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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 (Date of earliest event reported): May 1, 1997
WILLIAMS COAL SEAM GAS ROYALTY TRUST
(Exact name of registrant as specified in its charter)
Delaware 1-11608 75-6437433
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Trust Division
NationsBank of Texas, N.A.
901 Main Street, Suite 1700
Dallas, Texas 75202
(Address, including zip code, of principal executive offices)
Registrant's telephone number, including area code: (214) 508-2364
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Item 5. OTHER EVENTS.
Williams Coal Seam Gas Royalty Trust (the "Trust") was formed as a Delaware
business trust pursuant to the Trust Agreement of Williams Coal Seam Gas Royalty
Trust (as amended, the "Trust Agreement") entered into effective as of December
1, 1992 by and among Williams Production Company ("WPC"), as trustor, The
Williams Companies, Inc. ("Williams"), the parent company of WPC, and
NationsBank of Texas, N.A. (the "Trustee") and Chemical Bank Delaware (the
"Delaware Trustee"), as trustees. The Trust owns certain net profits interests
(the "Royalty Interests") in proved natural gas properties located in the San
Juan Basin of New Mexico and Colorado (the "Underlying Properties"), which
Royalty Interests were conveyed to the Trust pursuant to that certain Net
Profits Conveyance (the "Conveyance") dated effective as of October 1, 1992 by
and among WPC, Williams, the Trustee and the Delaware Trustee. Copies of the
Trust Agreement and the Conveyance are filed as exhibits to the Trust's Form 10-
K for the year ended December 31, 1996 (the "1996 Form 10-K").
On May 7, 1997, effective as of May 1, 1997, WPC transferred the Underlying
Properties to an unaffiliated third party ("Buyer") pursuant to that certain
Purchase and Sale Agreement dated as of May 1, 1997 (herein so called) between
WPC and Buyer (the "Transaction"). Prior to the Transaction, WPC had owned the
Underlying Properties, subject to and burdened by the Royalty Interests owned by
the Trust, since the inception of the Trust. Neither the Trustee nor the
Delaware Trustee has any control over or responsibility relating to the
operation of the Underlying Properties. The Transaction was previously reported
as a subsequent event by the Trust in its Form 10-Q for the quarter ended March
31, 1997, which was filed with the Securities and Exchange Commission on May 15,
1997.
Concurrently with the Transaction, WPC and Buyer entered into a Management
Services Agreement dated as of May 1, 1997 (the "Management Agreement") whereby
WPC was engaged by Buyer to (i) manage and operate the Underlying Properties on
behalf of Buyer, (ii) act for Buyer with respect to the receipt of funds and
payment of certain obligations related to the Underlying Properties, and (iii)
provide reports and other information with respect to the Underlying Properties.
For so long as WPC continues to manage the Underlying Properties, WPC does
not anticipate that the Transaction will have any material effect on the
operation of the Underlying Properties. The Management Agreement may, however,
be terminated by the Buyer at any time, with or without cause. In the event of
such a termination, WPC has an option to repurchase the Underlying Properties at
fair market value. In addition, the Purchase and Sale Agreement also provides
WPC other options to repurchase the Underlying Properties at fair market value
at certain times specified in the Purchase and Sale Agreement.
Prior to the Transaction, WPC received all payments relating to the
Underlying Properties and, pursuant to the Conveyance, paid to the Trust the
portion thereof attributable to the Royalty Interests. Following the
Transaction, WPC continues to collect all revenues on behalf of Buyer and
remains obligated to pay to the Trust on behalf of Buyer the amounts
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payable with respect to the Royalty Interests. Concurrently with the
Transaction, WPC, Williams, the Trust and Buyer entered into an Agreement dated
May 7, 1997 (the "Supplemental Agreement") pursuant to which (i) the parties
acknowledged that WPC was selling the Underlying Properties to Buyer, but
retaining all of its duties and obligations under the Trust Agreement,
Conveyance and related documents (the "Trust Documents"), subject to the terms
and conditions set forth in the Purchase and Sale Agreement and the agreements
entered into pursuant to the Purchase and sale Agreement, (ii) Williams and WPC
each confirmed and agreed that, notwithstanding the sale of the Underlying
Properties to Buyer, Williams and WPC would continue to perform their respective
obligations to the Trust pursuant to the Trust Documents, including without
limitation the performance assurances of Williams set forth in the Conveyance,
and (iii) Buyer acknowledged and agreed that it was purchasing the Underlying
Properties burdened by the Royalty Interests owned by the Trust. As a condition
to the effectiveness of the Supplemental Agreement, the Trustee received an
opinion of counsel to Williams to the effect that neither the Supplemental
Agreement nor the transaction contemplated by the Purchase and Sale Agreement
was required to be submitted for approval by vote of the Unitholders of the
Trust.
A copy of the Supplemental Agreement is filed as an exhibit to this Form 8-
K. The foregoing summary of the material provisions of the Supplemental
Agreement is qualified in its entirety by reference to the terms of such
agreement as set forth in such exhibit. For a description of Williams'
performance assurances, see "Item 2--The Royalty Interests--Williams'
Performance Assurances" in the 1996 Form 10-K.
It is anticipated that the Transaction will have no adverse effect on
Unitholders.
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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.
WILLIAMS COAL SEAM GAS
ROYALTY TRUST
By: NationsBank of Texas, N.A., Trustee
Date: June 20, 1997 By: /s/ RON E. HOOPER
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Ron E. Hooper
Vice President and Administrator
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INDEX TO EXHIBITS
Item
Number Exhibit
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10.1 Agreement dated May 7, 1997, effective as of May 1, 1997, by and
among Williams Production Company, The Williams Companies, Inc.,
Williams Coal Seam Gas Royalty Trust and Quatro Finale LLC.
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EXHIBIT 10.1
AGREEMENT
THIS AGREEMENT (this "AGREEMENT") is entered into on May 7, 1997, by and
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among WILLIAMS PRODUCTION COMPANY, a Delaware corporation with its principal
office in Tulsa, Oklahoma ("WPC"), THE WILLIAMS COMPANIES, INC., a Delaware
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corporation with its principal office in Tulsa, Oklahoma ("WILLIAMS"), WILLIAMS
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COAL SEAM GAS ROYALTY TRUST (the "TRUST"), a Delaware business trust acting
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through NATIONSBANK OF TEXAS, N.A. (the "TRUSTEE"), a banking association
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organized under the laws of the United States of America with its principal
office in Dallas, Texas, as trustee, and QUATRO FINALE LLC, a Delaware limited
liability company with its principal office in New York, New York ("QUATRO
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FINALE");
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WITNESSETH:
WHEREAS, the Trust was formed as a Delaware business trust pursuant to that
certain Trust Agreement of Williams Coal Seam Gas Royalty Trust entered into
effective as of December 1, 1992, by and among WPC, as trustor, Williams, the
parent company of WPC, and NationsBank of Texas, N.A. and Chemical Bank Delaware
(the "DELAWARE TRUSTEE"), as trustees (as amended, the "TRUST AGREEMENT"), to
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acquire and hold certain net profits interests (the "ROYALTY INTERESTS") in
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proved coal seam gas properties located in the San Juan Basin of New Mexico and
Colorado (the "UNDERLYING PROPERTIES"); and
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WHEREAS, the Royalty Interests were conveyed to the Trust on January 21,
1993, pursuant to that certain Net Profits Conveyance (the "CONVEYANCE") dated
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effective as of October 1, 1992, by and among WPC, Williams, the Trustee and the
Delaware Trustee for the benefit of the unitholders of the Trust; and
WHEREAS, the Trustee and Williams are parties to that certain
Administrative Services Agreement dated effective December 1, 1992 (the
"SERVICES AGREEMENT"); and
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WHEREAS, pursuant to Article XV of the Conveyance, Williams agreed to cause
certain obligations of WPC (the "WPC PAYMENT OBLIGATIONS" as defined in the
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Conveyance) and of Williams Gas Marketing Company (the "WGM PAYMENT OBLIGATIONS"
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as defined in the Conveyance), a wholly-owned subsidiary of Williams ("WGM"), to
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be paid in full when due; and
WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated
April 28, 1995, WFS Gas Resources Company, a Delaware corporation and a wholly-
owned subsidiary of Williams ("WFS RESOURCES"), fully assumed the WGM Payment
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Obligations; and
WHEREAS, in that certain Confirmation Agreement dated May 1, 1995 (the
"CONFIRMATION AGREEMENT"), Williams expressly confirmed that its agreement to
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cause the WGM Payment Obligations to be paid in full when due continued in full
force and effect notwithstanding the assignments by WGM to WFS Resources of the
Sales Contract (as
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defined in the Conveyance) and the Gas Gathering Contract (as defined in the
Conveyance); and
WHEREAS, WPC and Quatro Finale have entered into that certain Purchase and
Sale Agreement dated as of May 1, 1997 (the "PURCHASE AGREEMENT") whereby WPC
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has agreed to sell and Quatro Finale has agreed to purchase the Underlying
Properties;
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. ASSIGNMENT AND ASSUMPTION. The parties hereby acknowledge that WPC is
selling the Underlying Properties to Quatro Finale, but retaining all of its
duties and obligations under the Trust Documents (as defined below), subject to
the terms and conditions set forth in the Purchase Agreement and the agreements
entered into pursuant to the Purchase Agreement.
2. CONFIRMATION OF OBLIGATIONS OF WPC AND WILLIAMS. Williams and WPC each
confirm and agree that (i) Williams and WPC shall continue to perform their
respective obligations to the Trust pursuant to the Trust Agreement, the
Conveyance, the Services Agreement, the Confirmation Agreement and all other
related agreements (such documents, collectively, the "TRUST DOCUMENTS"),
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notwithstanding the sale of the Underlying Properties to Quatro Finale, and
notwithstanding any provision of the Trust Documents, including without
limitation Article VI of the Trust Agreement and Articles XIV and XV of the
Conveyance, if applicable, and (ii) such agreements of Williams and WPC
constitute valid and binding agreements of each, respectively.
3. ACKNOWLEDGMENT OF TRUST'S OWNERSHIP OF THE ROYALTY INTERESTS. Quatro
Finale acknowledges and agrees that it is purchasing the Underlying Properties
burdened by the Royalty Interests owned by the Trust.
4. TRUST DOCUMENTS IN FULL FORCE AND EFFECT. Each of Williams and WPC
hereby confirms that the Trust Documents are in full force and effect and that,
to the best of its knowledge, it is not in default or breach of any material
term or condition of any of the Trust Documents.
5. CONDITION TO EFFECTIVENESS. As a condition to the effectiveness of
this Agreement the Trust has received an opinion of counsel from Rebecca H.
Hilborne, Assistant General Counsel of Williams, dated of even date herewith, to
the effect that neither this Agreement nor the transaction contemplated by the
Purchase Agreement is required to be submitted for approval by vote of the
unitholders of the Trust.
6. EFFECTIVE DATE. This Agreement shall be effective as of May 1, 1997
(the "EFFECTIVE DATE").
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7. DUE AUTHORIZATION. Each party represents and warrants, as to itself,
that such party has the requisite power and authority to execute, deliver and
perform this Agreement. Each party further represents and warrants, as to
itself, that this Agreement has been duly executed and delivered by such party
and is a valid and binding obligation of each of them.
8. ENTIRE AGREEMENT. This Agreement evidences the entire Agreement
between the parties with respect to the subject matter hereof and supersedes any
prior agreement, understanding, negotiation or discussion, whether oral or
written, between or among the parties to this Agreement with respect to the
subject matter hereof.
9. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. This
Agreement shall not be assigned by a party hereto without the prior written
consent of the other parties to this Agreement.
10. COUNTERPART EXECUTION. This Agreement may be executed in several
counterparts all of which are identical and each of which will be an original.
All of such counterparts together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written, but effective as of the Effective Date.
ATTEST: WILLIAMS PRODUCTION COMPANY
By: /s/ BRIAN K. SHORE By: /s/ RALPH A. HILL
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Name: Brian K. Shore Name: Ralph A. Hill
Title: Assistant Secretary Title: Vice President and
General Manager
[Seal if by corporate officer]
ATTEST: THE WILLIAMS COMPANIES, INC.
By: /s/ SHAWNA L. BARNARD By: /s/ JACK D. MCCARTHY
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Name: Shawna L. Barnard Name: Jack D. McCarthy
Title: Assistant Secretary Title: Senior Vice President and
Chief Financial Officer
[Seal if by corporate officer]
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WILLIAMS COAL SEAM GAS
ROYALTY TRUST,
ATTEST: By: NationsBank of Texas, N.A.,
Trustee
By: /s/ DON A. YUCHS By: /s/ RON HOOPER
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Name: Don A. Yuchs Name: Ron Hooper
Title: Assistant Vice President Title: Vice President
[Seal if by corporate officer]
QUATRO FINALE LLC
By: /s/ JOSEPH J. STARK, JR.
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Name: Joseph J. Stark, Jr.
Title: Vice President
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STATE OF OKLAHOMA )
) ss.
COUNTY OF TULSA )
The foregoing instrument was acknowledged before this 7th day of May, 1997,
by Ralph A. Hill, Vice President and General Manager of Williams Production
Company, a Delaware corporation, on behalf of said corporation.
/s/ CAROL WRIGHT
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Notary Public
My commission expires:
MARCH 20, 1999
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STATE OF OKLAHOMA )
) ss.
COUNTY OF TULSA )
The foregoing instrument was acknowledged before me this 7th day of May,
1997, by Jack D. McCarthy, Senior Vice President and Chief Financial Officer of
The Williams Companies, Inc., a Delaware corporation, on behalf of said
corporation.
/s/ CAROL WRIGHT
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Notary Public
My commission expires:
MARCH 20, 1999
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STATE OF TEXAS )
) ss.
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this 7th day of May,
1997, by Ron E. Hooper, Vice President of NationsBank of Texas, N.A., a national
banking association, as Trustee, on behalf of said corporation acting as trustee
of Williams Coal Seam Gas Royalty Trust.
/s/ JANA L. EGLER
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Notary Public
My commission expires:
OCTOBER 22, 1998
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STATE OF OKLAHOMA )
) ss.
COUNTY OF TULSA )
The foregoing instrument was acknowledged before me this 7th day of May,
1997, by Joseph J. Stark, Jr., Vice President of Quatro Finale LLC, a Delaware
limited liability company, on behalf of said limited liability company.
/s/ LADONNA MCCONNELL
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Notary Public
My commission expires:
JULY 27, 1997
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