergreen Stock, at Closing, shall not be
registered and shall be initially restricted. The terms of Seller's holding of
such stock shall be subject to the provisions of EXHIBIT J.
(c) On December 29, 2000, the parties shall calculate the simple
arithmetic average of the settle prices for NYMEX natural gas futures contracts
for the months of January, 2001 through December, 2001, as published in the
December 27, 2000, edition of THE WALL STREET JOURNAL under the heading "Natural
Gas, (NYM) 10,000 MMBtu.; $ per MMBtu's". If such average equals or exceeds
$4.465 per MMBtu, then Buyer shall, on or before January 5, 2001, deliver to
Seller a certificate or certificates, registered in the name of the Seller or
its designee, evidencing ownership of shares of common stock of the Buyer
aggregating Four Million Dollars ($US4,000,000.00) of Buyer's common stock (the
Adjustment Stock") calculated as provided in the next sentence. The number of
shares of Adjustment Stock shall be calculated based on a per-share price equal
to the average closing price of the Adjustment Stock for the fifteen trading day
period ending the day prior to the date of delivery of the Adjustment Stock to
Seller. The Adjustment Stock, when issued, shall not be registered and shall be
initially restricted. The terms of Seller's holding of such stock shall be
subject, MUTATIS MUTANDIS, to the provisions of EXHIBIT J.
(d) Notwithstanding anything set out herein, if, at December 31,
2000, the Redemption of the Preferred Stock as provided in Section 2.4 of the
Amendment to State Terms, set forth in Exhibit I hereof (the "Amendment") has
not occurred, the Parties shall make the following calculation: Take the sum of
the Dividends received pursuant to Section 2.1 of the Amendment (excluding,
however, any Dividends received associated with an increase in Dividends over
the initially effective dividend amount of $95 per share per annum set forth in
Section 2.1) plus the actual proceeds received by the Seller or its assigns
pursuant to that certain production payment reserved in that certain conveyance
from Seller to Buyer set forth in Exhibit C ("Production Payment") and covering
certain Leases and Lands in Las Animas County, Colorado. If such sum does not
equal what Seller would have received had it reserved a production payment equal
to the "Applicable Percentage", as defined below, of the Hydrocarbons
attributable to such Leases and Lands (instead of the 18.64% that it did
reserve), assuming that Seller would have been paid at precisely the same
average rate per Mcf, that Seller, in fact, received attributable to is
Production Payment reserved in Exhibit C, then Buyer shall be obligated to pay a
one-time payment ("December Adjustment"), as an adjustment to the Purchase
Price, to Seller equal to the difference between what Seller actually received
and what it would have received had it reserved only the Applicable Percentage
production payment and had not received, and had not been entitled to receive,
any dividend hereunder ("Theoretical Production Payment"). In addition, at the
time of the Redemption of the last share of Seller's Preferred Stock, Buyer and
Seller shall make the calculation, and Buyer shall be obligated to the payment,
if such results from that calculation, as an adjustment to the Purchase Price
utilizing the formula set out in the preceding sentence, but calculated from
December
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31, 2000 through the date of the Redemption of the last share of Seller's
Preferred Stock ("Final Adjustment") Buyer and Seller both recognize that actual
proceeds of the Production Payment may not be paid until the second month after
the end of the month in which production occurred. Accordingly, upon each
payment required in this Section 3.1(d), the Buyer and Seller shall meet and
determine, in good faith, their best estimate of what cash payments Seller is
likely to receive from the Production Payment, but attributable to the
particular time period set out above, after the relevant date and take that sum
into consideration in calculating each of the one-time adjustments provided for
hereunder. If Buyer and Seller cannot agree, then the average of the actual
proceeds received in the three calendar months next preceding the Adjustment
(whether the December Adjustment or the Final Adjustment) shall be used for
making such estimate. The Final Adjustment shall be made contemporaneously and
as a condition of the Redemption; provided, however, nothing herein shall
prohibit Buyer from making the Redemption of the last share of Seller's
Preferred Stock on or before December 31, 2000, in which case there shall be
only on Adjustment. The Buyer and Seller shall meet within 120 days of each
Adjustment to make a final determination of the correct amount of each one-time
dividend. If, on the other hand, the Production Payment and the Dividends paid
actually exceed the Theoretical Production Payment, then Seller shall refund the
excess amount to Buyer. The term "Redemption" has the meaning ascribed to it in
the Amendment.
(e) As used above, the "Applicable Percentage" means:
i. Initially 59.47%. The Applicable Percentage will remain 59.47% if
the preferential purchase right applicable to the Lorencito
properties (as described under the terms of that certain
Agreement for Purchase and Sale between Buyer and Seller of even
date herewith) is NOT exercised by the holder thereof.
ii. If that preferential right is exercised by the holder thereof,
then Buyer, within 10 days following the closing on the exercise
of that preferential right, shall make a Redemption of $20
million worth of Seller's Preferred Stock, and upon that
Redemption, the Applicable Percentage shall be 56.8%.
3.2 PURCHASE PRICE CREDITS.
(a) Within 10 days after December 31, 2000, the parties shall
exchange information with respect to revenues received from production and other
operating sources (excluding interest income), from or attributable to the
Assets for periods on or after the Effective Date received by Seller plus
$150,000.00 ("Buyer's Credits") and shall calculate all exploration, production,
development, operating, overhead, general and administrative and other costs
paid or incurred by Seller with respect to the Assets for such period charged
under applicable operating agreements or, if no operating agreement is
applicable, then under the most recent ▇▇▇▇▇ Accounting Procedure Joint
Operations ("Seller's Credits") excluding all non-cash charges attributable to
depletion, depreciation, bad debt losses, lease abandonment, etc.; provided that
Seller shall have no obligation to make any payment that would constitute a
Seller's Credit after the Effective Time. Only items of revenue, cost and
expense attributable to the Assets shall be included in the foregoing
calculations. If Seller's Credits exceed Buyer's Credits, the difference shall
be due
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Seller by Buyer. If Buyer's Credits exceed Seller's Credits, the difference
shall be due Buyer by Seller. Prior to the end of the ten day period beginning
with December 31, 2000, Seller shall furnish Buyer with an estimated accounting
showing the amount of Seller's Credits and the amount of Buyer's Credits. The
amount of the final credit, as adjusted, shall be paid in cash on final
adjustment by the party owing it. If within such time period, the parties are
unable to agree as to whether an item of income or expense belongs in the period
before or after the Effective Time, or is properly included in Seller's Credits
or Buyer's Credits, or as to any other accounting matters, then such item or
matter may be submitted for determination to a mutually acceptable accounting
firm in accordance with Section 12.2 hereof. Final settlement shall be made
within ten (10) business days following agreement by the Buyer and Seller or
final determination by said accounting firm (which final determination shall be
binding upon Buyer and Seller).
(b) Seller and Buyer or representatives of each shall determine the
amount of the Hydrocarbons existing in storage tanks, gathering lines,
pipelines, gasoline plants, and other facilities as of the Effective Date using
the point or points of delivery to Seller's purchasers as a zero reference
point. Seller shall receive a credit in the final adjustment of the Purchase
Price as provided for in paragraph (a) above equal to an amount calculated by
multiplying the volume of such Hydrocarbons by (i) in the case of oil, the
posted price in the field, as of the Effective Time (or if none, a mutually
agreeable price) or (ii) in the case of gas, the prevailing spot market price
net of transportation and basis differential at the location of the Subject
Interests, as of the Effective Time
3.3 PURCHASE PRICE ALLOCATIONS. Seller and Buyer mutually agree to
allocate the Purchase Price among the Assets as set forth in EXHIBIT B attached
hereto. Seller and Buyer agree that said allocation as set forth in EXHIBIT B is
the proper allocation of the Purchase Price in accordance with the fair market
value of the Assets, and that said allocation of the Purchase Price of the
Assets as set forth in EXHIBIT B shall apply for purposes of Sections 755 and
1060 of the Internal Revenue Code of 1986 (as amended and together with any
regulations promulgated thereunder, the "Code"). Seller and Buyer agree (and
each agrees to cause its affiliates) to report the federal, state and local
income and other tax consequences of the transactions contemplated herein, and
in particular to report the information required under Section 1060(b) of the
Code (and any regulations promulgated thereunder), in a manner consistent with
such allocation. Seller and Buyer further agree (and each agrees to cause its
affiliates) to not take any tax position inconsistent with such allocation in
connection with the examination of any of their tax returns, refund claims or
litigation, investigations or other proceedings involving any of their tax
returns. Seller and Buyer each further agree that they will not take any
position inconsistent with this allocation in preparing financial statements,
tax returns, reports to shareholders or government authorities or otherwise.
Buyer and Seller each agree to furnish the other a copy of IRS Form 8594
(Asset Acquisition Statement under Section 1060 of the Code) as filed with the
Internal Revenue Service by such party or any affiliate thereof, pursuant to
Sections 755 and 1060 of the Code, as a result of the consummation of the
transactions contemplated hereby, within thirty (30) days of the filing of such
form with the Internal Revenue Service.
ARTICLE IV
SELLER'S REPRESENTATIONS
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4.1 SELLER'S REPRESENTATIONS. Seller represents to Buyer as of the date
hereof that:
(a) Seller is a limited liability company duly formed and existing
pursuant to the laws of the State of Delaware and is qualified to do business in
the State of Colorado.
(b) Subject to Section 14.1, the consummation of the transactions
contemplated by this Agreement will not violate, or be in conflict with, any
provision of the governing documents of Seller, any provision of any agreement
or instrument to which Seller is a party or by which Seller is a party or by
which it is bound or to the knowledge of Seller, any judgment, decree, order,
statute, rule or regulation applicable to Seller.
(c) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action by Seller.
(d) This Agreement constitutes, and all documents and instruments
required hereunder to be executed and delivered by Seller at Closing will
constitute, legal, valid and binding obligations of Seller in accordance with
their respective terms, subject to applicable bankruptcy and other similar laws
of general application with respect to creditors;
(e) There are no bankruptcy, reorganization or arrangement
proceedings pending, being contemplated by, or to the actual knowledge of the
officers of Seller, threatened against Seller;
(f) Seller may contract for brokerage or finder's services against
which it shall hold Buyer harmless pursuant to Section 14.4;
(g) Except as shown on EXHIBIT K hereto, there is no claim, demand or
suit, action or other proceeding pending in which Seller has been served with
process, or to Seller's knowledge threatened, before any, court or governmental
agency which if adversely decided could reasonably be expected to result in a
material impairment or loss of title to any material part of the Assets taken as
a whole or the value thereof taken as a whole or which might materially hinder
or impede the operation of the Assets taken as a whole;
(h) Except as shown on EXHIBIT K and as may be referred to in Article
XIV, Seller, to its knowledge, has not violated, and to Seller's knowledge there
are no alleged violations by Seller of, any applicable rules, regulations or
orders of any governmental agency having jurisdiction over the Assets which
would affect in any material respect the value of the Assets taken as a whole;
and
(i) Seller is a United States person within the meaning of Section
7701(a)(30) of the Internal Revenue Code of 1986, as amended.
(j) Seller makes no representation or warranty, express or implied
with respect to whether any of the Subject Interests are qualified for, or
whether Buyer might be qualified to take,
11
tax credits under Section 29 of the Internal Revenue Code with respect to
production from the Subject Interests.
(k) Seller is not in breach or default, or to Seller's knowledge,
alleged to be in breach or default, under any of (i) the Oil and Gas Purchase
and Processing Agreements, (ii) any of the instruments creating or reserving the
Subject Interests, or (iii) any other Material Contract affecting or included
within the Assets, other than a breach or default which would not have a
material adverse effect, and, to Seller's knowledge, no other party to any of
the instruments and agreements described in (i) through (iii), of this paragraph
(k) is in breach of or default thereunder. No event, condition or occurrence
exists which after notice or lapse of time or both would constitute a breach or
default by Seller under any of the foregoing except for such breaches or
defaults that would not have a material adverse effect.
(l) There are no gas imbalances, other than imbalances affecting the
pipeline, on the Subject Interests.
(m) The only consents to which the Subject Interests or the Material
Contracts are subject are contained in the transportation agreements included in
Incidental Rights or as otherwise set forth in Exhibit E.
(n) Seller (a) understands that the offer and sale of the Evergreen
Stock, the Preferred Stock and the Adjustment Stock have not been and, subject
the provisions of Exhibit J, will not be registered under the Securities Act of
1933, as amended (the "Securities Act"), or under any state securities laws, and
that such stock is being offered and sold in reliance upon federal and state
exemptions for transactions not involving any public offering; (b) is acquiring
such stock solely for its own account for investment purposes and not with a
view to the distribution of such stock, and will not transfer any shares of such
stock without compliance with all applicable securities laws; (c) is an
"accredited investor," as that term is defined in Rule 501(a) promulgated under
the Securities Act; (d) is a sophisticated investor with sufficient knowledge
and experience in financial, investment and business affairs to permit it to
evaluate the merits and risks involved in purchasing such stock and is able to
bear the economic risk and lack of liquidity inherent in holding such stock for
an indefinite period of time; and (e) has received information concerning Buyer
and has had the opportunity to ask questions of, and receive answers from, Buyer
and its representatives concerning the business of Buyer and the terms of the
Evergreen Stock, the Preferred Stock and the Adjustment Stock and to obtain
additional information as desired in order to evaluate the merits and risks
inherent in holding such stock.
ARTICLE V
BUYER'S REPRESENTATIONS
5.1 BUYER'S REPRESENTATIONS. Buyer represents to Seller as of the date
hereof that:
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(a) It is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Colorado, and Buyer is or prior to
Closing will be duly qualified pursuant to any and all applicable laws, statutes
and regulations to own and operate the Assets;
(b) It has all requisite power and authority to carry on its business
as presently conducted, to enter into this Agreement and the other documents and
agreements contemplated hereby, to purchase the Assets on the terms described in
this Agreement, and to perform its other obligations under this Agreement and
the other documents and agreements contemplated hereby. Subject to Section 14.1,
the consummation of the transactions contemplated by this Agreement will not
violate., nor be in conflict with, any provision of Buyer's charter, or
governing documents, or any material agreement or instrument to which Buyer is a
party or by which it is bound, or any judgment, decree, order, statute, rule or
regulation applicable to Buyer;
(c) The execution, delivery and performance of this Agreement and the
transactions contemplated hereunder have been duly and validly authorized by all
requisite action on the part of Buyer;
(d) This Agreement constitutes, and all documents and instruments
required hereunder to be executed and delivered by Buyer at Closing will
constitute, legal, valid and binding obligations of Buyer in accordance with
their respective terms, subject to bankruptcy and other similar laws of general
application with respect to creditors;
(e) There are no bankruptcy, reorganization or arrangement
proceedings pending, being contemplated by, or to the actual knowledge of the
officers of Buyer, threatened against Buyer;
(f) No broker or finder has acted for or on behalf of Buyer in
connection with this Agreement or the transactions contemplated by this
Agreement, and no broker or finder is entitled to any brokerage or finder's fee
or commission in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer;
(g) Buyer is now or prior to Closing will be, and after Closing shall
continue to be, qualified to own Federal and State oil, gas and mineral leases
in all jurisdictions where any such Subject Interests are located, and the
consummation of the transactions contemplated hereby will not cause Buyer to be
disqualified as such an owner or to exceed any acreage limitation imposed by any
law, statute, rule or regulation;
(h) Buyer has arranged to have available by the Closing Date
sufficient funds and shares to enable the Buyer to pay in full the Initial
Payment, together with all costs and expenses relative thereto, and otherwise to
perform its obligations under this Agreement.
(i) Buyer is not a Public Utility Holding Company as defined in the
Public Utility Holding Company Act of 1935, and, to the knowledge of Seller, it
is not a partner with any party who is a Public Utility Holding Company.
13
(j) All shares of Buyer, whether preferred or common, issued or to be
issued to Seller pursuant to the terms of this Agreement, are, at the time of
issuance, duly and validly authorized for issuance, validly issued, fully paid
and nonassessable, and have not been issued, and are not held, in violation of a
preemptive rights. All such shares shall be free and clear of all liens,
encumbrances, claims and restrictions, except as set forth in this Agreement.
There are no agreements or understandings with respect to the voting of such
shares. Buyer has furnished to the Seller true and complete copies of the
Certificate of Incorporation and Bylaws of the Buyer, including all amendments
and restatements thereof.
ARTICLE VI
ACCESS TO INFORMATION AND INSPECTION
6.1 FILES. Seller has permitted Buyer and its representatives access to
all accounting records, abstracts of title, title opinions, title files,
ownership maps, lease files, assignments, division orders, check vouchers,
payout statements and agreements pertaining to the Assets insofar as the same
are now in existence and in the possession of Seller. Buyer and Seller
acknowledge that Buyer has had access to such records and information, prior to
the execution of this Agreement.
6.2 OTHER FILES. Seller has made available to Buyer for inspection by
Buyer all geological, geophysical, production and engineering books, records and
data in possession of Seller, except such records or data which Seller is
prevented by contractual obligations with third parties from disclosing.
6.3 CONFIDENTIALITY AGREEMENT. Buyer and Seller entered into that certain
Confidentiality Agreement dated June 23, 2000, between Seller and Buyer, the
terms of which are incorporated herein by reference and made a part of this
Agreement. The Confidentiality Agreement shall expire at Closing.
6.4 INSPECTIONS. Seller has permitted Buyer and its representatives at
reasonable times and at their sole risk, cost and expense, to conduct reasonable
inspections of the Assets; provided, however, Buyer shall repair any damage to
the Assets resulting from such inspections and Buyer does hereby indemnify and
hold harmless Seller from and against any and all losses, costs, damages,
obligations, claims, liabilities, expenses or causes of action arising from
Buyer's inspection of the Assets, including, without limitation, claims for
personal injuries, property damage and reasonable attorney's fees and further
including claims arising in whole or part from Seller's negligence.
ARTICLE VII
TITLE
7.1 NO WARRANTY OR REPRESENTATION. Seller shall convey Seller's interests
in and to the Assets to Buyer subject to the Permitted Encumbrances and without
any warranty of title, express or implied, except as to claims by, through and
under Seller, but not otherwise, as provided in the form of Assignment, ▇▇▇▇ of
Sale and Conveyance attached as EXHIBIT C hereto. Seller makes no warranty or
representation, express or implied, with respect to the accuracy or completeness
of the
14
information, records and data now, heretofore or hereafter made available to
Buyer in connection with this Agreement (including, without limitation, any
description of the Assets, pricing assumptions, potential for production of
Hydrocarbons from the Subject Interests, or any other matters contained in any
other material furnished to Buyer by Seller or by Seller's agents or
representatives). The Subject Interests are subject to a secured loan in favor
of BankOne, N.A. Agent, which will be released at or prior to closing.
7.2 BUYER'S TITLE REVIEW.
(a) For 45 calendar days after Closing, Buyer may at Buyer's sole
cost and expense commence and diligently pursue such examination of title to the
Subject Interests as Buyer desires. Seller shall fully cooperate with Buyer and
shall make available to Buyer at Seller's offices in Overland Park, Kansas, all
documents, records and material in Seller's possession (except to the extent
disclosure of same is prohibited pursuant to agreements with third parties) and
all assistance reasonably necessary to assist Buyer in determining the validity
of Seller's title in and to the Subject Interests. In no event, however, does
Seller warrant or represent the sufficiency, completeness or accuracy of such
documents, records and materials, and Buyer's reliance thereon shall be at
Buyer's sole risk and expense. Immediately upon completion of Buyer's title
review of each property, Buyer shall notify Seller of any Title Defects
associated with such property in accordance with Section 7.4 below. Buyer will
conclude Buyer's title review and give notice to Seller of all asserted Title
Defects not later than five (5) days after the send of said 45 day period. To be
effective, Buyer's written notice of a Title Defect must include (i) a brief
description of the matter constituting the asserted Title Defect and (ii)
supporting documents reasonably necessary for Seller (or a title attorney or
examiner hired by Seller) to verify the existence of such asserted Title Defect.
Any matters not described in a written notice of Title Defect as provided above
shall conclusively be deemed to have been waived and accepted by Buyer, and
shall be deemed Permitted Encumbrances hereunder.
(b) Upon receipt of the notice set forth under Section 7.2(a) Seller
shall have the right, but not the obligation, for 10 calendar days to cure all
or any portion of asserted Title Defects, such curative costs to be borne solely
by Seller. If Buyer elects to waive or is deemed to have waived any asserted or
unasserted Title Defects, such waived or unasserted Title Defects shall be
deemed Permitted Encumbrances hereunder. If Seller within the time provided
above is unable, elects not, or refuses, to cure such asserted Title Defects,
Buyer may, subject to Section 7.4 below, by written notice delivered to Seller
not later than two (2) business days after the end of such period, and as
Buyer's sole and exclusive remedy and only if the thresholds of Section 12.9
have been met, elect to have Seller refund to Buyer, a portion of the Purchase
Price by an amount attributable to the reserves to which title has failed as
mutually agreed upon by the parties and based upon the allocations made pursuant
to Section 3.3, and Buyer shall reconvey such portion of the Subject Interests
to Seller. Failure by Buyer to timely assert a claim for an adjustment to the
Purchase Price shall be deemed an election by Buyer to waive such claim and
retain the interest covered by the asserted but uncured Title Defect. In the
event Buyer and Seller are unable to agree upon the amount of the downward
adjustment of the Purchase Price attributable to a Title Defect for the purposes
of the foregoing, then the same shall be submitted for determination to a
mutually acceptable reservoir engineering firm whose determination shall be
final.
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7.3 TITLE DEFECTS. For the purposes of this Agreement, a portion of the
Subject Interests shall be deemed to have a "Title Defect" if any one or more of
the following statements is untrue in any material respect with respect to such
portion of the Subject Interests as of the Effective Time:
(i) Seller has Defensible Title thereto.
(ii) All royalties, rentals, ▇▇▇▇ clause payments, shut-in gas
payments and other payments due with respect to such portion of the Subject
Interests have been properly and timely paid, except for payments held in
suspense for title or other reasons which are customary in the industry and
which will not result in grounds for cancellation of Seller's rights in such
portion of the Subject Interests.
(iii) Except as set forth in any of the Exhibits hereto, Seller is not
in default under the material terms of any leases, farmout agreements or other
contracts or agreements respecting such portion of the Subject Interests which
could (1) materially interfere with the operation; value or use thereof, (2)
materially prevent Seller from receiving the proceeds of production attributable
to Seller's interest therein, or (3) result in cancellation of Seller's interest
therein.
(iv) There is no lien, charge, encumbrance, defect or objection
(other than a Permitted Encumbrance) against, in or to Seller's title thereto or
right or interest therein, and no fact or circumstance relative thereto exists
of such significance that a reasonable and prudent person engaged in the
business of the ownership, development and operation of oil and gas properties
with knowledge of all the facts and appreciation of their legal significance
would be unwilling to accept and pay for the Subject Interest or portion thereof
which is affected thereby.
Notwithstanding the foregoing, loss of any Subject Interest or portion
thereof following the Effective Time due to (i) any election or decision made by
Seller in accordance with Article VIII or (ii) expiration of the primary or
secondary term of a lease shall not constitute a Title Defect as long as Seller
shall not have breached the provisions of Article VIII. Subject to Section 14.1
below, the failure of any governmental office to approve or consent to any
assignment or other conveyance of a Subject Interest filed with such office
shall not constitute a Title Defect; provided that such office has not expressly
and specifically refused to grant such consent or approval as a result of the
existence of a Title Defect.
7.4 TITLE INDEMNIFICATION. Notwithstanding any other provisions of this
Article VII, Seller shall have the option to execute and deliver to Buyer a
title indemnity whereby Seller shall keep Buyer indemnified from and against any
and all liability, loss, costs (including legal costs), suits, judgments, causes
of action, claims or damages arising or incurred in connection with any uncured
Title Defects, to the extent the same relate to acts, omissions or other matters
occurring prior to the Effective Time and only with respect to such uncured
Title Defects. The title indemnity shall be limited to the amount determined in
accordance with this Article VII with respect to the particular Asset for which
the indemnity is given. If Seller provides such a title indemnity, the relevant
uncured Title Defects shall be deemed to be cured and removed for the purposes
of this Agreement.
ARTICLE VIII
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COVENANTS OF SELLER
8.1 COVENANTS OF SELLER PENDING CLOSING. From and after the date of
execution of this Agreement and until the Closing, except as otherwise consented
to by Buyer in writing and subject to Section 8.2 below and the terms of the
Material Contracts, Seller shall:
(a) Subject to Seller's right to obtain Seller's Credits pursuant to
Section 3.2, continue to operate the Assets owned by it for the account of Buyer
in a manner consistent with past practices;
(b) Maintain in full force and effect all policies of insurance
covering the Assets now maintained by Seller;
(c) Use reasonable efforts to preserve in full force and effect all
material leases, operating agreements, easements, rights-of-way, permits,
licenses, contracts and other material agreements included in the Incidental
Rights which relate to the Assets in which it owns an interest and perform all
material obligations of Seller in or under any such agreement relating to such
Assets;
(d) Not enter into any agreement or arrangement granting any
preferential right to purchase any of the Assets or requiring the consent of any
person to the transfer and assignment of any of the Assets hereunder, except in
connection with the performance by Seller of an obligation or agreement existing
on the date hereof or pursuant to this Agreement;
(e) Not dedicate, sell, farm out, encumber or dispose of any Assets
without Buyer's written consent except (i) sales of oil and gas production in
the ordinary course of business and (ii) as to a portion of the Assets that do
not, in the aggregate, constitute a material portion of the Assets; and
(f) Maintain all material equipment included in the Assets in
accordance with customary industry operating practices and procedures.
Notwithstanding the other provisions of this Article VIII, (i) Seller may
take any action with respect to the Assets if reasonably necessary under
emergency circumstances and provided Buyer is notified as soon thereafter as
reasonably practical, (ii) except as to a reduction in the Purchase Price
attributable to a Title Defect, Seller shall have no liability to Buyer for the
incorrect payment of royalties, shut-in royalties or similar payments or for any
failure to pay any such payments through mistake or oversight (including
Seller's negligence), and (iii) Seller's non-willful failure to comply with any
of the requirements of this Article VIII shall not be deemed a default by Seller
hereunder, serve as a basis for a claim by Buyer for damages (other than a
reduction of the Purchase Price as a result of the failure of title), afford
Buyer the right to make a claim for damages or permit Buyer not to close this
sale if such failure does not have a material adverse effect on the value of the
Assets taken as a whole. Any consent requested of Buyer with respect to the
matters covered by this Article VIII shall not be unreasonably withheld or
action with respect thereto unduly delayed.
8.2 LIMITATIONS ON SELLER'S COVENANTS PENDING CLOSING.
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(a) To the extent Seller is not the operator of any of the Assets,
the obligations of Seller in Section 8.1 above, which have reference to
operations or activities which normally or pursuant to existing contracts are
carried out or performed by the operator, shall be construed to require only
that Seller use reasonable efforts (without being obligated to incur any expense
or institute any cause of action) to cause the operator of such Assets to take
such actions or render such performance within the constraints of the applicable
operating agreements and other applicable agreements.
(b) Notwithstanding anything to the contrary in this Article VIII,
should Seller not wish to pay any lease rental or other payment or participate
in any reworking, deepening, drilling, completion, equipping or other operation
on or with respect to any well or other Asset which may otherwise be required by
Section 8.1 above, Seller shall give Buyer timely written or oral notice thereof
as soon as reasonably practicable after Seller receives written notice thereof
from the operator of such property (or if Seller is the operator, at the same
▇▇▇▇ ▇▇▇▇▇▇ gives written notice thereof to the non-operators of such property);
and Seller shall not be obligated to make any such payment or to elect to
participate in any such operation which Seller does not wish to make or
participate in unless Seller receives from Buyer, within a reasonable time prior
to the date when such payment or election is required to be made by Seller, (i)
the written election and agreement of Buyer to require Seller to take such
action and to indemnify Seller therefrom and (ii) all funds necessary for such
action. Notwithstanding the foregoing, Seller shall not be obligated to pay any
lease rental or other payment or to elect to participate in any operation if the
third party operator of the property involved recommends that such action not be
taken. If Buyer advances any funds pursuant to this Section 8.2(b) and the
Assets to which such payments relate are not conveyed to Buyer at Closing, and
Seller does not reimburse Buyer for all advances made by Buyer with respect to
such Assets pursuant to this Section 8.2(b) within thirty (30) days after this
Agreement terminates with respect to such Assets, then (i) Buyer shall own and
be entitled to any right of Seller that would have lapsed but for such payment,
and (ii) in the case of operations, Buyer shall be entitled to receive the
penalty which Seller, as nonconsenting party, would have suffered under the
applicable operating agreement with respect to such operations as if Buyer were
a consenting party thereunder.
8.3. POST-CLOSING. To the extent that the agreement anticipated to be
attached as EXHIBIT G has not been reached and Closing proceeds under Sections
10.2(i) and 10.3(i), Buyer and Seller shall use best efforts to enter into such
agreements after the Closing.
ARTICLE IX
CLOSING CONDITIONS
9.1 SELLER'S CLOSING CONDITIONS. The obligations of Seller under this
Agreement are subject, at the option of Seller, to the satisfaction at or prior
to the Closing of the following conditions:
(a) All representations and warranties of Buyer contained in this
Agreement shall be true in all material respects at and as of the Closing as if
such representations and warranties were
18
made at and as of the Closing, and Buyer shall have performed and satisfied all
agreements required by this Agreement to be performed and satisfied by Buyer at
or prior to the Closing;
(b) Seller shall have received a certificate dated as of the Closing,
executed by a duly authorized officer of Buyer, to the effect that to such
officer's knowledge the statements made under Article V above are true at and as
of the Closing;
(c) Seller believes that, pursuant to Section 802.3 of the FTC
regulations, no ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act filing is necessary, with respect to this
transaction. If Buyer disagree with Seller's determination, the Buyer shall
notify Seller within 10 days after the execution of this Agreement. If Buyer and
Seller cannot agree, then the following becomes a Seller's Closing Condition:
Except for approvals covered by Section 14.1 hereof, all necessary consents of
and filings with the Federal Trade Commission and any other state or federal
governmental authority or agency relating to the consummation of the
transactions contemplated by this Agreement shall have been obtained,
accomplished or waived, and the applicable waiting periods prescribed in
connection with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have elapsed or terminated (by
early termination or otherwise) since the dates of the filings by the parties
with respect thereto; and
(d) As of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by Seller) shall be pending or threatened
before any court or governmental agency seeking to restrain Seller or prohibit
the Closing or seeking damages against Seller as a result of the consummation of
this Agreement.
(e) All material third party consents required for the transfer of
the Subject interests to Buyer shall have been received, waived, or the time for
exercise has expired so as to bar their exercise.
(f) Satisfactory releases of Seller's lender's mortgages on the
Assets shall have been received.
(g) Seller reserves the right to exchange, for other property of like
kind and qualifying use within the meaning of Section 1031 of the Internal
Revenue Code of 1986 and the regulations promulgated thereunder, the Real
Property Assets which, in part, are the subject of this Agreement. Seller
expressly reserves the right to assign its rights, but not its obligations,
hereunder to a "qualified intermediary" as provided in Section 1.103(k)-1(g)(4)
of the U.S. Treasury regulations on or before the Closing Date. Buyer agrees to
take all actions reasonably required of it, including, but not limited to,
executing and delivering documents, to permit Seller to effect the exchange
described in the this Section. The Seller agrees to indemnify and hold harmless
the Buyer from all costs, losses, expenses, and liabilities arising out of the
Buyer's cooperation with the Seller in accomplishing such an exchange. The Buyer
makes no warranty or representation with regard to the Seller's ability to
qualify for a tax-free exchange pursuant to Section 1031 of the Internal Revenue
Code.
(h) The parties shall have executed a Purchase and Sale Agreement
covering the Lorencito tract and the ownership interest of seller in Lorencito
Gas Gathering, L.L.C.
19
(i) The parties shall have entered into an Agency Agreement in the
form set forth in Exhibit G, under which Seller shall appoint Buyer as its agent
in connection with the special use permits required with respect to the Subject
Interests.
9.2 BUYER'S CLOSING CONDITIONS. The obligations of Buyer under this
Agreement are subject, at the option of Buyer, to the satisfaction at or prior
to the Closing of the following conditions:
(a) All representations and warranties of Seller contained in this
Agreement shall be true in all material respects at and as of the Closing as if
such representations and warranties were made at and as of the Closing, and
Seller shall have performed and satisfied all agreements required by this
Agreement to be performed and satisfied by Seller at or prior to the Closing;
(b) Buyer shall have received a certificate dated as of the Closing,
executed by a duly authorized officer of Seller, to the effect that to such
officer's knowledge the statements made under Article IV above by Seller are
true at and as of the Closing;
(c) Seller believes that, pursuant to Section 802.3 of the FTC
regulations, no ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act filing is necessary, with respect to this
transaction. If Buyer disagree with Seller's determination, the Buyer shall
notify Seller within 10 days after the execution of this Agreement. If Buyer and
Seller cannot agree, then the following becomes a Buyer's Closing Condition:
Except for approvals covered by Section 14.1 hereof, all necessary consents and
filings with the Federal Trade Commission and any other state or federal
governmental authority or agency relating to the consummation of the
transactions contemplated by this Agreement shall have been obtained,
accomplished or waived, and the applicable waiting periods prescribed in
connection with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have elapsed or terminated (by
early termination or otherwise) since the dates of the filings by the parties
with respect thereto; and
(d) As of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by Buyer) shall be pending or threatened
before any court or governmental agency seeking to restrain Buyer or prohibit
the Closing or seeking damages against Buyer as a result of the consummation of
this Agreement.
(e) All material third party consents required for the transfer of
the Subject Interests and Material Contracts to Buyer shall have been received,
waived, or the time for exercise has expired so as to bar their exercise.
(f) Satisfactory releases of Seller's lender's mortgages on the
Assets shall have been received.
(g) The parties shall have executed a Purchase and Sale Agreement
covering the Lorencito tract and the ownership interest of seller in Lorencito
Gas Gathering, L.L.C.
20
(h) The parties shall have entered into an Agency Agreement in the
form set forth in Exhibit G, under which Seller shall appoint Buyer as its agent
in connection with the special use permits required with respect to the Subject
Interests.
ARTICLE X
CLOSING
10.1 CLOSING. The closing of this transaction (the "Closing") shall be held
at 10:00 a.m., Central Standard Time, at the offices of Seller at ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ on or before September 30, 2000, or at
such other date or place as the parties may agree in writing (herein called
"Closing Date"). Regardless of when the Closing shall occur, Closing shall be
effective with respect to each Asset as of the Effective Time, as specified in
Section 1.11.
10.2 SELLER'S CLOSING OBLIGATIONS. At Closing (except Seller shall have a
reasonable period after the Closing for items d, e, f and g), Seller shall
deliver to Buyer the following:
(a) The Assignments, Bills of Sale and Conveyances substantially in
the form attached hereto as EXHIBIT C and such other documents as may be
reasonably necessary to convey all Seller's interest in the Assets to Buyer in
accordance with the provisions hereof;
(b) The certificate of Seller referred to in Section 9.2(b) hereof;
(c) Evidence of Seller's compliance with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act
(if necessary);
(d) Transfer or division orders, or letters-in-lieu thereof, to be
effective at the Effective Time in the form required by the purchasers of the
Hydrocarbons from the producing properties, provided that if any purchasers
prepare the same, the execution and delivery thereof may be deferred until they
are prepared;
(e) All title opinions, abstracts of title, lease records, data
sheets, status and other reports pertaining to the Subject Interests heretofore
received by Seller or to which Seller has access;
(f) All of the Basic Documents, and the files pertaining thereto, and
all other contracts, documents and files affecting title to the Subject
Interests to which Seller has access; and
(g) All lease files, land files, well files, gas and oil sales
contract files, gas processing files, division order files, abstracts, title
opinions, and all other books, files and records information and data, except
insofar as Seller is prevented from transferring same by contractual obligations
to third parties or applicable law.
(h) A certificate of Seller as to the representation made in Section
4.1(i).
21
(i) To the extent Buyer and Seller have reached agreement with
respect to Special Use Permits as provided in EXHIBIT G, such agreement shall be
delivered. If agreement has not been reached with respect to that matter, the
lack of such agreement shall not constitute a condition of Closing and Closing
shall proceed without such agreement and, subject to Section 8.3, such Special
Use Permits shall be governed by the provisions of Section 13.10.
10.3 BUYER'S CLOSING OBLIGATIONS. At Closing, Buyer shall deliver to Seller
the following:
(a) The Initial Payment portion of the Purchase Price subject to such
adjustments, if any, as are expressly provided for in this Agreement) in
immediately available funds to Seller as provided in Section 3.1 hereof (or to
such other account within the continental United States of America designated by
Seller to Buyer at least five (5) days prior to the Closing Date);
(b) The certificate of Buyer referred to in Section 9.1(b) hereof;
(c) Evidence of Buyer's compliance with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act (if
necessary);
(d) The Redeemable Preferred Stock of Buyer as described in
EXHIBIT I.
(e) The Evergreen Stock in the amount determined by Section 3.2(b)
above, subject to Section 10.4, below; and
(f) The executed agreements as set out in EXHIBITS J.
(g) To the extent Buyer and Seller have reached agreement with
respect to Special Use Permits as provided in EXHIBIT G, such agreement shall be
delivered. If agreement has not been reached with respect to that matter, the
lack of such agreement shall not constitute a condition of Closing and Closing
shall proceed without such agreement and, subject to Section 8.3, such Special
Use Permits shall be governed by the provisions of Section 13.10.
10.4 POST CLOSING STOCK LISTINGS AND ADJUSTMENTS. The Evergreen Stock and
the Adjustment Stock are required to be approved for listing on the New York
Stock Exchange ("NYSE") prior to issuance to Seller. Buyer and Seller
acknowledge that the NYSE could impose conditions in connection with the
approval of the listing of such stock. Upon the signing of this Agreement, Buyer
shall diligently pursue the listing of the Evergreen Stock and the Adjustment
Stock. Buyer shall issue and deliver the Evergreen Stock to Seller immediately
upon the receipt of NYSE approval for listing. The Redeemable Preferred Stock
shall not be listed on the NYSE, and shall be issued and delivered to Seller at
Closing. The terms of the Redeemable Preferred Stock as described in Exhibit I
shall, however, upon the signing of this Agreement, be submitted by Buyer to the
NYSE for review, and Buyer and Seller acknowledge that the NYSE may comment on
the terms of such stock. To the extent that the NYSE suggests or requires any
changes to the terms and conditions contained in Exhibit I, or imposes any
conditions in connection with the approval of the listing of the Evergreen Stock
and the Adjustment Stock, and such changes or conditions, if implemented, are
likely to have an adverse economic effect on Seller, Buyer and Seller shall
22
negotiate in good faith to agree upon a means to compensate Seller for such
adverse economic effect. Upon agreement on such means, Seller agrees to accept
the changes to the terms of the Redeemable Preferred Stock and Exhibit I
required or requested by the NYSE and any conditions in connection with the
approval of the listing of the Evergreen Stock and the Adjustment Stock imposed
by the NYSE.
ARTICLE XI
EFFECT OF CLOSING
11.1 REVENUES. To the extent not included in the reimbursements under
Section 3.2 hereof, all proceeds, accounts receivable, notes receivable,
revenues, monies and other items included in or attributable to the Excluded
Assets and all other Excluded Assets shall belong to and be paid over to Seller
and all other proceeds, accounts receivable, notes receivable, revenues, monies
and other items relating to the period of time after the Effective Time and
included in or attributable to the Assets shall belong to and be paid over to
Buyer.
11.2 TAXES.
(a) Apportionment of Ad Valorem and Property Taxes. All ad valorem,
real property taxes and personal property taxes, including interest and
penalties attributable thereto (hereinafter "Property Taxes"), attributable to
the Assets with respect to the tax assessment period ("Tax Period") during which
the Effective Time occurs shall be apportioned as of the Effective Time between
Seller and Buyer, with Seller paying a fraction thereof based upon the number of
days in the Tax Period prior to the Effective Time and Buyer paying the balance
thereof. This allocation prevails even if the assessment for the Tax Period is
attributable, in whole or in part, to a prior calendar year. The owner of record
on the assessment date shall file or cause to be filed all required reports and
returns incident to the Property Taxes and shall pay or cause to be paid to the
taxing authorities all Property Taxes relating to the Tax Period during which
the Effective Time occurs. If Seller is the owner of record on the assessment
date, then Buyer shall pay to Seller Buyer's pro rata portion of Property Taxes
within thirty (30) days after receipt of Seller's invoice therefor, except to
the extent taken into account as an adjustment to the Purchase Price pursuant to
Section 3.2. If Buyer is the owner of record as of the assessment date then
Seller shall pay to Buyer Seller's pro rata portion of Property Taxes within
thirty (30) days after receipt of Buyer's invoice therefor, except to the extent
taken into account as an adjustment to the Purchase Price pursuant to Section
3.2.
(b) Sales Taxes. The Purchase Price provided for hereunder excludes,
and Buyer shall be liable for, any Transfer Taxes (as defined below) required to
be paid in connection with the sale of the Assets pursuant to this Agreement. To
the extent required by applicable law, Seller shall collect and remit any
Transfer Taxes that are required to be paid as a result of the transfer of the
Assets by Seller to the Buyer. If the transfer of the Assets pursuant to this
Agreement is exempt from any Transfer Taxes, Buyer shall, at Closing, provide
Seller with properly executed exemption certificates or other documentation
acceptable under applicable law. As used here, the term "Transfer Taxes" shall
mean any sales, use, excise, stock, stamp, document, filing, recording,
registration, authorization and similar taxes, fees and charges.
23
(c) Other Taxes. With the exception of income and franchise taxes,
all other federal, state and local taxes (including interest and penalties
attributable thereto) on the ownership or operations of the Assets which are
imposed with respect to periods or portions of periods prior to the Effective
Time shall be paid by Seller and all such taxes imposed with respect to periods
or portions of periods beginning on or after the Effective Time shall be paid by
Buyer.
(d) Cooperation. After the Closing, each party to this Agreement
shall provide the other party with reasonable access to all relevant documents,
data and other information (other than that which is subject to any
attorney-client privilege) which may be required by the other party for the
purpose of preparing tax returns, filing refund claims and responding to any
audit by any taxing jurisdiction. Each party to this Agreement shall cooperate
with all reasonable requests of the other party made in connection with
contesting the imposition of taxes. Notwithstanding anything to the contrary in
this Agreement, neither party to this Agreement shall be required at any time to
disclose to the other party any Tax Return or other confidential tax
information. Except where disclosure is required by applicable law or judicial
order, any information obtained by a party pursuant to this Section 11.2(d)
shall be kept confidential by such party, except to the extent disclosure is
required in connection with the filing of any Tax Returns or claims for refund
or in connection with the conduct of an audit, or other proceedings in response
to an audit, by a taxing jurisdiction.
11.3 EXPENSES. To the extent not included in the reimbursements under
Section 3.2 hereof or in the Assumed Obligations, all accounts payable and other
costs and expenses (other than taxes described in Section 11.2) with respect to
the Seller's interest in the Assets which are attributable under GAAP to the
period prior to the Effective Time shall be the obligation of and be paid by
Seller, and those which are attributable under GAAP to the period commencing
with the Effective Time, as well as all Assumed Obligations, shall be the
obligation of and be paid by Buyer.
11.4 SHARED OBLIGATIONS. If monies are received by any party hereto which,
under the terms of this Article XI, belong to another party, the same shall
immediately be paid over to the proper party. If an invoice or other evidence of
an obligation is received which under the terms of this Article XI is partially
the obligation of Seller and partially the obligation of Buyer, then the parties
shall consult each other and each shall promptly pay its portion of such
obligation to the obligee, provided that if either party hereto shall fail
promptly to pay its portion of such obligation to the obligee, the other party
hereto shall have the right (but not the obligation) to pay such portion of such
obligation, whereupon the defaulting party shall promptly reimburse such other
party for the defaulting party's portion so paid, plus interest on said amounts
until reimbursed, at the rate applicable under Article III above.
11.5 SELLER OPERATED PROPERTIES. It is expressly understood and agreed that
Seller shall not be obligated to continue operating any of the Assets following
the Closing Date and Buyer hereby assumes full responsibility for operating (or
causing the operation of) all Assets following the Closing Date.
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11.6 RESERVATION OF RIGHT TO QUALIFY UNDER SECTION 29 OF THE CODE. Seller
hereby retains, and Buyer consents thereto, the right to seek qualification of
certain of the Real Property Assets under Section 29 of the Internal Revenue
Code of 1986, as amended, and as gas produced from coal seams under Section 503
of the Natural Gas Policy Act of 1978 (and including any successor or similar
state or federal legislation) before the Federal Energy Regulatory Commission,
or its successor agency. This reservation is not intended to reserve any rights
to claim Section 29 credits with respect to production occurring after the
Effective Date, but rather is to assure Seller's right to such credits prior to
the Effective Date. Buyer agrees to cooperate fully with Seller at Seller's
expense and to permit access to Buyer's records and all reasonable time to
permit Seller to complete this qualification process.
ARTICLE XII
SETTLEMENT OF PRORATIONS
12.1 ACCOUNTING. Prior to Closing, Seller shall furnish Buyer with an
estimated accounting showing in reasonable detail the prorating of any amounts
described in and subject to Article XI of this Agreement. If pursuant to such
estimated accounting either Seller or Buyer shall owe any obligation to the
other which is not included in the reimbursements under Section 3.2, then the
Purchase Price paid at Closing shall be further adjusted to reflect such charges
and credits which are necessary to accomplish such adjustment. Promptly after
the Closing Date (but not later than one hundred twenty (120) days thereafter),
Seller shall furnish Buyer with a final accounting showing in reasonable detail
the prorating of any amounts described in and subject to Article XI hereof.
12.2 SETTLEMENT OF DISPUTES. If within thirty (30) days after Seller
furnishes such final accounting to Buyer, Buyer and Seller are unable to agree
on such final accounting or the adjustments provided for in Section 3.2 hereof,
then either Seller or Buyer may submit such proration or allocation dispute to a
mutually acceptable accounting firm, and the determination made as to such
proration or allocation by such accounting firm shall be final and binding upon
Seller and Buyer. Final settlement shall be made within ten (10) business days
following agreement by the Buyer and Seller or final determination by said
accounting firm. All determinations and adjustments with respect to allocating
items to the periods before or after the Effective Time shall be in accordance
with GAAP. The fees charged by said accounting firm for making determinations
under Section 3.2 or this Section 12.2 shall be paid one-half (1/2) by Buyer and
one-half (1/2) by Seller.
ARTICLE XIII
ENVIRONMENTAL
13.1 AVAILABILITY OF DATA TO BUYER: The Assets which are the subject of
this Agreement have been utilized by Seller for the purposes of exploration,
development and production of oil and gas, for related oilfield operations and
possibly for the storage and disposal of waste materials or hazardous
substances. Seller shall make available to Buyer, during the environmental
assessment period described in Section 13.3 below, Seller's historical files
regarding the foregoing operations, to the extent available and to the extent
Seller is authorized to disclose same (excepting documents subject to
confidentiality restrictions or legal privilege).
25
13.2 SPILLS AND NORM: Without changing the allocation of risk reflected in
Sections 13.7 and 13.8, and without creating knowledge on Buyer's part that
could or would limit or eliminate Seller's indemnification under Section
13.8(c)(ii), Buyer acknowledges that in the past there may have been spills of
wastes, crude oil, produced water, or other materials (including, without
limitation, any toxic, hazardous or extremely hazardous substances) onto the
Lands. In addition, some production equipment may contain asbestos and/or
Naturally Occurring Radioactive Material (hereinafter referred to as "NORM"). In
this regard Buyer expressly understands that NORM may affix or attach itself to
the inside of ▇▇▇▇▇, materials and equipment as scale or in other forms, that
said ▇▇▇▇▇, materials and equipment located on the Lands or included in the
Assets described herein may contain NORM and that NORM-containing material may
have been buried or otherwise disposed of on the Lands. Buyer also expressly
understands that special procedures may be required for the remediation,
removal, transportation and disposal of asbestos, NORM or other materials from
the Assets and Lands where such material may be found and that Buyer assumes all
liability for or in connection with the assessment, containment, removal,
remediation, transportation and disposal of any such materials, in accordance
with all past, present or future applicable laws, rules, regulations and other
requirements of any governmental or judicial entities having jurisdiction and
also with the terms and conditions of all applicable leases and other contracts.
13.3 ACCESS TO CONDUCT ASSESSMENT:
BUYER AGREES TO RELEASE, INDEMNIFY, DEFEND AND HOLD SELLER HARMLESS
FROM ANY CLAIM, CAUSE OF ACTION, JUDGMENT, LIABILITY, LOSS, DAMAGE OR OTHER COST
WHATSOEVER BROUGHT BY OR IN FAVOR OF ANY PERSON FOR INJURY, ILLNESS OR DEATH,
DAMAGE TO OR LOSS OF PROPERTY, FOR DAMAGE OR HARM TO THE ENVIRONMENT OR FOR ANY
OTHER MATTER CAUSED BY BUYER'S ACCESS TO THE LANDS OR THE ENVIRONMENTAL
ASSESSMENT OR TESTING THEREOF, EVEN IF SUCH LIABILITY IS ATTRIBUTABLE TO THE
CONTRIBUTORY NEGLIGENCE OF SELLER; PROVIDED, THE FOREGOING SHALL NOT APPLY TO
ANY CLAIM, CAUSE OF ACTION, JUDGMENT, LIABILITY, LOSS, DAMAGE OR OTHER COST
WHATSOEVER TO THE EXTENT ARISING FROM CONDITIONS ON THE LANDS AS OPPOSED TO
BUYER'S ACTIVITIES ON THE LAND PRIOR TO CLOSING.
13.4 MATERIAL ADVERSE ENVIRONMENTAL CONDITIONS: Buyer's sole and exclusive
remedy for environmental conditions is as provided in Section 13.8.
13.5 "AS IS, WHERE IS" PURCHASE: Subject to Section 13.8, Buyer shall
acquire the Assets in an "AS IS, WHERE IS" condition and shall assume all risks
that the Assets may contain waste materials (whether toxic, hazardous, extremely
hazardous or otherwise) or other adverse physical conditions, including, but not
limited to, the presence of unknown abandoned oil and gas ▇▇▇▇▇, water ▇▇▇▇▇,
sumps, pits, pipelines or other waste or spill sites which may not have been
revealed by Buyer's investigation. On and after the Effective Time, all
responsibility and liability related to all such conditions, whether known or
unknown, fixed or contingent, will be transferred from Seller to Buyer, except
as provided in Section 13.8.
26
13.6 DISPOSAL OF MATERIALS, SUBSTANCES AND WASTES: Buyer shall properly
handle, remove, transport and dispose of any material, substance or waste
(whether toxic, hazardous, extremely hazardous or otherwise) from the Assets or
Lands (including, but not limited to, produced water, drilling fluids and other
associated wastes), whether present before or after the Effective Time, in
accordance with applicable local, state and federal laws and regulations. To the
extent that the Lands are not sold in fee to Buyer, Buyer shall keep records of
the types, amounts and location of materials, substances and wastes which are
transported, handled, discharged, released or disposed onsite and offsite. When
and if any lease, an interest in which has been assigned pursuant to this
Agreement, is terminated, Buyer shall take whatever additional testing,
assessment, closure, reporting or remedial action with respect to the Assets or
Lands as is necessary to meet any local, state or federal requirements directed
at protecting human health or the environment in effect at that time, and any
other action as necessary to restore the Lands or Assets to their original
condition.
13.7 BUYER'S INDEMNITY:
(a) SUBJECT TO SECTION 13.8, AND (i) BEGINNING ON A DATE TWO YEARS
FROM CLOSING, WITH RESPECT TO ALL LIABILITIES DESCRIBED HEREIN AND (ii) FROM THE
CLOSING DATE WITH RESPECT TO ALL LIABILITIES NOT SUBJECT TO SECTION 13.8 BELOW,
BUYER SHALL INDEMNIFY, HOLD HARMLESS, RELEASE AND DEFEND SELLER FROM AND AGAINST
ALL DAMAGES, LOSSES, CLAIMS, DEMANDS, CAUSES OF ACTION, JUDGMENTS AND OTHER
COSTS (INCLUDING BUT NOT LIMITED TO ANY CIVIL FINES, PENALTIES, COSTS OF
ASSESSMENT, CLEAN-UP, REMOVAL AND REMEDIATION OF POLLUTION OR CONTAMINATION, AND
EXPENSES FOR THE MODIFICATION, REPAIR OR REPLACEMENT OF FACILITIES ON THE LANDS)
BROUGHT BY ANY AND ALL PERSONS AND ANY AGENCY OR OTHER BODY OF FEDERAL, STATE OR
LOCAL GOVERNMENT, ON ACCOUNT OF ANY PERSONAL INJURY, ILLNESS OR DEATH, ANY
DAMAGE TO, DESTRUCTION OR LOSS OF PROPERTY, AND ANY CONTAMINATION OR POLLUTION
OF NATURAL RESOURCES (INCLUDING SOIL, AIR, SURFACE WATER OR GROUNDWATER) TO THE
EXTENT ANY OF THE FOREGOING DIRECTLY OR INDIRECTLY IS CAUSED BY OR OTHERWISE
INVOLVES ANY ENVIRONMENTAL CONDITION OF THE ASSETS OR LANDS, WHETHER CREATED OR
EXISTING BEFORE, ON OR AFTER THE EFFECTIVE TIME, INCLUDING, BUT NOT LIMITED TO,
THE PRESENCE, DISPOSAL OR RELEASE OF ANY MATERIAL (WHETHER HAZARDOUS, EXTREMELY
HAZARDOUS, TOXIC OR OTHERWISE) OF ANY KIND IN, ON OR UNDER THE ASSETS OR THE
LANDS.
(b) SUBJECT TO SECTION 13.8, BUYER'S INDEMNIFICATION OBLIGATIONS
SHALL EXTEND TO AND INCLUDE, BUT NOT BE LIMITED TO (I) THE NEGLIGENCE OR OTHER
FAULT OF SELLER, BUYER AND THIRD PARTIES, WHETHER SUCH NEGLIGENCE IS ACTIVE OR
PASSIVE, GROSS, JOINT, SOLE OR CONCURRENT, (II) SELLER'S OR BUYER'S STRICT
LIABILITY, AND (III) SELLER'S OR BUYER'S LIABILITIES OR OBLIGATIONS UNDER THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS
AMENDED (42 U.S.C. SECTIONS 9601 ET. SEQ.), THE RESOURCE CONSERVATION AND
RECOVERY ACT OF 1976 (42 U.S.C. SECTIONS 6901 ET. SEQ.), THE CLEAN WATER ACT (33
U.S.C. SECTIONS 466 ET. SEQ.), THE SAFE
27
DRINKING WATER ACT (14 U.S.C. SECTIONS 1401-1450), THE HAZARDOUS MATERIALS
TRANSPORTATION ACT (49 U.S.C. SECTIONS 1801 ET. SEQ.), THE TOXIC SUBSTANCES
CONTROL ACT (15 U.S.C. SECTIONS 2601-2629), THE CLEAN AIR ACT (42 U.S.C.
SECTIONS 7401 ET. SEQ,) AS AMENDED, THE CLEAN AIR ACT AMENDMENTS OF 1990 AND ALL
STATE AND LOCAL LAWS AND ANY REPLACEMENT OR SUCCESSOR LEGISLATION OR REGULATION
THERETO. THIS INDEMNIFICATION SHALL BE IN ADDITION TO ANY OTHER INDEMNITY
PROVISIONS CONTAINED IN THIS AGREEMENT, AND IT IS EXPRESSLY UNDERSTOOD AND
AGREED THAT ANY TERMS OF THIS ARTICLE SHALL CONTROL OVER ANY CONFLICTING OR
CONTRADICTING TERMS OR PROVISIONS CONTAINED IN THIS AGREEMENT.
13.8 SELLER'S INDEMNITY:
(a) SUBJECT TO THE TERMS AND PROVISIONS OF SECTIONS 13.7 AND 14.7 OF
THIS AGREEMENT, AND WITH RESPECT TO ANY CLAIM DESCRIBED IN THIS SECTION 13.8(a),
WRITTEN NOTICE OF WHICH BUYER HAS GIVEN SELLER WITHIN A TWO-YEAR PERIOD
FOLLOWING THE CLOSING DATE, SELLER SHALL INDEMNIFY, HOLD HARMLESS, RELEASE AND
DEFEND BUYER FROM AND AGAINST DAMAGES, LOSSES, CLAIMS, DEMANDS, CAUSES OF
ACTION, JUDGMENTS AND OTHER COSTS (INCLUDING BUT NOT LIMITED TO ANY CIVIL FINES,
PENALTIES, COSTS OF ASSESSMENT, CLEAN-UP, REMOVAL AND REMEDIATION OF POLLUTION
OR CONTAMINATION, AND EXPENSES FOR THE MODIFICATION, REPAIR OR REPLACEMENT OF
FACILITIES ON THE LANDS BUT ONLY TO THE EXTENT SUCH ITEMS EXCEED $1 MILLION) BUT
ONLY IF BROUGHT BY ANY AGENCY OR OTHER BODY OF FEDERAL, STATE OR LOCAL
GOVERNMENT OR A THIRD PARTY, WHICH IS ENTIRELY UNAFFILIATED WITH BUYER, ON
ACCOUNT OF ANY CLAIM OF VIOLATION OF ANY ENVIRONMENTAL LAW OR REGULATION TO THE
EXTENT ANY OF THE FOREGOING DIRECTLY OR INDIRECTLY IS CAUSED BY OR OTHERWISE
INVOLVES ANY ENVIRONMENTAL CONDITION OF THE ASSETS OR LANDS, CREATED OR EXISTING
BEFORE THE EFFECTIVE TIME, AND WHICH CONSTITUTES A VIOLATION OF APPLICABLE
ENVIRONMENTAL LAWS IN EFFECT AS OF THE EFFECTIVE TIME, INCLUDING, BUT NOT
LIMITED TO, THE PRESENCE, DISPOSAL OR RELEASE OF ANY MATERIAL (WHETHER
HAZARDOUS, EXTREMELY HAZARDOUS, TOXIC OR OTHERWISE) OF ANY KIND IN, ON OR UNDER
THE ASSETS OR THE LANDS.
(b) SELLER'S INDEMNIFICATION OBLIGATIONS SHALL EXTEND TO AND INCLUDE,
BUT NOT BE LIMITED TO (I) THE NEGLIGENCE OR OTHER FAULT OF SELLER, BUYER AND
THIRD PARTIES, WHETHER SUCH NEGLIGENCE IS ACTIVE OR PASSIVE, GROSS, JOINT, SOLE
OR CONCURRENT, (II) SELLER'S OR BUYER'S STRICT LIABILITY, AND (III) SELLER'S OR
BUYER'S LIABILITIES OR OBLIGATIONS UNDER THE COMPREHENSIVE ENVIRONMENTAL
RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED (42 U.S.C. SECTIONS
9601 ET. SEQ.), THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976 (42 U.S.C.
SECTION 6901 ET. SEQ.), THE CLEAN WATER ACT (33 U.S.C. SECTIONS 466 ET. SEQ.),
THE SAFE DRINKING WATER ACT (14 U.S.C. SECTIONS 1401-1450), THE HAZARDOUS
MATERIALS TRANSPORTATION ACT (49 U.S.C. SECTIONS 1801
28
ET. SEQ.), THE TOXIC SUBSTANCES CONTROL ACT (15 U.S.C. SECTIONS 2601-2629), THE
CLEAN AIR ACT (42 U.S.C. SECTION 7401 ET. SEQ.) AS AMENDED, THE CLEAN AIR ACT
AMENDMENTS OF 1990 AND ALL STATE AND LOCAL LAWS, AS IN EFFECT AS OF THE DATE OF
THIS AGREEMENT. THIS INDEMNIFICATION SHALL BE IN ADDITION TO ANY OTHER INDEMNITY
PROVISIONS CONTAINED IN THIS AGREEMENT, AND IT IS EXPRESSLY UNDERSTOOD AND
AGREED THAT ANY TERMS OF THIS ARTICLE SHALL CONTROL OVER ANY CONFLICTING OR
CONTRADICTING TERMS OR PROVISIONS CONTAINED IN THIS AGREEMENT.
(c) SELLER'S INDEMNIFICATION SHALL NOT EXTEND TO MATTERS OR
CONDITIONS (i) FOR WHICH AN ADJUSTMENT OF THE PURCHASE PRICE WAS MADE , OR (ii)
WHICH WERE DISCLOSED TO OR KNOWN BY BUYER ON OR BEFORE BUYER'S EXECUTION OF THIS
AGREEMENT.
13.9 REDUCTION. There shall be no reduction in the Purchase Price under
Section 7.2 unless Seller's share of a proposed reduction as to any single
incident exceeds $50,000.00; this shall be determined on an incident by incident
basis. In addition, if Seller's share of the proposed reduction under Section
7.2 as to any single incident exceeds $50,000.00, there shall be no reduction in
the Purchase Price until such time as the total of these excess amounts (over
$50,000.00) exceeds $500,000.00. Seller's indemnity under Section 13.8 shall not
be applicable until such time as Seller's share of liability under Section 13.8
exceeds $1,000,000.00.
13.10. ENVIRONMENTAL PERMITS. Notwithstanding any other provision of this
Agreement, and except as set out in EXHIBIT G to the extent executed and
delivered at Closing, Buyer and Seller agree as follows:
a. There are various permits and licenses required by governmental
agencies in connection with the operation of the Subject Interests.
b. With respect to all such licenses, permits and similar items, the
parties agree that
(1) those that can be assigned or transferred without
governmental approval will be so assigned or transferred at Closing;
(2) those that can be assigned or transferred, but only with
governmental approval, will be requested to be assigned or transferred
at or shortly after Closing;
(3) as to those that cannot be assigned or transferred, Buyer
will commence its application for such licenses, permits and similar
items at or before Closing and Seller will cooperate fully with Buyer
in attempting to acquire such items; and
29
(4) the lack of a necessary permit, license, or similar item
will not constitute an unfilled closing condition of either party and
will not constitute a breach of either party's representations or
warranties.
ARTICLE XIV
MISCELLANEOUS
14.1 CERTAIN GOVERNMENTAL CONSENTS. At the Closing, Seller shall execute
and deliver to Buyer such assignments of Federal and State leases as require
consent to assignment, on the forms required by the governmental agency having
jurisdiction thereof. Seller and Buyer will use reasonable efforts after Closing
to obtain approval of such assignments.
14.2 PUBLIC ANNOUNCEMENTS. The parties hereto agree that prior to making
any public announcement or statement with respect to the transaction
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other party hereto and exercise
reasonable efforts to (i) agree upon the text of a joint public announcement or
statement to be made by both of such parties or (ii) obtain approval of the
other party hereto to the text of a public announcement or statement to be made
solely by Seller or Buyer, as the case may be. Nothing contained in this
paragraph shall be construed to require either party to obtain approval of the
other party hereto to disclose information with respect to the transaction
contemplated by this Agreement to any state or federal governmental authority or
agency to the extent required by applicable law or by any applicable rules,
regulations or orders of any governmental authority or agency having
jurisdiction or necessary to comply with disclosure requirements of any major
stock exchange and applicable securities laws .
14.3 FILING AND RECORDING OF ASSIGNMENTS, ETC. Buyer shall be solely
responsible for all filings and recording of assignments and other documents
related to the Assets and for all fees connected therewith, and upon request
Buyer shall advise Seller of the pertinent recording data. Seller shall not be
responsible for any loss to Buyer because of Buyer's failure to file or record
documents correctly or promptly. Buyer shall promptly file all appropriate
forms, declarations or bonds with Federal, State and Indian agencies relative to
its assumption of operations and Seller shall cooperate with Buyer in connection
with such filings.
14.4 ASSUMPTION AND INDEMNITY. SUBJECT TO THE OTHER PROVISIONS HEREIN,
BUYER SHALL ASSUME ALL RISK OF LOSS WITH RESPECT TO ANY CHANGE IN THE CONDITION
OF THE ASSETS FROM AND AFTER THE EFFECTIVE TIME THROUGH CLOSING (EVEN THOUGH DUE
IN WHOLE OR IN PART TO SELLER'S NEGLIGENCE). BUYER AGREES TO ASSUME AND PAY,
PERFORM, FULFILL AND DISCHARGE ALL ASSUMED OBLIGATIONS, AND AGREES TO INDEMNIFY,
DEFEND AND HOLD SELLER HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES,
DAMAGES, COSTS, EXPENSES, CAUSES OF ACTION OR JUDGMENTS OF ANY KIND OR CHARACTER
WITH RESPECT TO ALL LIABILITIES AND OBLIGATIONS OR ALLEGED OR THREATENED
LIABILITIES AND OBLIGATIONS ATTRIBUTABLE TO OR ARISING OUT OF THE ASSUMED
OBLIGATIONS, INCLUDING, WITHOUT LIMITATION, ANY INTEREST,
30
PENALTY, REASONABLE ATTORNEY'S FEES AND OTHER COSTS AND EXPENSES INCURRED IN
CONNECTION THEREWITH OR THE DEFENSE THEREOF. TO THE EXTENT NOT INCLUDED IN
ASSUMED OBLIGATIONS AND SUBJECT TO THE OTHER PROVISIONS HEREIN, SELLER AGREES
TO PAY, PERFORM, FULFILL AND DISCHARGE ALL COSTS, EXPENSES AND LIABILITIES
INCURRED BY SELLER WITH RESPECT TO THE OWNERSHIP OR OPERATION OF SELLER'S
INTEREST IN THE ASSETS AND ACCRUING PRIOR TO THE EFFECTIVE TIME EVEN THOUGH
ASSERTED AFTER THE EFFECTIVE TIME, AND AGREES TO INDEMNIFY, DEFEND AND HOLD
BUYER HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES, COSTS,
EXPENSES, CAUSES OF ACTION OR JUDGMENTS OF ANY KIND OR CHARACTER WITH RESPECT
TO ALL LIABILITIES AND OBLIGATIONS OR ALLEGED OR THREATENED LIABILITIES AND
OBLIGATIONS ATTRIBUTABLE TO OR ARISING OUT OF SUCH OBLIGATIONS OF SELLER,
INCLUDING, WITHOUT LIMITATION, ANY INTEREST, PENALTY, REASONABLE ATTORNEY'S
FEES AND OTHER COSTS AND EXPENSES INCURRED IN CONNECTION THEREWITH OR THE
DEFENSE THEREOF. FOR EXAMPLE, WITH RESPECT TO OPERATIONS COMMITTED TO BY
SELLER AND COMMENCED PRIOR TO THE EFFECTIVE TIME, BUT NOT COMPLETED UNTIL
AFTER THE EFFECTIVE TIME, THE COSTS ACCRUING WITH RESPECT THERETO PRIOR TO
THE EFFECTIVE TIME SHALL BE THE OBLIGATION OF SELLER AND THE COSTS ACCRUING
WITH RESPECT THERETO AFTER THE EFFECTIVE TIME SHALL BE THE OBLIGATION OF
BUYER. WITHOUT LIMITING THE PARTIES' RESPECTIVE REPRESENTATIONS IN SECTIONS
4.1(f) AND 5.1(f) HEREOF, EACH PARTY HEREBY AGREES TO INDEMNIFY AND HOLD THE
OTHER HARMLESS FROM AND AGAINST ANY CLAIM FOR A BROKERAGE OR FINDER'S FEE OR
COMMISSION IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT TO THE EXTENT SUCH CLAIM ARISES FROM OR, IS ATTRIBUTABLE TO
THE ACTIONS OF SUCH INDEMNIFYING PARTY, INCLUDING, WITHOUT LIMITATION, ANY
AND ALL LOSSES, DAMAGES, ATTORNEY'S FEES, COSTS AND EXPENSES OF ANY KIND OR
CHARACTER ARISING OUT OF OR INCURRED IN CONNECTION WITH ANY SUCH CLAIM OR
DEFENDING AGAINST THE SAME.
14.5 FURTHER ASSURANCES AND RECORDS
(a) After the Closing, each of the parties will execute, acknowledge
and deliver to the other such further instruments, and take such other action,
as may be reasonably requested in order to more effectively assure to said party
all of the respective properties, rights, titles, interests, estates, and
privileges intended to be assigned, delivered or inuring to the benefit of such
party in consummation of the transactions contemplated hereby.
(b) Buyer agrees to maintain the files and records of Seller that are
acquired pursuant to this Agreement until the tenth (10th) anniversary of the
Closing Date (or for such longer period of time as Seller shall advise Buyer is
necessary in order to have records available with respect to open years for tax
audit purposes), or, if any of such records pertain to any claim or dispute
pending on the tenth (10th) anniversary of the Closing Date, Buyer shall
maintain any of such records designated by Seller until such claim or dispute is
finally resolved and the time for all
31
appeals has been exhausted. Buyer shall provide Seller and its representatives
reasonable access to and the right to copy such files and records for the
purposes of (i) preparing and delivering any accounting provided for under this
Agreement and adjusting, prorating and settling the charges and credits provided
for in this Agreement, (ii) complying with any law, rule or regulation affecting
Seller's interest in the Assets prior to the Closing Date, (iii) preparing any
audit of the books and records of any third party relating to Seller's interest
in the Assets prior to the Closing Date, or responding to any audit prepared by
such third parties, (iv) preparing tax returns, (v) responding to or disputing
any tax audit or (vi) asserting, defending or otherwise dealing with any claim
or dispute under this Agreement. In no event shall Buyer destroy any such files
and records without giving Seller sixty (60) days advance written notice thereof
and the opportunity, at Seller's expense, to obtain such files and records prior
to their destruction.
(c) Buyer agrees that, as soon as practicable after the Closing, it
will remove or cause to be removed the names and marks used by Seller and all
variations and derivatives thereof and logos relating thereto from the Assets
and will not thereafter make any use whatsoever of such names, marks and logos.
(d) To the extent not obtained or satisfied as of Closing, Seller
agrees to continue to use reasonable efforts, but without any obligation to
incur any cost or expense in connection therewith, and to cooperate with Buyer's
efforts to obtain for Buyer (i) access to files, records and data relating to
the Assets in the possession of third parties; (ii) access to ▇▇▇▇▇ constituting
a part of the Assets operated by third parties for purposes of inspecting same;
and (iii) the waiver of confidentiality or other restrictions on the review by
and/or transfer to Buyer of seismic, geophysical, engineering or other data
pertaining to the Subject Interests.
14.6 LIMITATIONS. The express representations and warranties of Seller
contained in this Agreement (i) are made by Seller solely with respect to Assets
owned by Seller, (ii) are enforceable against the owner of the respective Assets
and are not a joint or collective liability and (iii) are exclusive and are in
lieu of all other representations and warranties, express, implied or statutory,
including without limitation any representation or warranty with respect to
title to the Assets or the quality, quantity or volume of the reserves of oil,
gas or other Hydrocarbons in or under the Subject Interests and unless
specifically provided otherwise in this Agreement, such express representations
and warranties of Seller shall terminate at Closing and be of no further force
and effect. The items of personal property, equipment, fixtures and
appurtenances conveyed as part of the Assets are sold hereunder "AS IS, WHERE
IS" and no warranties or representations of any kind or character, express or
implied, including any warranty of quality, merchantability, fitness for a
particular purpose or condition, are given by or on behalf of Seller. THE
WARRANTIES OF SELLER CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, AND BUYER HEREBY WAIVES ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONDITION.
BUYER ACKNOWLEDGES THAT SELLER HAS NOT MADE, AND SELLER HEREBY EXPRESSLY
DISCLAIMS AND NEGATES, AND BUYER HEREBY EXPRESSLY WAIVES, ANY REPRESENTATION OR
WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE RELATING TO
(a) PRODUCTION RATES,
32
RECOMPLETION OPPORTUNITIES, DECLINE RATES, GAS BALANCING INFORMATION OR THE
QUALITY, QUANTITY OR VOLUME OF THE RESERVES OF HYDROCARBONS, IF ANY,
ATTRIBUTABLE TO THE ASSETS, (b) THE ACCURACY, COMPLETENESS OR MATERIALITY OF ANY
INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL) NOW, HERETOFORE OR
HEREAFTER FURNISHED TO BUYER BY OR ON BEHALF OF SELLER, AND (c) THE
ENVIRONMENTAL CONDITION OF THE ASSETS. NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS AGREEMENT, SELLER EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER HEREBY
WAIVES, AS TO PERSONAL, MOVABLE AND IMMOVABLE PROPERTY, EQUIPMENT AND FIXTURES
CONSTITUTING A PART OF THE ASSETS (i) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (ii) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, (iii) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS, (iv) ANY RIGHTS OF PURCHASERS UNDER APPROPRIATE
STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE PRICE,
(v) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM VICES OR DEFECTS, WHETHER
KNOWN OR UNKNOWN, AND (vi) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER
APPLICABLE LAW AND (vii) ANY IMPLIED OR EXPRESS WARRANTY REGARDING ENVIRONMENTAL
LAWS, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR PROTECTION OF THE
ENVIRONMENT OR HEALTH, IT BEING THE EXPRESS INTENTION OF BUYER AND SELLER THAT
THE REAL PROPERTY, IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY, FIXTURES AND PERSONAL PROPERTY SHALL BE CONVEYED TO BUYER AS IS AND
IN THEIR PRESENT CONDITION AND STATE OF REPAIR, AND BUYER REPRESENTS TO SELLER
THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS WITH RESPECT TO THE
REAL PROPERTY, IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY, FIXTURES AND PERSONAL PROPERTY AS BUYER DEEMS APPROPRIATE AND BUYER
WILL ACCEPT THE REAL PROPERTY, IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT,
INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY AS IS, IN THEIR PRESENT
CONDITION AND STATE OF REPAIR, IT BEING THE EXPRESS INTENTION OF BOTH BUYER AND
SELLER THAT THE PERSONAL PROPERTY, EQUIPMENT AND FIXTURES INCLUDED WITHIN THE
ASSETS ARE HEREBY CONVEYED TO BUYER IN THEIR PRESENT CONDITION AND STATE OF
REPAIR, "AS IS" AND "WHERE IS" WITH ALL FAULTS, AND THAT BUYER HAS MADE OR
CAUSED TO BE MADE SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE. SELLER AND BUYER
AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE
DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED IN THIS SECTION ARE "CONSPICUOUS"
DISCLAIMERS FOR THE PURPOSES OF ANY APPLICABLE LAW, RULE OR ORDER. To the
maximum extent permitted by law, Buyer waives all provisions of the Texas
Deceptive Trade Practices Act, Chapter 17, Texas Business and Commerce Code
(other than Section 17.555 thereof) and, to the extent permitted by law, similar
such provisions in like Acts in all other applicable jurisdictions, insofar as
the provisions of such act may be applicable to this Agreement or the
transactions contemplated hereby. To evidence its ability to grant such waiver,
Buyer hereby represents and warrants to Seller that the Buyer (i) is seeking or
acquiring, by purchase or lease, goods or services for commercial or business
use, (ii) has assets of
33
$5 million or more according to its most recent financial statement prepared in
accordance with GAAP, (iii) has knowledge and experience in financial and
business matters that enable it to evaluate the merits and risks of the
transaction contemplated hereby and (iv) is not in a significantly disparate
bargaining position. Seller makes no representation or warranty, express or
implied with respect to whether any of the Subject Interests are qualified for,
or whether Buyer might be qualified to take, tax credits under Section 29 of the
Internal Revenue Code with respect to production from the Subject Interests.
14.7 SURVIVAL. No representation, warranty, covenant or agreement made
herein shall survive the Closing except as provided in this Section 14.7. It is
expressly agreed that the terms and provisions of Articles I, III, IV, V, XII,
and XIII and Sections 6.3, 6.4, 7.1, Sections 13.1 through 13.7 and Section
13.9, shall survive the Closing. The terms and provisions of Section 13.8 shall
expire according its term.
14.8 SIGNATURE OF KLT INC. This Agreement for Purchase and Sale is executed
by KLT Inc. solely for purposes of Article XIII and Section 14.4 and for no
other purpose.
14.9 NOTICES. All notices authorized or required by any of the provisions
of this Agreement, unless otherwise specifically provided, shall be in writing
and delivered in person or by United States mail, courier service, telegram,
telex, telecopier, or any other form of facsimile, postage or charges prepaid,
and addressed to the parties at the addresses set forth below:
If to Seller: Apache Canyon Gas, L.L.C.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: President
If to Buyer: Evergreen Resources, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may, by written notice so delivered to the other, change the address
to which delivery shall thereafter be made.
14.10 INCIDENTAL EXPENSES. Buyer shall bear and pay (i) any and all
Federal, State or local Transfer Taxes as defined in Section 11.2(b) hereof
incident to the transfer, assignment or other conveyance of the Assets to Buyer,
and (ii) all costs or fees required to obtain consent to assign any Federal,
State or Indian leases included in the Assets. Each party shall bear its own
respective expenses incurred in connection with the Closing of this transaction,
including its own consultants' fees, attorneys' fees, accountants' fees, and
other similar costs and expenses.
34
14.11 ENTIRE AGREEMENT. Except for the Confidentiality Agreement referenced
in Section 6.3, this Agreement embodies the entire agreement between the parties
(superseding all prior agreements, arrangements and understandings related to
the subject matter hereof), and may be supplemented, altered, amended, modified
or revoked by writing only, signed by all of the parties hereto. No supplement,
amendment, modification, waiver or termination of this Agreement shall be
binding unless in writing and executed by both parties hereto. The headings
herein are for convenience only and shall have no significance in the
interpretation hereof.
14.12 GOVERNING LAW. Except for matters of title to the Subject Interests
or their transfer, which shall be governed by the law of their situs, this
Agreement shall be governed by and interpreted in accordance with the laws of
the State of Colorado without regard for any conflict of laws or choice of laws
principles that would permit or require the application of the laws of any other
jurisdiction.
14.13 EXHIBITS. All Exhibits and Schedules hereto which are referred to
herein are hereby made a part hereof and incorporated herein by reference.
14.14 CERTAIN TERMS. As used in this Agreement, the term "knowledge" means
actual knowledge of any fact, circumstance or condition by the officers or
management employees of the party involved at a supervisory or higher level, but
does not include (i) knowledge imputed to the party involved by reason of
knowledge of or notice to any person, firm or corporation other than its
officers or employees at a supervisory or higher level or (ii) knowledge deemed
to have been constructively given by reason of any filing, registration or
recording of any document or instrument in any public record or with any
governmental entity. As used in this Agreement, the term "day" means any
calendar day, and the term "business day" means any day exclusive of Saturdays,
Sundays and national holidays.
14.15 INTERIM ACCOUNTING, PAYMENT AND COLLECTION SERVICES. Buyer and Seller
agree to cooperate to transfer financial accounting services for the Assets as
promptly as practicable after the Effective Time.
14.16 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each and every counterpart shall be deemed for all purposes
one (1) agreement.
14.17 WAIVER. Any of the terms, provisions, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by the party waiving compliance. Except as otherwise expressly provided
in this Agreement, the failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect such party's right
to enforce the same. No waiver by any party of any condition, or of the breach
of any term, provision, covenant, representation or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or of the breach of any
other term, provision, covenant, representation or warranty.
35
14.18 BINDING, EFFECT; ASSIGNMENT. All the terms, provisions, covenants,
representations, warranties and conditions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto and
their respective successors; but this Agreement and the rights and obligations
hereunder shall not be assignable or delegable by Buyer without the express
written consent of Seller. Any assignment or delegation without such consent
will be void. In addition to its rights under Section 10.1(g), Seller shall have
the right to transfer its rights and obligations hereunder without Buyer's
consent so long as such transferee is capable of delivering to Buyer the same
title Seller is capable of delivering and Seller remains liable for its
warranties and representation made hereunder to the same extent Seller would
have been liable had such transfer not been made.
14.19 NO RECORDATION. Without limiting any party's right to file suit to
enforce its rights under this Agreement and except as to those portions of this
Agreement set forth in the Assignment, ▇▇▇▇ of Sale and Conveyance, EXHIBIT C,
Buyer and Seller expressly covenant and agree not to record or place of record
this Agreement or any copy or memorandum hereof.
14.20 INDEPENDENT INVESTIGATION. Buyer represents and acknowledges that it
is knowledgeable of the oil and gas business and of the usual and customary
practices of producers such as Seller and that it has had access to the Assets,
the offices and employees of Seller, and the books, records and files of Seller
relating to the Assets and in making the decision to enter into this Agreement
and consummate the transactions contemplated hereby, Buyer has relied solely on
the basis of its own independent due diligence investigation of the Assets and
upon the representations and warranties made in Article IV. Accordingly, Buyer
acknowledges that Seller has not made, and Seller hereby expressly disclaims and
negates any representation or warranty (other than those express representations
and warranties made in Article IV), express, implied, at common law, by statute
or otherwise, relating to the Assets.
14.21 TERMINATION. In the event the total amount of adjustments to the
Purchase Price under Sections 7.2 and 13.4 exceeds twenty-five percent (25%) of
the Purchase Price, either party may terminate this Agreement by notifying the
other party of its intention to terminate on or before the Closing Date and in
the event of such termination neither Seller nor Buyer shall be under any
obligation to the other with regard to the purchase and sale of any of the
Assets or Subject Interests, such termination to be without liability to either
party.
14.22 COSTS. Each party shall pay its own costs, including fees and
expenses of its own counsel and accountants, in connection with the purchase and
sale of the Properties. Seller shall discharge all Encumbrances other than the
Permitted Encumbrances. Seller shall pay all sales and other transfer taxes, if
any, incurred in connection with the transaction contemplated by this Agreement.
Buyer shall pay all documentary, filing and recording fees.
14.23 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall entitle
any Person, other than the parties hereto or their respective permitted
successors and assigns, to any claim, cause of action, remedy or right of any
kind.
14.24 LIABILITIES OF THE PARTIES. The liability of the parties shall be
several, not joint or collective. Each party shall be responsible only for its
obligations. It is not the intention of the
36
parties to create, nor shall this agreement be construed as creating, a mining
or other partnership, joint venture, agency relationship or association, or to
render the parties liable as partners, co-venturers, or principals. In their
relations with each other under this agreement, the parties shall not be
considered fiduciaries or to have established a confidential relationship but
rather shall be free to act on an arm's-length basis in accordance with their
own respective interest.
14.25 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO,
ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM
THIS AGREEMENT MAY BE LITIGATED ON IN STATE OR FEDERAL COURTS IN COLORADO,
RESPECTIVELY. BUYER AND SELLER HEREBY SUBMIT TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN COLORADO, AND EACH HEREBY WAIVES ANY RIGHTS IT MAY HAVE
TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT
AGAINST IT BY THE OTHER.
14.26 WAIVER OR RIGHTS TO JURY TRIAL. BUYER AND SELLER HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY, IRREVOCABLY, AND UNCONDITIONALLY WAIVE ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING, COUNTERCLAIM, OR OTHER
LITIGATION THAT RELATES TO OR ARISES OUT OF ANY OF THIS AGREEMENT OR OTHERWISE
WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE MATERIAL INDUCEMENT FOR
SELLER ENTERING INTO THIS AGREEMENT.
ARTICLE XV
CASUALTY LOSS AND CONDEMNATION
15.1 NO TERMINATION.
(a) Buyer shall assume all risk of loss with respect to, and any
change in the condition of, the Assets from the Effective Time until Closing for
production of oil, gas and/or other hydrocarbons through depletion (including
the watering-out of any well, collapsed casing or sand infiltration of any well)
and the depreciation of personal property due to ordinary wear and tear.
(b) If after the Effective Time and prior to the Closing any part of
the Assets shall be destroyed by fire or other casualty or if any part of the
Assets shall be taken in condemnation or under the right of eminent domain or if
proceedings for such purposes shall be pending or threatened, this Agreement
shall remain in full force and effect notwithstanding any such destruction,
taking or proceeding or the threat thereof.
15.2 PROCEEDS AND AWARDS. In the event of any loss described in Section
15.1(b), Seller shall either (i) at the Closing pay to Buyer all sums paid to
Seller by reason of such destruction less any costs and expenses incurred by
Seller in collecting same, or (ii) commit, use, or apply such sums (less any
costs and expenses incurred by Seller in collecting same) to repair, restore or
replace such damaged or taken Assets. To the extent the insurance proceeds,
condemnation awards or other
37
payments are not committed, used or applied by Seller prior to the Closing Date
to repair, restore or replace such damaged or taken Assets, Seller shall at the
Closing pay to Buyer all sums paid to Seller by reason of such destruction or
taking, less any costs and expenses incurred by Seller in collecting same. In
addition and to the extent such proceeds, awards or payments have not been
committed, used or applied by Seller in repair, restoration or replacement as
aforesaid, Seller shall assign, transfer and set over unto Buyer, without
recourse against Seller, all of the right, title and interest of Seller in and
to any claims against third parties with respect to the event or circumstance
causing such loss and any unpaid insurance proceeds, condemnation awards or
other payments arising out of such destruction or taking, less any costs and
expenses incurred by Seller in collecting same. Any such funds which have been
committed by Seller for repair, restoration or replacement as aforesaid shall be
paid by Seller for such purposes or, at Seller's option, delivered to Buyer upon
Seller's receipt from Buyer of adequate assurance and indemnity from Buyer that
Seller shall incur no liability or expense as a result of such commitment.
Notwithstanding anything to the contrary in this Section 15.2, Seller shall not
be obligated to carry or maintain, and shall have no obligation or liability to
Buyer for its failure to carry or maintain, any insurance coverage with respect
to any of the Assets, except as required by Section 8.1(b).
ARTICLE XVI
DEFAULT AND REMEDIES
16.1 SELLER'S REMEDIES. Upon failure of Buyer to comply herewith by the
Closing Date, as it may be extended in accordance herewith, Seller, at its sole
option, may (i) enforce whatever legal or equitable rights may be appropriate
and applicable in Seller's sole discretion or (ii) terminate this Agreement, all
other remedies (except as expressly retained in Section 16.3) being expressly
waived by Seller.
16.2 BUYER'S REMEDIES. Upon failure of Seller to comply herewith by the
Closing Date, as it may be extended in accordance herewith, Buyer, at its sole
option and as its sole and exclusive remedy, may (i) bring an action for
specific performance of this Agreement or (ii) terminate this Agreement , all
other remedies (except as expressly retained in Section 16.3) being expressly
waived by Buyer.
16.3 OTHER REMEDIES. Notwithstanding the foregoing, termination of this
Agreement shall not prejudice or impair Buyer's obligations under Sections 6.3
(and the Confidentiality Agreement referenced therein), 6.4 and 8.2(b) and such
other portions of this Agreement as are necessary to the enforcement and
construction of Sections 6.3, 6.4 and 8.2(b). The prevailing party in any legal
proceeding brought under or to enforce this Agreement shall be additionally
entitled to recover court costs and reasonable attorney's fees from the
non-prevailing party.
16.4 NOTICE. Notice of termination under this Article XVI or under Section
14.21 shall be in writing and given as provided in Section 14.9. The party
receiving the notice shall have 30 days from receipt of such notice to cure of
remedy the circumstance giving rise to the termination right to the satisfaction
of the party delivering such notice.
38
[signature page follows]
39
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
APACHE CANYON GAS, L.L.C.,
a Delaware limited liability company
By: KLT Inc., as designated director of
KLT Gas, Inc., sole member
By:
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Title: Managing Director
"SELLER"
EVERGREEN RESOURCES, INC.,
a Colorado corporation
By:
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and CEO
"BUYER"
KLT INC.
a Missouri corporation
Executed solely for the purpose of
ARTICLE XIII and Section 14.4
By:
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Title: Managing Director
40
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS ................................................ 1
ARTICLE II - SALE AND PURCHASE ......................................... 6
ARTICLE III - PURCHASE PRICE AND PAYMENT ............................... 6
ARTICLE IV - SELLER'S REPRESENTATIONS .................................. 8
ARTICLE V - BUYER'S REPRESENTATIONS .................................... 9
ARTICLE VI - ACCESS TO INFORMATION AND INSPECTION ...................... 10
ARTICLE VII - TITLE .................................................... 11
ARTICLE VIII - COVENANTS OF SELLER ..................................... 13
ARTICLE IX - CLOSING CONDITIONS ........................................ 14
ARTICLE X - CLOSING .................................................... 16
ARTICLE XI - EFFECT OF CLOSING ......................................... 17
ARTICLE XII - SETTLEMENT OF PRORATIONS ................................. 19
ARTICLE XIII - ENVIRONMENTAL ........................................... 19
ARTICLE XIV - MISCELLANEOUS ............................................ 22
ARTICLE XV - CASUALTY LOSS AND CONDEMNATION ............................ 29
ARTICLE XVI - DEFAULT AND REMEDIES ..................................... 30
-i-
EXHIBITS
A Net Revenue and Working Interests in Subject Interests
A-1 Seller's Subject Interests
B Purchase Price Allocation
C Assignment, ▇▇▇▇ of Sale and Conveyance
D Excluded Assets
E Material Contracts
F - There is no Exhibit F to this Agreement -
G Agency Agreement for Special Use Permits
H Permitted Encumbrances / Contracts with affiliates
I Amendment to State Terms of Series Share of Series A Redeemable Preferred Stock
J Registration Rights Agreement
K Litigation and Other Liabilities
L There is no Exhibit L.
-ii-
EXHIBITS
to that
Purchase and Sale Agreement
between
Apache Canyon Gas, LLC, as Seller
and
Evergreen Resources, Inc., as Purchaser
EXHIBIT A
NET REVENUE AND WORKING INTERESTS IN SUBJECT INTERESTS
EXHIBIT A-1
SELLER'S SUBJECT INTERESTS
Exhibits A and A-1 (A/A-1) are combined into the following eighteen (18)
pages. The combined Exhibit is divided into four parts. Part I consists of
interests received by Seller pursuant to an Assignment and ▇▇▇▇ of Sale from
Meridian Oil, Inc. Part II consists of interests received by Seller pursuant to
a Special Warranty Deed, Assignment and ▇▇▇▇ of Sale from TBI Production
Company. Part III consists of leases obtained by Seller from other assignors or
directly from the lessor(s). All recording references are to the official
records of Las Animas County, Colorado.
In Exhibits B through K, listings under references of Part I or Part II
shall correspond to the properties received from Meridian Oil, Inc. or TBI
Production Company, respectively.
--------------------------------------------------------------------------------
EXHIBIT A/A-1
EXHIBIT A/A-1
PART I
The right, title and interest of Seller in the following described
properties or interests only, as received along with other properties or
interests not a part hereof, in that Assignment and ▇▇▇▇ of Sale from Meridian
Oil, Inc. to Apache Canyon Gas, L.L.C., dated January 18, 1996 and effective as
of January 1, 1996, and recorded as document #616690, at Book 926, Page 435 of
the official records of Las Animas County, Colorado.
To wit:
(i) The oil and gas leases and related agreements described on Exhibit
"a" attached hereto, including, without limitation, all working interests, term
royalty interests, and overriding royalty interests (collectively, the
"Leases"), together with all of Seller's right, title and interest in and to the
property rights incident thereto, including, without limitation, as of the
Effective Time, rights in, to, and under agreements, leases, permits,
rights-of-way, easements, licenses, options, orders, and other contracts in any
way relating thereto;
(ii) All ▇▇▇▇▇ described on Exhibit "b" and all other ▇▇▇▇▇ (whether or
not listed on Exhibit "b" attached hereto) located on the Leases, including,
without limitation, production and disposal ▇▇▇▇▇;
(iii) All equipment and other items of tangible personal property of every
kind and description located on or obtained in connection with the Leases or
located in the equipment yard or warehouse maintained on the Leases, including,
without limitation, (a) the nitrogen metering equipment, and the air compression
and storage equipment located on the Leases, dehydrator, and other equipment
appurtenant thereto or used in connection therewith, (b) all other equipment,
materials, fixtures and improvements on the Leases, appurtenant thereto or used
in connection with the Leases or with the production, treatment, sale or
disposal of hydrocarbons or waste produced therefrom or attributable thereto,
and other appurtenances thereunto belonging, together with all warranties of
manufacturers, suppliers, or others providing equipment, materials or services;
and
(iv) All records, files, and data relating to the leases, including,
without limitation, all data and information stored on tapes, disks, and other
electronic storage media, records relating to ad valorem, excise, and other
production-related taxes, lease files, land files, well files, environmental
files, product purchase and sale contracts, division order files, payout files,
revenue and expense files, abstracts, title opinions, engineering and geological
data, geophysical data (to the extent assignable), maps, logs, production
records and well records (collectively, the "Records").
--------------------------------------------------------------------------------
EXHIBIT A/A-1
Exhibit "a"
to Part I
of Exhibit A/A-1
1. Seller's rights to the Lessee's interest in that Oil and Gas Lease dated
May 26, 1989, between Western Oil Corporation, Lessor, and Meridian Oil
Inc., Lessee, PROVIDED, HOWEVER, ONLY as that lease pertains to Tract II
described in Exhibit "A" thereto (commonly known as the "Weston tract"). A
Memorandum of Oil and Gas Lease dated October 25, 1999, was filed in regard
to such lease in the Las Animas County records at Reception No. 586608,
Book 870, Page 37. Such lease was ratified by Western Oil Corporation in
that Ratification of Oil and Gas Lease dated May 10, 1990, and recorded in
the Las Animas County records at Reception No. 588507, Book 873, Page 531.
A metes and bounds description of Tract II of the above-described lease is
attached hereto as Attachment 1.
2. Seller's rights in the Oil and Gas Lease dated September 6, 1989, between
H&H Minerals, Inc.; ▇.▇. ▇▇▇▇, individually; ▇.▇. ▇▇▇▇ as trustee for ▇▇▇
▇. ▇▇▇▇; and C&NM Ranch, Lessors, and Meridian Oil Inc., Lessee, (the "Hill
Ranch Lease") PROVIDED, HOWEVER, ONLY as that lease pertains to the lands
described in Exhibit "A" thereto ( commonly known as the "▇▇▇▇ Tract"). A
Memorandum of Oil and Gas Lease dated September 6, 1989, was filed in
regard to such lease in the Las Animas County records at Reception No.
586609, Book 870, Page 44. Such lease was ratified by Lessors and amended
in that Ratification and Amendment to Oil and Gas Lease dated January 17,
1996. A further Memorandum of Oil and Gas Lease dated January 17, 1996, was
recorded in the Las Animas County records at Reception No. 616693, Book
926, Page 493. A copy of said Exhibit "A" describing the ▇▇▇▇ Tract as
covered by this Purchase and Sale Agreement is attached hereto as
Attachment 2.
3. Other Related Agreements, as and if they pertain to the above tracts:
A. Agreement dated April 28, 1989, by and between Meridian Oil Inc. and
Western Oil Corporation.
B. Agreement dated January 31, 1990, by and between Meridian Oil Inc. and
Western Oil Corporation.
--------------------------------------------------------------------------------
EXHIBIT A/A-1
Exhibit "b"
to Part I
of Exhibit A/A-1
▇▇▇▇ ▇▇▇▇▇
Hill Lease
Well Name Working Interest Net Revenue
Interest
1 ▇▇▇▇ 1 100% 81.25%
2 ▇▇▇▇ 2 100% 81.25%
3 ▇▇▇▇ 3A 100% 81.25%
4 ▇▇▇▇ 4 100% 81.25%
5 ▇▇▇▇ 5 100% 81.25%
6 ▇▇▇▇ 6A 100% 81.25%
7 ▇▇▇▇ 7 100% 81.25%
8 ▇▇▇▇ 8 100% 81.25%
9 ▇▇▇▇ 9 100% 81.25%
10 ▇▇▇▇ 10 100% 81.25%
11 ▇▇▇▇ 11 100% 81.25%
12 ▇▇▇▇ 12 100% 81.25%
13 ▇▇▇▇ 13 100% 81.25%
14 ▇▇▇▇ 14 100% 81.25%
15 ▇▇▇▇ 15 100% 81.25%
16 ▇▇▇▇ 16 100% 81.25%
17 ▇▇▇▇ 17 100% 81.25%
18 ▇▇▇▇ 18 100% 81.25%
19 ▇▇▇▇ 19 100% 81.25%
20 ▇▇▇▇ 20 100% 81.25%
21 ▇▇▇▇ 21 100% 81.25%
22 ▇▇▇▇ 22 100% 81.25%
23 ▇▇▇▇ 23 100% 81.25%
24 ▇▇▇▇ 24 100% 81.25%
25 ▇▇▇▇ 25 100% 81.25%
26 ▇▇▇▇ 26 100% 81.25%
27 ▇▇▇▇ 27 100% 81.25%
28 ▇▇▇▇ 28 100% 81.25%
29 ▇▇▇▇ 29 100% 81.25%
30 ▇▇▇▇ 30 100% 81.25%
31 ▇▇▇▇ 31 100% 81.25%
32 ▇▇▇▇ 32 100% 81.25%
33 ▇▇▇▇ 33 100% 81.25%
34 ▇▇▇▇ 34 100% 81.25%
35 ▇▇▇▇ 35 100% 81.25%
--------------------------------------------------------------------------------
EXHIBIT A/A-1
Well Name Working Interest Net Revenue
Interest
36 ▇▇▇▇ 36 100% 81.25%
37 ▇▇▇▇ 37 100% 81.25%
38 ▇▇▇▇ 38 100% 81.25%
39 ▇▇▇▇ 39 100% 81.25%
40 ▇▇▇▇ 40A 100% 81.25%
41 ▇▇▇▇ 41 100% 81.25%
42 ▇▇▇▇ 42 100% 81.25%
43 ▇▇▇▇ 43 100% 81.25%
44 ▇▇▇▇ 44 100% 81.25%
45 ▇▇▇▇ 45 100% 81.25%
46 ▇▇▇▇ 46 100% 81.25%
47 ▇▇▇▇ 47 100% 81.25%
48 ▇▇▇▇ 48 100% 81.25%
49 ▇▇▇▇ 49 100% 81.25%
50 ▇▇▇▇ 50 100% 81.25%
51 ▇▇▇▇ 51 100% 81.25%
52 ▇▇▇▇ 52 100% 81.25%
53 ▇▇▇▇ 53 100% 81.25%
54 ▇▇▇▇ 54 100% 81.25%
55 ▇▇▇▇ 55 100% 81.25%
56 ▇▇▇▇ 56 100% 81.25%
57 ▇▇▇▇ 57 100% 81.25%
58 ▇▇▇▇ 58 100% 81.25%
59 ▇▇▇▇ 59 100% 81.25%
60 ▇▇▇▇ 60 100% 81.25%
61 ▇▇▇▇ 61 100% 81.25%
62 ▇▇▇▇ 62 100% 81.25%
63 ▇▇▇▇ 63 100% 81.25%
64 ▇▇▇▇ 64 100% 81.25%
65 ▇▇▇▇ 65 100% 81.25%
66 ▇▇▇▇ 66 100% 81.25%
67 ▇▇▇▇ 67 100% 81.25%
68 ▇▇▇▇ 68 100% 81.25%
69 ▇▇▇▇ 69 100% 81.25%
70 ▇▇▇▇ 70 100% 81.25%
71 ▇▇▇▇ 71 100% 81.25%
72 ▇▇▇▇ 72 100% 81.25%
73 ▇▇▇▇ 73 100% 81.25%
74 ▇▇▇▇ 74 100% 81.25%
75 ▇▇▇▇ 75 100% 81.25%
76 ▇▇▇▇ 76 100% 81.25%
77 ▇▇▇▇ 77 100% 81.25%
78 ▇▇▇▇ 78 100% 81.25%
--------------------------------------------------------------------------------
EXHIBIT A/A-1
Well Name Working Interest Net Revenue
Interest
79 ▇▇▇▇ 79 100% 81.25%
80 ▇▇▇▇ 80 100% 81.25%
81 ▇▇▇▇ 81 100% 81.25%
82 ▇▇▇▇ 82 100% 81.25%
83 ▇▇▇▇ 83 100% 81.25%
84 ▇▇▇▇ 84 100% 81.25%
The Net Revenue Interest ("NRI") shown is before well payout; after well
payout, the NRI is reduced to 80%.
--------------------------------------------------------------------------------
EXHIBIT A/A-1
EXHIBIT A/A-1
PART II
The right, title and interest of Seller in the following described
properties or interests only, as received along with other properties or
interests NOT a part hereof, in that Special Warranty Deed, Assignment and ▇▇▇▇
of Sale from TBI Production Company to Apache Canyon Gas, L.L.C., dated July 12,
1996 and effective July 1, 1996, recorded on July 15, 1996 as document #619368,
at Book 932, Page 175 of the official records of Las Animas County, Colorado.
To wit:
(i) The lands described on Exhibit "a" attached hereto (the "Lands"),
including, without limitation, as to all depths, all oil, gas, coalbed methane
gas, coalbed gas, methane gas, gob gas, other naturally occurring gases
associated with any coal seam, helium, carbon dioxide and all other hydrocarbon
and non-hydrocarbon substances produced in association with any of the
foregoing; rights of ingress and egress for the purpose of drilling, mining,
exploring, operating and developing the Lands for the foregoing (including the
right to fracture or otherwise stimulate any subsurface formation including coal
seams and adjacent rocks) and producing, storing, handling, transporting and
marketing the foregoing; and all agreements, leases, permits, rights-of-way,
easements, licenses, options, orders and other properties and interests
appurtenant, incident or in any way relating thereto;
(ii) All oil and gas leases described on Exhibit "b" (collectively, the
"Leases") and any other oil and gas or other mineral leases covering all or any
portion of the Lands, including, without limitation, all working interests,
royalty interests, overriding royalty interests and other interests of every
kind and description;
(iii) All well bores, horizontal or vertical ventilation holes, and all
other ▇▇▇▇▇ located on the Leases or Lands, including, without limitation,
production and disposal ▇▇▇▇▇;
(iv) All equipment, materials, fixtures and improvements on the Leases or
Lands, appurtenant thereto, or used in connection with the Leases or Lands or
with the production, treatment, sale or disposal of hydrocarbons or other
minerals or waste produced therefrom or attributable thereto, and other
appurtenances thereunto belonging;
(v) All records, files and data relating to the Leases and the Lands,
including, without limitation, all data and information stored on tapes, disks
and other electronic storage media; records relating to ad valorem, excise and
other production-related taxes; lease files, land files, well files,
environmental files, product purchase and sale contracts, division order files,
payout files, revenue and expense files, abstracts, title opinions, engineering
and geological data, geophysical data, maps, logs, production records and well
records; and
(vi) Oil, gas and other hydrocarbon and nonhydrocarbon substances, and
other substances, compounds or elements which are considered a mineral under
applicable law, produced from or
--------------------------------------------------------------------------------
EXHIBIT A/A-1
attributable to the foregoing after the effective time set forth below, and any
royalty or proceeds thereof;
SAVE AND EXCEPT, that eight-inch gathering line found in the southwest part
of the "Lease ▇▇. ▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇" as described in Exhibit "a" hereto,
servicing ▇▇▇▇▇ on the west-adjacent tract commonly known as the "Golden Eagle
Tract" and indirectly connecting to the Colorado Interstate Gas Company
pipeline, and all associated equipment related thereto or necessary for the
operation thereof. Seller shall reserve unto itself and its successors and
assigns said gathering line, related equipment, all necessary rights of way for
the passage of the gathering line through the "Lease ▇▇. ▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,"
and all rights of access for the operation, maintenance, replacement,
modification, or expansion (including but not limited to looping of the line) of
the line as such activities are deemed necessary in the sole discretion of
Seller.
--------------------------------------------------------------------------------
EXHIBIT A/A-1
Exhibit "b"
to Part II
of Exhibit A/A-1
Seller's rights to the Lessor's interest in that Oil and Gas Lease dated
May 26, 1989, between Western Oil Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as Lessor, and Meridian Oil Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, as Lessee, a Memorandum and Ratification of Oil and Gas
Lease of which is filed for record on February 14, 1996, in the Real Property
Records of Las Animas County, Colorado, under File N. 616694, in Book 926, Page
504, PROVIDED, HOWEVER, that such interest in such lease is assigned ONLY as it
pertains to Tract II as described in Exhibit "A" thereto. A metes and bounds
description of Tract II of the above-described lease is attached hereto as
Attachment 1.
--------------------------------------------------------------------------------
EXHIBIT A/A-1
EXHIBIT A/A-1
PART III
1. Paid Up Oil and Gas Lease dated March 1, 1998, between ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Individually and as Attorney-in-Fact for: ▇▇▇ ▇▇▇▇▇▇, ▇▇.; ▇▇▇ ▇▇▇▇▇▇,
a/k/a ▇▇▇ ▇▇▇▇▇▇; Lucy ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, a/k/a ▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, a/k/a ▇▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a/k/a ▇▇▇ ▇▇▇▇▇▇, as Lessor,
and Apache Canyon Gas, L.L.C. as Lessee; covering W/2 SW/4 of Section 26, and
SE/4 SE/4 of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ P.M.; and recorded at Book
962, Page 194 of the official records of Las Animas County, Colorado.
2. Paid Up Oil and Gas Lease dated March 1, 1998, between ▇▇▇▇▇▇ ▇▇▇▇▇▇,
a/k/a ▇▇▇▇▇▇ ▇▇▇▇▇▇, a single man, as Lessor, and Apache Canyon Gas. L.L.C., as
Lessee; covering W/2 SW/4 of Section 26, and SE/4 SE/4 of Section ▇▇, ▇▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ P.M.; and recorded at Book 962, Page 196 of the official
records of Las Animas County, Colorado.
3. Paid Up Oil and Gas Lease dated October 1, 1997, between ▇▇▇▇▇▇ ▇.
Cargo, a widower, as Lessor, and Apache Canyon Gas, L.L.C., as Lessee, covering
W/2 SE/4, and NE/4 SE/4 of Section 27, Township 33S, Range 66W, 6th P.M.; and
recorded at Book 957, Page 291 of the official records of Las Animas County,
Colorado.
4. Paid Up Oil and Gas Lease dated August 1, 1997, between ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, husband and wife, as Lessor, and Apache Canyon Gas,
L.L.C., as Lessee; covering the lands described therein in Section 33 of
Township 33S, Range 66W of the 6th P.M.; and recorded at Book 948, Page 988 of
the official records of Las Animas County, Colorado.
--------------------------------------------------------------------------------
EXHIBIT A/A-1
EXHIBIT B
PURCHASE PRICE ALLOCATION
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ 20.7
▇▇▇▇ Non-▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ 35.3
▇▇▇▇ Gas Gathering 15.0
Primero ▇▇▇▇▇ 55.0
Primero Gas Gathering 15.0
141.0
--------------------------------------------------------------------------------
EXHIBIT B Page 1 of 1
EXHIBIT C
ASSIGNMENT, ▇▇▇▇ OF SALE AND CONVEYANCE
WITH
RESERVATION OF PRODUCTION PAYMENT
To ensure that all interests received by Seller from Meridian Oil, Inc.,
and TBI Production Company are conveyed to Purchaser, two assignments
substantially similar to the respective assignments into Seller will be used.
The Subject Interests listed under Part III of Exhibit A/A-1 will be assigned in
an assignment substantially the same as that under Part I of this Exhibit C.
PART I
ASSIGNMENT AND ▇▇▇▇ OF SALE
WITH
RESERVATION OF PRODUCTION PAYMENT
STATE OF COLORADO )
) KNOW ALL MEN BY THESE PRESENTS THAT:
COUNTY OF LAS ANIMAS )
APACHE CANYON GAS, L.L.C., a Delaware limited liability company, with
offices at ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ("Assignor"), for
and in consideration of ONE HUNDRED DOLLARS ($100.00) and other good and
valuable consideration, receipt of which is hereby acknowledged, does hereby
assign, transfer, grant and convey unto ________________________, a __________
[entity], with offices at , ("Assignee"), all of Assignor's right, title and
interest in, to and under the following assets:
(i) The oil and gas leases and related agreements described on
Exhibit "A" attached hereto, including, without limitation, all working
interests, term royalty interests, and overriding royalty interests
(collectively, the "Leases"), together with all of Seller's right, title
and interest in and to the property rights incident thereto, including,
without limitation, as of the Effective Time, rights in, to, and under
agreements, leases, permits, rights-of-way, easements, licenses, options,
orders, and other contracts in any way relating thereto;
(ii) All ▇▇▇▇▇ described on Exhibit "B" and all other ▇▇▇▇▇ (whether
or not listed on Exhibit "B" attached hereto) located on the Leases,
including, without limitation, production and disposal ▇▇▇▇▇;
(iii) All equipment and other items of tangible personal property of
every kind and description located on or obtained in connection with the
Leases or located in the equipment yard or warehouse maintained on the
Leases, including, without limitation, (a) any nitrogen metering equipment,
and any air compression and storage equipment located on the Leases,
dehydrator, and other equipment appurtenant thereto or used in connection
therewith, (b) any
--------------------------------------------------------------------------------
EXHIBIT C Page 1 of 18
electrical distribution system located on the Leases and all generators,
transformers, and other equipment appurtenant thereto or used or obtained
in connection therewith, and (d) all other equipment, materials, fixtures
and improvements on the Leases, appurtenant thereto or used in connection
with the Leases or with the production, treatment, sale or disposal of
hydrocarbons or waste produced therefrom or attributable thereto, and other
appurtenances thereunto belonging, (all of the foregoing being referred to
collectively as the "Equipment"), together with all warranties of
manufacturers, suppliers, or others providing equipment, materials or
services; and
(iv) All records, files, and data relating to the leases, including,
without limitation, all data and information stored on tapes, disks, and
other electronic storage media, records relating to ad valorem, excise, and
other production-related taxes, lease files, land files, well files,
environmental files, product purchase and sale contracts, division order
files, payout files, revenue and expense files, abstracts, title opinions,
engineering and geological data, geophysical data (to the extent
assignable), maps, logs, production records and well records (collectively,
the "Records"); provided, however, that Assignor may retain copies of any
Records pertaining to portions of the Leases not conveyed to Assignee.
Assignor's interests in these assets is herein collectively referred to as
the "Interests" provided, however, the Interests shall not include, and there is
excepted, reserved and excluded from this Assignment and ▇▇▇▇ of Sale, vehicles
located on the Leases and the Production Payment particularly described below.
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns,
forever, subject to the terms and provisions hereof.
Assignor hereby reserves unto itself, its successors and assigns, during
the period from the Effective Time until the Termination Time (as defined in
Exhibit "C" hereto), as a Production Payment, an interest in each of the Subject
Interests (as defined in Exhibit "C") in and to the Hydrocarbons (as defined in
Exhibit "C") which may be procured and saved from the Subject Interests equal to
18.64% of 8/8ths of production attributable to the Subject Interests (after
deduction of Lease Use Hydrocarbons and Non-Consent Hydrocarbons attributable to
the Subject Interests and Deductible Operating Expenses (all as defined in
Exhibit "C")), together with all and singular the rights and appurtenances
thereto in anywise belonging (the "Production Payment"). The Production Payment
shall be held subject to the terms, provisions and conditions set forth in
Exhibit "C" hereto.
This Assignment and ▇▇▇▇ of Sale is accepted subject to, and Assignee
agrees to assume and perform, from and after the Effective Time, any and all of
the liabilities and obligations of Assignor that arise under the Leases,
Equipment Leases, permits, rights-of-way, licenses, easements, options, orders,
or any other agreements or contracts attributable to, affecting or otherwise
relating to the Interests, including, but not limited to, any and all
liabilities and obligations (i) to pay and deliver royalties, overriding
royalties, and other burdens on production, and (ii) necessary to comply with
all laws and governmental regulations with respect to the Interests, including,
but not limited to, the lawful plugging and abandonment of oil and gas ▇▇▇▇▇ and
the restoration of the surface of the land; provided, however, that except as
set forth in the Agreement, Assignee shall not assume any liability
--------------------------------------------------------------------------------
EXHIBIT C Page 2 of 18
or obligation attributable to or arising out of Assignor's ownership or
operation of the Interests prior to the Effective Time.
THIS ASSIGNMENT AND ▇▇▇▇ OF SALE IS EXECUTED, DELIVERED, AND ACCEPTED
WITHOUT ANY REPRESENTATION, WARRANTY OR COVENANT OF TITLE OF ANY KIND OR NATURE,
EITHER EXPRESS, IMPLIED OR STATUTORY; PROVIDED, HOWEVER, ASSIGNOR SHALL WARRANT
AND AGREE TO DEFEND THE TITLE TO THE INTERESTS AGAINST THE LAWFUL CLAIMS AND
DEMANDS OF ALL PERSONS AND ENTITIES CLAIMING THE SAME OR ANY PART THEREOF BY,
THROUGH OR UNDER ASSIGNOR, BUT NOT OTHERWISE; AND FURTHER PROVIDED THAT NOTHING
HEREIN SHALL BE DEEMED TO IMPAIR ANY RIGHTS OF ASSIGNEE UNDER ANY REPRESENTATION
OF ASSIGNOR MADE IN ARTICLE IV OF THE AGREEMENT FOR PURCHASE AND SALE DATED
______________, 2000, BETWEEN ASSIGNOR AND ASSIGNEE. THE EQUIPMENT IS BEING
CONVEYED AND ASSIGNED TO AND ACCEPTED BY THE ASSIGNEE IN ITS "AS IS, WHERE IS"
CONDITION AND STATE OF REPAIR, AND WITH ALL FAULTS AND DEFECTS, WITHOUT ANY
REPRESENTATION, WARRANTY OR COVENANT OF ANY KIND OR NATURE, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MARKETABILITY, QUALITY,
CONDITION, CONFORMITY TO SAMPLES, MERCHANTABILITY, AND/OR FITNESS FOR A
PARTICULAR PURPOSE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED BY ASSIGNOR AND WAIVED
BY ASSIGNEE, BUT ALL MANUFACTURER'S WARRANTIES AND OTHER CLAIMS AGAINST
MANUFACTURERS ARE HEREBY ASSIGNED TO ASSIGNEE. THE INTERESTS HAVE BEEN USED FOR
OIL AND GAS PIPELINE, TRANSPORTATION, STORAGE AND RELATED OPERATIONS. PHYSICAL
CHANGES IN THE INTERESTS AND IN THE LANDS BURDENED THEREBY MAY HAVE OCCURRED AS
A RESULT OF SUCH USES. THE INTERESTS MAY ALSO INCLUDE BURIED PIPELINES AND OTHER
EQUIPMENT, THE LOCATIONS OF WHICH MAY NOT BE KNOWN BY ASSIGNOR OR READILY
APPARENT BY A PHYSICAL INSPECTION OF THE INTERESTS. IT IS UNDERSTOOD AND AGREED
THAT ASSIGNEE HAS INSPECTED PRIOR TO CLOSING (OR SHALL BE DEEMED TO HAVE WAIVED
ITS RIGHT TO INSPECT) THE LEASES AND THE EQUIPMENT, AND THAT ASSIGNEE SHALL
ACCEPT ALL OF THE SAME IN THEIR "AS IS, WHERE IS" CONDITION AND STATE OF REPAIR
AND WITH ALL FAULTS AND DEFECTS. IN ADDITION, ASSIGNOR MAKES NO REPRESENTATION,
COVENANT OR WARRANTY, EXPRESS, IMPLIED OR STATUTORY, AS TO THE ACCURACY OR
COMPLETENESS OF ANY DATA OR RECORDS DELIVERED TO ASSIGNEE WITH RESPECT TO THE
INTERESTS, OR CONCERNING THE QUALITY OR QUANTITY OF HYDROCARBON RESERVES, IF
ANY, ATTRIBUTABLE TO THE INTERESTS, OR THE ABILITY OF THE INTERESTS TO PRODUCE
HYDROCARBONS, OR THE PRICES WHICH ASSIGNEE IS OR WILL BE ENTITLED TO RECEIVE FOR
ANY SUCH HYDROCARBONS.
TO THE EXTENT APPLICABLE TO THE INTERESTS OR ANY PORTION THEREOF, ASSIGNEE
HEREBY WAIVES ITS RIGHTS UNDER THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE
PRACTICES ACT, CHAPTER 17, SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE
(OTHER THAN SECTION 17.555, WHICH IS NOT WAIVED),
--------------------------------------------------------------------------------
EXHIBIT C Page 3 of 18
OF THE TEXAS BUSINESS & COMMERCE CODE (A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS
AND PROTECTIONS). AFTER CONSULTATION WITH AN ATTORNEY OF ITS CHOICE, ASSIGNEE
VOLUNTARILY CONSENTS TO THIS WAIVER.
This Assignment and ▇▇▇▇ of Sale shall inure to the benefit of and be
binding upon the parties hereto, their successors and assigns.
This Assignment and ▇▇▇▇ of Sale is subject to all of the terms and
conditions of that certain Agreement for Purchase and Sale by and between
Assignor and Assignee, dated ________________, 2000.
IN WITNESS WHEREOF, this instrument is executed the ___ day of
________________, 2000, but shall be effective as of 7:00 a.m. in Las Animas
County, Colorado on September 1, 2000.
ASSIGNOR:
APACHE CANYON GAS, L.L.C.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
ASSIGNEE:
-----------------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
EXHIBIT "C"
to that Assignment, ▇▇▇▇ of Sale and Conveyance
--------------------------------------------------------------------------------
EXHIBIT C Page 4 of 18
with Reservation of Production Payment
between Apache Canyon Gas, L.L.C., Assignor
and Evergreen Resources, Inc., Assignee
PRODUCTION PAYMENT TERMS , PROVISIONS, AND CONDITIONS
ARTICLE I
TERMS AND CONDITIONS
Section 1.1 NON-OPERATING, NON-EXPENSE-BEARING INTEREST. The Production
Payment reserved hereby is a non-operating, limited-expense-bearing royalty
interest in the Subject Interests. Assignor shall hold the Production Payment
without obligation to pay any costs or expenses of drilling, completing, or
equipping, but Assignor's reserved interest shall be subject to the Deductible
Operating Expenses. Assignor shall bear no risk or cost, other than those
specified above, other than the risk of non-production and the risk of commodity
pricing. Assignee may deduct those Deductible Operating Expenses. This
reservation is of a real property interest.
Section1.2. TERMINATION. The Production Payment shall remain in full force
and effect until 7:00 a.m. Mountain Time on the earlier of (i) the first day of
the calendar month following the redemption of the last shares of the Redeemable
Preferred Stock of Buyer issued by Evergreen Resources, Inc. to Apache Canyon
Gas, L.L.C. on September __, 2000, or (ii) January 1, 2003 (the "Termination
Time").
Upon termination of the Production Payment, all rights, titles and interests
herein reserved shall automatically terminate and vest in Assignee and Assignor
shall execute and deliver such instrument or instruments as may be necessary to
evidence the discharge and termination of the Production Payment. In the event
any individual Subject Interest (or portion thereof, as applicable) should
expire before the Termination Time and not be extended, renewed or replaced, the
Production Payment no longer shall apply to that particular Subject Interest (or
such portion thereof, as applicable), but the Production Payment shall remain in
full force and effect and undiminished as to all remaining Subject Interests
(and the remainder portion of such Subject Interest, as applicable).
Section 1.3. DELIVERY TO GRANTEE. The Production Payment Hydrocarbons shall
be delivered into the facilities of the First Transporter, to be marketed in
accordance with Section 1.9, below. As between Assignee and Assignor, Assignee
shall be in exclusive control and possession of the Production Payment
Hydrocarbons deliverable hereunder and responsible for any loss, damage or
injury caused thereby (except for physical losses of Hydrocarbons, which shall
be considered as Deductible Operating Expenses) until the same shall have been
delivered at the Delivery Point.
Section 1.4. CERTAIN LIMITATIONS. The Production Payment shall be subject
to the following provisions:
A. Assignor shall look solely to the Production Payment Hydrocarbons for
satisfaction and discharge of the Production Payment, and Assignee
shall not be personally liable
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EXHIBIT C Page 5 of 18
for the payment and discharge thereof. However, the foregoing
provision shall not relieve Assignee of the obligation to respond in
damages for any breach of any of the provisions hereof.
B. There shall not be included in the Production Payment Hydrocarbons any
Lease Use Hydrocarbons or Non-Consent Hydrocarbons; however, Assignee
shall not, without the consent of Assignor, use Hydrocarbons allocable
to the Subject Interests for the purpose of gas injection, secondary
or tertiary recovery, pressure maintenance, repressuring or cycling
operations.
Section 1.5. MEASUREMENT. Measurement of the volume and Btu content of
Production Payment Hydrocarbons delivered hereunder shall be made at the
existing metering points. Measurement of Gas shall be as determined as provided
in the First Transporter's transportation agreements and/or published tariffs.
The last previous measurement of Btu Content of Gas under the applicable
transportation agreement between Assignee and the First Transporter (corrected,
if necessary, to an actual water vapor content basis), shall be deemed to be the
Btu Content for all Gas delivered from that measurement date or adjustment
relating to Btu Content.
Section 1.6. ROYALTIES; TAXES. Assignor's Production Payment is subject to
18.64% of all royalties and other burdens on production existing and affecting
the Subject Interests as of the Effective Time of the Assignment. The Production
Payment shall be free of (and without deduction therefrom of) any and all
royalties and other burdens on production created after the Effective Time of
the Assignment and shall bear no part of same; Assignee's leasehold interest
shall be burdened with all such royalties and other burdens on production
created after the Effective Time, and Assignee shall defend, indemnify and hold
Assignor harmless from and against any loss or claim with respect to any such
royalties and other burdens on production or any claim by the owners or holders
of such royalties and other burdens on production. Notwithstanding the
foregoing, to the extent that Assignee holds the underlying royalty, mineral or
reversionary interest, with respect to any of the Leases, such interests are
included in Production Payment Hydrocarbons and no deduction for such interest
is permitted. Assignor shall bear and pay all Taxes with respect to the
Production Payment, and the Production Payment Hydrocarbons.
Section 1.7. ASSIGNMENT BY ASSIGNEE. During the term of the Production
Payment, Assignee shall not assign, sell, convey or otherwise transfer
Assignee's remaining interests in the Subject Interests or any part thereof
unless Assignor expressly consents thereto in writing, and the transferee
expressly agrees to assume and perform all of Assignee's obligations under this
reservation of Production Payment and such sale, transfer or assignment is made
and accepted expressly subject and subordinate to the Production Payment. Any
purported assignment, sale, conveyance or other transfer in contravention of the
foregoing terms shall be null and void.
Section 1.8. PROTECTION TO PURCHASERS. No pipeline company or other person
purchasing or taking or processing Production Payment Hydrocarbons shall be
required to take notice of, or to keep informed concerning, termination of the
Production Payment, until actual receipt of written notice from Assignor
advising such company or person of such termination.
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EXHIBIT C Page 6 of 18
Section 1.9. MARKETING OBLIGATION. Except as provided in the next sentence,
Assignee has the obligation to sell Gas on the same basis as Assignee sells its
Hydrocarbons; Assignee, for this purpose, is considered as including any
affiliate, parent, or subsidiary of Assignee, and any entity of which Assignee
owns 10% or more of the voting or beneficial interest. Notwithstanding the
foregoing sentence, Assignee shall deliver, out of first production of
Production Payment Hydrocarbons to NTGS, LLC, at the Forgan delivery point on
the Colorado Interstate Gas Company (or successor) pipeline, as provided for in
Exhibit "A", dated January 31, 2000, to the Gas Purchase and Sale Contract dated
April 1, 1996, Contract Number PUR00737, by and between NTGS, LLC and Assignor.
The amount of Gas to be delivered hereunder shall be the minimum amount
necessary to comply with such NTGS contract; the balance of the Production
Payment Hydrocarbons shall be marketed as provided in the first sentence. By
such delivery, Buyer does not assume any obligation to NTGS, LLC arising under
said NTGS contract. Assignee has the obligation to sell Gas out of which
Assignor's Production Payment Hydrocarbons are allocated on the same basis as
Assignee sells its Hydrocarbons; Assignee, for this purpose, being considered as
including any affiliate, parent, or subsidiary of Assignee, and any entity of
which Assignee owns 10% or more of the voting or beneficial interest.
Section 1.10. SUCCESSORS AND ASSIGNS. The provisions and conditions of the
Production Payment retained in this Assignment shall run with the land and the
respective interests of Assignee and Assignor and (subject to the foregoing
restrictions in Section 1.7) shall be binding upon and inure to the benefit of
Assignee and Assignor and their respective successors and assigns. All
references herein to either Assignee or Assignor shall include their respective
successors and assigns.
ARTICLE II
DEFINITIONS
As used herein and in the exhibits hereto, the following terms shall have
the respective meanings ascribed to them below:
"British Thermal Unit" or "Btu" means the amount of energy required to
raise the temperature of one (1) pound of pure water one degree Fahrenheit
(1DEG.F.) From fifty-nine degrees ▇▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇.▇.) To sixty degrees
▇▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇.▇.) under a constant pressure of 14.73 pounds per square
inch absolute.
"Btu Content" means the Btu content determined on an actual water vapor
content basis.
"Deductible Operating Expenses" means 18.64% of 8/8ths of those costs
incurred after the Effective Time but before the Termination Time with respect
to the operation of the Leases and Lands but excluding costs incurred in the
drilling, completing, equipping, reworking or other capital costs related to
▇▇▇▇▇ on the Leases or Lands but including direct costs and expenses incurred in
production, gathering, dehydrating, treating, compressing, transporting,
handling and delivery of Hydrocarbons to the Delivery Point.
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EXHIBIT C Page 7 of 18
"Delivery Point" means the point or points in or near the field where the
Hydrocarbon is customarily delivered to the purchasers thereof.
"First Transporter" means the first interstate or intrastate pipeline
downstream of the Delivery Point.
"Gas" means natural gas and other gaseous hydrocarbons.
"Hydrocarbons" means Oil and Gas.
"Lease" means an oil and gas lease described, referred to or identified in
Exhibit A, together with any renewal or extension of such lease, and any lease
taken by or on behalf of Assignee taken or effective before the Termination Time
and covering all or any part of the lands covered by and Lease conveyed in this
Assignment.
"Lease Use Hydrocarbons" means any Hydrocarbons which are unavoidably lost
in the production thereof or used by Assignee in conformity with good oil field
practices on the Leases or any unit to which the Leases are committed, or off
lease or off unit, for drilling, and production operations, including off lease
compression operations, conducted prudently and in good faith for the purpose of
producing Hydrocarbons from the Leases or from any unit to which the Leases are
committed, but only for so long as such Hydrocarbons are so used.
"MMBtu" means 1,000,000 British Thermal Units.
"Non-Consent Hydrocarbons" means all hydrocarbons produced during the
applicable period of recoupment or reimbursement from a subject well as to which
Assignee is a Non-Consenting party and which hydrocarbons are dedicated to the
recoupment or reimbursement of costs and expenses of the consenting party or
parties by the terms of the applicable existing third-party operating agreement,
unit agreement, contract for development, or other instrument providing for such
non-consent operations, provided such agreement, contract or instrument
qualifies as a Permitted Encumbrance, and provided that Assignee's election not
to participate in such operations is made in good faith.
"Production Payment Hydrocarbons" shall mean the Hydrocarbons attributable
to the limited royalty in the Subject Interests reserved unto Assignor pursuant
to this Assignment and ▇▇▇▇ of Sale.
"Subject Interests" or "Subject Interest" means the Leases and the
production therefrom, together with any pooled, communitized or unitized acreage
by virtue of any Lease or lands being a part thereof, including all production
from the pool, communitized area or unit and all interests in any ▇▇▇▇▇, whether
now existing or drilled hereafter, on any such Lease or lands or within any such
pool, communitized area or unit, including, without limitation, those ▇▇▇▇▇
described in Exhibit A, all as said interests shall be enlarged by the discharge
of any burdens or by the removal of any charges or encumbrances to which any of
the same may be subject at the Effective Time, and any and all renewals and
extensions of any of the same, and expressly excluding any additional interests
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EXHIBIT C Page 8 of 18
in the Leases (or the production therefrom) acquired by Assignee after the
Effective Time but before the Termination Time.
"Taxes" means all ad valorem, property, occupation, gathering, pipeline
regulating, windfall profit, severance, gross production, excise and other taxes
and governmental charges and assessments imposed on the Subject Interests or the
Production Payment, including the Production Payment Hydrocarbons, other than
income taxes.
"Termination Time" is defined in Section 1.03 hereof.
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EXHIBIT C Page 9 of 18
PART II
SPECIAL WARRANTY DEED, ASSIGNMENT AND ▇▇▇▇ OF SALE
WITH RESERVATION OF A PRODUCTION PAYMENT
APACHE CANYON GAS, L.L.C., a Delaware limited liability company, the
address of which is 10740 ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
hereinafter called Grantor, for and in consideration of the sum of Ten Dollars
($10.00) cash in hand paid and other good and valuable considerations, the
receipt of which is hereby acknowledged, does hereby grant, bargain, sell,
convey, transfer, assign and deliver unto __________________, a
____________________ [entity], the address of which is
__________________________________, hereinafter called Grantee, all of Grantor's
right, title and interest in and to and under the following (collectively, the
"Property"):
(i) The lands described on Exhibit A attached hereto (the "Lands"),
including, without limitation, as to all depths, all oil, gas, coalbed methane
gas, coalbed gas, methane gas, gob gas, other naturally occurring gases
associated with any coal seam, helium, carbon dioxide and all other hydrocarbon
and non-hydrocarbon substances produced in association with any of the
foregoing; mineral rights, if any, and all royalty or reversionary rights,
except as reserved herein; rights of ingress and egress for the purpose of
drilling, mining, exploring, operating and developing the Lands for the
foregoing (including the right to fracture or otherwise stimulate any subsurface
formation including coal seams and adjacent rocks) and producing, storing,
handling, transporting and marketing the foregoing; and all agreements, leases,
permits, rights-of-way, easements, licenses, options, orders and other
properties and interests appurtenant, incident or in any way relating thereto;
(ii) All oil and gas leases described on Exhibit B (collectively, the
"Leases") and any other oil and gas or other mineral leases covering all or any
portion of the Lands, including, without limitation, all working interests,
royalty interests, overriding royalty interests and other interests of every
kind and description;
(iii) All well bores, horizontal or vertical ventilation holes, and all
other ▇▇▇▇▇ located on the Leases or Lands, including, without limitation,
production and disposal ▇▇▇▇▇;
(iv) All equipment, materials, fixtures and improvements on the Leases or
Lands, appurtenant thereto, or used in connection with the Leases or Lands or
with the production, treatment, sale or disposal of hydrocarbons or other
minerals or waste produced therefrom or attributable thereto, and other
appurtenances thereunto belonging;
(v) All records, files and data relating to the Leases and the Lands,
including, without limitation, all data and information stored on tapes, disks
and other electronic storage media; records relating to ad valorem, excise and
other production-related taxes; lease files, land files, well files,
environmental files, product purchase and sale contracts, division order files,
payout files, revenue and expense files, abstracts, title opinions, engineering
and geological data, geophysical data, maps, logs, production records and well
records; provided, however, that Grantor may retain copies of any Records
pertaining to portions of the Leases not conveyed to Grantee.
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EXHIBIT C Page 10 of 18
(vi) Oil, gas and other hydrocarbon and nonhydrocarbon substances, and
other substances, compounds or elements which are considered a mineral under
applicable law, produced from or attributable to the foregoing after the
effective time set forth below, and any royalty or proceeds thereof;
SAVE AND EXCEPT, Grantor hereby reserves unto itself, its successors and
assigns, during the period from the Effective Time until the Termination Time
(as defined in Exhibit C hereto), as a Production Payment, an interest in each
of the Subject Interests (as defined in Exhibit C) in and to the Hydrocarbons
(as defined in Exhibit C) which may be procured and saved from the Subject
Interests equal to 18.64% of 8/8ths of production attributable to the Subject
Interests (after deduction of Lease Use Hydrocarbons and Non-Consent
Hydrocarbons attributable to the Subject Interests and Deductible Operating
Expenses (all as defined in Exhibit C)), together with all and singular the
rights and appurtenances thereto in anywise belonging (the "Production
Payment"). The Production Payment shall be held subject to the terms, provisions
and conditions set forth in Exhibit C hereto.
This sale is made subject to any rights now existing to any lessee or
assigns under any valid and subsisting oil and gas lease now of legal record; it
being understood and agreed that Grantee shall have, receive and enjoy the
herein granted interest in and to all bonuses, rents, royalties and other
benefits which may accrue thereunder from and after the date hereof only insofar
as it covers the Grantor's right, title and interest in and to the Property,
precisely as if Grantee had been at the date of the making of said lease the
owner of a similar undivided interest in and to the Property and Grantee one of
the lessors therein.
Grantor agrees to execute such further assurances as may be requisite for
the full and complete enjoyment of the rights herein granted.
TO HAVE AND TO HOLD the Property with all and singular the rights,
privileges and appurtenances thereunder or in any wise belonging to the said
Grantee, its successors and assigns forever, and Grantor does hereby bind
itself, its successors and assigns to warrant and forever defend all and
singular the Property unto Grantee, its successors and assigns against every
person whomsoever lawfully claiming or to claim the same or any part thereof by,
through and under Grantor, but not otherwise.
THIS CONVEYANCE SHALL BE WITHOUT ANY WARRANTY OR REPRESENTATION OF TITLE,
EITHER EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, SAVE AND EXCEPT THE FOREGOING
SPECIAL WARRANTY OF TITLE AGAINST ENCUMBRANCES BY, THROUGH OR UNDER GRANTOR AND
FURTHER PROVIDED THAT NOTHING HEREIN SHALL BE DEEMED TO IMPAIR ANY RIGHTS OF
GRANTEE UNDER ANY REPRESENTATION MADE IN ARTICLE IV OF THAT CERTAIN AGREEMENT
FOR PURCHASE AND SALE BETWEEN GRANTOR AND GRANTEE DATED _______________________,
2000 (THE "AGREEMENT"). THIS CONVEYANCE SHALL BE WITHOUT ANY EXPRESS, IMPLIED,
STATUTORY OR OTHER WARRANTY OR REPRESENTATION AS TO THE CONDITION, QUANTITY,
QUALITY, FITNESS FOR A PARTICULAR PURPOSE, FREEDOM FROM PROHIBITORY VICES OR
DEFECTS, CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OR MERCHANTABILITY OF
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EXHIBIT C Page 11 of 18
ANY OF THE EQUIPMENT OR ITS FITNESS FOR ANY PURPOSE AND WITHOUT ANY OTHER
EXPRESS, IMPLIED, STATUTORY OR OTHER WARRANTY OR REPRESENTATION WHATSOEVER.
GRANTEE HAS INSPECTED OR WAIVED ITS RIGHT TO INSPECT THE PROPERTIES FOR ALL
PURPOSES AND SATISFIED ITSELF AS TO THEIR PHYSICAL CONDITION, BOTH SURFACE AND
SUBSURFACE, INCLUDING, BUT NOT LIMITED TO, CONDITIONS SPECIFICALLY RELATED TO
THE CONDITION OF ANY WELL CASE, TUBING OR DOWNHOLE EQUIPMENT. GRANTEE IS RELYING
SOLELY UPON ITS OWN INSPECTION OF THE PROPERTIES, AND GRANTEE ACCEPTS ALL OF THE
SAME IN THEIR "AS IS, WHERE IS" CONDITION. IN ADDITION, GRANTOR MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE
ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION
OR MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO GRANTOR
OR GRANTEE IN CONNECTION WITH THE AGREEMENT INCLUDING, WITHOUT LIMITATION, ANY
DESCRIPTION OF THE PROPERTIES, PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OF
HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE PROPERTIES OR THE ABILITY OR
POTENTIAL OF THE PROPERTIES TO PRODUCE HYDROCARBONS OR ANY OTHER MATTERS
CONTAINED IN THE PROPRIETARY DATA OR ANY OTHER MATERIALS FURNISHED OR MADE
AVAILABLE TO GRANTEE BY GRANTOR OR BY GRANTOR'S AGENTS OR REPRESENTATIVES, ANY
AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION AND OTHER
MATERIALS FURNISHED BY GRANTOR OR OTHERWISE MADE AVAILABLE TO GRANTEE ARE
PROVIDED GRANTEE AS A CONVENIENCE AND SHALL NOT CREATE OR GIVE RISE TO ANY
LIABILITY OF OR AGAINST GRANTOR, ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT
GRANTEE'S SOLE RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW.
THE PROPERTIES HAVE BEEN USED FOR OIL AND GAS DRILLING AND PRODUCING
OPERATIONS RELATED TO OIL FIELD OPERATIONS. PHYSICAL CHANGES IN THE PROPERTIES
MAY HAVE OCCURRED AS A RESULT OF SUCH USES. THE PROPERTIES ALSO MAY CONTAIN
BURIED PIPELINES AND OTHER EQUIPMENT, WHETHER OR NOT OF A SIMILAR NATURE THE
LOCATIONS OF WHICH MAY NOT NOW BE KNOWN BY GRANTOR OR BE READILY APPARENT BY A
PHYSICAL INSPECTION OF THE PROPERTIES. GRANTEE UNDERSTANDS THAT GRANTOR ODES NOT
HAVE THE REQUISITE INFORMATION WITH WHICH TO DETERMINE THE EXACT NATURE OR
CONDITION OF THE PROPERTIES OR THE EFFECT ANY SUCH USE HAS HAD ON THE PHYSICAL
CONDITION OF THE PROPERTIES. GRANTEE ACKNOWLEDGES THAT: (I) IT IS KNOWLEDGEABLE
IN THE OIL AND GAS BUSINESS; (II) IT HAS BEEN AFFORDED AN OPPORTUNITY TO (A)
EXAMINE THE PROPERTIES AND SUCH MATERIALS AS IT HAS REQUESTED TO BE PROVIDED TO
IT BY GRANTOR; (B) DISCUSS WITH REPRESENTATIVES OF GRANTOR SUCH MATERIALS AND
THE NATURE AND OPERATION OF THE PROPERTIES AND (C) INVESTIGATE THE CONDITION,
INCLUDING SUBSURFACE CONDITION OF THE PROPERTIES AND THE CONDITION OF THE
EQUIPMENT; (III) IT HAS ENTERED INTO THIS AGREEMENT TO PURCHASE THE PROPERTIES
ON THE BASIS OF ITS OWN INVESTIGATION OF THE
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EXHIBIT C Page 12 of 18
PHYSICAL CONDITION; (IV) THE PROPERTIES HAVE BEEN USED IN THE MANNER AND FOR
THE PURPOSES SET FORTH ABOVE AND THAT PHYSICAL CHANGES TO THE PROPERTIES MAY
HAVE OCCURRED AS A RESULT OF SUCH USE; AND (V) IN ENTERING INTO THE AGREEMENT
TO PURCHASE THE PROPERTIES, GRANTEE HAS RELIED SOLELY ON THE EXPRESS
REPRESENTATIONS AND COVENANTS OF GRANTOR IN THE AGREEMENT, ITS INDEPENDENT
INVESTIGATION OF, AND JUDGMENT WITH RESPECT TO, THE EQUIPMENT AND THE OTHER
PROPERTIES AND THE ADVICE OF ITS OWN LEGAL, TAX, ECONOMIC, ENVIRONMENTAL,
ENGINEERING, GEOLOGICAL AND GEOPHYSICAL ADVISORS AND NOT ON ANY COMMENTS OR
STATEMENTS OF ANY REPRESENTATIVES OF, OR CONSULTANTS OR ADVISORS ENGAGED BY
GRANTOR.
Executed this ____________ day of __________________________, 2000,
effective as of 7:00 a.m. local time at Las Animas County, Colorado, on
September 1, 2000 (the "Effective Time").
GRANTOR:
APACHE CANYON GAS, L.L.C.
By: KLT Gas Inc.,
Its Sole Member
By:
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
GRANTEE:
----------------------------------------
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
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EXHIBIT C Page 13 of 18
EXHIBIT C
to that Special Warranty Deed, Assignment and ▇▇▇▇ of Sale
With Reservation of Production Payment
between Apache Canyon Gas, L.L.C., Grantor
and Evergreen Resources, Inc., Grantee
PRODUCTION PAYMENT TERMS , PROVISIONS, AND CONDITIONS
ARTICLE I
TERMS AND CONDITIONS
Section 1.1 NON-OPERATING, NON-EXPENSE-BEARING INTEREST. The Production
Payment reserved hereby is a non-operating, limited-expense-bearing royalty
interest in the Subject Interests. Grantor shall hold the Production Payment
without obligation to pay any costs or expenses of drilling, completing, or
equipping, but Grantor's reserved interest shall be subject to the Deductible
Operating Expenses. Grantor shall bear no risk or cost, other than those
specified above, other than the risk of non-production and the risk of commodity
pricing. Grantee may deduct those Deductible Operating Expenses. This
reservation is of a real property interest.
Section 1.2. TERMINATION. The Production Payment shall remain in full force
and effect until 7:00 a.m. Mountain Time on the earlier of (i) the first day of
the calendar month following the redemption of the last shares of the Redeemable
Preferred Stock of Buyer issued by Evergreen Resources, Inc. to Apache Canyon
Gas, L.L.C. on September __, 2000, or (ii) January 1, 2003 (the "Termination
Time").
Upon termination of the Production Payment, all rights, titles and interests
herein reserved shall automatically terminate and vest in Grantee and Grantor
shall execute and deliver such instrument or instruments as may be necessary to
evidence the discharge and termination of the Production Payment. In the event
any individual Subject Interest (or portion thereof, as applicable) should
expire before the Termination Time and not be extended, renewed or replaced, the
Production Payment no longer shall apply to that particular Subject Interest (or
such portion thereof, as applicable), but the Production Payment shall remain in
full force and effect and undiminished as to all remaining Subject Interests
(and the remainder portion of such Subject Interest, as applicable).
Section 1.3. DELIVERY TO GRANTEE. The Production Payment Hydrocarbons shall
be delivered into the facilities of the First Transporter, to be marketed in
accordance with Section 1.9, below. As between Grantee and Grantor, Grantee
shall be in exclusive control and possession of the Production Payment
Hydrocarbons deliverable hereunder and responsible for any loss, damage or
injury caused thereby (except for physical losses of Hydrocarbons, which shall
be considered as Deductible Operating Expenses) until the same shall have been
delivered at the Delivery Point.
Section 1.4. CERTAIN LIMITATIONS. The Production Payment shall be subject
to the following provisions:
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EXHIBIT C Page 14 of 18
A. Grantor shall look solely to the Production Payment Hydrocarbons for
satisfaction and discharge of the Production Payment, and Grantee
shall not be personally liable for the payment and discharge thereof.
However, the foregoing provision shall not relieve Grantee of the
obligation to respond in damages for any breach of any of the
provisions hereof.
B. There shall not be included in the Production Payment Hydrocarbons any
Lease Use Hydrocarbons or Non-Consent Hydrocarbons; however, Grantee
shall not, without the consent of Grantor, use Hydrocarbons allocable
to the Subject Interests for the purpose of gas injection, secondary
or tertiary recovery, pressure maintenance, repressuring or cycling
operations.
Section 1.5. MEASUREMENT. Measurement of the volume and Btu content of
Production Payment Hydrocarbons delivered hereunder shall be made at the
existing metering points. Measurement of Gas shall be as determined as provided
in the First Transporter's transportation agreements and/or published tariffs.
The last previous measurement of Btu Content of Gas under the applicable
transportation agreement between Grantee and the First Transporter (corrected,
if necessary, to an actual water vapor content basis), shall be deemed to be the
Btu Content for all Gas delivered from that measurement date or adjustment
relating to Btu Content.
Section 1.6. ROYALTIES; TAXES. Grantor shall bear 18.64% of all royalties
and other burdens on production existing and affecting the Subject Interests as
of the Effective Time of the Assignment. The Production Payment shall be free of
(and without deduction therefrom of) any and all royalties and other burdens on
production created after the Effective Time of the Assignment and shall bear no
part of same; Grantee's leasehold interest shall be burdened with all such
royalties and other burdens on production created after the Effective Time, and
Grantee shall defend, indemnify and hold Grantor harmless from and against any
loss or claim with respect to any such royalties and other burdens on production
or any claim by the owners or holders of such royalties and other burdens on
production. Notwithstanding the foregoing, to the extent that Grantee holds the
underlying royalty, mineral or reversionary interest, with respect to any of the
Leases, such interests are included in Production Payment Hydrocarbons and no
deduction for such interest is permitted. Grantor shall bear and pay all Taxes
with respect to the Production Payment, and the Production Payment Hydrocarbons.
Section 1.7. ASSIGNMENT BY GRANTEE. During the term of the Production
Payment, Grantee shall not assign, sell, convey or otherwise transfer Grantee's
remaining interests in the Subject Interests or any part thereof unless Grantor
expressly consents thereto in writing, and the transferee expressly agrees to
assume and perform all of Grantee's obligations under this reservation of
Production Payment and such sale, transfer or assignment is made and accepted
expressly subject and subordinate to the Production Payment. Any purported
assignment, sale, conveyance or other transfer in contravention of the foregoing
terms shall be null and void.
Section 1.8. PROTECTION TO PURCHASERS. No pipeline company or other person
purchasing or taking or processing Production Payment Hydrocarbons shall be
required to take notice of, or to keep informed concerning, termination of the
Production Payment, until actual receipt of written notice from Grantor advising
such company or person of such termination.
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EXHIBIT C Page 15 of 18
Section 1.9. MARKETING OBLIGATION. Except as provided in the next sentence,
Assignee has the obligation to sell Gas on the same basis as Assignee sells its
Hydrocarbons; Assignee, for this purpose, is considered as including any
affiliate, parent, or subsidiary of Assignee, and any entity of which Assignee
owns 10% or more of the voting or beneficial interest. Notwithstanding the
foregoing sentence, Assignee shall deliver, out of first production of
Production Payment Hydrocarbons to NTGS, LLC, at the Forgan delivery point on
the Colorado Interstate Gas Company (or successor) pipeline, as provided for in
Exhibit "A", dated January 31, 2000, to the Gas Purchase and Sale Contract dated
April 1, 1996, Contract Number PUR00737, by and between NTGS, LLC and Assignor.
The amount of Gas to be delivered hereunder shall be the minimum amount
necessary to comply with such NTGS contract; the balance of the Production
Payment Hydrocarbons shall be marketed as provided in the first sentence. By
such delivery, Buyer does not assume any obligation to NTGS, LLC arising under
said NTGS contract. Grantee has the obligation to sell gas out of which
Grantor's Production Payment Hydrocarbons are allocated on the same basis as
Grantee sells its Hydrocarbons; Grantee, for this purpose, being considered as
including any affiliate, parent, or subsidiary of Grantee, and any entity of
which Grantee owns 10% or more of the voting or beneficial interest.
Section 1.10. SUCCESSORS AND ASSIGNS. The provisions and conditions of the
Production Payment retained in this Assignment shall run with the land and the
respective interests of Grantee and Grantor and (subject to the foregoing
restrictions in Section 1.7) shall be binding upon and inure to the benefit of
Grantee and Grantor and their respective successors and assigns. All references
herein to either Grantee or Grantor shall include their respective successors
and assigns.
ARTICLE II
DEFINITIONS
As used herein and in the exhibits hereto, the following terms shall have
the respective meanings ascribed to them below:
"British Thermal Unit" or "Btu" means the amount of energy required to
raise the temperature of one (1) pound of pure water one degree Fahrenheit
(1DEG.F.) From fifty-nine degrees Fahrenheit (59DEG.F). To sixty degrees
▇▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇.▇.) under a constant pressure of 14.73 pounds per square
inch absolute.
"Btu Content" means the Btu content determined on an actual water vapor
content basis.
"Deductible Operating Expenses" means 18.64% of 8/8ths of those costs
incurred after the Effective Time but before the Termination Time with respect
to the operation of the Leases and Lands but excluding costs incurred in the
drilling, completing, equipping, reworking or other capital costs related to
▇▇▇▇▇ on the Leases or Lands but including direct cost and expenses incurred in
production, gathering, operating, dehydration, treating, compressing,
transporting, handling and delivery of Hydrocarbons to the Delivery Point.
"Delivery Point" means the point or points in or near the field where the
Hydrocarbon is customarily delivered to the purchasers thereof.
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EXHIBIT C Page 16 of 18
"First Transporter" means the first interstate or intrastate pipeline
downstream of the Delivery Point.
"Gas" means natural gas and other gaseous hydrocarbons.
"Hydrocarbons" means Oil and Gas.
"Lands" mean all interest of Grantor in, or under the lands described in
Exhibit A and acquired in the Special Warranty Deed, Assignment and ▇▇▇▇ of
Sale, including, without limitation, mineral interests, surface use rights,
easements, rights-of-way, reversionary interests, leasehold and royalty
interests.
"Lease" means an oil and gas lease described, referred to or identified in
Exhibit A, together with any renewal or extension of such lease, and any lease
taken by or on behalf of Grantee taken or effective before the Termination Time
and covering all or any part of the Lands covered by and Lease conveyed in this
Assignment.
"Lease Use Hydrocarbons" means any Hydrocarbons which are unavoidably lost
in the production thereof or used by Grantee in conformity with good oil field
practices on the Leases or any unit to which the Leases are committed, or off
lease or off unit, for drilling, and production operations, including off lease
compression operations, conducted prudently and in good faith for the purpose of
producing Hydrocarbons from the Leases or from any unit to which the Leases are
committed, but only for so long as such Hydrocarbons are so used.
"MMBtu" means 1,000,000 British Thermal Units.
"Non-Consent Hydrocarbons" means all hydrocarbons produced during the
applicable period of recoupment or reimbursement from a subject well as to which
Grantee is a Non-Consenting party and which hydrocarbons are dedicated to the
recoupment or reimbursement of costs and expenses of the consenting party or
parties by the terms of the applicable existing third-party operating agreement,
unit agreement, contract for development, or other instrument providing for such
non-consent operations, provided such agreement, contract or instrument
qualifies as a Permitted Encumbrance, and provided that Grantee's election not
to participate in such operations is made in good faith.
"Production Payment Hydrocarbons" shall mean the Hydrocarbons attributable
to the limited royalty in the Subject Interests reserved unto Grantor pursuant
to this Assignment and ▇▇▇▇ of Sale.
"Subject Interests" or "Subject Interest" means the Leases and Lands and
the production therefrom, together with any pooled, communitized or unitized
acreage by virtue of any Lease or Lands being a part thereof, including all
production from the pool, communitized area or unit and all interests in any
▇▇▇▇▇, whether now existing or drilled hereafter, on any such Lease or Lands or
within any such pool, communitized area or unit, including, without limitation,
those ▇▇▇▇▇ described in Exhibit A, all as said interests shall be enlarged by
the discharge of any burdens or by the removal
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EXHIBIT C Page 17 of 18
of any charges or encumbrances to which any of the same may be subject at the
Effective Time, and any and all renewals and extensions of any of the same, and
expressly excluding any additional interests in the Leases (or the production
therefrom) acquired by Grantee after the Effective Time but before the
Termination Time.
"Taxes" means all ad valorem, property, occupation, gathering, pipeline
regulating, windfall profit, severance, gross production, excise and other taxes
and governmental charges and assessments imposed on the Subject Interests or the
Production Payment, including the Production Payment Hydrocarbons, other than
income taxes.
"Termination Time" is defined in Section 1.03 hereof.
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EXHIBIT C Page 18 of 18
EXHIBIT D
EXCLUDED ASSETS
All assets not pertaining to the Subject Interests identified in Exhibit
A/A-1.
All Excluded Assets, as defined in Section 1.12 of the Agreement.
The eight-inch gathering line crossing the southwest portion of the Wet
Canyon tract, as described in Exhibit A/A-1, Part II.
Easement Agreement dated September 24, 1996, by and between Trinidad
Railway, Inc. and Apache Canyon Gas, L.L.C.
Material Contracts, described in Exhibit E, to the extent that such
contracts pertain to other Excluded Assets.
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EXHIBIT D Page 1 of 1
EXHIBIT E
MATERIAL CONTRACTS
PART I - Agreements pertinent to Subject Interests received from Meridian Oil,
Inc.
Transportation Agreements
1. Picketwire Lateral - Letter Agreement dated May 17, 1994, by and between
Meridian Oil Inc. and Colorado Interstate Gas Company ("CIG"), but only as
it pertains to CIG contracts no. 33160000 and 33195000. (assignment of this
agreement is subject to CIG's tariff terms and conditions)..
The above agreement is subject to that certain Assignment of Firm Capacity
Rights dated as of August 1, 1995, by and between Meridian Oil Inc. and CNG
Energy Services.
Gas Purchase Contract
Equipment Leases
1. Compressor Lease, Unit #404724, with Compressor Systems Inc., dated ▇▇▇▇▇
▇▇, ▇▇▇▇ (▇▇▇▇) (assignment of this agreement requires the prior written
consent of CSI).
2. Compressor Lease (▇▇▇▇ booster compressor), Unit #40-7345, with Compressor
Systems Inc., dated ▇▇▇▇▇▇ ▇▇, ▇▇▇▇ (▇▇▇▇) (assignment of this agreement
requires the prior written consent of CSI).
Other Agreements
1. Electric Service Agreement, WO#98-1409, with San ▇▇▇▇▇▇▇ Electric
Association, Inc. (▇▇▇▇)
2. Purchase and Sale Agreement dated December 22, 1995, between Meridian Oil
Inc., as Seller, and ▇▇▇▇▇▇ Oil Properties, as Buyer, and all closing
documents. (▇▇▇▇)
3. Surface Damages Division Order-Hill Lease, dated July 6, 1998.
PART II - Agreements pertinent to Subject Interests received from TBI Production
Company (Primero Tract)
1. Electric Service Agreement, WO#96-1963, with San ▇▇▇▇▇▇▇ Electric
Association, Inc.
2. Surface Damage Agreement, dated May 2, 1997, with Primero Ranch Company.
3. Surface Use Agreement, dated January 31, 2000, with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
4. Purchase and Sale Agreement dated July 12, 1996, between TBI Production
Company, as Seller, and Apache Canyon Gas LLC, as Buyer.
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EXHIBIT E Page 1 of 3
5. Surface Use Agreement, dated July 13, 1997, with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
AGREEMENTS PERTINENT TO SUBJECT INTERESTS REFERENCED IN PART I AND PART II
1. Operating Agreement dated January 1, 1996, by and between ▇▇▇▇▇▇ Oil
Properties, Inc., as Operator, and Apache Canyon Gas, L.L.C. as
non-operator, under which KLT Gas Inc. assumed the obligations and rights
as Operator as of May 1, 1999.
2. Contract Operator Agreement dated December, 1999, but effective as of May
1, 1999, between GeoMet Operating Company, Inc. and KLT Gas Inc., as it
pertains to the Subject Interests KLT Gas Inc. has given notice of
termination of this agreement. (assignment of this agreement requires the
consent of GeoMet).
3. Standard Gas Compressor Equipment Master Rental and Service Agreement,
RS-000419, dated June 11, 1999, between Compressor Systems Inc. ("CSI") and
Apache Canyon Gas, L.L.C., as it pertains to compressors located on the
▇▇▇▇ and Primero tracts. (assignment of this agreement requires the consent
of CSI).
4. Gas Purchase Agreement between Apache Canyon Gas, L.L.C. and Vermejo
Minerals Corporation, dated May 21, 1999, terminating effective as of
September 23, 2000.
5. Interruptible Transportation Service Agreement, Rate Schedule TI-1,
Contract No. 36088000, dated March 1, 1996, as amended, by and between
Colorado Interstate Gas Company and Apache Canyon Gas, L.L.C. (assignment
of this agreement is subject to CIG's tariff terms and conditions).
6. Operational Balancing Agreement, Contract No. 51052000, dated June 1, 1996,
by and between Colorado Interstate Gas Company and Apache Canyon Gas,
L.L.C., as it pertains to CIG contract nos. 33160000, 33195000 and
36088000. (assignment of this agreement is subject to CIG's tariff terms
and conditions).
7. Firm Transportation Agreement, Rate TF-1, Contract No. 33160000, dated
September 1, 1998, by and between Colorado Interstate Gas Company and
Apache Canyon Gas, L.L.C.
8. Letter Agreement dated May 12, 1997, with Amoco, granting the right to
cross Amoco's Picketwire 8-inch steel sales line, as it pertains to the
Subject Interests.
9. Firm Transportation Service Agreement, Rate Schedule TF-1, Contract No.
33195000, dated November 1, 1998, by and between Colorado Interstate Gas
Company and Apache Canyon Gas, L.L.C.
10. Gas Purchase Agreement between NGTS, LLC and Apache Canyon Gas, L.L.C. as
it pertains to the Subject Interests but EXCLUDING any ▇▇▇▇▇▇ contracted
thereunder, (assignment of this agreement is subject to the consent of
NGTS).
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EXHIBIT E Page 2 of 3
WESTON
1. Purchase and Sale Agreement dated July 12, 1996, between TBI Production
Company, as Seller, and Apache Canyon Gas LLC, as Buyer.
2. Purchase and Sale Agreement dated December 22, 1995, between Meridian Oil
Inc., as Seller, and ▇▇▇▇▇▇ Oil Properties, as Buyer, and all closing
documents.
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EXHIBIT E Page 3 of 3
EXHIBIT F
AGREEMENT REGARDING WATER PERMITS
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EXHIBIT F Page 1 of 1
EXHIBIT G
AGENCY AGREEMENT FOR SPECIAL USE PERMITS
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EXHIBIT G Page 1 of 1
EXHIBIT H
PERMITTED ENCUMBRANCES / CONTRACTS WITH AFFILIATES
1. Operating Agreement dated January 1, 1996, by and between ▇▇▇▇▇▇ Oil
Properties, Inc., as Operator, and Apache Canyon Gas, L.L.C., as
non-operator, under which KLT Gas Inc. assumed the obligations and rights
as Operator as of May 1, 1999.
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EXHIBIT H Page 1 of 1
EXHIBIT I
PREFERRED STOCK AGREEMENT
AMENDMENT TO STATE TERMS OF SERIES SHARES
OF
SERIES A REDEEMABLE PREFERRED STOCK
OF
EVERGREEN RESOURCES, INC.
September ___, 2000
Pursuant to Section ▇-▇▇▇-▇▇▇ of the
Colorado Business Corporation Act
Evergreen Resources, Inc. (the "CORPORATION"), a corporation organized and
existing under the Colorado Business Corporation Act, does hereby certify that,
pursuant to authority conferred upon the Board of Directors of the Corporation
by Article 4.2 of its Amended and Restated Articles of Incorporation
(hereinafter referred to as the "ARTICLES OF INCORPORATION"), and pursuant to
the provisions of Section ▇-▇▇▇-▇▇▇ of the Colorado Business Corporation Act,
the Board of Directors, by unanimous written consent dated as of September 12,
2000, duly approved and adopted the following resolution (the "RESOLUTION"):
RESOLVED, that, pursuant to the authority vested in the Board of Directors
of the Corporation by ARTICLE 4.2 of its Articles of Incorporation, the Board of
Directors does hereby create, authorize and provide for the issuance of Series A
Redeemable Preferred Stock, $1.00 par value, with a liquidation preference of
$1,000 per share, consisting of ONE HUNDRED THOUSAND (100,000) shares, having
the designations, preferences, relative, participating, optional and other
special rights and the qualifications, limitations and restrictions thereof that
are set forth in the Articles of Incorporation and in this Resolution as
follows:
1. NUMBER OF SHARES. The shares of the initial series of preferred stock
shall be designated "Series A Redeemable Preferred Stock" (the "PREFERRED
STOCK"), and the number of shares of the Preferred Stock which may be issued
shall be ONE HUNDRED THOUSAND (100,000).
2. PREFERRED STOCK. The designations, preferences, limitations, relative
rights and privileges in respect of the Preferred Stock are as follows:
2.1 DIVIDENDS.
2.1.1 The holders of Preferred Stock shall be entitled to receive
monthly dividends, out of funds legally available therefor, accruing daily at a
rate per share (the "DIVIDEND RATE") equal to (a) prior to December 31, 2000,
$95 per annum per share, (b) after December 31, 2000, and until March 31, 2001,
$215 per annum per share and (c) after March 31, 2001, $275 per annum per share,
(said dividends to be appropriately adjusted for stock divisions, dividends,
combinations,
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EXHIBIT I Page 2 of 9
recapitalizations and reclassifications). Such dividends shall be fully
cumulative, prior and in preference to any declaration or payment of any
dividend or other distribution on any other class or series of capital stock of
the Corporation but shall be payable only when, as and if declared by the Board
of Directors of the Corporation out of funds legally available for the payment
of dividends. Payments of dividends shall be made in arrears, provided, however,
that all accrued but unpaid dividends on the Preferred Stock must be paid, in
arrears, in cash, before payment of any cash dividends on any other series or
class of capital stock of the Corporation.
Monthly dividend periods (each a "MONTHLY DIVIDEND PERIOD") shall commence
on the first day of each month, in each year, except that the first Monthly
Dividend Period shall commence on September 1, 2000, and shall end on and
include the day immediately preceding the first day of the next Monthly Dividend
Period. Dividends on the shares of Preferred Stock shall be payable on the last
day of each month (a "DIVIDEND PAYMENT DATE"), commencing October 31, 2000;
provided, however, that no obligation to pay a dividend shall exist until such
dividends are declared by the Board of Directors. Each such dividend shall be
paid to the holders of record of the Preferred Stock as they shall appear on the
stock register of the Corporation on such record date, not exceeding thirty (30)
days preceding such Dividend Payment Date, as shall be fixed by the Board of
Directors of the Corporation or a duly authorized committee thereof.
If, on any Dividend Payment Date, all accrued and unpaid dividends provided
for in this SECTION 2.1 are not paid to the holders of the Preferred Stock
(whether declared or undeclared), then such dividends shall cumulate with
additional dividends thereon, compounded monthly, at the dividend rate
applicable to the Preferred Stock as provided in this SECTION 2.1, for each
succeeding full Monthly Dividend Period during which such dividends shall remain
unpaid.
Notwithstanding anything to the contrary in this Resolution, in the event
any redemption or liquidation occurs as of a date other than on a Dividend
Payment Date, the holder of Preferred Stock shall be paid, out of funds legally
available therefor, a pro rata dividend equal to the dividend payable for that
Monthly Dividend Period multiplied by a fraction, the numerator of which is the
number of days that have elapsed since the last Dividend Payment Date and the
denominator of which is the number of days in the Monthly Dividend Period in
which the redemption or liquidation occurs. For this purpose, and all other
calculations of dividends hereunder, each year shall be deemed to consist of 360
days.
2.1.2 The amount of any dividends accrued on any share of the Preferred
Stock on any Dividend Payment Date shall be deemed to be the amount of any
unpaid dividends accumulated thereon to and including such Dividend Payment
Date, whether or not earned or declared. The amount of dividends accrued on any
share of the Preferred Stock on any date other than a Dividend Payment Date
shall be deemed to be the sum of (i) the amount of any unpaid dividends
accumulated thereon to and including the last preceding Dividend Payment Date,
whether or not earned or declared, and (ii) an amount determined by multiplying
(x) the dividend payable for the Monthly Dividend Period during which such date
falls by (y) a fraction, the numerator of which shall be the number of days from
the last preceding Dividend Payment Date to and including the date on which such
calculation is made and the denominator of which shall be the full number of
days in such Monthly Dividend Period.
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EXHIBIT I Page 3 of 9
2.1.3 Immediately prior to authorizing or making any distribution in
redemption or liquidation with respect to the Preferred Stock (other than a
purchase or acquisition of Preferred Stock pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding Preferred Stock), the
Board of Directors shall, to the extent of any funds legally available therefor,
declare a dividend in cash on the Preferred Stock payable on the distribution
date in an amount equal to any accrued and unpaid dividends on the Preferred
Stock as of such date.
2.1.4 Except as provided under SUBSECTION 2.1.5, the Corporation shall not
declare or pay any dividend or make any other distribution on any shares of
Parity Stock or Junior Stock (other than dividends payable in Parity Stock or
Junior Stock, as the case may be, to holders thereof) or purchase, redeem or
otherwise acquire for consideration any shares of Parity Stock or Junior Stock,
unless all aggregate accrued dividends on all outstanding shares of Preferred
Stock shall have been paid for all past periods.
2.1.5 If any dividends shall have been declared but not paid in full or
funds set apart for payment in full on the payment date for such dividends on
the outstanding shares of the Preferred Stock and any Parity Stock that is equal
in rank as to dividends, then, to the extent any dividends are thereafter paid
or set apart for payment on the outstanding shares of the Preferred Stock or
such Parity Stock, the money for such payment or so set aside shall be shared
ratably by the holders of the outstanding shares of the Preferred Stock and the
holders of the outstanding Parity Stock in proportion to the respective unpaid
dividends.
2.2 VOTING RIGHTS.
2.2.1 The holders of Preferred Stock shall have no voting rights
whatsoever, except as set forth below in SUBSECTIONS 2.2.2 AND 2.2.3 or as
otherwise existing under applicable law.
2.2.2 So long as any shares of Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval (by vote or written
consent) of the holders of at least a majority of the shares of Preferred Stock
then outstanding, voting as a separate class, take any action to:
2.2.2.1 approve an agreement or plan of merger or consolidation
or conversion under which the Corporation is to merge or consolidate with or
into any other corporation or convert into any other business entity, if such
merger, consolidation or conversion would require the approval of the holders of
the Common Stock under applicable state law or the rules of the New York Stock
Exchange, Inc.;
2.2.2.2 approve any sale or transfer of all or substantially all
of the assets of the Corporation;
2.2.2.3 create, authorize or issue any share of any series or
class of Prior Stock or Parity Stock, including the issuance of any debt
securities, stock or other security convertible into any class or series of
Prior Stock or Parity Stock;
2.2.2.4 repurchase, redeem or retire any shares of Preferred
Stock or Parity Stock except pursuant to any provision of this Resolution;
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EXHIBIT I Page 4 of 9
2.2.2.5 repurchase, redeem or retire any shares of Common Stock
or Junior Stock;
2.2.2.6 amend, alter or repeal any of the provisions of the
Articles of Incorporation or this Resolution, if such amendment, alteration or
repeal would adversely affect any privilege, preference, right or power of the
Preferred Stock or the holders thereof;
2.2.2.7 increase or decrease the authorized number of shares of
Preferred Stock;
2.2.2.8 authorize or pay any dividend or other distribution
(other than dividends payable to the holders of Preferred Stock as contemplated
by SUBSECTION 2.1.1 with respect to the Preferred Stock or the Common Stock; or
2.2.2.9 incur any Indebtedness other than pursuant to the Current
Bank Facility; PROVIDED, HOWEVER, that the Corporation shall be permitted, at
its option, to increase its Indebtedness under the Current Bank Facility to up
to an aggregate of $200,000,0000 without the approval of the holders of the
Preferred Stock as provided herein.
2.2.3 In addition to the special voting rights provided in SUBSECTIONS
2.2.2 above, the holders of the Preferred Stock shall also have the right to
vote as a separate class on any matter if required by the Colorado Business
Corporation Act or any successor statute.
2.3 LIQUIDATION RIGHTS.
2.3.1 In the event of a Liquidation, the holders of Preferred Stock
shall be entitled to receive, out of the assets of the Corporation legally
available for distribution to stockholders and before any payment shall be made
or any assets distributed to the holders of Junior Stock, an amount per share
equal to the sum in cash of (i) $1,000 (the "LIQUIDATION PREFERENCE"), plus (ii)
on a per share basis, an amount equal to all dividends, if any, accumulated and
unpaid, whether or not declared or earned, as of the date of the final
distribution to the holders of the Preferred Stock. If the Corporation at any
time after the Issuance Date effects a subdivision of the outstanding Preferred
Stock, the Liquidation Preference for the Preferred Stock in effect immediately
before the subdivision shall be proportionately decreased, and conversely, if
the Corporation at any time after the Issuance Date effects a combination of the
Preferred Stock, the Liquidation Preference for the Preferred Stock in effect
immediately before the combination shall be proportionately increased. Any such
adjustment to the Liquidation Preference shall become effective at the time the
subdivision or combination becomes effective.
2.3.2 After payment to the holders of Preferred Stock of the amounts
set forth in SUBSECTION 2.3.1 above and the simultaneous payment of all amounts
owning to holders of Parity Stock, if any, the remaining assets of the
Corporation shall first be distributed to the holders of all Junior Stock in
accordance with the Articles of Incorporation, and then the holders of the
Corporation's Common Stock shall be entitled to share in all of the remaining
assets and funds of the Corporation ratably in proportion to the number of
shares of Common Stock then outstanding.
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EXHIBIT I Page 5 of 9
2.3.3 If, upon any Liquidation, the assets to be distributed among the
holders of Preferred Stock and any Parity Stock that is of equal rank as to
distributions of assets shall be insufficient to permit payment to such holders
of the full amounts to which they shall be entitled, the holders of Preferred
Stock and such Parity Stock shall share ratably in any such distribution of
assets in accordance with the percentage which would be payable if all such
amounts were paid in full.
2.3.4 The Corporation shall provide written notice to each holder of
Preferred Stock at least 20 days prior to any event of Liquidation or a Change
of Control.
2.3.5 For purposes of this SECTION 2.3, the holders of a majority of
the Preferred Stock may elect to have treated as a Liquidation: (i) the
consolidation or merger of the Corporation with or into any other corporation or
any other reorganization of the Corporation, unless the stockholders of the
Corporation immediately prior to any such transaction are holders of a majority
of the voting securities of the surviving or acquiring corporation immediately
thereafter (and for purposes of this calculation equity securities which any
stockholder or the Corporation owned immediately prior to such merger or
consolidation as a stockholder of another party to the transaction shall be
disregarded); or (ii) the sale or other transfer in a single transaction or a
series of related transactions of all or substantially all of the assets of the
Corporation.
2.4 REDEMPTION.
2.4.1 OPTIONAL REDEMPTION. The Corporation may, by written notice to
holders of the Preferred Stock, redeem all such shares for an amount per share
equal to (x) the Liquidation Preference, plus (y) on a per share basis, an
amount equal to all dividends, if any, accumulated and unpaid whether or not
declared or earned (including any dividends therein calculated through the date
of redemption). Such notices shall specify the date of the redemption, which
shall be not more than five business days after receipt of the notice.
2.4.2 MANDATORY REDEMPTION AT ELECTION OF PREFERRED STOCK. From and
after the earlier of (i) June 30, 2001 and (ii) consummation of an Approved
Offering, the Corporation shall be obligated to redeem and shall promptly redeem
all of the shares of Preferred Stock, upon written request by the holders of a
majority of the issued and outstanding shares of Preferred Stock, for an amount
per share equal to (x) the Liquidation Preference, plus (y) on a per share
basis, an amount equal to all dividends, if any, accumulated and unpaid, whether
or not declared or earned (including any dividends thereon calculated through
the date of redemption) (the "MANDATORY REDEMPTION OBLIGATION"). Payment in full
of the Mandatory Redemption Obligation shall be due and payable within five
business days of receipt of the redemption request.
2.4.3 FAILURE TO MAKE PAYMENT. If and so long as the Mandatory
Redemption Obligation with respect to Preferred Stock shall not fully be
discharged, the Corporation shall not, directly or indirectly, declare or pay
any dividend or make any distributions on, or purchase, redeem or retire, or
satisfy any mandatory or optional redemption, sinking fund or other similar
obligation in respect of, any Parity Stock or Junior Stock or warrants, rights
or options exercisable for any such Parity Stock or Junior Stock (other than
dividends or distributions payable in a particular class or series of such
Parity Stock or Junior Stock, as the case may be, to holders thereof), except
that the Corporation may redeem Parity Stock that is also subject to mandatory
redemption provisions at
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EXHIBIT I Page 6 of 9
such time on a pro rata basis with any required redemption of the Preferred
Stock based on the relative required redemption payment amounts.
2.5 CERTAIN DEFINITIONS. For purposes of this Resolution, the following
terms have the following meanings:
"APPROVED OFFERING" shall mean the consummation of an underwritten
public offering of Common Stock of the Corporation pursuant to a
registration statement filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (or any successor provision),
with a concurrent listing on the New York Stock Exchange, the American
Stock Exchange, or the Nasdaq Stock Market, Inc. that results in gross
proceeds to the Corporation (before deduction of underwriting discounts and
expenses of sale) of not less than $20,000,000.
"COMMON STOCK" shall mean, the common stock, no par value, of the
Corporation.
"CURRENT BANK FACILITY" shall mean the First Amendment to Amended and
Restated Credit Agreement dated effective as of September 15, 2000 by and
among Hibernia National Bank, BNP-Paribas, ▇▇▇▇▇ Fargo Bank Texas, NA, Bank
One, NA, Fleet National Bank, Bank of Scotland and the Corporation, as
amended from time to time.
"ISSUANCE DATE" shall mean the actual initial date of issuance of the
Preferred Stock.
"INDEBTEDNESS" shall mean with respect to any person, without
duplication, (i) all liabilities of such person for borrowed money
(including overdrafts), excluding any trade payables and other accrued
current liabilities arising in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of
such person in connection with any letters of credit and acceptances issued
under letter of credit facilities, acceptance facilities or other similar
facilities, (ii) all obligations of such person evidenced by bonds, notes,
debentures or other similar instruments, (iii) all Indebtedness referred to
in clauses (i) and (ii) above of other persons and all dividends of other
persons, the payment of which is secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any lien, upon or with respect to property (including, without
limitation, accounts and contract rights) owned by such person, even though
such person has not assumed or become liable for the payment of such
Indebtedness, (iv) all guaranteed debt of such person, (v) all redeemable
capital stock valued at the greater of its voluntary or involuntary maximum
fixed repurchase price plus accrued and unpaid dividends, and (vi) any
amendment, supplement, modification, deferral, renewal, extension,
refunding or refinancing of any liability of the types referred to in
clauses (i) through (v) above.
"JUNIOR STOCK" shall mean all Common Stock and all other shares of
stock of any other class of the Corporation, whether or not presently
authorized, ranking as to redemption, payment of dividends or distribution
of assets junior to the Preferred Stock.
"LIQUIDATION" shall mean any voluntary and involuntary liquidation,
dissolution or winding up of the Corporation (including without limitation
a liquidation or reorganization
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EXHIBIT I Page 7 of 9
under Chapter 11 of the United States Bankruptcy Code, as amended and as
may hereinafter be amended).
"PARITY STOCK" shall mean all stock of the Corporation, whether or not
presently authorized, ranking, as to redemption, payment of dividends or
distribution of assets, on a parity with the Preferred Stock.
"PRIOR STOCK" shall mean all stock of the Corporation ranking, as to
redemption, conversion, payment of dividends or distribution of assets,
prior to the Preferred Stock.
2.6 PROHIBITION AGAINST REISSUANCE OF SHARES OF PREFERRED STOCK. Any
shares of Preferred Stock that are repurchased or otherwise acquired by the
Corporation may not be reissued by the Corporation.
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EXHIBIT I Page 8 of 9
IN WITNESS WHEREOF, and in accordance with Section ▇-▇▇▇-▇▇▇ of the
Colorado Business Corporation Act, the undersigned has executed this Amendment
to State Terms of Series Shares as of the date first above written.
EVERGREEN RESOURCES, INC.
By:
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Name:
--------------------------------
Title:
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EXHIBIT I Page 9 of 9
EXHIBIT J
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is entered into
effective as of September __, 2000, by and between Evergreen Resources, Inc., a
Colorado corporation (the "COMPANY") and Apache Canyon Gas, LLC, a Delaware
limited liability company ("ACG").
W I T N E S S E T H:
WHEREAS, in connection with the Agreement for Purchase and Sale dated as of
September ___, 2000, as may be subsequently amended, modified, supplemented or
restated (the "Purchase and Sale Agreement") by and between the Company and ACG,
ACG has agreed to purchase certain shares of the common stock, no par value, of
the Company.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned parties hereto
agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the following respective meanings:
(a) "COMMON STOCK" shall mean the Company's common stock, no par
value, as authorized on the date of this Agreement or class of common stock
issued in exchange therefor.
(b) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
(c) "HOLDER" shall mean a holder of Registrable Shares provided that
anyone who acquires any Registrable Shares in a distribution pursuant to a
Registration Statement filed by the Company under the Securities Act shall
not thereby be deemed to be a Holder.
(d) "INDEMNIFIED PARTY" has the meaning set forth in Section 6.3.
(e) "INDEMNIFYING PARTY" has the meaning set forth in Section 6.3.
(f) "NASD" means the National Association of Securities Dealers, Inc.
(g) "PERSON" shall mean an individual, a corporation, a partnership,
a limited liability company, a joint venture, a trust, an estate, an
unincorporated organization, a government or any agency or political
subdivision thereof.
(h) "REGISTRATION EXPENSES" means all expenses (excluding
underwriters' discounts and commissions, and excluding expenses of special
counsel for any Holders selling Registrable
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EXHIBIT J Page 1 of 11
Shares in excess of $15,000) incident to the Company's performance of or
compliance with this Agreement, including all registration and filing fees,
fees with respect to filings required to be made with any stock exchange or
the NASD, fees and expenses of compliance with state securities or blue sky
laws (including reasonable fees and disbursements of counsel in connection
with blue sky qualifications of the Registrable Shares), messenger,
telephone and delivery expenses, costs of printing prospectuses, fees and
expenses of all independent certified public accountants of the Company
(including the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), the fees and expenses of
counsel for the Company, and the fees and expenses of the legal counsel of
the Holders selling Registrable Shares up to $15,000.
(i) "REGISTRABLE SHARES" shall mean the number of shares of Common
Stock purchased by ACG from the Company pursuant to Section 3.1(a) of the
Purchase and Sale Agreement, as well as the shares of Common Stock issuable
pursuant to Section 3.1(c) of the Purchase and Sale Agreement, if such
shares are in fact subsequently issued pursuant thereto.
(j) "REGISTRATION STATEMENT" means any registration statement of the
Company which includes any of the Registrable Shares pursuant to this
Agreement, including the prospectus included or deemed included in the
Registration Statement and all amendments and supplements to the
Registration Statement or the prospectus, including post-effective
amendments, and all exhibits to, and all materials incorporated by
reference in, such registration statement.
(k) "RULE 144" means Rule 144 promulgated under the Securities Act or
any successor provision.
(l) "SEC" means the United States Securities and Exchange Commission
or any similar agency then having the authority to enforce the Exchange Act
or the Securities Act.
(m) "SECTION 6.1 INDEMNITEE" has the meaning set forth in Section 6.1
hereof.
(n) "SECTION 6.2 INDEMNITEE" has the meaning set forth in Section 6.2
hereof.
(o) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
2. REGISTRATION UNDER SECURITIES ACT; DEMAND REGISTRATION.
2.1. DEMAND FOR REGISTRATION. Subject to the terms of this Section 2,
on or after April 1, 2001, ACG may request by written notice that the Company
effect the registration (the "INITIAL DEMAND REGISTRATION DATE") under the
Securities Act of all or any portion of the Registrable Shares. Upon receipt of
such request, the Company shall use its commercially reasonable efforts to (A)
file within 45 days all documentation with the SEC necessary to effect such
registration, and (B) promptly effect such registration; PROVIDED, HOWEVER, that
if the Company shall furnish to ACG a certificate signed by the President of the
Company stating that in his good faith judgment it would be detrimental to the
Company for such registration statement to be filed at the date filing would be
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EXHIBIT J Page 2 of 11
required hereunder and it is therefore essential to defer the filing of such
registration statement, the Company shall have an additional period of not more
than 45 days within which to file such registration (PROVIDED, FURTHER, that
such filing may not be deferred for more than a total of 45 days during any
six-month period).
2.2. LIMITATIONS ON COMPANY'S OBLIGATION. Except as set forth below,
the Company is obligated to effect only one (1) registration pursuant to this
Section 2, and thereafter the Company shall have no obligation to include any
Registrable Shares in any registration pursuant to this Section 2; PROVIDED,
HOWEVER, that any registration proceeding begun pursuant to this Section 2 that
is subsequently withdrawn at the request of ACG shall not count as the one (1)
registration which ACG has the right to cause the Company to effect pursuant to
this Section.
3. REGISTRATION UNDER THE SECURITIES ACT; PIGGY-BACK REGISTRATION.
3.1. PIGGY-BACK REGISTRATION. If at any time the Company proposes to
register on its own initiative any of its capital stock under the Securities Act
in connection with the public offering of such securities on a form and in a
manner that would permit registration of Shares for sale to the public under the
Securities Act, then:
(a) the Company shall notify ACG of its intention to effect such
a registration at least 10 days prior to the proposed filing of a
Registration Statement in connection therewith;
(b) the Company shall offer ACG the opportunity to include in
such registration all or such lesser amount of such ACG's Registrable
Shares. Upon the request of ACG given in writing within 10 days after
receipt of the notice described under Section 3.1(a) above, the Company,
subject to the provisions of Section 3.1(c), shall cause the Registrable
Shares specified by ACG to be included in the Registration Statement; and
(c) if the registration of which the Company gives written
notice under Section 3.1(a) above involves an underwriting, the Company
shall use its reasonable efforts to cause the managing underwriters of the
proposed underwritten offering to permit ACG to include the Registrable
Shares in the underwriting on the same terms and conditions as are
applicable to the securities of the Company included therein.
3.2. UNDERWRITTEN OFFER. If the registration of which the Company
gives written notice under Section 3.1(a) involves an underwriting, the Company
shall so advise in such written notice. In such event the right of ACG to
registration pursuant to Section 3.1 hereof shall be conditioned upon such ACG's
participation in such underwriting and the inclusion of such ACG's Registrable
Shares in such underwriting, subject to the provisions of Section 3.1(c). ACG
shall together with the Company shall participate in the underwriting by
entering, at the request of the underwriter or underwriters selected for such
underwriting by the Company, into an underwriting agreement in their customary
form.
4. FILING OBLIGATIONS OF THE COMPANY.
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EXHIBIT J Page 3 of 11
In connection with any registration of the Registrable Shares effected
pursuant to Sections 2 or 3, the Company shall:
(a) prepare and file the Registration Statement and such amendments
and supplements to the Registration Statement and the prospectus or
offering circular used in connection therewith as may be necessary to keep
the registration statement current and effective until such time as all of
such Registrable Shares covered by such Registration Statement have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement, but, in
no event for a period of more than eighteen (18) months after such
Registration Statement becomes effective, and to comply with the provisions
of the Securities Act and the rules and regulations thereunder with respect
to the disposition of all the Registrable Shares covered by the
Registration Statement for the period required to effect the distribution
thereof, and to use its best efforts to make any corrections or updates to
the registration statement or prospectus as promptly as practicable;
(b) furnish to ACG such number of copies of any prospectus or
offering circular, including a preliminary prospectus, and of a full
registration statement and exhibits in conformity with the requirements of
the Securities Act and rules and regulations thereunder, and each amendment
and supplement thereto, and such other documents as ACG may reasonably
request in order to facilitate the disposition of such securities;
(c) use its best efforts to register or qualify the Registrable
Shares covered by the registration statement under the securities or blue
sky laws of such jurisdictions of the United States (including territories
and commonwealths thereof) as ACG may reasonably request, and accomplish
any and all other acts and things which may be necessary or advisable to
permit sales in such jurisdictions of such Registrable Shares; PROVIDED,
HOWEVER, that the Company shall not be required to keep such registration
or qualification in effect for a period of more than eighteen (18) months
after such registration or qualification becomes effective; and PROVIDED
FURTHER, that the Company shall not be required to consent to general
service of process for all purposes, or to qualify as a foreign
corporation, in any jurisdiction where it is not then qualified or to
register or qualify the Registrable Shares covered by such registration
statement in any jurisdiction which would require the Company to amend its
Articles of Incorporation or Bylaws or covenant or undertake to do any
other act or make any other change regarding its capitalization or share
ownership prior to the effectiveness of such registration or qualification;
(d) if such registration is an underwritten offering, enter into an
underwriting agreement in form and substance customary under the
circumstances;
(e) upon request of ACG:
(i) furnish to ACG a copy, addressed to ACG (and the
underwriters, if any), of an opinion of counsel for the Company, dated
the effective date of such Registration Statement covering the matters
that are customarily covered in opinions of issuer's counsel delivered
in similar registrations; and
(ii) in the event the registration to be effected is
underwritten, use commercially
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EXHIBIT J Page 4 of 11
reasonable efforts to furnish to ACG a copy, addressed to ACG and the
underwriters, of a "comfort" letter, dated the effective date of such
Registration Statement, signed by the independent public accountants
who have audited the Company's financial statements included in such
registration statement, covering substantially the same matters with
respect to such registration statement (and the prospectus included
therein) and, in the case of the accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in accountants' letters delivered to the
underwriters in an underwritten offering;
(f) notify ACG, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were
made, in which case ACG shall immediately cease the offer and sale of
Registrable Shares pursuant thereto; and at the request of ACG, prepare and
furnish to such seller within a commercially reasonable time in light of
the specific circumstances (not to exceed 45 days) a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an 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 in the
light of the circumstances under which they were made;
(g) apply for listing and use its reasonable efforts to list the
Shares, if any, being registered on any national securities exchange on
which a class of the Company's equity securities is listed (and to maintain
such listing during the pendency of the relevant registration period) or,
if the Company does not have a class of equity securities listed on a
national securities exchange, apply for qualification and use its
reasonable efforts to qualify the Shares, if any, being registered for
inclusion on the automated quotation system of the NASD (and to maintain
such qualification during the pendency of the relevant registration
period); and
(h) make reasonably available appropriate management-level employees
to assist in customary due diligence and marketing activities incident to
such registration.
5. EXPENSES. Except as otherwise provided herein, the Company shall bear
and pay all Registration Expenses incurred in effecting a registration under
this Agreement.
6. INDEMNIFICATION.
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EXHIBIT J Page 5 of 11
6.1. INDEMNIFICATION BY THE COMPANY. To the extent permitted by
applicable law, the Company will indemnify ACG and each underwriter of the
securities so registered and each Person who controls such underwriter, and
their respective officers, directors, partners, agents, employees and
successors (each a "SECTION 6.1 INDEMNITEE"), against all costs, expenses,
demands, claims, losses, damages, liabilities, fines and penalties (or
actions in respect thereof), joint or several, to which such Section 6.1
Indemnitee may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such claims, losses, damages, liabilities, fines and
penalties arise out of or are based on any untrue statement (or alleged
untrue statement) of a material fact contained in any Registration
Statement or prospectus included therein, or arise out of or are based upon
any omission (or alleged omission) to state therein a fact required to be
stated therein or necessary to make the statements therein not misleading,
or any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state
securities law, and will reimburse each such Section 6.1 Indemnitee for
(and will make periodic advances to cover) any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
demand, claim, loss, damage, liability or action promptly after submission
of supporting materials with respect to such expenses; PROVIDED, HOWEVER,
that the Company shall not be required to indemnify any Section 6.1
Indemnitee for any cost, expense, demand, claim, loss, damage, liability,
fine or penalty which arises out of or is based upon any written
information provided by any such Section 6.1 Indemnitee expressly for
inclusion in the Registration Statement.
6.2. INDEMNIFICATION BY HOLDER. To the extent permitted by applicable
law, ACG will indemnify the Company, each of its officers, directors,
employees, agents, successors and controlling persons (within the meaning
of Section 15 of the Exchange Act) and each underwriter of the securities
so registered and each Person who controls such underwriter (each a
"SECTION 6.2 INDEMNITEE"), against all costs, expenses, demands, claims,
losses, damages, liabilities, fines and penalties (or actions in respect
thereof), joint or several, to which each such Section 6.2 Indemnitee may
become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities arise out of or are
based upon an untrue statement (or alleged untrue statement) of a material
fact contained in any Registration Statement or prospectus, or arise out of
or are based upon the omission (or alleged omission) to state therein a
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) was made in any Registration Statement or prospectus in
reliance upon and in conformity with written information furnished to the
Company by ACG requesting or joining in a registration specifically for use
in the preparation thereof; provided, however, that (i) the obligations of
ACG hereunder shall be limited to an amount equal to the proceeds of
Registrable Shares which ACG received in connection with such registration,
and (ii) ACG shall not be required to indemnify any Section 6.2 Indemnitee
for any cost, expense, demand, claim, loss, damage, liability, fine or
penalty which arises out of or is based upon any written information
provided by any such Section 6.2 Indemnitee expressly for inclusion in the
Registration Statement.
6.3. INDEMNIFICATION PROCEDURE. Each party entitled to indemnification
under this Section 6 (the "INDEMNIFIED PARTY") shall give notice to the
party required to provide indemnification (the "INDEMNIFYING PARTY")
promptly after such Indemnified Party has received written notice of any
claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided such
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EXHIBIT J Page 6 of 11
counsel for the Indemnifying Party, who shall conduct the defense of such
claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld or delayed). The Indemnified
Party may participate in such defense at such Indemnified Party's expense;
provided, however, that the Indemnifying Party shall bear the expense of
such defense of the Indemnified Party if (i) the Indemnifying Party has
agreed in writing to pay such expenses, (ii) the Indemnifying Party shall
have failed to assume the defense of such claim or employ counsel
reasonably satisfactory to the Indemnified Party, or (iii) in the
reasonable judgment of the Indemnified Party, based upon the written advice
of such Indemnified Party's counsel, representation of both parties by the
same counsel would be inappropriate due to actual or potential conflicts of
interest. The Indemnified Party shall not make any settlement without the
prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. The failure of any Indemnified Party to
give notice as provided herein shall relieve the Indemnifying Party of its
obligations under this Section only to the extent that such failure to give
notice shall materially adversely prejudice the Indemnifying Party in the
defense of any such claim or any such litigation. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the prior
written consent of each Indemnified Party, consent to entry of any judgment
or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified
Party of a release from all liability in respect to such claim or
litigation in form and substance reasonably satisfactory to such
Indemnified Party.
7. CONTRIBUTION.
7.1 INDEMNIFICATION UNAVAILABLE OR UNENFORCEABLE. If the
indemnification provided for in Section 6 hereof from the Indemnifying
Party is unavailable to or unenforceable by the Indemnified Party in
respect to any costs, fines, penalties, losses, claims, damages,
liabilities or expenses referred to herein, then the Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such costs, fines,
penalties, losses, claims damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, a
well as any other relevant equitable considerations. The relative fault of
such Indemnifying Party and Indemnified Parties shall be determined by
reference to, among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Parties,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable
by a party as a result of the costs, fines, penalties, losses, claims,
damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth herein, any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
7.2. EQUITABLE CONSIDERATION. The Company and the Holders agree that
it would not be just and equitable if contribution pursuant to this Section
7 were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to in Section 7.1. No Person guilty of fraudulent
misrepresentation (within
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EXHIBIT J Page 7 of 11
the meaning of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
7.3. FULL INDEMNIFICATION UNDER SECTION 7. If indemnification is
available under Section 6, the Indemnifying Parties shall indemnify each
Indemnified Party to the full extent provided in Section 6 without regard to the
relative fault of the Indemnifying Party or Indemnified Party or any other
equitable consideration provided for in Section 6 .
8. RULE 144 AND STOCK EXCHANGE LISTINGS. To the extent that the Company
is subject to the filing and reporting requirements of the Exchange Act, and so
long as there are Registrable Shares outstanding:
8.1. RULE 144. The Company will file the reports required to be filed
by it under the Exchange Act and the rules and regulations adopted by the SEC
thereunder, and will take such further action as ACG may reasonably request, all
to the extent required from time to time to enable ACG to sell Registrable
Shares without registration under the Securities Act within the limitation of
the exemptions provided by (i) Rule 144, as such Rule may be amended from time
to time, or (ii) any similar rule or regulation hereafter adopted by the SEC.
Upon the request of ACG, the Company will deliver to ACG a written statement as
to whether it has complied with such information and requirements.
8.2. STOCK EXCHANGE LISTINGS. The Company will use reasonable efforts
to avoid taking any action which would cause the Common Stock to cease to be
eligible for inclusion on the New York Stock Exchange or for listing on any
securities exchange on which it may become listed.
9. OBLIGATION OF ACG. ACG shall furnish to the Company such information
regarding ACG and the distribution proposed by ACG as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
10. MISCELLANEOUS.
10.1. TRANSFER OF CERTAIN RIGHT. Any transfer of Registrable Shares by
ACG to a transferee without violation of an agreement between the Company and
ACG ("PERMITTED TRANSFEREE") shall result in such Person becoming a Holder for
purposes of this Agreement. Promptly upon the Company's request and in no event
later than five (5) days thereafter, such Permitted Transferee shall execute a
written agreement provided by the Company to adopt and agree to be bound by this
Agreement; otherwise such transferee shall be deemed to have waived any
registration rights hereunder and such securities shall no longer be deemed to
be Registrable Shares.
10.2. REMEDIES. In the event of a breach by the Company of its
obligations under this Agreement, each Holder of Registrable Shares, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this
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Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
10.3. AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given without the written consent of the
Company and ACG.
10.4. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the Company, ACG, and the respective successors, assigns, heirs
and legal representatives (as the case may be) of the Company and ACG.
10.5. NOTICES. All notices or other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if delivered
personally, by facsimile, by nationally recognized overnight courier or mailed
by registered or certified mail (return receipt requested), postage prepaid, to
the parties at the following address:
(a) if to the Company, to
Evergreen Resources, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, PLLC
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
P.O. Box 10208
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to ACG, to
Apache Canyon Gas, LLC
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C.
5400 Renaissance Tower
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▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: H. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier # (▇▇▇) ▇▇▇-▇▇▇▇
The Company and ACG may change its address by notice to others in accordance
with this Section 10.5. Any such notice shall be deemed given and effective upon
the earliest to occur of (x) receipt of such facsimile at the facsimile
telephone number specified in this Section, (y) five (5) business days after
deposit in the United States mails, or (z) upon actual receipt by the party to
whom such notice is required to be given.
10.6. NO SUPERIOR OR INCONSISTENT AGREEMENTS. After the effective
date of this Agreement, the Company shall not enter into any agreement granting
registration rights more favorable to the registration rights granted to the ACG
in this Agreement without granting the same registration rights to ACG. To the
extent, if any, the registration rights granted to ACG hereunder conflict or are
inconsistent with the rights granted to any Holders of Registrable Shares under
other agreements, the provisions of this Agreement shall control.
10.7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado without regard to
the conflicts of law provisions thereof.
10.8. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Each such multiple
counterpart of this Agreement may be transmitted via facsimile or other similar
electronic means and executed by one or more of the undersigned, and a facsimile
of the signature of one or more of the undersigned shall be deemed an original
signature for all purposes and have the same force and effect as a
manually-signed original.
10.9. CONSTRUCTION. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. The terms "include", "including" and all variants thereof shall
indicate a non-exclusive example and shall be construed as if immediately
followed by the words "without limitation."
10.10. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
10.11 ENTIRE AGREEMENT. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto and
supersede all prior agreements and understandings, oral or written, among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred
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EXHIBIT J Page 10 of 11
to herein with respect to the registration rights granted by the Company with
respect to any securities now or hereafter owned by ACG.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties as
of the date first above written.
EVERGREEN RESOURCES, INC.
By:
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Name:
---------------------------------
Title:
--------------------------------
APACHE CANYON GAS, L.L.C.
By:
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Name:
---------------------------------
Title:
--------------------------------
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EXHIBIT J Page 11 of 11
EXHIBIT K
LITIGATION AND CLAIMS
▇▇. ▇▇▇▇ ▇▇▇▇▇▇ purchased the surface of certain tracts in the New Elk and
Primero Blocks in Las Animas County, Colorado. These tracts were subject to an
Agreement dated January 31, 1990, between ▇▇. ▇▇▇▇▇▇'▇ predecessor in title,
Western Oil Corporation (or Basin Resources), and Meridian Oil Inc., Seller's
predecessor in title to leases covering those tracts. The Agreement contained
certain restrictions on surface use and for the payment of specified sums for
surface damages caused by various operations on the tracts. ▇▇. ▇▇▇▇▇▇ has filed
a lawsuit against Meridian Oil Inc. based on breach of the January, 1990,
Agreement. Seller has not been served or joined in the suit, but the potential
for same exists. There is also potential, minimal continuing liability under the
Agreement if it is found that Seller's staging area or other operations exceed
the allowed number of acres or require payment under the Agreement.
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EXHIBIT K Page 1 of 1
EXHIBIT L
DISMISSAL FROM LITIGATION
[▇▇▇▇▇ is preparing]
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EXHIBIT L Page 1 of 1