SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
April 5, 1996
DELTA PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Colorado 0-16203 84-1060803
(State of Commission (I.R.S. Employer
Incorporation) File No. Identification No.)
Suite 3310
555 17th Street
Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(303) 293-9133
ITEM 5. OTHER EVENTS
A. 1) On April 5, 1996, the Company completed the
acquisition of the interests and operating rights of Wagner &
Brown, Ltd., in leases comprising 28,612 gross acres
(approximately 21,000 net acres) lying within the boundaries of
the Company's Moneta Hills Prospect in the Wind
River Basin in Fremont and Natrona counties in Wyoming. The
Company previously acquired interests in most of these same
leases in late 1995. (See Form 8-K dated November 1, 1995.) The
Company acquired the Wagner & Brown, Ltd. interests in these
properties through a collective assignment by
Melange Associates, Inc., Nautilus Oil and Gas Company and
Thorofare Resources, Inc. (collectively "MNT") of their rights
and obligations under a purchase and sale agreement with Wagner &
Brown, Ltd., to acquire the above referenced interests. A copy
of this agreement entitled "Moneta Hills Purchase and Sale
Agreement" (without exhibits) and a copy of an agreement entitled
"Assignment and Assumption" are attached hereto as Exhibit 99.1.
Included in the acquisition were the interests of
Wagner & Brown, Ltd., in three wells located on the leased
acreage which are not currently producing. The Company believes
one or more of the wells may now be capable
of commercial production because of the availability of a nearby
gas gathering system owned by the Company. The interests in the
wells and acreage acquired from Wagner & Brown, Ltd., are subject
to the October 31, 1995 agreement between the Company and MNT
(attached as Exhibit 99.1 to the November 1, 1995 Form 8-K) with
respect to certain overriding royalties, net profit interests in
the wells, acreage and contract area of
mutual interest. As consideration for the acquisition of the
above referenced properties from Wagner & Brown, Ltd, the Company:
paid $50,000; paid an additional
approximately $18,500 for prepaid delay rentals and unpaid lease
operating expenses; assumed plugging and abandonment obligations
for the three wells; and agreed that Wagner & Brown, Ltd. would
no longer be obligated to make certain payments upon the plugging
and abandonment of the three wells referenced above. The
acquisition of the Wagner & Brown, Ltd., interests gives the
Company approximately 100% of the working interest
in most of the leases which constitute its Moneta Hills Prospect.
The Company currently intends to attempt to place one or more of
the six existing wells on the prospect back on production, to
attempt to recomplete one or more of the wells in additional
productive zones and to drill additional wells on
the prospect.
2) On March 12, 1996, the Company was the highest
bidder for and thereby acquired a 539 acre five year lease from
the State of Wyoming within the boundaries of its Moneta Hills
Prospect referenced above giving the Company a total of
approximately 29,994 gross acres within this prospect.
The Company paid $28,612 for the lease.
3) On March 7, 1996, the Company sold 115,000 shares
of its restricted and legended common stock to C.A. Opportunidad
of San Jose, Costa Rica for $550,000 in a private
transaction pursuant to the rules and regulations of the SEC
regarding offshore transactions with non-U.S. persons. The
proceeds from the sale will be used to fund the Company's
activities on its Moneta Hills Prospect and for other general
corporate purposes. A copy of the agreement relating to this
transaction is attached as Exhibit 99.2.
B. On January 19, 1996 and January 22, 1996, the Company
entered employment and employment related agreements with two of
its employees. Copies of these agreements are attached hereto as
Exhibits 99.3 and 99.4.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
99.1 Wagner & Brown, Ltd. Moneta Hills Purchase and
Sale Agreement (without exhbits) and Assignment and Assumption
Agreement.
99.2 C.A. Opportunidad stock purchase agreement.
99.3 Employment and related agreements.
99.4 Employment agreement.
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 hereunto duly authorized.
DELTA PETROLEUM CORPORATION
(Registrant)
Date: April 16, 1996 By:s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr.
Chairman/C.E.O.
INDEX TO EXHIBITS
(1) Underwriting Agreement. Not applicable.
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession. Not applicable.
(3) (i) Articles of Incorporation. Not applicable.
(ii) Bylaws. Not applicable.
(4) Instruments Defining the Rights of Security Holders,
including Indentures. Not applicable.
(5) Opinion: re: Legality. Not applicable.
(6) Opinion: Discount on Capital Shares. Not applicable.
(7) Opinion: re: Liquidation Preference. Not Applicable.
(8) Opinion: re: Tax Matters. Not Applicable.
(9) Voting Trust Agreement. Not Applicable.
(10) Material Contracts. Not Applicable.
(11) Statement re: Computation of Per Share Earnings.
Not Applicable.
(12) Statement re: Computation of Ratios. Not Applicable.
(13) Annual Report to Security Holders, etc. Not Applicable.
(14) Material Foreign Patents. Not Applicable.
(15) Letter re: Unaudited Interim Financial Information.
Not Applicable.
(16) Letter re: Change in Certifying Accountant.
Not applicable.
(17) Letter re: Director Resignation. Not applicable.
(18) Letter re: Change in Accounting Principles. Not Applicable.
(19) Report Furnished to Security Holders. Not Applicable.
(20) Other Documents or Statements to Security Holders.
Not applicable.
(21) Subsidiaries of the Registrant. Not Applicable.
(22) Published Report Regarding Matters Submitted to Vote of
Security Holders. Not Applicable.
(23) Consents of Experts and Counsel. Not applicable.
(24) Power of Attorney. Not applicable.
(25) Statement of Eligibility of Trustee. Not Applicable.
(26) Invitations for Competitive Bids. Not Applicable.
(27) Financial Data Schedule. Not Applicable.
(99) Additional Exhibits.
99.1 Wagner & Brown, Ltd. Moneta Hills Purchase and Sale
Agreement (without exhbits) and Assignment and Assumption
Agreement.
99.2 C.A. Opportunidad stock purchase agreement.
99.3 Employment and related agreements.
99.4 Employment agreement.
MONETA HILLS PURCHASE AND SALE AGREEMENT
By and Between
Melange Associates, Inc.
Nautilus Oil and Gas Company
Thorofare Resources, Inc
("Purchasers")
And
Wagner & Brown, Ltd
("Sellers")
Dated
February 23, 1996
MONETA HILLS PURCHASE AND SALES AGREEMENT
TABLE OF CONTENTS
Definitions: 1
Exhibits: 3
Article 1: Purchase and Sale 3
1.1 Purchase and Sale 3
A. Assets 3
B. Excluded Assets 4
C. Gas Imbalance 4
D. Purchasers to Assume General Liabilities 5
1.2 Purchase Price 5
A. Cash Payment 5
B. Adjusted Purchase Price 5
C. Payment at Closing 6
Article 2: Title Examination 6
2.1 Access to Title and Other Information 6
2.2 Title Defects 7
2.3 Notice of Title Defects 7
2.4 Remedies for Title Defects 7
2.5 Rights of Preferential Purchase and 8
Consents to Assign
Article 3: Environmental Matters 8
3.1 Condition of the Properties 8
3.2 Sellers' Disclaimer 8
3.3 Environmental Due Diligence 8
3.4 Remedy for Material Environmental Deficiency 9
3.5 Environmental Indemnification 9
Article 4: Closing 10
4.1 Closing Date 10
4.2 Time of the Essence 10
4.3 Sellers' Actions at Closing 10
4.4 Purchasers' Action at Closing 10
Article 5: Seller's Representations 11
5.1 Organization of Sellers and 11
Authority to do Business
5.2 Binding Obligation 11
5.3 Litigation 11
5.4 Limited Warranty 11
5.5 Confidentiality 11
Article 6: Purchasers Representations 12
6.1 Organization and Authority to do Business 12
6.2 Binding Obligation 12
6.3 Litigation 13
Article 7: Parties' Covenants 13
7.1 Other Negotiations 13
7.2 Right of Examination, Access to Information 13
7.3 Additional Agreement 14
Article 8: Purchasers' Obligation to Close 14
8.1 Compliance with Representations, 14
Covenants and Conditions
8.2 Opinion of Legal Counsel 14
8.3 Litigation 14
8.4 Delivery of Instruments of Transfer 15
Article 9: Sellers' Obligations to Close 15
9.1 Compliance with Representations, 15
Covenants and Conditions
9.2 Cash Purchase Price 15
9.3 Preferential Purchase Rights 15
9.4 Litigation 15
Article 10: Transfer of Operation 15
10.1 Operations 15
10.2 Casualty Loss 16
10.3 Accounting Services 16
Article II: Taxes 16
11.1 Apportionment of Ad Valorem and Property Taxes 16
11.2 Sales Taxes, Filing Fees 16
11.3 Other Taxes 16
Article 12: Termination of Agreement 16
12.1 Termination 16
12.2 Effect of Termination 17
Article 13: Action after Closing: 17
13.1 Final Accounting 17
13.2 Suspended Funds 17
13.3 Further Assurances and Subsequent Cooperation 17
Article 14: Miscellaneous 17
14.1 Survival of Representations 17
14.3 Expenses 18
14.3 Notices 18
14.4 Assignment 18
14.5 Titles for Convenience Only 18
14.6 Severability 18
14.7 Binding Effect 19
14.8 Compliance With Laws and Regulations 19
14.9 Counterparts 19
14.10 Governing Law 19
Exhibit:
A. Moneta Hills Real Property
B. Moneta Hills Personal Property and Equipment
C. Moneta Hills Intangible Property
D. There is no Exhibit D to this Agreement
E. Outstanding Joint Interest Billings, Leasehold Delay
Rentals or
Minimum Royalty Payments
F. There is no Exhibit F to this Agreement
G. Disclosure Schedule
H. Form of Bill of Sale
I. Form of Assignment of Intangible Contractual Rights and
other Intangible Property
J. Form of Assignment of Leases (county)
MONETA HILLS
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made and entered
into this 23rd day of February, 1996 by and between, Melange
Associates, Inc, a Colorado Corporation, Nautilus Oil and Gas
Company, a Colorado Corporation and Thorofare Resources, Inc, a
Wyoming Corporation, (hereinafter collectively referred to herein
as "Purchasers" and individually from time to time referred to as
"Purchaser"), and Wagner & Brown, Ltd, a Texas Limited
Partnership, (hereinafter collectively referred to herein as
"Seller").
WITNESSETH:
This Agreement sets forth the understandings and
agreements pursuant to which Purchaser win acquire from Seller
one hundred percent (100%) of all of its rights, titles and
interests in and to all real and personal property of any land
and nature on, in under or appurtenant to the original Moneta
Hills Unit Area, including without Stations the RCU 1-34 well,
and the two Moneta Hills wells, the Moneta Hills #s 1 and 2, the
leases within the original Moneta Hills Unit Area, any gathering
system or part thereof located on and around said unit, all
leasehold and unit equipment, any easements or rights of way, and
any executory or contractual rights or interest, corporeal or
incorporeal, relating thereto.
NOW THEREFORE, in consideration of ten and more dollars
($10.00) and of the mutual covenants and agreements contained
here the receipt and sufficiency of which are hereby confessed,
the Parties hereto agree as follows:
DEFINITIONS
"Adjusted Purchase Price" means the amount described in Article
1.2.C.
"Agreement" means this Purchase and Sale Agreement dated February
23, 1996 by and between Purchasers and Seller.
"Cash Payment" means the cash or certified funds paid to Seller
pursuant to Article 1.2.A.
"Cash Settlement" shall be that amount due at Closing pursuant to
1.2.C.
"Closing" means the consummation of the transaction contemplated
by this Agreement.
"Closing date" shall be the later of (1) March 31, 1996; (2) the
first business day (being Monday through Friday) following the
14th day after execution of this Agreement by the final Party
executing same, or such other date as is mutually agreed upon by
the Parties.
"Closing Statement" means the statement prepared by Seller for
Closing.
"Due Diligence Period" means the period of time commencing with
the date of this Agreement and continuing until five (5) days
before the Closing Date.
"Effective Date" means March 1, 1996.
"Final Accounting" means the statement of accounting required by
Article 13.1.
"Gas Imbalances" means the difference between the volume of
produced gas that a Seller took from all or part of the Moneta
Hill Real Property and the volume of a Seller's gas entitlement
under the applicable agreement or arrangement.
"Material Environmental Deficiency" means a deficiency or
deficiencies in the Properties based upon environmental
conditions whose cumulative value is likely to create a liability
in excess of the Cash Payment.
"Moneta Hills Real Property" means the real property, lands, and
oil and gas leases described in Article 1. 1. A. 1.
"Moneta Hills Personal Property" means the wells, equipment and
facilities and other personal property of any kind and nature
described in Article 1. 1.A.2.
"Moneta Hills Intangible Property" means the easements, rights-
of-way, permits, licenses, surface leases, agreements and
servitude described 'm Article 1.1.A.3.
"Property Schedules" means Exhibits A, B, and C.
"Properties" means all the assets described in Article 1.1.A.
"Purchase Price" means the total consideration to be paid or
assigned to Seller pursuant to this Agreement.
"Title Defects" means those conditions described in Article 2.2.
EXHIBITS
Exhibit A: Moneta Hills Real Property
Exhibit B: Moneta Hills Personal Property and Equipment
Exhibit C: Moneta Hills Intangible Property
Exhibit D: There is no Exhibit D
Exhibit E: Outstanding Joint Interest Billings,
Leasehold Delay Rentals and Minimum Royalty Payments
Exhibit F: There is no Exhibit F to this Agreement
Exhibit G: Disclosure Schedule
Exhibit H: Form of Bill of Sale
Exhibit I: Form of Assignment of Intangible Contractual Rights
and other Intangible Property
Exhibit J: Form of Assignment of Leases (county)
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale.
A. Assets: Subject to the terms and conditions of this
Agreement, Seller shall sell and Purchasers shall acquire on the
Effective Date all of Sellers right, title and interest in the
following assets (which together are referred to from time to
time as "Properties"):
1. One hundred percent (100%) of all of Sellers'
right, title and interest in and to the real property, lands, and
oil and gas leases set forth on Exhibit A, reference to which is
hereby made for all purposes (the Moneta Hills Real Property).
Seller covenants and by these presents agrees to grant,
bargain, sell, assign and convey all of its right, title and
interest in the foregoing described real property, including
by way of example and not limitation, all leasehold interest,
working interests, and operating rights presently held, free
and clear of any liens or encumbrances of any land and without
any additional royalty or overriding royalty, production
payments, net profits interests or other burdens, similar or
dissimilar, not of record prior to March 1, 1996.
2. All wells, equipment, pipelines and facilities and
other personal property of any kind and nature on, in, under or
appurtenant to the Moneta Hill Unit Area, which are located on
or used in connection with the production, treatment or
transportation of oil and gas from the Moneta Hills Unit Area
including, without limitation, the RCU 1-34 well, and the two
Moneta Hills wells, the Moneta Hills #s I and 2, and the
personal property described Exhibit B, reference to which is
hereby made for all purposes (the Moneta Hills Personal
Property). Seller covenants and by these presents agrees to
grant, bargain, sell, assign and convey all of their rights,
titles and interests in the foregoing described personal
property free and clear of any liens or encumbrances of any
kind.
3. Any and all easements, rights-of-way, permits,
licenses, surface leases, agreement, and servitude to the extent
assignable used in connection with the Moneta Hills Real Property
and/or the Moneta Hills Personal Property, and any
intangible contractual rights and other intangible property
described on Exhibit C (the Moneta Hills Intangible Property).
4. Any gas gathering system or portion thereof located
on and around the Moneta Hills Federal Unit.
5. Originals or copies of all records relating to the
leasehold property and unit equipment, any easements or rights
of way, and any executory or contractual rights or interest,
corporeal or incorporeal relating thereto, to the extent they
are in Seller's possession including by way of example and not
limitation lease files, unit files, contract files, well files
and non-interpretive geological data.
B. Excluded Assets: None
C. Gas Imbalance:
1. The Seller represents that no Gas Imbalances exist.
2. Should it be discovered that any Gas Imbalances exist
Purchasers shall assume all benefits,
obligations and liabilities associated therewith such
Gas Imbalances as of 7:00 A.M. on the Effective Date of
this Agreement. The Purchase Price shall be adjusted at
Closing as follows:
a. There shall be deducted from the Cash Payment an
amount equal the sum of (i) to any obligation of any
Seller to balance overproduction in cash prior to the
depletion of the well, and (ii) any responsibility for
payment of royalties on volumes of gas which any Seller
took in excess of its entitlement.
b. There shall be an adjustment for any Gas Imbalance
at the Effective Date. Such adjustment will be a
deduction from the Cash Payment in an amount equal to
the value of any increased overbalance. This adjustment
will be on the basis of individual properties in
accordance with the actual average price paid during the
period between February 23, 1996 and the Effective Date.
D. Purchasers to Assume General Liabilities: On the
Effective Date, Purchasers win assume, pay for, perform and
comply with all the duties, liabilities, and obligations (express
andimplied) binding upon Seller that relate to or are
attributable to the Properties after the Effective Date,
including but not limited to, all applicable valid recorded
agreements, all unrecorded agreements disclosed by Seller to
Purchasers, including gas balancing agreements or
arrangements, gas sales contracts and instruments, and duties
imposed by governmental laws and regulations. Any unrecorded
agreement not disclosed by its inclusion on Exhibit A, B, or
C shall be disclosed on Exhibit G, Disclosure Schedule.
1. Notwithstanding the assumption of general
liabilities contained in this provision, if within two (2) years
of the effective date hereof a third party asserts a claim
against Purchasers or Seller arising from a material breach of a
duty, liability or obligation by Seller occurring prior to the
Effective Date, or arising from the tortious acts of Seller
occurring prior to the Effective Date, and attributable to the
ownership of any of the properties acquired by Purchasers
hereunder, excluding Environmental Liabilities and all
customary and usual operations for plugging, abandonment and
surface restoration occurring in the normal course of
operating the Properties, then Seller shall discharge and hold
Purchasers harmless from any loss or cost, including
reasonable attorney's fees, arising by, through or from such
claim.
2. Without limiting the foregoing assumption of
general liabilities, Purchasers agree, effective as of the
Effective Date, to assume all Seller' obligations to properly and
timely plug and abandon the RCU 1-34 well, and the two Moneta
Hills wells, the Moneta Hills #s 1 and 2, to remove all equipment
and facilities therefrom, and to restore the surface as
required by applicable rule or regulation.
1.2 Purchase Price. The Purchase Price consists of a cash
payment and other consideration.
A. Cash Payment: On the basis of the terms, representations
and agreements and subject to the conditions herein set forth,
Purchasers hereby agree to pay to Seller, at the Closing on
the Closing Date the Purchase Price as set forth below.
Cash Payment. Purchasers shall pay the sum of Fifty
Thousand Dollars, ($50,000.00) in cash or certified funds
to be paid to Seller.
B. Adjusted Purchase Price: The net cash paid by Purchasers
at closing shall be:
1. The Cash Payment set forth in Article 1.2 A.; and
2. Plus or minus any adjustments for Title Defects as
determined in Article 2.4 below; and
3. Less the allocated value of any exercised preferential
purchase right as determined in accordance with Article 2.5,
below; and
4. Less any adjustment for Gas Imbalances pursuant to
1.1.C.2;
5. Plus the payment of any outstanding joint interest
billings, leasehold delay rentals or minimum royalty payments
propertly due and outstanding incurred from and after June 1,
1995 attributable to those interest within the Moneta Hills Unit
area formerly held by Chaparral Resources, Inc., a Colorado
corporation, J. Hiram Moore, an individual, Richard L. Moore,
an individual, Michael H. Moore, an individual, and Richard L.
Moore, Independent Executor for the Estate of Stephen S.
Moore, said outstanding joint interest billings, leasehold
delay rentals or minimum royalty payments being set forth and
described on Exhibit E, reference to which is hereby made for
all purposes.
C. Payment at Closing: Not less than 5 days prior to
closing, Seller shall furnish Purchasers with an estimated Closing
Statement which will include the following:
1. The Adjusted Purchase Price calculated pursuant Article
1.2.B above, and
2. Cash Settlement determined by adding and subtracting as
follows:
i. Subtract any cash to be withheld for taxes pursuant
to Article 1 1. 1; and
ii. add any expenditures made by Seller attributable
to the properties for the period between the
Effective Date and Closing Date including by way
of example and not limitation, payments of
royalties, taxes, rentals and similar charges,
amounts billed under applicable operating
agreements, and all prepaid expenses; and
iii. add the value of all liquid hydrocarbons in
storage tanks above the pipeline connection at
7:00 a.m. (local time) on the Effective Date
valued at market or contract price in effect on
that date after deducting royalty and tax
obligations; and
iv. subtract the amount of estimated revenues received
by Seller from sales of hydrocarbons and
associated products, together with any other
income, attributable to the Properties accruing
after the Effective Date.
ARTICLE 2
TITLE EXAMINATION
2.1 Access to Title and Other Information: During the Due
Diligence Period, Seller shall make the records described in
Article 1.1.A.5. available to Purchaser at Sellers offices
located at 300 N. Marienfeld, Midland, TX 79702, or such other
place as is mutually acceptable to the Parties, during normal
business hours for examination by the Purchasers or its
representatives. Seller shall not be obligated to perform any
title work, and no abstracts or title opinions will be made
current by Seller. Seller will provide Purchasers and its
accountants, counsel and other representatives, reasonable access
during the Due Diligence Period, commencing on the date of this
Agreement and continuing until five (5) days before the Closing
Date, to all of Seller's properties, books, contracts, documents
and records relating to the Properties and will use reasonable
efforts to promptly furnish Purchasers all material information
concerning the business and Properties relating to the ownership
and operation of said Properties, including to the extent
prepared in the ordinary course of business, such data and
operating reports as may reasonably be necessary or appropriate
for any relevant purposes of investigation and analysis related
to this Agreement. This obligation by Seller to furnish material
information is subject to any existing confidentiality agreements
with third parties except that Seller shall use its best efforts
to secure waiver of any such confidentiality agreement. Seller
shall make its officers, employees, consultants, contractors and
representatives available to Purchasers or its representatives
with instructions to discuss any material matters related to this
Agreement.
2.2 Title Defects: A Title Defect under this Agreement is:
A. When Seller owns more or less than the interest set
forth on the Property Schedules, ( Property Schedules are
Exhibits A through C).
B. When Sellers' rights and interest in any interest shown
on the Property Schedules, is subject to reduction by virtue of
the exercise by any other party of a reversionary interest,
back-in or similar right not disclosed on said Property
Schedules, or on Exhibit G.
C. When Sellers' rights and interest in any interest shown
on the Property Schedules, is subject to any outstanding
mortgage, deed of trust, security interest, lien or
encumbrance or other adverse claim not disclosed on said
Property Schedules, or on Exhibit G.
2.3 Notice of Title Defects: Upon discovery of any Title
Defect, purchasers shall notify Seller in writing of the nature
and extent and value of said defect. Any Title Defect not
brought to Seller's attention by the end of the Due Diligence
Period shall be deemed waived by Purchasers for all purposes.
Seller may elect to cure any Title Defect to the reasonable
satisfaction of Purchasers.
2.4 Remedies for Title Defects: If the value of all uncured
Title Defects at the end of the Due Diligence period is less than
or equal to 20% of the Cash Payment portion of the Purchase
Price, Purchasers shah be obligated to proceed with the
transaction. If the value of all uncured Title Defects at the
end of the Due Diligence period is greater than 20% of the Cash
Payment portion of the Purchase Price, then either Purchasers or
Seller may elect to terminate this Agreement with no liability to
the other parties hereto.
2.5 Rights of Preferential Purchase and Consents to Assign.
Upon execution of this Agreement, Seller shall disclose to
Purchasers all preferential rights to purchase and consents to
assignments, except those consents by State and Federal
governmental agencies which are routinely granted.
Purchasers shall within 5 days of the receipt thereof submit to
Seller a good faith allocation of values for any Properties
subject to said rights. Seller shall timely send notice to the
holder of each such right offering in the case of preferential
rights to purchase the right to acquire such interest at the good
faith allocated value or for consent to make assignment. An
election to exercise a preferential right to purchase or a
failure to approve assignment shall reduce the cash Purchase
Price by the allocated amount, provided however should such total
reduction exceed 20% of the Cash portion of the Purchase Price,
Purchasers may elect to terminate this Agreement with no
liability whatsoever.
ARTICLE 3
ENVIRONMENTAL MATTERS
3.1 Condition of the Properties: Purchasers acknowledge that
the Properties have been utilized for the purpose of exploration,
development and production of oil and gas. Purchasers
acknowledge that wastes, including but not limited to, crude oil,
natural gas, natural gas liquids, produced water, and other
wastes associated with oil and gas production and exploration
operations, may have been spilled, released or disposed of on
site by, among other ways, placement in pits, burial, land
farming, land spreading and underground injection, into or onto
the assets. In addition, Purchasers acknowledge that some oil
field production equipment may contain asbestos, mercury and/or
naturally-occurring radioactive material ("NORM"). Purchasers
understand that NORM may affix or attach itself to the inside of
wells, materials and equipment as scale or in other form and that
wells, materials equipment located on the Properties may contain
NORM and that NORM-containing materials may be buried or have
otherwise been disposed on the Properties. Purchasers also
understand that special procedures may be required for the
removal and disposal of asbestos, mercury and
NORM from the equipment and properties where it may be found.
3.2 Seller's Disclaimer: It is understood between the
Parties that Purchasers have not relied upon the accuracy or
completeness of any statements, samples, material, test results,
or other information supplied by or received from Seller in
evaluating the environmental condition or other condition of the
Properties or any potential liability arising from or related to
the Properties. The Parties agree that Purchasers' assessment of
the environmental condition and other condition and any potential
liability arising from or related to the Properties has been
based upon Purchasers' own independent examination.
3.3 Environmental Due Diligence: During the Due Diligence
Period, Seller will provide Purchasers, or its representatives,
with reasonable access to the properties. During such time
Purchasers, at its own risk expense, may conduct such
environmental site assessments, including but not limited to a
Phase I environmental site assessment, as Purchasers deems
appropriate. Any data or information acquired by such
examination and the results of any analysis of such data and
information shall be held confidential. Except as required by law
or regulation, Purchasers shall not disclose any of said data,
information or the results of any analysis thereof to any person
or agency without the prior written approval of Seller.
3.4 Remedy for Material Environmental Deficiency: Should
Purchasers discover a Material Environmental Deficiency of or
affecting the Properties, Purchasers shall notify Seller of the
nature and extent thereof. Thereupon the Parties shall elect one
of the following alternatives:
A. Purchasers may elect to terminate this Agreement with no
further liability provided that Seller shall have the option, but
not the obligation, to elect to remediate, at their own
risk and expense, the Material Environmental Deficiency to the
satisfaction of the Purchasers. Closing shall be delayed to
allow for such remediation but in no event beyond May 15, 1996.
B. Seller and Purchasers may elect to terminate this
agreement with no further liability to or from either party.
C. Purchasers may elect to go forward with the transaction
described in this Agreement despite the existence of the
Material Environmental Defect.
3.5 Environmental Indemnification: Upon the closing of the
Purchase and Sale contemplated herein, and effective as of the
Effective Date, Purchasers shall assume, and agree to indemnify,
hold harmless and defend seller from and against, all
environmental liabilities arising with respect to the Properties.
In this Agreement "Environmental Liabilities are defined as all
damages, losses, claims, demands and causes of action (including,
but not limited to, any civil fines, penalties, expenses and
costs of clean-up or remediation) brought by any and all persons
(including, but not limited to, Purchasers' and Sellers'
employees, agents or representatives, and any private citizens,
persons or organizations, and any agency, branch or
representative of federal, state or local government) on account
of any personal injury, death, damage, destruction loss of
property, contamination of natural resource (including soil,
surface water or ground water) or lack, loss or failure of
permits resulting from, arising out of, caused by or connected
with any environmental conditions of the properties, or
operations related thereto, including, but not
limited to, the presence, disposal or release of any material of
any kind in, on or under the properties or other property
(whether neighboring or otherwise): and including any liability
or obligations that may arise on account of or in any way be
connected with the physical condition of the property or any law
or regulation applicable thereto, including, without Stations the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C.Section 9601 Et Seq.) the Resource
Conservation and Recovery Acto of 1976 (42 U. S. C. Section 6901 Et
Seq.), the Clean Water Act (22 U.S.C. Section 466 Et Seq.), the Safe
Drinking Water Act (14 U. S. C. Section 1401-1450), the Hazardous
Material Transportation Act (49 U. S. C. Section 1801 Et Seq.), the
Toxic Substances Control Act (15 U.S.C. Section 2601-2629), the Clean
Water Act, as amended (42 U.S.C. Section 7401 Et Seq.) and the Clean
Air Act amendments of 1990.
Purchasers shall at all times retain sole and exclusive
authority for, final approval of and responsibility and control
over all acts and decisions of whatsoever nature relating to
environmental laws, rules and regulations and Environmental
Liabilities. Should Seller exercise or attempt to exercise any
authority for, final approval of or responsibility and control
over all acts and decisions of whatsoever nature relating to
environmental laws, rules and regulations and Environmental
Liabilities the indemnification under this Article 3.5 shall
become void and of no force and effect.
Seller, its successors or assigns, shall promptly
provide Purchasers, their successor or assigns, with notice of
any claim or intent to make a claim for Environmental Liabilities
by any party of whatsoever nature. This Article 3.5 shall
survive the Closing and shall continue without limitation as to
time for as long as is necessary to accomplish its purpose.
ARTICLE 4
CLOSING
4.1 Closing Date: The Closing of this Agreement shall occur
at the offices of Nautilus Oil and Gas Company, 600 17th Street,
Denver, CO 80202, or at such other place as is mutually agreeable
to the Parties hereto. Closing shall occur at 10:00 a.m., local
time, on the Closing Date.
4.2 Time of the Essence: Time is of the essence under this
Agreement.
4.3 Seller Actions at Closing:
A. Seller shall execute in favor of and deliver to
Purchasers, or to Purchaser's designee, the instruments of
transfer described below. Purchasers shall give written notice
to Seller of their designee, if any, no less than five (5) days
prior to Closing.
1. The Bill of Sale for the Personal Property and
Equipment in the form set forth in Exhibit H to this
Agreement.
2. The Assignment of Intangible Contractual Rights and
other Intangible Property in the form set forth in
Exhibit I to this Agreement.
3. The Assignment of Leases in the form set forth in
Exhibit J to this Agreement. Seller shall also
execute and deliver to Purchaser in the required
number any assignment forms required by any state
or federal agency for transfer of its oil and gas
leases, rights of way or other interests
transferred herein.
B. Seller shall at closing or within thirty (30) days after
Closing, provide Purchaser with the original lease files,
contract files, well files, field files and other relevant
information pertaining to the Properties.
4.4 Purchasers' Actions at Closing: Purchaser shall pay to
Seller by certified checks the Cash Payment required by Article
1.2.C. as directed therein.
ARTICLE 5
SELLER'S REPRESENTATIONS
Seller hereby represents and warrants to Purchaser as follows:
5.1 Organization of Seller and Authority to do Business:
Wagner & Brown, Ltd. represents and warrants that it is a
limited partnership organized and existing in good standing
under the laws of Texas and is qualified to do business and is
registered and in good standing in the State of Wyoming and
that Canyon Energy, Inc., is its Managing General Partner.
5.2 Binding Obligation: Seller Represents and Warrants:
Wagner & Brown, Ltd. and Canyon Energy, Inc., as its Managing
General Partner represents and warrants that Canyon Energy,
Inc., as Managing General Partner has all requisite power and
authority to enter into and perform the obligations of Wagner
& Brown, Ltd. under this Agreement and to carry out the
transaction contemplated hereby, that all acts and other
proceedings required to be taken by Wagner & Brown, Ltd. to
authorize the execution and delivery by Canyon Energy, Inc.,
as Managing General Partner of Wagner & Brown, Ltd., Inc. of
this Agreement and performance by Wagner & Brown, Ltd. have
been duly and properly taken, and that this Agreement has been
duly executed and delivered by Canyon Energy, Inc., as
Managing General Partner of Wagner & Brown, Ltd. on behalf of
and at the behest of Wagner & Brown, Ltd. and constitutes the
valid and binding obligation of Wagner & Brown, Ltd.,
enforceable against Wagner & Brown, Ltd. and Canyon Energy,
Inc. in accordance with its terms.
5.3 Litigation: There is no pending or threatened litigation
affecting the Seller or any pending or threatened governmental
proceeding or otherwise, which might result in a judgement,
decree or order having a material adverse effect on the Seller or
a material adverse effect on the Properties. The Seller is in
compliance with all laws, all rules and regulation of
governmental agencies and authorities and all judgement, orders
or decrees which by their terms apply to them.
5.4 Limited Warranty: Seller warrants title to the
Properties comprised of real property against the claims of
persons claiming same or part thereof by through and under Seller
but not otherwise.
5.5 Seller's Disclaimers:
A. Disclaimer of UCC Warranties; "As Is" Sale: All
Personal Property and fixtures included in this Agreement are
sold on an "As Is" and "Where Is" basis, "with all fault," and
Seller disclaims any implied warranties with respect to such
property. Seller expressly disclaims any warranty of title, any
warranty of merchantability and any warranty of fitness for any
particular purpose whatsoever with respect to the personal
property and fixtures sold hereunder.
B. Disclaimer Concerning Accuracy of Information:
Seller makes no warranty or representation, express or implied,
as to the accuracy or completeness of any data, information or
materials heretofore or hereafter furnished Purchasers in
connection with the interests or to which Purchasers are
granted access, nor as to the quality or quantity of
hydrocarbon reserves (if any) attributable to the properties or
the ability of the properties to produce hydrocarbons, any and
all such data, information and other materials furnished by Seller
are provided Purchasers as a convenience, and any reliance on
or use of the same shall be at purchasers' sole risk.
Purchasers expressly waive the provisions of Chapter 12,
Article I., Wyoming Consumer Protection Act (Section 40-12-101 Et
Seq.).
ARTICLE 6
PURCHASER'S REPRESENTATIONS
Purchaser hereby represents and warrants to Seller as follows:
6.1 Organization and Authority to do Business:
A. Melange Associates, Inc. represents and warrants that it
is a corporation organized and existing in good standing under
the laws of Colorado and is qualified to do business and is
registered and in good standing as a foreign corporation in
the State of Wyoming.
B. Nautilus Oil and Gas Company represents and warrants that
it is a corporation organized and existing in good standing under
the laws of Colorado and is qualified to do business and is
registered and in good standing as a foreign corporation in
the State of Wyoming.
C. Thorofare Resources, Inc. represents and warrants that
it is a corporation organized and existing in good standing under
the laws of Wyoming and is qualified to do business and is
registered and in good standing as a foreign corporation in
the State of Colorado.
6.2 Binding Obligation: Purchasers Represent and Warrant:
A. Melange Associates, Inc. represents and warrants, that
it has all requisite corporate power and authority to enter into
and perform its obligations under this Agreement and to carry out
the transaction contemplated hereby, that all corporate acts
and other proceedings required to be taken by Melange
Associates, Inc. to authorize the execution, delivery and
performance by Melange Associates, Inc. of this Agreement
have been duly and properly taken; and that this Agreement has
been duly executed and delivered by Melange Associates, Inc.
and constitutes the valid and binding obligation of Melange
Associates, Inc., enforceable against Melange Associates, Inc.
in accordance with its terms.
B. Nautilus Oil and Gas Company represents and warrants that
it has all requisite corporate power and authority to enter into
and perform its obligations under this Agreement and to carry
out the transaction contemplated hereby, that all corporate
acts and other proceedings required to be taken by Nautilus Oil
and Gas Company to authorize the execution, delivery and
performance by Nautilus Oil and Gas Company of this Agreement
have been duly and properly taken; and that this Agreement has
been duly executed and delivered by Nautilus Oil and Gas
Company and constitutes the valid and binding obligation of
Nautilus Oil and Gas Company, enforceable against Nautilus Oil
and Gas Company in accordance with its terms.
C. Thorofare Resources, Inc. represents and warrants that
it has all requisite corporate power and authority to enter into
and perform its obligations under this Agreement and to carry out
the transaction contemplated hereby, that all corporate acts
and other proceedings required to be taken by Thorofare
Resources, Inc. to authorize the execution, delivery and
performance by Thorofare Resources, Inc. of this Agreement
have been duly and properly taken; and that this Agreement has
been duly executed and delivered by Thorofare Resources, Inc.
and constitutes the valid and binding obligation of Thorofare
Resources, Inc., enforceable against Thorofare Resources, Inc.
in accordance with its terms.
6.3 Litigation: There is no pending or threatened litigation
affecting the Purchasers or any pending or threatened
governmental proceeding or otherwise, which might result in a
judgement, decree or order having a material adverse effect on
the Purchasers or a material adverse effect on the Properties.
The Purchasers are in compliance with all laws, all rules and
regulation of governmental agencies and authorities and all
judgement, orders or decrees which by their terms apply to them.
ARTICLE 7
PARTIES' COVENANTS
7.1 Other Negotiations: Seller will refrain from negotiating
with any third party or parties for the sale of or other disposal
or exchange of any of the Properties.
7.2 Right of Examination, Access to Information: Purchasers
shall make or arrange for others to make such inspection and
investigation of the Properties and any assumed liabilities as
they deem appropriate. At all times prior to the Closing, Seller
will give to Purchasers and their representatives full access at
reasonable times, as they may reasonably request, to all
Properties, books, contracts, documents and records related to
the Properties. This provision shall in no way be construed to
limit the rights of access granted in Articles 2.1 and 3.3.
Seller shall to the best of its ability arrange for Purchasers
and its representatives to discuss with appropriate officers,
employees, consultants, contractors and representatives of
Purchasers such matters related to this transaction as Purchasers
may reasonably request. Purchasers will hold such information in
confidence.
7.3 Additional Agreement: The Parties shall execute such
further documents and instruments, requested by either Party, as
may be necessary or reasonably desirable to consummate this
transaction or any part thereof The Parties agree to use their
best efforts at their own expense to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws to consummate and make
effective this transaction.
ARTICLE 8
PURCHASERS' OBLIGATION TO CLOSE
The obligation of Purchasers to consummate the transactions
contemplated herein are subject to the satisfaction, at the
discretion of Purchasers, at or prior to the Closing Date of each
of the following conditions:
8.1 Compliance with Representations, Covenants and
Conditions: The representations made by Seller in this Agreement
shall have been true when made and shall be true in all material
respects at the Closing Date with the same force and effect as if
such representations were made at and as of the Closing Date, and
Seller shall have performed or complied with all covenants and
conditions required by this Agreement to be performed or complied
with by it prior to or at the Closing. On the Closing Date,
Seller or an officer thereof shall furnish to Purchasers a
certificate certifying to the foregoing.
8.2 Opinion of Legal Counsel: The receipt by Purchasers of
an opinion from counsel to the Seller dated the Closing Date that
Seller is a limited partnership duly organized, validly existing,
and in good standing under the laws of the State of Texas and is
authorized to do business in the State of Wyoming; has the full
power to carry out the transaction provided for in this
Agreement; that this Agreement has been duly executed and
delivered by Canyon Energy, Inc., as Managing General Partner of
Wagner & Brown, Ltd.; that this Agreement is the legal and
binding obligation of Wagner & Brown, Ltd., enforceable in
accordance with its terms; and that the execution, delivery and
performance of this Agreement by Canyon Energy, Inc., as Managing
General Partner of Wagner & Brown, Ltd. and the consummation by
Wagner & Brown, Ltd. win not constitute a breach, violation, or
default under the partnership agreement of Wagner & Brown, Ltd.
8.3 Litigation: On the Closing Date, there shall be no
litigation, investigation, inquiry or proceeding pending or
threatened in or by any court or governmental agency or authority
which might result in action to restrain, enjoin or prohibit
consummation of the transactions contemplated by this Agreement.
Seller shall cause a certificate dated the Closing Date signed by
Seller, or an officer thereof, to be furnished to Purchasers
stating no such litigation, investigation inquiry or proceeding
is pending or, to the best his knowledge, threatened.
8.4 Delivery of Instruments of Transfer: At Closing, Seller
shall deliver to Purchasers executed, and where appropriate
recordable, bill of sale, lease assignments and other instruments
of conveyance pursuant to Article 4.3.
ARTICLE 9
SELLER'S OBLIGATIONS TO CLOSE
The obligations of Seller to consummate the transactions
contemplated hereby are subject to the satisfaction, at the
discretion of Seller, at or prior to the Closing Date of each of
the following conditions:
9.1 Compliance with Representations, Covenants and
Conditions: The representations and warranties made by Purchasers
in this Agreement shall have been true when made and shall be
true in all material respects as of the Closing Date with the
same force and effect as if such representations and warranties
were made at and as of the Closing date and Purchasers shall have
performed or complied with all covenants and conditions required
by this Agreement to be performed or complied with by Purchasers
prior to or at Closing.
9.2 Cash Purchase Price: At Closing, Purchasers shall
deliver the Adjusted Purchase Price pursuant to Article I hereof.
9.3 Preferential Purchase Rights: All preferential purchase
right obligation attributable to the Properties shall have been
satisfied.
9.4 Litigation: On the Closing Date, there shall be no
litigation, investigation, inquiry or proceeding pending or
threatened in or by any court or governmental agency or authority
which might result in action to restrain, enjoin or prohibit
consummation of the transactions contemplated by this Agreement.
ARTICLE 10
TRANSFER OF OPERATION
10.1 Operations: It is the desire of the Parties that
Thorofare Resources, Inc., or its designee, take over operations
of those portion of the Properties which Seller now operates as
of the Effective date, or as soon thereafter as BLM and State
approval to transfer operation is obtained. Seller shall e all
costs of operating prior to the transfer of such operations.
Between the Effective Date and actual transfer of operations,
Seller shall continue the physical operation of such Properties
pursuant to the terms of the Moneta Hill Unit Operating Agreement
until BLM and State approval to transfer operations is obtained.
For operations from and after the Effective Date conducted by
Seller for and on behalf of Purchasers, Seller may make
appropriate charges to Purchasers pursuant to the Moneta Hill
Unit Operating Agreement.
10.2 Casualty Loss: The risk of casualty loss relating to the
Properties shall pass from Seller to Purchasers on the Effective
Date of this Agreement.
10.3 Accounting Services: Seller will continue to generate
delay rental, royalty, minimum royalty and other similar payments
due on the Properties for a for a period of 90 days following
closing. Seller's obligation to pay delay rentals, royalty,
minimum royalty and other payments under this Agreement shall be
to the extent of Seller's best efforts, and Seller shall have no
liability whatsoever for any loss occurring through inadvertence
or any other cause other than wilful misconduct. Purchasers
agree promptly to reimburse Seller for any payments made by
Seller under this provision.
ARTICLE II
TAXES
11.1 Apportionment of Ad Valorem and Property Taxes: All ad
valorem taxes, real property taxes, personal property taxes and
similar obligation shall be apportioned as of the Effective Date
between Seller and Purchasers. All such taxes allocable to the
periods before and to the Effective date shall be paid by Seller.
AU such taxes due and payable on or before the Effective Date
shall be paid in full by Seller prior to Closing. Funds to pay
all such taxes becoming due and payable after the Effective Date
allocable to periods before and to the Effective Date shall be
withheld by Purchasers from the Cash Payment at Closing. All such
taxes allocable to after the Effective Date shall be paid by
Purchasers. Any refunds allocable to on or before the Effective
Date shall belong to Seller.
11.2 Sales Taxes, Filing Fees: The Purchasers shall bear any
sales taxes or other transfer taxes and be liable for any
applicable conveyance, transfer and recording fees, and real
estate transfer stamp or taxes imposed upon the sale pursuant to
this Agreement.
11.3 Other Taxes: All production, severance or excise taxes,
conservation fees and other similar such taxes or fees other than
income taxes relating to the oil and gas produced and sold from
the Properties on or before the Effective Date shall be paid by
Seller. All such taxes and fees relating to oil and gas produced
and sold after the Effective Date shall be paid by Purchasers.
ARTICLE 12
TERMINATION OF AGREEMENT
12.1 Termination: This Agreement and the transaction
contemplated herein may be terminated at any time prior to
Closing by:
A. the mutual consent of the Parties;
B. by either Party if there has been a breach of covenant
or agreement contained herein by the other Party and such breach
has not been promptly cured;
C. by the operation of Articles 2.4, Remedies for Title
Defects, 2.5, Rights of Preferential Purchase and Consents to
Assign, and 3.4, Remedy for Material Environmental Deficiency,
or Article 14.9, Counterparts.
12.2 Effect of Termination: In the event of termination of
this Agreement pursuant to 12.1 A. or 12.1.C., this Agreement
shall forthwith become void and there shall be no liability or
obligation on the part of either Party or their respective
officers, directors and shareholders or partners except as
otherwise set forth herein.
ARTICLE 13
ACTION AFTER CLOSING
13.1 Final Accounting: Within 90 days after Closing, Seller
shall provide the Final Accounting to Purchasers for its
approval. Purchasers shall have seven (7) days thereafter to
review the Final Accounting. Seller shall make its accountant
available to Purchasers' accountant during that period. If
Sellers' and Purchasers' accountants are unable to agree upon the
Final Accounting within seven (7) days of the end of Purchasers'
review period, they shall together select an independent
accounting firm to make the final determination. Such
determination shall be conclusive and the cost of such shall be
borne equally by the Seller and Purchasers.
13.2 Suspended Funds: After Closing, Seller will provide to
Purchasers a fist of all proceeds from production attributable to
the Moneta Hills Real Property which are then being held in
suspense. Seller shall transfer to Purchasers all of those
suspended proceeds and all applicable files pertaining thereto.
Purchasers shall thereafter be responsible for proper
distribution of all suspended proceeds.
13.3 Further Assurances and Subsequent Cooperation: After
Closing, Seller and Purchasers agree to take such further actions and
to execute, acknowledge and deliver all such further documents
that are necessary or useful in carrying out the purposes of this
Agreement or of any document delivered pursuant hereto.
Purchasers shall timely record the assignments and bills of sale
in appropriate offices in the state and counties where the
properties are located. Purchasers shall timely file for and
obtain appropriate state, federal or other governmental approvals
and forms of assignments. Each Party will provide reasonable
access to properties and records to the other Parties and
cooperate with such other Parties in matters relating to
financial reporting, tax or similar purposes, or purposes of
investigating claims, or conducting litigation or administrative
proceedings with third parties or governmental agencies. It is
specifically understood and agreed that Purchasers shall comply
with such bonding and other requirements as may be necessary to
obtain the approval of assignment of the United States oil and
gas leases and the release of Seller from its obligations as
lessee under such leases from and after the earliest practicable
date of government approval.
ARTICLE 14
MISCELLANEOUS
14.1 Survival of Representations: All representation of the
parties contained in this Agreement shall survive the Closing and
continue for a period of two (2) years from and after Closing
Date.
14.2 Expenses: Whether or not this Agreement is Closed and
the transaction consummated, each Party to this Agreement will
bear and pay its own expenses incurred in connection with the
preparation and performance of this Agreement.
14.3 Notices: Any notice given hereunder shall be in writing
and shall be delivered personally, by facsimile (Fax), or by
registered or certified mail, postage prepaid to the Parties at
the following addresses:
Seller PURCHASERS
Wagner & Brown, Ltd. Melange Associates, Inc.
P.O. Box 1714 821 17th Street, Suite 600
Midland, TX 79702 Denver, CO 80202
Phone: (915) 686-5910 Phone: (303) 298-9415
Fax: (303) 686-6485 Fax: (303) 298-0729
Nautilus Oil and Gas
Company
P.O. Box 2428
Denver, CO 80201
Phone: (303) 534-5220
Fax: (303) 534-5414
Thorofare Resources, Inc.
1888 Sherman Street, Suite 760
Denver, CO 80203
Phone: (303) 830-7208
Fax: (303) 830-7004
Each Party may change its address at any time and from time to
time by giving notice to the other parties.
14.4 Assignment: This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective
heirs, successors and assigns. Purchasers are free to assign all
or any portion of their interest herein at any time; provided,
however Purchasers shall not be relieved of any obligation
imposed upon one or more of them by this Agreement as a result of
any such assignment.
14.5 Titles for Convenience Only: The Table of Contents and
headings used in this Agreement are inserted for convenience only
and shall be disregarded in construing this Agreement.
14.6 Severability: It is the intent of the Parties that the
provisions contained in this Agreement shall be severable.
Should the whole or any portion of any provision of this
Agreement be held void or invalid, as a matter of law, such
holding shall not affect other portions thereof which can be
given effect without the invalid or void portion.
14.7 Binding Effect: This Agreement shall be binding upon and
shall inure to the benefit of the Parties hereto and to their
respective heirs, devisees, legatees, legal representatives,
successors and assigns.
14.8 Compliance With Laws And Regulations: The Parties shall
each comply with all laws, rules and regulations of any
government authority in its operations hereunder.
14.9 Counterparts: This Agreement may be executed in
counterparts, and all such counterparts taken together shall be
deemed to constitute one and the same instrument. Execution by a
each Seller shall bind that Seller regardless of execution by any
other Seller provided however that should less than all Seller
execute this Agreement Purchasers may terminate this Agreement.
14.10 Governing Law: This Agreement shall be governed by the
laws of the State of Wyoming applicable to contracts made and to
be performed therein. AU assignments and instruments executed in
accordance with this Agreement shall be governed by and
interpreted in accordance with the laws of the state where the
Properties conveyed thereby are located.
IN WITNESS OF, this Agreement is executed effective as of the
date herein above provided.
Seller:
Wagner & Brown, Ltd.
By: Canyon Energy, Inc. as Managing General Partner
By: s/Ted C. Meade
Ted C. Meade, Vice President, Land
Date: April 4, 1996
PURCHASERS
Melange Associates, Inc. Thorofare Resources, Inc.
s/Gary C. Stewart s/Tim Macke
By: Gary C. Stewart, President Tim Macke,President
Date: 3/29/96 Date: 3/29/96
Nautilus Oil and Gas Company
By: s/Joseph R. Pope
Joseph R. Pope, President
Date: 3/29/96
ASSIGNMENT AND ASSUMPTION
THIS INSTRUMENT is made and entered into as of the day
of April, 1996, between Melange Associates, Inc., a Colorado
corporation, Nautilus Oil and Gas Company, a Colorado
corporation, and Thorofare Resources, Inc., a Wyoming corporation
(hereinafter collectively referred to as "Assignors") and Delta
Petroleum Corporation, a Colorado corporation, ("Assignee").
WHEREAS, pursuant to the Moneta Hills Purchase and Sale
Agreement dated February 23, 1996 by and between the Assignors,
as Purchasers and Wagner & Brown, Ltd. ("WB"), as Seller ("the
Agreement"), the Assignors have agreed to purchase WB's interest
in the Properties as that term is defined in the Agreement on the
terms and conditions set forth in the Agreement.
WHEREAS, Assignee desires to acquire all of the rights
and assume and undertake all of the obligations of Assignors
under the Agreement, and Assignors are willing to assign such
rights and obligations to Assignee on the terms and conditions
set forth in this instrument.
NOW, THEREFORE, in consideration of the premises, the
mutual agreements and obligations of Assignors and Assignee
hereinafter set forth, and other good and valuable consideration,
the sufficiency of which is hereby acknowledged, Assignors and
Assignee do hereby agree as follows:
1. Subject to all of the terms of this instrument, Assignors
hereby assign and transfer unto Assignee all of Assignors'
rights and interest in, to and under the Agreement.
2. Assignee hereby assumes and agrees to timely perform
each of the Assignors' respective and collective covenants,
obligations and liabilities under the Agreement, including,
but not limited to, the obligations of Assignors to pay the
purchase price to WB at closing under the Agreement and to
indemnify and hold WB harmless from certain obligations and
liabilities incident to the ownership and operation of the
Properties as specified in the Agreement.
3. By its execution hereof, WB consents to the foregoing
assignment and assumption of contractual rights and
obligations, but in no way releases or waives any rights or
remedies it may have under the Agreement with respect to the
Assignors who remain liable for their respective and
collective obligations as Purchasers under the Agreement.
EXECUTED in counterpart as of the day and year first
above written.
ASSIGNORS: ASSIGNEE:
MELANGE ASSOCIATES, INC. DELTA PETROLEUM CORPORATION
By:s/Gary C. Stewart By: s/Roger A. Parker
Printed Name: Gary C. Stewart Printed Name: Roger A. Parker
Title: President Title: President
NAUTILUS OIL AND GAS COMPANY
By: s/Joseph R. Pope
Printed Name: Joseph R. Pope
Title: President
THOROFARE RESOURCES, INC.
By:s/Tim Macke
Printed Name: Tim Macke
Title: Vice President
Consent to the above and foregoing Assignment and Assumption is
granted as of this the 5th day of April 1996.
WAGNER & BROWN, LTD.
By: Canyon Energy, Inc.,
as Managing General Partner
By:s/Ted C. Meade
Printed Name: Ted C. Meade
Title: Vice President - Land
INVESTMENT REPRESENTATION AGREEMENT
REGARDING OFFSHORE SUBSCRIPTIONS
Delta Petroleum Corporation
555 17th Street, Suite 3310
Denver, Colorado 80202
Gentlemen:
1. Subscription. The undersigned C.A. Opportunidad of Aparado 1474;
San Jose 1000, San Jose, Costa Rica, hereby agrees to acquire from Delta
Petroleum Corporation ("Seller") 115,000 shares of restricted and legended
common stock of Delta Petroleum Corporation ("Seller", "Delta" or "Company")
(collectively the "Securities"), for $550,000 in a private negotiated
transaction pursuant to the U.S. Securities and Exchange Commission
Regulation S and/or other applicable statute, rule and\or regulation.
The delivery of the certificate representing the Securities and the
payment therefore in certified funds shall take place
on or before March 11, 1996.
2. Representations and Warranties. The undersigned warrants and
represents to Seller and to the Company that:
a. Offshore Transaction.
(i) Undersigned is not a U.S. person as that term is defined
under Regulation S as promulgated by the Securities and Exchange
Commission ("SEC") under authority of the Securities Act of 1993,
as amended ("Act").
(ii) At the time the buy order was originated, undersigned was
outside the United States.
(iii) Undersigned is purchasing for its own account and not on
behalf of any U.S. Person, and the sale has not been pre-arranged with
a buyer in the United States.
(iv) Each distributor participating in the offering of the
Securities, if any, has agreed in writing that all offers and sales of
the Securities prior to the expiration of a period commencing on the
Closing Date of the transaction and ending the later of 40 days thereafter
or as set forth in the legend at Paragraph 3 herein shall be made in
compliance with the Issuer Safe Harbor, pursuant to registration of
Securities under the Act or pursuant to an exemption
from such registration requirements.
(v) The undersigned represents and warrants and hereby
agrees that all offers and sales of the Securities of the Company
acquired hereby prior to the expiration of a period commencing on
the Closing Date of the transaction and ending the later of 40 days
thereafter or as set forth in the legend at Paragraph 3 herein shall
be made in compliance with the Issuer Safe Harbor, pursuant to
registration of Securities under the Act or pursuant to an exemption
from registration.
(iv) All offering documents received by the undersigned include
statements to the effect that the Securities have not been registered
under the Act and may not be offered or sold in the United States or to
U.S. persons during a period commencing on the Closing Date of the
transaction and ending the later of 40 days thereafter or as set forth
in the legend at Paragraph 3 herein unless the Securities are registered
under the Act or an exemption from the registration
requirements is available.
b. The undersigned will not take, or cause to be taken, any action
that would cause it to be deemed an underwriter of the Securities, as
defined in Section 2(11) of the Act. The Purchaser is acquiring the
Shares for its own account, for investment purposes only and without
the intent toward the further resale or distribution thereof.
c. The undersigned has been afforded and has utilized an opportunity
to examine such documents and obtain such information concerning the
Company as it may have requested, including without limitation all
publicly available information, and has had the opportunity to
request such other information (and all information so requested has been
provided) for the purpose of verifying the information furnished to it
and for the purpose of answering any questions it may have had concerning
the business affairs of the Company and it has reviewed
to the extent desired by it, the Articles, Bylaws and Minutes of the
Company, documentation concerning the Company's financial condition,
assets, liabilities, share ownership and capital
structure, operations, sales, management, relationship with Amber
Resources Company and Delta Petroleum Corporation; all documents, comment
letters and responses thereto relating to the Company's pending S-3
Registration Statement; the existing but thinly traded public market;
public filings; litigation; leases and lease-related obligations (and the
geology and related properties of such leases), and other material
contracts and matters and all documents filed with
the SEC to date.
d. The undersigned (and its officers, directors and/or agents, as
applicable) have had an opportunity to personally ask questions of, and
receive answers from, one or more of the officers and directors of the
Company and/or the attorneys for the Company to ascertain and
verify the accuracy and completeness of all material information regarding
the Company, its business and its officers, directors, and promoters.
The undersigned has had an opportunity to ask questions of and receive
answers from duly designated representatives of the Company
concerning the terms and conditions pursuant to which the Securities
are being acquired by it.
e. The undersigned understands that its acquisition of the
Securities from the Company is a negotiated private transaction.
f. By reason of its knowledge and experience (and that of its
officers and directors and/or advisors and investment bankers) in
financial and business matters in general, and investments in particular,
the undersigned is capable of evaluating the merits and risks of an
investment in the Securities.
g. The undersigned is capable of bearing the economic risks of
an investment in the Securities. The undersigned's present financial
condition is such that it is under no present or contemplated future
need to dispose of any portion of the Securities to satisfy any existing or
contemplated undertaking, need or indebtedness. The undersigned is an
accredited investor within the meaning of Rule 501 promulgated under the Act.
h. If required to do so, the undersigned has retained to advise it,
as to the merits and risks of a prospective investment in the Securities,
a purchaser representative, legal counsel,
financial and accounting advisors, investment bankers, etc.
i. The undersigned understands that no federal or state agency of
either the U.S. or Costa Rica or any other jurisdiction has passed on
or made any recommendation or endorsement of the Securities.
j. The undersigned hereby represents and warrants to Seller and
to the Company that all of the representations, warranties and
acknowledgements contained in this agreement, and the agreements to
which this document is attached as an exhibit are true, accurate and
complete as of the date herein and acknowledges that the Company, its
officers, directors, agents, and affiliates have relied on its
representations and warranties herein in consenting to the restricted
issuance and/or transfer of the Securities and the undersigned hereby agrees
to indemnify and hold the Seller and the Company (together with its
officers, directors, agents and affiliates) harmless with respect to
any and all expenses, claims or litigation (including without limitation
reasonable attorney's fees related thereto) arising from or related to
breach of any warranty or representation herein.
3. Restrictions. The undersigned acknowledges and understands that
the Securities are unregistered and must be held indefinitely unless they
are subsequently registered under the
Act or an exemption from such registration is available.
There is a limited trading market in Securities of the Company as of
this date on the small cap NASDAQ Stock Market and there is no assurance
such trading market will develop further or, if developed,
will continue or be substantial or liquid if it continues.
Any and all certificates representing the Securities and any and
all Securities issued in replacement or conversion thereof or in exchange
thereof shall bear either the transfer agent's usual restrictive legend
for restricted shares or the following legend, or one substantially similar
thereto, which the undersigned has read and understands:
The shares represented by this certificate ("Shares") have been
issued pursuant to Regulation S promulgated under the Securities
Act of 1933, as amended ("Act") and certain contractual
agreements. These shares may be sold without restriction and
freely transferred to foreign nationals or companies by the registrar
of the Company's shares. However, no United States national or
company can buy or transfer any of the shares prior to (a date will
be inserted here which is 41 days subsequent to the payment for
and delivery of the shares) in the absence of an effective
registration statement pursuant to the Act and other applicable
Securities laws of the United States, or exemption therefrom.
The undersigned further agrees that the Company shall have the right to
issue transfer instructions to its transfer agent, if any, or to note a
transfer instruction in its stockholder records, as per the legend above,
and it acknowledges that the Company has informed it of its
intention to issue such instructions when and if necessary.
4. Company's Representations.
a. Reporting Company Status. The Company is a reporting company as
defined by Rule 902 of Regulation S. The Company is in full compliance
with all reporting obligations under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended.
b. Offshore Transaction.
(i) The Company has not offered these Securities to any person
in the United States or to any U.S. person as that term is defined
in Regulation S.
(ii) At the time the buy order was originated, the Company
and/or its agent reasonably believed undersigned was outside of
the United States and was not a U.S. person.
(iii) The Company and/or its agent reasonably believe that
the transaction has not been pre-arranged with a buyer in the United States.
5. Exemption: Reliance on Representations.
Undersigned understands that the Securities are not being registered
under the Act. The Company is relying on the rules governing offers
and sales made outside the United States pursuant to Regulation S.
Rules 901 through 904 of Regulation S govern this transaction.
6. Conditions to the Seller's Obligation to Sell the Shares.
The obligations of the Seller under this Agreement are subject, in the
discretion of the Company, to the satisfaction at
or prior to the Closing Date of the following conditions.
(a) The Company's receipt of the Purchase Price for the Shares,
as described in paragraph 1 of this agreement.
(b) The representations and warranties made by the Purchaser in this
agreement were true when made and shall be true as at the Closing Date
with the same force and effect as if such representations and warranties
were made at and as of the Closing Date.
(c) All of the terms, covenants and conditions of this Agreement to
be complied with and performed by Purchaser on or prior to the Closing
Date shall have been fully complied with and performed.
(d) Purchaser shall have provided the Company with a certified copy
of resolutions of the Board of Directors of the Purchaser authorizing the
purchase of the Shares and the transactions contemplated herein.
7. Conditions to the Purchaser's Obligation to Buy the Shares.
The obligations of the Purchaser under this Agreement are subject in the
discretion of the Purchaser, to the satisfaction at or prior to the
Closing Date of the following conditions:
(a) Delivery of the Shares to the Purchaser together with a
certified copy of resolutions of the Board of Directors of the Seller,
authorizing the sale of the Shares and the transactions contemplated herein.
(b) The representations and warranties made by the Company in this
Agreement were true when made and shall be true as at the Closing Date
with the same force and effect as if such
representations and warranties were made at and as of the Closing Date.
(c) All of the terms, covenants and conditions of this Agreement to
be complied with and performed by the Company on or prior to the Closing
Date shall have been fully complied with and performed.
(d) The Company's legal counsel shall have supplied the Company's
transfer agent with instructions, based upon an opinion of purchaser's
legal counsel, that the legend set forth on the certificates evidencing
the Shares can be removed upon the effectuation of the sale of the
Shares contemplated herein to Purchaser in accordance with Regulation S
and all stop transfer order notations with respect to the Shares
have been removed from the transfer agent's books
and records with respect thereto.
8. Notices. Any notices or other communications required or
permitted hereby shall be sufficiently given if sent by registered or
certified mail, postage prepaid, return receipt
requested, and, if to the Company, at the address to which this
agreement is addressed, and if to the undersigned, at the address
set forth below its signature hereto, or to such other addresses
as either you or the undersigned shall designate to the other by
notice in writing.
9. Successors and Assigns. This agreement shall be binding upon
and shall inure to the benefit of the parties hereto and to the successors
and assigns of the Seller and to the personal and legal representatives,
heirs, guardians, successors and permitted assignees of the undersigned.
10. Applicable Law. This agreement shall be governed by and
construed in accordance with the laws of the State of Colorado and,
to the extent it involves any United States statute, in accordance
with the laws of the United States, and jurisdiction and venue for any
dispute related hereto shall be in the District Court for the City and
County of Denver, Colorado.
11. Counterparts. This agreement may be executed in any number of
counterparts, including facsimile signatures which shall be deemed as
original signatures. All executed counterparts shall constitute one
Agreement, notwithstanding that all signatories are not signatories
to the original or the same counterparts.
C.A. OPPORTUNIDAD
By: s/Adriana Tristan Gomes
Typed or Printed Name Signature
Adriana Tristan Gomes, Presidente
Apartado 1474
Address
San Jose 1000
San Jose, Costa Rica
City, State and Zip Code
SELLER:
DELTA PETROLEUM CORPORATION
By:s/Aleron H. Larson, Jr.
Dated: March 7, 1996
January 19, 1996
Mr. David Castaneda ("Castaneda")
957 S. Corona
Denver, Colorado 80209
Dear Mr. Castaneda:
You and Delta Petroleum Corporation ("Delta") have entered
into an employment agreement dated January 19, 1996. From time to
time Delta may grant options to you under its Incentive Plan or
otherwise in addition to the shares of Delta stock paid to you
under the employment agreement or that you may own or acquire in
some other manner.
We hereby acknowledge that it has been and remains the intent
of Delta and Castaneda that neither Castaneda nor Castaneda and any
other affiliated person or entity as a group hold or own (directly
and/or beneficially) five percent (5%) or more of Delta's common
stock at any time by reason of the exercise of the above referenced
options. In that regard Castaneda and Delta agree as follows:
Notwithstanding any provision set forth in the options or in any
other agreement between Castaneda or his affiliates and Delta, no
Option to purchase Delta's common stock shall be delivered to
Castaneda and/or be exercisable by Castaneda if such Option, when
combined with shares of Delta's common stock owned by Castaneda on
such date will cause Castaneda (or Castaneda and affiliates) to
own, or be able to own by exercise of the such Options, 5.0% or
more of Delta's outstanding common stock; if vesting and/or
delivery of any Option would have such effect, such Option shall be
reduced prior to delivery so that Castaneda's ownership of the
Delta's outstanding common stock will be less than 5.0%; any
reduced portion of such Option shall not vest in Castaneda until
the first date when his vesting will not increase Castaneda's
ownership to 5.0% or greater; Castaneda shall inform Delta of his
ownership of Delta's securities prior to the exercise of any option
so that the calculations required hereby can be timely made.
It is further acknowledged that the parties have entered into
a voting agreement of even date herewith with respect to all shares
now owned or that might in the future become owned by Castaneda.
Please sign below to indicate your agreement.
Very truly yours,
DELTA PETROLEUM CORPORATION
s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr., CEO
By: s/David Castaneda
David Castaneda
EMPLOYMENT AGREEMENT
This agreement is entered into as of January 19, 1996, by and
between Delta Petroleum Corporation ("Delta" or the "Company") and
David Castaneda ("Employee").
The Company desires to retain the services of Employee as an
employee upon the conditions contained in this Agreement and
Employee desires to provide services to the Company under such
conditions.
NOW THEREFORE, in consideration of the mutual covenants and
conditions hereafter set forth, the Company and Employee agree as
follows:
1. Employment. The Company hereby agrees to engage
Employee, and Employee does hereby agree to be engaged by the
Company, upon the terms and conditions set forth in the following
paragraphs.
2. Employment Period. The Company hereby engages Employee
for the period commencing February 1, 1996 and ending January 31,
1997 ("Employment Period") to serve as manager of shareholder
relations, broker relations and marketing and to render such other
services in that capacity as the Company shall reasonably require.
Employee hereby agrees to remain in the employ of the Company for
the Employment Period, provided that Employee may, by 90 days
written notice to the Company, terminate his employment with the
Company; in which case this Agreement shall terminate, except as to
provisions which survive termination of employment as provided
herein, without liability one to the other upon the date specified
by Employee.
3. Duties. Employee agrees that at all times during the
Employment Period, he will faithfully and diligently endeavor to
promote the business and business interests of the Company, and
that he will devote such time and attention to the affairs of the
Company as is necessary and appropriate; provided, however, that
this Agreement shall not restrict Employee from engaging, directly
or indirectly, in any business, investment or activity which is not
inconsistent with the performance by the Employee of his duties
under this Agreement.
4. Salary and Benefits. Subject to the provisions of
Paragraph 7 below, during the Employment Period, Employee shall be
compensated as follows:
a) Employee shall earn a salary of $15,000 per month,
payable in the company's common stock at a price of six dollars
($6.00) per share, subject to the customary payroll deductions for
Federal, State and local taxes which Employee shall direct to the
Company from the proceeds of any sale of the common stock. The
Company, for convenience, may issue the shares representing
Employee's salary for the following twelve months, provided,
however, that Employee may not sell more than 2,500 shares in any
one month.
b) Employee shall also receive an option to purchase 50,000
shares of common stock at a purchase price of $7.00 per share which
shall vest January 31, 1997 and shall expire January 31, 2002.
c) the Board of Directors and/or the Compensation Committee
of the Board of Directors of the Company may review Employee's
compensation from time to time with a view to making such increases
in Employee's compensation or declaring such bonuses or other
benefits to Employee as maybe merited and warranted in light of
factors considered pertinent;
5. Expenses. All pre-approved expenses incurred by Employee
in the performance of his duties under this Agreement, including
but not limited to expenses for entertainment, travel and similar
items, will be paid or reimbursed monthly by the Company in common
stock as in paragraph 4.a) above. The Company will furnish
Employee with an office in its principal executive offices in
Denver and necessary secretarial, geological, engineering, legal,
accounting and other services necessary to properly support
Employee's performance of his duties at the Company's expense.
6. Termination Upon Death and Disability. The Employment
Period shall automatically terminate upon the death of Employee;
provided, however, that in the event of the Employee's death, all
compensation Employee is entitled to receive under this Agreement
at the time of his death shall be paid to his legal representative
in accordance with the provisions of Paragraph (4)(a) hereof for
the remainder of the Employment Period.
7. Termination for Cause. Upon the occurrence of any of the
events listed below, the Company may terminate the Employee without
further obligation under this Agreement except as to provisions
which survive termination of employment or termination of this
agreement as provided herein:
a) Employee's conviction of any criminal act directly related
to Employee's duties hereunder including without limitation
misappropriation of funds or property of the Company or a felony
criminal act directly related to Employee's duties hereunder.
b) Employee's misfeasance or malfeasance in office, which
the parties agree shall mean fraud, dishonesty, wilful misconduct
or gross neglect of duties.
c) Breach by Employee of any material provision of this
Agreement.
8. Termination without Cause. In the event Employee is
terminated by the Company for any reason except as set forth at
Paragraph 7 above, he shall continue to be compensated for the
duration of the Employment Period in the full amounts provided for
in Paragraphs 4, 5, and 6 hereof.
9. Notice of Termination. Prior to termination, for any
reason (with or without cause), Employee will be given notice
thereof sufficient to allow Employee to exercise any and all
options granted to Employee under Delta's 1993 Incentive Plan but
which notice in any event shall be given not less than thirty (30)
days prior to such termination.
10. Parties in Interest. This Agreement shall be binding
upon, and shall inure to the benefit of the Company and its
successors and assigns and any person acquiring, whether by merger,
consolidation, liquidation, purchase of assets or otherwise, all or
substantially all of the Company's equity or assets, and business.
11. Choice of Law. It is the intention of the parties hereto
that this Agreement and the performance hereunder and all suits and
special proceedings hereunder be construed in accordance with and
under the laws of the State of Colorado and that in any action,
special proceeding or other proceeding that may be brought arising
out of, in connection with, or by reason of this Agreement, the
laws of the State of Colorado shall be applicable and shall govern
to the exclusion of the law of any other forum, without regard to
the jurisdiction in which any action or special proceeding may be
instituted.
12. Severance of Invalid Provisions. In case any one or more
of the provisions, or portions thereof, of this Agreement should be
determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby.
13. Integrated Agreement. This Agreement shall constitute
the entire agreement between the parties hereto relating to the
Engagement of Employee.
IN WITNESS WHEREOF, Employee has executed this Agreement and
the Company has caused this Agreement to be duly executed on its
behalf by its duly authorized officer, all as of the date first
above written.
DELTA PETROLEUM CORPORATION
By: s/Aleron H. Larson, Jr.
Authorized Officer, CEO
EMPLOYEE:
s/David Castaneda
David Castaneda
STOCK VOTING AGREEMENT
THIS VOTING AGREEMENT, executed this 19th day of January, 1996
by and between and among DELTA PETROLEUM CORPORATION, a Colorado
corporation ("Delta"), David Castaneda ("Shareholder").
WHEREAS, Shareholder owns shares of Delta common stock and
holds options from Delta exercisable into Delta common stock from
time to time; and
WHEREAS, Delta has requested that the voting rights to all
shares now owned or that may be acquired in the future by Castaneda
(the "Shares") be subject to the provisions hereof, as set forth
below.
NOW, THEREFORE, in consideration of the mutual agreements of
the parties hereto and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. Shareholder hereby constitutes and appoints Aleron H.
Larson, Jr. and Roger A. Parker, and each of them, with full power
of substitution, for the period commencing on the date hereof and
ending on January 31, 2004, to vote the Shares as the proxy of
Shareholder, at any and all meetings, regular or special, of the
shareholders of Delta, or at any adjournments thereof, which may be
held during such period, hereby granting to said Aleron H. Larson,
Jr. and Roger A. Parker, and each of them (the "Proxies"), as
Shareholder's attorney and proxy, all powers Shareholder would
possess if personally present at any such meetings. The proxy
granted hereby is expressly acknowledged to be coupled with an
interest and shall be irrevocable to the full extent permitted by
law until January 31, 2004, except to the extent specifically
provided in Paragraph 3 below. The proxy granted hereby revokes
any other proxy relative to the Shares heretofore granted by
Shareholder.
2. During the entire term of this Agreement, the Proxies,
and each of them, shall have full and absolute discretion as to the
manner in which Shares are to be voted as to any matter whatsoever,
all without any liability or obligation of any kind to Shareholder.
3. Nothing contained herein shall be construed in such a
manner so as to prohibit or preclude the sale or exchange or other
disposition of all or any part of the Shares by Shareholder. In
the event that all or any portion of the Shares are sold, assigned,
exchanged or otherwise disposed of by Shareholder (and/or its
assigns) to a non-affiliate of Shareholder in any transaction(s)
prior to January 31, 2004, then, with regard to such transferred
portion of the shares, the voting provisions set forth herein shall
terminate.
4. A counterpart of this Agreement shall forthwith be
deposited with Delta at its principal place of business.
5. This Agreement shall be construed in accordance with the
laws of the State of Colorado and shall be binding upon the
successors and assigns of each party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date set forth above.
DELTA PETROLEUM CORPORATION
By: s/Aleron H. Larson, Jr.
Authorized Officer CEO
By: s/David Castaneda
David Castaneda
EMPLOYMENT AGREEMENT
This agreement is entered into as of January 22, 1996, by and
between Delta Petroleum Corporation ("Delta" or the "Company") and
Kevin K. Nanke ("Employee").
Employee has in the past and does at present act as controller
of the Company.
The Company desires to retain the services of Employee as an
employee upon the conditions contained in this Agreement and
Employee desires to provide services to the Company under such
conditions.
NOW THEREFORE, in consideration of the mutual covenants and
conditions hereafter set forth, the Company and Employee agree as
follows:
1. Employment. The Company hereby agrees to engage
Employee, and Employee does hereby agree to be engaged by the
Company, upon the terms and conditions set forth in the following
paragraphs. This agreement replaces and supersedes all prior
employment agreements.
2. Employment Period. The Company hereby engages Employee
for the period commencing January 22, 1996 and ending on the second
anniversary of such date ("Employment Period") to continue to serve
in his present position with the Company and to render such other
services in a similar capacity as the Company shall reasonably
require. Employee hereby agrees to remain in the employ of the
Company for the Employment Period, provided that Employee may, by
30 days written notice to the Company, terminate his employment
with the Company; in which case this Agreement shall terminate,
except as to provisions which survive termination of employment as
provided herein, without liability one to the other upon the date
specified by Employee.
3. Duties. Employee agrees that at all times during the
Employment Period, he will faithfully and diligently endeavor to
promote the business and business interests of the Company, and
that he will devote such time and attention to the affairs of the
Company as is necessary and appropriate; provided, however, that
this Agreement shall not restrict Employee from engaging, directly
or indirectly, in any business, investment or activity which is not
inconsistent with the performance by the Employee of his duties
under this Agreement.
4. Salary and Benefits. Subject to the provisions of
Paragraph 8 below, during the Employment Period, Employee shall be
compensated as follows:
a) Employee shall earn a salary of $60,000 per annum,
payable in monthly installments, subject to the customary payroll
deductions for Federal, State and local taxes;
b) the Chairman/CEO and President, the Board of Directors
and/or the Compensation Committee of the Board of Directors of the
Company may review Employee's salary from time to time, and at
least no less than annually, with a view to making such increases
in Employee's salary or declaring such bonuses or other benefits to
Employee as may be merited and warranted in light of factors
considered pertinent; the parties recognize that Employee has
already been granted certain options under the Company's 1993
Incentive Plan;
c) Employee shall have the use of a Company automobile, or,
in lieu thereof a monthly automobile allowance therefore of $480
per month, receive free of cost parking for his automobile and
health, hospitalization and life insurance with coverage exceeding
or equal to that now in force, plus such other benefits as the
Board shall vote; and
d) Employee shall be entitled to three weeks vacation per
year to be taken at such times as do not interfere with the
performance of his duties hereunder; and
5. Expenses. All reasonable and necessary pre-approved
expenses incurred by Employee in the performance of his duties
under this Agreement, including but not limited to expenses for
entertainment, travel and similar items, will be paid or reimbursed
monthly by the Company. The Company will furnish Employee with an
office in its principal executive offices in Denver and
secretarial, and other services necessary to properly support
Employee's performance of his duties at the Company's expenses.
6. Disability of Employee. In the event of the disability
(as defined herein) of Employee prior to the expiration of the
Employment Period, Employee shall nevertheless continue to be
compensated for a period of three months following the date of
disability at the annual rate and with such benefits provided for
in Paragraph 4 hereof. For purposes of this Agreement, Employee
shall be deemed to be disabled if, because of illness or other
physical or mental condition, he is unable to perform for two
successive months, or for short periods aggregating over two months
in any twelve successive calendar months, his duties under this
Agreement. Such benefit period shall run from the time disability
commenced until Employee's condition improves sufficiently to
permit him to work after which date he must be available at the
Company's option.
7. Termination Upon Death and Disability. The Employment
Period shall automatically terminate upon the death of Employee;
provided, however, that in the event of the Employee's death, all
compensation Employee is entitled to receive under this Agreement
at the time of his death shall be paid to his legal representative
in accordance with the provisions of Paragraph (4)(a) hereof for
the shorter of a period of three months following the date of
Employee's death or the remainder of the Employment Period. The
Employment Period shall automatically terminate upon the payment
for three consecutive months of disability benefits to Employee (as
defined in Paragraph 6 above).
8. Termination for Cause. Upon the occurrence of any of the
events listed below, the Company may terminate the Employee without
further obligation under this Agreement except as to provisions
which survive termination of employment or termination of this
agreement as provided herein:
a) Employee's conviction of any criminal act directly related
to Employee's duties hereunder including without limitation
misappropriation of funds or property of the Company or a felony
criminal act directly related to Employee's duties hereunder.
b) Employee's misfeasance or malfeasance, which the parties
agree shall mean fraud, dishonesty, wilful misconduct or gross
neglect of duties.
c) Failure to follow and execute reasonable directions of
management.
d) Breach by Employee of any material provision of this
Agreement.
9. Termination without Cause. In the event Employee is
terminated by the Company for any reason except as set forth at
Paragraph 8 above, he shall continue to be compensated for three
months in the full amounts provided for in Paragraphs 4, 5, 6 and
7 hereof.
10. Termination Upon Change in Control.
During the period of employment and provided that the Company
is controlled by either Aleron H. Larson, Jr. or Roger A. Parker,
or both, Employee may be terminated with or without cause as
provided herein. Notwithstanding the foregoing, in the event that
a Change in Control (as defined in Delta's 1993 Incentive Plan) of
the Company shall occur at any time during the Employment Period,
as a result of which the Company appoints a person other than
Employee to serve in the capacity for which Employee is employed
hereunder, Employee nevertheless shall be entitled to the benefits
of and subject to all of the terms and conditions set forth herein,
including, without limitation, the right to receive full
compensation as provided in Paragraphs 4, 5, 6 and 7 hereof with an
automatic annual 10% increase in salary regardless of whether
Employee continues to perform any services for the Company.
11. Employee shall have the right to participate in the cost
of drilling any Company well or wells in which Aleron H. Larson,
Jr. and Roger A. Parker are permitted to participate upon identical
terms.
12. Notice of Termination. Prior to termination, for any
reason (with or without cause), Employee will be given notice
thereof sufficient to allow Employee to exercise any and all
options granted to Employee under Delta's 1993 Incentive Plan but
which notice in any event shall be given not less than thirty (30)
days prior to such termination.
13. Parties in Interest. This Agreement shall be binding
upon, and shall inure to the benefit of the Company and its
successors and assigns and any person acquiring, whether by merger,
consolidation, liquidation, purchase of assets or otherwise, all or
substantially all of the Company's equity or assets, and business.
14. Choice of Law. It is the intention of the parties hereto
that this Agreement and the performance hereunder and all suits and
special proceedings hereunder be construed in accordance with and
under the laws of the State of Colorado and that in any action,
special proceeding or other proceeding that may be brought arising
out of, in connection with, or by reason of this Agreement, the
laws of the State of Colorado shall be applicable and shall govern
to the exclusion of the law of any other forum, without regard to
the jurisdiction in which any action or special proceeding may be
instituted.
15. Severance of Invalid Provisions. In case any one or more
of the provisions, or portions thereof, of this Agreement should be
determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby.
16. Integrated Agreement. This Agreement shall constitute
the entire agreement between the parties hereto relating to the
Engagement of Employee.
IN WITNESS WHEREOF, Employee has executed this Agreement and
the Company has caused this Agreement to be duly executed on its
behalf by its duly authorized officer, all as of the date first
above written.
RATIFIED AND APPROVED BY
DELTA PETROLEUM CORPORATION
COMPENSATION COMMITTEE: DELTA PETROLEUM CORPORATION
By: s/Terry D. Enright By:s/Aleron H. Larson, Jr.
Terry D. Enright Authorized Officer
By: s/Don E. Mettler EMPLOYEE:
Don Mettler
s/Kevin K. Nanke
Kevin K. Nanke
