<PAGE>
Total 13 Pages
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
------
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1996
------------------------------------------------
OR
_______ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from _____________________ to _____________________
Commission file number 1-13446
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Barrett Resources Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-0832476
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1515 Arapahoe Street, Tower 3, Suite 1000 Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
(303) 572-3900
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
There were 25,572,507 shares of the registrant's $.01 par value common
stock outstanding as of May 13, 1996.
<PAGE>
BARRETT RESOURCES CORPORATION
-----------------------------
INDEX
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PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Condensed Balance
Sheets - March 31, 1996 and
December 31, 1995.............................. 3
Consolidated Condensed Statements of
Income - Three Months Ended
March 31, 1996 and 1995........................ 4
Consolidated Condensed Statements of
Cash Flows - Three Months Ended
March 31, 1996 and 1995........................ 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations.................................. 8
PART II. OTHER INFORMATION
Item 5. Other Information.............................. 11
Item 6. Exhibits and Reports on Form 8-K .............. 12
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
<TABLE>
<CAPTION>
BARRETT RESOURCES CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
March 31, December 31,
1996 1995
------------- ------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,945 $ 7,529
Receivables, net 36,290 31,434
Inventory 598 657
Other current assets 535 470
------------ -----------
Total current assets 48,368 40,090
Property and equipment, net 313,359 300,666
-------- -----------
$ 361,727 $ 340,756
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,522 $ 14,403
Amounts payable to oil and gas property
owners 9,656 8,874
Production taxes payable 12,082 8,047
Accrued and other liabilities 3,592 5,080
------------ -----------
Total current liabilities 39,852 36,404
Long-term debt 100,000 89,000
Deferred income taxes 25,362 23,524
Stockholders' equity:
Preferred stock, $.001 par value: 1,000,000
shares authorized, none outstanding -- --
Common stock, $.01 par value: 35,000,000
shares authorized; 25,153,666 issued
(25,092,246 at December 31, 1995) 252 251
Additional paid-in capital 87,382 86,154
Retained earnings 109,346 105,890
Treasury stock, at cost: 20,439 shares (467) (467)
------------ -----------
Total stockholders' equity 196,513 191,828
------------ -----------
$ 361,727 $ 340,756
============ ===========
</TABLE>
See accompanying notes.
3
<PAGE>
BARRETT RESOURCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------
March 31, March 31,
1996 1995
----------- ------------
<S> <C> <C>
Revenues:
Oil and gas production $ 29,544 $ 24,981
Trading revenues 11,993 7,788
Revenue from gas gathering 448 291
Interest income 197 153
Other income 125 258
----------- ------------
42,307 33,471
Operating expenses:
Lease operating expenses 10,947 8,897
Cost of trading 11,214 7,452
Depreciation, depletion and amortization 9,404 8,100
General and administrative 3,618 3,629
Interest expense 1,551 941
Other expense -- 125
----------- ------------
36,734 29,144
----------- ------------
Income for the period before income taxes 5,573 4,327
Provision for income taxes 2,117 1,313
----------- ------------
Net income for the period $ 3,456 $ 3,014
=========== ============
Net income per common share and common
share equivalent $ .14 $ .11
=========== ============
Weighted average number of shares of
common stock and common stock
equivalents 25,234 24,952
=========== ============
</TABLE>
See accompanying notes.
4
<PAGE>
BARRETT RESOURCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31, March 31,
1996 1995
---------- -----------
<S> <C> <C>
Cash flows from operations:
Net income $ 3,456 $ 3,014
Adjustments needed to reconcile to
net cash provided by operations:
Depreciation, depletion, and amortization 9,404 8,100
Amortization of unrealized hedging gains/
(losses) (1,138) --
Deferred income taxes 1,838 1,213
--------- ----------
13,560 12,327
Change in current assets and liabilities:
Accounts receivable (4,856) 6,185
Other current assets (65) 265
Accounts payable 119 (14,133)
Amounts due oil and gas owners 782 401
Production taxes payable 4,035 --
Accrued and other liabilities (350) 1,933
--------- ----------
Net cash flow provided by operations 13,225 6,978
--------- ----------
Cash flows from investing activities:
Proceeds from sale of oil and gas properties 135 5
Acquisition of property and equipment (22,173) (18,252)
Other -- (264)
--------- ----------
Net cash flow used in investing activities (22,038) (18,511)
--------- ----------
Cash flows from financing activities:
Proceeds from issuance of common stock 1,229 323
Borrowings on line of credit 11,000 15,000
Payments on line of credit -- (2,500)
Dividends paid -- (590)
--------- ----------
Net cash flow provided by financing activities 12,229 12,233
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Increase in cash and cash equivalents 3,416 700
Cash and cash equivalents at beginning of period 7,529 12,348
--------- ----------
Cash and cash equivalents at end of period $ 10,945 $ 13,048
========= ==========
</TABLE>
See accompanying notes.
5
<PAGE>
BARRETT RESOURCES CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1996
1. UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments necessary to present
fairly the financial position of Barrett Resources Corporation and its
wholly owned subsidiaries, collectively referred to as the "Company", as of
March 31, 1996 and the results of operations and cash flows for the periods
presented. All such adjustments are of a normal recurring nature. The
results of operations for the periods presented are not necessarily
indicative of the results for the full year.
On July 18, 1995, Plains Petroleum Company ("Plains") was merged with a
subsidiary of the Company and thereby became a wholly owned subsidiary. The
merger was accounted for using the pooling of interests method, and
accordingly, the accompanying financial statements have been restated to
include the accounts and operations of Plains for all periods prior to the
merger. Due to this restatement, the financial statements included in this
Form 10-Q are not comparable to the financial statements for the same
periods as presented in previously filed documents.
The accounting policies followed by the Company are set forth in Note 1 to
the Company's financial statements in Form 10-K for the year ended December
31, 1995. These financial statements should be read in conjunction with
the financial statements and notes included in the Form 10-K.
2. INCOME TAXES
Provisions for income taxes were calculated in accordance with Statement of
Financial Accounting Standards No. 109 which provides that a deferred tax
liability or asset be determined based on the timing differences between
the basis used for financial versus tax reporting of assets and liabilities
as measured by the effective tax rates. For the quarter ended March 31,
1996, the Company used an estimated effective tax rate of thirty-eight
percent.
The Internal Revenue Service (IRS) has examined the federal tax returns of
Plains for the calendar years 1991, 1992 and 1993. In a report to the
Company, transmitted by a "30-day letter" that requests a response by the
Company within a 30 day period, the IRS has proposed a tax deficiency of
$5.3 million together with penalties of $1.1 million, and an undetermined
amount of interest. The IRS proposed deficiency resulted primarily from
the disallowance of certain net operating loss deductions claimed during
the periods under examination. These net operating losses originally were
incurred by a company that was acquired by Plains in 1986. The Company
currently has additional unused net operating loss carryforwards of
approximately $30 million related to the same acquisition.
6
<PAGE>
Management disagrees with the IRS position, and the Company has rejected
the IRS's position by refusing to accept the adjustments proposed in the
30-day letter. In management's opinion, the federal tax returns of Plains
under examination reflect the proper federal income tax liability and the
existing net operating loss carryforwards are appropriate as supported by
relevant authority. The Company will vigorously contest these proposed
adjustments and believes it will prevail in its positions. It is
anticipated that the final determination of this matter will involve a
lengthy process.
3. LONG-TERM DEBT
Subsequent to December 31, 1995, the Company increased the borrowing limit
on its reserved-based line of credit to $110 million. The Company
currently has a borrowing base of $160 million and may, at its option,
increase the borrowing limit to the amount of the borrowing base.
As of March 31, 1996 the Company's effective interest rate, on an
outstanding balance of $100 million, was approximately 6.3% per annum.
Total interest costs incurred for the quarter ended March 31, 1996 were
$1.6 million. Of this amount, $8,000 was capitalized for specific
projects.
4. SUBSEQUENT EVENT
In April 1996, the Company acquired additional interests in oil and gas
properties and in a gas gathering system located in the Piceance Basin of
Colorado. Please refer to Item 5 of this Form 10-Q for additional
information regarding this transaction.
7
<PAGE>
BARRETT RESOURCES CORPORATION
For the Quarter Ended
March 31, 1996
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Liquidity and Capital Resources
- -------------------------------
For the three months ended March 31, 1996, total assets increased $20.9
million, or 5.8 percent, to $361.7 million as compared with total assets of
$340.8 million at December 31, 1995. Cash and short term investments
increased $3.4 million, working capital increased $4.8 million and property
and equipment increased $12.7 million. During the quarter, the Company
actively invested in oil and gas properties in its areas of activity, which
increased both property and equipment and long-term debt.
At the end of the quarter, total long-term debt was $100 million, an
increase of $11 million from year-end 1995. These funds were utilized to
fund the Company's drilling programs and acquire additional interests in
oil and gas properties. The Company's unsecured line of credit of $200
million has a current borrowing base of $160 million.
Operating cash flows before working capital adjustments totaled $13.6
million in the first quarter of 1996 compared with $12.3 million in the
first quarter of 1995. After working capital adjustments, cash flow
provided by operations increased by 90 percent to $13.2 million as compared
with the same period in 1995.
Capital expenditures of $22.2 million for the quarter increased $3.7
million over the same period in 1995. These expenditures, funded by
operating cash flows and borrowings, consisted principally of drilling and
development activities of oil and gas properties, and acquisition and
development of producing properties. Of these capital investments,
approximately $16.1 million was invested in development and expansion
activities in the Piceance, Wind River and Anadarko Basins.
In April, the Company expended $2.7 million and issued 350,000 shares of
its common stock to acquire additional interests in oil and gas properties
and a gas gathering system located in the Piceance Basin of Colorado. See
Item 5 of this Form 10-Q for additional information regarding this
transaction.
In May 1996, the Company announced its intent to undertake a public
offering of four million shares of its common stock. Proceeds from this
offering are intended to be used to reduce the Company's current
outstanding debt and thereby enable the Company to utilize its line of
credit, together with operating cash flow, to fund its planned oil and gas
exploration and development activities. If the offering is not completed
for any reason, management believes that the Company's borrowing capacities
and cash flow are sufficient to fund its planned exploration and
development activities, albeit at a higher debt level.
8
<PAGE>
Results of Operations
- ---------------------
The following discussion of operating results is based on historical
consolidated financial information that has been restated as though the
companies of the merger of the Company and Plains on July 18, 1995 had been
combined from inception.
Net income for the quarters ended March 31, 1996 and 1995 was $3.5 million
($.14 per share) and $3.0 million ($.11 per share), respectively. This
increase is primarily due to increased oil and gas production revenue and a
6 percent increase in the average oil and gas sales prices for the quarter.
Total revenues for the quarter were $42.3 million, up 26 percent compared
to $33.5 million for the same period in 1995. This increase is attributed
to higher production revenues and a 54 percent increase in trading
revenues.
Production revenue for the first quarter of 1996 increased 18 percent from
$25.0 million to $29.5 million. Production revenues and related volumes
and average prices during the periods presented were as follows:
<TABLE>
<CAPTION>
Quarter Ended
March 31,
--------------
1996 1995
-------- --------
<S> <C> <C>
Gas Revenues (000's) $ 22,444 $ 18,296
Gas Production (Bcf) 13.5 11.7
Average Price per Mcf $ 1.67 $ 1.57
Oil Revenues (000's) $ 7,100 $ 6,685
Oil Production (Mbbls) 430 430
Average Price per Barrel $ 16.51 $ 15.55
</TABLE>
(Note: Bcf = billion cubic feet; Mcf = thousand cubic feet; MBbls =
thousand barrels)
First quarter gas revenues increased 23 percent as compared with the same
period in 1995, principally due to a 15 percent increase in production
volumes and a 6 percent increase in average gas prices.
The 6 percent increase in first quarter 1996 oil revenues from the same
period in 1995 is directly attributed to a 6 percent increase in average
oil prices.
9
<PAGE>
For the quarter ended March 31, 1996, revenues from trading were $12.0
million compared to $7.8 million for the same period in 1995. The
associated costs of trading increased to $11.2 million from $7.5 million.
Gross profit from trading was $779,000 and $336,000 for the respective
quarters ended March 31, 1996 and 1995.
To reduce its exposure to volatile oil and gas price fluctuations, the
Company enters into hedging arrangements for both trading and producing
activities. During the first quarter ending March 31, 1996, the Company
recognized net producing hedging expenses of $812,000 which was recorded in
the consolidated statements of income as adjustments of oil and gas
production revenue. As of March 31, 1996, the Company held positions to
hedge production of 0.075 Bcf of gas and 91,000 barrels of oil.
Production costs increased due to increases in sales and higher operating
costs in the winter months in the first quarter.
Depreciation, depletion and amortization increased to $9.4 million from
$8.1 million due to a 13 percent increase in oil and gas equivalent
production. During the 1996 and 1995 quarters, depletion on oil and gas
production was recorded at $3.36 and $3.22 per BOE, respectively.
Interest expenses for the first quarter increased from $.9 million in 1995
to $1.6 million in 1996. Increases are directly attributed to additional
borrowing used principally to fund exploration, development and acquisition
of oil and gas properties.
The Company's largest source of operating income is from sales of its gas
and oil production. Therefore, the levels of the Company's revenues and
earnings are affected by prices at which natural gas and oil are being
sold. This is particularly true with respect to natural gas, which
accounted for approximately 76 percent of the Company's production revenue
for the first quarter 1996. As a result, the Company's operating results
for any prior period are not necessarily indicative of future operating
results because of the fluctuations in gas and oil prices and the lack of
predictability of those fluctuations as well as changes in production
levels.
10
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
-----------------
(i) On April 10, 1996, the Company acquired for $2.7 million from Zenith
Drilling Corporation ("Zenith") all of Zenith's oil and gas
interests located in the Piceance Basin of Colorado. Also on April
10, 1996, the Company acquired all the stock of Grand Valley
Corporation ("GVC") in exchange for 350,000 shares of the Company's
common stock. This transaction consisted of a merger of GVC into a
subsidiary of the Company. The sole asset of GVC was an approximate
10 percent interest in the Grand Valley Gathering System. The
Company is the operator and previously had owned interests in both
the gathering system and the oil and gas assets in which it acquired
interests as a result of these transactions. Pursuant to the
respective agreements with Zenith and GVC, Zenith is responsible for
all liabilities related to the interests transferred by Zenith, and
the shareholders of GVC are responsible for certain liabilities of
GVC that accrue on or before March 1, 1996. The Company is
responsible for liabilities accruing after March 1, 1996.
The terms of these transactions were negotiated on behalf of the
Company by a Special Committee of the Board of Directors of the
Company, consisting of four independent outside directors (Messrs.
Grant, Rodgers, Schreiber and Welch.) The Company also obtained an
opinion from an investment banking firm that the terms of these
transactions are fair to the Company. Mr. C. Robert Buford, a
director of the Company, owns 89 percent of Zenith. In addition, at
the time of the transaction, Mr. Buford served as a director of GVC
and owned 10 percent of GVC. The other 90 percent of GVC was owned
at that time by Mr. Buford's three adult children.
(ii) At the April 24, 1996 Federal OCS lease sale for the Central Gulf of
Mexico, the Company joined United Meridian Corporation in submitting
high bids on nine tracts in the West Cameron, East Cameron,
Vermilion, South Monarch Island and Eugene Island areas. The Company
will have a 22.22 percent working interest in each of these nine
tracts. Separately, the Company joined with Norcen Explorer, Inc.
with a 50 percent working interest, in submitting the high bid for
the Ship Shoal Block 235 tract. Finally, the Company independently
submitted the high bid for the West Cameron Block 211 tract. Total
bonus payments, net to the Company, for these lease interests will
be $2.28 million. All bids are subject to approval by the Minerals
Management Service.
(iii) The Compensation Committee of the Company's Board of Directors has
agreed with William J. Barrett that Mr. Barrett will continue as
Chairman of the Board until the Company's 1999 Annual Meeting of
Stockholders and as Chief Executive Officer until the 1997 Annual
Meeting of Stockholders.
11
<PAGE>
(iv) See "Note 2. Income Taxes" in Notes to Consolidated Condensed
Financial Statements in this Form 10-Q for description of a dispute
with the Internal Revenue Service.
(v) Two putative class actions filed in Delaware Chancery Court, Miller
------
v. Cody and Crandon Capital Partners v. Miller, against Plains and
------- ----------------------------------
certain of its former directors were dismissed without prejudice in
March. No defendent paid any consideration for such dismissals.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) The following Exhibits are filed as part of this Quarterly
Report on Form 10-Q:
10.1 Employment Agreement dated August 7, 1994 between Plains
Petroleum Operating Company and William F. Wallace is
incorporated by reference from Plains Petroleum Company's
Quarterly Report on Form 10-Q dated November 11, 1994.
10.2 Amendment of Employment Agreement dated October 3, 1994
between Plains Petroleum Operating Company and William F.
Wallace is incorporated by reference from Plains Petroleum
Company's Quarterly Report on Form 10-Q dated November 11,
1994.
10.3 Employment Agreement dated as of July 19, 1995 between the
Registrant and William F. Wallace.
10.4 Severance Agreement dated September 26, 1990 between
Plains Petroleum Company and Eugene A. Lang, Jr. is
incorporated by reference from Plains Petroleum Company's
Quarterly Report on Form 10-Q dated November 13, 1990.
10.5 Letter agreement dated September 18, 1995 between the
Registrant and Eugene A. Lang, Jr. concerning the
Severance Agreement dated September 26, 1990.
10.6 Agreement and Plan of Reorganization between and among
Registrant, Bargath Inc., and Grand Valley Corporation
dated April 10, 1996.
10.7 Purchase And Sale Agreement dated April 10, 1996 between
the Registrant and Zenith Drilling Corporation.
27. Financial Data Schedule.
(b) There were no reports on Form 8-K filed during the quarter
ended March 31, 1996.
12
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
BARRETT RESOURCES CORPORATION
May 14, 1996 By /s/ Paul M. Rady
---------------------------------
Paul M. Rady
President
May 14, 1996 By /s/ J. Frank Keller
---------------------------------
J. Frank Keller
Chief Financial Officer
13
<PAGE>
Exhibit 10.3
EMPLOYMENT AGREEMENT
Employment Agreement dated as of July 19, 1995 among William F.
Wallace (the "Executive"), Barrett Resources corporation, a Delaware corporation
(the "Company"), Plains Petroleum Company, a Delaware corporation ("PPC"), and
Plains Petroleum Operating company, a Delaware corporation ("PPOC").
WHEREAS, pursuant to an Agreement and plan of Merger dated as of May
2, 1995 (the "Merger Agreement"), Barrett Energy Inc., a wholly-owned subsidiary
of the Company, merged (the "Merger") with and into PPC, resulting in PPC
becoming a wholly-owned subsidiary of the Company on July 18, 1995 (the
"Effective Time");
WHEREAS, the Executive and PPOC, a wholly-owned subsidiary of PPC,
entered into an Employment Agreement dated as of August 17, 1994 (the "PPOC
Employment Agreement"), pursuant to which PPOC employed the Executive as its
President and Chief Operating Officer, and PPC undertook to perform the
obligations of PPOC thereunder;
WHEREAS, on May 1, 1995, the Executive was elected by the Board of
Directors of PPC to the additional position of President and Chief Operating
Officer of PPC;
WHEREAS, the Company, PPC and PPOC desire that the employment of the
Executive as President and Chief Operating Officer of PPC be terminated,
effective as of the Effective Time, and that the employment of the Executive as
President and Chief Operating Officer of PPOC be terminated pursuant to Section
3.6(a) of the PPOC Employment Agreement, effective as of the Effective Time,
entitling the Executive to the payment of all of the amounts described in
Section 3.6 of the PPOC Employment Agreement as set forth herein;
WHEREAS, the Company desires to employ the Executive as its Vice
Chairman, and the Executive desires to accept such employment, for the term and
upon the other conditions set forth herein; and
WHEREAS, the Company, PPC and PPOC acknowledge that the employment of
the Executive pursuant to the terms of this Agreement does not constitute a
waiver by the Executive of his right to receive the amounts described in Section
3.6 of the PPOC Employment Agreement and that the Executive continues to be
entitled to all such amounts as set forth herein.
NOW, THEREFORE, in consideration of the agreements and covenants
contained herein, the Executive, the Company, PPC and PPOC hereby agree as
follows:
<PAGE>
ARTICLE I
Termination of Employment with PPC and PPOC
1.1 Termination of Employment. The employment of the Executive as
-------------------------
President and Chief Operating Officer of PPC is hereby terminated, effective as
of the Effective Time, and the employment of the Executive as President and
Chief Operating Officer of PPOC under the PPOC Employment Agreement is hereby
terminated pursuant to Section 3.6(a) thereof, effective as of the Effective
Time. As set forth herein, such termination of employment entitles the
Executive to all of the amounts described in Section 3.6 of the PPOC Employment
Agreement, which amounts area listed, described or referred to on Schedule A
attached hereto (the "Termination Amounts").
ARTICLE II
Employment
Section 2.1. Position; Term; Responsibilities. The Company shall
--------------------------------
employ the Executive as its Vice Chairman for a term commencing as of the
Effective Time and ending on December 31, 1995 (the "Employment Period").
Subject to the powers, authorities and responsibilities vested in the Board of
Directors (the "Board") of the Company under the General Corporation Law of the
State of Delaware, in duly constituted committees of the Board and in the Chief
Executive Officer of the Company (the "Company CEO"), and subject to the
direction of both the Board and the Company CEO, the Executive's principal
responsibility will be to assist in the transition and integration of PPC and
PPOC with the Company pursuant to the Merger. The Executive shall also perform
such other executive and administrative duties (not inconsistent with the
position of Vice Chairman) as the Executive may reasonably be expected to be
capable of performing on behalf of the Company, as may from time to time be
authorized or directed by the Company CEO or the Board. The Company, PPC, PPOC
and the Executive agree that the employment of the Executive pursuant to the
terms of this Agreement does not constitute a waiver by the Executive of his
right to receive the Termination Amounts and that the Executive continues to be
entitled to the Termination Amounts as set forth herein.
Section 2.2. Duties. During the Employment Period, the Executive
------
shall use his reasonable best efforts to perform faithfully the duties assigned
to him hereunder and shall devote his full and undivided business time and
attention to the Company's business and not engage in any other business
activities except with the approval of the Company CEO. Nothing contained in
this Section 2.2 shall preclude the Executive from making investments in
publicly traded companies for his own account or for the accounts of members of
his family.
-2-
<PAGE>
Section 2.3. Service as Director. The Board has appointed the
-------------------
Executive as a director of the Company, as of the Effective Time of the Merger,
to serve until the next annual meeting of the stockholders of the Company.
ARTICLE III
Compensation
Section 3.1. Base Salary. As compensation for his services
-----------
hereunder, the Company shall pay to the Executive during the employment period a
salary at the annual rate of $231,000, payable in installments in accordance
with the Company's normal payment schedule for senior executives of the Company.
The Executive's annual salary may be increased from time to time by the Board in
its discretion. The Executive's annual salary in effect from time to time
pursuant to this Section 3.1 is hereinafter called his "Base Salary."
Section 3.2. Automobile; Club Dues. The Company shall provide to the
---------------------
Executive an automobile allowance in the amount of $550 per month during the
Employment Period. The Company shall also, during the Employment Period, pay
the annual dues and assessments for the Executive's membership in (a) one
country club located in the Denver area and (b) the Denver Petroleum Club.
Section 3.3. Benefits. The Executive shall be entitled to
--------
participate in all employee benefit plans, including group health, life, short-
term disability, long-term disability, 401(k), stock option and any other
employee benefit plans available to senior executives of he Company (the
"Employee Benefit Plans"). The Executive shall be credited with additional
years of service such that his service shall be deemed to have commenced on the
same date as the commencement of his employment by PPOC in those plans available
to the executives of the Company shall the benefits of which are based upon
credited years of service. The Executive shall be entitled to vacation at the
rate of four weeks per year during the Employment Period, and the Executive
shall be entitled to be paid for any unused vacation accrued since the
commencement of the Employment Period in the event of his termination of
employment hereunder for any reason. The Executive shall be entitled to take
time off for illness in accordance with the Company's policy for senior
executives and to receive all other fringe benefits as are from time to time
made generally available to the senior executives of the Company.
Section 3.4. Expense Reimbursement. The Company shall reimburse the
---------------------
Executive for all proper expenses incurred by him in the performance of his
duties hereunder in accordance with the Company's policies and procedures.
-3-
<PAGE>
ARTICLE IV
Termination of Employment
Section 4.1. Termination For Cause. The Company may terminate the
---------------------
Executive's employment for Cause (as hereinafter defined) upon written notice to
the Executive. For purposes of this Agreement, "Cause" shall mean any act of
dishonesty, commission of a felony, significant activities harmful to the
reputation of the Company, refusal to perform or substantial disregard of the
duties properly assigned pursuant to Article II, or significant violation of any
statutory or common law duty of loyalty to the Company. In the event that the
Company exercises its election to terminate the Executive's employment pursuant
to this Section 4.1, the Employment Period shall terminate effective with such
notice and the Executive shall be entitled to receive any unpaid compensation
pursuant to Section 3.1, 3.2 and 3.3 accrued through the date of such
termination and reimbursement for expenses incurred through such date pursuant
to Section 3.4 and PPOC, PPC and the Company shall pay the Termination Amounts
to the Executive at the times specified by Sections 3.6(a) and 3.6(b) of the
PPOC Employment Agreement.
Section 4.2. Death. In the event of the death of the Executive
-----
during the Employment Period, his successors shall be entitled to receive any
accrued and unpaid compensation pursuant to Sections 3.1, 3.2 and 3.3 and any
unreimbursed expenses pursuant to Section 3.4 and PPOC, PPC and the Company
shall pay the Termination Amounts to such successors at the times specified by
Sections 3.6(a) and 3.6(b) of the PPOC Employment Agreement.
Section 4.3. Disability. In the event that the Executive becomes
----------
unable to perform his duties hereunder by reason of disability, the Executive
shall be entitled to receive any unpaid compensation pursuant to Sections 3.1,
3.2 and 3.3 accrued through the date of such event and reimbursement for
expenses incurred through such date pursuant to Section 3.4 and PPOC, PPC and
the Company shall pay the Termination amounts to the Executive at the times
specified by Sections 3.6(a) and 3.6(b) of the PPOC Employment Agreement.
Section 4.4. Resignation. Notwithstanding the provisions of Section
-----------
2.1, the Executive shall be entitled during the Employment Period to terminate
his employment hereunder voluntarily upon written notice to the Company. In the
event that the Executive voluntarily terminates his employment pursuant to this
Section 4.4, the Employment Period shall terminate effective upon such
termination and the Executive shall be entitled to receive any unpaid
compensation pursuant to Sections 3.1, 3.2 and 3.3 accrued through the date of
such termination and reimbursement for expenses incurred through such date
pursuant to Section 3.4 and PPOC, PPC and the Company shall pay the
-4-
<PAGE>
Termination Amounts to the Executive at the times specified by Sections 3.6(a)
and 3.6(b) of the PPOC Employment Agreement.
Section 4.5. Other Termination. The Company may, pursuant to this
-----------------
Section 4.5, terminate the Executive's employment hereunder for any reason other
than the reasons set forth in Sections 4.1, 4.2, 4.3 or 4.4 upon written notice
to the Executive. In addition, the Executive may, pursuant to this Section 4.5,
terminate his employment hereunder for any reason upon written notice to the
Company. In the event that the Company shall exercise its election to terminate
the Executive's employment pursuant to this Section 4.5 or in the event that the
Executive shall exercise his election to terminate his employment pursuant to
this Section 4.5, the Employment Period shall terminate effective with such
notice and the Executive shall be entitled to receive any unpaid compensation
pursuant to Sections 3.1, 3.2 and 3.3 accrued through the date of such
termination and reimbursement of expenses incurred through such date pursuant to
Section 3.4 and PPOC, PPC and the Company shall pay the Termination Amounts to
the Executive at the times specified by Sections 3.6(a) and 3.6(b) of the PPOC
Employment Agreement.
ARTICLE V
Rights at End of Employment Period
5.1 Election by the Company. If not less than 15 days prior to the
-----------------------
end of the Employment Period, the Company does not,in its sole discretion, make
an offer to the Executive of the position of Chef Executive Officer of the
Company or another significant leadership position of Chief Executive Officer of
the Company or another significant leadership position as an executive officer
of the Company (the "Continued Employment Offer"), then the Company shall be
deemed to have elected not to make the Continued Employment Offer to the
Executive.
5.2 Election by the Executive. In the event that the Company makes
-------------------------
the Continued Employment Offer to the Executive, the Executive shall advise the
Company, within 15 days of his receipt thereof, whether he elects, in his sole
discretion, to pursue such offer, subject to the parties' mutually agreeing to
enter into a mutually acceptable written employment agreement.
5.3 Rights upon Elections. If the Company makes the Continued
---------------------
Employment Offer to the Executive pursuant to Section 5.1 and the Executive
elects to pursue the Continued Employment Offer pursuant to Section 5.2, the
Company and the Executive shall negotiate in good faith to enter into an
employment agreement that will continue to provide the Executive with the
Termination Amounts upon termination of such employment agreement. If the
Company elects not to make the continued Employment Offer or if the Company
makes the Continued Employment Offer and the Executive elects not to pursue such
offer, or if
-5-
<PAGE>
the Company makes the Continued Employment Offer and the Executive elects to
pursue such offer, but the Company and the Executive are unable to reach
agreement with respect to a new employment agreement within 30 days following
the election to pursue such offer by the Executive, then, in any of such events,
PPOC, PPC and the Company shall pay the Termination Amounts to the Executive at
the times specified by Sections 3.6(a) and 3.6(b) of the PPOC Employment
Agreement, and PPOC, PPC and the Company shall have no further obligation or
liability to the Executive pursuant to the provisions of this Article V.
ARTICLE VI
Miscellaneous
Section 6.1. Notices. Any notice or request required or permitted to
-------
be given hereunder shall be sufficient if in writing and delivered personally or
by courier or overnight express delivery service or sent by registered or
certified mail, return receipt requested, as follows: if to the Executive, to
30036 Snowbird Lane, Evergreen, Colorado 80439, and if to the Company, to
Barrett Resources Corporation, 1125 Seventeenth Street, Suite 2400, Denver,
Colorado 80202, Attention Chief Executive Officer, or to any other address
designated by either party by notice similarly given. Such notice shall be
deemed to have been given upon the personal delivery thereof, upon the delivery
thereof by courier or overnight express delivery services or five business days
after the mailing thereof, as the case may be.
Section 6.2. Assignment and Succession. The rights and obligations
-------------------------
of the Company under this Agreement shall inure to the benefit of and be binding
upon its successors and assigns, and the Executive's rights and obligations
hereunder shall inure to the benefit of and be binding upon his successors.
Section 6.3. Headings. The Article, Section, paragraph and
--------
subparagraph headings are for convenience of reference only and shall not define
or limit the provisions hereof.
Section 6.4. Applicable Law. This Agreement shall at all times be
--------------
governed by and construed, interpreted and enforced in accordance with the
internal laws (as opposed to the conflict of laws provisions) of the State of
Delaware.
IN WITNESS WHEREOF, each of the Company, PPC and PPOC has caused this
Agreement to be signed by its duly authorized officer and the Executive has
signed this Agreement as of the day and year first above written.
-6-
<PAGE>
BARRETT RESOURCES CORPORATION
By: /s/ Wm. J. Barrett
--------------------
William J. Barrett
PLAINS PETROLEUM COMPANY
By: /s/ Wm. J. Barrett
--------------------
PLAINS PETROLEUM OPERATING COMPANY
By: /s/ Wm. J. Barrett
--------------------
EXECUTIVE:
/s/ William F. Wallace
-------------------------
William F. Wallace
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<PAGE>
SCHEDULE A
----------
TERMINATION AMOUNTS
I. SEVERANCE AGREEMENT
All benefits pursuant to Section 3.6(a)(i) of the PPOC
Employment Agreement, as follows:
Base Compensation Multiple Gross Benefit
$240,960 2.99 $720,470.40
All benefits pursuant to Sections 3.6(a)(ii), 3.6(a)(iii)
and
3.6(b) of the PPOC Employment Agreement.
II. UNUSED VACATION
Unused Hours of Vacation
(As of June 30, 1995)
140 To be used by December 31, 1995.
-8-
<PAGE>
Exhibit 10.5
September 18, 1995
Eugene A. Lang, Jr., Esq.
Barrett Resources Corporation
1125 Seventeenth Street, Suite 2400
Denver, CO 80202
Dear Gene:
This letter is to confirm our understanding and agreement that you have
been employed by Barrett Resources Corporation as Senior Vice President, General
Counsel and Assistant Secretary, with terms of employment that include, among
other things, a salary of $11,530 per month, and eligibility on the same basis
as other officers of Barrett Resources for any other compensation and incentive
plans that Barrett Resources may have in effect during the time of your
employment, and duties and responsibilities substantially as described in the
outline which you delivered to me (the "Outline").
It is part of our understanding and agreement that these terms of
employment, i.e., the position of Senior Vice President, General Counsel and
Assistant Secretary, the salary of $11,530 per month, the eligibility to
participate on the same basis as other officers of Barrett Resources Corporation
in whatever compensation and/or incentive plans Barrett Resources may have in
effect at that time, and the duties and responsibilities set forth in the
Outline, shall be deemed to constitute a similar level of employment
responsibility, status and compensation as you had prior to the Barrett/Plains
merger, and therefore mean that there is not "Good Reason" for you to terminate
your employment and request termination compensation under the terms of your
Severance Agreement with Plains Petroleum Company dated September 26, 1990.
Also based on our understanding and agreement, as long as the same terms of
employment described in this letter, or such other terms of employment as you
and Barrett Resources, each acting in your sole respective discretion, agree to,
remain in effect without any course of conduct by or on behalf of Barrett
rendering you unable to effectively discharge your employment responsibilities,
then the right to request termination compensation under the Severance Agreement
cannot be exercised. We also understand that the right to request termination
compensation pursuant to the Severance Agreement cannot be exercised at any time
after July 18, 1998.
If the matters set forth in this letter are consistent with your
understanding of our agreement, please execute the enclosed copy of this letter
in the space provided below and return it to me at your convenience.
We look forward to a mutually satisfying and rewarding relationship.
Very truly yours,
BARRETT RESOURCES CORPORATION
By: /s/ John F. Keller
---------------------
John F. Keller
Executive Vice President and
Chief Financial Officer
APPROVED:
/s/ Eugene A. Lang, Jr.
--------------------------
Eugene A. Lang, Jr.
<PAGE>
Exhibit 10.6
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN AND AMONG
BARRETT RESOURCES CORPORATION,
BARGATH INC.
AND
GRAND VALLEY CORPORATION
April 10, 1996
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
TABLE OF CONTENTS
1. Definitions........................................................ 1
1.1. "Articles Of Merger"......................................... 1
1.2. "Closing".................................................... 1
1.3. "Code"....................................................... 2
1.4. "Colorado Act"............................................... 2
1.5. "Constituent Corporations"................................... 2
1.6. "Cutoff Date"................................................ 2
1.8. "Grand Valley Gathering Systems"............................. 2
1.9. "GVC"........................................................ 2
1.10. "GVC Common Stock"........................................... 2
1.11. "GVC Shareholders"........................................... 2
1.12. "Hazardous Materials"........................................ 2
1.13. "Kansas Code"................................................ 2
1.15. "Merger"..................................................... 2
1.16. "1933 Act"................................................... 2
1.17. "1934 Act"................................................... 2
1.18. "Parent"..................................................... 3
1.19. "Parent Common Stock"........................................ 3
1.20. "SEC"........................................................ 3
1.21. "Sub"........................................................ 3
1.22. "Subsidiary"................................................. 3
1.23. "Significant Subsidiary"..................................... 3
2. The Merger......................................................... 3
2.1. Merger....................................................... 3
2.2. Effective Time............................................... 3
3. Articles Of Incorporation, Bylaws And Directors.................... 3
3.1. Articles And Bylaws.......................................... 3
3.2. Directors Of Surviving Corporation........................... 3
4. Conversion Of Shares............................................... 3
4.1. Conversion Of Shares......................................... 4
4.2. Certain Effects Of The Merger................................ 4
4.3. Mechanics Of Exchange........................................ 4
4.4. Stock Transfer Books......................................... 5
5. Representations And Warranties Of Parent........................... 5
5.1. Organization And Standing.................................... 5
5.2. Capitalization............................................... 5
5.3. Authority; Non-Contravention................................. 5
5.4. Governmental Consents........................................ 6
5.5. Disclosure................................................... 6
5.6. SEC Documents................................................ 6
5.7. Reorganization............................................... 7
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<PAGE>
6. Representations And Warranties Of GVC.............................. 7
6.1. Organization And Standing.................................... 7
6.2. No Subsidiaries.............................................. 7
6.3. Capitalization............................................... 7
6.4. Authority; Non-Contravention................................. 8
6.5. Contracts And Commitments.................................... 8
6.6. Compliance With Other Instruments............................ 9
6.7. Litigation And Claims........................................ 9
6.8. Insurance.................................................... 9
6.9. Governmental Consents........................................ 9
6.10. Disclosure................................................... 9
6.11. Actions..................................................... 10
6.12. Taxes....................................................... 10
6.13. No Employees; No Retirement Obligations..................... 10
6.14. Books And Records........................................... 11
6.15. Copies Of Documents......................................... 11
6.16. Officers, Directors, Employees And Consultants.............. 11
6.17. Bank Accounts............................................... 11
6.18. Information................................................. 11
6.19. Documents Delivered......................................... 11
6.20. No Material Changes......................................... 11
6.21. Financial Statements; Undisclosed Liabilities............... 13
6.22. Leases...................................................... 13
6.23. No Encumbrances............................................. 13
6.24. Reorganization.............................................. 14
6.25. Restricted Stock............................................ 14
7. Representations And Warranties Regarding Sub...................... 14
7.1. Organization and Standing................................... 14
7.2. Capital Structure........................................... 14
7.3. Authority; Non-Contravention................................ 15
8. Certain Agreements................................................ 15
8.1. Access And Information...................................... 15
8.2. Shareholder Authorization................................... 15
8.3. Operation Of Business....................................... 15
8.4. Preservation Of Business.................................... 16
................................................................ 16
8.7. Reorganization.............................................. 19
8.8. Compliance With The Securities Act.......................... 19
8.9. Registration Rights......................................... 20
8.11. Consents, Waivers And Approvals............................. 21
8.12. Notice Of Breach Of Warranty................................ 21
8.13. Additional Documents; Further Assurances.................... 21
8.14. Notice Of Inaccurate Information............................ 21
8.15. Publicity................................................... 22
9. Conditions To Performance By All Parties.......................... 22
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<PAGE>
10. Conditions Precedent To Performance By GVC....................... 22
11. Conditions Precedent To Performance By Parent And Sub............ 23
12. Indemnification By Parent........................................ 24
13. Indemnification By GVC Shareholders.............................. 24
14. Notice Of Claim.................................................. 25
15. Closing.......................................................... 26
16. Termination And Abandonment Of The Merger........................ 26
16.1. Termination............................................... 26
16.2. Effect Of Termination..................................... 26
17. Amendment Or Waiver.............................................. 26
18. Entire Agreement................................................. 27
19. Notice........................................................... 27
20. Severability..................................................... 27
21. Headings......................................................... 28
22. Counterparts..................................................... 28
23. Expenses......................................................... 28
24. Nature And Survival Of Representation............................ 28
25. Benefits And Assignment.......................................... 28
26. Specific Performance............................................. 28
27. Brokers.......................................................... 28
28. Costs............................................................ 28
29. Termination On Default........................................... 29
30. Choice Of Law.................................................... 29
-iii-
<PAGE>
SCHEDULES
---------
Schedule No. And Description
- ----------------------------
6.5. Material Contracts, Indebtedness, Liabilities And Obligations
6.6. Violations Of Articles Of Incorporation, Bylaws, Contracts, Etc.
6.7. Litigation And Claims
6.8. Insurance Policies
6.16. Annual Compensation
6.20. No Material Changes
6.21. GVC Financial Statements
6.22. Leases
6.23. Encumbrances
-iv-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN AND AMONG
BARRETT RESOURCES CORPORATION,
BARGATH INC.
AND
GRAND VALLEY CORPORATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
March__, 1996, is entered into between and among Barrett Resources Corporation,
a Delaware corporation ("Parent"), Bargath Inc. ("Sub"), a Colorado corporation
and a wholly-owned subsidiary of Parent, and Grand Valley Corporation, a Kansas
corporation ("GVC"). Each of Parent, Sub, and GVC may be referred to
individually as a "Party", and all of Parent, Sub, and GVC may be referred to
collectively as the Parties".
RECITALS
A. The Parties to this Agreement desire to effect the merger (the "Merger")
of GVC with and into Sub pursuant to the terms and conditions of this Agreement
as a result of which (a) Sub shall be the surviving corporation, (b) the
separate corporate existence of GVC shall cease, and (c) the holders of the
outstanding capital stock of GVC will receive an aggregate of 350,000 shares of
common stock of Parent in exchange for all of the shares of common stock of GVC.
B. The respective Boards Of Directors of Sub and GVC have approved this
Agreement and have determined that GVC should merge with and into Sub on the
terms and conditions hereinafter set forth in this Agreement.
C. The Parties desire to effectuate the Merger as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
D. The Parties acknowledge that C. Robert Buford is a Director and
shareholder of Parent and a Director and a stockholder of GVC.
AGREEMENT
In consideration of the premises and the mutual representations,
warranties, covenants and agreements herein contained, the Parties agree as
follows:
1. Definitions. As used in this Agreement the following terms have the
-----------
meanings indicated:
1.1. "Articles Of Merger" refers to the articles of merger merging GVC
into Sub and meeting the requirements of the Colorado Act and the Kansas Code.
1.2. "Closing" refers to the consummation of the transactions
contemplated by this Agreement.
<PAGE>
1.3. "Code" refers to the Internal Revenue Code of 1986, as amended.
1.4. "Colorado Act" refers to the Colorado Business Corporation Act.
1.5. "Constituent Corporations" refers to Sub and GVC, collectively.
1.6. "Cutoff Date" refers to March 1, 1996, which is the date on which
all obligations and rights with respect to GVC corporate activities transfer
from the GVC Shareholders to Sub pursuant to Section 8.5 of this Agreement.
1.7. "Effective Time" refers to the date and time of the filing of the
Articles Of Merger with the Secretary of State of the State of Colorado.
1.8. "Grand Valley Gathering Systems" means the pipeline gathering
system and related facilities located in the Grand Valley Field in Mesa and
Garfield Counties, Colorado in which GVC owns a 10.4327 percent interest as of
the date of this Agreement and GVC's interest in the Trailridge Gathering System
and Rulison Gathering System.
1.9. "GVC" refers to Grand Valley Corporation, a Kansas corporation
currently classified as a Subchapter S corporation for income tax reporting.
1.10. "GVC Common Stock" refers to the $1.00 par value common stock of
GVC.
1.11. "GVC Shareholders" means C. Robert Buford, Robert Canterbury
Buford, Martha Josephine Buford, and Anne Sharp Buford, who collectively own all
the outstanding GVC Common Stock.
1.12. "Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any fraction
thereof) and petroleum products, asbestos and asbestos-containing materials,
pollutants, contaminants and all other materials and substances, including but
not limited to radioactive materials regulated pursuant to any Environmental Law
or that could result in liability under any Environmental Laws.
1.13. "Kansas Code" means the General Corporation Code of Kansas.
1.14. "Material Adverse Change" or "Material Adverse Effect" means,
when used with respect to Parent or GVC, as the case may be, any change or
effect that is or, so far as can reasonably be determined, is likely to be
materially adverse to the assets, properties, condition (financial or
otherwise), business or results of operations of Parent and its Significant
Subsidiaries taken as a whole or GVC, as the case may be.
1.15. "Merger" refers to the merger of GVC into Sub pursuant to the
terms and conditions of this Agreement.
1.16. "1933 Act" refers to the Securities Act of 1933, as amended.
1.17. "1934 Act" refers to the Securities Exchange Act of 1934, as
amended.
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<PAGE>
1.18. "Parent" refers to Barrett Resources Corporation, a Delaware
corporation, unless otherwise indicated.
1.19. "Parent Common Stock" refers to the $.01 par value common stock
of Parent.
1.20. "SEC" refers to the Securities And Exchange Commission.
1.21. "Sub" refers to Bargath Inc., a Colorado corporation, all the
outstanding shares of which are owned by Parent, unless otherwise indicated.
1.22. "Subsidiary" means any corporation, partnership, joint venture or
other legal entity of which Parent or GVC, as the case may be (either alone or
through or together with any other Subsidiary), owns, directly or indirectly, 50
percent or more of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
1.23. "Significant Subsidiary" means any Significant Subsidiary within
the meaning of Rule 1-02 of Regulation S-X of the United States Securities And
Exchange Commission (the "SEC").
2. The Merger.
----------
2.1. Merger. Subject to the terms and conditions hereof, at the
------
Effective Time, GVC shall be merged with and into Sub in accordance with the
laws of the State of Colorado and the State of Kansas; with Sub being the
surviving corporation. Sub is also sometimes referred to as the "Surviving
Corporation".
2.2. Effective Time. Subject to compliance by Sub and GVC with the
--------------
covenants and agreements of, and satisfaction of the conditions contained in,
this Agreement, the Parties shall take all actions as are required by law to
make the Merger effective, including the filing of duly executed Articles Of
Merger meeting the requirements of the Colorado Act and the Kansas Code with the
Secretary of State of the State of Colorado and the Secretary of State of the
State of Kansas. The Merger shall become effective on the date and as of the
time of the filing of the Articles Of Merger with the Secretary of State of the
State of Colorado. Such date and time are herein referred to as the "Effective
Time". The Articles Of Merger shall be executed at the Closing and filed
promptly thereafter.
3. Articles Of Incorporation, Bylaws And Directors.
-----------------------------------------------
3.1. Articles And Bylaws. The Articles Of Incorporation and Bylaws of
-------------------
Sub in effect at the Effective Time shall be the Articles Of Incorporation and
Bylaws of the Surviving Corporation.
3.2. Directors Of Surviving Corporation. At the Effective Time the
----------------------------------
directors of the Surviving Corporation shall be William J. Barrett, J. Frank
Keller and Robert W. Howard. After the Merger, the directors of Sub shall be
William J. Barrett, J. Frank Keller and Robert W. Howard.
4. Conversion Of Shares.
--------------------
4.1. Conversion Of Shares. At the Effective Time, by virtue of the
--------------------
Merger and without any further action:
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<PAGE>
4.1.1. Each share of common stock, $1.00 par value ("GVC Common
Stock"), of GVC issued and outstanding shall be cancelled and converted into the
right to receive seven shares of common stock, $.01 par value, of Parent
("Parent Common Stock").
4.1.2. No fractional shares of the Parent Common Stock will be
issued. Each shareholder of GVC shall receive the number of shares of Parent
Common Stock set forth below:
<TABLE>
<CAPTION>
Shares of Common Shares of Parent Common
GVC Shareholder Stock Held Stock to be Issued
- --------------- ---------------- ------------------
<S> <C> <C>
C. Robert Buford 5,000 35,000
Robert Canterbury Buford 15,000 105,000
Martha Josephine Buford 15,000 105,000
Anne Sharp Buford 15,000 105,000
</TABLE>
4.2. Certain Effects Of The Merger. At the Effective Time, the separate
-----------------------------
existence of GVC shall cease, and GVC shall be merged with and into Sub, which,
as the Surviving Corporation, shall thereupon and thereafter possess all the
rights, privileges, powers and franchises of a public as well as of a private
nature, and shall be subject to all the restrictions, disabilities and duties of
each of the Constituent Corporations; and all the rights, privileges, powers and
franchises of each of the Constituent Corporations, and all property, real,
personal and mixed, and all debts due to either of the Constituent Corporations
on whatever account, as well as for stock subscriptions and all other choses in
action and other interests due or belonging to each of the Constituent
Corporations, shall be vested in the Surviving Corporation; and all property,
rights, privileges, powers and franchises, and all and every other interest,
shall be thereafter as effectively the property of the Surviving Corporation as
they were of the respective Constituent Corporations and shall not revert or be
in any way impaired by reason of the Merger; subject to the provisions of
Section 8.5 of this Agreement, all rights of creditors and all liens upon any
property of either of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts, liabilities and duties
had been incurred or contracted by the Surviving Corporation.
4.3. Mechanics Of Exchange. At the Closing, each GVC Shareholder who is
---------------------
the holder of a certificate that immediately prior to the Effective Time
represented outstanding shares of GVC Common Stock shall surrender that
certificate, together with any other reasonably required documents, to Parent
and that GVC Shareholder shall be entitled, upon surrender, to receive in
exchange therefor certificates representing shares of Parent Common Stock in
accordance with the terms of this Agreement. If any certificate for Parent
Common Stock is to be issued in a name other than that in which the certificate
for shares of GVC Common Stock surrendered in exchange therefor is registered,
it shall be a condition of that exchange that the person requesting the exchange
shall pay to Boston Equiserve Limited Partnership, 150 Royall Street, Canton,
Massachusetts 02021 (the "Transfer Agent"), any transfer or other taxes or fees
required by reason of the issuance of certificates for Parent Common Stock in a
name other than that of the registered holder of the GVC certificate
surrendered. Any GVC shareholder whose certificates representing shares of GVC
Common Stock shall have been lost or destroyed may obtain the certificate
representing the Parent Common Stock to which that GVC shareholder is entitled
by reason of the consummation of the Merger, provided that the GVC shareholder
delivers to Parent and the Transfer Agent a statement certifying to the loss or
destruction and providing for indemnity or in
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<PAGE>
certain cases a bond satisfactory to Parent and the Transfer Agent indemnifying
Parent and the Transfer Agent against any loss or expense either of them may
incur if the lost or destroyed certificates are thereafter presented to the
Transfer Agent for exchange.
4.4. Stock Transfer Books. At the Effective Time, the stock transfer
--------------------
books of GVC shall be closed and no transfer of GVC Common Stock thereafter
shall be made.
5. Representations And Warranties Of Parent.
----------------------------------------
Parent represents and warrants to GVC as follows:
5.1. Organization And Standing. Each of Parent and the Significant
-------------------------
Subsidiaries (as defined below in this Section 5.1) is a corporation duly
organized, validly existing and in good standing under the laws of its
respective state of its incorporation. Each of Parent and the Significant
Subsidiaries has the requisite corporate power to own and operate its properties
and assets, and to carry on its business as currently conducted and as proposed
to be conducted. Each of Parent and the Significant Subsidiaries is licensed or
qualified as a foreign corporation and is in good standing in every state, or
other jurisdiction, wherein the character of its property or the nature of its
activities makes such licensing or qualification necessary and wherein the
failure to be so licensed or qualified would have a Material Adverse Effect on
the business and operations of Parent taken as a whole. Parent has furnished
GVC or GVC's counsel with copies of its and the Sub's current Certificates or
Articles of Incorporation and Bylaws (certified by its corporate Secretary).
These copies are true, correct and complete in the form in which they now exist
and contain all amendments through the date of this Agreement.
5.2. Capitalization. Parent's entire authorized capital stock consists
--------------
of 35,000,000 shares of Parent Common Stock, par value $.01 per share, and
1,000,000 shares of preferred stock, par value $.001 per share. At March 12,
1996, there were 25,103,666 shares of Parent Common Stock issued and
outstanding. This does not include 1,093,726 shares of Parent Common Stock
reserved for issuance pursuant to Parent's stock option plans and an additional
700,000 shares of Parent Common Stock that have been reserved for issuance
pursuant to Parent's stock option plans pursuant to amendments to those plans
approved by the Board Of Directors of Parent on March 5, 1996 subject to
approval by Parent's stockholders. There are no shares of Parent's preferred
stock outstanding.
5.3. Authority; Non-Contravention. Parent has the requisite power and
----------------------------
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, the
performance by Parent of its obligations hereunder and the consummation of the
transactions contemplated hereby have been duly authorized by its Board Of
Directors, and, except for the corporate filings required by state law, no other
corporate proceedings on the part of Parent are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Parent and (assuming the due
authorization, execution and delivery hereof by GVC) constitutes a valid and
binding obligation of Parent enforceable against Parent in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws of general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at law).
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not, conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
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cancellation or acceleration of any obligation or to the loss of a material
benefit under, or result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of Parent under, any
provision of (i) the Certificate Of Incorporation or Bylaws (true and complete
copies of which as of the date hereof have been delivered to GVC) of Parent,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement instrument, permit, concession, franchise or license applicable
to Parent or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or any of its properties or assets, other than,
in the case of clauses (ii) or (iii), any such conflicts, violations, defaults,
right, liens, security interests, charges or encumbrances that, individually or
in the aggregate, would not have a Material Adverse Effect on Parent, materially
impair the ability of Parent to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
5.4. Governmental Consents. Except for actions that have been or will
---------------------
be taken prior to the Closing, no consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
governmental or regulatory authority on the part of Parent or any Significant
Subsidiary is required in connection with the consummation of the transactions
contemplated by this Agreement. As of the Closing, there will be no consent of
any third party that has not been obtained and that is required in order to
consummate the transactions being consummated at the Closing.
5.5. Disclosure. Neither this Agreement nor any Schedule, Exhibit or
----------
certificate delivered in accordance with the terms hereof or any document or
statement in writing which has been supplied by or on behalf of Parent or of any
of the Significant Subsidiaries, or by any of the directors or officers of
Parent or of any of the Significant Subsidiaries, in connection with the
transactions contemplated hereby, contains any untrue statement (attributable to
Parent) of a material fact. There is no fact known to Parent which would cause
a Material Adverse Effect on the business, prospects or financial condition of
Parent and the Significant Subsidiaries or any of their respective properties or
assets taken as a whole, which has not been set forth in this Agreement or in
the Schedules or Exhibits or certificates, SEC filings by Parent, or statements
in writing furnished in connection with the transactions contemplated by this
Agreement. Parent has fully provided GVC with all the written information that
GVC has requested for the purpose of deciding whether to consummate the Merger.
Parent agrees that, during the period between execution of this Agreement and
the date of the Closing, Parent will provide all additional information that GVC
reasonably requests.
5.6. SEC Documents. Parent has filed all required documents with the
-------------
SEC since January 1, 1993 (the "Parent SEC Documents"). As of their respective
dates, the Parent SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
none of the Parent SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Parent
included in the Parent SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of the unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly present the consolidated financial position of Parent and its
consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and statements of cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). There is no
liability or obligation of any kind, whether accrued, absolute,
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fixed or contingent, of Parent or any Subsidiary of Parent of which the
executive officers of Parent have knowledge and which is required by generally
accepted accounting principles to be reflected or reserved against or otherwise
disclosed in the most recent financial statements of Parent included in the
Parent SEC Documents which is not so reflected or reserved against that
individually or in the aggregate would have a Material Adverse Effect on Parent.
5.7. Reorganization. To the knowledge of Parent, neither Parent nor Sub
--------------
has taken any action or failed to take any action which action or failure to
take action would jeopardize the qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code. Without limiting the
foregoing: (i) Sub is wholly owned directly by Parent, (ii) Parent has no plan
or intention: to cause the Surviving Corporation to issue any shares of stock
following the Merger, to reacquire any of the Parent Common Stock issued in the
Merger, to liquidate the Surviving Corporation, to merge the Surviving
Corporation with or into another corporation, to sell or otherwise dispose of
any stock of the Surviving Corporation, or to cause the Surviving Corporation to
sell or otherwise dispose of (except in the ordinary course of business) any of
its assets, (iii) following the Merger, the Surviving Corporation will continue
at least one significant historic business line of GVC, or use at least a
significant portion of GVC's historic business assets in a business, in each
case within the meaning of Treas. Reg. (S) 1.368-1(d), and (iv) neither Parent
nor any of its Subsidiaries own, nor have any of them owned during the past five
years, any capital stock of GVC.
6. Representations And Warranties Of GVC. GVC agrees, represents and
-------------------------------------
warrants to Parent and Sub as follows:
6.1. Organization And Standing. GVC is a corporation duly organized,
-------------------------
validly existing and in good standing under the laws of the State of Kansas.
GVC has the requisite corporate power to own and operate its properties and
assets, and to carry on its business as currently conducted and as proposed to
be conducted. GVC is licensed or qualified as a foreign corporation and is in
good standing in every state, or other jurisdiction, wherein the character of
its property or the nature of its activities makes such licensing or
qualification necessary and wherein the failure to be so licensed or qualified
would have a Material Adverse Effect on the business and operations of GVC taken
as a whole. GVC does not own or lease property in any jurisdiction other than
Colorado and Kansas.
6.2. No Subsidiaries. GVC has no partially or wholly-owned, direct or
---------------
indirect, Subsidiaries.
6.3. Capitalization. GVC's entire authorized capital stock consists of
--------------
500,000 shares of GVC Common Stock, par value $1.00 per share, and no shares of
preferred stock. At April 10, 1996, there were 50,000 shares of GVC Common
Stock issued and outstanding and there are no shareholders of GVC other than the
GVC Shareholders listed in Section 1.11. GVC has no stock option plans or
agreements. GVC has granted no warrant, call, option, convertible security or
other agreement or right (contingent or otherwise) to purchase or acquire any
GVC Common Stock or any other capital stock of GVC, GVC has no commitment to
issue such warrant, call, option, convertible security or other right, and, to
the best of GVC's knowledge, GVC has no obligation, contingent or otherwise, to
purchase, redeem, or otherwise acquire any shares of GVC's capital stock or any
interest therein or to pay any dividend or to make any other distribution in
respect thereof, except as permitted by this Agreement.
6.4. Authority; Non-Contravention. GVC has the requisite power and
----------------------------
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, the
performance by GVC of its obligations hereunder and the consummation of the
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<PAGE>
transactions contemplated hereby have been duly authorized by its Board Of
Directors and, subject to the approval of the shareholders of GVC as provided in
Section 8.2 of this Agreement, and, except for the corporate filings required by
state law, no other corporate proceedings on the part of GVC are necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by GVC and (assuming
the due authorization, execution and delivery hereof by Parent and Sub and
assuming the approval of the shareholders of GVC as provided in Section 8.2 of
this Agreement) constitutes a valid and binding obligation of GVC enforceable
against GVC in accordance with its terms, except to the extent enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or affecting
the enforcement of creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law). The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
GVC under, any provision of (i) the Articles Of Incorporation or Bylaws (true
and complete copies of which as of the date hereof have been delivered to
Parent) of GVC, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement instrument, permit, concession, franchise or
license applicable to GVC or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to GVC or any of its properties or
assets, other than, in the case of clauses (ii) or (iii), any such conflicts,
violations, defaults, right, liens, security interests, charges or encumbrances
that, individually or in the aggregate, would not have a Material Adverse Effect
on GVC , materially impair the ability of Sub to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
6.5. Contracts And Commitments. Other than this Agreement and the
-------------------------
agreements and documents contemplated herein, attached hereto as Schedule 6.5 is
a list of all agreements, contracts, indebtedness, liabilities and other
obligations known to GVC to which GVC is a Party or by which GVC is bound or
subject, which are material to the conduct and operations of its business. True
and complete copies of such agreements and obligations, if extant, have been
made available for inspection by Parent at the offices of GVC. Except as set
forth on Schedule 6.5, all of the contracts and other agreements listed on
Schedule 6.5 are valid and binding upon GVC in accordance with their terms, and
neither GVC nor, to the knowledge of GVC, any other Party is in default, nor has
GVC received or sent notice of default or of any unresolved claim, under any
such contracts or other agreements. Except as separately identified on Schedule
6.5, no approval or consent of any person is needed in order that the contracts
and other agreements set forth on Schedule 6.5 or on any other Schedule continue
in full force and effect following the consummation of the transactions
contemplated by this Agreement.
6.6. Compliance With Other Instruments. GVC is not in violation of any
---------------------------------
term of its Articles Of Incorporation or Bylaws, or in any respect material to
the business and operations of GVC taken as a whole of any contract, agreement,
instrument, judgment, decree, or order, except as set forth on Schedule 6.6
hereto. Except as set forth on Schedule 6.6 to the best of GVC's knowledge GVC
is not in violation of any material federal, state, or local law, ordinance,
statute, rule or regulation or any other material requirement of any
governmental or regulatory body, court or arbitrator applicable to the business
of that entity. GVC holds, or believes that in the ordinary course of business
it will be able to obtain, all licenses, permits, orders and approvals of any
federal, state or local governmental or regulatory bodies that are material to
or necessary for the conduct of the business of GVC (collectively,
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<PAGE>
"Permits"). All Permits are in full force and effect; and no proceeding is
pending or, to the knowledge of Parent, threatened to revoke or limit any
Permit.
6.7. Litigation And Claims. Except as shown on Schedule 6.7 hereto, and
---------------------
except for claims of creditors of GVC for unpaid obligations, there is no
action, suit, claim or legal, administrative or arbitral proceeding or
investigation (whether or not the defense thereof or liabilities in respect
thereof are covered by insurance) pending and known to GVC or known and
currently threatened against GVC or any properties or assets of any of them nor
to the knowledge of GVC is there a basis therefor which questions the validity
of this Agreement or the right of GVC to enter into it, or to consummate the
transactions contemplated hereby, or which might result, either individually or
in the aggregate, in any Material Adverse Change in the assets, condition,
affairs or prospects of GVC, financially or otherwise, nor does GVC know of any
meritorious basis for the foregoing. Other than those incurred in the ordinary
course of business, neither GVC nor any properties or assets of GVC is a Party
or subject to the provisions of any order, writ, injunction, judgment, award or
decree of any court or government or regulatory agency or instrumentality or
arbitration tribunal of a material nature that has not been disclosed in
Schedule 6.8. All notices required to have been given to any insurance company
listed as insuring against any action, suit or claim set forth on Schedule 6.7
have been timely and duly given and no insurance company has asserted, orally or
in writing, that such claim is not covered by the applicable policy relating to
such claim.
6.8. Insurance. All the insurable properties of GVC are insured for the
---------
benefit of GVC under valid and enforceable policies in full force and effect
issued by financially sound and reputable insurers (a) in reasonably sufficient
amounts against all risks usually insured against by persons operating similar
properties in the locality where such properties are located or (b) as
reasonably determined by GVC after consideration of risk, reward, cost and other
relevant factors. GVC's insurance policies, copies of which have been provided
to Parent, are listed on Schedule 6.8 hereto.
6.9. Governmental Consents. Except for actions that have been or will
---------------------
be taken prior to the Closing, no consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
governmental or regulatory authority on the part of GVC is required in
connection with the consummation of the transactions contemplated by this
Agreement. As of the Closing, there will be no consent of any third party that
has not been obtained and that is required in order to consummate the
transactions being consummated at the Closing.
6.10. Disclosure. Neither this Agreement nor any Schedule, Exhibit or
----------
certificate delivered in accordance with the terms hereof or any document or
statement in writing which has been supplied by or on behalf of GVC, or by any
of the directors or officers of GVC in connection with the transactions
contemplated hereby, contains any untrue statement (attributable to GVC) of a
material fact. There is no fact known to GVC which would cause a Material
Adverse Effect on the business, prospects or financial condition of GVC or any
of its respective properties or assets taken as a whole, which has not been set
forth in this Agreement or in the Schedules or Exhibits or certificates or
statements in writing furnished in connection with the transactions contemplated
by this Agreement. GVC has fully provided Parent with all the written
information that Parent has requested for the purpose of deciding whether to
consummate the Merger. GVC agrees that, during the period between execution of
this Agreement and the date of the Closing, GVC will provide all additional
information that Parent reasonably requests.
6.11. Actions. Except as otherwise set forth in this Agreement or the
-------
Schedules hereto, during the period from March 1, 1996, to and including the
date of Closing, GVC will not have (a)
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declared or paid any dividends, or authorized or made any distribution upon or
with respect to any class or series of its capital stock or redeemed, purchased
or otherwise acquired any shares of its capital stock or any option, warrant or
other right to purchase or acquire any such shares, (b) incurred any
indebtedness for money borrowed or incurred any other liabilities or
obligations, or (c) made any loans or advances to any officer, director or
shareholder, (d) sold, exchanged or otherwise disposed of any its assets or
rights, (e) permitted any of its assets to be subjected to any mortgage, pledge,
lien, security interest, encumbrance, restriction or charge of any kind, (f)
sold, transferred or otherwise disposed of any assets, (g) made any capital
expenditure or commitment therefor, (h) made any bonus or profit sharing
distribution or payment of any kind, (i) increased its indebtedness for borrowed
money, or made any loan to any person, (j) written-off as uncollectible any
notes or accounts receivable, (k) granted any increase in the rate of wages,
salaries, bonuses or other remuneration of any officer, director, employee or
consultant, (l) cancelled or waived any claims or rights, (m) made any change in
any method of accounting or auditing practice, (n) otherwise conducted its
business or entered into any transaction, other than in the usual and ordinary
manner and in the ordinary course of its business, or (o) agreed, whether or not
in writing, to do any of the foregoing. GVC will cause all outstanding bank
debt to be paid in full prior to the Effective Time.
6.12. Taxes. All income, excise, occupation, franchise, and other
-----
taxes, duties or charges levied, assessed or imposed upon GVC by the United
States or by any government, state, municipality or governmental subdivision
have been duly paid or adequately provided for or are being timely and properly
contested, and all income, excise, franchise and other tax reports or other
reports required by law or regulation have been duly filed or extensions have
been duly obtained. All federal and state tax returns of GVC have been filed by
GVC as required with the appropriate governmental agency and all assessments
with respect to such periods have been paid or adequately provided for or are
being timely and properly contested. Since January 1, 1990, (a) no audit of any
federal, state or local tax returns of GVC has been conducted, is in progress
or, to GVC's knowledge, has been threatened, (b) GVC has not waived any statute
of limitations with respect to any of its tax liabilities, including, without
limitation, liability for federal income or any other taxes for any period prior
to the date hereof, and (c) no consents have been filed pursuant to Section
341(f) of the Code by GVC or any transferor corporation to GVC. The federal and
state income tax returns for the fiscal year ended December 31, 1995 have been
filed. The GVC Shareholders will prepare and file a federal and state income
tax return for the period through the Effective Time. This tax return will be
prepared in sufficient detail to determine the tax basis of the investments as
of that date.
6.13. No Employees; No Retirement Obligations. GVC has no employees.
---------------------------------------
GVC has no obligation under any pension, retirement or similar plan or
obligation, whether of a legally binding nature or in the nature of informal
understandings. GVC has no employment contracts, collective bargaining
agreements, health, medical, long-term disability, dental, overriding royalty
plans, or pension, bonus, profit-sharing, stock option, or 401(k) plans, or
other agreements providing for employee remuneration or benefits, or any
consulting, commission or fee agreements with independent contractors.
6.14. Books And Records. With respect to matters occurring since the
-----------------
inception of GVC, the minute books of GVC contain complete and accurate records
of all meetings and other corporate actions of GVC's shareholders, Board Of
Directors and all committees, if any, appointed by the Board Of Directors.
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6.15. Copies Of Documents. GVC has caused to be made available, to the
-------------------
extent reasonably requested by Parent, for inspection and copying by Parent and
its advisors, true, complete and correct copies of all documents referred to in
any Schedule furnished by GVC to Parent.
6.16. Officers, Directors, Employees And Consultants. Schedule 6.16
----------------------------------------------
sets forth the name and total annual compensation, from GVC, of each officer and
director and of each other consultant, agent or other representative of GVC
other than day laborers and contract employees. GVC has made no commitment or
agreement to increase the compensation or to modify the conditions or terms of
engagement of any such person and GVC has no other liability to any such person.
None of such persons has made a written threat to GVC or to any of GVC's
officers or directors to cancel or otherwise terminate such person's
relationship with GVC.
6.17. Bank Accounts. Immediately prior to the Effective Time, GVC will
-------------
distribute the funds in the GVC bank accounts at that time to Russell Briggs as
agent for the GVC Shareholders, which distribution shall be deemed to be a
payment on the Activity Notes described in Section 8.5.5.
6.18. Information. GVC has made available, and will continue to make
-----------
available upon request, to Parent all of GVC's information relating to GVC's
interests in gas transmission facilities, pipelines, gathering systems, and
related assets. All information provided or made available to Parent is
accurate, correct, and complete in all material respects.
6.19. Documents Delivered. GVC has furnished to Parent for its
-------------------
examination true and complete copies of the following: (a) the Articles Of
Incorporation, as amended, and the Bylaws, as amended, of GVC, certified as
correct and complete by the Secretary of GVC; (b) the minute book of GVC,
certified as correct and complete by the Secretary of GVC, containing all
records required to be set forth concerning all proceedings, consents, actions
and meetings of the shareholders and the Board of Directors of GVC; and (c) all
material permits, orders, and consents (issued by a governmental or quasi-
governmental authority) received by GVC, or with respect to any security of GVC,
and all applications for such permits, orders and consents, except for permits,
orders and consents, or applications therefor, issued to or received by GVC in
the ordinary course of GVC's business. No amendments will be made to the
Articles Of Incorporation or Bylaws of GVC prior to the Closing without Parent's
consent.
6.20. No Material Changes. Except as set forth in Schedule 6.20, since
-------------------
March 1, 1996, none of the following has occurred:
6.20.1. Any material transaction by GVC;
6.20.2. Any capital expenditure by GVC, except for amounts paid
for invoices from Sub as the operator of the Grand Valley Gathering Systems;
6.20.3. Any changes in the condition (financial or otherwise),
liabilities, assets, or business of GVC that, when considered individually or in
the aggregate, have a Material Adverse Effect except for general political,
economic or industry changes that GVC reasonably believes Parent already has
knowledge of from sources other than GVC;
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<PAGE>
6.20.4. The destruction of, damage to, or loss of any asset of
GVC (regardless of whether covered by insurance) that, when considered
individually or in the aggregate, has a Material Adverse Effect upon the
condition (financial or otherwise) or business of GVC;
6.20.5. Any labor matters or other events or conditions of any
character that, when considered individually or in the aggregate, have a
Material Adverse Effect upon the condition (financial or otherwise) of GVC
except for general political, economic or industry changes that GVC reasonably
believes Parent already has knowledge of from sources other than GVC;
6.20.6. Any change in accounting methods or practices
(including, without limitation, any change in depreciation or amortization
policies or rates) by GVC;
6.20.7. The declaration, setting aside, or payment of a dividend
or other distribution with respect to the capital stock of GVC, or any direct or
indirect redemption, purchase or other acquisition by GVC of any of its shares
of capital stock, except as otherwise permitted in this Agreement;
6.20.8. Any increase in the salary or other compensation payable
or to become payable by GVC to any of its officers or directors, or the
declaration, payment, or commitment or obligation of any kind for the payment by
GVC of a bonus or other additional salary or compensation to any such person;
6.20.9. The amendment or termination of any contract, agreement,
or license to which GVC is a party;
6.20.10. Any loan by GVC to any person or entity, or the
guaranteeing by GVC of any loan;
6.20.11. Any mortgage, pledge or other encumbrance of any asset
of GVC;
6.20.12. The waiver or release of any right or claim of GVC;
6.20.13. Any other events or conditions of any character within
the knowledge of GVC that, when considered individually or in the aggregate,
have or might reasonably be expected to have a Material Adverse Effect on the
condition (financial or otherwise), business or assets of GVC except for general
political, economic or industry events or conditions that GVC reasonably
believes Parent already has knowledge of from sources other than GVC;
6.20.14. The issuance or sale by GVC of any shares of its
capital stock of any class, or of any other of its securities;
6.20.15. The granting, by GVC, exercise or expiration of options
or other rights to purchase securities of GVC; or
6.20.16. Any agreement by GVC to do any of the things described
in this Section 6.20.
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6.21. Financial Statements; Undisclosed Liabilities. Schedule
---------------------------------------------
6.21 to this Agreement sets forth the unaudited balance sheets of GVC as of
December 31, 1995, together with the related unaudited statements of operations
for the 12 months ended December 31, 1995, certified by the Treasurer of GVC.
That Schedule also includes an unaudited balance sheet of GVC as of March 1,
1996, together with the related unaudited statements of operations for the two
months ended March 1, 1996, certified by the Treasurer of GVC. The financial
statements in Schedule 6.21 are referred to as the "GVC Financial Statements".
The financial statements as of March 1, 1996 are based on the best available
information as of the Effective Time and may be modified for subsequent
information as provided in Section 8.5. Except as set forth in Schedule 6.21,
the GVC Financial Statements have been prepared on a tax basis consistently
followed by GVC throughout the periods indicated, and fairly present the
financial position of GVC as of the respective dates of the balance sheets
included in the GVC Financial Statements, and the results of the operations for
the respective periods indicated. GVC does not have any debt, liability or any
obligations of any nature, whether accrued, absolute, contingent, or otherwise,
and whether due or to become due, including a debt, liability or obligation
relating to or arising out of any act, transaction, circumstance or state of
facts that occurred or existed on or before March 1, 1996, that is not
reflected, reserved against or noted in GVC's balance sheet as of March 1, 1996,
included in the GVC Financial Statements, except for those debts, liabilities or
obligations that are not required by generally accepted accounting principles to
be included in the GVC Financial Statements and that are set forth in
Schedule 6.21. The statements made in the preceding sentence are to the best
of GVC's knowledge and belief with respect to matters occurring prior to March
1, 1996. All material debts, liabilities, and obligations incurred by GVC after
March 1, 1996 were incurred in the ordinary course of business, and are usual
and normal in amount both individually and in the aggregate.
6.22. Leases. Schedule 6.22 attached to this Agreement is a
------
complete and accurate legal description of each parcel of real property, other
than the Grand Valley System, leased to GVC. Schedule 6.22 also contains a
description of all buildings located on the real properties described in that
Schedule. In addition, Schedule 6.22 sets forth a statement of the rent
chargeable and the lease term expiration date for each of the real properties
described in that Schedule. Except as set forth in Schedule 6.22, all the leases
in Schedule 6.22 are valid, in good standing, and in full force and there does
not exist any default or event that with notice or lapse of time, or both, would
constitute a default under any of these leases.
6.23. No Encumbrances. All of GVC's interests in the Grand
---------------
Valley System and in tangible and intangible property are free and clear of
restrictions on or conditions to transfer or assignment, and free and clear of
liens, pledges, charges, encumbrances, equities, claims, conditions, or
restrictions, except for (a) those restrictions, conditions or liens disclosed
in GVC's balance sheet as of December 31, 1995 included in the GVC Financial
Statements, or in Schedule 6.23 to this Agreement; (b) the lien of current taxes
not yet due and payable; and (c) matters that, in the aggregate, are not
substantial and do not materially detract from or interfere with the present or
intended use of these assets, or do not materially impair the business
operations of GVC. All real property and tangible personal property of GVC is in
good operating condition and repair, ordinary wear and tear excepted. GVC is in
possession of all premises leased to it from others. To the best of GVC's
knowledge, no officer, director, or representative of GVC, nor any spouse, child
or other member of the immediate family of these persons, owns, or has any
interest, directly or indirectly, in any of the real or personal property owned
by or leased to GVC. GVC does not occupy any real property in violation of any
law, regulation or decree.
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6.24. Reorganization. To the knowledge of GVC, GVC has not taken
--------------
any action or failed to take any action which action or failure to take action
would jeopardize the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code. Without limiting the foregoing: (i) to
the knowledge of the executive officers of GVC, there is no plan or intention on
the part of the holders of GVC Common Stock to sell, exchange, or otherwise
dispose of a number of shares of Parent Common Stock that would cause paragraph
2 of Section 7.03 of Rev. Proc. 77-37 (as amplified) not to be true as applied
to the Merger, and all the GVC Shareholders own more than five percent of the
outstanding GVC Common Stock, (ii) as of the Effective Time and immediately
following the Merger, the Surviving Corporation will hold "substantially all" of
GVC's properties within the meaning of Section 368(a)(2)(E) of the Code and Rev.
Proc. 77-37 (as amplified), (iii) there is no intercorporate indebtedness
between GVC and Parent, (iv) immediately following the Merger, the Surviving
Corporation will be wholly owned directly by Parent, and the Surviving
Corporation will not have outstanding any type of right or obligation pursuant
to which any person could acquire capital stock of the Surviving Corporation,
and (v) GVC has no plan or intention for the Surviving Corporation to issue
additional shares of its capital stock following the Merger.
6.25. Restricted Stock. GVC understands and agrees that the
----------------
shares of Parent Common Stock have not been registered under federal or state
securities laws and are "restricted" securities as defined in Rule 144 under the
Securities Act of 1933, as amended (the "Act"). GVC understands and agrees that
no holder of GVC Common Stock may sell, offer for sale, transfer, pledge or
hypothecate the shares of Parent Common Stock in the absence of an effective
registration statement covering that transaction, under all applicable federal
and state securities laws, unless that transaction is exempt from registration
under all applicable federal and state securities laws, including an exemption
under rule 144 promulgated under the Act. GVC understands that the GVC
Shareholders will have the registration rights with respect to the Parent Common
Stock granted pursuant to Section 8.9. Each GVC Shareholder shall agree to be
bound by the provisions of this Section 6.25 by signing a counterpart of this
Agreement prior to Closing.
7. Representations And Warranties Regarding Sub. Parent and Sub jointly
--------------------------------------------
and severally represent and warrant to GVC as follows:
7.1. Organization and Standing. Sub is a corporation duly incorporated,
-------------------------
validly existing and in good standing under the laws of the State of Colorado.
7.2. Capital Structure. The authorized capital stock of Sub consists of
-----------------
10,000 shares of common stock, par value $.001 per share, all of which are
validly issued and outstanding, fully paid and nonassessable and are owned by
Parent free and clear of all liens, claims and encumbrances.
7.3. Authority; Non-Contravention. Sub has the requisite power and
----------------------------
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, the
performance by Sub of its obligations hereunder and the consummation of the
transactions contemplated hereby have been duly authorized by its Board Of
Directors and by Parent as Sub's sole stockholder, and, except for the corporate
filings required by state law, no other corporate proceedings on the part of Sub
are necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by Sub
and (assuming the due authorization, execution and delivery hereof by GVC)
constitutes a valid and binding obligation of Sub enforceable against Sub in
accordance with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
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<PAGE>
similar laws of general applicability relating to or affecting the enforcement
of creditors' rights and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law). The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Sub under, any provision of (i) the Certificate Of Incorporation or Bylaws (true
and complete copies of which as of the date hereof have been delivered to GVC)
of Sub, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement instrument, permit, concession, franchise or license
applicable to Sub or (iii) any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Sub or any of its properties or assets, other
than, in the case of clauses (ii) or (iii), any such conflicts, violations,
defaults, right, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
Sub, materially impair the ability of Sub to perform its obligations hereunder
or prevent the consummation of any of the transactions contemplated hereby.
8. Certain Agreements.
------------------
8.1. Access And Information. GVC shall give to Parent and Sub and their
----------------------
respective representatives and Sub shall give to GVC and its representatives,
during normal business hours from the date of execution of this Agreement until
the Effective Time, full access to all properties, books, contracts and records
(including tax returns and insurance policies) of or relating to GVC, Parent, or
Sub, respectively, with all information reasonably requested by the other Party.
Except as agreed to by GVC, Parent, and Sub, all information obtained hereunder
which is not otherwise public shall be held confidential and, in the event of
termination of this Agreement, all documents (including copies thereof) obtained
hereunder containing such information shall be destroyed or returned to the
Party from which they were obtained. At the Closing, GVC shall deliver to
Parent all books, contracts, and records (including tax returns and insurance
policies) of or relating to GVC.
8.2. Shareholder Authorization. The Board of Directors of GVC will
-------------------------
submit this Agreement and the transactions contemplated by this Agreement to its
shareholders for their approval in accordance with all applicable laws and the
governing documents of GVC at the earliest practicable date.
8.3. Operation Of Business. Each of GVC and Sub agrees with the other
---------------------
that from the date hereof to the Effective Time, except as otherwise consented
to or approved by the other in writing, each will operate its business as
presently operated in the ordinary course, and, consistent with those
operations, each of GVC and Sub will substantially comply with all applicable
legal and contractual obligations, except where noncompliance will not cause a
Material Adverse Effect on their respective operations, and will use its best
efforts consistent with past practices to preserve the goodwill of its
suppliers, customers and others with whom it has business relationships; and
neither GVC nor Sub, without the written consent of the other Party, (a) shall
institute nor use any methods of purchase, sale, lease, management, accounting
or operation that are inconsistent with practices normally followed or that vary
substantially from those methods used by that Party as of the date of this
Agreement, (b) will take any action (or omit to take any action) which action or
omission would cause any representation to be untrue at any time prior to the
Effective Time as if that representation or warranty were made at and as of the
Effective Time, or make any change in any method of reporting income or expenses
for federal income tax purposes.
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<PAGE>
8.4. Preservation Of Business. Unless it has the written consent of
------------------------
the other Party to this Agreement, GVC and Sub will each use its best efforts to
preserve its business organization intact and to preserve its present
relationships with suppliers, customers and others having business relationships
with it.
8.5. Allocation Of Revenues, Expenses, And Capital Investments.
---------------------------------------------------------
8.5.1. The GVC Shareholders represent that GVC is being reported
as an "S corporation" for income tax purposes under the Code. As an "S
corporation", the profits and losses of GVC for all periods prior to and through
the Cutoff Date are taxed to the GVC Shareholders.
8.5.2. Parent, Sub and GVC Shareholders each acknowledge that
neither the Parent nor the Sub is acquiring any interest in the activities of
GVC prior to the Cutoff Date. All revenue and expense, including capital
funding, for all periods prior to and through the Cutoff Date will be allocated
to the GVC Shareholders. Any cash distributions with respect to activities
prior to the Cutoff Date will accrue to the benefit of the GVC Shareholders.
The GVC Shareholders will own all rights to any cash, accounts receivable, or
other similar assets of GVC as of the Cutoff Date. The GVC Shareholders will be
obligated to pay for any accounts payable, accrued liabilities, debt balances or
similar liabilities of GVC as of the Cutoff Date.
8.5.3. Due to the nature of GVC operating activities, there is a
time lag between the occurrence of an operating activity and the date on which
information becomes available to accurately prepare the financial statements.
This information time lag will not affect the ultimate responsibility or rights
of the GVC Shareholders for activities prior to the Cutoff Date. Parent, Sub
and GVC Shareholders agree to cooperate in determining the amount of activities
accruing to each party as of the Cutoff Date. By June 30, 1996 Parent, Sub and
GVC Shareholders will determine the amount of GVC activities that occurred prior
to March 1, 1996 and the amount of activities that occurred subsequent to March
1, 1996.
8.5.4. GVC Shareholders agree to execute and deliver to GVC at
the Closing a note payable to GVC (the "Funding Note") in an amount equal to the
unpaid amounts related to capital commitments and investments accrued through
and including the Cutoff Date, which amount shall be determined using
information available to Sub and GVC immediately prior to Closing and which
amount shall be subject to adjustment as provided in this Section 8.5. The
Funding Note shall be in the form of Exhibit A attached to and made a part of
this Agreement. The Funding Note will not bear interest and will mature on June
30, 1996. Adjustments to the amount of the Funding Note will be determined
during the period from the Cutoff Date to June 30, 1996 in accordance with this
Section 8.5. The Funding Note will include bank debt owed by GVC as of the
Cutoff Date that has not been paid prior to the Closing and interest due on the
bank debt through the date the bank debt is repaid. The GVC Shareholders will
cause the bank debt to be paid in full prior to the Closing. Amounts paid by the
GVC Shareholders after the Cutoff Date to repay the bank debt, either directly
to the bank or to GVC for repayment to the bank, will be removed from the
principal balance set forth on the Funding Note only to the extent that those
amounts were previously included in the principal balance set forth on the
Funding Note. The GVC Shareholders may make payments to GVC to reduce the
principal balance of the Funding Note during the period from the Cutoff Date to
the Effective Time. The principal balance of the Funding Note will be reduced
for any prepayments made by GVC for capital costs for which GVC is not
responsible pursuant to the provisions of this Section 8.5 that were not
incurred prior to the Cutoff Date.
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8.5.5. GVC agrees to execute and deliver to the GVC Shareholders at
Closing notes payable to the GVC Shareholders (the "Activity Notes") in an
aggregate amount equal to the net undistributed revenue and expense of GVC as of
the Cutoff Date, with each GVC Shareholder receiving an Activity Note in a face
amount equal to the product of the aggregate amount of the net undistributed
revenue and expenses of GVC as of the Cutoff Date multiplied by a fraction, the
numerator of which is the number of shares of GVC Common Stock owned by that GVC
Shareholder on the Cutoff Date and the denominator of which is 50,000. The
principal face amounts of the respective Activities Notes shall be determined
using information available to Sub and GVC immediately prior to Closing and
shall be subject to adjustment as provided in this Section 8.5. The Activity
Notes shall be in the form of Exhibit B attached to and made a part of this
Agreement. The Activity Notes will not bear interest and will mature on June
30, 1996. Adjustments to the amount of the Activity Notes will be determined
during the period from the Cutoff Date to June 30, 1996 in accordance with this
Section 8.5. GVC may make payments to reduce the balance of the respective
Activity Notes during the period from the Cutoff Date to the Effective Time.
8.5.6. After the Effective Time, the GVC Shareholders will remain
obligated to GVC for all unpaid amounts on the Funding Note and GVC will be
obligated to the GVC Shareholders for all unpaid amounts on the Activity Notes.
During the period from the Effective Time to June 30, 1996, the outstanding
amounts of the Funding Note and the Activity Notes will be adjusted for
information that becomes available regarding GVC activities that occurred prior
to the Cutoff Date. On June 30, 1996, the GVC Shareholders will pay the
remaining balance of the Funding Note and GVC will pay the remaining balance of
the Activity Notes.
8.5.7. The GVC Financial Statements provided in accordance with
Section 6.21 are based on the best available information as of the Effective
Time. As of the Effective Time, the GVC Shareholders will provide to the Parent
and Sub all information pertaining to GVC transactions from the Cutoff Date to
the Effective Time for purposes of preparing the March 1, 1996 financial
statements and determining the amount of the Funding Note and the Activity
Notes. The GVC Financial Statements will be revised to incorporate the
additional information that becomes available subsequent to the Effective Time.
On or before June 30, 1996, the Parent, Sub and the GVC Shareholders will
prepare final GVC Financial Statements as of March 1, 1996 based on all
available information.
8.5.8. During the period from the Cutoff Date to the Effective Time,
GVC will continue to process cash receipts and make cash disbursements required
in the normal course of its business subject to the terms of this Agreement.
Distributions will be made to and contributions received from the GVC
Shareholders to the extent the underlying activities occurred prior to the
Cutoff Date. Any such distributions or contributions will be recorded as
adjustments to the balance of the Funding Note and Activity Notes as
appropriate. Until the Effective Time, GVC and the GVC Shareholders agree that
cash related to all transactions with respect to activities subsequent to the
Cutoff Date will remain the property of GVC. The Parent, Sub and the GVC
Shareholders agree to maintain adequate records to support the cash transactions
being processed properly with respect to the Cutoff Date.
8.5.9. As of the Cutoff Date, GVC was obligated to fund various
construction activities related to the Grand Valley Gathering Systems and
related facilities in which GVC owned an interest. These activities were
subject to various funding requests and prepayments to the partnerships
operating the Grand Valley Gathering Systems. The GVC Shareholders will be
obligated only for the construction work completed and costs incurred through
the Cutoff Date. GVC will be obligated for construction costs incurred
subsequent to the Cutoff Date. Cash settlements of the Funding Note on June
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<PAGE>
30, 1996 will be made in a manner that properly charges the GVC Shareholders for
costs incurred as of the Cutoff Date with consideration given to unapplied
prepayments of GVC prior to the Cutoff Date.
8.5.10. As of the Cutoff Date, GVC is a party to the construction and
operation of a gas gathering system and related facilities in the Rulison field
located in Garfield County, Colorado referred to as the Rulison Gathering System
("RGS") that is a part of the Grand Valley Gathering Systems. The Parties agree
that the GVC Shareholders will be obligated for cost allocations with respect to
the Grand Valley Gathering Systems in the aggregate and with respect to RGS
individually through the Cutoff Date, including cost allocations resulting from
any adjustments to the ownership interests in the Grand Valley Gathering Systems
for time periods prior to and as of the Cutoff Date, and GVC will be responsible
for the cost allocations for time periods subsequent to the Cutoff Date. The
adjustments required as a result of this Section 8.5.10 will adjust the balances
of the Funding Note and Activity Notes.
8.5.11. The GVC Shareholders will be obligated for two-twelfths
(2/12) of 1996 property taxes related to GVC's ownership in the Grand Valley
Gathering Systems and the related facilities relating for the period from
January 1, 1996 to the Cutoff Date. The tax amount due for 1996 will be
determined based on the 1995 property tax bills. The property tax amount will
be recorded as an adjustment to the Activity Notes.
8.6. Interim Operations. From the date of this Agreement to the
------------------
Effective Time, GVC will not, except as expressly contemplated by this Agreement
or unless Sub gives its prior written approval: (a) amend or otherwise change
its Articles Of Incorporation or Bylaws; (b) issue or sell or authorize for
issuance or sale additional shares of any class of capital stock, or
subscriptions, options (including employee stock options), warrants, rights or
convertible securities or other agreements obligating GVC to issue shares of its
capital stock, (c) declare, set aside, make or pay any dividend or other
distribution with respect to its capital stock; (d) redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock; (e) issue
any instrument that permits participation in the revenues or profits of GVC; (f)
incur any indebtedness; (g) permit the sale or encumbrance of any of the assets
of GVC; (h) enter into any employment or severance agreements or similar
agreements with any person; or (i) agree to, make, engage in or allow to occur
or continue any of the following:
8.6.1. Any material transaction;
8.6.2. Any capital expenditure;
8.6.3. Any changes in its condition (financial or otherwise),
liabilities, assets, or business that, when considered individually or in the
aggregate, have a material adverse effect;
8.6.4. The destruction of, damage to, or loss of any asset of GVC
(regardless of whether covered by insurance) that, when considered individually
or in the aggregate, has a material adverse effect upon the condition (financial
or otherwise) or business of GVC;
8.6.5. Any labor troubles or other events or conditions of any
character that, when considered individually or in the aggregate, have a
material adverse effect upon the condition (financial or otherwise) or business
of GVC;
8.6.6. Any change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization policies or
rates);
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<PAGE>
8.6.7. Any increase in the salary or other compensation payable or
to become payable to any of its officers or directors, or the declaration,
payment, or commitment or obligation of any kind for the payment of a bonus or
other additional salary or compensation to any such person;
8.6.8. The material amendment or termination of any material
contract, agreement, or license to which it is a party;
8.6.9. Any loan to any person or entity, or the guaranteeing of
any loan;
8.6.10. Any mortgage, pledge or other encumbrance of any of its
assets; or
8.6.11. The waiver or release of any right or claim.
8.7. Reorganization. During the period from the date of this Agreement
--------------
through the Effective Time, unless the other Parties shall otherwise agree in
writing, none of GVC, Parent, Sub, or any other Subsidiary of Parent shall
knowingly take or fail to take any action which action or failure to act would
jeopardize qualification of the Merger as a reorganization within the meaning of
Section 368(a) of the Code.
8.8. Compliance With The Securities Act. Prior to the Effective Time,
----------------------------------
GVC shall cause to be prepared and delivered to Parent a list (reasonably
satisfactory to counsel for Parent) identifying all persons who, at the time of
the Closing, may be deemed to be "affiliates" of GVC as that term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act (the "Affiliates").
The Company shall use its reasonable best efforts to cause each person who is
identified as an Affiliate in such list to deliver to Parent on or prior to the
Effective Time a written agreement, in the form previously approved by the
Parties hereto, that such Affiliate will not sell, pledge, transfer or otherwise
dispose of any shares of Parent Common Stock issued to such possible Affiliate
pursuant to the Merger, except pursuant to an effective registration statement
or in compliance with Rule 145 or an exemption from the registration
requirements of the Securities Act.
8.9. Registration Rights.
-------------------
8.9.1. Parent will no later than 20 days after the Closing file
with the Securities And Exchange Commission (the "SEC") a registration statement
covering the sale in the open market by the GVC Shareholders of the Parent
Common Stock issued to the GVC Shareholders pursuant to this Agreement. Parent
will undertake due diligence to cause the registration statement to become
effective with the SEC as soon as possible after its filing.
8.9.2. As to any registration statement, Parent's obligations
contained in this Section 8.9 shall be conditioned upon timely receipt by the
Company in writing of information as to the terms of the contemplated transfer
to be registered furnished by and on behalf of the GVC Shareholders, and such
other information as the Company reasonably may require from the GVC
Shareholders or any underwriter for any shares of the Parent Common Stock for
inclusion in the registration statement. Such information shall be provided to
the Company in writing within 10 days after the request for that information by
the Company.
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<PAGE>
8.9.3. All registration expenses incurred by the Company in
connection with any registration, qualification or compliance pursuant to this
Section 8.9, including reasonable printing expenses, fees and disbursements of
the Company's counsel, and registration and filing fees relating to shares of
Parent Common Stock to be registered on behalf of the Company pursuant to any
registration statement required to be filed by the Company on behalf of the GVC
Shareholders pursuant to this Section 2, shall be borne by the Company. All
selling expenses, including commissions and brokers' or investment bankers'
expense allowances, allocable to shares of Parent Common Stock registered on
behalf of the GVC Shareholders shall be borne by the GVC Shareholders.
8.9.4. In the case of a registration, qualification or compliance
effected by the Company on behalf of the GVC Shareholders pursuant to this
Section 8.9, the Company shall keep the GVC Shareholders advised in writing as
to the initiation of such registration, qualification, and compliance and as to
the completion thereof. At its expense, the Company will keep such
registration, qualification or compliance effective for a period of three years
after the Closing or until the GVC Shareholders have completed the distribution
described in the registration statement relating thereto, whichever first
occurs.
8.9.5. In the case of a registration, qualification or compliance
effected by the Company on behalf of the GVC Shareholders pursuant to this
Section 8.9, the Company shall cooperate with the GVC Shareholders in taking
such action as may be necessary to register or qualify the sale of the GVC
Shareholders' shares of Parent Common Stock under the securities acts or blue
sky laws of such jurisdictions as the GVC Shareholders may reasonably request
and to do any and all other acts and things which may be necessary or advisable
to enable the GVC Shareholders to complete such proposed sale or other
distribution of the GVC Shareholders' shares of Parent Common Stock in any such
jurisdiction; provided however, that in no event shall the Company be obligated
to register or qualify under the blue sky laws of any state in which the Parent
Common Stock currently is not qualified for resale, or be obligated to register
or qualify the securities in any jurisdiction which would require Parent to
qualify to do business or to file a general consent to service of process in any
jurisdiction where it shall not then be qualified.
8.9.6. Parent will indemnify and hold harmless the GVC Shareholders
against any loss, claim, damage or liability (or action in respect thereof) to
which the GVC Shareholders may become subject, under the Securities Act of 1933,
as amended (the "Act"), or otherwise, insofar as any such loss, claim, damage or
liability (or action in respect thereof) is caused by any untrue statement or
alleged untrue statement of any material facts contained in the registration
statement, any prospectus contained in the registration statement, or any
amendment or supplement thereto, or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements made therein not misleading.
Notwithstanding the foregoing provisions of this paragraph, Parent will not be
liable in any such case to the extent that any such loss, claim, damage, expense
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by any of the GVC Shareholders or any agent or other
representative of any of the GVC Shareholders.
8.9.7. Each GVC Shareholder, jointly and severally, will indemnify
and hold harmless Parent and any underwriter (as defined in the Act) for Parent
and each person, if any, who controls Parent or such underwriter against any
loss, claim, damage or liability (or action in respect thereof) to which Parent
or such underwriter or controlling person may become subject, under the Act or
otherwise, insofar as any such loss, claim, damage or liability (or action in
respect thereof) is caused
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by any untrue statement or alleged untrue statement or omission or alleged
omission made in conformity with information furnished by the GVC Shareholders
or any agent or other representative of the GVC Shareholders or other
representative of the GVC Shareholders for use in the registration statement.
8.10. Accuracy Of Representations. Each Party will take all reasonable
---------------------------
action necessary to render accurate, as of the Closing, its representations and
warranties contained in this Agreement, and it will refrain from taking any
action that would render any such representation or warranty inaccurate as of
that time. Each Party will use its best efforts to perform or cause to be
satisfied each covenant or condition to be performed or satisfied by it pursuant
to the terms of this Agreement.
8.11. Consents, Waivers And Approvals. As soon as practicable after
-------------------------------
the date hereof, each of GVC and Sub shall use its respective best efforts to
obtain in writing all such consents, waivers, approvals and authorizations
required prior to the consummation of the Merger.
8.12. Notice Of Breach Of Warranty. GVC will immediately give notice
----------------------------
to Sub of the occurrence of any event or the failure of any event to occur that
has resulted in a breach of GVC's representations or warranties or a failure by
GVC to comply with any covenant, condition or agreement contained in this
Agreement. Each of Parent and Sub will immediately give notice to GVC of the
occurrence of any event or the failure of any event to occur that has resulted
in a breach of Parent's or Sub's representations or warranties or a failure by
Parent or Sub to comply with any covenant, condition or agreement contained in
this Agreement.
8.13. Additional Documents; Further Assurances. In addition to the
----------------------------------------
schedules and other items specifically required to be furnished hereunder, GVC,
Parent, and Sub hereby agree that each will promptly furnish to the other such
further schedules, certificates and other instruments and take such other action
as may reasonably be requested in order to effectuate the purposes of this
Agreement.
8.14. Notice Of Inaccurate Information. GVC, Parent and Sub each will
--------------------------------
notify the other in writing as soon as possible of any events or occurrences
that have happened or that may happen and that have caused or that may cause any
of the information contained in this Agreement or in the Schedules to this
Agreement to become inaccurate or incomplete.
8.15. Publicity. All notices to third parties and all other publicity
---------
concerning the transactions contemplated by this Agreement shall be directed by
Parent. Notwithstanding anything to the contrary in this Section, any Party to
this Agreement shall be permitted unilaterally to make such notices and to
engage in such publicity as it reasonably deems necessary to comply with
applicable laws and regulations, including their respective reporting
obligations under the 1934 Act. The provisions of this Section shall remain in
effect only until the earlier to occur of the Closing or the termination of this
Agreement.
9. Conditions To Performance By All Parties. The obligations of all
----------------------------------------
Parties to effect the Merger shall be subject to the fulfillment at or prior to
the Effective Time of the following conditions:
9.1. The Merger shall have been approved by the board of directors and
shareholders of GVC in accordance with the Kansas Code.
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<PAGE>
9.2. The Merger shall have been approved by the board of directors of
Parent, by the board of directors of Sub, and by Parent as the sole stockholder
of Sub in accordance with the Colorado Act.
9.3. At the Effective Time, there shall not be in effect any court order
restraining or prohibiting consummation of the Merger, or any pending proceeding
brought by, or before, any governmental commission, board, agency, court or body
with a view to seeking, or in which it is sought, to restrain or prohibit
consummation of the Merger or in which it is sought to obtain divestiture of a
material amount of assets of either GVC and its Subsidiaries taken as a whole.
10. Conditions Precedent To Performance By GVC. The obligations of GVC to
------------------------------------------
effect the Merger shall be, at GVC's option, subject to the fulfillment at or
prior to the Effective Time of the following conditions (unless any or all of
them is waived by GVC):
10.1. The representations and warranties of Parent and Sub set forth in
this Agreement including the attached Schedules, shall be true and correct in
all material respects at and as of the date hereof and shall be true and correct
in all material respects at and as of the Effective Time as though made at and
as of the Effective Time, except for changes which do not have a Material
Adverse Effect on Parent or Sub and except to the extent such representations
and warranties are not true and correct by reason of actions permitted or
authorized by this Agreement or consented to in writing by GVC. GVC shall have
received a certificate of each of Parent and Sub, dated the Effective Time and
duly executed by its respective President and Secretary, as to the accuracy of
their respective representations and warranties as of the Effective Time.
10.2. Each of Parent and Sub shall have performed all obligations
required to be performed by them and shall have furnished all documents,
schedules and instruments required to be furnished by them under this Agreement
at or prior to the Effective Time. GVC shall have received a certificate of
each of Parent and Sub, dated the Effective Time and duly executed by its
respective President to this effect.
11. Conditions Precedent To Performance By Parent And Sub. The
-----------------------------------------------------
obligations of Parent and Sub to effect the Merger shall be, at Parent's and
Sub's option, subject to the fulfillment at or prior to the Effective Time of
the following conditions:
11.1. The representations and warranties of GVC set forth in this
Agreement, including the attached Schedules, shall be true and correct in all
material respects at and as of the date hereof and shall be true and correct in
all material respects at and as of the Effective Time as though made at and as
of the Effective Time, except to the extent such representations and warranties
are not true and correct by reason of actions permitted or authorized by this
Agreement or consented to in writing by Parent and Sub. Parent and Sub shall
have received a certificate of GVC, dated the Effective Time and duly executed
by its President and Secretary as to the accuracy of its representations and
warranties.
11.2. GVC shall have performed all obligations required to be performed
by it and shall have furnished all documents, schedules and instruments required
to be furnished by it under this Agreement at or prior to the Effective Time.
Parent and Sub shall have received a certificate of GVC, dated the Effective
Time and duly executed by its President to this effect.
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<PAGE>
11.3. Parent and Sub shall have received from GVC copies of the
unaudited consolidated financial statements of GVC as of and for the period from
January 1, 1996 through March 1, 1996, and those financial statements shall not
reflect any materially adverse change from the unaudited financial statements of
GVC dated as of and for the one-year period ended December 31, 1995 (in the form
included in the GVC Financial Statements) in the financial condition or results
of operations of GVC, except for changes or transactions, if any, contemplated
by this Agreement.
11.4. Parent and Sub shall have received a letter from GVC signed by
its chief financial officer, dated the Effective Time stating that on the basis
of a limited review (not an audit) of the latest available accounting records of
GVC, consultations with other responsible officers of GVC and other pertinent
inquiries that it may deem necessary, it has no reason to believe that during
the period from January 1, 1996, to a specific date not more than five business
days before the Effective Time there was any change in the financial condition
or results of operations of GVC, except for (a) changes incurred in the ordinary
and usual course of the businesses of GVC during that period that in the
aggregate are not materially adverse, and (b) other changes or transactions, if
any contemplated by this Agreement.
11.5. GVC shall have obtained and delivered to Parent and Sub the
agreements of affiliated shareholders called for by Section 8.8 hereof.
11.6. No holders of the shares of GVC Common Stock outstanding prior to
the Merger shall have exercised their appraisal rights in connection with the
Merger.
11.7. On or before the date of Closing, all necessary approvals and
consents of any Parties as set forth in Schedule 6.5 shall have been obtained by
GVC and delivered to Sub.
11.8. At or before the Closing, Parent's and Sub's counsel shall have
been furnished with all documents that it reasonably may require for the purpose
of enabling it to pass upon the valid exchange of the Parent Common Stock for
GVC Common Stock and in order to evidence the accuracy of any of the
representations or warranties and the fulfillment of any of the conditions
contained in this Agreement. All proceedings taken by GVC in connection with
the consummation of transactions contemplated by this Agreement shall be
satisfactory in form and substance to Parent and Sub and their counsel.
11.9. Parent shall have received the written opinion of Howard, Weil,
Labouisse, Friedrichs Incorporated to the effect that the Merger is fair to
stockholders of Parent from a financial point of view.
11.10. GVC Shareholders will cause the bank debt and related interest
to be paid in full.
12. Indemnification By Parent. Parent hereby agrees to indemnify and hold
-------------------------
harmless GVC, GVC's officers, directors, shareholders, employees and agents
against any and all losses, claims, damages, liabilities, costs and expenses
(including but not limited to attorneys' fees and other expenses of
investigation and defense of any claims or actions) to which they or any of them
may become subject due to, or which results from, any of the following:
12.1. Any breach of Parent's covenants, agreements, warranties or
representations contained in this Agreement.
-23-
<PAGE>
12.2. Any misstatement of a material fact contained in this Agreement
or in any of the documents executed in connection with transactions contemplated
by this Agreement, but only if the misstatement relates to information
concerning Parent and its operations.
12.3. The omission to state any fact necessary to make the statements
contained in this Agreement or in any of the documents executed in connection
with the transactions contemplated by this Agreement not misleading, but only if
the omission relates to information concerning Parent and its operations.
12.4. The operations of Parent and the Significant Subsidiaries or the
acts of their employees, acting in their capacities as such, prior to the
Closing, except that Parent shall not indemnify GVC or its officers, directors,
employees and agents for liabilities incurred by GVC in the ordinary course of
business prior to the Closing.
12.5. Actions or inactions of Parent, any Significant Subsidiary, or
the agents of Parent or any Significant Subsidiary acting in their capacity as
agents, prior to the Closing, except any such costs or losses incurred through
reasonable and good faith acts in the ordinary course of the business of Parent
and the Significant Subsidiaries.
13. Indemnification By GVC Shareholders. Each GVC Shareholder hereby
-----------------------------------
agrees to indemnify and hold harmless Parent, the Significant Subsidiaries,
Parent's and the Significant Subsidiaries' officers, directors, employees and
agents against any and all losses, claims, damages, liabilities, costs and
expenses (including but not limited to attorneys' fees and other expenses of
investigation and defense of any claims or actions) to which they or any of them
may become subject due to, or which results from, any of the following:
13.1. Any breach of GVC's covenants, agreements, warranties or
representations contained in this Agreement.
13.2. Any misstatement of a material fact contained in this Agreement
or in any of the documents executed in connection with transactions contemplated
by this Agreement, but only if the misstatement related to information
concerning GVC and its operations.
13.3. The omission to state any fact necessary to make the statements
contained in this Agreement or in any of the documents executed in connection
with the transactions contemplated by this Agreement (including without
limitation the Registration Statement) not misleading, but only if the omission
relates to information concerning GVC and its operations.
13.4. The operations of GVC or the acts of their employees, acting in
their capacities as such, prior to the Closing, except that GVC shall not
indemnify Parent or the Significant Subsidiaries or their respective officers,
directors, employees and agents for liabilities incurred by any of them in the
ordinary course of business prior to the Closing.
13.5. Actions or inactions of GVC, or the agents of GVC acting in their
capacity as agents, prior to the Closing, except any such costs or losses
incurred through reasonable and good faith acts in the ordinary course of the
business of GVC.
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<PAGE>
14. Notice Of Claim. Should any Party (the "Indemnified Party") suffer
---------------
any loss, damage or expense for which the other Party (the "Indemnifying Party")
is obligated to indemnify and hold such Indemnified Party harmless pursuant to
Section 12 or 13 of this Agreement, the following shall apply: Promptly upon
receipt by the Indemnified Party of notice of any demand, assertion, claim,
action or proceeding, judicial or otherwise, with respect to any matter as to
which the Indemnifying Party is obligated to indemnify the Indemnified Party
under the provisions of this Agreement, the Indemnified Party shall give prompt
notice thereof to the Indemnifying Party, together with a statement of such
information respecting such matter as the Indemnified Party shall then have and
a statement advising that the Indemnifying Party must notify it within 10 days
whether the Indemnifying Party will undertake the defense of such matter. The
Indemnifying Party shall not be obligated to indemnify the Indemnifying Party
with respect to any matter hereunder if the Indemnified Party has failed to use
its best efforts to notify the Indemnifying Party thereof in accordance with the
provisions of the Agreement in sufficient time to permit the Indemnifying Party
and its counsel to defend against such matter and to make a timely response
thereto, including without limitation, the preparation and assertion of an
answer or other responsive motion to a complaint, petition, notice or other
legal, equitable or administrative process relating to any such claim. Notice
of the intention of the Indemnifying Party to contest any such claim, and the
identity of counsel that the Indemnifying Party intends to employ to contest any
such claim, shall be given by the Indemnifying Party to the Indemnified Party
within 10 days from the date of mailing to the Indemnifying Party of notice by
the Indemnified Party of the assertion of any such claim. The Indemnified Party
shall have the right to approve the counsel named in the Notice provided
pursuant to the preceding sentence, provided that such approval shall not be
unreasonably withheld. The Indemnified Party shall have the right to
participate in such proceedings and to be represented by attorneys of its own
choosing; however, such representation shall be at the Indemnified Party's own
expense if the Indemnifying Party selects different counsel of its own choosing.
If the Indemnifying Party does not elect to contest any such claim, the
Indemnifying Party shall be bound by the results obtained with respect thereto
by the Indemnified Party, including any settlement of such claim. If the
Indemnifying Party elects to contest any claim, the Indemnified Party shall be
bound by the results obtained with respect thereto by the Indemnifying Party,
including any settlement of such claim.
15. Closing. Subject to the terms and conditions contained in this
-------
Agreement, the Closing shall take place at ____ p.m. Denver time on the third
business day following the date of the GVC shareholders' meeting, or on such
other date or at such other time as shall be agreed upon by GVC and Parent at
the offices of Parent. At the Closing, the following shall occur:
15.1. GVC shall deliver to Parent (a) the report of GVC's Chief
Financial Officer or President dated as of the Closing as provided in Section
10.4; (b) a certificate executed by the President and Secretary of GVC dated as
of the Closing certifying that the representations and warranties of GVC in this
Agreement are true and correct in all material respects at and as of the Closing
as though each representation and warranty had been made on that date; (c) the
opinion of GVC's counsel dated as of the Closing, as provided in Section 10.5;
(d) the stock book, stock ledger, minute book and corporate seal of GVC, and (e)
such other documents as are required to be delivered to Parent under the terms
of this Agreement.
15.2. Parent and Sub shall deliver to GVC (a) a certificate executed by
the President and Secretary of each of Parent and Sub dated as of the Closing,
certifying that the representations and warranties of Parent and Sub in this
Agreement are true and correct in all material respects at and as of the
Closing, as though each representation and warranty had been made on that date;
(b) the opinion of
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<PAGE>
Parent's counsel dated as of the Closing, as provided in Section ?; and (c) such
other documents are required to be delivered to GVC under the terms of this
Agreement.
15.3. GVC, Parent, and Sub agree that they will at any time and from
time to time after the Closing, upon the request of the other Party, perform,
execute, acknowledge and deliver all such further acts, deeds, assignments,
transfers, powers of attorney and assurances as may be required for the purpose
of effectuating the consummation of the transactions contemplated by this
Agreement.
16. Termination And Abandonment Of The Merger.
-----------------------------------------
16.1. Termination. Anything herein or elsewhere to the contrary
-----------
notwithstanding, this Agreement may be terminated and abandoned at any time
before the consummation of the Merger whether before or after adoption and
approval of the Merger and related matters by the shareholders of GVC by the
mutual consent of the Boards of Directors of Parent and GVC.
16.2. Effect Of Termination. In the event of termination and
---------------------
abandonment under Section 1.61, this Agreement shall forthwith become void and
there shall be no liability on the part of any of GVC or Parent or their
respective officers and directors, except that the provisions of the last
sentence of Section 8.1 hereof and the provisions of Section 2.3 hereof shall
continue in effect.
17. Amendment Or Waiver. This Agreement may be amended, modified or
-------------------
superseded, and any of the terms, covenants, representations, warranties or
condition hereof may be waived, but only by a written instrument executed by
GVC, Parent, and Sub; provided, however, that after approval by the GVC
shareholders, the terms of the Merger concerning the ratio of the conversion of
shares of GVC Common Stock may be amended, modified or superseded only with the
approval of Parent and GVC and the GVC shareholders. Except as expressly
otherwise required by the previous sentence or applicable law, no shareholders
approval shall be required for any amendment, modification or waiver. No waiver
of any nature, in any one or more instances, shall be deemed to be or construed
as a further or continued waiver of any condition or any breach of any other
term, representation or warranty in this Agreement.
18. Entire Agreement. This Agreement, together with the Schedules hereto,
----------------
and the documents referred to herein, constitutes the entire agreement among the
Parties with respect to the Merger, and supersedes all prior arrangements or
understandings with respect thereto.
19. Notice. All notices, requests, demands, directions and other
------
communications ("Notices") provided for in this Agreement shall be in writing
and shall be mailed or delivered personally or sent by telecopier or facsimile
to the applicable Party at the address of such Party set forth below in this
Section 19. When mailed, each such Notice shall be sent by first class,
certified mail, return receipt requested, enclosed in a postage prepaid wrapper,
and shall be effective on the third business day after it has been deposited in
the mail. When delivered personally, each such Notice shall be effective when
delivered to the address for the respective Party set forth in this Section 1.9.
When sent by telecopier or facsimile, each such Notice shall be effective on the
first business day on which or after which it is sent. Each such Notice shall
be addressed to the Party to be notified as shown below:
PARENT:
Barrett Resources Corporation
ATTN: William J. Barrett
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<PAGE>
Tower 3, Suite 1000
1515 Arapahoe Street
Denver, CO 80202
Facsimile No.: (303) 629-8282
SUB:
Bargath Inc.
ATTN: William J. Barrett
Tower 3, Suite 1000
1515 Arapahoe Street
Denver, CO 80202
Facsimile No.: (303) 629-8522
GVC:
Grand Valley Corporation
P.O. Box 780428
1861 N. Rock Rd.
Wichita, KS 67206
Facsimile No.: (316) 686-6777
Any Party may change his or its respective address for purposes of this
Section 1.9 by giving the other Party Notice of the new address in the manner
set forth above.
20. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such a manner as to be effective and valid under
applicable law, and if any provision of this Agreement shall be or become
prohibited or invalid in whole or in part for any reason whatsoever, that
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remaining portion of that provision or the
remaining provisions of this Agreement.
21. Headings. The headings to this Agreement are for convenience only;
--------
they form no part of this Agreement and shall not affect its interpretation.
22. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
23. Expenses. Whether or not the transactions provided for herein are
--------
consummated, each Party to this Agreement will pay its respective costs and
expenses.
24. Nature And Survival Of Representation. All statements contained in
-------------------------------------
this Agreement and in the Schedules to this Agreement shall be deemed
representations and warranties by the applicable Party under this Agreement.
All representations and warranties made by the Parties in this Agreement or
pursuant to this Agreement shall be true and accurate as of the Closing in all
material respects. The obligation that the representations and warranties be
accurate as of the Closing in all material respects shall survive the Closing.
In addition, all obligations relating to indemnification under this Agreement
shall survive the Closing.
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<PAGE>
25. Benefits And Assignment. The provisions of this Agreement shall be
-----------------------
binding upon and inure to the benefit of and be enforceable by the Parties
hereto and their respective successors and assigns. The Parties agree that this
Agreement is made solely for the benefit of the Parties and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The terms "successor" or the term
"successors and assigns" as used in this Agreement shall not include any holders
of the GVC Common Stock, or recipients of the Parent Common Stock pursuant to
this Agreement.
26. Specific Performance. Each Party's obligation under this Agreement is
--------------------
unique. If any Party should default in its obligations under this Agreement,
the Parties each acknowledge that it would be extremely impracticable to measure
the resulting damages; accordingly, the nondefaulting Party, in addition to any
other available rights or remedies, may sue in equity for specific performance,
and the Parties each expressly waive the defense that a remedy in damages will
be adequate. Notwithstanding any breach or default by any of the Parties of any
of their respective representations, warranties, covenants or agreements under
this Agreement, if Closing occurs as contemplated, each of the Parties waives
any rights that it or they may have to rescind this Agreement or the
transactions consummated pursuant to it; provided, however, this wavier shall
not affect any other rights or remedies available to the Parties under this
Agreement or under the law.
27. Brokers. Each of Parent, Sub, and GVC represents and warrants to the
-------
others that all of their negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on directly, without the
intervention of any other person, so as not to give rise to any valid claim
against any Party hereto for a finder's fee, brokerage commission or other like
payment.
28. Costs. If any legal action or other proceeding is brought by one of
-----
the Parties to this Agreement against another Party to this Agreement for the
enforcement of this Agreement, or because of an alleged dispute, breach, default
or misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing Party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it or they may be entitled.
29. Termination On Default. If Parent, Sub, or GVC materially defaults in
----------------------
the due and timely performance of any of its or their warranties, covenants or
agreements under this Agreement, then the nondefaulting Party may at the time
set for the Closing give notice of termination of this Agreement, in the manner
provided in Section 1.9. A notice shall specify with particularity the default
or defaults on which the notice is based. The defaulting Party, however, shall
have the right to cure such default or defaults within 30 days after the date
set for Closing. The termination shall be effective 30 days after the date set
for Closing, unless the specific default or defaults have been cured on or
before this effective date for termination.
30. Choice Of Law. This Agreement shall be governed by, construed,
-------------
interpreted and the rights of the Parties determined in accordance with the laws
of the State of Colorado without regard to principles of conflicts of laws.
IN WITNESS WHEREOF, the Parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives on the date
first above written.
PARENT:
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<PAGE>
ATTEST:
/s/ John F. Keller
- -----------------------------
John F. Keller, Secretary
SUB:
BARGATH INC.
By: /s/ William J. Barrett
--------------------------------------
William J. Barrett
Chairman of the Board and Chief
Executive Officer
ATTEST:
/s/ John F. Keller
- -----------------------------
John F. Keller, Secretary
GVC:
By: /s/ Russell D. Briggs
--------------------------------------
Signature
Russell D. Briggs, President
------------------------------------------
Printed Name And Title
ATTEST:
/s/ Myrna D. Murphy
- ------------------------------
Secretary
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<PAGE>
Agreements Of GVC Shareholders
------------------------------
Each of the undersigned GVC Shareholders hereby acknowledges the benefits
to be received by the GVC Shareholders pursuant to this Agreement and each of
the undersigned GVC Shareholders agrees to, and agrees to be bound by, the
provisions of Section 6.25, Section 8.5, Section 8.9, Section 13, and Section 14
of this Agreement.
GVC SHAREHOLDERS:
Date: April 10, 1996 /s/ C. Robert Burford
--------------- ---------------------------------------
C. Robert Buford, Individually
Date: April 10, 1996 /s/ Robert Canterbury Buford
--------------- ---------------------------------------
Robert Canterbury Buford, Individually
Date: April 10, 1996 /s/ Martha Josephine Buford
--------------- ---------------------------------------
Martha Josephine Buford, Individually
Date: April 10, 1996 /s/ Anne Sharp Buford
--------------- ---------------------------------------
Anne Sharp Buford, Individually
* * * * *
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<PAGE>
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT ("Agreement"), dated this 10th day of
April, 1996, is by and between Zenith Drilling Corporation, an Oklahoma
corporation, whose address is 1861 North Rock Road, Suite 200, Wichita, Kansas
67206-1264 ("Zenith" or "Seller") and Barrett Resources Corporation, a Delaware
corporation, whose address is 1515 Arapahoe Street, Tower 3, Suite 1000, Denver,
Colorado 80202 ("Barrett" or "Buyer").
RECITALS
--------
A. Buyer and Seller have entered into discussions regarding
Barrett's purchase of Zenith's real and personal property interests located in
Garfield, Rio Blanco and Mesa Counties, Colorado described in Article 2 below
(the "Assets").
B. Seller owns and desires to sell the Assets to Buyer pursuant to
the terms of this Agreement. Buyer has conducted an independent investigation
of the nature and extent of the Assets and desires to purchase the Assets
pursuant to the terms of this Agreement.
AGREEMENT
---------
In consideration of the mutual promises contained herein, $100.00 and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Buyer and Seller agree as follows:
1. Agreement to Sell and Buy. Seller agrees to sell and convey to
-------------------------
Buyer, and Buyer agrees to purchase and receive from Seller, the Assets as
defined below.
2. Assets. The "Assets" are all of Seller's right, title, and
------
interest in and to the following real and personal property interests located in
Garfield, Rio Blanco and Mesa Counties, Colorado:
a. All of Seller's fee surface interests and mineral interests
located in Garfield, Rio Blanco and Mesa Counties, Colorado, including but
not limited to the fee surface interests and mineral interests described in
Exhibit A (the "Fee Interests"), all of Seller's oil and gas leases and
other leasehold interests located in Garfield, Rio Blanco and Mesa
Counties, Colorado, including but not limited to the oil and gas leases and
other leasehold interests described in Exhibit A (the "Leases"), all right,
title and interest in and to the oil, gas and all other
<PAGE>
hydrocarbons, whether liquid or gaseous (the "Hydrocarbons"), in, on or
under or that may be produced from the lands covered by the Leases or Fee
Interests (the "Lands") after the Effective Time and all other minerals of
whatever nature in, on or under the Leases and Lands.
b. The oil and gas wells located on the Leases and Lands, or lands
pooled or unitized therewith which include the oil and gas wells described
in Exhibit B (the "Wells"), all injection and disposal wells on the Leases
or Lands, and all personal property and equipment associated with the Wells
as of the Closing Date.
c. The rights, to the extent transferable, in and to all existing and
effective unitization, pooling and communitization agreements, declarations
and orders, to the extent that they relate to or affect any of the
interests described in Sections 2.a. and b. or the post-Effective Time
production of Hydrocarbons from the Leases and Lands.
d. The rights, to the extent transferable, in and to Hydrocarbon
sales (including that certain Gas Sales and Purchase Agreement between
Texaco Gas Marketing, Inc. and Barrett, among others, dated October 21,
1991 which is generally referred to as the "Texaco Co-gen Agreement"),
purchase, gathering, firm and interruptable transportation and processing
contracts, operating agreements, partnership agreements, farmout agreements
and other contracts, agreements and instruments relating to the interests
described in Sections 2.a., b. and c.
e. All of the personal property, fixtures, improvements, permits,
licenses, approvals, servitudes, rights-of-way, easements and other surface
rights located on or used in connection with the properties and interests
described in Sections 2.a. through d. to the extent that they are located
on the Leases and Lands as of the Closing Date.
f. The files, records, data and information relating to the items
described in Sections 2.a. through e. maintained by Seller (the "Records").
3. Buyer's Due Diligence. Subject to Buyer's agreement to maintain the
---------------------
confidentiality of all data and information related to the Assets and/or this
Agreement, Buyer may commence its "due diligence" inspection of the Assets and
of Seller's files (including title and contract files, well files, and
production files) immediately upon the execution of this Agreement.
4. Effective Time. The purchase and sale of the Assets shall be
--------------
effective as of March 1, 1996 at 7:00 a.m. local time at the site of the Assets
(the "Effective Time").
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<PAGE>
5. Purchase Price. The purchase price for the Assets shall be $2,700,000
--------------
(the "Purchase Price"), payable by Buyer to Seller at Closing by cashier's check
or by wire transfer of immediately available funds.
a. Adjustments to Purchase Price. The Purchase Price shall be
-----------------------------
adjusted for the customary pre- and post-Effective Time production revenues
and expenditures attributable to the Assets, including adjustments for
production in tanks at the Effective Time (using the daily gauging reports
prepared by Buyer if Buyer operates the Assets), gas balancing, "take-or-
pay" make-up rights, prepaid expenses, taxes (apportioned as set forth in
Article 12 and using estimates where the actual tax amounts are not
available), all revenues received by Buyer or Seller from the sale of oil
and gas from the Assets, all normal and customary costs and burdens
associated with the ownership and operation of the Assets, and such other
adjustments as are usual or customary in the purchase and sale of producing
oil and gas properties and as are agreed upon by the parties. In addition,
at Closing, the Purchase Price may be adjusted for Defective Interests and
non-permitted Encumbrances discovered in Buyer's "due diligence" review.
b. Preliminary Settlement Statement. The Purchase Price shall be
--------------------------------
adjusted at Closing pursuant to the "Preliminary Settlement Statement"
prepared by Buyer and submitted to Seller prior to or at the Closing Date
for Seller's comment and review. The Preliminary Settlement Statement
shall set forth all Purchase Price adjustments and associated calculations,
with the resulting amount being called the "Closing Amount."
c. Final Settlement Statement. After Closing, the Purchase Price
--------------------------
shall be adjusted pursuant to a "Final Settlement Statement" prepared by
Buyer and delivered by Buyer to Seller on or before 120 days following the
Closing Date, setting forth each adjustment or payment that was not finally
determined as of the Closing and showing the calculation of such adjustment
and the resulting Purchase Price. On or before 15 days after Seller's
receipt of Buyer's proposed Final Settlement Statement, Seller shall
deliver to Buyer a "written report" containing Buyer's proposed changes to
the Final Settlement Statement. Seller's failure to timely deliver to
Buyer the "written report" shall be deemed an acceptance by Seller of the
Final Settlement Statement as submitted by Buyer. The parties shall agree
with respect to the changes proposed by Seller no later than 30 days after
receipt of Seller's "written report," and the date on which the Final
Purchase Price is established shall be called the "Final Settlement Date."
Any payments due from one party to the other as a result of the Final
Settlement Statement shall be made within five days of the Final Settlement
Date.
6. Title Matters. The term "Defensible Title" to the Assets means such
-------------
title of Seller that, subject to and except for the Permitted Encumbrances: (i)
entitles Seller to receive an interest in production from the Wells not less
than the net revenue interest ("NRI") and bear expenses attributable to the
Wells of not more than the working
-3-
<PAGE>
interest ("WI"), all as set forth on Exhibit B, as to the interest in the
properties subject thereto.
a. Permitted Encumbrances. The Assets shall be transferred to Buyer
----------------------
free and clear of all royalties, overriding royalties, production payments,
debts, liens, mortgages, security interests, contract obligations, claims,
and encumbrances (collectively, "Encumbrances"), except for "Permitted
Encumbrances." The term "Permitted Encumbrances" shall mean the following:
i. the burdens, encumbrances and obligations created by or
arising under the Leases and Wells and other agreements affecting the
Assets, and all royalties, overriding royalties, net profits
interests, carried interests, reversionary interests, back-in rights
and other burdens taken into account in computing the NRI and WI set
forth on Exhibit B for the Wells;
ii. liens securing amounts not yet owing for taxes and for
services of mechanics and materialmen or liens that are being
contested in good faith by Seller;
iii. liens of a form and scope customary in the oil and gas
industry under operating agreements and other similar instruments and
agreements; and
iv. operating agreements, oil and gas sales contracts and
other contracts that are usual and customary in the industry.
b. Defective Interest. "Defective Interest(s)" means such Asset
------------------
affected by a title defect that reduces the value allocated to the Asset by
more than $2,500 (net to the Seller's interest).
c. Notice of Defective Interest. Buyer shall deliver Seller a
----------------------------
written "Notice of Defective Interests" on or before 5 days prior to the
Closing Date at 5:00 p.m. Such notice shall include a description of and
documentation supporting the basis for the Defective Interest and Buyer's
good faith estimate of the value of the defect and associated computations.
d. Defect Adjustments. Unless, at Seller's election, (i) Seller
------------------
cures the Title Defect at its sole cost and expense prior to Closing, or
(ii) Buyer waives the relevant Title Defect, or (iii) Seller elects to cure
such Title Defects no later than 60 days after Closing, the Purchase Price
shall be reduced by the value of the defect as mutually agreed to by the
parties, which reduction shall be called a "Defect Adjustment."
-4-
<PAGE>
7. Representations and Warranties of Buyer. Buyer makes the following
---------------------------------------
representations and warranties as of the date of this Agreement:
a. Existence. Buyer is a corporation, duly organized, validly
---------
existing and formed under the laws of the State of Delaware, and Buyer is
duly qualified and in good standing in the State of Colorado.
b. Power and Authority. Buyer has all requisite power and authority
-------------------
to carry on its business as presently conducted, to enter into this
Agreement and each of the documents contemplated to be executed by Buyer at
Closing, and to perform its obligations under this Agreement and under such
documents. The consummation of the transactions contemplated by this
Agreement and each of the documents contemplated to be executed by Buyer at
Closing will not violate, nor be in conflict with, (i) any provision of
Buyer's organizational or governing documents, (ii) any agreement or
instrument to which Buyer is a party or is bound, or (iii) any judgment,
decree, order, statute, rule or regulation applicable to Buyer.
c. Authorization. The execution, delivery and performance of this
-------------
Agreement and each of the documents contemplated to be executed by Buyer at
Closing and the transactions contemplated hereby and thereby have been duly
and validly authorized by all requisite action on the part of Buyer.
d. Execution and Delivery. This Agreement has been duly executed and
----------------------
delivered on behalf of Buyer, and at the Closing all documents and
instruments required hereunder to be executed and delivered by Buyer shall
have been duly executed and delivered. This Agreement does, and such
documents and instruments shall, constitute legal, valid and binding
obligations of Buyer enforceable in accordance with their terms, subject to
(i) applicable bankruptcy, insolvency, reorganization, moratorium and other
similar laws of general application with respect to creditors, (ii) general
principles of equity and (iii) the power of a court to deny enforcement of
remedies generally based upon public policy.
e. Brokers' Fees. Buyer has incurred no liability, contingent or
-------------
otherwise, for brokers' or finders' fees relating to the transactions
contemplated by this Agreement for which Seller shall have any
responsibility whatsoever.
8. Representations and Warranties of Seller. Seller makes the following
----------------------------------------
representations and warranties as of the date of this Agreement:
a. Existence. Seller is a corporation duly organized and validly
---------
existing under the laws of the State of Oklahoma.
-5-
<PAGE>
b. Power and Authority. Seller has all requisite power and authority
-------------------
to carry on its business as presently conducted, to enter into this
Agreement and each of the documents contemplated to be executed by Seller
at Closing, and to perform its obligations under this Agreement and under
such documents. The consummation of the transactions contemplated by this
Agreement and each of the documents contemplated to be executed by Seller
at Closing will not violate, nor be in conflict with, (i) any provision of
Seller's organizational or governing documents, (ii) any agreement or
instrument to which Seller is a party or is bound, or (iii) any judgment,
decree, order, statute, rule or regulation applicable to Seller.
c. Authorization. The execution, delivery and performance of this
-------------
Agreement and each of the documents contemplated to be executed by Seller
at Closing and the transactions contemplated hereby and thereby have been
duly and validly authorized by all requisite corporate and shareholder
action on the part of Seller.
d. Execution and Delivery. This Agreement has been duly executed and
----------------------
delivered on behalf of Seller, and all documents and instruments required
hereunder to be executed and delivered by Seller have been duly executed
and delivered. This Agreement does, and such documents and instruments
shall, constitute legal, valid and binding obligations of Seller
enforceable in accordance with their terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
of general application with respect to creditors, (ii) general principles
of equity and (iii) the power of a court to deny enforcement of remedies
generally based upon public policy.
e. Brokers' Fees. Seller has incurred no liability, contingent or
-------------
otherwise, for brokers' or finders' fees relating to the transactions
contemplated by this Agreement for which Buyer shall have any
responsibility whatsoever.
f. Liens. Except for the burdens and obligations created by or
-----
arising under the Leases and except for Permitted Encumbrances, the Assets
are free and clear of all Encumbrances.
g. Leases. To Seller's best knowledge, (i) all royalties, rentals
------
and other payments due by Seller under the Leases have been properly and
timely paid except where the failure to pay same will not have a material
adverse effect on the value of the particular Asset; (ii) all Leases are
presently in full force and effect; and (iii) Seller has not received a
written notice of material default under any Lease that could result in
cancellation of the Lease.
h. Proceeds of Production. Seller is currently receiving from all
----------------------
purchasers of production from the Assets at least the NRI set forth in
Exhibit B
-6-
<PAGE>
without suspense or any indemnity other than the normal division order
warranty of title.
i. Compliance with Laws. Seller has not received a written notice of
--------------------
a material violation of all laws, rules, regulations, ordinances and orders
of all governmental and regulatory bodies having authority over the Assets,
material to the ownership or operation of the Assets.
j. No Prepayments. To Seller's best knowledge, Seller is not
--------------
obligated, by virtue of a prepayment arrangement, a "take or pay"
arrangement, a production payment, hedging or any other arrangement, to
deliver any material portion of the Hydrocarbons produced from the Assets
at some future time without then or thereafter receiving full payment
therefor.
k. Gas Balancing. To Seller's best knowledge, no material portion of
-------------
Hydrocarbons produced from the Assets are subject to a gas imbalance or
other arrangement requiring delivery of Hydrocarbons after the Effective
Time without receiving full payment therefor.
l. Gas Contracts. Except for agreements terminable on 30 days notice
-------------
and except for agreements to which Barrett is a party, no Hydrocarbons
produced from the Assets are subject to a sales contract.
m. Litigation. Seller is not aware of and Seller has not received
----------
written notice of any demand, lawsuit, compliance order, notice of probable
violation or similar governmental action that, if adversely determined,
might (i) result in an impairment or loss of title to the Assets, (ii)
materially impair the value of the Assets or (iii) materially hinder or
impede the operation of the Assets.
9. Closing Conditions.
------------------
a. Seller's Closing Conditions. The obligation of Seller to
---------------------------
consummate the transactions contemplated hereby is subject, at the option
of Seller, to the satisfaction on or prior to the Closing Date (hereinafter
defined) of all of the following conditions precedent:
i. Representations and Warranties. The representations and
------------------------------
warranties of Buyer contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date.
ii. Closing Documents. Buyer shall have executed and
-----------------
delivered the documents which are contemplated to be executed and
delivered by it pursuant to Section 10 hereof prior to or on the
Closing Date.
-7-
<PAGE>
iii. No Action. On the Closing Date, no suit, action or
---------
other proceeding (excluding any such matter initiated by Seller or any
of its affiliates) shall be pending or threatened before any court or
governmental agency or body of competent jurisdiction seeking to
enjoin or restrain the consummation of this Agreement or recover
damages from Seller resulting therefrom.
b. Buyer's Closing Conditions. The obligation of Buyer to consummate
--------------------------
the transactions contemplated hereby is subject, at the option of Buyer, to
the satisfaction on or prior to the Closing Date of all of the following
conditions precedent:
i. Representations and Warranties. The representations and
------------------------------
warranties of Seller contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date.
ii. Closing Documents. Seller shall have executed and
-----------------
delivered the documents which are contemplated to be executed and
delivered by it pursuant to Section 10 hereof prior to or on the
Closing Date.
iii. No Action. On the Closing Date, no suit, action or
---------
other proceeding (excluding any such matter initiated by Buyer or any
of its affiliates) shall be pending or threatened before any court or
governmental agency or body of competent jurisdiction seeking to
enjoin or restrain the consummation of this Agreement or recover
damages from Buyer resulting therefrom.
10. Closing. The closing of the transaction contemplated by this
-------
Agreement ("Closing" or "Closing Date") shall be held on or before April 10,
1996 at Buyer's offices at 10:00 a.m. or at such other time and place as the
parties may agree in writing. At Closing, the following events shall occur,
each being a condition precedent to the others and each being deemed to have
occurred simultaneously with the others:
a. Assignment. Seller shall execute, acknowledge and deliver to
----------
Buyer an Assignment, Bill of Sale and Conveyance, attached as Exhibit C,
effective as of the Effective Time, conveying the Assets to Buyer with no
representations of warranties, express, implied or statutory, except that
Seller shall warrant title to the Assets against all persons claiming by,
through or under Seller, but not otherwise. All personal property and
fixtures are conveyed "AS IS, WHERE IS." In addition, Seller shall
deliver to Buyer such other assignments, bills of sale, or deeds necessary
to transfer the Assets to Buyer, including any conveyances on official
forms and related documentation necessary to transfer the Assets to Buyer
in accordance with requirements of governmental regulations.
-8-
<PAGE>
b. Preliminary Settlement Statement. Seller and Buyer shall execute
--------------------------------
and deliver the Preliminary Settlement Statement.
c. Purchase Price. Buyer shall deliver to Seller the Closing Amount
--------------
by cashier's check or by wire transfer of immediately available funds.
d. Letters in Lieu. Seller and Buyer shall execute and deliver
---------------
letters in lieu of transfer orders directing all purchasers of production
to pay Buyer the proceeds attributable to production from the Assets from
and after the Effective Time.
e. Seller's Officer's Certificate. Seller shall execute and deliver
------------------------------
to Buyer an officer's certificate in form and substance similar to Exhibit
D, stating that all conditions precedent to Closing have been satisfied.
f. Buyer's Officer's Certificate. Buyer shall execute and deliver to
-----------------------------
Seller an officer's certificate in form and substance similar to Exhibit E,
stating that all conditions precedent to Closing have been satisfied.
11. Apportionment of Production Revenues and Expenses. All revenues,
-------------------------------------------------
obligations, liabilities and expenses associated with the Assets shall be
apportioned as of the Effective Time between Buyer and Seller, with Buyer
assuming all post-Effective Time revenues and expenses and Seller retaining all
pre-Effective Time revenues and expenses.
12. Taxes. All "Taxes" (including ad valorem, property, production,
-----
excise, net proceeds, severance and other similar obligations assessed against
the Assets or based on or measured by the ownership of the Assets or production
therefrom) shall be prorated between Seller and Buyer as of the Effective Time;
provided, however, that any Taxes determined by the value of any production
shall be deemed to be attributable to the period during which such production
occurred and not attributable to the year in which such Taxes are assessed.
13. Apportionment of Liabilities and Obligations.
--------------------------------------------
a. Buyer. Upon Closing, Buyer shall assume and pay for, fulfill and
-----
discharge all costs, expenses, liabilities and obligations accruing or
relating to the owning, operating or maintaining of the Assets or the
producing, transporting and marketing of hydrocarbons from the Assets,
relating to periods on and after the Effective Time, including without
limitation, environmental obligations and liabilities, offsite liabilities
associated with the Assets, the obligation to plug and abandon all Wells
and reclaim all Well sites and all obligations arising under
-9-
<PAGE>
agreements covering or relating to the Assets (collectively, the "Post-
Effective Time Liabilities").
b. Seller. Upon Closing, Seller shall retain, assume and pay for,
------
fulfill and discharge all costs, expenses, liabilities and obligations
accruing or relating to the owning, operating or maintaining of the Assets
or the producing, transporting and marketing of hydrocarbons from the
Assets, relating to periods before the Effective Time, including without
limitation, environmental obligations and liabilities, the obligation to
plug and abandon all wells, off site liabilities associated with the
Assets, and all obligations arising under agreements covering or relating
to the Assets (collectively, the "Pre-Effective Time Liabilities").
14. Indemnification. For the purposes of this Agreement, "Losses" shall
---------------
mean any actual loss, cost and expense (including reasonable fees and expenses
of attorneys, technical experts and expert witnesses), liability, and damage
(including those arising out of demands, suits, sanctions of every kind and
character); provided, however, that in no event shall "Losses" be deemed to
include consequential damages.
a. Buyer's Indemnification of Seller. Buyer shall indemnify and
---------------------------------
hold harmless Seller, its officers, directors, shareholders, employees,
representatives, agents, successors and assigns, forever, from and against
all Losses which arise from or in connection with (i) the Post-Effective
Time Liabilities, and (ii) Buyer's breach of its representations and
warranties in this Agreement.
b. Seller's Indemnification of Buyer. Seller shall indemnify and
---------------------------------
hold harmless Buyer, its officers, directors, members, employees,
representatives, agents, successors and assigns, forever, from and against
all Losses which arise from or in connection with (i) the Pre-Effective
Time Liabilities and (ii) Seller's breach of its representations and
warranties in this Agreement regardless of Seller's knowledge if such
representations or warranties are knowledge qualified.
c. Release. Buyer shall be deemed to have released Seller at the
-------
Closing from any Losses for which Buyer has agreed to indemnify Seller
hereunder; Seller shall be deemed to have released Buyer at the Closing
from any Losses for which Seller has agreed to indemnify Seller hereunder.
d. Third Party Claims. If a claim by a third party is made against
------------------
Seller or Buyer (an "Indemnified Party"), and if such party intends to seek
indemnity with respect thereto under this Article, such Indemnified Party
shall promptly notify Buyer or Seller, as the case may be (the
"Indemnitor"), of such claims. The Indemnitor shall have 30 days after
receipt of such notice to undertake, conduct and control, through counsel
of its own choosing and at its own expense, the settlement or defense
thereof, and the Indemnified Party shall cooperate with it in connection
therewith; provided that the Indemnitor shall permit the Indemnified Party
to participate in such settlement or defense through
-10-
<PAGE>
counsel chosen by such Indemnified Party, however, the fees and expenses of
such counsel shall be borne by such Indemnified Party. So long as the
Indemnitor, at Indemnitor's cost and expense, (1) has undertaken the
defense of, and assumed full responsibility for all Losses with respect to,
such claim, and (2) is reasonably contesting such claim in good faith, by
appropriate proceedings, the Indemnified Party shall not pay or settle any
such claim. Notwithstanding compliance by the Indemnitor with the preceding
sentence, the Indemnified Party shall have the right to pay or settle any
such claim, provided that in such event it shall waive any right to
indemnity therefor by the Indemnitor for such claim. If, within thirty (30)
days after the receipt of the Indemnified Party's notice of a claim of
indemnity hereunder, the Indemnitor does not notify the Indemnified Party
that it elects, at Indemnitor's cost and expense, to undertake the defense
thereof and assume full responsibility for all Losses with respect thereto,
or gives such notice and thereafter fails to contest such claim in good
faith, the Indemnified Party shall have the right to contest, settle or
compromise the claim but shall not thereby waive any right to indemnity
therefor pursuant to this Agreement.
15. Miscellaneous.
-------------
a. Further Assurances. After Closing, Seller and Buyer shall
------------------
execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered such instruments and take such other action as may be reasonably
necessary or advisable to carry out the purposes and intents of this
Agreement and any document, certificate or other instrument delivered
pursuant hereto.
b. Expenses. Each party shall be liable for its respective costs and
--------
expenses incurred in connection with the transactions contemplated by this
Agreement.
c. Notices. All notices under this Agreement shall be in writing and
-------
addressed as set forth below. Any communication or delivery hereunder
shall be deemed to have been duly made and the receiving party charged with
notice (i) if personally delivered or faxed, when received, (ii) if mailed,
three business days after mailing, certified mail, return receipt
requested, or (iii) if sent by overnight courier, one day after sending.
All notices shall be addressed as follows:
If to Seller:
------------
Zenith Drilling Corporation
1861 North Rock Road, Suite 200,
Wichita, Kansas 67206-1264
Attn: C. Robert Buford
Telephone: (316) 684-9777
Fax: (316) 686-6777
-11-
<PAGE>
If to Buyer:
-----------
Barrett Resources Corporation
1515 Arapahoe Street, Tower 3, Suite 1000
Denver, Colorado 80202
Attn: Mr. A. Ralph Reed
Telephone: (303) 606-4351
Fax: (303) 629-8265
Any party may, by written notice so delivered to the other party, change
the address or individual to which delivery shall thereafter be made.
d. Survival. The representations, warranties, covenants, agreements
--------
and indemnities included or provided in this Agreement shall survive
Closing.
e. Confidentiality. Buyer and Seller shall keep this Agreement
---------------
confidential except to the extent each may be required to disclose the
contents hereof by recording the Assignment in the real property records in
the counties in which the Assets are located or filing the official forms
of conveyances covering the Assets with appropriate governmental
authorities, the Internal Revenue Service or to the extent required by law,
regulation or order, in connection with obtaining third party consents and
waivers of preferential purchase rights.
f. Announcements. Buyer may issue press releases and other public
-------------
announcements at, prior to or following Closing concerning this Agreement
and the transactions contemplated hereby. Seller acknowledges that this
transaction will be disclosed in all governmental regulatory filings Buyer
is or may be required to make.
g. Assignment. Neither Buyer nor Seller may assign its rights or
----------
delegate its duties or obligations under the terms of this Agreement
without the prior written consent of the other party.
h. Binding Effect. This Agreement shall be binding upon and shall
--------------
inure to the benefit of the parties hereto and their successors and
assigns.
i. Complete Agreement. When executed by the authorized
------------------
representative of Seller and Buyer, this Agreement, the Exhibits hereto and
the documents to be delivered pursuant hereto shall constitute the complete
agreement between the parties. This Agreement may be amended only by a
writing signed by both parties.
j. Knowledge. As used in this Agreement, the term "knowledge" shall
---------
mean the actual knowledge of any fact, circumstance or condition by the
officers or employees at a manager or higher level of the party involved as
such
-12-
<PAGE>
knowledge has been obtained in the performance of their duties in the
ordinary course of business after making reasonable and appropriate
inquiries.
k. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO WITHOUT REFERENCE TO
THE CONFLICT OF LAW PRINCIPLES THEREOF.
l. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party.
Executed on the dates set forth in the acknowledgments below.
ZENITH DRILLING CORPORATION
an Oklahoma corporation
/s/ C. Robert Buford
------------------------------------
President, Chairman of the Board and
Chief Executive Officer
BARRETT RESOURCES CORPORATION
a Delaware corporation
/s/ William J. Barrett
------------------------------------
Chairman of the Board and Chief
Executive Officer
-13-
<PAGE>
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 10th day of April,
1996 by C. Robert Buford, as President, Chairman of the Board and Chief
Executive Officer of Zenith Drilling Corporation, an Oklahoma corporation.
Witness my hand and official seal.
My commission expires: __________________
_______________________
Notary Public
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 10th day of April,
1996 by William J. Barrett as Chief Executive Officer and Chairman of the Board
of Barrett Resources Corporation, a Delaware corporation.
Witness my hand and official seal.
My commission expires: __________________
_______________________
Notary Public
-14-
<PAGE>
LIST OF EXHIBITS
----------------
Exhibit A Fee Interests, Leases and Lands
Exhibit B Wells
Exhibit C Assignment, Bill of Sale and Conveyance
Exhibit D Form of Seller's Officer's Certificate
Exhibit E Form of Buyer's Officer's Certificate
A-1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> MAR-31-1996 MAR-31-1995
<CASH> 10,945 7,529
<SECURITIES> 0 0
<RECEIVABLES> 36,491 31,635
<ALLOWANCES> 201 201
<INVENTORY> 598 657
<CURRENT-ASSETS> 48,368 40,090
<PP&E> 471,862 449,979
<DEPRECIATION> 158,503 149,313
<TOTAL-ASSETS> 361,727 340,756
<CURRENT-LIABILITIES> 39,852 36,404
<BONDS> 0 0
0 0
0 0
<COMMON> 252 251
<OTHER-SE> 196,261 191,577
<TOTAL-LIABILITY-AND-EQUITY> 361,727 340,756
<SALES> 41,537 32,769
<TOTAL-REVENUES> 42,307 33,471
<CGS> 22,161 16,349
<TOTAL-COSTS> 35,183 28,078
<OTHER-EXPENSES> 0 125
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,551 941
<INCOME-PRETAX> 5,573 4,327
<INCOME-TAX> 2,117 1,313
<INCOME-CONTINUING> 3,456 3,014
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,456 3,014
<EPS-PRIMARY> .14 .11
<EPS-DILUTED> .14 .11
</TABLE>
