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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT - DECEMBER 15, 1997
(DATE OF EARLIEST EVENT REPORTED)
HS RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COMMISSION FILE NO. 0-18886
DELAWARE 94-303-6864
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
ONE MARITIME PLAZA, 15TH FLOOR, SAN FRANCISCO, CALIFORNIA 94111
(ADDRESS OF PRINCIPAL (ZIP CODE)
EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 433-5795
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FORM 8-K
HS RESOURCES, INC.
DECEMBER 15, 1997
ITEM 2. ACQUISITION OF ASSETS
On December 15, 1997, HS Resources, Inc., a Delaware corporation ("HSR" or the
"Company"), consummated the purchase of Amoco's producing and non-producing
properties (the "Amoco Properties") in the Wattenberg Field area of the
Denver-Julesburg ("D-J") Basin in northeastern Colorado (the "Amoco
Acquisition"), as contemplated by a definitive agreement, dated November
25, 1997, (the "Asset Purchase Agreement") with Amoco Production Company
("Amoco"). In connection with the Amoco Acquisition, the Company (i) paid $290
million in cash, (ii) issued to Amoco 1.2 million shares (the "Amoco Shares") of
the Company's common stock, par value $0.001 per share (the "Common Stock"), and
(iii) transferred to Amoco certain Mid-Continent producing properties (the
"Transferred Properties"). The Amoco Acquisition is effective December 1, 1997.
More detailed information relating to the Amoco Acquisition is presented in the
Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on December 10, 1997 the text of which is incorporated herein by
reference.
FINANCING
The Company purchased the Amoco Properties for $290 million in cash, 1.2
million shares of Common Stock and the conveyance to Amoco of the Transferred
Properties, for a total purchase price of approximately $333 million. HSR has
financed the cash portion of the Amoco Purchase Price primarily through
borrowings under its revolving credit facility with The Chase Manhattan Bank, as
agent, which has been amended in connection with the Amoco Acquisition (the
"Chase Facility"). Concurrently with the closing of the Amoco Acquisition, the
Company also closed two separate transactions which monetize a portion of the
Section 29 tax credits associated with production from the Amoco Properties. The
first transaction was entered into with a financial institution, covering
production from 534 wells. At closing, HSR received net cash proceeds of $9.7
million, and it will receive additional future cash payments the amounts of
which will depend on future tax credit qualified production from these wells. In
the second transaction, the Company sold small, non-operated working interests
and associated tax credits in 138 gross (2 net) wells to Patina Oil and Gas
Corporation. Net proceeds to HSR at the closing of this transaction were $2.4
million. To further reduce indebtedness incurred in connection with the Amoco
Acquisition, the Company intends to use the net proceeds from an offering of one
or more types of equity and debt securities (the "Proposed Offering") combined
with the proceeds from the sale or monetization of additional non-strategic
properties. There can be no assurance that the Company will be successful in
consummating the Proposed Offering or any additional sales or monetizations, or
that the timing, terms and conditions of any such offering or any additional
sales or monetizations will be favorable to it.
OTHER MATTERS
Amoco has agreed not to sell any of the Amoco Shares until after the
consummation of the Proposed Offering, and not to sell 1,000,000 of such shares
for a period of 90 days after the closing of the Amoco Acquisition. The Company
has agreed to register the Amoco Shares after the consummation of the Proposed
Offering. Amoco has informed the Company that it intends to hold the Amoco
Shares for investment purposes.
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Report includes statements that are not purely historical and are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including statements regarding the Company's expectations,
hopes, beliefs, intentions or strategies regarding the future. All statements
other than statements of historical facts included herein, regarding the Amoco
Acquisition, financing plans, the availability of financing, plans to sell or
monetize non-strategic properties, and the Company's financial position, are
forward-looking statements. All forward-looking statements included herein are
based on information available to the Company on the date hereof, and the
Company assumes no obligation to update such forward-looking statements.
Although the Company believes that the assumptions and expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct or that the Company will take
any actions that may presently be planned. There are numerous uncertainties
inherent in estimating quantities of proved oil and gas reserves and projecting
future rates of production and timing of development expenditures, including
many factors beyond the control of the Company.
Many factors may affect the Company's expectations and plans. Capital
expenditure and financing plans may change in connection with the success of
drilling activities, the general availability of capital, interest rates,
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and cash flow available from operations. Cash flow available from operations may
change depending on costs of materials and services, regulatory burdens and
commodity prices. Oil and gas prices are volatile, and there are several
potentially significant adverse effects to the Company that can result if
product prices decline materially. First, lower product prices will adversely
impact the Company's cash flow and could cause the Company to (i) curtail its
capital program, (ii) borrow additional amounts under its revolving credit
agreement, or (iii) issue additional debt or equity securities. Second, lower
product prices could cause the borrowing base under the Company's bank credit
agreement to be reduced and certain covenant tests to be adversely affected.
Certain additional important factors that could cause actual results to
differ materially from the Company's forward-looking statements are disclosed
in the Company's Current Report on Form 8-K filed February 26, 1997. All
subsequent written or oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by such factors.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The financial statements required by this item relating to
acquisition described above are not included herewith but will be
filed by amendment within 60 days of the date of this report.
(b) Pro Forma Financial Information.
The pro forma financial information required by this item relating
to the acquisition described above is not included herewith but
will be filed by amendment within 60 days of the date of this
report.
(c) Exhibits.
10.1 Purchase and Sale Agreement between the Company and
Amoco Production Company dated November 25, 1997.
10.2 Side Letter Agreement between the Company and Amoco
Production Company dated November 25, 1997.
10.3 Closing Side Agreement between the Company and Amoco
Production Company dated December 15, 1997.
10.4 Third Amendment to Amended and Restated Credit Agreement
dated as of December 15, 1997 among the Company and
The Chase Manhattan Bank, as agent for the Lenders
signatory thereto.
99.1 Press Release of the Company, dated December 17, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
HS RESOURCES, INC.
By: /s/ JAMES M. PICCONE
---------------------------
James M. Piccone
Vice President
Dated: December 23, 1997.
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.1 Purchase and Sale Agreement between the Company and Amoco
Production Company dated November 25, 1997.
10.2 Side Letter Agreement between the Company and Amoco Production
Company dated November 25, 1997.
10.3 Closing Side Agreement between the Company and Amoco Production
Company dated December 15, 1997.
10.4 Third Amendment to Amended and Restated Credit Agreement dated as
of December 15, 1997 among the Company and The Chase Manhattan
Bank, as agent for the Lenders signatory thereto.
99.1 Press Release of the Company, dated December 17, 1997.
</TABLE>
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EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
AMOCO PRODUCTION COMPANY, SELLER
AND
HS RESOURCES, INC., BUYER
DATED
NOVEMBER 25, 1997
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<TABLE>
INDEX
<S> <C> <C>
Article 1. DEFINITIONS....................................................1
Article 2. SALE AND PURCHASE AND EXCHANGE
2.1 Sale and Purchase and Exchange.................................9
Article 3. PURCHASE PRICE, DEPOSIT, STOCK, PREFERENTIAL RIGHTS,
AND CONSENTS
3.1 Purchase Price.................................................9
3.2 Deposit.......................................................10
3.3 Buyer's Common Stock Provisions...............................10
3.4 Preferential Rights To Purchase...............................12
3.5 Consents......................................................12
Article 4. TITLE REVIEW
4.1 Review of Title Records.......................................13
4.2 Alleged Title Defects.........................................13
4.3 Section 29 Credits............................................14
4.4 Alleged Gas Imbalance Defects.................................15
4.5 Waiver .......................................................16
Article 5. INSPECTION OF PREMISES
5.1 Inspection of Premises........................................16
5.2 Alleged Adverse Conditions....................................16
5.3 Waiver .......................................................17
Article 6. ACCOUNTING
6.1 Revenues, Expenses and Capital Expenditures...................17
6.2 Taxes.........................................................18
6.3 Obligations and Credits.......................................18
6.4 Miscellaneous Accounting......................................18
6.5 Final Accounting Settlement...................................19
6.6 Post-Final Accounting Settlement..............................19
Article 7. LOSS, CASUALTY AND CONDEMNATION
7.1 Notice of Loss................................................20
7.2 Casualty and Condemnation.....................................20
Article 8. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES
8.1 Opportunity for Review........................................20
8.2 Seller's Non-Environmental Indemnity Obligation...............20
8.3 Seller's Environmental Indemnity Obligation...................21
8.4 Buyer's Non-Environmental Indemnity Obligation................22
8.5 Buyer's Environmental Indemnity Obligation....................22
8.6 Legal Claims and Defenses.....................................23
8.7 Asbestos and NORM.............................................23
</TABLE>
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<TABLE>
<S> <C> <C>
8.8 Buyer's Assumption of Obligations.............................23
8.9 Process Safety Management.....................................24
8.10 Notice of Claims..............................................24
8.11 Defense of Claims.............................................24
8.12 Waiver of Certain Damages.....................................25
8.13 Limitation on Indemnities.....................................25
Article 9. SPECIAL WARRANTY AND DISCLAIMERS
9.1 Special Warranty of Title.....................................25
9.2 Disclaimer - Representations and Warranties...................26
9.3 Disclaimer - Statements and Information.......................26
Article 10. SELLER'S REPRESENTATIONS AND WARRANTIES
10.1 Organization and Good Standing................................27
10.2 Corporate Authority; Authorization of Agreement...............27
10.3 No Violations.................................................27
10.4 Absence of Certain Changes....................................28
10.5 Operating Costs...............................................28
10.6 Litigation....................................................28
10.7 Bankruptcy....................................................29
10.8 Removal.......................................................29
Article 11. BUYER'S REPRESENTATIONS AND WARRANTIES
11.1 Organization and Good Standing................................29
11.2 Corporate Authority; Authorization of Agreement...............29
11.3 No Violations.................................................29
11.4 SEC Disclosure................................................30
11.5 Independent Evaluation........................................30
11.6 Buyer's Reliance..............................................30
Article 12. ADDITIONAL COVENANTS AND CONSIDERATIONS
12.1 Subsequent Operations.........................................31
12.2 Transition Agreement..........................................31
12.3 License Agreement(s)..........................................31
12.4 Crude Call....................................................31
12.5 Natural Gas Processing Agreement..............................33
12.6 Rights of Way and Surface Leases .............................33
12.7 Conduct of Business...........................................33
Article 13. PROPERTY EXCHANGE
13.1 Property Exchange.............................................36
13.2 HS Exchange Properties........................................36
13.3 Amoco Exchange Properties.....................................38
13.4 Identification of Amoco Exchange Properties...................40
13.5 HS Exchange Properties Allocation.............................40
13.6 HS Contracts..................................................40
</TABLE>
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<TABLE>
<S> <C> <C>
13.7 Gas Imbalances................................................. 40
13.8 Partnerships................................................... 40
13.9 Litigation..................................................... 41
13.10 HS Exchange Properties Transition.............................. 41
13.11 Title Defects.................................................. 41
13.12 Adverse Conditions............................................. 41
13.13 Amoco Defect Value............................................. 42
13.14 Tax Gross-Up................................................... 42
13.15 Preferential Rights............................................ 42
13.16 Payout......................................................... 42
13.17 Non-Applicable Provisions...................................... 42
13.18 Release........................................................ 42
13.19 Survival of Representations and Warranties..................... 43
13.20 Administration of Agreement.................................... 43
Article 14. PERSONNEL MATTERS
14.1 Employee Lists..................................................43
14.2 Offers of Employment............................................43
14.3 Savings Plan....................................................44
14.5 Accrued and Unused Vacation.....................................45
14.6 Severance.......................................................45
14.7 WARN Act........................................................46
Article 15. HSR FILINGS
15.1 HSR Filings.....................................................46
Article 16. CONDITIONS PRECEDENT TO CLOSING
16.1 Conditions Precedent to Seller's Obligation to Close............47
16.2 Conditions Precedent to Buyer's Obligation to Close.............47
16.3 Conditions Precedent to Obligation of Each Party to Close.......47
Article 17. THE CLOSING
17.1 Closing.........................................................48
17.2 Obligations of Seller at Closing................................48
17.3 Obligations of Buyer at Closing.................................49
Article 18. TERMINATION
18.1 Grounds for Termination.........................................50
18.2 Effect of Termination...........................................51
18.3 Dispute over Right to Terminate.................................51
18.4 Return of Documents.............................................51
18.5 Confidentiality.................................................51
Article 19. ARBITRATION
19.1 Arbitration.....................................................52
</TABLE>
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<TABLE>
<S> <C> <C>
Article 20. MISCELLANEOUS
20.1 Notices........................................................53
20.2 Conveyance Costs...............................................53
20.3 Brokers' Fees..................................................54
20.4 Records........................................................54
20.5 Further Assurances.............................................54
20.6 Survival of Representations and Warranties.....................55
20.7 Amendments and Severability....................................55
20.8 No Multiple Recoveries.........................................55
20.9 Successors and Assigns.........................................55
20.10 Headings.......................................................55
20.11 Governing Law..................................................55
20.12 No Partnership Created.........................................56
20.13 Public Announcements...........................................56
20.14 No Third Party Beneficiaries...................................56
20.15 Waiver of Consumer Rights......................................56
20.16 Not to be Construed Against Drafter............................56
20.17 Tax Deferred Exchange Election.................................56
20.18 Conspicuousness of Provisions..................................56
20.19 Execution in Counterparts......................................57
20.20 Entire Agreement...............................................57
</TABLE>
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<TABLE>
EXHIBITS
<S> <C>
EXHIBIT "A" - WORKING INTERESTS AND NET REVENUE INTERESTS -
AMOCO PROPERTIES
EXHIBIT "B" - WORKING INTERESTS AND NET REVENUE INTERESTS -
HS PROPERTIES
EXHIBIT "C" - MAJOR CONTRACTS
EXHIBIT "D" - GAS IMBALANCES
EXHIBIT "E" - PARTNERSHIPS
EXHIBIT "F" (Part 1) EXCLUDED PROPERTIES - AFFILIATES
(Part 2) EXCLUDED PROPERTIES - OTHER
EXHIBIT "G" - CLAIMS, DISPUTES AND LITIGATION
EXHIBIT "H" - SECTION 29 TAX CREDIT WELLS
EXHIBIT "I" - ASSIGNMENT AND BILL OF SALE
EXHIBIT "J" - SURFACE DEED
EXHIBIT "K" - MINERAL DEED
EXHIBIT "L" - CERTIFICATE
EXHIBIT "M" - LETTERS-IN-LIEU
EXHIBIT "N" - OPINION OF COUNSEL
EXHIBIT "O" - NON-FOREIGN AFFIDAVIT
EXHIBIT "P" - TRANSITION AGREEMENT - AMOCO PROPERTIES
EXHIBIT "P-1" - TRANSITION AGREEMENT - HS PROPERTIES
EXHIBIT "Q" - LICENSE AGREEMENT
</TABLE>
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is dated the 25TH
day of NOVEMBER, 1997, by and between AMOCO PRODUCTION COMPANY, a Delaware
corporation, with an office at 501 WestLake Park Boulevard, Houston, Texas
77079 (hereinafter referred to as "Seller") and HS RESOURCES, INC. a Delaware
corporation, with an office at One Maritime Plaza, 15th floor, San Francisco,
CA 94111(hereinafter referred to as "Buyer"), and is based on the following
premises:
WHEREAS, Seller desires to sell, assign and convey to Buyer and Buyer
desires to purchase and accept certain oil and gas properties and related
interests; and
WHEREAS, Seller and Buyer also desire to exchange certain oil and gas
properties; and
WHEREAS, the parties have reached agreement regarding such sale,
purchase, and exchange.
NOW, THEREFORE, for valuable consideration and the mutual covenants and
agreements herein contained, Seller and Buyer agree as follows:
ARTICLE 1. DEFINITIONS
1. Definitions: In this Agreement, capitalized terms have the meanings provided
in this Article, unless expressly provided otherwise in other Articles. All
defined terms include both the singular and the plural. All references to
Articles refer to Articles in this Agreement, and all references to Exhibits
refer to Exhibits attached to and made a part of this Agreement.
1.1 "Accounting Referee" has the meaning set forth in Article 6.5.
1.2 "Affiliate" means any entity that, directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under common
control with the entity specified. Control means ownership of fifty percent
(50%) or greater of the voting stock of such entity.
1.3 "Alleged Adverse Condition" means an environmental or physical
condition on or migrating from the Properties asserted by Buyer in accordance
with Article 5.2 that, as of Closing (as hereinafter defined), is not in
compliance with the then existing Laws (as hereinafter defined), and the costs
associated with compliance with the pertinent Environmental Laws of such
individual Alleged Adverse Condition exceeds Seventy-Five Thousand and No/100
United States Dollars (US $75,000) net to Seller's interests. NOTWITHSTANDING
ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, BUYER SHALL NOT BE
ENTITLED TO
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RAISE AN ALLEGED ADVERSE CONDITION UNLESS THE AGGREGATE COST ASSOCIATED WITH
REMEDIATING ALL SUCH ALLEGED ADVERSE CONDITION(S) EXCEEDS $10,000,000 (IT BEING
ACKNOWLEDGED AND AGREED THAT BUYER SHALL BE SOLELY RESPONSIBLE FOR ANY AND ALL
ALLEGED ADVERSE CONDITION(S) UP TO $10,000,000).
1.4 "Alleged Gas Imbalance Defect" shall mean those gas imbalances set
forth on Exhibit "D" attached hereto, which are determined to be incorrect as
of the date set forth therein, which are asserted by Buyer in accordance with
Article 4.4 and the net difference in value for said imbalances, as of the date
set forth therein, valued at $0.75/MCF, is greater than $50,000.
1.5 "Alleged Section 29 Defect" shall have the meaning set forth in
Article 4.3.
1.6 "Alleged Title Defect" means a Title Defect (as hereinafter
defined) which is asserted by Buyer in accordance with Article 4.2 as to a
distinct Item Number listed on Exhibit "A" attached hereto, and the costs
associated with curing such Alleged Title Defect with respect to such Item
Number exceeds Seventy-Five Thousand and No/100 (US $75,000) net to Seller's
interests. EXCEPT AS EXPRESSLY STATED HEREINABOVE, NOTWITHSTANDING ANYTHING
CONTAINED IN THIS AGREEMENT TO THE CONTRARY, BUYER SHALL NOT BE ENTITLED TO
RAISE AN ALLEGED TITLE DEFECT UNLESS THE AGGREGATE COST ASSOCIATED WITH CURING
ALL SUCH ALLEGED TITLE DEFECT(S) EXCEEDS $10,000,000 (IT BEING ACKNOWLEDGED AND
AGREED THAT BUYER SHALL BE SOLELY RESPONSIBLE FOR ANY AND ALL ALLEGED TITLE
DEFECT(S) UP TO $10,000,000).
1.7 "Amoco Severance Plan" has the meaning set forth in Article 14.6.
1.8 "Arbitrable Dispute" has the meaning set forth in Article 19.1.
1.9 "Assignment and Bill of Sale" means a document in the form of
Exhibit "I".
1.10 "Business Day" means a Day (as hereinafter defined) excluding
Saturdays, Sundays and U.S. legal holidays.
1.11 "Buyer Group" has the meaning set forth in Article 8.2.
1.12 "Buyer Savings Plan" has the meaning set forth in 14.3.
1.13 "Casualty Loss" means any loss, damage or reduction in value of
the Properties which occurs prior to Closing resulting from mechanical failure
or defects, catastrophic occurrences, acts of God or any other losses which are
not the result of normal wear and tear or of natural reservoir changes.
1.14 "Certificate" means a document in the form of Exhibit "L".
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1.15 "Claim" means any and all claims, demands, suits, causes of
action, losses, damages, liabilities, fines, penalties and costs (including
attorneys' fees and costs of litigation) which are brought by or owed to a
Third Party (as hereinafter defined).
1.16 "Claimant" has the meaning set forth in Article 19.1.
1.17 "Claim Notice" has the meaning set forth in Article 8.10.
1.18 "Close" or "Closing" means the consummation of the transfer of
title to the Properties (as hereinafter defined) to Buyer, including execution
and delivery of all documents provided for in this Agreement.
1.19 "Closing Date" means December 15, 1997.
1.20 "Computed Interest" means simple interest of seven and one-half
percent (7.5%) per annum using a three hundred sixty-five (365) Day year.
1.21 "Confidentiality Agreement" has the meaning set forth in Article
18.5.
1.22 "Day" means a calendar day consisting of twenty-four (24) hours
from midnight to midnight.
1.23 "Defensible Title" means, as to the Properties, such title held by
Seller as of Closing that, except for the Permitted Encumbrances (as
hereinafter defined):
1.23.1 Entitles Seller as of Closing to receive not less than
the "Net Revenue Interests" set forth in Exhibit "A" of all oil, gas
and associated liquid and gaseous hydrocarbons and non-hydrocarbons
produced, saved and marketed from the Properties; and
1.23.2 Obligates Seller as of Closing to bear costs and
expenses relating to the ownership, operation, maintenance and repair
of the Properties in an amount not greater than the " Working
Interests" set forth in Exhibit "A", unless there is a corresponding
increase in the Net Revenue Interests.
1.24 "Deposit" has the meaning set forth in Article 3.2.
1.25 "Effective Time" means December 1, 1997, at 7:00 a.m., local time
where the Properties are located.
1.26 "Environmental Claims" means all Claims which are based on breach
of or noncompliance with Environmental Laws (as hereinafter defined).
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1.27 "Environmental Laws" means any and all Laws that relate to: (a)
the prevention of pollution or environmental damage, (b) the remediation of
pollution or environmental damage, and/or (c) the protection of the environment
generally; including without limitation, the Clean Air Act, as amended, the
Clean Water Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Federal Water Pollution
Control Act, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, the Safe Drinking Water Act, as amended, the Toxic Substance and
Control Act, as amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, the Hazardous and the Solid Waste Amendments Act of 1984, as
amended, and the Oil Pollution Act of 1990, as amended.
1.28 "ERISA" has the meaning set forth in Article 14.4
1.29 "Final Accounting Settlement" has the meaning set forth in
Article 6.5.
1.30 "Final Settlement Date" has the meaning set forth in Article 6.5.
1.31 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
1.32 "Laws" means laws, statutes, ordinances, permits, decrees, orders,
judgments, rules or regulations (including without limitation Environmental
Laws) which are promulgated, issued or enacted by a governmental entity or
tribal authority having appropriate jurisdiction.
1.33 "Letters-in-Lieu" means a document in the form of Exhibit "M".
1.34 "License Agreement - SAMS" means a document in the form of Exhibit
"Q", and "License Agreement - Seismic" means the document referred to in
Article 12.3.
1.35 "Mineral Deed" means a document in the form of Exhibit "K".
1.36 "Non-Environmental Claims" means all Claims, except Environmental
Claims.
1.37 "Non-Foreign Affidavit" means a document in the form of Exhibit
"O".
1.38 "NORM" means naturally occurring radioactive materials.
1.39 "Opinion of Counsel" means a document in the form of Exhibit "N".
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1.40 "Permitted Encumbrances" means:
1.40.1 Royalties, overriding royalties, production payments,
reversionary interests, convertible interests, net profits interests,
division orders and similar burdens encumbering the Properties to the
extent the net cumulative effect of such burdens do not, as of
Closing, operate to reduce the Net Revenue Interests of the Properties
to less than the Net Revenue Interests set forth in Exhibit "A";
1.40.2 Consents to assignment and similar contractual
provisions encumbering the Properties to which, prior to Closing,
waivers or consents are obtained from the appropriate parties, or
which the obligation to obtain prior to Closing is waived by the
Buyer;
1.40.3 Preferential rights to purchase encumbering any one
(1) or more of the Properties to which, prior to Closing: (a) waivers
are obtained from the appropriate parties, or (b) the time period for
exercising said right has elapsed.
1.40.4 All rights to consent by, required notices to, filings
with or other actions by a governmental entity or tribal authority in
connection with the sale or conveyance of the Properties, if the same
are customarily obtained subsequent to the transfer of title;
1.40.5 Rights reserved to or vested in a governmental entity
or tribal authority having appropriate jurisdiction to control or
regulate the Properties in any manner whatsoever, and all Laws of any
such governmental entity or tribal authority;
1.40.6 Easements, rights-of-way, servitudes, surface leases,
sub-surface leases, grazing rights, logging rights, and surface rights
with respect to canals, ditches, reservoirs, pipelines, utility lines,
telephone lines, power lines, railways, streets, roads, highways and
structures on, over and through the Properties, to the extent such
rights, interests or structures do not materially interfere with the
operation of the Properties;
1.40.7 The terms and conditions of all leases, units,
agreements, contracts, instruments, licenses and permits associated
with, attributable to or encumbering the Properties which have been
filed with the appropriate governmental entity or tribal authority,
placed of record in the appropriate County records or otherwise
disclosed by Seller to Buyer that in the aggregate (a) are not such as
to impair or interfere materially with the operation, value or use of
any Property; (b) do not prevent Buyer from receiving the proceeds of
production from any Property; or (c) in the case of gas purchase or
sales contracts, are terminable on thirty (30) days notice or less;
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1.40.8 Liens for taxes or assessments not yet due or not yet
delinquent or, if delinquent, that are being contested by Seller in
good faith in the normal course of business;
1.40.9 Liens of operators relating to obligations not yet due
or not yet delinquent or, if delinquent, that are being contested by
Seller in good faith in the normal course of business;
1.40.10 Alleged Title Defect(s) which do not meet the
individual or aggregate threshold amounts set forth in Article 1.6 or
which Buyer has waived under Article 4.5;
1.40.11 Alleged Adverse Condition(s) which do not meet the
individual or aggregate threshold amounts set forth in Article 1.3 or
which Buyer has waived under Article 5.3;
1.40.12 Gas imbalances associated with the Properties;
1.40.13 Suspense funds associated with the Properties; and
1.40.14 Such defects or irregularities in the title to the
Properties that do not materially interfere with the operation, value
or use of the Properties affected thereby and that would be considered
not material when applying general industry standards.
1.41 "Personnel" has the meaning set forth in Article 14.1
1.42 "Process Safety Management" has the meaning set forth in Article
8.9.
1.43 "Property" or "Properties" means Seller's ownership interests in
the properties (real, personal or mixed) and appurtenant rights (contractual or
otherwise) as follows:
1.43.1 All of Seller's right, title and interests in, to and
under, or derived from, the oil and gas leasehold interests, royalty
interests, overriding royalty interests, mineral interests, production
payments, net profits interests and surface interests which are
described in Exhibit "A", and all rights (contractual or otherwise)
that are appurtenant to such interests.
1.43.2 All of Seller's right, title and interests in, to and
under, or derived from, all of the presently existing and valid
unitization, communitization and pooling declarations, orders, and
agreements (including all units formed by voluntary agreement and
those formed under the rules, regulations, orders or other official
acts of any
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governmental entity or tribal authority having appropriate jurisdiction)
to the extent they relate to any of the interests which are described in
Exhibit "A", or the production of oil, gas or other hydrocarbon and
non-hydrocarbon substances attributable thereto;
1.43.3 All of Seller's right, title and interests in, to and
under, or derived from, all of the presently existing and valid oil
sales contracts, casinghead gas sales contracts, gas sales contracts,
processing contracts, gathering contracts, transportation contracts,
easements, rights-of-way, servitudes, surface leases, subsurface
leases, permits, licenses, farm-out contracts, farm-in contracts,
balancing contracts (including but not limited to the gas imbalances
described in Exhibit "D"), suspense funds, operating agreements, areas
of mutual interest, and other contracts, agreements and instruments
(including but not limited to the major contracts described in Exhibit
"C") to the extent they relate to any of the interests which are
described in Exhibit "A", or the production of oil, gas or other
hydrocarbon and non-hydrocarbon substances attributable thereto;
1.43.4 All of Seller's right, title and interests in, to and
under, or derived from, the personal property, improvements, fixtures,
wells (whether producing, plugged and abandoned, shut-in, injection,
disposal or water supply), tanks, boilers, buildings, machinery,
equipment, pipelines, utility lines, power lines, telephone lines,
roads and other appurtenances, to the extent the same are situated
upon and used or held for use by Seller in connection with the
ownership, operation, development, maintenance or repair of the
interests which are described in Exhibit "A", or the production of
oil, gas or other hydrocarbon and non-hydrocarbon substances
attributable thereto;
1.43.5 All of Seller's right, title and interests in, to and
under, or derived from, the seismic, geologic or geophysical
information and data to the extent the same relates to any of the
interests which are described in Exhibit "A", or the production of
oil, gas or hydrocarbon and non-hydrocarbon substances attributable
thereto; and
1.43.6 All of Seller's right, title and interests in, to and
under, or derived from, the partnerships (tax or otherwise) described
in Exhibit "E".
1.43.7 All of Seller's right, title and interest in, to and
under (i) all oil, gas and mineral leases, fee interests, royalties,
overriding royalties, production payments, net profits interests and
all other interest of every kind and character located in Weld, Adams,
Boulder and Arapahoe Counties Colorado and (ii) each type of property
interest or right described in Articles 1.43.1 through 1.43.6 that is
related to the property interest described in (i) above.
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1.43.8 All rights and title to Seller's Ft. Lupton office,
yard and related facilities and ground lease, furniture, fixtures and
equipment, except as excluded on Exhibit "F".
SELLER EXCEPTS, RESERVES AND RETAINS, unto itself, its Affiliates,
successors and assigns from the Properties the following properties (real,
personal or mixed) and appurtenant rights (contractual or otherwise):
(a) Any and all seismic, geologic or geophysical information and data
that are: (i) interpretive in nature, (ii) covered an obligation of
non-disclosure, (iii) covered by an obligation of confidentiality, (iv) covered
by a prohibition against transfer (provided Seller shall use its reasonable
efforts to remove any restriction on transferring the information to Buyer),
(v) covers (in whole or in part) retained assets of Seller;
(b) Any and all pipelines, equipment, facilities, permits, contracts,
agreements, easements, rights-of-way, surface leases and subsurface leases
owned by an Affiliate of Seller, including without limitation, the properties
(real, personal and mixed) and appurtenant rights (contractual or otherwise)
described in Exhibit "F";
(c) Any and all records which consist of previous offers and economic
analyses associated with the purchase, sale or exchange of the Properties,
proprietary information, interpretive information, reserve data, internal
communications, personnel information, tax information (except any information
concerning Section 29 Credits relating the Tax Partnerships set forth on
Exhibit "E" necessary to conduct due diligence or effectuate transition),
information covered by a non-disclosure obligation and information covered by a
legal privilege;
(d) The properties (real, personal and mixed) and appurtenant rights
(contractual or otherwise) described in Exhibit "F"; and
(e) A concurrent interest in, to and under, or derived from, the
contracts, agreements, instruments, permits, easements, rights-of-way,
servitudes, surface leases, subsurface leases and any other rights (contractual
or otherwise) to the extent that they relate to or affect the interests not
conveyed herein.
1.44 "Purchase Price" has the meaning set forth in Article 3.1.
1.45 "Records" means all of Seller's books, records and files related
to the Properties; provided however, the term Records shall not include (and
Seller shall have no obligation to deliver to Buyer) previous offers and
economic analyses associated with the purchase, sale or exchange of the
Properties, proprietary information, interpretive information, reserve data,
internal communications, personnel information, tax information (except any
information
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concerning Section 29 Credits relating to the Tax Partnerships set forth on
Exhibit "E" necessary to conduct due diligence or effectuate transition),
information covered by a non-disclosure obligation and information covered by a
legal privilege.
1.46 "Respondent" has the meaning set forth in Article 19.1.
1.47 "Seller Group" has the meaning set forth in Article 8.2.
1.48 "Surface Deed" means a document in the form of Exhibit "J".
1.49 "Third Party" means any person or entity, governmental or
otherwise, other than Seller and Buyer.
1.50 "Title Defect" means any lien, encumbrance, encroachment or
defect associated with Seller's title to the Properties (excluding Permitted
Encumbrances) that would cause Seller, as of Closing, not to have Defensible
Title.
1.51 "Transition Agreement" means a document in the form of Exhibit
"P" and "P-1", as applicable.
1.52 "WARN Obligations" has the meaning set forth in Article 14.7.
ARTICLE 2. SALE AND PURCHASE AND EXCHANGE
2.1 Sale and Purchase and Exchange. On the Closing Date, effective as
of the Effective Time and upon the terms and conditions herein set forth,
Seller agrees to sell and assign the Properties set forth on Exhibit "A" to
Buyer and Buyer agrees to buy and accept the Properties set forth on Exhibit
"A", and/or exchange the Properties set forth in Exhibit "A" and Exhibit "B",
as applicable. Further, Buyer and Seller agree to identify for exchange the
properties set forth on Exhibit "A" ("Amoco Exchange Properties") for the
properties set forth on Exhibit "B" ("HS Exchange Properties").
ARTICLE 3. PURCHASE PRICE, DEPOSIT, STOCK, PREFERENTIAL RIGHTS,
AND CONSENTS
3.1 Purchase Price. The total purchase price, subject to adjustments
as set forth in this Agreement, paid to Seller by Buyer for the Properties set
forth on Exhibit A" shall be (a) TWO HUNDRED NINETY MILLION and No/100 United
States Dollars (US $290,000,000.00) payable in full at Closing in immediately
available funds, and (b) ONE MILLION TWO HUNDRED THOUSAND (1,200,000) shares of
Buyer's common stock ("Buyer Common Stock") and (c) conveyance from Buyer to
Seller of the HS Exchange Properties as defined in Article 13.2 (collectively,
the "Purchase Price"). If Closing occurs on December
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15, 1997, or if Closing occurs after December 15, 1997, due to the fault of
Seller, the Deposit shall be increased by Computed Interest in the amount of
Six Thousand, Seven Hundred Eighty-One and No/100 Dollars ($6,781.00) per Day
calculated from the date of receipt by Seller to Closing and in either
situation, the Purchase Price due Seller is not increased by Computed Interest.
In the event that the Closing occurs after December 15, 1997, due to the fault
of Buyer the Purchase Price shall be increased by the Computed Interest in the
amount of Sixty-Eight Thousand, Four Hundred Twenty and No/100 Dollars
($68,420.00) per Day from the Effective Time until Closing, and the Deposit
shall be increased by the Computed Interest thereon from receipt to December
15, 1997 and shall not be increased by Computed Interest after December 15,
1997.
3.2 Deposit. Upon the execution of this Agreement, Buyer shall pay
to Seller a deposit in the amount of $ 33,000,000 ("Deposit"). In the event of
Closing, the Purchase Price shall be credited by the amount of the Deposit
(plus Computed Interest in the amount of Six Thousand, Seven Hundred Eighty-One
and No/100 Dollars ($6,781.00) per Day on the Deposit from the date of receipt
by Seller until Closing, unless Closing occurs after December 15, 1997, in
which event no Computed Interest will be credited to the Deposit). If Closing
does not occur, the Deposit (plus Computed Interest on the Deposit from the
date of receipt by Seller until termination) will be refunded to Buyer within
five (5) Days of such termination, unless Closing failed to occur as a result
of Buyer's breach of this Agreement (including without limitation Buyer's
failure to comply with Article 15.1) in which case the provisions of Article
18.2 shall apply.
3.3 Buyer's Common Stock Provisions
3.3.1 Registration. Subject to the terms and provisions hereof,
Buyer shall use its best efforts to (i) prepare and file a registration
statement and to have it declared effective for sales of Buyer's
Common Stock, which registration statement shall not be used for sales
of securities for Buyer's account (the "Registration") and (ii) have
Buyer's Common Stock listed for trading on the New York Stock Exchange
("NYSE"). Such Registration Statement shall be on Form S-3, or, if
Form S-3 is not available, on any form available for registration of
Buyer's Common Stock, if available, and shall be filed as promptly as
practicable after the date hereof, provided, however, that should
Buyer elect to commence a public offering of common stock for its own
account in December 1997, Buyer shall not be obligated to file such
registration statement until after the termination of such offering.
The obligation under this Article expires at the expiration of the
holding period that would permit a non-affiliate to sell Buyer's
Common Stock without restriction under Rule 144(k) (or any similar
provision then in force).
3.3.2 Lockup Agreement. Seller agrees not to offer, pledge,
sell, contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, (i) 1,000,000 of the shares of
Buyer's
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Common Stock acquired hereunder for a period of ninety (90) days
following the date on which the Closing occurs and (ii) any of the
shares of Buyer Common Stock acquired hereunder during the period in
which Buyer is conducting a public offering of Buyer's common stock,
such period to commence upon notice from Buyer to Seller of such
offering, and such period ending on the earlier of the termination of
such offering or forty-five (45) days following Buyer's notice of
commencement of the offering; provided that the restriction provided
in subsection (ii) shall end no later than ninety (90) days following
the Closing. The foregoing provision shall not restrict Seller from
acquiring a put, collar or similar financial instrument with respect
to any of Buyer's Common Stock so long as Seller has reasonable
assurances that the counterparty to the transaction will not engage
in a market transaction affecting Buyer's Common Stock to cover such
counterparty's position during the period of Buyer's public offering
referred to above. Seller acknowledges that it is acquiring the
Buyer's Common Stock for investment and not with a view to
distribution thereof except pursuant to the Registration or as
otherwise permitted by law.
3.3.3 Make Whole Provisions. As to the 200,000 shares of
Buyer's Common Stock not subject to the 90 day lockup provision
provided for in Article 3.3.2(i) ("Saleable Shares") during any
period Seller is entitled to sell any of the Saleable Shares as
contemplated by Article 3.3.2(ii) of this Agreement, and the
Registration Statement contemplated by Article 3.3.1 has not been
declared effective, Seller shall be entitled to give Buyer a written
notice of intent to sell setting forth the number of Saleable Shares
Seller desires to sell on that date. Each notice given is irrevocable
and not amendable. Buyer shall have the option to (i) repurchase the
Saleable Shares set forth in such notice at the closing sale price,
regular way, of Buyer's Common Stock on the NYSE on the date the
notice was given (the "Notice Date Price") or (ii) to defer such
purchase until the date the registration statement has been declared
effective (the "Registration Statement Effective Date"). The option
contemplated by this Article 3.3.3 shall remain exercisable until
5:00 p.m. San Francisco time on the Registration Statement Effective
Date. If the Registration Statement Effective Date has not occurred
by the 50th day following the Closing, and Buyer has not exercised
its option on or before such date, Buyer's option to purchase shall
become a mandatory obligation on the 51st day following Closing. If
Buyer elects to defer and has not exercised the option contemplated
above as to any of the Saleable Shares subject to the notice, Seller
shall have a period of ten NYSE trading days immediately following
the Registration Statement Effective Date to sell, in a regular way
transaction on the NYSE, including block trades on the NYSE, the
Saleable Shares covered by the notice and not purchased by Buyer. In
the event the actual gross sales price resulting from such sale is
less than the Notice Day Price, Buyer shall pay to Seller the
difference between such prices multiplied by the number of
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Saleable Shares that were subject to the notice, were not purchased
by Buyer, and were actually sold by Seller, upon receipt of written
information from Seller and the broker/dealer effecting the sale on
behalf of Seller, setting forth the number of shares sold and the
actual gross sales price. The payments to be made pursuant to this
Article 3.3.3 shall be made within five (5) days after the date they
become due by wire transfer of immediately available funds to the
account designated by Seller. If Seller does not sell the shares
within the ten trading day period, Buyer shall have no further "make
whole" obligations in connection with the Saleable Shares.
3.3.4 Anti-Dilution Protection. If from the date of this
Agreement until the Closing, Seller engages in a stock split,
reclassification of Buyer's Common Stock or reorganization
transaction, the Buyer's Common Stock delivered at Closing shall be
increased by the number of shares Seller would have received if it
had held the Buyer's Common Stock at the time of such transaction.
3.4 Preferential Rights To Purchase. Buyer's good faith
allocation of the Purchase Price as set forth in Exhibit "A" shall be
used by Seller to provide any required preferential purchase right
notifications. If, prior to Closing, a holder of a preferential
purchase right notifies Seller that it intends to exercise its rights
with respect to a Property to which its preferential purchase right
applies (as determined in accordance with the agreement in which the
preferential purchase right arises), the Property covered by said
preferential purchase right shall be excluded from the Properties to
be conveyed to Buyer, and the Purchase Price shall be reduced by the
value allocated to said Property in Exhibit "A". Buyer acknowledges
and agrees that Seller shall determine (in its sole judgment) the
extent of the preferential purchase rights encumbering the
Properties, and said determination shall be used by Seller to provide
the preferential purchase right notifications. If the holder of the
preferential purchase right fails to consummate the purchase of the
Property subject to the preferential purchase right, Seller shall
promptly notify Buyer. Within ten (10) Business Days after Buyer's
receipt of such notice or Closing, whichever is later, Seller shall
sell to Buyer, and Buyer shall purchase from Seller, such Property
under the terms of this Agreement for a price equal to the value
allocated to such Property in Exhibit "A". Notwithstanding the
foregoing, Buyer shall have no obligation under this Agreement or
otherwise to purchase the Property if Buyer is not notified of the
preferential purchase right holder's failure to consummate the
purchase of the Property within ninety (90) Days following Closing.
3.5 Consents. With respect to any leasehold interest for
which consent is not obtained prior to Closing, Seller shall be
obligated to use all reasonable efforts to obtain such consent after
Closing and shall indemnify and hold Buyer harmless from and against
any and all claims, demands,
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suits, causes of action, losses, damages, costs and liabilities of
whatsoever nature arising out of Seller's failure to obtain such
consent, provided that Seller's maximum liability under this
indemnity shall be limited to the allocated values per Exhibit "A" or
"B", as applicable, plus interest thereon from the Closing Date at
the Prime Rate plus one percent (1%) less interest at the Prime Rate
plus one percent (1%) on the net proceeds actually received by Buyer
from the Properties from and after the Closing Date until consent is
obtained. Seller shall hold title to the interests as trustee for
Buyer, and Buyer shall have all rights and obligations associated
with the ownership and operation of the Properties as if it were the
title holder.
ARTICLE 4. TITLE REVIEW
4.1 Review of Title Records. Upon execution of this Agreement,
Seller shall make available to Buyer during reasonable business hours
Records in Seller's possession relating to the title to the
Properties. Buyer shall be entitled to review said title Records.
Buyer shall have the right to reasonably request copies of any and
all such title Records and upon such request, Seller shall provide
the requested copies to Buyer at Buyer's expense.
4.2 Alleged Title Defects. As soon as reasonably practicable
(and on an ongoing basis), but in no event later than one hundred
twenty (120) Days after Closing, Buyer shall notify Seller of any
Properties which are subject to Alleged Title Defect(s). Buyer's
notice asserting Alleged Title Defect(s) shall include a description
and full explanation (including any and all supporting documentation
associated therewith) of each Alleged Title Defect being claimed and
a value which Buyer in good faith attributes to curing the same.
Seller, during said one hundred twenty (120) Day period, shall have
the right to notify Buyer of any increases in Net Revenue Interest or
decreases in Working Interest in the Properties and request a
corresponding adjustment where the increase in value applicable to an
individual well or location listed on Exhibit A exceeds $75,000
("Title Increase"); provided, however, that Title Increase shall give
rise to increases to the Purchase Price or be used as credits against
adjustments that would otherwise be made for Title Defects only to
the extent the aggregate value of all Title Increases exceeds
$10,000,000. Buyer and Seller shall meet from time to time as
necessary in an attempt to mutually agree on a proposed resolution
with respect to the Alleged Title Defect(s) raised by Buyer and
increases in Net Revenue Interest or decreases in Working Interest
raised by Seller. The value allocated to each Property as set forth
on Exhibit "A" and the costs to cure such title defects shall be used
by the parties to determine the amount of any adjustment, if any, due
to the existence of an Alleged Title Defect. It is recognized that
good faith differences of opinion may exist between Buyer and Seller
in connection
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with the Alleged Title Defect(s) raised by Buyer and adjustments to
the Net Revenue Interests or Working Interests raised by Seller,
including without limitation, disputes as to: (a) whether or not the
alleged defect constitutes an Alleged Title Defect within the meaning
of this Agreement, (b) whether or not the magnitude of the Alleged
Title Defect exceeds the threshold amount set forth in Article 1.4,
(c) whether or not the Alleged Title Defect raised by Buyer was
properly and timely asserted by Buyer pursuant to this Article,
and/or (d) the appropriate upward or downward adjustment to the
Purchase Price, if any, on account of a change in the Net Revenue
Interest or Working Interests from those set forth in Exhibit "A". If
any such differences of opinion are not resolved by mutual agreement
of Buyer and Seller, either party shall have the right, exercisable
within one hundred eighty (180) Days after Closing, to initiate
binding arbitration in accordance with Article 19.1, using
arbitrators who are attorney(s) licensed in the state where the
Property at issue is located and who have at least ten (10) years oil
and gas title experience.
4.3 Section 29 Credits
4.3.1 Review of Section 29 Records. Upon execution of this
Agreement, Seller shall make available to Buyer during reasonable
business hours Records in Seller's possession relating to the Section
29 Tax credits available on the Properties. Buyer shall be entitled
to review said Records. Buyer shall have the right to reasonably
request copies of any and all such title Records and upon such
request, Seller shall provide the requested copies to Buyer at
Buyer's expense.
4.3.2 Alleged Section 29 Defects. As soon as reasonably
practicable (and on an ongoing basis), but in no event later than one
hundred twenty (120) Days after Closing, Buyer shall notify Seller of
any Properties which are subject to Alleged Section 29 Defect(s). An
"Alleged Section 29 Defect " shall mean Buyer's reasonable assertion
that there is a failure of Seller's Records or public records to
support the following statements with respect to the natural gas
produced from the wells and horizons identified on Exhibit H provided
that any such well or horizon that is identified on such Exhibit as
not having a Section 503 of the Natural Gas Policy Act of 1978
("NGPA") determination shall not be subject to statement (4) below:
1) It shall be produced from tight formations which have been designated as
such in accordance with Section 503 of the NGPA.
2) It shall be produced from wells drilled or recompleted after December 31,
1990 and before January 1, 1993 or such later date as may be permitted by
future amendments to the Code that extend the cut-off date in Code Section
29(f)(1)(A) or it shall be produced from wells which, as of April 20, 1977
were dedicated to interstate commerce.
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3) No credit allowed under Section 38 of the Code for any taxable year has
been allowed to Seller or any of its Affiliates by reasons of any enhanced
oil recovery credit under Section 43 of the Code with respect to
Properties that produced the gas.
4) FERC well category determinations under Section 503 of the NGPA have been
issued for the wells listed on Exhibit H with respect to the producing
horizons listed on Exhibit H.
5) It shall be produced from a property from which gas from a tight formation
was not produced in marketable quantities before January 1, 1980, in
accordance with Section 29(d)(4) of the Code, as interpreted by the IRS in
Private Letter Ruling 8950026.
4.3.3 Notice and Adjustment. Buyer's notice asserting Alleged
Section 29 Defect(s) shall include a description and full explanation
(including any and all supporting documentation associated therewith)
of each Alleged Section 29 Defect being claimed and a value which
Buyer in good faith attributes to curing the same. The value of
Section 29 Tax Credits shall be the present value, discounted at 10%,
of the tax credits expected to be received from the Effective Time
through December 31, 2002 from the gas stream of the wells and
horizons listed on Exhibit H. It is acknowledged that by virtue of
Seller's tax partnerships, certain Section 29 Tax Credit values in
particular wells are not in proportion to the Seller's net revenue
interest in the wells. No adjustment shall be made with respect to
Section 29 Defects unless the aggregate value of all Section 29
Defects exceeds a threshold of $50,000, in which case such adjustment
to the Purchase Price shall be made from first dollar. Buyer and
Seller shall meet from time to time as necessary in an attempt to
mutually agree on a proposed resolution with respect to the Alleged
Section 29 Defect(s) raised by Buyer. It is recognized that good faith
differences of opinion may exist between Buyer and Seller in
connection with the Alleged Section 29 Defect(s) raised by Buyer.
Either party shall have the right, exercisable within one hundred
eighty (180) Days after Closing, to initiate binding arbitration in
accordance with Article 19.1, to determine the appropriate adjustment
to the Purchase Price due to the defect, using arbitrators who are
attorney(s) licensed in the state where the Property at issue is
located and who have at least ten (10) years oil and gas tax
experience.
4.4 Alleged Gas Imbalance Defects. As soon as reasonably practicable,
but in no event later than one hundred twenty (120) Days after Closing, Buyer
shall notify Seller of any Properties which are subject to Alleged Gas
Imbalance Defects. If the net difference in value of the Alleged Gas Imbalance
Defects is in excess of $50,000, the entire amount of gas imbalance value
differential may be raised as a Gas Imbalance Defect.
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4.5 Waiver. EXCEPT FOR CLAIMS BUYER ASSERTS UNDER SELLER'S SPECIAL
warranty of title coNTAINED IN ARTICLE 9.1, ALL TITLE OBJECTIONS (INCLUDING
without limitation ALLEGED SECTION 29 DEFECTS, ALLEGED GAS IMBALANCE DEFECTS,
and Alleged Title DeFECT(S)) NOT RAISED OR REFERRED TO BINDING ARBITRATION, AS
applicable, by Buyer WITHIN THE TIME PERIOD PROVIDED IN ARTICLE 4.2, 4.3 AND
4.4, as applicable, SHALL BE WAIVED BY BUYER FOR ALL PURPOSES, AND BUYER SHALL
have no right to seeK AN ADJUSTMENT TO THE PURCHASE PRICE, MAKE A CLAIM (IN
accordance with ArtiCLE 19.1 OR OTHERWISE) AGAINST SELLER OR SEEK
indemnification (in ACCORDANCE WITH ARTICLE 8 OR OTHERWISE) FROM SELLER
associated with the SAME, AND BUYER (ON BEHALF OF ITSELF, ITS OFFICERS, AGENTS,
employees, AffiliateS, SUCCESSORS AND ASSIGNS) IRREVOCABLY WAIVES SUCH CLAIMS.
ARTICLE 5. INSPECTION OF PREMISES
5.1 Inspection of Premises. Prior to Closing, Buyer shall have access
during reasonable business hours to the Seller-operated Properties, and Seller
shall use reasonable efforts to obtain permission for Buyer to gain access to
the Third Party-operated Properties, for the purpose of inspecting the
environmental and physical condition of the same. Such inspection shall be
conducted in accordance with the terms of the Confidentiality Agreement.
5.2 Alleged Adverse Conditions. As soon as reasonably practical (and on
an ongoing basis), but in no event later than one hundred eighty (180) Days
after Closing, Buyer shall notify Seller of any Properties which are subject to
Alleged Adverse Condition(s). Buyer's notice of Alleged Adverse Condition(s)
shall include a complete description of each individual condition to which
Buyer takes exception (including any and all supporting documentation
associated therewith) and the costs which Buyer in good faith attributes to
remediating the same. Buyer and Seller shall meet from time to time as
necessary in an attempt to mutually agree on a proposed resolution with respect
to the Alleged Adverse Condition(s) raised by Buyer. The value allocated to
each Property as set forth on Exhibit "A" and the costs to cure such Alleged
Adverse Condition shall be used by the parties to determine the amount of any
adjustment, if any, due to the existence of an Alleged Adverse Condition. It is
recognized that good faith differences of opinion may exist between Buyer and
Seller in connection with the Alleged Adverse Condition(s) raised by Buyer,
including without limitation, disputes as to: (a) whether or not the alleged
defect constitutes an Alleged Adverse Condition within the meaning of this
Agreement, (b) whether or not the magnitude of the Alleged Adverse Condition
individually or in the aggregate exceeds the threshold amounts set forth in
Article 1.3, (c) whether or not the Alleged Adverse Condition raised by Buyer
was properly and timely asserted by Buyer pursuant to this Article, and/or (d)
the adjustment to the Purchase Price, if any, on account of the Alleged Adverse
Condition. If any such difference of opinion regarding an Alleged Adverse
Condition raised by Buyer is not resolved by mutual agreement of Buyer and
Seller, either party shall have the right, exercisable within two hundred
seventy (270) Days after Closing, to initiate
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binding arbitration in accordance with Article 19.1. Notwithstanding anything
contained in this Agreement to the contrary (including Article 19.1), if Seller
disagrees with the decision of the arbitration panel, Seller shall have the
right (but not the obligation) to: (i) remediate, at Seller's sole cost, the
Property at issue to a point where it is in compliance with the Laws, or (ii)
require the reassignment of the Property at issue from Buyer to Seller. If
Seller elects to require the reassignment of the Property at issue, Buyer and
Seller will take all necessary action (including without limitation, execution
of documentation and conducting an accounting) required to place the parties
back into a position with respect to the Property at issue just prior to
Closing.
5.3 Waiver. ALL ADVERSE CONDITIONS (INCLUDING WITHOUT LIMITATION
ALLEGED ADVERSE CONDITION(S)) NOT RAISED OR REFERRED TO BINDING ARBITRATION, AS
APPLICABLE, BY BUYER WITHIN THE TIME PERIOD PROVIDED IN ARTICLE 5.2 SHALL BE
WAIVED BY BUYER FOR ALL PURPOSES, AND BUYER SHALL HAVE NO RIGHT TO SEEK AN
ADJUSTMENT TO THE PURCHASE PRICE, MAKE A CLAIM (IN ACCORDANCE WITH ARTICLE 19.1
OR OTHERWISE) AGAINST SELLER OR SEEK INDEMNIFICATION (IN ACCORDANCE WITH
ARTICLE 8 OR OTHERWISE) FROM SELLER ASSOCIATED WITH THE SAME, AND BUYER (ON
BEHALF OF ITSELF, ITS OFFICERS, AGENTS, EMPLOYEES, AFFILIATES, SUCCESSORS AND
ASSIGNS) IRREVOCABLY WAIVES SUCH CLAIMS.
ARTICLE 6. ACCOUNTING
6.1 Revenues, Expenses and Capital Expenditures. All merchantable oil,
liquid hydrocarbon and non-hydrocarbon substances stored in tanks and vessels
on the Properties (including any and all line fill owned by Seller or its
Affiliates downstream of the custody transfer point) will be gauged to the
bottom of the flange by Seller or the operator of the Properties, as
applicable, as of the Effective Time, and Seller shall be entitled to the
proceeds associated with such oil, liquid hydrocarbon and non-hydrocarbon
substances so gauged when sold. Oil, liquid hydrocarbon and non-hydrocarbon
substances in treating equipment and separation equipment below pipeline
connections as of the Effective Time shall not be considered to be merchantable
and shall become the property of Buyer. Seller shall be entitled to all
operating revenues and related accounts receivable arising in the ordinary
course of business attributable to the Properties and shall be responsible for
all operating expenses and related accounts payable (except as provided below)
arising in the ordinary course of business attributable to the Properties, in
each case to the extent they relate to the period of time prior to the
Effective Time. Buyer shall be entitled to all operating revenues and related
accounts receivable arising in the ordinary course of business attributable to
the Properties and responsible for the payment of all operating expenses and
related accounts payable arising in the ordinary course of business
attributable to the Properties, in each case to the extent they relate to time
after the Effective Time. Notwithstanding anything contained in this Agreement
to the contrary, Buyer shall assume and be solely responsible for: (a) any and
all suspense funds associated with the Properties, (b) any and all gas
imbalances associated with the Properties, and (c) any and all capital
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expenditures associated with the Properties to the extent said capital
expenditures were incurred (or the obligation to incur said costs and expenses
was undertaken) by Seller within the period of time six (6) months prior to
Closing and exceed Three Million Three Hundred Thousand Dollars and No/100
($3,300,000). The actual amounts or values associated with the above shall be
accounted for in the Final Accounting Settlement.
6.2 Taxes. All taxes and assessments, including without limitation,
excise taxes, severance taxes, property taxes, ad valorem taxes and any other
federal, state, local or tribal taxes or assessments attributable to the
ownership, operation, or production of the Properties prior to the Effective
Time shall remain Seller's responsibility, and all deductions, credits or
refunds pertaining to the aforementioned taxes and assessments, and all
additional assessments or delinquencies relating to time periods or production
prior to the Effective Time resulting from audits or otherwise, no matter when
received, shall belong to or be paid by Seller. Ad valorem, severance and other
taxes measured by production shall be allocated to and paid by Seller to the
extent such taxes are measured by production produced prior to the Effective
Time. All taxes and assessments, including without limitation, excise taxes,
severance taxes, property taxes, ad valorem taxes and any other federal, state,
local or tribal taxes and assessments attributable to the ownership, operation,
or production of the Properties after the Effective Time (excluding Seller's
income taxes from the Effective Time through Closing and any associated capital
gains taxes which shall remain Seller's obligation) shall be Buyer's
responsibility, and all deductions, credits or refunds pertaining to the
aforementioned taxes and assessments, and all additional assessments or
delinquencies relating to time periods of production after the Effective Time
resulting from audits or otherwise, no matter when received, shall belong to
and be paid by Buyer. The actual amounts or values associated with the above,
to the extent known or assessed at that time, shall be accounted for in the
Final Accounting Settlement. Ad valorem taxes on tangible personal property
shall be prorated between Seller and Buyer as of the Effective Time. Buyer
shall additionally be solely responsible for all transfer, sales, use or
similar taxes resulting from or associated with the transaction contemplated
under this Agreement. Notwithstanding anything contained in this Agreement to
the contrary, Seller shall be entitled to retain any and all Section 29 tax
credits associated with the Properties from the Effective Time through Closing.
6.3 Obligations and Credits. All prepaid insurance premiums, utility
charges, taxes, rentals, deposits and any other prepaids applicable to the
period of time after the Effective Time, if any, and attributable to the
Properties shall be reimbursed to Seller by Buyer, and all accrued payables
applicable to the period of time prior to the Effective Time, if any, and
attributable to the Properties shall be the responsibility of Seller. The
actual amounts or values associated with the above shall be accounted for in
the Final Accounting Settlement.
6.4 Miscellaneous Accounting. In addition to the items set forth in
Articles 6.1 through 6.3, any other amounts due between Buyer and Seller
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related to the ownership or operation of the Properties from the Effective Time
through Closing shall be accounted for in the Final Accounting Settlement.
6.5 Final Accounting Settlement. As soon as reasonably practicable, but
in no event later than one hundred eighty (180) Days after Closing, Seller
shall deliver to Buyer a post-Closing statement setting forth a detailed
calculation of all post-Closing adjustments applicable to the period of time
between the Effective Time and Closing ("Final Accounting Settlement"). As soon
as reasonably practicable, but in no event later than thirty (30) Days after
Buyer receives the post-Closing statement, Buyer shall deliver to Seller a
written report containing any changes which Buyer proposes to be made to such
post-Closing statement. If Buyer fails to timely deliver the written report to
Seller containing changes Buyer proposes to be made to the post-Closing
statement, the post-Closing statement delivered by Seller shall be deemed to be
true and correct and the same shall be final and binding on the parties and not
subject to arbitration hereunder. As soon as reasonably practicable, but in no
event later than fifteen (15) Days after Seller receives Buyer's written
report, the parties shall meet and undertake to agree on the final post-Closing
adjustments. If the parties fail to agree on the final post-Closing adjustments
within such fifteen (15) Day period, the disputed items shall be resolved by
submitting the same to Ernst & Young LLP (the "Accounting Referee"). The
Accounting Referee shall resolve the dispute(s) regarding the post-Closing
adjustments within thirty (30) Days after having the relevant materials
submitted for review. The decision of the Accounting Referee shall be binding
on and non-appealable by the parties. The fees and expenses associated with the
Accounting Referee shall be borne equally by Buyer and Seller. The date upon
which all amounts associated with the Final Accounting Settlement are agreed to
by the parties, whether by decision of the Accounting Referee or otherwise,
shall be herein called the "Final Settlement Date". Any amounts owed by either
party to the other as a result of such post-Closing adjustments shall be paid
within five (5) Business Days after the Final Settlement Date.
6.6 Post-Final Accounting Settlement. Nothing in Section 6.5 is
intended to limit either party's rights with respect to Purchase Price
adjustments, refunds, revenue allocations, expense allocation or any other
matters that cannot or have not been determined with finality. Any revenues
received or costs and expenses paid by Buyer after the Final Accounting
Settlement which are attributable to the ownership or operation of the
Properties prior to the Effective Time, (or in the case of taxes which are
based on or measured by production, attributable to production prior to the
Effective Time), and not assigned to Buyer, shall be billed or reimbursed, as
appropriate, to Seller within thirty (30) Days after receipt by Buyer. Any
revenues received or costs and expenses paid by Seller after the Final
Accounting Settlement which are attributable to the ownership or operation of
the Properties after the Effective Time, (or, in the case of taxes which are
based on or measured by production, attributable to production after the
Effective Time) and not reserved by Seller, shall be billed or reimbursed, as
appropriate, to Buyer within thirty (30) Days after receipt by Seller.
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ARTICLE 7. LOSS, CASUALTY AND CONDEMNATION
7.1 Notice of Loss. From the date hereof until Closing, Seller shall
promptly notify Buyer of any loss or damage to the Properties, or any part
thereof, known to Seller exceeding Fifty Thousand and No/100 United States
Dollars (US $50,000) net to Seller's interest.
7.2 Casualty and Condemnation. If, prior to Closing, a substantial part
of the Properties shall: (a) be destroyed by a Casualty Loss, or (b) be taken
in condemnation or if proceedings for such purposes shall be pending; then
Seller and Buyer shall attempt to mutually agree on a reduction in the Purchase
Price reflecting the reduction in the value of the Properties affected by the
Casualty Loss or taking. If Seller and Buyer are unable to mutually agree on
such reduction, either party shall have the right, exercisable within ninety
(90) Days after Closing, to initiate binding arbitration in accordance with
Article 19.1. Seller shall retain any and all sums paid to Seller, unpaid
awards, insurance proceeds or other payments associated with or attributable to
such Casualty Loss or taking.
ARTICLE 8. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES
8.1 Opportunity for Review. EACH PARTY REPRESENTS THAT IT HAS HAD AN
ADEQUATE OPPORTUNITY TO REVIEW THE FOLLOWING INDEMNITY AND RELEASE PROVISIONS,
INCLUDING THE OPPORTUNITY TO SUBMIT THE SAME TO LEGAL COUNSEL FOR REVIEW AND
COMMENT. BASED UPON THE FOREGOING REPRESENTATION, THE PARTIES AGREE TO THE
PROVISIONS SET FORTH BELOW.
8.2 Seller's Non-Environmental Indemnity Obligation. SELLER SHALL,
SUBJECT TO THE LIMITATIONS SET FORTH BELOW, RELEASE BUYER FROM AND SHALL FULLY
PROTECT, INDEMNIFY AND DEFEND BUYER, ITS OFFICERS, AGENTS, EMPLOYEES AND
AFFILIATES ("BUYER GROUP") AND HOLD THEM HARMLESS FROM AND AGAINST ANY AND ALL
NON-ENVIRONMENTAL CLAIMS, AND ANY AND ALL OCCURRENCES AND CONDITIONS WHICH
WOULD OTHERWISE CONSTITUTE NON-ENVIRONMENTAL CLAIMS BUT WHICH ARE ASSERTED BY
SELLER, ITS OFFICERS, AGENTS, EMPLOYEES AND AFFILIATES ("SELLER GROUP"),
RELATING TO, ARISING OUT OF, OR CONNECTED, DIRECTLY OR INDIRECTLY, WITH THE
OWNERSHIP OR OPERATION OF THE PROPERTIES, OR ANY PART THEREOF, PERTAINING TO
THE PERIOD OF TIME PRIOR TO CLOSING, INCLUDING WITHOUT LIMITATION,
NON-ENVIRONMENTAL CLAIMS RELATING TO: (a) INJURY OR DEATH OF ANY PERSON OR
PERSONS WHOMSOEVER, (b) DAMAGES TO OR LOSS OF ANY PROPERTY OR RESOURCES, (c)
COMMON LAW CAUSES OF ACTION SUCH AS NEGLIGENCE, GROSS NEGLIGENCE, STRICT
LIABILITY, NUISANCE OR TRESPASS, AND/OR (d) FAULT IMPOSED BY STATUTE, RULE,
REGULATION OR OTHERWISE. THE INDEMNITY OBLIGATION AND RELEASE PROVIDED HEREIN
SHALL APPLY REGARDLESS OF CAUSE OR OF ANY NEGLIGENT ACTS OR OMISSIONS OF BUYER
GROUP. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY,
SELLER SHALL HAVE NO OBLIGATION UNDER THIS AGREEMENT OR OTHERWISE TO PROTECT,
INDEMNIFY, DEFEND AND HOLD HARMLESS
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BUYER GROUP FROM AND AGAINST ANY ONE OR MORE OF THE FOLLOWING: (i)
NON-ENVIRONMENTAL CLAIMS FOR WHICH BUYER HAS NOT PROVIDED SELLER WITH WRITTEN
NOTICE OF SUCH NON-ENVIRONMENTAL CLAIM IN ACCORDANCE WITH ARTICLE 8.10 WITHIN
TWO (2) YEARS AFTER CLOSING (IT BEING ACKNOWLEDGED AND AGREED THAT BUYER SHALL
BE SOLELY RESPONSIBLE FOR ANY AND ALL NON-ENVIRONMENTAL CLAIMS NOT RAISED
WITHIN SUCH TWO (2) YEAR PERIOD, (EXCEPT AS EXPRESSLY SET FORTH BELOW), AND
(ii) NON-ENVIRONMENTAL CLAIMS UP TO $10,000,000 (IT BEING ACKNOWLEDGED AND
AGREED THAT BUYER SHALL BE SOLELY RESPONSIBLE FOR ANY AND ALL NON-ENVIRONMENTAL
CLAIMS UP TO $10,000,000 EXCEPT AS EXPRESSLY SET FORTH BELOW); PROVIDED,
HOWEVER, THERE SHALL BE NO MONETARY THRESHOLD OR DEDUCTIBLE REQUIREMENT, AND
THE TIME PERIOD WITHIN WHICH NOTICE MUST BE GIVEN SHALL BE SIX (6) YEARS FROM
CLOSING FOR (i) ANY CLAIMS WITH RESPECT TO THE PROPER PAYMENT OF ROYALTY
AMOUNTS DUE (OTHER THAN ERRORS IN PAYMENT DUE TO CLERICAL ERRORS, OR TITLE OR
DIVISION ORDER MISTAKES OR VARIANCES), INCLUDING, WITHOUT LIMITATION, ANY
CLAIMS RELATING TO POSTED PRICING AND SALES TO, OR PROCESSING OR SIMILAR
AGREEMENTS WITH, SELLER'S AFFILIATES, AND (ii) ANY CLAIMS BY ANY PERSON WHO IS
OR WAS AN EMPLOYEE OF SELLER, THE BASIS OF WHICH CLAIM IS SELLER'S HIRING,
RETENTION, LABOR OR BENEFITS, ACTIONS, POLICIES, OR PROCEDURES, RELATING TO THE
PERIOD OF SUCH PERSON'S EMPLOYMENT WITH SELLER. FURTHER, THERE SHALL BE NO TIME
LIMIT AND NO MONETARY THRESHOLD OR DEDUCTIBLE FOR ANY LITIGATION, ARBITRATION,
MEDIATION OR OTHER EXISTING ACTION OR PROCEEDING OR CLAIMS REQUIRED TO BE
DISCLOSED PURSUANT TO SECTION 10.6.
8.3 Seller's Environmental Indemnity Obligation. SELLER SHALL, SUBJECT
TO THE LIMITATIONS SET FORTH BELOW, RELEASE BUYER FROM AND SHALL FULLY PROTECT,
INDEMNIFY AND DEFEND BUYER GROUP AND HOLD THEM HARMLESS FROM AND AGAINST ANY
AND ALL ENVIRONMENTAL CLAIMS, AND ANY AND ALL OCCURRENCES AND CONDITIONS WHICH
WOULD OTHERWISE CONSTITUTE ENVIRONMENTAL CLAIMS BUT WHICH ARE ASSERTED BY
SELLER GROUP, RELATING TO, ARISING OUT OF, OR CONNECTED, DIRECTLY OR
INDIRECTLY, WITH THE OWNERSHIP OR OPERATION OF THE PROPERTIES, OR ANY PART
THEREOF, PERTAINING TO THE PERIOD OF TIME PRIOR TO CLOSING, INCLUDING WITHOUT
LIMITATION, ENVIRONMENTAL CLAIMS RELATING TO: (a) INJURY OR DEATH OF ANY PERSON
OR PERSONS WHOMSOEVER, (b) DAMAGES TO OR LOSS OF ANY PROPERTY OR RESOURCES, (c)
POLLUTION, ENVIRONMENTAL DAMAGE OR VIOLATION OF ENVIRONMENTAL LAWS, (d) COMMON
LAW CAUSES OF ACTION SUCH AS NEGLIGENCE, GROSS NEGLIGENCE, STRICT LIABILITY,
NUISANCE OR TRESPASS, AND/OR (e) FAULT IMPOSED BY STATUTE, RULE, REGULATION OR
OTHERWISE. THE INDEMNITY OBLIGATION AND RELEASE PROVIDED HEREIN SHALL APPLY
REGARDLESS OF CAUSE OR OF ANY NEGLIGENT ACTS OR OMISSIONS OF BUYER GROUP.
NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, SELLER
SHALL HAVE NO OBLIGATION UNDER THIS AGREEMENT OR OTHERWISE TO PROTECT,
INDEMNIFY, DEFEND AND HOLD HARMLESS BUYER GROUP FROM AND AGAINST ANY ONE OR
MORE OF THE FOLLOWING: (i) ENVIRONMENTAL CLAIMS FOR WHICH BUYER HAS NOT
PROVIDED SELLER WITH WRITTEN NOTICE OF SAID ENVIRONMENTAL CLAIM IN ACCORDANCE
WITH ARTICLE 8.10 WITHIN TWELVE (12) MONTHS AFTER CLOSING (IT BEING
ACKNOWLEDGED AND AGREED THAT BUYER SHALL BE SOLELY RESPONSIBLE FOR ANY AND ALL
ENVIRONMENTAL
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CLAIMS NOT RAISED WITHIN SUCH TWELVE MONTH PERIOD, EXCEPT AS EXPRESSLY PROVIDED
BELOW), (ii) ENVIRONMENTAL CLAIMS UP TO $10,000,000 (IT BEING ACKNOWLEDGED AND
AGREED THAT BUYER SHALL BE SOLELY RESPONSIBLE FOR ANY AND ALL ENVIRONMENTAL
CLAIMS UP TO $10,000,000), OR (iii) ENVIRONMENTAL CLAIMS GREATER THAN
$166,500,000.00 (IT BEING ACKNOWLEDGED AND AGREED THAT BUYER SHALL BE SOLELY
RESPONSIBLE FOR ANY AND ALL ENVIRONMENTAL CLAIMS GREATER THAN $166,500,000.00.
FURTHER, THERE SHALL BE NO TIME LIMIT AND NO MONETARY THRESHOLD, DEDUCTIBLE OR
CAP FOR ANY LITIGATION, ARBITRATION, MEDIATION OR OTHER EXISTING ACTION OR
PROCEEDING OR CLAIMS REQUIRED TO BE DISCLOSED PURSUANT TO ARTICLE 10.6.
8.4 Buyer's Non-Environmental Indemnity Obligation. BUYER SHALL RELEASE
SELLER FROM AND SHALL FULLY PROTECT, INDEMNIFY AND DEFEND SELLER GROUP AND HOLD
THEM HARMLESS FROM AND AGAINST ANY AND ALL NON-ENVIRONMENTAL CLAIMS, AND ANY
AND ALL OCCURRENCES AND CONDITIONS WHICH WOULD OTHERWISE CONSTITUTE
NON-ENVIRONMENTAL CLAIMS BUT WHICH ARE ASSERTED BY BUYER GROUP, RELATING TO,
ARISING OUT OF, OR CONNECTED, DIRECTLY OR INDIRECTLY, WITH THE OWNERSHIP OR
OPERATION OF THE PROPERTIES, OR ANY PART THEREOF, PERTAINING TO THE PERIOD OF
TIME PRIOR TO CLOSING, NO MATTER WHEN ASSERTED, FOR WHICH SELLER'S INDEMNITY
OBLIGATION HAS CEASED, TERMINATED (IN ACCORDANCE WITH ARTICLE 8.2 OR OTHERWISE)
OR DID NOT EXIST, AND FROM AND AGAINST ANY AND ALL NON-ENVIRONMENTAL CLAIMS
RELATING TO, ARISING OUT OF, OR CONNECTED, DIRECTLY OR INDIRECTLY, WITH THE
OWNERSHIP OR OPERATION OF THE PROPERTIES, OR ANY PART THEREOF, PERTAINING TO
THE PERIOD OF TIME AT AND AFTER CLOSING, NO MATTER WHEN ASSERTED; INCLUDING
WITHOUT LIMITATION, NON-ENVIRONMENTAL CLAIMS RELATING TO: (a) INJURY OR DEATH
OF ANY PERSON OR PERSONS WHOMSOEVER, (b) DAMAGES TO OR LOSS OF ANY PROPERTY OR
RESOURCES, (c) COMMON LAW CAUSES OF ACTION SUCH AS NEGLIGENCE, GROSS
NEGLIGENCE, STRICT LIABILITY, NUISANCE OR TRESPASS, AND/OR (d) FAULT IMPOSED BY
STATUTE, RULE, REGULATION OR OTHERWISE. THE INDEMNITY OBLIGATION AND RELEASE
PROVIDED HEREIN SHALL APPLY REGARDLESS OF CAUSE OR OF ANY NEGLIGENT ACTS OR
OMISSIONS OF SELLER GROUP.
8.5 Buyer's Environmental Indemnity Obligation. BUYER SHALL RELEASE
SELLER FROM AND SHALL FULLY PROTECT, INDEMNIFY AND DEFEND SELLER GROUP AND HOLD
THEM HARMLESS FROM AND AGAINST ANY AND ALL ENVIRONMENTAL CLAIMS, AND ANY AND
ALL OCCURRENCES AND CONDITIONS WHICH WOULD OTHERWISE CONSTITUTE ENVIRONMENTAL
CLAIMS BUT WHICH ARE ASSERTED BY BUYER GROUP, RELATING TO, ARISING OUT OF, OR
CONNECTED, DIRECTLY OR INDIRECTLY, WITH THE OWNERSHIP OR OPERATION OF THE
PROPERTIES, OR ANY PART THEREOF (BUT NOT DISPOSAL OFF THE PROPERTIES),
PERTAINING TO THE PERIOD OF TIME PRIOR TO CLOSING, NO MATTER WHEN ASSERTED, FOR
WHICH SELLER'S INDEMNITY OBLIGATION HAS CEASED, TERMINATED (IN ACCORDANCE WITH
ARTICLE 8.3 OR OTHERWISE) OR DID NOT EXIST, AND FROM AND AGAINST ANY AND ALL
ENVIRONMENTAL CLAIMS RELATING TO, ARISING OUT OF, OR CONNECTED, DIRECTLY OR
INDIRECTLY, WITH THE OWNERSHIP OR OPERATION OF THE PROPERTIES, OR ANY PART
THEREOF, PERTAINING TO THE PERIOD OF TIME AT AND AFTER CLOSING, NO MATTER WHEN
ASSERTED; INCLUDING WITHOUT
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LIMITATION, ENVIRONMENTAL CLAIMS RELATING TO: (a) INJURY OR DEATH OF ANY PERSON
OR PERSONS WHOMSOEVER, (b) DAMAGE TO OR LOSS OF ANY PROPERTY OR RESOURCE, (c)
POLLUTION, ENVIRONMENTAL DAMAGE OR VIOLATION OF ENVIRONMENTAL LAWS, (d) COMMON
LAW CAUSES OF ACTION SUCH AS NEGLIGENCE, GROSS NEGLIGENCE, STRICT LIABILITY,
NUISANCE OR TRESPASS, AND/OR (e) FAULT IMPOSED BY STATUTE, RULE, REGULATION OR
OTHERWISE. THE INDEMNITY OBLIGATION AND RELEASE PROVIDED HEREIN SHALL APPLY
REGARDLESS OF CAUSE OR OF ANY NEGLIGENT ACTS OR OMISSIONS OF SELLER GROUP.
8.6 Legal Claims and Defenses. Each indemnifying party shall be deemed
to be entitled to all of the indemnified party's legal claims and defenses that
relate to any claim for which the indemnifying party provides indemnification
under Articles 8.2, 8.3, 8.4 or 8.5 with respect to any liability the
respective parties assume thereunder.
8.7 Asbestos and NORM. Buyer acknowledges that the Properties may
currently or have in the past contained asbestos or NORM and that special
procedures may be required for the assessment, remediation, removal,
transportation or disposal of such asbestos and NORM. NOTWITHSTANDING ANYTHING
CONTAINED IN THIS AGREEMENT TO THE CONTRARY (INCLUDING WITHOUT LIMITATION
ARTICLES 5.2, 8.2 OR 8.3), BUYER AGREES TO ACCEPT FULL RESPONSIBILITY FOR AND
SHALL PAY ALL COSTS AND EXPENSES ASSOCIATED WITH THE ASSESSMENT, REMEDIATION,
REMOVAL, TRANSPORTATION AND DISPOSAL OF THE ASBESTOS OR NORM ASSOCIATED WITH
THE PROPERTIES, AND SHALL NOT BE ENTITLED TO CLAIM THE FACT THE ASSESSMENT,
REMEDIATION, REMOVAL, TRANSPORTATION OR DISPOSAL OF THE ASBESTOS OR NORM IS NOT
COMPLETE OR THAT ADDITIONAL COST WILL BE REQUIRED TO COMPLETE THE ASSESSMENT,
REMEDIATION, REMOVAL, TRANSPORTATION OR DISPOSAL OF THE ASBESTOS OR NORM AS AN
ALLEGED TITLE DEFECT, ALLEGED ADVERSE CONDITION, BREACH OF SELLER'S
REPRESENTATIONS AND WARRANTIES OR BREACH OF SELLER'S INDEMNITY OBLIGATION UNDER
THIS AGREEMENT, AND BUYER (ON BEHALF OF ITSELF, ITS OFFICERS, AGENTS,
EMPLOYEES, AFFILIATES, SUCCESSORS AND ASSIGNS) IRREVOCABLY WAIVES SUCH CLAIMS.
In conducting the duties and obligations contained in this Article, Buyer shall
comply with the applicable Laws.
8.8 Buyer's Assumption of Obligations. Buyer agrees to assume and shall
shall timely perform and discharge all duties and obligations of Seller
associated with the Properties (including without limitation any contractual
obligations excepting obligations assumed by Seller relating to the Transition
Agreement) assumed by Seller relating to the period of time at and after
Closing, and Seller shall incur no liability for Buyer's failure to properly
perform or discharge any such duties and obligations. NOTWITHSTANDING ANYTHING
CONTAINED IN THIS AGREEMENT TO THE CONTRARY (INCLUDING WITHOUT LIMITATION
ARTICLES 5.2, 8.2 OR 8.3), BUYER AGREES TO ACCEPT FULL RESPONSIBILITY FOR AND
SHALL PAY ALL COSTS AND EXPENSES ASSOCIATED WITH THE PLUGGING AND ABANDONMENT
OF THE WELLS AND FACILITIES INCLUDED IN THE PROPERTIES, AND SHALL NOT BE
ENTITLED TO CLAIM THE FACT THAT PLUGGING AND ABANDONMENT OPERATIONS ARE NOT
COMPLETE OR THAT ADDITIONAL COST WILL BE REQUIRED TO
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COMPLETE THE PLUGGING AND ABANDONMENT OPERATIONS AS AN ALLEGED TITLE DEFECT,
ALLEGED ADVERSE CONDITION, BREACH OF SELLER'S REPRESENTATIONS AND WARRANTIES OR
BREACH OF SELLER'S INDEMNITY OBLIGATION UNDER THIS AGREEMENT, AND BUYER (ON
BEHALF OF ITSELF, ITS OFFICERS, AGENTS, EMPLOYEES, AFFILIATES, SUCCESSORS AND
ASSIGNS) IRREVOCABLY WAIVES SUCH CLAIMS. In conducting the duties and
obligations contained in this Article, Buyer shall comply with the applicable
Laws.
8.9 Process Safety Management. Buyer acknowledges that Process Safety
Management of Highly Hazardous Chemicals; Explosives and Blasting Agents (i.e.,
29 CFR 1910) (collectively "Process Safety Management") associated with the
Properties is an ongoing process. NOTWITHSTANDING ANYTHING CONTAINED IN THIS
AGREEMENT TO THE CONTRARY (INCLUDING WITHOUT LIMITATION ARTICLES 5.2, 8.2 OR
8.3), BUYER AGREES TO ACCEPT FULL RESPONSIBILITY FOR AND SHALL PAY ALL COSTS
AND EXPENSES ASSOCIATED WITH THE PROCESS SAFETY MANAGEMENT PROCESS (INCLUDING
WITHOUT LIMITATION THE IDENTIFICATION, EVALUATION AND REMEDIATION), AND SHALL
NOT BE ENTITLED TO CLAIM THE FACT THAT PROCESS SAFETY MANAGEMENT IS NOT
COMPLETE OR THAT ADDITIONAL COST WILL BE REQUIRED TO COMPLY WITH OR COMPLETE
THE PROCESS SAFETY MANAGEMENT PROCESS AS AN ALLEGED TITLE DEFECT, ALLEGED
ADVERSE CONDITION, BREACH OF SELLER'S REPRESENTATIONS AND WARRANTIES OR BREACH
OF SELLER'S INDEMNITY OBLIGATION UNDER THIS AGREEMENT, AND BUYER (ON BEHALF OF
ITSELF, ITS OFFICERS, AGENTS, EMPLOYEES, AFFILIATES, SUCCESSORS AND ASSIGNS)
IRREVOCABLY WAIVES SUCH CLAIMS. In conducting the duties and obligations
contained in this Article, Buyer shall comply with the applicable Laws.
8.10 Notice of Claims. If a Claim is asserted against a party for which
the other party may have an obligation of indemnity, it shall be a condition
precedent to the indemnifying party's obligations under this Article 8 that the
indemnified party give the indemnifying party written notice of such Claim
setting forth full particulars of the Claim (including a copy of the written
Claim, if any) as then known by the indemnified party. The indemnified party
shall make a good faith effort to notify the indemnifying party within one (1)
month of receipt of a Claim and shall in all events effect notice within such
time as will allow the indemnifying party a reasonable period of time in which
to evaluate and timely respond to said Claim. The notice of Claim provided
hereunder is referred to as a "Claim Notice."
8.11 Defense of Claims. Upon receipt of a Claim Notice, the
indemnifying party may assume the defense of said Claim with counsel selected
by the indemnifying party and reasonably satisfactory to the indemnified party.
The indemnified party shall cooperate in all reasonable respects in such
defense. If any Claim involves a fact pattern wherein Buyer may have an
obligation to indemnify Seller and Seller may have an obligation to indemnify
Buyer, each party shall have the right to assume the defense of and hire
counsel for that portion of the Claim for which it may have an obligation of
indemnity. In all instances, the indemnified party shall have the right to
employ separate counsel and to participate in the defense of any Claim;
provided however, the fees and
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expenses of counsel employed by the indemnified party shall be borne solely by
the indemnified party. If the indemnifying party does not notify the
indemnified party within the earlier to occur of: (a) five (5) Business Days
before the time a response is due in any litigation matter, or (b) sixty (60)
Days after receipt of the Claim Notice, that the indemnifying party elects to
undertake the defense of a Claim, the indemnified party shall have the right to
defend, at the expense of the indemnifying party, the Claim with counsel of the
indemnified party's choosing, subject to the right of the indemnifying party to
assume the defense of the Claim at any time prior to settlement or final
determination thereof. In such event, the indemnified party shall promptly send
a written notice to the indemnifying party of any proposed settlement of a
Claim, which settlement the indemnifying party may accept or reject, in its
reasonable judgment, within thirty (30) days of receipt of such notice, unless
the settlement offer is limited to a shorter period of time in which case the
indemnifying party shall have such shorter period of time in which to accept or
reject the proposed settlement. Failure of the indemnifying party to accept or
reject such settlement within the applicable period of time shall be deemed to
be its rejection of such settlement. Notwithstanding the foregoing, the
indemnified party may settle any matter over the objection of the indemnifying
party, but in so doing the indemnified party shall be deemed to have waived any
right to indemnity therefor as to (and only as to) liabilities with respect to
which the indemnifying party has acknowledged in writing its indemnity
obligation.
8.12 Waiver of Certain Damages. EACH OF THE PARTIES HEREBY WAIVES AND
AGREES NOT TO SEEK INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OF
ANY KIND WITH RESPECT TO ANY CLAIM OR DISPUTE ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR BREACH HEREOF. THIS PROVISION SHALL NOT DIMINISH OR AFFECT IN
ANY WAY THE PARTIES' RIGHTS AND OBLIGATIONS UNDER ANY INDEMNITIES PROVIDED FOR
IN THIS AGREEMENT.
8.13 Limitation on Indemnities. IN NO EVENT SHALL AN INDEMNIFYING PARTY
HAVE ANY OBLIGATION OF INDEMNIFICATION TO THE INDEMNIFIED PARTY, IF THE CLAIM
FOR WHICH INDEMNITY IS SOUGHT WAS CAUSED BY THE GROSS NEGLIGENCE, WILLFUL
MISCONDUCT, RECKLESS CONDUCT, FRAUD, MISREPRESENTATION, OR CRIMINAL VIOLATION,
OF THE INDEMNIFIED PARTY OR ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
AFFILIATES, SUCCESSORS AND ASSIGNS, NOR SHALL ANY INDEMNITY PROVISIONS IN THIS
AGREEMENT APPLY TO OR BE DEEMED TO APPLY TO MATTERS AFFECTING PROPERTIES (REAL,
PERSONAL OR MIXED) AND APPURTENANT RIGHTS (CONTRACTUAL OR OTHERWISE) OTHER THAN
THOSE WHICH ARE COVERED BY THIS AGREEMENT OR TO MATTERS DISCLOSED ON EXHIBIT
"G" HERETO WHICH HAVE BEEN DISCLOSED AND EXCLUDED FROM THESE INDEMNITIES.
ARTICLE 9. SPECIAL WARRANTY AND DISCLAIMERS
9.1 Special Warranty of Title. SELLER SHALL WARRANT TITLE TO AND
FOREVER DEFEND TITLE TO THE PROPERTIES CONVEYED TO BUYER AGAINST EVERY PERSON
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WHOMSOEVER LAWFULLY CLAIMING TITLE TO THE PROPERTIES, OR ANY PART THEREOF BY,
THROUGH OR UNDER SELLER, BUT NOT OTHERWISE.
9.2 Disclaimer - Representations and Warranties. BUYER ACKNOWLEDGES AND
AGREES THAT THE PROPERTIES ARE BEING TRANSFERRED, ASSIGNED AND CONVEYED FROM
SELLER TO BUYER "AS-IS, WHERE-IS", AND WITH ALL FAULTS IN THEIR PRESENT
CONDITION AND STATE OF REPAIR, WITHOUT RECOURSE. EXCEPT AS EXPRESSLY SET FORTH
IN ARTICLE 10 BELOW, SELLER HEREBY EXPRESSLY DISCLAIMS ANY AND ALL
REPRESENTATIONS AND WARRANTIES CONCERNING THE PROPERTIES, EXPRESS, STATUTORY,
IMPLIED OR OTHERWISE, INCLUDING WITHOUT LIMITATION: (a) ANY WARRANTY OF TITLE
(EXCEPT FOR THE SPECIAL WARRANTY OF TITLE SET FORTH IN ARTICLE 9.1), (b) THE
EXISTENCE OF ANY AND ALL PROSPECTS, (c) THE GEOGRAPHIC, GEOLOGIC OR GEOPHYSICAL
CHARACTERISTICS ASSOCIATED WITH ANY AND ALL PROSPECTS, (d) THE EXISTENCE,
QUALITY, QUANTITY OR RECOVERABILITY OF HYDROCARBON RESERVES ASSOCIATED WITH THE
PROPERTIES, (e) THE COSTS, EXPENSES, REVENUES OR RECEIPTS ASSOCIATED WITH THE
PROPERTIES, (f) THE CONTRACTUAL, ECONOMIC OR FINANCIAL DATA ASSOCIATED WITH THE
PROPERTIES, (g) THE CONTINUED FINANCIAL VIABILITY OR PRODUCTIVITY OF THE
PROPERTIES, (h) THE ENVIRONMENTAL OR PHYSICAL CONDITION OF THE PROPERTIES, (i)
THE FEDERAL, STATE, LOCAL OR TRIBAL INCOME OR OTHER TAX CONSEQUENCES ASSOCIATED
WITH THE PROPERTIES, OR THE AGREEMENTS TO WHICH THE PROPERTIES ARE SUBJECT, (j)
THE ABSENCE OF PATENT OR LATENT DEFECTS, (k) SAFETY, (l) STATE OF REPAIR, (m)
MERCHANTABILITY, AND (n) FITNESS FOR A PARTICULAR PURPOSE; AND BUYER (ON BEHALF
OF ITSELF, ITS OFFICERS, AGENTS, EMPLOYEES, AFFILIATES, SUCCESSORS AND ASSIGNS)
IRREVOCABLY WAIVES SUCH CLAIMS.
9.3 Disclaimer - Statements and Information. SELLER EXPRESSLY DISCLAIMS
ANY AND ALL LIABILITY AND RESPONSIBILITY FOR AND ASSOCIATED WITH THE QUALITY,
ACCURACY, COMPLETENESS OR MATERIALITY OF THE DATA, INFORMATION AND MATERIALS
FURNISHED (ELECTRONICALLY, ORALLY, BY VIDEO, IN WRITING OR ANY OTHER MEDIUM) AT
ANY TIME TO BUYER, ITS OFFICERS, AGENTS, EMPLOYEES OR AFFILIATES IN CONNECTION
WITH THE TRANSACTION CONTEMPLATED HEREIN, INCLUDING WITHOUT LIMITATION: (a) THE
EXISTENCE OF ANY AND ALL PROSPECTS, (b) THE GEOGRAPHIC, GEOLOGIC OR GEOPHYSICAL
CHARACTERISTICS ASSOCIATED WITH ANY AND ALL PROSPECTS, (c) THE EXISTENCE,
QUALITY, QUANTITY OR RECOVERABILITY OF HYDROCARBON RESERVES ASSOCIATED WITH THE
PROPERTIES, (d) THE COSTS, EXPENSES, REVENUES OR RECEIPTS ASSOCIATED WITH THE
PROPERTIES, (e) THE CONTRACTUAL, ECONOMIC OR FINANCIAL DATA ASSOCIATED WITH THE
PROPERTIES, (f) THE CONTINUED FINANCIAL VIABILITY OR PRODUCTIVITY OF THE
PROPERTIES, (g) THE ENVIRONMENTAL OR PHYSICAL CONDITION OF THE PROPERTIES, AND
(h) THE FEDERAL, STATE, LOCAL OR TRIBAL INCOME OR OTHER TAX CONSEQUENCES
ASSOCIATED WITH THE PROPERTIES, OR THE AGREEMENTS TO WHICH THE PROPERTIES ARE
SUBJECT; AND BUYER (ON BEHALF OF ITSELF, ITS OFFICERS, AGENTS, EMPLOYEES,
AFFILIATES, SUCCESSORS AND ASSIGNS) IRREVOCABLY WAIVES SUCH CLAIMS. HOWEVER,
THE PROVISION OF THIS ARTICLE 9.3 SHALL NOT BE DEEMED TO WAIVE THE OBLIGATIONS
OF SELLER AS SET FORTH IN ARTICLE 8 OR SELLER'S REPRESENTATIONS AND WARRANTIES
IN ARTICLE 10.
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ARTICLE 10. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer that, to the best of Seller's
knowledge, on the date hereof and as of Closing:
10.1 Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, and has all requisite corporate power and authority to own and lease
the Properties. Seller is duly licensed or qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which the
Properties are located.
10.2 Corporate Authority; Authorization of Agreement. Seller has all
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated herein and to perform all of the
terms and conditions to be performed by it as provided for in this Agreement.
The execution and delivery of this Agreement by Seller, the performance by
Seller of all of the terms and conditions to be performed by it and the
consummation of the transactions contemplated herein have been duly authorized
and approved by all necessary corporate action. This Agreement has been duly
executed and delivered by Seller and constitutes the valid and binding
obligation of Seller, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency or other
Laws relating to or affecting the enforcement of creditors' rights and general
principles of equity (regardless of whether such enforceability is considered
in a proceeding at law or in equity). For purposes of this Article 10.2 only,
the term "Agreement" shall also be deemed to include the documents executed by
the parties at Closing (including such documents that are Exhibits to this
Agreement).
10.3 No Violations. Assuming expiration or termination of the
applicable waiting period under the HSR Act, if applicable, the execution and
delivery of this Agreement by Seller does not, and the fulfillment and
compliance with the terms and conditions hereof and the consummation of the
transactions contemplated herein, will not:
10.3.1 Conflict with or require the consent of any person or
entity under any of the terms, conditions or provisions of the
certificate of incorporation or bylaws of Seller;
10.3.2 Violate any provision of, or require any filing,
consent or approval under any Law applicable to or binding upon Seller
(assuming receipt of all consents and approvals of governmental
entities or tribal authorities customarily obtained subsequent to the
transfers of title);
10.3.3 Conflict with, result in a breach of, constitute a
default under or constitute an event that with notice or lapse of time,
or both,
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would constitute a default under, accelerate or permit the
acceleration of the performance required by, or require any consent,
authorization or approval under: (i) any mortgage, indenture, loan,
credit agreement or other agreement, evidencing indebtedness for
borrowed money to which Seller is a party or by which Seller is bound,
or (ii) any order, judgment or decree of any governmental entity or
tribal authority; or
10.3.4 Result in the creation or imposition of any lien or
encumbrance upon the Properties.
10.4 Absence of Certain Changes. Between the date of execution of
this Agreement and Closing, there has not been without Buyer's prior written
consent:
10.4.1 A waiver of any right of material value relating to the
Properties, other than in the ordinary course of business;
10.4.2 A sale, lease or other disposition of the Properties,
other than in the ordinary course of business;
10.4.3 A mortgage, pledge or grant of a lien or security
interest in any of the Properties; or
10.4.4 A contract or commitment to do any of the foregoing.
10.5 Operating Costs. All costs incurred in connection with the
operation of the Properties have been fully paid and discharged by Seller,
except normal expenses incurred in operating the Properties within the previous
sixty (60) Days or as to which Seller has not yet been billed.
10.6 Litigation. Except as set forth in Exhibit "G" or disclosed prior
to Closing, there is no action, suit or proceeding pending, or to the best
knowledge of the management team of Seller's Fort Lupton Operations Center,
("Management"), threatened against Seller which would have a material adverse
effect on the value or ownership or operation of the Properties or that would
prevent the consummation of the transaction contemplated by this Agreement. Nor
to the best of Seller's Management's knowledge has there been any occurrence
that would be likely to give rise to a Claim that would have a material adverse
effect on the value, or ownership or operation of the Properties or that could
give rise to a material Claim against Seller for which Buyer could be liable
under Article 8.4 or 8.5. Seller shall retain responsibility for the claims,
disputes, and litigation matters referenced in Exhibit "G" or that are
disclosed prior to Closing to the extent the underlying Claims relate to the
period of time prior to Closing. Buyer shall be solely responsible for such
matters to the extent the underlying Claims relate to: (a) the Properties, and
(b) the period of time subsequent to Closing. Seller shall keep Buyer informed
with respect to and
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shall consult with and allow reasonable participation of Buyer in litigation
for which Seller retains responsibility and that affect the Properties, with
respect to future ownership and operation of the Properties.
10.7 Bankruptcy. There are no bankruptcy, reorganization or
receivership proceedings pending, being contemplated by or threatened against
Seller.
10.8 Removal. Except in the ordinary course of operating the Properties
in a manner consistent with Seller's prior operations, no significant
equipment, material or inventory will be removed from the Properties or
exchanged for equipment or inventory of lesser value from the date of execution
of this Agreement until Closing without the consent of Buyer, excluding the
assets set forth on Exhibit "F".
ARTICLE 11. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller that, to the best of Buyer's
knowledge, on the date hereof and as of Closing:
11.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware and has all requisite corporate power and authority to own and lease
the Properties. Buyer is duly licensed or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the
Properties are located.
11.2 Corporate Authority; Authorization of Agreement. Buyer has all
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated herein and to perform all the terms
and conditions to be performed by it as provided for in this Agreement. The
execution and delivery of this Agreement by Buyer, the performance by Buyer of
all the terms and conditions to be performed by it and the consummation of the
transactions contemplated herein have been duly authorized and approved by all
necessary corporate action. This Agreement has been duly executed and delivered
by Buyer and constitutes the valid and binding obligation of Buyer, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other Laws relating to or affecting the
enforcement of creditors' rights and general principles of equity (regardless
of whether such enforceability is considered in a proceeding at law or in
equity).
11.3 No Violations. Assuming expiration or termination of the
applicable waiting period under the HSR Act, if applicable, the execution and
delivery of this Agreement by Buyer does not, and the fulfillment and
compliance with the terms and conditions hereof and the consummation of the
transactions contemplated herein, will not:
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11.3.1 Conflict with or require the consent of any person or
entity under any of the terms, conditions or provisions of the
certificate of incorporation or bylaws of Buyer;
11.3.2 Violate any provision of, or require any filing, consent
or approval under any Law applicable to or binding upon Buyer; or
11.3.3 Conflict with, result in a breach of, constitute a
default under or constitute an event that with notice or lapse of
time, or both, would constitute a default under, accelerate or permit
the acceleration of the performance required by, or require any
consent, authorization or approval under: (i) any mortgage, indenture,
loan, credit agreement or other agreement evidencing indebtedness for
borrowed money to which Buyer is a party or by which Buyer is bound,
or (ii) any order, judgment or decree of any governmental entity or
tribal authority.
11.4 SEC Disclosure. Buyer is acquiring the Properties for its own
account for use in its trade or business, and not with a view toward or for
sale in connection with any distribution thereof, nor with any present
intention of making a distribution thereof within the meaning of the Securities
Act of 1933, as amended.
11.5 Independent Evaluation. BUYER REPRESENTS THAT IT IS SOPHISTICATED
IN THE EVALUATION, PURCHASE, OWNERSHIP AND OPERATION OF OIL AND GAS PROPERTIES
AND RELATED FACILITIES. IN MAKING ITS DECISION TO ENTER INTO THIS AGREEMENT AND
TO CONSUMMATE THE TRANSACTION CONTEMPLATED HEREIN, BUYER REPRESENTS THAT: (A)
IT HAS RELIED SOLELY ON ITS OWN INDEPENDENT INVESTIGATION AND EVALUATION OF THE
PROPERTIES, AND (B) IT HAS SATISFIED ITSELF AS TO THE PHYSICAL AND
ENVIRONMENTAL CONDITION OF THE PROPERTIES.
11.6 Buyer's Reliance. BUYER ACKNOWLEDGES AND AGREES THAT IT IS
ENTITLED TO RELY ONLY ON THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN
THIS AGREEMENT.
ARTICLE 12. ADDITIONAL COVENANTS AND CONSIDERATIONS
12.1 Subsequent Operations. Seller makes no representations or
warranties to Buyer as to the transferability or assignability of operatorship
of the Properties. Buyer acknowledges that the rights and obligations
associated with operatorship of the Properties are governed by the applicable
agreement(s) and that operatorship of the Properties will be decided in
accordance with the terms of said agreement(s). Within ten (10) Days after
Closing, Seller shall send out notices, where applicable, advising working
interest owners of the Properties it operates that it has transferred its
interests in the Properties to Buyer. Within fifteen (15) Days after Closing,
Buyer shall send out ballots, where applicable, associated with the selection
of a successor operator of the Properties. Seller
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shall have no obligation under this Agreement or otherwise to send out notices
balloting for the selection of a successor operator.
12.2 Transition Agreement. At Closing, Buyer and Seller shall
execute the applicable Transition Agreements.
12.3 License Agreement(s). At Closing, Buyer and Seller shall
execute the License Agreement - SAMS, covering certain proprietary technology
of Seller, including the "SAMS" automation system. If requested by Seller,
Buyer shall execute and deliver to Seller a License Agreement - Seismic in a
mutually agreed form, granting to Seller, at no cost to Seller, a right and
license to use the seismic data, or any portion thereof, conveyed to Buyer
under the terms of this Agreement.
12.4 Crude Call.
12.4.1 Seller reserves the continuing right and option (but shall not
have the obligation) to purchase on the terms set forth herein all or part of
the oil and/or other liquid hydrocarbons, including but not limited to,
condensate, distillate, and other liquids recovered from the well stream by
normal lease separation methods (the "Oil") produced and saved from any of the
Properties identified on Exhibit "A" (excluding Oil used for ordinary leasehold
operations thereon.)
12.4.2 Seller herein elects to purchase the Oil from the Properties,
to be effective as of the Closing Date. Seller's obligation to purchase the Oil
under the above election shall continue for a period of thirty (30) Days, and
unless terminated by Seller by giving Buyer at least thirty (30) Days prior
written notice of Seller's intent to discontinue such purchases, shall continue
on a month to month basis thereafter.
12.4.3. If Seller notifies Buyer that Seller elects to discontinue
purchases of the Oil in accordance with Article 12.4.2, at the end of the
thirty (30) Day notice period, Buyer shall be free for a period not to exceed
six (6) months to market the Oil to Third Parties; provided however, at the end
of the six (6) month period Seller shall have the right to recommence
purchasing the Oil by providing Buyer at least thirty (30) Days written notice
prior to the end of the six (6) month period of Seller's intent to recommence
purchasing the Oil. In the event Seller does not elect to recommence purchasing
the Oil, then Buyer shall be free to market the Oil to Third Parties for an
additional six (6) month period. Seller's right to elect to purchase and/or
discontinue purchase of the Oil shall be an ongoing and reoccurring right
during the duration of the crude call. During the period of time Seller is not
purchasing the Oil under the terms of this Article 12, Seller shall have no
obligation to purchase or furnish a market for all or any part of the Oil
associated with Properties.
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12.4.4. During the period of time Seller elects to purchase the Oil
under the terms of this Article 12, subject to the Ceiling and Floor Pricing
Limitations set forth below in Article 12.4.5, Seller shall pay Buyer the Amoco
Eastern Colorado Sweet Posting plus $0.80 per barrel of Oil produced and saved.
Buyer's Oil shall be deemed to be 53 degree API gravity Oil.
12.4.5 Ceiling and Floor Pricing Limitations
Notwithstanding the above, in no event shall the price paid by Seller to Buyer
for the Oil be greater than the Wattenberg Sweet Ceiling Price or less than the
Wattenberg Sweet Floor Price, as defined below:
a. The Wattenberg Sweet Ceiling Price will be Platt's Wyoming Sweet
Monthly Average, Calendar Month Price, Including Weekends and Holidays minus
$0.50 per barrel. If in any month of delivery, the average monthly calculated
price exceeds the Wattenberg Sweet Ceiling Price, then the price paid for all
production produced by Buyer and purchased by Seller for the month of delivery
shall be the Wattenberg Sweet Ceiling Price.
b. The Wattenberg Sweet Floor will be Platt's Wyoming Sweet Monthly
Average, Calendar Month Price, Including Weekends and Holidays minus $1.50 per
barrel. If in any month of delivery, the average monthly calculated price falls
below the Wattenberg Sweet Floor Price, then the price paid for all the
production produced by Buyer and purchased by Seller for the month of delivery
shall be the Wattenberg Sweet Floor Price.
12.4.6 In the event one of the indexes referenced above is
discontinued, the parties shall meet and attempt to mutually agree on a
replacement which is similar to the discontinued index. If the parties are
unable to agree on the replacement index the same shall be submitted to binding
arbitration in accordance with Article 18.
12.4.7 Seller's rights under this Article 12 shall not terminate, and
shall be for the life of the Properties, so long as they are producing Oil and
condensate.
12.4.8 Notwithstanding anything contained in this Agreement to the
contrary, Seller reserves the right to assign the rights and obligations
arising under this Article 12 to an Affiliate of Seller. If Seller elects to
assign the rights and obligation under this Article 12 to an Affiliate of
Seller, then Seller shall provide Buyer with a mutually agreeable corporate
guarantee wherein Seller guarantees the performance of Seller's Affiliate under
the terms of this Article 12. Notwithstanding anything contained in this
Agreement to the contrary, after the termination of the Transition Agreement,
Seller shall have no obligation to provide accounting services associated with
the crude call retained herein. Any and all notifications to Seller associated
with this crude call provision shall be directed to Amoco Oil Company, Crude
Supply and Logistics, P.O. Box 800, Denver, Colorado 80202.
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12.5 Natural Gas Processing Agreement. Prior to Closing, Seller shall
amend Article 8.2 of the Gas Processing Agreement dated August 1, 1997 between
Amoco Production Company (as producer) and Amoco Production Company (in its
capacity as operator of the Wattenberg Gas Processing Plant) to provide an
option to Seller, as operator of the Wattenberg Plant, which may be exercised
each year on or before April 30, and which shall be effective for the
immediately following calendar year from June 1 through May 31 to (a) replace
shrinkage gas with equivalent BTU's of gas of like kind and quality, at
Seller's election (i) into PSCO's distribution system or (ii) into Colorado
Interstate Gas Co's DJ Basin system or (b) to pay for shrinkage at Colorado
Interstate Gas Co.-Rocky Mountains as reported in the first issue of Inside
F.E.R.C's Gas Market Report under the "Prices of Spot Gas Delivered to
Pipelines table for the applicable month, plus $0.15/MMBTU for such shrinkage
gas. In addition, the amendment will provide that in the event Seller's
Wattenberg Plant is unable in any month to process all of Buyer's gas dedicated
under the Gas Processing Agreement in that month due to capacity constraints,
Seller will temporarily release the gas attributable to the excess capacity
from the Gas Processing Agreement for the next month. Further, the amendment
will provide that Buyer shall provide Seller, as operator of the Wattenberg
Plant, on a periodic, timely basis, at least once per year, with development
plans and other pertinent information to apprise Seller of Buyer's plans with
respect to future production and capacity needs.
12.6 Rights-Of -Way and Surface Leases. Buyer herein grants to Seller
(and its Affiliates) non-exclusive cost-free right(s)-of-way and surface
lease(s) on, over and through the Properties (including but not limited to,
pipeline, utility, and road usage rights-of-way, facility surface leases and
all necessary rights of ingress and egress), necessary to allow Seller (and its
Affiliates) to continue to conduct operations on or across the Properties in
connection with properties and assets not being conveyed herein, which were
being conducted by Seller (and its Affiliates) prior to Closing. Buyer agrees
to execute any and all instruments deemed necessary by Seller (or its
Affiliate) to further delineate the rights granted herein.
12.7 Conduct of Business.
12.7.1 Waiver of Claims. From the date hereof until Closing,
Seller shall not and will not agree to cancel any debts or waive any
claims or rights of value, except for fair and equivalent value in the
ordinary course of business and consistent with past practice.
12.7.2 Operations. From the date hereof until Closing, Seller
shall keep and maintain the Properties in full force and effect except
abandonments consistent with prudent operation and shall perform and
shall comply with the material covenants and conditions contained in
the
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oil and gas leases and the material agreements included in or affecting
the Properties.
From the date hereof until Closing, Seller shall promptly
inform Buyer of all requests by third parties for commitments to
expend funds for capital expenditures with respect to the Properties
in excess of $50,000 (net to Seller) for any single operation. From
the date hereof until Closing, without the prior written consent of
Buyer, Seller shall not (i) commit to or incur any capital
expenditures in excess of $50,000 (net to Seller's interest) with
respect to any part of the Properties; (ii) make any material
non-consent elections with respect to operations affecting the
Properties involving a proposal expected to cost in excess of $50,000
(net to Seller's interest); (iii) except in accordance with prudent
operations or previous contractual requirements, abandon any well or
release or abandon all or any material portion of any of the leases,
or modify or terminate any of the material agreements; (iv) agree to
any renegotiated price, take or other terms under existing gas
purchase agreements extending more than thirty (30) Days beyond the
Closing; (v) agree to any credit or prepayment arrangement that would
reduce the share of gas to which Seller would be entitled with respect
to the Properties following the execution date of this Agreement; or
(vi) enter into any agreement or instrument for the sale, treatment,
or transportation of production from the Properties (except for such
agreements terminable on no more than thirty (30) Days notice).
From the date hereof until Closing, Seller shall use
reasonable efforts to keep Buyer currently and completely informed as
to all material developments affecting or potentially affecting the
Properties. Seller and Buyer shall develop a mutually agreeable
procedure for Buyer's representatives to have access to Seller's
operations in order to remain informed about the status of the
Properties.
Notwithstanding the foregoing, Seller may take any action it
believes in good faith and in accordance with prudent operations to be
advisable to protect persons and property or to prevent the loss of a
valuable right, interest or opportunity, and shall give notice to
Buyer as soon as possible that Seller intends to or has taken such
action.
12.7.3 Access.
12.7.3.1. Historical Financial and Operating Data. Between
execution of this Agreement and Closing, Seller shall furnish Buyer
with such unaudited historical financial and operating data and other
information with respect to the Properties as Buyer shall reasonably
request, including without limitation, historical data and information
requested by Buyer or any of its Affiliates in connection with the
preparation of any financial statements, reports or other documents
(including exhibits thereto) to be filed with or provided to the
Securities
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and Exchange Commission, any state securities commission, any other
applicable governmental authorities or an applicable securities
exchange.
12.7.3.2. From the Closing until the delivery of the Records and
completion of the transition pursuant to the Transition Agreement,
Seller shall afford to Buyer and its authorized representatives
reasonable access, during normal business hours, to the Properties
operated by Seller and the Records; provided, however, that with
respect to properties not operated by Seller, Seller will use its
reasonable efforts to obtain from the operator such access as Buyer
requests and provided that access to such properties and/or Records to
be licensed to Buyer pursuant to the License Agreement shall be in
accordance with the provisions thereof. Seller shall furnish to Buyer
such existing financial and operating data and other information
relating to the Properties as it may reasonably request, except to the
extent that such access and disclosure would violate the terms of any
agreement to which Seller or any of its Affiliates is bound or any
applicable law or regulation. Seller may also restrict access to
Records to the extent providing access to Buyer would destroy Seller's
attorney-client or work product privilege as to such Records. Except
as limited in the foregoing sentence, Seller will during the term of
the Transition Agreement furnish Buyer with such additional historical
financial and operating data and other information as to the business
and properties of Seller relating to or in connection with the
Properties as Buyer shall from time to time reasonably request
including copies of historical financial data for the Properties for
the years 1995, 1996 and 1997 year to date information up to the date
of Closing (including monthly and calendar quarter summaries within
those periods) including but not limited to, lease operating
statements and lease operating costs reports (detailed by property
with related summaries), and shall allow Buyer's employees and
representatives reasonable access upon prior written notice to
supporting records, invoices and other source documents insofar as
required to complete necessary audits and due diligence procedures,
and shall reasonably cooperate with Buyer to enable Buyer to complete
audits and due diligence on a timely basis, provided, however, that
Seller shall provide only such data as it has in its possession and
shall not be obligated to generate such data in any particular form or
format. Seller shall permit or, in case of any third-party operated
wells, use its reasonable efforts to cause the operator thereof to
permit Buyer's authorized representatives to consult with agents and
employees of Seller and/or third-party operator with respect to the
Properties during reasonable business hours and to conduct, at Buyer's
sole risk and expense, on-site inspections, tests and inventories of
the Properties. Buyer is not authorized to investigate any matter with
any governmental agency having jurisdiction over any aspect of
Seller's business or operations without Seller's prior written
consent, which shall not be unreasonably denied. The confidentiality
of any data or information so accessed by Buyer shall be maintained by
Buyer and its representatives
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in accordance with the Confidentiality Agreement.
ARTICLE 13
PROPERTY EXCHANGE
13.1 Property Exchange. Seller and Buyer agree that it may be
beneficial to structure a portion of the transaction contained in this
Agreement as a like-kind exchange of properties under Section 1031 of the
Internal Revenue Code of 1986, as amended. Accordingly, under the terms and
conditions set forth in this Agreement (as modified, clarified or limited in
this Article 13): (a) Seller agrees to assign and convey to Buyer at Closing,
all of Seller's right, title and interests in and to the Amoco Exchange
Properties (as hereinafter defined), effective as of the Effective Time, and
Buyer agrees to accept the Amoco Exchange Properties at Closing, effective as
of the Effective Time, and (b) Buyer agrees to assign and convey to Seller at
Closing, all of Buyer's right, title and interests in and to the HS Exchange
Properties (as hereinafter defined), effective as of the Effective Time, and
Seller agrees to accept the HS Exchange Properties at Closing, effective as of
the Effective Time. Seller and Buyer agree that the aggregate fair market
values of the real property portions of the HS Exchange Properties and Amoco
Exchange Properties are equal, and that the aggregate fair market values of the
personal property portions of the HS Exchange Properties and Amoco Exchange
Properties are equal.
13.2 HS Exchange Properties. For the purpose of this Article 13, the
term "HS Exchange Properties" shall mean Buyer's ownership interests in the
properties (real, personal or mixed) and appurtenant rights (contractual or
otherwise) as follows:
13.2.1 All of Buyer's right, title and interests in, to and
under, or derived from, the oil and gas leasehold interests, royalty
interests, overriding royalty interests, mineral interests, production
payments, net profits interests and surface interests which are
attributable to the interests described in Exhibit "B" and all rights
(contractual or otherwise) that are appurtenant to such interests;
13.2.2 All of Buyer's right, title and interests in, to and
under, or derived from, all of the presently existing and valid
unitization, communitization and pooling declarations, orders, and
agreements (including all units formed by voluntary agreement and
those formed under the rules, regulations, orders or other official
acts of any governmental entity or tribal authority having appropriate
jurisdiction) to the extent they relate to any of the interests which
are described in Exhibit "B", or the production of oil, gas or other
hydrocarbon and non-hydrocarbon substances attributable thereto;
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13.2.3 All of Buyer's right, title and interests in, to and
under, or derived from, all of the presently existing and valid oil
sales contracts, casinghead gas sales contracts, gas sales contracts,
processing contracts, gathering contracts, transportation contracts,
easements, rights-of-way, servitudes, surface leases, subsurface
leases, permits, licenses, farm-out contracts, farm-in contracts,
balancing contracts, suspense funds, operating agreements, areas of
mutual interest, and other contracts, agreements and instruments to
the extent they relate to any of the interests which are described in
Exhibit "B", or the production of oil, gas or other hydrocarbon and
non-hydrocarbon substances attributable thereto; and
13.2.4 All of Buyer's right, title and interests in, to and
under, or derived from, the personal property, improvements, fixtures,
wells (whether producing, plugged and abandoned, shut-in, injection,
disposal or water supply), tanks, boilers, buildings, machinery,
equipment, pipelines, utility lines, power lines, telephone lines,
roads and other appurtenances, to the extent the same are situated
upon and used or held for use by Seller in connection with the
ownership, operation, development, maintenance or repair of the
interests which are described in Exhibit "B", or the production of
oil, gas or other hydrocarbon and non-hydrocarbon substances
attributable thereto;
13.2.5 All of Buyer's right, title and interests in, to and
under, or derived from, the seismic, geologic or geophysical
information and data to the extent the same relates to any of the
interests which are described in Exhibit "B", or the production of
oil, gas or hydrocarbon and non-hydrocarbon substances attributable
thereto; and
BUYER EXCEPTS, RESERVES AND RETAINS, unto itself, its Affiliates,
successors and assigns from the HS Exchange Properties the following properties
(real, personal or mixed) and appurtenant rights (contractual or otherwise):
(a) Any and all seismic, geologic or geophysical information and data
that are: (i) interpretive in nature, (ii) covered by an obligation of
non-disclosure, (iii) covered by an obligation of confidentiality, (iv) covered
by a prohibition against transfer (provided Buyer shall use its reasonable
efforts to remove any restriction or transferring the information to Buyer),
(v) covers (in whole or in part) retained assets of Buyer;
(b) Any and all pipelines, equipment, facilities, permits, contracts,
agreements, easements, rights-of-way, surface leases and subsurface leases owned
by an Affiliate of Buyer;
(c) Any and all records which consist of previous offers and economic
analyses associated with the purchase, sale or exchange of the HS Exchange
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Properties, proprietary information, interpretive information, reserve data,
internal communications, personnel information, tax information, information
covered by a non-disclosure obligation and information covered by a legal
privilege; and
(d) A concurrent interest in, to and under, or derived from, the
contracts, agreements, instruments, permits, easements, rights-of-way,
servitudes, surface leases, subsurface leases and any other rights (contractual
or otherwise) to the extent that they relate to or affect the interests not
conveyed herein.
13.3 Amoco Exchange Properties. For the purpose of this Article 13,
the term "Amoco Exchange Properties" shall mean Seller's ownership interests in
the properties (real, personal and mixed) and appurtenant rights (contractual
or otherwise) as follows:
13.3.1 All of Seller's right, title and interests in, to and
under, or derived from, the oil and gas leasehold interests, royalty
interests, overriding royalty interests, mineral interests, production
payments, net profits interests and surface interests which are
attributable to the interests which will be identified in accordance
with Article 13.4 below, and all rights (contractual or otherwise)
that are appurtenant to such interests;
13.3.2 All of Seller's right, title and interests in, to and
under, or derived from, all of the presently existing and valid
unitization, communitization and pooling declarations, orders, and
agreements (including all units formed by voluntary agreement and
those formed under the rules, regulations, orders or other official
acts of any governmental entity or tribal authority having appropriate
jurisdiction) to the extent they relate to any of the interests which
will be identified in accordance with Article 13.4 below, or the
production of oil, gas or other hydrocarbon and non-hydrocarbon
substances attributable thereto;
13.3.3 All of Seller's right, title and interests in, to and
under, or derived from, all of the presently existing and valid oil
sales contracts, casinghead gas sales contracts, gas sales contracts,
processing contracts, gathering contracts, transportation contracts,
easements, rights-of-way, servitudes, surface leases, subsurface
leases, permits, licenses, farm-out contracts, farm-in contracts,
balancing contracts, suspense funds, operating agreements, areas of
mutual interest, and other contracts, agreements and instruments to
the extent they relate to any of the interests which will be
identified in accordance with Article 13.4 below, or the production of
oil, gas or other hydrocarbon and non-hydrocarbon substances
attributable thereto;
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13.3.4 All of Seller's right, title and interests in, to and
under, or derived from, the personal property, improvements, fixtures,
wells (whether producing, plugged and abandoned, shut-in, injection,
disposal or water supply), tanks, boilers, buildings, machinery,
equipment, pipelines, utility lines, power lines, telephone lines,
roads and other appurtenances, to the extent the same are situated
upon and used or held for use by Seller in connection with the
ownership, operation, development, maintenance or repair of the
interests which will be identified in accordance with Article 13.4
below, or the production of oil, gas or other hydrocarbon and
non-hydrocarbon substances attributable thereto;
13.3.5 All of Seller's right, title and interests in, to and
under, or derived from, the seismic, geologic or geophysical
information and data to the extent the same relates to any of the
interests which will be identified in accordance with Article 13.4
below, or the production of oil, gas or hydrocarbon and
non-hydrocarbon substances attributable thereto; and
SELLER EXCEPTS, RESERVES AND RETAINS, unto itself, its Affiliates,
successors and assigns from the Amoco Exchange Properties the following
properties (real, personal or mixed) and appurtenant rights (contractual or
otherwise):
(a) Any and all seismic, geologic or geophysical information and data
that are: (i) interpretive in nature, (ii) covered by an obligation of
non-disclosure, (iii) covered by an obligation of confidentiality, (iv) covered
by a prohibition against transfer (provided Seller shall use its reasonable
efforts to remove any restriction on transferring the information to Buyer) (v)
covers (in whole or in part) retained assets of Seller;
(b) Any and all pipelines, equipment, facilities, permits, contracts,
agreements, easements, rights-of-way, surface leases and subsurface leases
owned by an Affiliate of Seller, including without limitation, the properties
(real, personal and mixed) and appurtenant rights (contractual or otherwise)
described in Exhibit "F";
(c) Any and all records which consist of previous offers and economic
analyses associated with the purchase, sale or exchange of the Properties,
proprietary information, interpretive information, reserve data, internal
communications, personnel information, tax information (except any information
concerning Section 29 Credits relating to the Tax Partnerships set forth on
Exhibit "E" necessary to conduct due diligence or effectuate transaction),
information covered by a non-disclosure obligation and information covered by a
legal privilege;
(d) The properties (real, personal and mixed) and appurtenant rights
(contractual or otherwise) described in Exhibit "F"; and
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(e) A concurrent interest in, to and under, or derived from, the
contracts, agreements, instruments, permits, easements, rights-of-way,
servitudes, surface leases, subsurface leases and any other rights (contractual
or otherwise) to the extent that they relate to or affect the interests not
conveyed herein.
13.4 Identification of Amoco Exchange Properties. Five (5) Days prior
to Closing, Seller shall provide Buyer with a list of properties (which shall
be a subset of Exhibit "A") with an allocated defect value of at least
Twenty-Three Million and No\100 Dollars ($23,000,000) ("Amoco Defect Value"),
which list of properties will comprise the Amoco Exchange Properties.
13.5 HS Exchange Properties Allocation. Within seven (7) Days after
execution of this Agreement, Seller shall provide Buyer with an allocated value
for the HS Exchange Properties which shall be used for administration of this
Agreement, including without limitation, Articles 3.4, 4.2, 5.2 and 7.2. Buyer
shall have the right to review and approve the allocated value, which approval
shall not be unreasonably withheld.
13.6 HS Contracts. Within ten (10) Days after execution of this
Agreement, Buyer shall provide Seller with a list of material marketing and
non-standard contracts and agreements encumbering the HS Exchange Properties.
Buyer additionally represents and warrants to Seller that there are no
undisclosed contracts or agreements encumbering the HS Exchange Properties
which contain provisions which are: (a) non-standard from an oil and gas
operations perspective, and (b) would in aggregate have a material adverse
impact on the value of one or more of the HS Exchange Properties. For the
purpose of this Article 13.6, "material adverse impact" shall mean an impact
greater than Fifty Thousand and No\100 Dollars ($50,000).
13.7 Gas Imbalances. For evaluation purposes it has been deemed that
the gas imbalance position with respect to the HS Exchange Properties is zero.
Within one hundred twenty (120) Days after Closing, Buyer shall deliver to
Seller information which sets forth the actual gas imbalance information as
then known by Buyer. If it is determined (prior to finalization of the Final
Accounting Settlement) that a gas imbalance exists with respect to any one or
more of the HS Exchange Properties, the parties shall settle as part of the
Final Accounting Settlement any and all gas imbalance overages or underages net
to Buyer's interest using a deemed gas price of One Dollar per Mcf ($1.00/Mcf);
provided however, there shall be no adjustment if the aggregate value of the
gas imbalance does not exceed Fifty Thousand and No\100 Dollars ($50,000) .
13.8 Partnerships. Buyer represents and warrants to Seller that, either
(i) no partnerships exist or are encumbering the HS Exchange Properties, or
(ii) as to any partnerships that exist, Buyer has the right to and shall convey
the HS Exchange Properties out of the partnerships.
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13.9 Litigation. Except as disclosed prior to Closing, there is no
action, suit or proceeding pending or to the best knowledge of Buyer's Senior
Management Team ("Management"), threatened against Buyer which would have a
material adverse effect on the value or ownership or operation of the HS
Exchange Properties or that would prevent the consummation of the transaction
contemplated by this Agreement, nor has there been any occurrence that would be
likely to give rise to a Claim that would have a material adverse effect on the
value or ownership or operation of the HS Exchange Properties or that could
give rise to a material claim against Buyer for which Seller would be liable
under Article 8.2 or 8.3. Buyer shall retain responsibility for the claims,
disputes and litigation matters or that are disclosed prior to Closing to the
extent the underlying Claims relate to the period of time prior to Closing.
Seller shall be solely responsible for such matters to the extent the
underlying Claims relate to: (a) the HS Exchange Properties, and (b) the period
of time subsequent to Closing. Buyer shall keep Seller informed with respect to
and shall consult with and allow reasonable participation of Seller in
litigation for which Buyer retains responsibility and that affect the HS
Exchange Properties with respect to future ownership and operation of the HS
Exchange Properties.
13.10 HS Exchange Properties Transition. At Closing, Buyer and Seller
shall execute the HS Exchange Properties Transition Agreement. For the purpose
of this Agreement, "HS Exchange Properties Transition Agreement" means a
document in the form of Exhibit "P-1".
13.11 Title Defects. Notwithstanding anything contained in this
Agreement to the contrary, Article 1.4 shall not apply to the HS Exchange
Properties. In determining whether an alleged title defect exists with respect
to the HS Exchange Properties, the term "Alleged Title Defect " shall mean a
Title Defect which is asserted by Seller in accordance with Article 4.2, and
the costs associated with curing such individual Alleged Title Defect exceeds
TWENTY-FIVE THOUSAND and No/100 United States Dollars (US $25,000) net to
Buyer's interests. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE
CONTRARY, SELLER SHALL NOT BE ENTITLED TO RAISE AN ALLEGED TITLE DEFECT UNLESS
THE AGGREGATE COST ASSOCIATED WITH CURING ALL SUCH ALLEGED TITLE DEFECT(S)
EXCEEDS THREE PERCENT (3%) OF THE AMOCO DEFECT VALUE (IT BEING ACKNOWLEDGED AND
AGREED THAT SELLER SHALL BE SOLELY RESPONSIBLE FOR ANY AND ALL ALLEGED TITLE
DEFECT(S) UP TO THREE PERCENT (3%) OF THE AMOCO DEFECT VALUE).
13.12 Adverse Conditions. Notwithstanding anything contained in this
Agreement to the contrary, Article 1.3 shall not apply to the HS Exchange
Properties. With respect to the HS Exchange Properties, the term "Alleged
Adverse Condition" shall mean an environmental or physical condition asserted
by Seller in accordance with Article 5.2 that, as of Closing, is not in
compliance with the then existing Laws, and the costs associated with
remediating such individual Alleged Adverse Condition exceeds FIFTY THOUSAND
and No/100
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United States Dollars (US $50,000) net to Buyer's interests. NOTWITHSTANDING
ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, SELLER SHALL NOT BE
ENTITLED TO RAISE AN ALLEGED ADVERSE CONDITION UNLESS THE AGGREGATE COST
ASSOCIATED WITH REMEDIATING ALL SUCH ALLEGED ADVERSE CONDITION(S) EXCEEDS THREE
PERCENT (3%) OF THE AMOCO DEFECT VALUE (IT BEING ACKNOWLEDGED AND AGREED THAT
SELLER SHALL BE SOLELY RESPONSIBLE FOR ANY AND ALL ALLEGED ADVERSE CONDITION(S)
UP TO THREE PERCENT (3%) OF THE AMOCO DEFECT VALUE).
13.13 Amoco Defect Value. With respect to the HS Exchange Properties,
wherever the term "Unadjusted Purchase Price" is used in this Agreement, the
words "Amoco Defect Value" shall be inserted in lieu thereof, except to the
extent the term is used in non-applicable provisions (as set forth in Article
13.17).
13.14 Tax Gross-Up. If the Alleged Title Defect value associated with
Article 13.11 exceeds twenty-five percent (25%) of the Amoco Defect Value, then
the amount to which Seller is entitled associated with such defects shall be
multiplied by 1.56 to compensate Seller for the loss in tax efficiency.
13.15 Preferential Rights. In recognition of the tax efficiencies
associated with the exchange of properties contemplated herein, the parties
agree that Buyer shall multiply the value used to provide any and all
preferential right to purchase notices by 1.56 to compensate Seller for the
loss in tax efficiency. Buyer shall pay to Seller at Closing an amount equal to
the Amoco Defect Value multiplied by 1.56 for any and all properties wherein a
valid election to purchase a property is received by Buyer from a Third Party
under the terms of the applicable preferential purchase right provisions.
13.16 Payout. To the extent a payout affects the Working Interests or
Net Revenue Interests reflected on Exhibit "B", such matter shall be treated as
an Alleged Title Defect, with the thresholds and deductibles as set for in
13.11.
13.17 Non-Applicable Provisions. Articles 3.1, 3.2, 3.3, 10.1, 10.2,
10.3, 11.1, 11.2, 11.3, 12.3, 12.4, 12.5, 12.7.3, all of Article 14, 17.2.11
and 17.3.10 shall not apply to the administration of this Agreement with
respect to the HS Exchange Properties.
13.18 Release. Seller herein agrees to release Buyer Group from and
against any and all claims associated with Seller's inability, for any reason
whatsoever, to obtain like-kind exchange tax treatment under Section 1031 of
the Internal Revenue Code of 1986, as amended, associated with the exchange
contemplated herein. Buyer herein agrees to release Seller Group from and
against any and all claims associated with Buyer's inability, for any reason
whatsoever, to obtain like-kind exchange tax treatment under Section 1031 of
the Internal Revenue Code of 1986, as amended, associated with the exchange
contemplated herein.
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13.19 Survival of Representations and Warranties. Notwithstanding
anything contained in this Agreement to the contrary, the representations and
warranties contained in this Article 13 shall terminate one (1) year after
Closing.
13.20 Administration of Agreement. Except where expressly modified (or
indicated to be not applicable in accordance with Article 13.17) in this
Article 13, the terms and conditions set forth in this Agreement shall apply to
the exchange of properties contemplated herein. In administering this Agreement
(excluding this Article 13 which shall apply as drafted) with respect to the HS
Exchange Properties: (a) HS Resources, Inc. shall, to the extent applicable, be
deemed to be the Seller and Amoco Production Company shall be deemed to be the
Buyer, and (b) HS Exchange Properties shall, to the extent applicable, be
deemed to be Properties.
ARTICLE 14. PERSONNEL MATTERS
14.1 Employee Lists. Prior to Closing, Seller will make available to
Buyer a list of employees who are directly engaged in the operation,
maintenance, administration, measurement, automation and similar functions for
the Properties subject to this Agreement, who are available for immediate
employment by Buyer commencing at the termination of the Transition Agreement
(for purposes of this Article 13 only, the first day of the month following the
month in which Buyer notifies Seller of termination of the Transition Agreement
or March 1, 1998, whichever is earlier, shall be referred to as the "Transition
Date"). In addition, prior to Closing, Seller will make available to Buyer a
separate list of employees who are engaged in management, analysis,
engineering, supervision, accounting and similar functions who are available
for immediate employment by Buyer commencing on or after the Transition Date.
For the purposes of this Agreement, the above-referenced employees of Seller
shall collectively be referred to as "Available Personnel" and such Available
Personnel that accept an offer of employment from Buyer in accordance with the
provisions of Section 13.2 shall be collectively referred to as "Personnel".
Buyer shall not solicit employment of any employees of Seller without obtaining
the advance written permission of Seller, except that Buyer may solicit
employees of Seller who did not work in Seller's business groups in Denver or
Fort Lupton directly associated with operations on the Properties. This
restriction shall remain in effect for twelve (12) months after Closing.
14.2 Offers of Employment. Buyer may make offers of employment
effective as of the Transition Date to any one or more of the Available
Personnel. Any offers of employment made by Buyer to Available Personnel shall
be for similar salaries or wages, and shall include the same employee benefit
plans and policies provided employees of Buyer performing similar duties and
responsibilities, consistent with the other provisions of this Article. To the
extent any Available Personnel are on military, family, or medical leave on the
Transition Date, Buyer shall give such Available Personnel consideration for
employment in the same manner as it does for other employees; provided
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however, Buyer may condition such offer upon the employee's return from leave
within one (1) year of the Transition Date and, in the case of medical leave,
that such return to work is approved by Buyer's physician.
14.3 Savings Plan. Buyer shall allow Personnel to participate in
Buyer's savings plan or other similar plans established pursuant to Section
401(k) of the Internal Revenue Code ("Buyer Savings Plan"). Buyer shall
recommend to its Board of Directors that effective January 1, 1998, the board
approve an amendment to Buyer Savings Plan to eliminate the one year waiting
period for Personnel and that Personnel thereby be allowed to immediately
participate fully in Buyer Savings Plan. Notwithstanding whether the waiting
period is eliminated by Buyer, Buyer shall credit Personnel's prior service
with Amoco and its Affiliates for all other purposes under Buyer Savings Plan.
Buyer shall permit Personnel at their option to transfer their Amoco Savings
Plan accounts to Buyer Savings Plan pursuant to a trust to trust transfer
within ninety (90) days of the Transition Date, and to transfer any outstanding
loan balances to Buyer Savings Plan under terms and conditions established by
Buyer's plan.
14.4 Other Employee Benefits. Buyer shall recognize the prior service
with Seller and its Affiliates of Personnel for all purposes, including,
without limitation, eligibility, vesting, and benefit determination and
accrual, in connection with Buyer's policies covering vacations, bonuses,
sickness and disability leave and all other employee benefits and policies, but
excluding Buyer's profit sharing plan. Except as otherwise provided in this
Agreement, Personnel and their eligible dependents who are enrolled in medical,
dental, life insurance and long-term disability plans available to such
Personnel as a result of their employment by Seller immediately prior to the
Transition Date shall be eligible to enroll in any plan or plans established by
Buyer which provide similar benefits to its employees as of the Transition
Date. If Personnel enroll in such plans, no physical examination or other proof
of insurability shall be required. Also, all coverage exclusions and
limitations relating to waiting periods or pre-existing conditions with respect
to such personnel or their dependents shall be waived. Buyer shall be
responsible for perpetuating the group health plan continuation coverage
pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended, and
Sections 601 through 609 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") for all Personnel and their eligible dependents and
shall cover such Personnel under Buyer's own group health plan to accommodate
this requirement. Buyer shall indemnify and hold Seller and its Affiliates
harmless from and against any and all liability Seller or its Affiliates incur
after Closing under the provisions of Section 4980B or the Code or Sections 601
through 609 of ERISA with respect to any Personnel, or dependent or spouse of
such Personnel, who had or has a "qualifying event" (within the meaning of
Section 4980B(f)(3) of the Code) on or after the Transition Date. Any expenses
incurred prior to and including the Transition Date which are used to satisfy
deductibles or co-pay amounts for 1997 under the welfare benefit plans (as
defined under Section 3(1) of ERISA) that Personnel or their dependents
participated in as a result of their employment with Seller
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immediately prior to the Transition Date may be used to satisfy any deductibles
and co-pay amounts for Buyer's current plan year under the corresponding plans
of Buyer. Seller shall provide necessary information to Buyer pertaining to
deductibles and co-pays incurred by Personnel prior to the Transition Date.
Seller shall also provide information to Buyer regarding the amount of prior
service and the credited service date with Seller and its Affiliates of any
Personnel.
14.5 Accrued and Unused Vacation. Between the Transition Date and the
end of the calendar year in which transition occurs, Buyer shall credit
Personnel's prior service with Amoco and its Affiliates to determine their
vacation eligibility under Buyer's vacation policy and allow Personnel to take
off without pay the same number of hours of unused vacation they would have
been eligible for with Seller but only up to the maximum allowed by Buyer's
vacation policy.
14.6 Severance. Buyer acknowledges that Personnel would have been
eligible to receive the severance benefits described in the current 1997 Amoco
Corporation and Participating Affiliates Severance Benefits Plan (the "Amoco
Severance Plan"), had they not been offered comparable positions with Buyer.
Therefore, Buyer agrees to provide severance benefits that are comparable to or
better than the severance benefits described in the Amoco Severance Plan,
including, without limitation, a severance allowance, medical benefits, life
insurance, and educational assistance, to Personnel whose employment is
terminated by Buyer or who are offered positions with Buyer that require a
geographical relocation or who suffer wage cuts effected by Buyer during the
period of twelve (12) months after the Closing Date under circumstances that
would make such Personnel eligible for the severance benefits described in the
Amoco Severance Plan. During this same twelve (12) month period, Buyer also
agrees to provide an additional sixty (60) Days on the payroll after such
Personnel are notified of eligibility for severance benefits, which is
consistent with the past practice and policy of Seller, and to provide up to
Five Thousand Dollars ($5,000) in outplacement benefits to each of such
Personnel, with the level of outplacement benefits actually provided being
commensurate with the level of benefits provided by Seller. For purposes of
calculating the severance allowance described in the Amoco Severance Plan,
"credited service" shall include service with Seller and/or its Affiliates in
addition to service with Buyer and/or its Affiliates for Personnel. In
addition, in the event that Buyer terminates any Personnel within twelve (12)
months of the Closing Date in such a manner that triggers further severance
obligations of Buyer for such Personnel under the Amoco Severance Plan or under
any severance plan of Buyer and said personnel who received severance benefits
from Seller or from Buyer on behalf of Seller at the time of their termination
from Seller, Buyer may offset the amount of any benefits paid by Seller from
the severance benefits set forth in the Amoco Severance Plan. Buyer also agrees
to include Seller and its Affiliates as third party beneficiaries in any
release executed by Personnel in order to receive the severance benefits
described in the Amoco Severance Plan. Lastly, Buyer agrees not to require
Personnel to execute a release in order to receive the sixty
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(60) Days on the payroll and the outplacement benefits described above. Buyer
shall reimburse Seller for all severance obligations of Seller incurred up to a
maximum amount of $250,000, for Personnel whose employment by Buyer triggers a
severance obligation for Seller under paragraphs (5) or (7) of the "Involuntary
terminations" provisions of the Amoco Severance Plan because the base salary or
base hourly pay rate for the position accepted by that person is less than 80%
of that person's final base salary or base hourly pay rate while employed at
Seller. Any severance amounts regarding Personnel under the Amoco Severance
Plan triggered as a result of employment of such Personnel by Buyer in excess
of $250,000 shall be the obligation of Seller.
14.7 WARN Act. Buyer and Seller represent and warrant to each other
that no major employment losses are anticipated as a consequence of the
transactions contemplated by this Agreement that might trigger obligations
under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Section
2101 et seq., or under any similar provision of any federal, state, regional,
foreign, or local law, rule, or regulation (referred to collectively as "WARN
Obligations"). Moreover, to the extent that any WARN Obligations might arise as
a consequence of the transactions contemplated by this Agreement, it is agreed
that Seller shall be responsible for any WARN Obligations arising as a result
of any employment losses occurring prior to or upon the Transition Date, and
Buyer shall be responsible for any WARN Obligations arising as a result of any
employment losses occurring after the Transition Date. Furthermore, for the
first ninety (90) Days following the Transition Date, Buyer shall not engage in
any mass layoff, plant closing, or other action that might trigger obligations
of Seller under the WARN Act or under any similar provision of any federal,
state, regional, foreign, or local law, rule, or regulation.
ARTICLE 15. HSR FILINGS
15.1 HSR Filings. If compliance with the HSR Act is required in
connection with the transaction contemplated under this Agreement, as promptly
as practicable and in any event not more than fifteen (15) Business Days
following the date on which the parties have executed this Agreement, both
parties will file with the Federal Trade Commission and the Department of
Justice, as applicable, the notification and report forms required for the
transactions contemplated herein and will as promptly as practicable furnish
any supplemental information which may be reasonably requested in connection
therewith. Each party shall request expedited treatment of such filing. If
failure by either party to obtain timely authorization from the Federal Trade
Commission or the Department of Justice results in the inability of the parties
to Close on the Closing Date, the time for Closing shall automatically be
extended until such date as Closing can occur in compliance with the HSR Act.
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ARTICLE 16. CONDITIONS PRECEDENT TO CLOSING
16.1 Conditions Precedent to Seller's Obligation to Close. Seller
shall be obligated to consummate the sale of the Properties as contemplated by
this Agreement on the Closing Date, provided the following conditions precedent
have been satisfied or have been waived by Seller:
16.1.1 All representations and warranties of Buyer contained
in this Agreement shall be true and correct in all material respects
at and as of Closing as though such representations and warranties
were made at and as of such time; and
16.1.2 Buyer shall have complied in all material respects
with all obligations and conditions contained in this Agreement to be
performed or complied with by Buyer on or prior to Closing.
16.2 Conditions Precedent to Buyer's Obligation to Close. Buyer shall
be obligated to consummate the purchase of the Properties as contemplated by
this Agreement on the Closing Date, provided the following conditions precedent
have been satisfied or have been waived by Buyer:
16.2.1 All representations and warranties of Seller contained
in this Agreement shall be true and correct in all material respects
at and as of Closing as though such representations and warranties
were made at and as of such time; and
16.2.2 Seller shall have complied in all material respects
with all obligations and conditions contained in this Agreement to be
performed or complied with by Seller on or prior to Closing.
16.3 Conditions Precedent to Obligation of Each Party to Close. The
parties shall be obligated to consummate the sale and purchase of the
Properties as contemplated in this Agreement on the Closing Date, provided the
following conditions precedent have been satisfied or have been waived by the
applicable party:
16.3.1 No suit, action or other proceedings shall be pending
before any court or governmental entity in which it is sought by a
person or entity other than the parties hereto or any of their
Affiliates, officers, directors or employees to restrain, enjoin or
otherwise prohibit the consummation of the transactions contemplated
by this Agreement, or to obtain substantial damages in connection with
the transaction contemplated herein, nor shall there be any
investigation by a governmental entity pending which might result in
any such suit, action or other proceedings seeking to restrain, enjoin
or otherwise prohibit the consummation of the transaction contemplated
by this Agreement;
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16.3.2 If applicable, consummation of the transaction
contemplated herein shall not have been prevented from occurring by
(and the required waiting period, if any, shall have expired under)
the HSR Act and the rules and regulations of the Federal Trade
Commission or the Department of Justice;
16.3.3 With respect to Properties which have not been
excluded from this Agreement because of exercise of a preferential
purchase right, if any, the preferential purchase rights applicable to
such Properties shall have been waived, or the time to elect under
such preferential purchase rights shall have elapsed, prior to
Closing.
ARTICLE 17. THE CLOSING
17.1 Closing. Five (5) Business Days prior to the Closing Date, Seller
shall provide Buyer with a Closing statement setting forth the Purchase Price
adjusted in accordance with the terms of this Agreement. Seller shall
additionally provide Buyer with wiring instructions designating the account or
accounts to which the Closing funds are to be delivered in accordance with
Article 17.3.1. Closing shall be held in Seller's office at the 4th Floor, 550
WestLake Park Boulevard, Houston, Texas 77079, or such other location as
mutually agreed in writing by Seller and Buyer.
17.2 Obligations of Seller at Closing. At Closing, Seller shall
deliver to Buyer, unless waived by Buyer, the following:
17.2.1 A document conveying all of Seller's right, title and
interests in and to the Properties substantially in the form of the
Assignment and Bill of Sale attached hereto as Exhibit "I". The
Assignment and Bill of Sale shall be executed and acknowledged in four
(4) multiple originals or such greater number as agreed between the
parties;
17.2.2 A document conveying all of Seller's right, title and
interests in and to surface interests which are included in the
Properties substantially in the form of the Surface Deed attached
hereto as Exhibit "J". The Surface Deed shall be executed and
acknowledged in four (4) multiple originals or such greater number as
agreed between the parties;
17.2.3 A document conveying Seller's interest in its Ft.
Lupton office building, furniture, fixtures, equipment, and inventory,
ground lease and related property rights, except those assets excluded
on Exhibit "F" attached hereto.
17.2.4 A document conveying all of Seller's right, title and
interests in and to the mineral interests which are included in the
Properties substantially in the form of the Mineral Deed attached
hereto as
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Exhibit "K". The Mineral Deed shall be executed and acknowledged in
four (4) multiple originals or such greater number as agreed between
the parties;
17.2.5 Executed and acknowledged assignments of all of
Seller's right, title and interest in and to federal, state or tribal
interests included in the Properties on approved forms for such
purpose;
17.2.6 A Certificate executed by an Attorney-in-Fact of
Seller certifying as to the matters specified in Articles 16.2.1 and
16.2.2 above substantially in the form of Exhibit "L";
17.2.7 Letters-in-Lieu of division orders or transfer orders
executed by an Attorney-in-Fact of Seller substantially in the form
of Exhibit "M";
17.2.8 An Opinion of Counsel executed by an attorney for
Seller substantially in the form of Exhibit "N";
17.2.9 A Non-Foreign Affidavit executed by an Attorney-in
-Fact of Seller substantially in the form of Exhibit "O";
17.2.10 Transition Agreements executed by an Attorney-in-Fact
of Seller substantially in the form of Exhibit "P" and Exhibit "P-1";
17.2.11 A License Agreement - SAMS substantially in the form
of Exhibit "Q", and a License Agreement - Seismic in a mutually agreed
form, as provided for in Article 12.4, executed by an Attorney-in-Fact
of Seller.
17.2.12 Evidence that all consents and approvals prerequisite
for the sale and conveyance of the Properties (except for consents and
approvals of governmental entities or tribal authorities customarily
obtained subsequent to the transfer of title) have been obtained, as
well as evidence of waiver or lapse of any unexercised preferential
purchase rights applicable to the Properties; and
17.2.13 Such other instruments as necessary to carry out
Seller's obligations under this Agreement.
17.3 Obligations of Buyer at Closing. At Closing, Buyer shall deliver
to Seller, unless waived by Seller, the following:
17.3.1 The adjusted Purchase Price, less Deposit plus
Computed Interest, if applicable, calculated in accordance with
Article 3 by wire transfer.
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17.3.2 The Assignment and Bill of Sale, executed and properly
acknowledged, referred to in Article 17.2.1;
17.3.3 The Surface Deed, executed and properly acknowledged,
referred to in Article 17.2.2;
17.3.4 The Mineral Deed, executed and properly acknowledged,
referred to in Article 17.2.3;
17.3.5 The federal, state and tribal assignments, executed and
properly acknowledged, referred to in Article 17.2.4;
17.3.6 A Certificate executed by an authorized officer or
Attorney-in-Fact of Buyer certifying as to the matters specified in
Articles 16.1.1 and 16.1.2 substantially in the form of Exhibit "L";
17.3.7 Letters-in-Lieu of division orders or transfer orders
executed by an authorized officer or Attorney-in-Fact of Buyer
substantially in the form of Exhibit "M";
17.3.8 An Opinion of Counsel executed by an attorney for Buyer
substantially in the form of Exhibit "N";
17.3.9 Transition Agreement executed by an authorized officer
or Attorney-in-Fact of Buyer substantially in the form of
Exhibit "P-1";
17.3.10 A License Agreement - SAMS substantially in the form
of Exhibit "Q", and a License Agreement - Seismic in a mutually agreed
form, as provided for in Article 12.4, executed by an authorized
officer or Attorney-in-Fact of Buyer;
17.3.11 Evidence of compliance with all governmental and
tribal requirements, if any, for the posting of plugging or other
applicable bonds relating to the ownership or operation of the
Properties; and
17.3.12 Such other instruments as necessary to carry out
Buyer's obligations under this Agreement.
ARTICLE 18. TERMINATION
18.1 Grounds for Termination. This Agreement may be terminated at
any time prior to Closing:
18.1.1 By the mutual written agreement of Seller and Buyer;
18.1.2 By either Seller or Buyer if the consummation of the
transactions contemplated herein would violate any nonappealable final
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<PAGE> 57
order, decree or judgment of any court or governmental entity having
appropriate jurisdiction enjoining or awarding substantial damages in
connection with the consummation of the transactions contemplated
herein;
18.1.3 Notwithstanding anything contained in this Agreement
to the contrary, either party may terminate this Agreement if Closing
shall not have occurred by December 31, 1997.
18.2 Effect of Termination. If this Agreement is terminated in
accordance with Article 18.1, such termination shall be without liability to
any party, except return of the Deposit (plus Computed Interest if applicable
on the Deposit from the date of receipt by Seller until termination of this
Agreement) and performance of the obligations provided in Articles 18.3, 18.4,
18.5, 19.1, 20.3, 20.11, 20.13, 20.14, 20.15 and 20.17 (which provisions shall
survive termination of this Agreement). If this Agreement is terminated as a
result of Buyer's failure or refusal to perform an obligation hereunder
(including without limitation Closing on the Closing Date), Seller shall be
entitled to retain the Deposit as liquidated damages (and not as a penalty) to
reimburse Seller for its out-of-pocket fees and expenses incurred in connection
with the transactions contemplated by this Agreement. In such event, if Seller
believes reasonably and in good faith that Buyer breached this Agreement in
failing to close, Seller may immediately proceed after termination to offer and
sell the Properties to another Purchaser, and Buyer shall release and waive all
rights and remedies it may have against Seller, its employees, agents,
officers, and affiliates, including but not limited to, lien or other equitable
remedies, and Buyer expressly agrees that it will not interfere with or enjoin
or seek damages with respect to any potential sale of the Properties to a third
party after December 31, 1997.
18.3 Dispute over Right to Terminate. If there is a dispute between
the parties over either party's right to terminate this Agreement under Article
18.1 or otherwise, Closing shall not occur, as scheduled. The party which
disputes the other party's right to terminate the Agreement may initiate
binding arbitration proceedings in accordance with Article 19.1 within thirty
(30) Days of the date on which Closing was scheduled to occur and, if
arbitration is so initiated, the dispute will be resolved through such binding
arbitration proceeding. If the party which disputes the termination right does
not initiate arbitration to resolve the dispute within the time period
specified hereinabove, such party shall be deemed to have waived for all
purposes its right to object to or dispute such termination.
18.4 Return of Documents. If this Agreement is terminated prior to
Closing, Buyer shall return Seller all books, records, maps, files, papers and
other property in Buyer's possession relating to the transaction contemplated
by this Agreement.
18.5 Confidentiality. Notwithstanding the termination of this
Agreement or any other provision of this Agreement to the contrary, the terms
of the
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Confidentiality Agreement dated the 29th day of July, 1997, by and between
Seller and Buyer ("Confidentiality Agreement"), shall remain in full force and
effect. If Closing of the transaction contemplated herein occurs, the
Confidentiality Agreement shall terminate (which termination shall be effective
as of the Closing).
ARTICLE 19. ARBITRATION
19.1 Arbitration. UNLESS EXPRESSLY PROVIDED OTHERWISE IN THIS
AGREEMENT, ANY AND ALL DISPUTES ARISING UNDER THE TERMS OF THIS AGREEMENT
("ARBITRABLE DISPUTE") SHALL BE REFERRED TO AND RESOLVED THROUGH THE USE OF
BINDING ARBITRATION USING THREE (3) ARBITRATORS, IN ACCORDANCE WITH THE
COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION, AND THE
FEDERAL ARBITRATION ACT (TITLE 9 OF THE UNITED STATES CODE). IF THERE IS ANY
INCONSISTENCY BETWEEN THIS ARTICLE AND ANY STATUTE OR RULES, THE TERMS OF THIS
ARTICLE SHALL CONTROL THE RIGHTS AND OBLIGATIONS OF THE PARTIES. ARBITRATION
SHALL BE INITIATED WITHIN THE APPLICABLE TIME LIMITS SET FORTH IN THIS
AGREEMENT AND NOT THEREAFTER OR IF NO TIME LIMIT IS GIVEN, WITHIN THE TIME
PERIOD ALLOWED BY THE APPLICABLE STATUTE OF LIMITATIONS. ARBITRATION SHALL BE
INITIATED BY ONE (1) PARTY ("CLAIMANT") SERVING WRITTEN NOTICE ON THE OTHER
PARTY ("RESPONDENT") THAT THE CLAIMANT ELECTS TO REFER THE ARBITRABLE DISPUTE
TO BINDING ARBITRATION, AND THAT THE CLAIMANT HAS APPOINTED AN ARBITRATOR, WHO
SHALL BE IDENTIFIED IN SUCH NOTICE. THE RESPONDENT SHALL RESPOND TO THE
CLAIMANT WITHIN THIRTY (30) DAYS AFTER RECEIPT OF CLAIMANT'S NOTICE,
IDENTIFYING THE ARBITRATOR RESPONDENT HAS APPOINTED. THE TWO (2) ARBITRATORS SO
CHOSEN SHALL SELECT A THIRD ARBITRATOR (WHO MUST HAVE NOT LESS THAN TEN (10)
YEARS EXPERIENCE AS AN OIL AND GAS LAWYER) WITHIN THIRTY (30) DAYS AFTER THE
SECOND ARBITRATOR HAS BEEN APPOINTED. SELLER SHALL PAY THE COMPENSATION AND
EXPENSES OF THE ARBITRATOR NAMED BY OR FOR IT, AND BUYER SHALL PAY THE
COMPENSATION AND EXPENSES OF THE ARBITRATOR NAMED BY OR FOR IT. SELLER AND
BUYER SHALL EACH PAY ONE-HALF OF THE COMPENSATION AND EXPENSES OF THE THIRD
ARBITRATOR. UNLESS EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT, ALL
ARBITRATORS MUST BE NEUTRAL PARTIES WHO HAVE NEVER BEEN OFFICERS, DIRECTORS OR
EMPLOYEES OF THE PARTIES OR ANY OF THEIR AFFILIATES. ADDITIONALLY, UNLESS
EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT, THE TWO (2) ARBITRATORS NAMED
BY THE PARTIES MUST HAVE NOT LESS THAN TEN (10) YEARS EXPERIENCE IN THE OIL AND
GAS INDUSTRY, AND MUST HAVE A FORMAL EDUCATION IN THE AREA OF DISPUTE (I.E.,
ACCOUNTING FOR AN ACCOUNTING DISPUTE, ETC.). THE HEARING SHALL BE COMMENCED
WITHIN THIRTY (30) DAYS AFTER THE SELECTION OF THE THIRD ARBITRATOR. THE
PARTIES AND THE ARBITRATORS SHALL PROCEED DILIGENTLY AND IN GOOD FAITH IN ORDER
THAT THE AWARD SHALL BE MADE AS PROMPTLY AS POSSIBLE. THE DECISION OF THE
ARBITRATORS SHALL BE BINDING ON AND NON-APPEALABLE BY THE PARTIES. THE
ARBITRATORS SHALL NOT HAVE THE AUTHORITY TO GRANT OR AWARD INDIRECT,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES.
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ARTICLE 20. MISCELLANEOUS
20.1 Notices. All notices and other communications required, permitted
or desired to be given hereunder must be in writing and sent by: (a) U.S. mail,
properly addressed as shown below, and with all postage and other charges fully
prepaid, (b) hand delivery, (c) facsimile transmission, or (d) national courier
service. Date of service by mail, courier and hand delivery is the date on
which such notice is received by the addressee and by facsimile is the date
sent (as evidenced by fax machine confirmation of receipt), or if such date is
not on a Business Day, then on the next date which is a Business Day. Each
party may change its address by notifying the other party in writing.
If to Seller Amoco Production Company
by mail: P.O. Box 3092
Houston, Texas 77253-3092
Attn: General Manager of Business Development
AEGNA Acquisitions and Divestments
If to Seller by Amoco Production Company
hand delivery: 550 WestLake Park Boulevard, 4th floor
Houston, Texas 77079
Attn: General Manager of Business Development
AEGNA Acquisitions and Divestments
If to Seller Amoco Production Company
by facsimile: Number: 281-366-7544
Attn: General Manager of Business Development
AEGNA Acquisitions and Divestments
If to Buyer HS Resources, Inc.
by mail: 1999 Broadway, Suite 3600
Denver, CO 80202
Attn: Vice President, Acquisitions and Divestitures
With copy to: General Counsel
If to Buyer Vice President, Acquisitions and Divestitures
by facsimile: Number: (303)296-3601
Attn: Vice President, Acquisitions and Divestitures
With copy to: General Counsel
20.2 Conveyance Costs. Buyer shall be solely responsible for filing
and recording documents related to the transfer of the Properties from Seller
to Buyer and for all costs and fees associated therewith, including, without
limitation, filing the assignment of the Properties with appropriate federal,
state, local and tribal
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authorities as required by applicable Law. As soon as practicable after
recording or filing, Buyer shall furnish Seller with all recording data and
evidence of all required filings.
20.3 Brokers' Fees. Neither Buyer nor Seller has retained any brokers,
agents or finders the payment to whom the other party would be responsible.
EACH PARTY AGREES TO RELEASE, PROTECT, INDEMNIFY, DEFEND AND HOLD THE OTHER
PARTY HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS WITH RESPECT TO ANY
COMMISSIONS, FINDERS' FEES OR OTHER REMUNERATION DUE TO ANY BROKER, AGENT OR
FINDER CLAIMING BY, THROUGH OR UNDER SUCH PARTY
20.4 Records. As soon as possible after termination of the Transition
Agreement but no later than sixty (60) Days thereafter (except as provided
below), Seller shall furnish to Buyer all Records which are maintained by
Seller; provided however, Seller shall be entitled to retain: (a) copies of any
or all such Records, (b) originals of any Records required in connection with
litigation or other proceedings pending or threatened against Seller and
associated with the Properties, (c) originals of any Records required in
connection with title or environmental due diligence, (d) originals of any
Records required in connection with the Final Accounting Settlement, (e)
originals of any Records required in connection with any transition activities,
and/or (f) originals of any Records associated with any retained properties or
interests. Any and all original Records retained by Seller shall be furnished
to Buyer within thirty (30) Days after Seller's reasonable need for said
Records ceases. Buyer agrees to maintain the Records received from Seller in
accordance herewith for a period of seven (7) years after the Closing and shall
afford Seller full access to the Records as reasonably requested by Seller. If
Buyer desires to destroy the Records, or any portion thereof, it shall notify
Seller prior to such destruction, and provide Seller the opportunity to take
possession of the same.
20.5 Further Assurances. From and after Closing, at the request of
Seller but without further consideration, Buyer will execute and deliver or use
reasonable efforts to cause to be executed and delivered such other instruments
of conveyance and take such other actions as Seller reasonably may request to
more effectively put Seller in possession of any property which was not
intended by the parties or should not have been conveyed by Buyer (including
without limitation, reassignment from Buyer to Seller of any Properties which
were conveyed in violation of a valid preferential right to purchase or consent
to assignment). From and after Closing, at the request of Buyer but without
further consideration, Seller shall execute and deliver or use reasonable
efforts to cause to be executed and delivered such other instruments of
conveyance and take such other actions as Buyer reasonably may request to more
effectively put Buyer in possession of the Properties. If any of the Properties
are incorrectly described, the description shall be corrected upon proof of the
proper description. From and after Closing, Buyer and Seller shall each
execute, acknowledge and deliver to the other such further instruments and take
such further action as may be reasonably requested in order to more effectively
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assure to the other the full beneficial use and enjoyment of the Properties and
otherwise to accomplish the purposes of the transaction contemplated by this
Agreement.
20.6 Survival of Representations and Warranties. THE REPRESENTATIONS
AND WARRANTIES CONTAINED IN ARTICLE 10 OF THIS AGREEMENT SHALL TERMINATE ONE
(1) YEAR AFTER CLOSING, EXCEPT THOSE IN ARTICLES 10.1, 10.2, 10.3, 11.1, 11.2,
AND 11.3 WHICH SHALL SURVIVE INDEFINITELY. EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT, ALL OTHER REPRESENTATIONS, WARRANTIES, INDEMNITIES, COVENANTS AND
AGREEMENTS CONTAINED IN THIS AGREEMENT SHALL SURVIVE THE CLOSING INDEFINITELY.
THE PARTIES HAVE MADE NO REPRESENTATIONS OR WARRANTIES, EXCEPT THOSE EXPRESSLY
SET FORTH IN THIS AGREEMENT. THE TERMINATION OF REPRESENTATIONS AND WARRANTIES
SHALL NOT AFFECT THE EXPRESS INDEMNITIES SET FORTH IN ARTICLE 8.
20.7 Amendments and Severability. No amendments or other changes to
this Agreement shall be effective or binding on either of the parties unless
the same shall be in writing and signed by both Seller and Buyer. The
invalidity of any one or more provisions of this Agreement shall not affect the
validity of this Agreement as a whole, and in case of any such invalidity, this
Agreement shall be construed as if the invalid provision had not been included
herein.
20.8 No Multiple Recoveries. Notwithstanding anything contained in
this Agreement to the contrary, there shall be no multiple recoveries for
breach of any representation, warranty or covenant or under any indemnity
provision contained in this Agreement or such other documents to be executed
and delivered at Closing as provided for in this Agreement related to the same
act, event or circumstance.
20.9 Successors and Assigns. This Agreement shall not be assigned,
either in whole or in part, without the express written consent of the
non-assigning party. The terms, covenants and conditions contained in this
Agreement shall be binding upon and shall inure to the benefit of Seller and
Buyer and their respective successors and assigns, and such terms, covenants
and conditions shall be covenants running with the land and with each
subsequent transfer or assignment of the Properties.
20.10 Headings. The titles and headings set forth in this Agreement
have been included solely for ease of reference and shall not be considered in
the interpretation or construction of this Agreement.
20.11 Governing Law. THIS AGREEMENT (INCLUDING ADMINISTRATION OF THE
BINDING ARBITRATION PROVISION SET FORTH IN ARTICLE 19.1) SHALL BE GOVERNED BY
AND CONSTRUED UNDER THE LAWS OF THE STATE OF COLORADO, EXCLUDING ANY CHOICE OF
LAW RULES WHICH MAY DIRECT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
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20.12 No Partnership Created. It is not the purpose or intention of
this Agreement to create (and it shall not be construed as creating) a joint
venture, partnership or any type of association, and the parties are not
authorized to act as agent or principal for each other with respect to any
matter related hereto.
20.13 Public Announcements. Neither Seller nor Buyer (including any of
their Affiliates in either case) shall issue a public statement or press
release with respect to the transaction contemplated herein (including the
price and other terms) without the prior written consent of the other party,
which shall not be unreasonably withheld, except as required by Law or listing
agreement with a national security exchange and then only after prior
consultation with the other party.
20.14 No Third Party Beneficiaries. Nothing contained in this
Agreement shall entitle anyone other than Seller or Buyer or their authorized
successors and assigns to any claim, cause of action, remedy or right of any
kind whatsoever.
20.15 Waiver of Consumer Rights. AS PARTIAL CONSIDERATION FOR THE
PARTIES AGREEING TO ENTER INTO THIS AGREEMENT, THE PARTIES EACH CAN AND DO
EXPRESSLY WAIVE THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES CONSUMER
PROTECTION ACT, ARTICLE 17.41 ET SEQ., TEXAS BUSINESS AND COMMERCE CODE, A LAW
THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTION, AND ALL OTHER CONSUMER
PROTECTION LAWS OF THE STATE OF TEXAS, OR ANY OTHER STATE, APPLICABLE TO THIS
TRANSACTION THAT MAY BE WAIVED BY THE PARTIES. IT IS NOT THE INTENT OF THE
PARTIES TO WAIVE AND THE PARTIES SHALL NOT WAIVE ANY APPLICABLE LAW OR
PROVISION THEREOF WHICH IS PROHIBITED BY LAW FROM BEING WAIVED. THE PARTIES
HERETO REPRESENT THAT THEY HAVE HAD AN ADEQUATE OPPORTUNITY TO REVIEW THE
PRECEDING WAIVER PROVISION, INCLUDING THE OPPORTUNITY TO SUBMIT THE SAME TO
LEGAL COUNSEL FOR REVIEW AND COMMENT AND AFTER CONSULTATION WITH AN ATTORNEY OF
THEIR OWN SELECTION VOLUNTARILY CONSENT TO THIS WAIVER, AND UNDERSTAND THE
RIGHTS BEING WAIVED HEREIN.
20.16 Not to be Construed Against Drafter. THE PARTIES ACKNOWLEDGE
THAT THEY HAVE HAD AN ADEQUATE OPPORTUNITY TO REVIEW EACH AND EVERY PROVISION
CONTAINED IN THIS AGREEMENT AND TO SUBMIT THE SAME TO LEGAL COUNSEL FOR REVIEW
AND COMMENT, INCLUDING WITHOUT LIMITATION THE WAIVERS AND INDEMNITIES IN
ARTICLES 4.5, 5.3, 8, 9, 20.3, 20.6 AND 20.15. BASED ON SAID REVIEW AND
CONSULTATION, THE PARTIES AGREE WITH EACH AND EVERY TERM CONTAINED IN THIS
AGREEMENT. BASED ON THE FOREGOING, THE PARTIES AGREE THAT THE RULE OF
CONSTRUCTION THAT A CONTRACT BE CONSTRUED AGAINST THE DRAFTER, IF ANY, SHALL
NOT BE APPLIED IN THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT.
20.17 Tax Deferred Exchange Election. Either party may elect to
structure the conveyance of the Properties as part of an exchange under Article
1031 of the Internal Revenue Code of 1986, as amended. The parties agree to
execute all documents, conveyances or other instruments necessary to
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effectuate an Article 1031 exchange, provided that such party indemnify the
cooperating part in effectuating the like kind exchange.
20.18 Conspicuousness of Provisions. THE PARTIES ACKNOWLEDGE THAT THE
PROVISIONS CONTAINED IN THIS AGREEMENT THAT ARE SET OUT IN "BOLD" SATISFY THE
REQUIREMENT OF THE EXPRESS NEGLIGENCE RULE AND ANY OTHER REQUIREMENT AT LAW OR
IN EQUITY THAT PROVISIONS CONTAINED IN A CONTRACT BE CONSPICUOUSLY MARKED OR
HIGHLIGHTED.
20.19 Execution in Counterparts. This Agreement may be executed in
counterparts, which shall when taken together constitute one (1) valid and
binding agreement.
20.20 Entire Agreement. This Agreement and the Confidentiality
Agreement supersede all prior and contemporaneous negotiations, understandings,
letters of intent and agreements (whether oral or written) between the parties
relating to the Properties and constitute the entire understanding and
agreement between the parties with respect to the sale and purchase of the
Properties.
The parties have executed this Agreement on the day and year first set
forth above.
AMOCO PRODUCTION COMPANY
By: /s/ LON O. BUEHNER
-------------------------------------
Name: Lon O. Buehner
Title: Attorney-in-Fact
HS RESOURCES, INC.
By: /s/ GEORGE H. SOLICH
-------------------------------------
Name: George H. Solich
Title: Vice President, Acquisitions and
Divestitures
57
<PAGE> 1
EXHIBIT 10.2
SIDE LETTER AGREEMENT
This Agreement is between Amoco Production Company ("Amoco") and HS
Resources, Inc. ("HS") and is dated this 25 day of November, 1997.
Amoco desires to sell, assign and convey to HS and HS desires to purchase
and accept certain oil and gas properties and related interests;
Amoco and HS also desire to exchange certain oil and gas properties;
The parties have reached agreement regarding such sale, purchase, and
exchange and wish to set forth in this side letter their agreement regarding the
total consideration for the transaction for purposes of public announcement and
press releases with respect thereto.
In consideration of the mutual promises set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows;
1. The total consideration to be paid by HS for the purchase of the
properties as described in the Agreement is as follows:
a. US$290,000,000 in cash;
b. 1,200,000 shares of HS common stock; and
c. Conveyance of certain of HS properties as described in
Exhibit B to the Agreement.
2. For the purpose of any press release or public announcement regarding
this transaction, the parties agree to use $333,000,000.00 as the total
consideration to be paid or to be received in conjunction with the closing of
the transaction.
AMOCO PRODUCTION COMPANY HS RESOURCES, INC.
By: /s/ LON O. BUEHNER By: /s/ GEORGE H. SOLICH
-------------------------- ----------------------------------
Name: Lon O. Buehner Name: George H. Solich
Title: Attorney-In-Fact Title: Vice President, Acquisitions
and Divestitures
<PAGE> 1
EXHIBIT 10.3
CLOSING SIDE AGREEMENT
This Closing Side Agreement ("Agreement") is between Amoco Production Company
("Amoco") and HS Resources, Inc. ("HS"), and is dated this 15th day of
December, 1997, to be effective as of December 1, 1997.
Amoco and HS entered in a Purchase and Sale Agreement ("PSA") dated November
25, 1997, and desire to enter into this Closing Agreement with respect to
certain matters set forth in the PSA and other matters..
In consideration of the mutual promises set forth in the PSA and other good and
valuable consideration, the parties hereby agree to amend the PSA as follows:
1. Norden Limited Partnership. Amoco has acquired additional net revenue
interests and/or working interests with respect to the wells and locations
identified on Exhibit "A" to the PSA attributable to interests owned by or in
the name of Anadarko Petroleum Corporation in the NorDen Limited Partnership
("Additional Interests"). Amoco shall be entitled to an increase in the Purchase
Price at Closing in the amount of $3,500,000 for the Additional Interests, as
set forth on Exhibit "1" attached hereto and made a part hereof, which
Additional Interests and their allocated values shall supplement the wells and
locations (and their associated allocated values) set forth in Exhibit "A" to
the PSA. The above increase in the Purchase Price covers the entire interest
of Anadarko in the NorDen Limited Partnership whether or not such interests are
correctly described on Exhibit "1".
2. Property Exchange. Pursuant to Article 13 Property Exchange of the PSA and
that certain letter from Amoco to HS dated December 10, 1997, designating the
Amoco Exchange Properties, the parties have agreed to exchange certain
properties. At Closing of the exchange transaction contemplated thereby, Amoco
shall convey to HS (as nominee for its wholly owned subsidiary HSRTW, Inc.) all
the Amoco Exchange Properties and HS (through HSRTW, Inc.) shall convey all the
HS Exchange Properties as to which preferential purchase rights of third
parties are inapplicable, have lapsed or have been waived.
3. Second Closing. In order to preserve the tax efficient nature of the
transaction as contemplated in the Article 13, Property Exchange, and to
provide additional time to satisfy any preferential right obligations, Amoco
and HS desire to amend Article 3.4, Preferential Rights to Purchase, Article
13, Property Exchange, and Article 17, The Closing, in order to allow for a
second closing to occur. The portions of the HS Exchange Properties or Amoco
Properties (as shown on
<PAGE> 2
Exhibits "2" or "3") that are subject to preferential purchase rights that have
not been waived, exercised, or expired as of the Closing, shall be conveyed in
the same manner and through the parties as described in paragraph 2 immediately
above at the second closing to be held at Amoco's Denver office on January 23,
1998. ("Second Closing"). If and to the extent that preferential rights are
exercised with respect to any of the HS Exchange Properties, at the Second
Closing HS shall pay to Amoco the appropriate consideration for those
properties, based on the Equivalent Cash Sales Value set forth in Exhibit "2"
attached hereto (which is the allocated valued as set forth in Exhibit "B" to
the PSA, grossed up by a factor of 1.56). If and to the extent that
preferential rights are exercised with respect to any of the Amoco Properties,
at the Second Closing Amoco shall pay the portion of the Purchase Price
attributable to the preferential purchase right in accordance with the
allocation for the properties set forth on Exhibit "3" hereto.
4. Stock Registration. That portion of Article 3.3.1 of the PSA relating to
the timing of the filing of a Registration Statement is amended to provide that
HS may delay the filing of the Registration Statement referred to in Article
3.3.1 until immediately after the consummation or termination of the HS public
offering currently expected to commence in January of 1998, but,
notwithstanding the foregoing, HS must file the Registration Statement no later
than February 15, 1998. HS shall prepare a draft of the Registration Statement
for Amoco's review and comment by December 22, 1997 and, subject to receipt of
such comments, take such actions as are necessary to file the Registration
Statement in accordance with the immediately preceding sentence. For
clarification regarding Article 3.3.3, HS agrees that it is not presently
conducting a public offering, such period to commence upon notice by HS to
Amoco that it has conducted its organizational meeting regarding the offering
and is preparing and intends to circulate a red herring prospectus as soon as
possible.
5. Litigation and Claims. The following matter shall be deemed to be included
in Exhibit "G" to the PSA:
Amoco has provided notice to HS of the filing of litigation by
Northern Oil & Gas, Inc. et al. against Amoco in the United States District
Court for the District of New Mexico. Amoco shall defend, indemnify, protect
and hold harmless HS (including the Buyer Group) from any claim or damage that
results from this lawsuit or any other lawsuit, dispute or claim arising out of
the circumstances underlying the lawsuit or involving any of the plaintiffs to
the lawsuit.
6. Amoco has been notified by the State of Colorado of certain problems
relating to the disposal of produced water into the Wattenberg SWD #1 well.
Within five (5) Days prior to the end of the production month in which the
Transition Agreement between the parties (executed pursuant to the PSA) is
terminated, Amoco, at its sole cost, shall cause such well to pass a mechanical
integrity test witnessed and accepted by the Colorado Oil and Gas Commission.
<PAGE> 3
7. HS intends to hold the Amoco Exchange Properties as nominee on behalf of
HSRTW, Inc. Amoco hereby consents to HS holding as nominee on behalf of HSRTW
beneficial title to such Amoco Exchange Properties.
8. Amoco has leased its Ft. Lupton office space and yard from Ft. Lupton
Development Corp. under Lease dated June 20, 1977, as amended and modified (the
"Lease"). Assignment of the Lease requires consent of the Lessor (as defined
in the Lease). Consent from the Lessor has not been obtained by Amoco. Amoco
shall continue to endeavor to obtain such consent from Lessor until January 31,
1998. In the event consent to assign the Lease is timely obtained by Amoco, the
Lease shall be assigned to HS in the form attached as Exhibit "4" to this
Agreement. If consent is not obtained by that date, Amoco shall exercise its
option to purchase the Lease Premises pursuant to Article 3 of the Second Lease
Modification Agreement dated March 16, 1992. The purchase price of $200,000
for such option shall be paid in equal shares by HS and Amoco.
9. HSR has requested the consent of Amoco for the assignment by HSR to Westide
Investments, LLC, a Delaware limited liability company with offices at 82
Devonshire Street, R22C, Boston, Massachusetts 02109 ("Assignee"), of HSR's
right upon the closing of the transaction contemplated by the PSA to receive
assignments of certain interests that qualify or may qualify for tax credits
under Section 29 of the Internal Revenue Code of 1986. HSR agrees that such
assignment will be subject to the following qualifications and conditions.
a. Amoco shall convey the properties pursuant to the
Agreement to HSR without reference to Assignee so
that there shall be no change in the forms of
conveyance contemplated by the Agreement.
b. HSR shall remain fully liable for the performance of
all obligations under the Agreement as though no
assignment had occurred.
c. HSR shall irrevocably be and remain the exclusive
agent of Assignee for all purposes under the
Agreement, and Assignee shall have no right to deal
with or make any claim or demand against Amoco
directly. HSR shall indemnify and hold Amoco
harmless from and against any and all claims or
demands which may be made by the Assignee against
Amoco, its officers, agents, employees, successors or
assigns arising out of the assignments to be executed
between HSR and its Assignees.
d. HSR shall assume responsibility for obtaining any
amended consents or waivers of preferential purchase
rights that might apply, and shall fully defend,
indemnify and hold harmless
<PAGE> 4
Amoco from any claim or damage that results from the
failure of Amoco to obtain such consents or waivers
in favor of an assignment to Assignee.
10. Notwithstanding the fact that some of the HS Exchange and/or Amoco
Properties may not be conveyed until the Second Closing, the Transition
Agreements shall be applicable with respect to all of such properties unless and
until conveyed to a third party pursuant to the exercise of a preferential
purchase right.
11. Notwithstanding the provisions of Article 6.5 of the PSA, which provide
for post-Closing adjustments for the period of time between the Effective Time
and Closing, the Estimated Monthly Statement (and payment) pursuant to the
Transition Agreement for the production month of December, 1997, shall include
the accounting for the entire month of December, 1997.
12. Amoco entered into that certain Natural Gas Purchase and Sale Agreement
between Public Service Company of Colorado ("PSCo") and Amoco Energy Trading
Corporation ("AETC") dated September 1, 1997, as amended (the "Contract").
Assignment of this Contract requires the consent of PSCo. If consent is
obtained by Amoco, HS shall assume the obligations of AETC thereunder as of the
Effective Time for the remaining term of the Contract. In such event, Amoco,
during the term of the Transition Agreement, shall account to HS using the
Contract price received for production sold under the Contract.
If consent is not received from PSCo, Amoco and HS shall cooperate to
ensure HS receives the benefit of the Contract. For the production months
during the term of the Transition Agreement, Amoco shall cause AETC to sell to
PSCo for the benefit of HS the volumes of production necessary to satisfy the
Contract and account to HS using the Contract price. After the termination of
the Transition Agreement, HS Energy Services, Inc., for the benefit of HS, will
sell to AETC such volumes necessary to satisfy the Contract at a transfer price
of the Colorado Interstate Gas Index Price as reported in the first issue of
Inside F.E.R.C's Gas Market Report under the "Prices of Spot Gas Delivered to
Pipelines table for the applicable month, plus $0.20/MMBTU and AETC shall resell
for the benefit of HS such production to PSCo under the Contract. In the event
HS Energy Services, Inc. fails to deliver the volumes necessary to enable AETC
to comply with the Contract, HS shall reimburse AETC for any costs or penalties
incurred by AETC to deliver the volumes. During the transition period under the
Transition Agreement and thereafter to the extent of the term of the Contract,
Amoco shall account to HS using the Contract price for such production sold to
PSCo.
Beginning with the production month of January 1998 until the termination
of the Transition Agreement, except for such production committed to the
<PAGE> 5
Contract, HS Energy Services, Inc. shall purchase from Amoco for the benefit of
HS residue gas production attributable to the Properties at the tailgate of the
Wattenberg Plant at the Colorado Interstate Gas Index Price, as reported in the
first issue of Inside F.E.R.C's Gas Market Report under the "Prices of Spot Gas
Delivered to Pipelines table for the applicable month, plus $0.20/MMBTU.
Notwithstanding anything contained herein, in its accounting to HS,
Amoco shall be entitled to make the applicable deductions from the Contract
price for gathering and other post-production costs incurred prior to the Point
of Delivery under the Contract.
13. HS shall determine if it holds any seismic licenses relating to the HS
Exchange Properties, and will provide assignments of said licenses to Amoco, in
accordance with the PSA, as soon as reasonably practicable after the Closing.
14. Defined terms in this Agreement shall have the meaning ascribed to
them in the PSA unless specifically defined herein.
Except as expressly set forth in this Closing Side Agreement, the terms and
conditions of the PSA shall remain in full force and effect as originally
executed. The terms of this Agreement are subject to the terms of the PSA,
except that the terms of this Agreement shall prevail over any contradictory
terms in the PSA, and to the extent that any of the terms of the PSA are deemed
to be in conflict with the terms of this Agreement, the PSA shall automatically
be amended to the extent necessary to resolve the conflict.
This Agreement is dated December 15, 1997, but effective as of December 1,
1997.
AMOCO PRODUCTION COMPANY HS RESOURCES, INC.
By: /s/ LON O. BUEHNER By: /s/ GEORGE H. SOLICH
------------------------- -------------------------
Name: Lon O. Buehner Name: George H. Solich
Title: Attorney-in-Fact Title: Vice-President
<PAGE> 1
EXHIBIT 10.4
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment") is dated as of December 15, 1997 among: HS RESOURCES, INC.,
a corporation formed under the laws of the State of Delaware (the "Borrower");
each of the lenders that is a signatory hereto; and THE CHASE MANHATTAN BANK
(in its individual capacity, "Chase"), as agent for the Lenders (in such
capacity, together with its successors in such capacity, the "Agent").
R E C I T A L S
A. The Borrower, the Agent, and the Lenders (as defined in the
Credit Agreement as hereafter defined) have entered into that certain Amended
and Restated Credit Agreement dated as of June 14, 1996, as amended by the
First Amendment to Amended and Restated Credit Agreement dated as of June 17,
1996 and the Second Amendment to Amended and Restated Credit Agreement dated as
of November 27, 1996 (as amended, the "Credit Agreement"), pursuant to which
the Lenders have agreed to make certain loans and extensions of credit to the
Borrower upon the terms and conditions as provided therein; and
B. The Borrower, the Agent, and the Lenders now desire to make
certain amendments to the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration and the mutual benefits, covenants and agreements herein
expressed, the parties hereto now agree as follows:
1. All capitalized terms used in this Amendment and not otherwise
defined herein shall have the meanings ascribed to such terms in the Credit
Agreement.
2. Section 2 of the Second Amendment is hereby deleted. The
definition of "Borrowing Base Utilization Percentage" is hereby deleted.
3. The definitions "Acquisition," "Aggregate Maximum Credit
Amounts," "Applicable Margin," "Reserve Report," "Revolving Credit Termination
Date," "Threshold Amount," in Section 1.02 of the Credit Agreement are hereby
amended to read as follows:
"Acquisitions" shall mean the Basin Acquisition, Tide West
Acquisition and the Amoco Acquisition.
"Aggregate Maximum Credit Amounts" at any time shall equal the
sum of the Maximum Credit Amounts of the Lenders ($450,000,000), as
the same may be reduced pursuant to Section 2.03(b).
<PAGE> 2
"Applicable Margin" shall mean for Base Rate Loans or
Eurodollar Loans or the commitment fee pursuant to Section 2.04(a) the
following rate per annum as applicable based on the Utilization
Percentage in effect from time to time:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Utilization Percentage Eurodollar Base Rate Commitment Fee
Loans Loan
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Greater than or equal to 1.6250% 0.6250% 0.500%
100%
-------------------------------------------------------------------------------
Greater than or equal to 1.2500% 0.2500% 0.375%
80%, but less than 100%
-------------------------------------------------------------------------------
Greater than or equal to 1.1125% 0.1250% 0.375%
60%, but less than 80%
-------------------------------------------------------------------------------
Greater than or equal to 1.0000% 0.000% 0.375%
40%, but less than 60%
-------------------------------------------------------------------------------
Less than 40% 0.7500% 0.000% 0.300%
-------------------------------------------------------------------------------
</TABLE>
"Reserve Report" shall mean a report, in form and substance
satisfactory to the Agent, setting forth, as of each January 1 (or
such other date in the event of an unscheduled redetermination); (i)
the oil and gas reserves attributable to the Borrower's and any
Subsidiary's Oil and Gas Properties to be included in the Borrowing
Base determination together with a projection of the rate of
production and future net income, taxes, operating expenses and
capital expenditures with respect thereto as of such date, based upon
the pricing assumptions consistent with SEC reporting requirements at
the time and (ii) such other information as the Agent may reasonably
request.
"Revolving Credit Termination Date" shall mean, unless the
Commitments are sooner terminated pursuant to Sections 2.03(b) or
10.02 hereof, December 15, 2002.
"Threshold Amount" shall represent the customary conforming
amount of a traditional hydrocarbon borrowing base loan.
4. Section 1.02 of the Credit Agreement is hereby supplemented,
where alphabetically appropriate, with the addition of the following
definitions:
"Amoco" shall mean Amoco Production Company.
"Amoco Acquisition" shall mean the acquisition by the Borrower
of the Amoco Properties.
-2-
<PAGE> 3
"Amoco Acquisition Documents" shall have the meaning assigned
in Section 7.22.
"Amoco Properties" shall mean the Oil and Gas Properties and
other Properties acquired by the Borrower pursuant to the Amoco
Acquisition Documents.
"Amoco Purchase and Sale Agreement" shall mean the Purchase
and Sale Agreement by and Between Amoco and the Borrower dated
November 25, 1997, as the same may be amended or modified from time to
time.
"Amoco Reserve Report" shall mean the reserve information
provided to the Lenders by the Borrower covering the Amoco Properties.
"Designated Transaction" shall mean (i) the issuance of equity
securities by the Borrower and/or (ii) the issuance of senior
subordinated notes by the Borrower, both on terms and in amounts
acceptable to the Majority Lenders.
"Initial Period" shall mean the period commencing on the
Third Amendment Effective Date and ending on the earlier of (i) the
date nine months thereafter or (ii) the date on which the Borrowing
Base equals the Threshold Amount.
"Redetermination Event" shall mean the occurrence of any of
the following events during the Initial Period: (a) the sale or
issuance of equity securities of the Borrower, (b) the incurrence of
subordinated Debt by the Borrower or (c) any sale or other disposition
(including as a result of casualty or condemnation) of any of the Oil
and Gas Properties of the Borrower or any Subsidiary other than as
permitted by Section 9.15. Such events in clauses (b) and (c) shall
still require the consent of the Majority Lenders, if otherwise in
violation of the other terms of this Agreement.
"Third Amendment" shall mean that certain Third Amendment to
Amended and Restated Credit Agreement dated as of December 15, 1997,
among the Borrower, the Lenders and the Agent.
"Third Amendment Effective Date" shall mean the effective date
of the Third Amendment and shall be the same date as the effective
date of the Amoco Acquisition; provided, that the conditions required
by Section 10 of the Third Amendment have been satisfied.
"Utilization Percentage" shall mean, as of any day, the
fraction expressed as a percentage, the numerator of which is the
balance of all Loans and LC Exposure outstanding on such day, and the
denominator of which is (i) during the Initial Period, the Threshold
Amount in effect on such day and (ii) after the Initial Period, the
Borrowing Base in effect on such day.
5. Section 2.07 of the Credit Agreement is hereby amended by
adding the following clause (e):
-3-
<PAGE> 4
"(e) Notwithstanding the provisions of Section 2.07(c) to
the contrary, if a Redetermination Event occurs during the Initial
Period and if the redetermined Borrowing Base as a result of such
Redetermination Event is less than the aggregate outstanding principal
amount of the Loans plus the LC Exposure ("Deficiency"), then the
Borrower shall immediately prepay such Deficiency. At the end of the
Initial Period, the Borrower must immediately prepay the amount that
the aggregate outstanding principal amount of the Loans plus the LC
Exposure exceeds the Threshold Amount."
6. Section 2.08 of the Credit Agreement is hereby amended to read
as follows:
"Section 2.08 Borrowing Base and Threshold Amount.
(a) The Borrowing Base shall be determined in accordance
with Section 2.08(b) by the Agent with the concurrence of the Super
Majority Lenders and is subject to redetermination in accordance with
Section 2.08(d). Upon any redetermination of the Borrowing Base, such
redetermination shall remain in effect until the next successive
Redetermination Date. "Redetermination Date" shall mean the date that
the redetermined Borrowing Base becomes effective subject to the
notice requirements specified in Section 2.08(f) both for scheduled
redeterminations and unscheduled redeterminations. So long as any of
the Commitments are in effect or any LC Exposure or Loans are
outstanding hereunder, this facility shall be governed by the then
effective Borrowing Base. During the Initial Period the amount of the
Borrowing Base shall be $450,000,000 and the amount of the Threshold
Amount shall be $400,000,000. During the Initial Period, the
Borrowing Base and the Threshold Amount shall be reduced or
redetermined upon the occurrence of a Redetermination Event. Upon the
occurrence of a Redetermination Event, the Borrowing Base (and, in the
case of a sale of Oil and Gas Properties of the Borrower or any
Subsidiary, the Threshold Amount) will be reduced by an amount equal
to the net proceeds received by the Borrower and any Subsidiary as a
result of the Redetermination Event, and upon the occurrence of a
Redetermination Event as a result of the issuance of subordinated Debt
by the Borrower, the Threshold Amount will be redetermined as
determined in the sole discretion of the Super Majority Lenders;
provided that, in lieu of any such reductions or redeterminations, the
Borrower may terminate the Initial Period and initiate its optional
unscheduled redetermination of the Borrowing Base as provided in
Section 2.08(d) by providing to the Lenders an acceptable Reserve
Report within ten (10) Business Days of such Redetermination Event.
(b) Upon receipt of the reports required by Section 8.07
and such other reports, data and supplemental information as may from
time to time be reasonably requested by the Agent (the "Engineering
Reports"), each Lender will evaluate the Oil and Gas Properties
contained in such Engineering Reports. Such evaluations will be in
accordance with its normal and customary procedures for evaluating oil
and gas reserves and other related assets as such exist at that
particular time. Each Lender, in its sole discretion, may make
adjustments to the rates, volumes and prices and other assumptions set
forth therein in accordance with its normal and customary procedures
for evaluating oil and gas reserves and other related assets as such
exist at that particular time. The Agent shall propose to the
-4-
<PAGE> 5
Lenders the new Borrowing Base (or in connection with the April 15,
1998 Scheduled Redetermination Date, the Threshold Amount) within 30
days following receipt by the Agent and the Lenders of the Engineering
Reports in a timely and complete manner. After having received notice
of such proposal by the Agent, the each Lender shall have 15 days to
agree or disagree with such proposal. If at the end of the 15 days,
any Lender has not communicated its approval or disapproval, such
silence shall be deemed to be an approval. If however, the Super
Majority Lenders shall not have approved or shall not have been deemed
to have approved the new Borrowing Base (or in connection with the
April 15, 1998 Scheduled Redetermination Date, the Threshold Amount)
within 15 days, the Agent and the Super Majority Lenders shall, within
a reasonable period of time, agree on the new Borrowing Base (or in
connection with the April 15, 1998 Scheduled Redetermination Date, the
Threshold Amount). During the Initial Period the Borrowing Base
shall not be less than the Threshold Amount. At the end of the
Initial Period, the Borrowing Base shall automatically be reduced to
equal the Threshold Amount outstanding on such date. After such date,
the Borrowing Base shall always equal the Threshold Amount, and any
reference to the Borrowing Base shall be deemed to be a reference to
the Threshold Amount where applicable and vice versa.
(c) The Agent may exclude any Oil and Gas Property or
portion of production therefrom or any income from any other Property
from the Borrowing Base, at any time, because title information is not
reasonably satisfactory.
(d) So long as any of the Commitments are in effect and
until payment in full of all Loans hereunder, on or around the
fifteenth day of each April, (each being a "Scheduled Redetermination
Date"), the Super Majority Lenders shall redetermine the amount of the
Threshold Amount on April 15, 1998 and commencing on April 15, 1999,
the Borrowing Base in accordance with Section 2.08(b). In addition,
after the Initial Period, the Super Majority Lenders or the Borrower
may initiate a redetermination of the Borrowing Base at any other time
as they so elect; provided, however, that the Borrower and the Super
Majority Lenders may each initiate only one such unscheduled
redetermination during any consecutive twelve (12) month period. In
the event of a redetermination initiated by the Super Majority
Lenders, the Agent will specify in writing to the Borrower the date on
which the Borrower is to furnish a Reserve Report in accordance with
Section 8.07(b) and the date on which such redetermination is to
occur.
(e) The Agent shall promptly notify in writing the
Borrower and the Lenders of the new Borrowing Base or Threshold
Amount. Any redetermination of the Borrowing Base or Threshold Amount
shall not be in effect until written notice is received by the
Borrower."
7. The Credit Agreement is hereby amended by adding the following
Section 7.22:
"Section 7.22 Amoco Acquisition.
(a) The Borrower has the full power and authority under
its certificate or articles of incorporation, its bylaws and the laws
of the state of its incorporation to execute, deliver and perform its
obligations under any agreements, instruments, documents and
certificates
-5-
<PAGE> 6
executed in connection with the Amoco Acquisition (collectively, the
"Amoco Acquisition Documents") to which it is a party and all
corporate action requisite for the execution, delivery and performance
by it of the Amoco Acquisition Documents to which it is a party has
been duly and effectively taken.
(b) The execution, delivery and performance by the
Borrower of the Amoco Acquisition Documents do not and will not (i)
violate any provision of either (A) its certificate or articles of
incorporation and bylaws or (B) in any material respect, any material
contract, agreement, instrument or Governmental Requirement to which
it is subject, except as disclosed to the Agent in writing or (ii)
result in the creation of or imposition of any Lien upon any of its
Property, other than those permitted under Section 9.02 of this
Agreement.
(c) The execution, delivery and performance by the
Borrower of the Amoco Acquisition Documents do not require the consent
or approval of any other Person, including any Governmental Authority,
except for such consents or approvals that have been obtained or where
the failure to obtain such consent or approval would not have a
Material Adverse Effect or except the consent and approval by the
applicable state or federal agency to the assignments of interests in
the Amoco Properties which are state or federal oil and gas leases
from Amoco Production Company to Borrower, which consent and approval
is customarily obtained subsequent to the execution and delivery of
such assignments and which Borrower reasonably believes will be
forthcoming, or except as disclosed to the Agent in writing.
(d) Except as disclosed to the Agent in writing, there
are no legal or arbitrational proceedings by or before any
Governmental Authority, now pending or threatened against the Amoco
Acquisition, any Amoco Acquisition Document or against any Amoco
Property.
(e) The copies of the Amoco Acquisition Documents
previously delivered by the Borrower to the Agent are complete and
accurate copies thereof and have not been amended or modified in any
manner. The Amoco Acquisition Documents have been duly authorized,
executed and delivered by the other parties thereto. The Amoco
Acquisition Documents are valid, binding and enforceable against the
parties thereto except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and general principles of equity. No
party to an Amoco Acquisition Document is in default thereunder.
(f) Immediately after the Amoco Acquisition the Borrower
shall own all of the Amoco Properties evaluated by the Amoco Reserve
Report except as a result of a sale which is permitted by Section
9.15(iv), and the representations in Sections 7.10 and 7.17 shall be
true and correct as to the Amoco Properties."
8. The Credit Agreement is hereby amended by adding the following
Section 8.10:
"Section 8.10 Additional Collateral.
(a) If the Borrower has not completed a Designated
Transaction on or before June 30, 1998, the Borrower shall, and shall
cause its Subsidiaries to, within thirty (30) days
-6-
<PAGE> 7
thereafter grant to the Agent as security for the Indebtedness a
first-priority Lien (subject only to Liens permitted by Section 9.02)
on the Borrower's and its Subsidiaries' interest in any Oil and Gas
Properties not already subject to a Lien of the Security Instruments,
so that at all times the value of the Oil and Gas Properties subject
to first-priority Liens securing the Indebtedness shall equal or
exceed 75% of the value of all of the Borrower's and its Subsidiaries'
Oil and Gas Properties that are included in the Borrowing Base as set
forth in the most recently delivered Reserve Report on a net
discounted basis discounted at 10% per annum. Such Lien will be
created and perfected by and in accordance with the provisions of
deeds of trust, security agreements and financing statements, or other
Security Instruments, all in form and substance satisfactory to the
Agent in its sole discretion and in sufficient executed (and
acknowledged where necessary or appropriate) counterparts for
recording purposes.
(b) Also, promptly after the filing of any new Security
Instrument in any state, upon the reasonable request of the Agent, the
Borrower will provide to the Agent an opinion addressed to the Agent
for the benefit of the Lenders in form and substance satisfactory to
the Agent in its sole discretion from counsel acceptable to Agent,
stating that the Security Instrument creates a lien on the collateral
described therein to the extent of Borrower's interest in such
collateral and in legally sufficient form for such jurisdiction.
9. Section 9.15(v) of the Credit Agreement is hereby deleted:
10. Annex I of the Credit Agreement is hereby replaced by Annex I
to this Amendment.
11. This Amendment shall become binding on the Lenders when, and
only when, the following conditions shall have been satisfied and the Agent
shall have received each of the following, as applicable, in form and
substance satisfactory to the Agent or its counsel:
(a) A certificate of the Secretary or an Assistant
Secretary of each of the Borrower and each Subsidiary executing a
Loan Document setting forth (i) resolutions of its board of directors
with respect to its authorization to execute and deliver the Loan
Documents to which it is a party and to enter into the transactions
contemplated in those documents including the Amoco Acquisition, (ii)
its officers (y) who are authorized to sign the Loan Documents to
which it is a party and (z) who will, until replaced by another
officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving
notices and other communications in connection with this Agreement and
the transactions contemplated hereby, (iii) specimen signatures of the
authorized officers, and (iv) amendments to its articles or
certificate of incorporation and bylaws adopted since the last such
certificated delivered to the Agent, certified as being true and
complete. The Agent and the Lenders may conclusively rely on such
certificate until the Agent receives notice in writing from the
Borrower to the contrary.
(b) counterparts of this Amendment executed by the
Borrower and the Lenders;
(c) new Notes where applicable duly completed and
executed by the Borrower;
-7-
<PAGE> 8
(d) counterparts of amendments to the Security
Instruments executed (and acknowledged where necessary or appropriate)
by the Borrower or any Subsidiary that is a party thereto;
(e) completion of an environmental due diligence review
of the Amoco Properties;
(f) the Borrower shall have contemporaneously purchased
and received an assignment of all of the Amoco Properties;
(g) the Agent shall have received (i) a certificate of a
Responsible Officer of the Borrower certifying that the Borrower has
purchased and received assignments of all of the Amoco Properties
included in the Amoco Reserve Report, except as a result of a sale
which is permitted by Section 9.15(iv) of the Credit Agreement, (ii) a
true and complete executed copy of the Amoco Purchase and Sale
Agreement, said agreements being in form and substance reasonably
satisfactory to the Agent, and being certified by such Responsible
Officer as being in full force and effect, (iii) a true and complete
executed counterpart of the opinions of counsel to each of the
Borrower and Amoco delivered in connection with the Amoco Acquisition,
in each case either addressed to the Agent and the Lenders or
accompanied with a letter from the issuer thereof granting to the
Agent and the Lenders the right to rely on the opinions set forth
therein, and (iv) such other related documents and information as the
Agent shall have reasonably requested;
(h) An opinion of James M. Piccone, general counsel of
the Borrower;
(i) the conditions set forth in Section 6.02 of the
Credit Agreement shall have been satisfied as of such date;
(j) an amendment fee of $1,350,000 for the pro rata
benefit of each Lender;
(k) other fees payable pursuant to the letter between the
Agent and the Borrower; and
(l) such other documents as it or its counsel may
reasonably request.
13. The parties hereto hereby acknowledge and agree that, except
as specifically supplemented and amended, changed or modified hereby, the
Credit Agreement shall remain in full force and effect in accordance with its
terms.
14. The Borrower hereby reaffirms that as of the date of this
Amendment, the representations and warranties contained in Article VII of the
Credit Agreement are true and correct on the date hereof as though made on and
as of the date of this Amendment, except as such representations and warranties
are expressly limited to an earlier date.
-8-
<PAGE> 9
15. THIS AMENDMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY
AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
16. This Amendment may be executed in two or more counterparts,
and it shall not be necessary that the signatures of all parties hereto be
contained on any one counterpart hereof; each counterpart shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
-9-
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date set forth in the opening paragraph of this Amendment.
BORROWER: HS RESOURCES, INC.
By: /s/ JAMES M. PICCONE
----------------------------
Name: James M. Piccone
Title: Vice President
LENDER AND AGENT: THE CHASE MANHATTAN BANK
By: /s/ MARY JO WOODFORD
----------------------------
Name: Mary Jo Woodford
Title:
LENDERS: CIBC, INC.
By: /s/ ALEKSANDRA K. DYMANUS
----------------------------
Name: Aleksandra K. Dymanus
Title: Authorized Signatory
WELLS FARGO BANK, N.A.
By: /s/ TODD STORNETTA
----------------------------
Name: Todd Stornetta
Title: Relationship Manager
S-1
<PAGE> 11
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ [ILLEGIBLE]
----------------------------
Name: ILLEGIBLE
Title: Senior Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ RANDALL OSTERBERG
----------------------------
Name: Randall Osterberg
Title: Vice President
ROYAL BANK OF CANADA
By: /s/ GIL J. BENARD
----------------------------
Name: Gil J. Benard
Title: Senior Manager
DEN NORSKE BANK ASA
By: /s/ WILLIAM V. MOYER
----------------------------
Name: William V. Moyer
Title: First Vice President
By: /s/ J. MORTEN KREUTZ
----------------------------
Name: J. Morten Kreutz
Title: Vice President
MEESPIERSON, N.V.
By: /s/ KAREL LOWMAN
----------------------------
Name: Karel Lowman
Title: Managing Director
S-2
<PAGE> 12
ABN AMRO BANK N.V.
San Francisco International Branch
By: /s/ BRADFORD H. LEAHY
----------------------------
Name: Bradford H. Leahy
Title: Assistant Vice President
By: /s/ JEFFREY A. FRENCH
----------------------------
Name: Jeffrey A. French
Title: Group Vice President
& Director
FIRST UNION NATIONAL BANK
By: /s/ MICHAEL J. KOLOSOWSKY
----------------------------
Name: Michael J. Kolosowsky
Title: Vice President
THE SANWA BANK, LIMITED
By: /s/ C. LAWRENCE MURPHY
----------------------------
Name: C. Lawrence Murphy
Title: Senior Vice President
SOCIETE GENERALE
By: /s/ RICHARD A. GOULD
----------------------------
Name: Richard A. Gould
Title: Vice President
S-3
<PAGE> 13
BANQUE PARIBAS
By: /s/ BARTON D. SCHOUEST
----------------------------
Name: Barton D. Schouest
Title: Managing Director
By: /s/ MICHAEL H. FIUZAT
----------------------------
Name: Michael H. Fiuzat
Title: Vice President
CREDIT AGRICOLE INDOSUEZ
By: /s/ DAVID BOUHL
----------------------------
Name: David Bouhl, F.V.P.
Title: Head of Corporate Banking
Chicago
By: /s/ KATHERINE L. ABBOTT
----------------------------
Name: Katherine L. Abbott
Title: First Vice President
S-4
<PAGE> 14
RATIFICATION
Each of the undersigned (a "Guarantor") hereby agrees that its
liabilities under its respective Guaranty Agreement dated as of June 14, 1996,
as amended by First Amendment to Guaranty Agreement dated as of June 17, 1996
(each such Guaranty Agreement as amended called a "Guaranty"), guaranteeing the
indebtedness, obligations and liabilities under that certain Amended and
Restated Credit Agreement dated June 14, 1996, as amended by First Amendment to
Amended and Restated Credit Agreement dated as of June 17, 1996, Second
Amendment to Amended and Restated Credit Agreement dated as of November 27,
1996 and the foregoing Third Amendment to Amended and Restated Credit Agreement
dated as of December 15, 1997 shall remain enforceable against such Guarantor
in accordance with the terms of its Guaranty and shall not be reduced, altered,
limited, lessened or in any way affected by the execution and delivery of this
Third Amendment to Amended and Restated Credit Agreement. Each Guarantor
hereby confirms and ratifies its liabilities under its Guaranty in all
respects.
ORION ACQUISITION, INC.
By: /s/ JAMES M. PICCONE
----------------------------
Name: James M. Piccone
Title: Vice President
HSRTW, INC. (formerly known as HSR
Acquisition, Inc.)
By: /s/ JAMES M. PICCONE
----------------------------
Name: James M. Piccone
Title: Vice President
S-5
<PAGE> 15
ANNEX I
LIST OF MAXIMUM CREDIT AMOUNTS
<TABLE>
<CAPTION>
Maximum
Name of Lender Percentage Share Credit Amount
-------------- ---------------- -------------
<S> <C> <C>
The Chase Manhattan Bank 10.0000000% $ 45,000,000
Wells Fargo Bank, N.A. 8.8888888% $ 40,000,000
CIBC, Inc. 8.8888888% $ 40,000,000
Credit Lyonnais New York Branch 8.8888888% $ 40,000,000
Union Bank of California, N.A. 8.8888888% $ 40,000,000
Banque Paribas 8.8888888% $ 40,000,000
Royal Bank of Canada 7.7777777% $ 35,000,000
Den norske Bank ASA 7.7777777% $ 35,000,000
ABN AMRO Bank N.V. 6.6666666% $ 30,000,000
Societe Generale 6.6666666% $ 30,000,000
MeesPierson, N.V. 5.5555555% $ 25,000,000
First Union National Bank 4.4444444% $ 20,000,000
The Sanwa Bank, Limited 4.4444444% $ 20,000,000
Credit Agricole Indosuez 2.2222222% $ 10,000,000
---------- ------------
Totals 100% $450,000,000
</TABLE>
<PAGE> 1
EXHIBIT 99.1
HS RESOURCES CLOSES ACQUISITION OF
AMOCO WATTENBERG PROPERTIES
December 17, 1997
San Francisco, California -- HS Resources, Inc. (NYSE:HSE) today announced that
it has completed the previously announced acquisition from Amoco Production
Company, a subsidiary of Amoco Corp. (NYSE:AN), of all of Amoco's oil and gas
producing properties located in the Denver-Julesburg ("D-J") Basin of northeast
Colorado. The Company paid $290 million in cash, issued 1.2 million shares of
common stock and transferred to Amoco certain properties located in Oklahoma.
The effective date of the transaction was December 1, 1997.
According to the Company, estimated proved reserves on the acquired properties
are approximately 15.2 million barrels of oil and 330 billion cubic feet of
gas, or approximately 70.2 million equivalent barrels of oil. The properties
include more than 800 operated wells located on 411,000 gross (311,000 net)
acres with an average working interest of 91%, plus smaller interests in
approximately 1,200 wells operated by others, including more than 500 operated
by HSE.
The Company also announced that, concurrently with the Amoco closing, it closed
two separate transactions which monetize a portion of the Section 29 income tax
credits associated with production from the acquired properties. The first
transaction was entered into with a financial institution, covering production
from 534 wells, and is structurally similar to previous transactions entered
into with the same institution. At closing HSE received net cash proceeds of
$9.7 million, and it will receive additional future cash payments which are a
function of future tax credit qualified production. In the second transaction,
HSE sold small, non-operated working interests and associated tax credits in
138 gross (2 net) wells to Patina Oil and Gas Corporation (NYSE:POG). Net
proceeds to HSE at closing of this transaction were $2.4 million.
<PAGE> 2
HSE President Mike Highum said, "The acquisition of the Amoco assets is a
significant milestone in the Company's efforts to reconsolidate oil and gas
properties in the D-J Basin. This reconsolidation opens the way to development
and production of billions of cubic feet of gas previously stranded because of
the complex layering of ownership. We expect that the transition from Amoco's
operatorship to ours will be accomplished smoothly and quickly, and should
result in lower per-unit operating costs."
CEO Nick Sutton noted, "Our technical and operational teams performed an
exhaustive analysis of these properties. They now are looking forward to
bringing significant new production on-line and booking new proved reserves.
Through their work, we have identified more than 2,100 opportunities to put
more than $400 million of low risk, high return capital to work in such
activities as infill drilling, refracs and recompletions, which we believe will
substantially augment the estimated 70.2 MMBoe of proved reserves. Last week we
filed with the Securities and Exchange Commission a report on Form 8-K which
describes the Amoco transaction in great detail, including a more specific
analysis of the opportunities which the transaction brings to the Company. We
have no doubt that these opportunities will substantially increase value to our
shareholders, including Amoco, our newest large shareholder."
Jim Duffy, the Company's Chief Financial Officer, commented, "We are delighted
to have this transaction closed, and to add these properties to our extensive
D-J Basin holdings. Looking into the new year, we are evaluating the many
options available to us for the longer term financing of the purchase. As a
part of our financing strategy, on December 1 we acquired an option, which is
exercisable through December 23, 1997, to hedge calendar year 1998 product
prices at $2.15 per MMBtu and $19.00 per Bbl (based on futures prices on the
New York Mercantile Exchange) covering virtually all of the Amoco property
production. By doing that, we effectively took near-term product price risk out
of the financing decision."
<PAGE> 3
Statements concerning debt repayment, operating costs, transition of
operations, drilling, exploration and other plans, expectations of drilling
success, production or reserve levels and all similar statements or
implications are forward looking statements within the meaning of Federal
securities laws. Actual results or events may differ materially from these
forward looking statements, depending upon a variety of factors, including
commodity prices, availability of capital, results of exploration and other
drilling, cash flow from operations, costs of materials and labor, availability
of equipment, regulatory burdens, Company objectives and business judgment and
other, both within and outside of the Company's control. The Company's forward
looking statements are qualified in their entirety by these and other factors
more fully set forth on the Company's report on Form 8-K filed February 26,
1997.
HS Resources, Inc. is an independent oil and gas exploration and development
company with active projects in the Rocky Mountain, Mid-Continent and Gulf
Coast regions. The common stock of HS Resources, Inc. is traded on the New
York Stock Exchange under the symbol "HSE".
Contact: Theodore Gazulis
Vice President - Treasury,
Capital Markets and Investor Relations
415-433-5795
[email protected]
