<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
AMENDMENT NO. 26
BURLINGTON RESOURCES COAL SEAM GAS ROYALTY TRUST
(NAME OF ISSUER)
UNITS OF BENEFICIAL INTEREST
(TITLE OF CLASS OF SECURITIES)
122016 10 8
(CUSIP NUMBER)
C. N. O'SULLIVAN
910 TRAVIS STREET
SUITE 2150
HOUSTON, TEXAS 77002
(713) 759-2030
WITH A COPY TO:
BRIAN D. BARNARD
HAYNES AND BOONE, LLP
201 MAIN STREET
SUITE 2200
FORT WORTH, TEXAS 76132
(817) 347-6600
(NAME, ADDRESSES AND TELEPHONE NUMBERS OF PERSONS AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS)
OCTOBER 21, 1998
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
================================================================================
<PAGE> 2
SCHEDULE 13D
<TABLE>
<S> <C>
CUSIP No. 122016 10 8 Page 2 of 17 Pages
------- --------
- ----------------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1
San Juan Partners, L.L.C.
- ----------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [x]
2 (b) [ ]
- ----------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- ----------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS (See Instructions)
4
AF, BK
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
5
- ----------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Texas
- ----------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
7
0 Units
-----------------------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 5,867,968 Units
OWNED BY -----------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON 0 Units
WITH -----------------------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
12
- ----------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
66.68%
- ----------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
OO
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
================================================================================
SCHEDULE 13D
<TABLE>
<S> <C>
CUSIP No. 122016 10 8 Page 3 of 17 Pages
------- --------
- -----------------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1
EnCap Energy Capital Fund III, L.P.
- -----------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [x]
2 (b) [ ]
- -----------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- -----------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS (See Instructions)
4
WC
- -----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
5
- -----------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Texas
- -----------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
------------------------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 5,867,968 Units
OWNED BY ------------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON 0
WITH ------------------------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
5,867,968 Units
- -----------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,867,968 Units
- -----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
12
- -----------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
66.68%
- -----------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
SCHEDULE 13D
<TABLE>
<S> <C>
CUSIP No. 122016 10 8 Page 4 of 17 Pages
------- --------
- ----------------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1
EnCap Energy Acquisition III-B, Inc.
- ----------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [x]
2 (b) [ ]
- ----------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- ----------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS (See Instructions)
4
WC
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
5
- ----------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Texas
- ----------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-----------------------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 5,867,968 Units
OWNED BY -----------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON 0
WITH -----------------------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
12
- ----------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
66.68%
- ----------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 5
5, SCHEDULE 13D
<TABLE>
<S> <C>
CUSIP No. 122016 10 8 Page 5 of 17 Pages
------- --------
- ----------------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1
ECIC Corporation
- ----------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [x]
2 (b) [ ]
- ----------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- ----------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS (See Instructions)
4
WC
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
5
- ----------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Texas
- ----------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-----------------------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 5,867,968 Units
OWNED BY -----------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON 0
WITH -----------------------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
12
- ----------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
66.68%
- ----------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
SCHEDULE 13D
<TABLE>
<S> <C>
CUSIP No. 122016 10 8 Page 6 of 17 Pages
------- --------
- ----------------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1
BOCP Energy Partners, L.P.
- ----------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [x]
2 (b) [ ]
- ----------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- ----------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS (See Instructions)
4
WC
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
5
- ----------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Texas
- ----------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-----------------------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 5,867,968 Units
OWNED BY -----------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON 0
WITH -----------------------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
12
- ----------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
66.68%
- ----------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 7
SCHEDULE 13D
<TABLE>
<S> <C>
CUSIP No. 122016 10 8 Page 7 of 17 Pages
------- --------
- ----------------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1
First Union Investors, Inc.
- ----------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [x]
(b) [ ]
2
- ----------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- ----------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS (See Instructions)
4
WC
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
5
- ----------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
North Carolina
- ----------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-----------------------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 5,867,968 Units
OWNED BY -----------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON 0
WITH -----------------------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
12
- ----------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
66.68%
- ----------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 8
SCHEDULE 13D
<TABLE>
<S> <C>
CUSIP No. 122016 10 8 Page 8 of 17 Pages
------- --------
- ----------------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1
Andover Group, Inc.
- ----------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [x]
2 (b) [ ]
- ----------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- ----------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS (See Instructions)
4
WC
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
5
- ----------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Texas
- ----------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-----------------------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 5,867,968 Units
OWNED BY -----------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON 0
WITH -----------------------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
12
- ----------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
66.68%
- ----------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 9
SCHEDULE 13D
<TABLE>
<S> <C>
CUSIP No. 122016 10 8 Page 9 of 17 Pages
------- --------
- ----------------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1
Charles T. McCord III
- ----------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [x]
2 (b) [ ]
- ----------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- ----------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS (See Instructions)
4
PF
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
5
- ----------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- ----------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-----------------------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 5,867,968 Units
OWNED BY -----------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON 0
WITH -----------------------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
12
- ----------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
66.68%
- ----------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
SCHEDULE 13D
<TABLE>
<S> <C>
CUSIP No. 122016 10 8 Page 10 of 17 Pages
-------- --------
- ----------------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1
O'Sullivan Oil & Gas Company, Inc.
- ----------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [x]
2 (b) [ ]
- ----------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- ----------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS (See Instructions)
4
WC
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
5
- ----------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Texas
- ----------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-----------------------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 5,867,968 Units
OWNED BY -----------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON 0
WITH -----------------------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
12
- ----------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
66.68%
- ----------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
SCHEDULE 13D
<TABLE>
<S> <C>
CUSIP No. 122016 10 8 Page 11 of 17 Pages
-------- --------
- ----------------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1
Christopher P. Scully
- ----------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [x]
2 (b) [ ]
- ----------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- ----------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS (See Instructions)
4
PF
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
5
- ----------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- ----------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-----------------------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 5,867,968 Units
OWNED BY -----------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON 0
WITH -----------------------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
12
- ----------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
66.68%
- ----------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
SCHEDULE 13D
<TABLE>
<S> <C>
CUSIP No. 122016 10 8 Page 12 of 17 Pages
-------- --------
- ----------------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1
Scott W. Smith Funding, L.L.C.
- ----------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [x]
2 (b) [ ]
- ----------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- ----------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS (See Instructions)
4
WC
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
5
- ----------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Texas
- ----------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-----------------------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 5,867,968 Units
OWNED BY -----------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON 0
WITH -----------------------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
12
- ----------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
66.68%
- ----------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
OO
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
SCHEDULE 13D
<TABLE>
<S> <C>
CUSIP No. 122016 10 8 Page 13 of 17 Pages
-------- --------
- ----------------------------------------------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1
John V. Whiting
- ----------------------------------------------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [x]
2 (b) [ ]
- ----------------------------------------------------------------------------------------------------------------------
SEC USE ONLY
3
- ----------------------------------------------------------------------------------------------------------------------
SOURCE OF FUNDS (See Instructions)
4
PF
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
5
- ----------------------------------------------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- ----------------------------------------------------------------------------------------------------------------------
SOLE VOTING POWER
7
0
-----------------------------------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 5,867,968 Units
OWNED BY -----------------------------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON 0
WITH -----------------------------------------------------------------------------------
SHARED DISPOSITIVE POWER
10
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,867,968 Units
- ----------------------------------------------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
12
- ----------------------------------------------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
66.68%
- ----------------------------------------------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 14
This Amendment No. 26 amends the Statement on Schedule 13D of San Juan
Partners, L.L.C., a Texas limited liability company (the "Purchaser"), and
EnCap Energy Capital Fund III, L.P., a Texas limited partnership ("EnCap
Energy"), EnCap Energy Acquisition III-B, Inc., a Texas corporation ("EnCap
B"), ECIC Corporation, a Texas corporation ("ECIC"), BOCP Energy Partners,
L.P., a Texas limited partnership ("BOCP"), First Union Investors, Inc. a
North Carolina corporation ("First Union Investors"), Andover Group, Inc., a
Texas corporation ("Andover"), Charles T. McCord III, O'Sullivan Oil & Gas
Company, Inc., a Texas corporation ("O'Sullivan Oil"), Christopher P. Scully,
Scott W. Smith Funding, L.L.C., a Texas limited liability company ("Smith
Funding"), and John V. Whiting (EnCap Energy, EnCap B, ECIC, BOCP, First Union
Investors, Andover, McCord, O'Sullivan Oil, Scully, Smith Funding and Whiting
collectively referred to herein as "Parents") with respect to Units of
Beneficial Interest (the "Units") of Burlington Resources Coal Seam Gas Royalty
Trust, a Delaware business trust (the "Trust").
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is amended as follows:
On October 9, 1998, Purchaser amended its Advancing Term Credit
Agreement dated January 15, 1998 by entering into that certain Second Amendment
to Loan Agreement (the "Second Amendment") with Bank One, Texas, N.A. (the
"Lender"). The principal modification set forth in the Second Amendment is to
increase the amount the Lender will lend to the Purchaser up to the lesser of
$26,500,000 or the Borrowing Base; the Borrowing Base is an amount equal to 50%
of the purchase price of the Units purchased by Purchaser.
ITEM 4. PURPOSE OF THE TRANSACTION
Item 4 is amended as follows:
The purpose of the transaction is to initiate proceedings to pursue
the termination of the Trust. It is the Purchaser's intention, pursuant to the
terms of that certain Purchase Agreement dated October 21, 1998 between the
Purchaser and Burlington Oil & Gas Company ("BROG") described in Item 6 hereof,
to call a meeting of Unitholders or request that a meeting of the Unitholders
be called as soon as practicable for the purpose of voting on the termination
and liquidation of the Trust. The calling and holding of a meeting of
Unitholders will be subject to the written information statement requirements
pursuant to Rule 14c-2 promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). If a meeting of the Unitholders is held
concerning the termination of the Trust, the Purchaser intends to vote any and
all Units owned by it or over which it has voting control at the time of such
meeting in favor of terminating and liquidating the Trust. The Purchaser
currently owns or has voting control over in excess of 66 2/3% of the
outstanding Units. Pursuant to the Trust Agreement, the affirmative vote of
holders of not less than 66 2/3% of the outstanding Units for a proposal to
terminate the Trust is required in order for the Trust to be terminated.
More comprehensive information concerning meetings of the Unitholders
and the procedures concerning the termination of the Trust is included in the
Trust Agreement (which was filed as Exhibit 4.1 to the Trust's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1993), and the information set
forth in this Item 4 is qualified in its entirety by reference to the Trust
Agreement.
Upon the consummation of the transactions contemplated by the Purchase
Agreement described in Item 6 hereof, Purchaser will acquire under the Purchase
Agreement, among other things, all of Burlington Resources Oil & Gas Company's
("BROG") right, title and interest, if any, under the Trust Agreement, to the
extent assignable, including BROG's rights (i) pursuant to Section 9.03(c)
thereof, to make a written cash offer to purchase the Remaining Royalty
Interests (as defined in the Trust Agreement) owned by the Trust before the
sixtieth day following the affirmative vote of the Unitholders to terminate the
Trust, and (ii) pursuant to Section 5.03(e) thereof, to purchase the Remaining
Royalty Interests for a cash purchase price equal to 105% of the highest offer
received by the Trustee for such interests if the Trustee elects to defer
action on any original offer submitted pursuant to
14
<PAGE> 15
clause (i) above. See Item 6 - "Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer."
It is the current intention of the Purchaser to offer or bid to
purchase the Remaining Royalty Interests following an affirmative vote of the
Unitholders to terminate the Trust through the exercise of the rights under
Section 9.03(c) and (e) of the Trust Agreement acquired from BROG as described
in the preceding paragraph. Whether the Purchaser will so offer or bid, and if
so, be successful, will be dependent on a number of factors, including the
price and terms of the offers or bids received from any third party bidders.
For these reasons, no assurances can be given that the Purchaser will offer or
bid, and if so, be successful in its efforts, to acquire the Remaining Royalty
Interests. In the event that the Purchaser is unsuccessful in acquiring the
Remaining Royalty Interests and the Remaining Royalty Interests are sold to a
third party, then the leases subject thereto will continue to be burdened by
the Remaining Royalty Interests pursuant to the terms of that certain Net
Profits Interest Conveyance dated effective May 1, 1993, from Meridian Oil
Production Inc. to the Trust (the "Net Profits Conveyance"). However, in the
event that the Purchaser is successful in acquiring the Remaining Royalty
Interests, it is anticipated that the Purchaser would seek to merge its title
in and to the Remaining Royalty Interests into its title in the leasehold
interests acquired from BROG under the Purchase Agreement, so that the
Remaining Royalty Interests would terminate and the leasehold interests would
no longer be burdened thereby. As owner of leasehold and related interests in
the Fruitland coal formation underlying the Northeast Blanco Unit in San Juan
and Arriba Counties, New Mexico, the Purchaser would have rights to consent to
and participate in decisions concerning future exploration, development and
exploitation of such interests to the extent of its interests therein as well
as monetize any Section 29 tax credits attributable to its working interest.
Following any merger of title of the Remaining Royalty Interests and such
leasehold interests, Purchaser may elect to sell such combined interests, or
the Purchaser may elect to retain such combined interests for its own account.
See Item 6 - "Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer."
An affirmative vote to terminate and liquidate the Trust could
adversely affect the liquidity and market value of the Units held by the
public. Following such a vote but prior to the complete liquidation of the
Trust, the Units may be delisted by the New York Stock Exchange ("NYSE"), and
the registration of the Units under the Exchange Act, may be terminated.
Following the completion of a liquidation of the Trust, the Units shall be
delisted from the NYSE and deregistered under the Exchange Act if they have not
yet been so delisted and deregistered as of such time.
According to the NYSE's published guidelines, the NYSE would consider
delisting the Units if, among other things, (i) the operating assets of the
Trust have been or are to be substantially reduced such as by sale, spin off,
distribution, or discontinuance, or the Trust has ceased to be an operating
company or discontinued a substantial portion of its operations or business;
(ii) liquidation of the Trust has been authorized and the Trust is committed to
proceed; or (iii) the registration of the Trust under the Exchange Act is no
longer effective.
Following a vote of the Unitholders approving the termination of the
Trust, the Units may no longer meet the requirements of the NYSE for continued
listing and may, therefore,
15
<PAGE> 16
be delisted from such exchange. If, as a result of the approval of the
termination of the Trust or otherwise, the Units no longer meet the
requirements of the NYSE for continued listing and/or trading and such trading
of the Units were discontinued, the market for such Units could be adversely
affected.
In the event of the delisting of the Units by the NYSE, it is possible
that, prior to the complete liquidation of the Trust, the Units would continue
to trade on another securities exchange or in the over-the-counter market and
that price quotations would be reported by such exchange, by the National
Association of Securities Dealers, Inc. (the "NASD") through the NASD Automated
Quotation System ("Nasdaq") or by other sources. The extent of the public
market for Units and the availability of such quotations would, however, depend
upon such factors as the number of Unitholders remaining at such time, the
interest in maintaining a market in such Units on the part of securities firms,
the possible termination of registration under the Exchange Act as described
below and other factors. The Units will be delisted from the NYSE upon the
completion of the liquidation of the Trust, if they have not been so
deregistered prior to such time.
The Units are currently registered under the Exchange Act. The vote
of the Unitholders to terminate the Trust may result in the Units becoming
eligible for deregistration under the Exchange Act. Registration of the Units
under the Exchange Act may be terminated upon application of the Trust to the
Commission if the Units are not listed on a national securities exchange and
there are fewer than 300 record holders of the Units. Termination of
registration of the Units under the Exchange Act would substantially reduce the
information required to be furnished by the Trust to Unitholders and to the
Commission and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act and
the requirements of furnishing a proxy or information statement in connection
with Unitholders' meeting pursuant to Section 14 of the Exchange Act, no longer
applicable to the Trust. Furthermore, the ability of "affiliates" of the Trust
and persons holding "restricted securities" of the Trust to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933,
as amended, may be impaired or eliminated. In addition, if registration of the
Units under the Exchange Act were terminated, the Units would no longer be
eligible for listing or Nasdaq reporting.
It is the present intention of the Purchaser to seek to cause the
Trust to make such an application for termination of registration of the Units
as soon as practicable under the circumstances following an approval of the
termination of the Trust by the Unitholders if the requirements for termination
of registration are met. The Units will be deregistered under the Exchange Act
upon the completion of the liquidation of the Trust if they have not been so
deregistered prior to such time.
The Units are presently "margin securities" under the regulations of
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to
extend credit on the collateral of such Units for the purpose of buying,
carrying or trading in securities ("Purpose Loans"). Depending upon factors
such as the number of record holders of the Units and the number and market
value of publicly held Units, following the termination of the Trust, the Units
may no longer
16
<PAGE> 17
constitute margin securities for purposes of the Federal Reserve Board's margin
regulations and, therefore, could no longer be used as collateral for Purpose
Loans made by brokers. In addition, if registration of the Units under the
Exchange Act were terminated, the Units would no longer constitute margin
securities.
Except as provided herein and in Item 6 below, the Purchaser has no
present plans or proposals (i) to vote its Units for the removal of either the
Trustee or the Delaware Trustee, (ii) to change the distributions of the Trust,
or (iii) that relate to or that would result in any of the other actions
specified in clauses (a) through (j) of Item 4 of Schedule 13D promulgated
under the Securities Exchange Act of 1934, as amended.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Item 6 is amended as follows:
On October 21, 1998, the Purchaser entered into a Purchase and Sale
Agreement (the "Purchase Agreement") with Burlington Resources Oil & Gas
Company ("BROG"), as contemplated by the Letter of Intent entered into between
the Purchaser and BROG on September 17, 1998. Pursuant to the terms of the
Purchase Agreement, BROG has agreed to sell (or cause to be sold) and Purchaser
has agreed to buy all of BROG's right, title and interest in and to (i) certain
leases, leasehold interests and overriding royalty interests of BROG in and to
the Fruitland coal formation in the Northeast Blanco Unit ("NEBU"), in San Juan
and Rio Arriba Counties, New Mexico (the "Leases"); (ii) the wells, fixtures
and equipment in connection with the Leases; (iii) that certain Northeast
Blanco Unit Agreement dated July 16, 1951 (the "Unit Agreement") and that
certain Unit Operating Agreement dated July 16, 1951, as amended on May 14,
1959 and January 24, 1991 (the "Unit Operating Agreement"), insofar as same
cover the Fruitland coal formation; (iv) certain gas purchase contracts,
product purchase and sale agreements, gas gathering agreements and gas
processing agreements related to the Leases (to the extent they are assignable)
including, but not limited to, that certain Gas Purchase Contract dated
effective May 1, 1993, by and between Meridian Oil Trading Inc. and Meridian
Oil Production Inc. (the "Gas Contract"); (v) any equipment leases and rental
contracts related to the interests conveyed, to the extent assignable; (vi) the
rights of BROG, if any, under the Trust Agreement to the extent assignable; and
(vii) the rights of BROG, assignor, under that certain Net Profits Interest
Conveyance (the "Net Profits Conveyance") dated effective May 1, 1993 from
Meridian Oil Production Inc. to the Burlington Resources Coal Seam Gas Royalty
Trust (the "Trust") (collectively, the "Interests"). In addition, the Purchase
Agreement provides that the Purchaser shall acquire (x) certain rights of BRI
under the Trust Agreement and that certain Administrative Services Agreement
dated effective May 1, 1993 by and between BRI and the Trust (the
"Administrative Services Agreement") and (y) certain rights of Burlington
Resources Trading Inc. ("BRTI") under that certain Gathering Agreement
(defined herein), all as described below. The effective date of the
conveyances contemplated under the Purchase Agreement is July 1, 1998 (the
"Effective Time"). Substantially all of the working interests owned by BROG
under the Leases are burdened by the Net Profits Interests, which comprise the
Trust Estate and the Units of Beneficial Interest therein.
17
<PAGE> 18
The Purchaser has agreed to pay a purchase price of $20,750,000 cash
for the Interests, which amount may be adjusted, among other things, (i) for
certain Title Defects or Environmental Defects (as those terms are defined in
the Purchase Agreement) associated with the Interests; (ii) in the event of
certain casualty losses or upon the failure of BROG to obtain certain required
consents to an assignment of a Lease; or (iii) for certain natural gas
imbalances with respect to the Interests.
The obligation of BROG to close the transactions contemplated by the
Purchase Agreement is subject to certain conditions, including (i) the
termination of all of BRI's obligations (other than obligations relating to the
wind-up of the Trust and any obligations which expressly survive the
termination of the Trust) under the Trust Agreement and under the
Administrative Services Agreement; (ii) that the total adjustments to the
purchase price do not exceed $4,000,000; (iii) there being no pending legal or
equitable action seeking to enjoin, prohibit or declare illegal the purchase
and sale of the Interests as contemplated by the Purchase Agreement; and (iv)
all consents, approvals and waivers required to be obtained in order to
consummate the transactions shall have been obtained, other than consents and
approvals that are customarily obtained after the consummation of similar
transactions. The obligation of the Purchaser to close the Purchase Agreement
is also subject to certain similar conditions.
As of the Closing Date (as defined below), BROG has agreed to retain
and perform (except to the extent expressly assumed by the Purchaser pursuant
to the Purchase Agreement) the liabilities and obligations of BROG (i) that
relate to periods prior to the Effective Time and which arise under the Trust
Agreement or the Net Profits Conveyance; (ii) that relate to periods prior to
the Effective Time arising under existing leases, operating agreements, gas
purchase contracts or other agreements relating to the Interests; and (iii)
that relate to the gross negligence or willful misconduct of BROG during the
period between the Effective Time and the Closing Date.
In addition, BROG has agreed, to the fullest extent permitted by law,
to indemnify the Purchaser and certain of its related parties for claims
arising out of (i) the ownership or operation of the Interests prior to the
Effective Time, (ii) BROG's retention of certain obligations or liabilities in
accordance with the terms of the Purchase Agreement, (iii) the breach by BROG
of its representations contained in the Purchase Agreement, and (iv) the breach
by BROG of any of its agreements and covenants contained in the Purchase
Agreement. Notwithstanding the preceding, the indemnity does not include (x)
matters pertaining to title to the Interests, (y) any claims with respect to
any and all actual, alleged or threatened gas balancing liabilities and
obligations, or (z) any claims with respect to any violation of environmental
laws (regardless of the dollar amount in issue) waived pursuant to the Purchase
Agreement or any other claims relating to the Interests (including
environmental claims) expressly assumed by the Purchaser under the Purchase
Agreement.
18
<PAGE> 19
As of the Closing Date, the Purchaser has agreed to assume and perform
(except to the extent expressly retained by BROG pursuant to the Purchase
Agreement) the liabilities and obligations of BROG that pertain to the
ownership and operation of the Interests (i) that relate to periods after the
Effective Time and arise under the Trust Agreement or the Net Profits
Conveyance, (ii) that relate to periods after the Effective Time and that arise
under the existing leases, operating agreements, gas purchase contracts or
other agreements relating to the Interests, (iii) in connection with balancing
of overproduction or underproduction from the Interests relating to periods
before or after the Effective Time, (iv) that relate to environmental claims,
to the extent the aggregate cost to remediate such environmental claims does
not exceed $250,000, net to BROG's interest in the affected Interests, and (v)
for any violation of environmental laws waived pursuant to the Purchase
Agreement. As of the Closing Date, the Purchaser has also agreed to assume and
perform the liabilities and obligations of BRI that relate to periods after
the Effective Time and arise under the Trust Agreement or the Administrative
Services Agreement. Additionally, as of the Closing Date, the Purchaser has
agreed to assume and perform any and all liabilities and obligations to comply
with all laws and governmental regulations with respect to the Interests
relating to events which occur after the Effective Time.
The Purchaser has also agreed, to the fullest extent permitted by law,
to indemnify BROG, BRI and certain of their related parties (the "Seller
Parties") from and against any and all claims attributable to or arising out of
the following: (i) the ownership or operation of the Interests subsequent to
the Effective Time, (ii) the Purchaser's assumption of any obligation or
liability contained in the Purchase Agreement, (iii) the breach by the
Purchaser of its representations, agreements or covenants contained in the
Purchase Agreement, and (iv) any act, omission, event, condition or
circumstance involving or relating to the Interests occurring or existing
before the Effective Time that was waived pursuant to the terms of the Purchase
Agreement.
The Purchaser has further agreed, to the fullest extent permitted by
law, to indemnify and hold the Seller Parties harmless from and against any and
all claims attributable to or arising out of any claims or actions by or
through any holder of any interest in the Trust in connection with the
transactions contemplated by the Purchase Agreement or the termination or
liquidation of the Trust as contemplated by the Purchase Agreement.
In addition, the Purchaser has agreed, to the fullest extent permitted
by law, to indemnify the Seller Parties from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof, to
which the Seller Parties become subject under the Exchange Act, insofar as such
loss, claim, damage, liability or action arises out of or is based upon, (i)
any actual or alleged untrue statement of a material fact contained in any
preliminary or definitive proxy statement, information statement, other
solicitation material or any other document filed by or on behalf of the
Purchaser with the Securities and Exchange Commission (the "Commission"), or
any other statement publicly made by or on behalf of the Purchaser in
connection with the proposal by the Purchaser to terminate the Trust or any
actions taken by or behalf of the Purchaser after such termination, or (ii) the
actual or alleged omission to state in any preliminary or definitive proxy
statement, information statement, other solicitation material or any other
document filed by or on behalf of the Purchaser with the Commission, or any
other statement publicly made by or on behalf
19
<PAGE> 20
of the Purchaser in connection with the proposal by the Purchaser to terminate
the Trust or any actions taken by or on behalf of the Purchaser after such
termination, any material fact required to be stated therein or necessary to
make the statements therein not misleading. The Purchaser, however, will not
be liable to the extent that any such claim arises out of, or is based upon,
(x) any fraudulent misrepresentation, gross negligence or willful misconduct of
BROG or (y) any untrue statement or omission included in any such preliminary
or definitive proxy statement, information statement or other solicitation
material in reliance upon and in conformity with written information furnished
to the Purchaser or the trustee of the Trust by or on behalf of BROG or any
third party specifically for inclusion therein.
If the indemnification described above is unavailable for any reason
or is insufficient to hold harmless the Seller Parties in respect of any such
loss, claim, damage or liability, or any action in respect thereof, then the
Purchaser shall, in lieu of indemnifying the Seller Parties, contribute to the
amount paid or payable by the Seller Parties as a result of such loss, claim,
damage or liability, or action in respect thereof, in such proportion as
appropriate to reflect the relative fault of the Purchaser with respect to the
statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to whether the actual or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the
Purchaser to the Seller Parties.
The Purchase Agreement provides that the closing is to be held no
later than ten business days following the Termination Date (as defined below),
or at such other time as BROG and the Purchaser may agree (the "Closing" or the
"Closing Date"). The "Termination Date" is defined as the date on which all of
the following conditions have been fully satisfied: (i) the Unitholders of the
Trust have approved, by an affirmative vote or consent, the termination and
liquidation of the Trust in accordance with Article VIII and Section 9.02 of
the Trust Agreement and (ii) the clearance or approval of the transactions
contemplated in clause (i) above and any related filings required or advisable
under applicable laws and regulations by all governmental authorities and with
any applicable stock exchange requirements.
At the Closing, (i) Purchaser will execute and BROG will cause
Burlington Resources Gathering Inc. ("BRGI"), as successor-in-interest to
Meridian Oil Gathering Inc. ("MOGI") to execute and deliver an amendment to
that certain Gas Gathering, Dehydrating and Treating Agreement dated May 3,
1990 between MOGI and BRTI as successor-in-interest to Meridian Oil Trading
Inc. ("MOTI"), as previously amended (the "Gathering Agreement"), pursuant to
which BRGI will agree to gather, dehydrate, treat and deliver up to 58,000 MCFD
of Purchaser's gas for a specified fee through at least December 31, 2007; (ii)
the Purchaser will execute, and BROG will cause BRTI, as successor-in-interest
to MOTI, to execute and deliver, an agreement pursuant to which the Gas
Contract will be terminated, on the last day of the month in which the
Termination Date occurs; and (iii) Purchaser shall execute and deliver and BROG
shall cause BRTI to execute and deliver, an agreement whereby each time
Purchaser receives a bona fide offer from a third party to purchase gas
produced from the Interests for a term of greater than six months, BRTI shall
have a right of first refusal for five business days to purchase such gas upon
the same terms contained in such offer.
20
<PAGE> 21
Except as otherwise provided in the Purchase Agreement, if all of the
conditions to Closing described in the Purchase Agreement have not been
satisfied or waived by the respective parties on or before April 1, 1999 (or
such later date as may be mutually agreed upon by the parties in writing), the
Purchase Agreement will terminate; provided, however, the Purchase Agreement
shall not terminate automatically on April 1, 1999 if (i) the conditions to
closing set forth in the Purchase Agreement have not been satisfied solely
because the transactions contemplated by the Purchase Agreement are still
pending approval or clearance from the Commission or other regulatory agency,
or (ii) such approvals or clearances have been received, but because of the
delay involved in obtaining such approvals or clearances, adequate time does
not remain to accomplish the steps subsequent to receiving such approvals or
clearances necessary for all such conditions to have been met. Each party will
remain liable for any willful failure to satisfy any conditions to Closing
required to be satisfied by it or for such party's breach of any of its
representations, covenants or other obligation contained in the Purchase
Agreement. In addition, if the Purchaser fails to timely initiate proceedings
to terminate or liquidate the Trust in accordance with Article VIII and
Sections 9.02 and 9.03 of the Trust Agreement, the Purchaser is required to pay
to BROG $2,000,000 as liquidated damages.
During the period from the date of the Purchase Agreement to Closing,
BROG has agreed to consult with the Purchaser with respect to matters
concerning the Interests, including certain authorizations for expenditures,
and with respect to all other material decisions to be made with respect to the
Interests.
In accordance with Section 8.02 of the Trust Agreement, the Purchaser
agreed that, in its capacity as an owner of Units, it will call a meeting (or
request that a meeting be called) of the holders of Units (the "Unitholder
Meeting") to be held as soon as reasonably practicable under the circumstances
for the purpose of voting on the termination of the Trust in accordance with
Article VIII and Section 9.02 of the Trust Agreement. Purchaser and BROG
further agreed that in connection with the Closing and as a result of the
termination of the Trust, the following events shall occur: (i) the Gas
Contract shall terminate as described herein, (ii) the Gathering Agreement
shall be amended as described herein, (iii) BROG and BRI shall assign their
rights and obligations under the Trust Agreement and the Administrative
Services Agreement to Purchaser and Purchaser shall assume such rights and
obligations, and (iv) the obligations of BRI under the Trust Agreement and the
Administrative Services Agreement (other than the obligations relating to the
windup of the Trust and any such obligations which by their express terms
survive the termination of the Trust) shall terminate and BRI shall be released
therefrom (the proposal to terminate the Trust and the events described in
clauses (i) through (iv) above being referred to herein as the "Termination
Proposal").
In connection with this meeting, the Purchase Agreement contemplates
that the Purchaser will (i) prepare (or cause to be prepared) and use (alone or
with others) its commercially reasonable efforts to have cleared by the
Commission as promptly as practicable such information regarding the
Termination Proposal as is required to be included in a proxy or information
statement and all other proxy or informational materials to be filed with the
Commission for such meeting and (ii) otherwise comply with all legal
requirements applicable to it under federal (including, without limitation, the
Exchange Act), state or local law and
21
<PAGE> 22
of The New York Stock Exchange, Inc. applicable to it (including without
limitation, the requirements applicable to it arising under the Trust
Agreement). The Purchase Agreement provides that such filed material will
include a statement that the Purchaser intends to vote its Units and the Units
for which it controls the voting rights at the Unitholder Meeting "for"
approval of the Termination Proposal.
BROG has agreed that BROG shall notify the Trustee in writing pursuant
to the Trust Agreement, to prepare and file with the Commission, use its
commercially reasonable efforts to have cleared by the Commission and
thereafter mail to the Unitholders a definitive proxy or information statement
of the Trust that includes the Termination Proposal. Purchaser has agreed to
take appropriate actions to respond to comments from the Commission to any such
filing and BROG has agreed to notify the Trustee in writing to file same. The
Purchase Agreement provides that when the statement has been cleared by the
Commission for mailing, BROG (upon Purchaser's request) shall notify the
Trustee in writing to mail the definitive Proxy Statement to the Trust
Unitholders as of the applicable record date.
The Purchaser has agreed to use its reasonable best efforts to assure
under the circumstances that, the proxy or information statement and any
amendments or supplements thereto will, when filed, comply as to form in all
material respects with the requirements of the Exchange Act applicable to the
Purchaser. The Purchaser will also use its reasonable best efforts to assure
under the circumstances that, at the time the proxy or information statement or
any amendment or supplement thereto is first mailed to the Unitholders and at
the time such Unitholders vote on the approval of the termination of the Trust,
the Proxy Statement, as supplemented or amended, if applicable, will, to the
Purchaser's knowledge, not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they were
made, not misleading. These representations and warranties, however, do not
apply to statements or omissions included in the Proxy Statement or any
amendment or supplement thereto based upon information furnished to the
Purchaser by BROG or any other person for use (or incorporation by reference)
therein.
The Purchase Agreement provides that Purchaser shall pay all
reasonable costs (other than legal fees and expenses incurred by the Trustee or
the Trust) incurred by the BROG, BRI and their respective affiliates related to
the preparation of the proxy or information statement or any other document
that is required to be filed on behalf of the Trust with the Commission or
mailed to Unitholders in connection with the transactions contemplated hereby.
From the date of the Purchase Agreement until its termination, BROG
has agreed that it will not, and will use its commercially reasonable efforts
to cause its officers, directors, employees, financial or legal advisors not
to, directly or indirectly, (i) take any action to solicit, initiate or
encourage any proposal to acquire from BROG the Interests, or any interest
therein, (ii) engage in negotiations with, or disclose any nonpublic
information relating to the Interests or afford access to the properties, books
or records of BROG or any of its subsidiaries to, any person that may be
considering making, or has made, a proposal to acquire the Interests, or (iii)
exercise its right under Section 9.03(c) of the Trust Agreement to make a cash
offer to purchase all of the Remaining Royalty Interests (as defined in the
22
<PAGE> 23
Trust Agreement) at any time prior to the sixtieth day following the date of
the Unitholder Meeting at which the Unitholders approve the termination of the
Trust. BROG has agreed in the Purchase Agreement that it will, and will cause
its directors, employees, officers and financial and legal advisors to, cease
immediately and cause to be terminated all activities, discussions or
negotiations, if any, with any persons conducted heretofore with respect to any
proposal by any person to acquire the Interests, or any interest therein.
In addition to the foregoing, to the extent the amount of certain
"Price Credits" in the "Price Credit Accounts" under the Gas Contract decrease
at certain points in time from the Effective Time through the Gas Contract
termination date, BRTI shall pay to Purchaser an amount equal to such
difference. If such amount of Price Credits have increased at such points in
time during such time period, Purchaser shall pay to BRTI an amount equal to
such difference.
A copy of the Purchase and Sale Agreement is included in this filing
as an exhibit, and all references to the Purchase and Sale Agreement herein are
qualified in their entirety by reference to such Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
(a)(18) Purchase and Sale Agreement, dated October 21, 1998,
by and between Burlington Resources Oil & Gas
Company, a Delaware corporation, and San Juan
Partners, L.L.C., a Texas limited liability company.
(b)(2) Second Amendment to Loan Agreement, dated October 9,
1998, by and between San Juan Partners, L.L.C. and
Bank One, Texas, N.A.
23
<PAGE> 24
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: October 26, 1998 SAN JUAN PARTNERS, L.L.C.
--------------------
By: /s/ C. N. O'Sullivan
----------------------------------------
Name: C. N. O'Sullivan,
Title: President - O'Sullivan Oil & Gas
Company, Inc., Manager
ENCAP ENERGY CAPITAL FUND III, L.P.
By: /s/ ROBERT L. ZORICH
----------------------------------------
Name: Robert L. Zorich
Title: Managing Director
ENCAP ENERGY ACQUISITION III-B, INC.
By: /s/ ROBERT L. ZORICH
----------------------------------------
Name: Robert L. Zorich
Title: Managing Director
ECIC CORPORATION
By: /s/ ROBERT L. ZORICH
----------------------------------------
Name: Robert L. Zorich
Title: Managing Director
BOCP ENERGY PARTNERS, L.P.
By: /s/ ROBERT L. ZORICH
----------------------------------------
Name: Robert L. Zorich
Title: Managing Director
FIRST UNION INVESTORS, INC.
By: /s/ Ted A. Gardner
----------------------------------------
Name: Ted A. Gardner
Title: Managing Partner
24
<PAGE> 25
ANDOVER GROUP, INC.
By: /s/ A. John Knapp, Jr.
----------------------------------------
Name: A. John Knapp, Jr.
Title: President
/s/ Charles T. McCord III
-------------------------------------------
Charles T. McCord III
O'SULLIVAN OIL & GAS COMPANY, INC.
By: /s/ C. N. O'Sullivan
----------------------------------------
Name: C. N. O'Sullivan
Title: President
/s/ Christopher P. Scully
-------------------------------------------
Christopher P. Scully
SCOTT W. SMITH FUNDING, L.L.C.
By: /s/ Scott W. Smith
----------------------------------------
Name: Scott W. Smith
Title: Manager
/s/ John V. Whiting
-------------------------------------------
John V. Whiting
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
99.(a)(18) Purchase and Sale Agreement, dated October 21, 1998,
by and between Burlington Resources Oil & Gas
Company, a Delaware corporation, and San Juan
Partners, L.L.C., a Texas limited liability company.
99.(b)(2) Second Amendment to Loan Agreement, dated October 9,
1998, by and between San Juan Partners, L.L.C. and
Bank One, Texas, N.A.
</TABLE>
<PAGE> 1
EXHIBIT 99(a)(18)
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT dated this 21st day of October, 1998, is between BURLINGTON
RESOURCES OIL & GAS COMPANY, a Delaware corporation ("Seller") with offices at
5051 Westheimer, Suite 1400, Houston, Texas 77056-2124, and SAN JUAN PARTNERS,
L.L.C., a Texas limited liability company ("Buyer"), with offices at 910 Travis
Street, Suite 2150, Houston, Texas 77002.
WHEREAS, Seller desires to sell, and Buyer desires to purchase, upon and subject
to the terms and conditions hereinafter set forth, all of Seller's right, title,
and interest in and to the following assets:
(i) The oil and gas leases, leasehold interests, overriding
royalty interests, rights and interests attributable or
allocable to that certain Northeast Blanco Unit Agreement
dated July 16, 1951, recorded in Book 182, Page 52 of the
records of San Juan County, New Mexico and in Volume 11, Page
361 of the records of Rio Arriba County, New Mexico (the "Unit
Agreement") and that certain Northeast Blanco Unit Operating
Agreement dated July 16, 1951, as amended on May 14, 1959 and
January 24, 1991 (the "Unit Operating Agreement"), and other
properties and interests described on Exhibit "A" Part I and
Part II attached hereto, insofar and only insofar as the
foregoing leases, rights, interests and properties cover the
coal seams with vertical limits comprising all coal seams
within the equivalent of the stratigraphic interval from depth
of approximately 2,450 feet to 2,880 feet as shown on the
Gamma Ray/Bulk Density log from Amoco Production Company's
Schneider Gas Com "B" Well No. 1 located 1,110 feet from the
south line and 1,185 feet from the west line of Section 28,
Township 32 North, Range 10 West, NMPM, San Juan County, New
Mexico (the "Fruitland coal formation"), and limited as to the
interests, lands and depths indicated in the Exhibit "A",
(collectively, the "Leases"), together with Seller's
right, title and interest in and to
<PAGE> 2
the property and rights incident thereto, including, but not
limited to, as of the Effective Time, rights in, to, and under
agreements, leases, permits, rights-of-way, easements,
licenses, farmouts, farmins, options, orders, and other
contracts or agreements of a similar nature in any way
relating thereto;
(ii) The wells, equipment, materials, fixtures and improvements on
the Leases as of the Effective Time, appurtenant thereto or
used or obtained in connection with the Leases or with the
production, treatment, sale or disposal of hydrocarbons or
waste produced therefrom or attributable thereto, and other
appurtenances thereunto belonging (the "Equipment"); provided,
however, Equipment shall not include leased equipment located
on the Leases;
(iii) The Unit Agreement and the Unit Operating Agreement, together
with any right, title and interest created thereby in the
Leases insofar and only insofar as same cover the Fruitland
coal formation;
(iv) Gas purchase contracts, product purchase and sale agreements,
gas gathering agreements and gas processing agreements related
to the Leases (to the extent same are assignable) including,
but not limited to, that certain Gas Purchase Contract dated
effective May 1, 1993, by and between Meridian Oil Trading
Inc. and Meridian Oil Production Inc. (the "Gas Contract");
(v) Equipment leases and rental contracts related to the
Interests, if any, to the extent the same are assignable;
(vi) The rights and interests of Seller, if any, under that certain
Trust Agreement of Burlington Resources Coal Seam Gas Royalty
Trust dated as of May 1, 1993 among Meridian Oil Production
Inc., Burlington Resources Inc., Mellon Bank (DE) National
Association and NationsBank of Texas, N.A. (the "Trust
Agreement") to the extent same are assignable; and
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<PAGE> 3
(vii) The rights and interests of Seller, if any, as assignor under
that certain Net Profits Interest Conveyance dated effective
May 1, 1993, from Meridian Oil Production Inc. to the
Burlington Resources Coal Seam Gas Royalty Trust ("BRU")
recorded in Book 1164, Page 465 of the records of San Juan
County, New Mexico and in Book 142, Page 469 of the records of
Rio Arriba County, New Mexico (the "Net Profits Conveyance").
Seller's interests in these assets is herein collectively referred to as the
"Interests"; provided, however, that this Agreement shall not include and there
is excepted and reserved by Seller (i) such portion of the Interests as is
necessary or convenient to the possession, exploration, production, operation,
ownership, maintenance and enjoyment of any interests in the lands covered by
the Leases which interests are not covered hereby, to the extent and only to the
extent such reserved interests do not unreasonably interfere with Buyer's
continued ownership, use, operation and maintenance of the Interests and (ii)
those interests described on Exhibit "A" Part III attached hereto.
NOW, THEREFORE, in consideration of the above recitals and of the covenants and
agreements herein contained, Seller and Buyer agree as follows:
1. Purchase and Sale. Subject to and upon all of the terms and conditions
herein set forth, Seller shall sell, transfer, assign, convey, and
deliver the Interests to Buyer, and Buyer shall purchase, receive, pay
for, and accept the Interests from Seller, effective July 1, 1998, 7
a.m. M.S.T. (the "Effective Time").
2. Purchase Price. The purchase price for the Interests shall be TWENTY
MILLION SEVEN HUNDRED AND FIFTY THOUSAND DOLLARS ($20,750,000) (the
"Base Purchase Price"), subject to any applicable purchase price
adjustment as provided for herein. Buyer and Seller agree that the Base
Purchase Price shall be allocated among the Interests as set forth in
Exhibit "B" for the purpose of establishing a basis for certain
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<PAGE> 4
taxes and determining the value of a Title Defect or an Environmental
Defect and handling those instances in which the Base Purchase Price
is to be adjusted.
3. Title Defects.
(a) As used herein, the term "Defensible Title" shall mean, as to
the Interests, such title held by Seller, that, subject to and
except for Permitted Encumbrances (as hereinafter defined):
(i) Entitles Seller to receive not less than the "Net
Revenue Interest" as set forth in Exhibit "B" of all
oil, gas, and associated liquid and gaseous
hydrocarbons produced, saved, and marketed from the
Interests from the Effective Time throughout the life
of the Interests;
(ii) Obligates Seller to bear costs and expenses relating
to the maintenance, development, and operation of all
wells located on the Interests in an amount not
greater than the "Working Interest" set forth in
Exhibit "B", unless there is at least a proportionate
increase in the Net Revenue Interest; and
(iii) Is free and clear of any and all encumbrances,
charges and liens.
(b) As used herein, the term "Permitted Encumbrances" shall mean:
(i) Lessor's royalties, overriding royalties, production
payments, and reversionary interests if the net
cumulative effect of such burdens does not operate to
reduce the Net Revenue Interest of any Interest to
less than the Net Revenue Interest set forth in
Exhibit "B" from the Effective Time throughout the
life of the Interests, subject, however, to Section
(b)(ix) below;
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<PAGE> 5
(ii) The Gas Contract and that certain Gas Gathering,
Dehydrating and Treating Agreement, as amended, dated
effective May 3, 1990, by and between Meridian Oil
Gathering Inc. and Meridian Oil Trading Inc. (the
"Gathering Agreement");
(iii) Required third party consents to assignments and
similar agreements with respect to which (i) waivers
or consents are obtained from the appropriate
parties, or (ii) required notices have been given to
the holders of such rights and the appropriate time
period for asserting such rights has expired without
an exercise of such rights;
(iv) Liens for taxes or assessments not due or not
delinquent on the Closing Date;
(v) All rights to consent by, required notices to,
filings with, or other actions by governmental
agencies in connection with the sale or conveyance of
oil and gas leases or interests therein or sale of
production therefrom if the same are customarily
obtained subsequent to such sale or conveyance;
(vi) Easements, rights-of-way, servitudes, permits,
surface leases, and other rights in respect of
surface operations on or over any of the Interests
which do not operate to interfere with current
operations on the Interests;
(vii) Inchoate liens of operators relating to obligations
not yet due or pursuant to which Seller is not in
default, and materialmen's, mechanics', repairmen's,
or other similar inchoate liens or charges arising in
the ordinary course of business incidental to
construction, maintenance or operation of the
Interests that have not been perfected;
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<PAGE> 6
(viii) Any Title Defects waived by Buyer pursuant to the
terms of this Agreement;
(ix) The Net Profits Conveyance;
(x) The Trust Agreement and that certain Administrative
Services Agreement dated effective May 1, 1993, by
and between Burlington Resources Inc. and BRU (the
"Administrative Services Agreement").
(c) The Interests shall be deemed to have a "Title Defect" if
Seller has less than Defensible Title to the Interests.
4. Purchase Price Adjustments for Title Defects.
(a) Buyer may, by delivery of written notice to Seller of the
existence of an alleged Title Defect, request reduction of the
purchase price for the Interest affected. The Title Defect
notice shall clearly indicate the nature of the Title Defect,
the Interest to which it relates, an explanation of the Title
Defect including the supporting legal theories, the allocated
value of the Interest as to which all or some portion of which
is affected by the Title Defect, and the amount by which Buyer
believes the value of the affected Interest has been reduced
because of the Title Defect, with the computation and
information upon which Buyer's belief is based. In determining
whether a portion of an Interest contains a Title Defect, it
is the intent of the parties to include, when possible, only
that portion of such Interest materially and adversely
affected. If the value properly allocated to a Title Defect
cannot be determined directly from Exhibit "B" because the
Title Defect is included within, but does not totally
comprise, the Interest to which the allocated value relates,
Buyer and Seller shall attempt, where feasible, to
proportionately reduce the allocated value in Exhibit "B".
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<PAGE> 7
(b) The Title Defect notice by Buyer shall be delivered to Seller
on or before the Termination Date (as hereinafter defined),
except that Buyer shall, to the extent reasonably practicable
and in addition to the Title Defect notice, notify Seller
immediately as it becomes aware of Title Defects while
performing its due diligence review of the Interests. Title
Defect for which notice is not delivered on or before the
Termination Date shall be deemed waived for all purposes, and
Buyer shall thereafter have no right to claim Title Defects
for which notice has not been so provided; and in the event
any Title Defect notice is timely delivered, all other Title
Defects relating to the same Interest which are not claimed on
or before the Termination Date shall be deemed waived for all
purposes. Seller shall have the right, but not the obligation,
to attempt to cure any alleged Title Defect prior to Closing.
In the event Seller is unable or unwilling to cure an alleged
Title Defect, Buyer and Seller shall meet and use their
reasonable efforts to agree on the validity of the claim of
Title Defect and the amount of any required adjustment to the
Base Purchase Price. In evaluating the significance of a fact,
circumstance or condition for purposes of determining an
alleged Title Defect, due consideration shall be given to the
length of time that the particular Lease has been producing
hydrocarbon substances and whether such fact, circumstance or
condition is of the type expected to be encountered in the
area involved, and is usual and customarily acceptable to
reasonable and prudent persons engaged in the business of the
ownership, development, and operation of oil and gas
properties with knowledge of all of the facts and appreciation
of their legal significance.
(c) In the event the parties cannot mutually agree on an
adjustment to the Base Purchase Price for an alleged Title
Defect, either Buyer or Seller shall give the other written
notice of intention to refer the matter to a mutually
agreeable third party independent reservoir engineer (the
"Determiner") to resolve the dispute in light of all relevant
circumstances. In the event Seller and Buyer are unable to
agree within five (5) business days after receipt of such
notice, then the matter
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<PAGE> 8
shall be so referred and the amount of the appropriate
adjustment to the Base Purchase Price shall be determined
solely by the Determiner. The parties shall submit all
relevant information available to the Determiner within
fifteen (15) days after the date of such referral and may
submit position papers on the subject to the Determiner
within such period, but not thereafter. Both parties shall
be bound by the decision of the Determiner. The Base
Purchase Price shall be reduced by the amount agreed upon by
the parties or established by the Determiner, as the case may
be. The fees and expenses of such third party determination
shall be borne equally by Buyer and Seller.
(d) There shall be no adjustment to the Base Purchase Price for
Title Defects unless the aggregate total of all adjustments to
the Base Purchase Price for Title Defects exceeds FIFTY
THOUSAND DOLLARS ($50,000) and thereafter, only to the extent
of such excess.
(e) In the event that Buyer shall determine that Seller's Net
Revenue Interests in the Interests are greater than the Net
Revenue Interests set forth on Exhibit "B", Buyer shall notify
Seller and Seller shall be entitled to a mutually agreeable
upward adjustment to the Base Purchase Price.
5. Conditions of Closing by Seller. The obligation of Seller to close is
subject to the satisfaction of the following conditions:
(a) The representations of Buyer contained in this Agreement shall
be true in all material respects on and as of the Closing
Date, and Buyer shall have performed materially all covenants
required by this Agreement to be performed at or prior to
Closing;
(b) Buyer shall have delivered to Seller a legal opinion rendered
by counsel to Buyer to the effect that (i) Buyer is a limited
liability company validly existing and in
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<PAGE> 9
good standing under the laws of the State of Texas and has all
requisite limited liability company power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby; (ii) the execution and
delivery of, and consummation of the transactions contemplated
by, this Agreement by Buyer have been duly authorized by all
necessary action on the part of the Buyer; and (iii) this
Agreement has been duly executed and delivered by Buyer and
constitutes a legal, valid and binding obligation of Buyer and
is enforceable against Buyer in accordance with its terms,
except that such enforcement may be subject to bankruptcy,
insolvency, moratorium or similar laws affecting creditors'
rights and to general principles of equity, and further
subject to the qualification that indemnification against
securities laws liabilities may violate public policy;
(c) Adjustments to the Base Purchase Price under the terms of this
Agreement shall not have exceeded FOUR MILLION DOLLARS
($4,000,000);
(d) All of the obligations (other than the obligations relating to
the wind-up of BRU and any such obligations which by their
express terms survive the termination of BRU) of BRI under (i)
the Trust Agreement and (ii) the Administrative Services
Agreement, including, without limitation, BRI's obligations
under Article X of the Trust Agreement, shall have terminated;
(e) There shall be no pending legal or equitable action seeking to
enjoin, prohibit or declare illegal the purchase and sale of
the Interests as contemplated by this Agreement; and
(f) All consents, approvals and waivers required to be obtained in
order to consummate the transactions contemplated hereby shall
have been obtained, other than consents and approvals by,
required notices to, and filings with governmental
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<PAGE> 10
authorities that are customarily obtained after the
consummation of transactions of the type contemplated hereby.
6. Conditions of Closing by Buyer. The obligation of Buyer to close is
subject to the satisfaction of the following conditions:
(a) The representations of Seller contained in this Agreement
shall be true in all material respects on and as of the
Closing Date, and Seller shall have performed materially all
covenants required by this Agreement to be performed by Seller
at or prior to Closing;
(b) Buyer and Seller shall have adjusted the Base Purchase Price
in accordance with the provisions of this Agreement;
(c) Seller shall have delivered to Buyer a legal opinion rendered
by Seller's corporate counsel to the effect that (i) Seller is
a corporation validly existing and in good standing under the
laws of the State of Delaware and has all requisite power and
authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby; (ii) the
execution and delivery of, and consummation of the
transactions contemplated by, this Agreement by Seller have
been duly authorized by all necessary action on the part of
Seller; and (iii) this Agreement has been duly executed and
delivered by Seller and constitutes a legal, valid and binding
obligation of Seller and is enforceable against Seller in
accordance with its terms, except that such enforcement may be
subject to bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights and to general principles of
equity;
(d) Seller shall have delivered to Buyer a legal opinion rendered
by Seller's Delaware counsel in substantially the form
attached hereto as Exhibit "C";
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<PAGE> 11
(e) There shall be no pending legal or equitable action seeking to
enjoin, prohibit or declare illegal the purchase and sale of
the Interests as contemplated by this Agreement; and
(f) All consents, approvals and waivers required to be obtained in
order to consummate the transactions contemplated hereby shall
have been obtained, other than consents and approvals by,
required notices to, and filings with governmental authorities
that are customarily obtained after the consummation of
transactions of the type contemplated hereby.
7. Representations of Seller. Seller represents to Buyer that:
(a) Seller is a corporation validly existing and in good standing
under the laws of the State of Delaware and is duly qualified
to own its properties and assets and to carry on its business
as now being conducted;
(b) Seller has the requisite power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby, and the execution and delivery of this
Agreement by Seller and the consummation of the transactions
contemplated hereby have been duly authorized;
(c) 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 the terms hereof,
subject to the effects of bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting
creditors' rights, and no other act, approval or proceeding on
the part of Seller or any other party is required to authorize
the execution and delivery of this Agreement by Seller or the
consummation of the transactions contemplated hereby (other
than consents and
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<PAGE> 12
approvals required under the Trust Agreement or the
Administrative Services Agreement and any consents or
approvals set forth on Exhibit "D-1" hereto);
(d) This Agreement, and the execution and delivery hereof by
Seller, does not and the consummation of the transactions
contemplated hereby will not (i) conflict with or result in a
breach of the charter or bylaws of Seller or any other
governing documents of Seller, (ii) violate, or conflict with,
or constitute a default under, or result in the creation or
imposition of any security interest, lien or encumbrance upon
any property or assets of Seller under any mortgage, indenture
or agreement to which it is a party or by which the Interests
are bound, which violation, conflict or default might
adversely affect the ability of Seller to perform its
obligation under this Agreement, or (iii) violate any statute
or law or any judgment, decree, order, writ, injunction,
regulation or rule of any court or governmental authority,
which violation might adversely affect the ability of Seller
to perform its obligations under this Agreement;
(e) Seller has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions
contemplated by this Agreement for which Buyer shall have any
responsibility whatsoever;
(f) Seller is not a "foreign person" as defined in Section 1445 of
the Internal Revenue Code of 1986 and in any regulations
promulgated thereunder;
(g) Except as set forth on Exhibit "D-2" attached hereto, to the
best of Seller's knowledge after a review of the Records,
there are no suits or proceedings (including condemnation or
similar proceedings) filed or threatened against the Interests
or any portion thereof that would have a material adverse
affect on the value or operation of the Interests; and
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<PAGE> 13
(h) Except as set forth on Exhibit "D-2" attached hereto, none of
the Interests are encumbered by take-or-pay or other similar
arrangements with purchasers of oil or gas whereby Seller is
obligated (i) to deliver production without receiving payment
therefor, or (ii) to repay monies received for production paid
for but not taken; and
(i) To the best of Seller's knowledge, Seller has not violated any
laws, statutes, regulations or orders applicable to any of the
Interests or the operation thereof which violation (i) would
have a material adverse affect on the value or operation of
the affected Interests or (ii) has not been remedied.
In those instances where Seller's representations are made on the basis
of "the best of Seller's knowledge", such representations are made by
Seller on the basis of the actual knowledge of Seller's personnel at or
above the supervisory level without any investigation. If such
personnel have notice of material facts which should cause them to
reasonably believe that an investigation should be conducted, then such
personnel shall be deemed to have actual knowledge of the facts that
would have been uncovered by such an investigation.
8. Representations of Buyer. Buyer represents to Seller that:
(a) Buyer is a limited liability company validly existing and in
good standing under the laws of the State of Texas and is duly
qualified to own its properties and assets and to carry on its
business as now being conducted;
(b) Buyer has the requisite power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement by Buyer and the consummation of the transactions
contemplated hereby have been duly authorized;
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<PAGE> 14
(c) 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 the terms hereof,
subject to the effects of bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting
creditors' rights. No other act, approval or proceeding on the
part of Buyer or any other party is required to authorize the
execution and delivery of this Agreement by Buyer or the
consummation of the transactions contemplated hereby (other
than consents and approvals required under the Trust Agreement
or the Administrative Services Agreement);
(d) This Agreement, and the execution and delivery hereof by
Buyer, does not and the consummation of the transactions
contemplated hereby will not (i) conflict with or result in a
breach of the governing documents of Buyer, or (ii) violate
any statute or law or any judgment, decree, order, writ,
injunction, regulation or rule of any court or governmental
authority, which violation might adversely affect the ability
of Buyer to perform its obligations under this Agreement;
(e) Buyer possesses all required governmental licenses, permits,
bonds, certificates, orders, and authorizations necessary to
own or operate the Interests;
(f) Buyer will have on the Closing Date and thereafter, sufficient
cash to enable it to make payment in immediately available
funds of the purchase price when due and any other amounts to
be paid by it hereunder;
(g) Buyer is an experienced and knowledgeable investor in the oil
and gas business. Buyer is not acquiring the Interests in
connection with a distribution or resale thereof in violation
of federal or state securities laws and the rules and
regulations thereunder;
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<PAGE> 15
(h) Buyer has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions
contemplated by this Agreement for which Seller shall have any
responsibility whatsoever; and
(i) As of October 15, 1998, Buyer is the beneficial owner of or
has voting control over 5,867,968 Trust Units ("BRU Units") of
BRU, which constitutes approximately 66.68145% of the total
number of BRU Units reported by BRU to be outstanding as of
such date and Buyer will not sell, transfer, relinquish voting
control over or otherwise dispose of, any of such BRU Units
prior to Closing.
9. Claims.
(a) "Claims" shall mean any and all claims, losses, damages,
costs, expenses, diminutions in value, suits, causes of action
or judgments of any kind or character with respect to any and
all liabilities and obligations or alleged or threatened
liabilities and obligations, including, but not limited to,
any interest, penalty, and any attorneys' fees and other costs
and expenses incurred in connection with investigating or
defending any claims or actions, whether or not resulting in
any liability.
(b) "Environmental Law" shall mean any statute, rule, regulation
or order of any governmental agency having jurisdiction over
the Interests or Seller pertaining to health, safety or the
environment.
(c) An "Environmental Defect" shall mean a Claim attributable to
or arising out of (i) personal injury, death and/or property
damages resulting from the release of any substance related to
the Interests deemed to be hazardous under any Environmental
Law in effect on the Effective Time or (ii) a violation of any
Environmental Law in effect on the Effective Time and
applicable to conditions
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<PAGE> 16
existing prior to the Closing Date, in each case, that is
known by or made known to Buyer prior to Closing.
(d) An "Environmental Claim" shall mean a Claim attributable to or
arising out of (i) personal injury, death and/or property
damages resulting from the release of any substance related to
the Interests deemed to be hazardous under any Environmental
Law in effect on the Effective Time, or (ii) a violation of
any Environmental Law in effect on the Effective Time and
applicable to conditions of the Interests existing prior to
the Closing Date, in each case, that is known by or made known
to Buyer after the Closing.
10. Retained Obligations and Indemnities of Seller.
(a) As of the Closing Date, Seller agrees to retain and perform
(except to the extent expressly assumed by Buyer under Section
11 hereof) any and all of the liabilities and obligations or
alleged or threatened liabilities and obligations of Seller
(i) that relate to periods prior to the Effective Time and
arise under the Trust Agreement or the Net Profits Conveyance;
(ii) that relate to periods prior to the Effective Time and
that arise under the existing oil and gas leases, assignments,
deeds, operating agreements, leases, permits, rights-of-way,
licenses, easements, options, orders, gas purchase contracts,
product purchase and sale agreements, gas gathering
agreements, gas processing agreements, or any other agreements
or contracts attributable to, affecting, or otherwise relating
to the Interests, including, but not limited to, any and all
liabilities and obligations to pay and deliver royalties,
overriding royalties, non-participating royalties, payments
due under the Net Profits Conveyance, and other burdens on
production, and (iii) that relate to the gross negligence or
willful misconduct of Seller during the period between the
Effective Time and the Closing Date.
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<PAGE> 17
(b) Seller shall, to the fullest extent permitted by law, protect,
defend, indemnify, and hold Buyer and its affiliates,
including its directors, officers, employees, shareholders,
partners, agents, and representatives of each of them and each
person who controls or is controlled by Buyer, harmless from
and against any and all Claims attributable to or arising out
of (i) the ownership or operation of the Interests prior to
the Effective Time, (ii) Seller's retention of any obligation
or liability contained in this Section 10, (iii) the breach by
Seller of the representations contained in Section 7 hereof,
(iv) the matters set forth in Exhibit "D-2" hereto, and (v)
the breach by Seller of any of the agreements and covenants
contained in this Agreement; provided, however, this indemnity
is limited and shall not cover or include (x) matters
pertaining to title to the Interests, all of which will be
governed by Section 4 hereof and the limited warranty of title
to be contained in the conveyance documents to be delivered
hereunder at the Closing, (y) any Claims with respect to any
and all gas balancing liabilities and obligations or alleged
or threatened gas balancing liabilities and obligations, all
of which will be governed by Section 14 hereof, or (z) any
Claims with respect to any violation of Environmental Laws
(regardless of the dollar amount in issue) waived pursuant to
Section 13 hereof or any other Claims relating to the
Interests (including Environmental Claims) expressly assumed
by Buyer under Section 11 hereof.
(c) After Closing, any assertion by Buyer that Seller is liable
under the terms of the indemnities provided by Section 10(b)
shall state the facts known to Buyer that give rise to such
notice in sufficient detail to allow Seller to evaluate the
assertion.
(d) Promptly after receipt by Buyer under this Section 10 of
notice of any claim or the commencement of any action, Buyer
shall, if a claim in respect thereof is to be made against
Seller under this Section 10, notify Seller in writing of the
claim or the commencement of that action; provided, however,
that the failure to notify Seller shall not relieve Seller
from any liability which it may have under this
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<PAGE> 18
Section 10 except to the extent Seller has been materially
prejudiced by such failure and, provided further, that the
failure to notify Seller shall not relieve Seller from any
liability which it may have to Buyer otherwise than under this
Section 10. If any such claim or action shall be brought
against Buyer, and Buyer shall notify Seller thereof, Seller
shall be entitled to participate therein and, to the extent
that it wishes, to assume the defense thereof with counsel
satisfactory to Buyer. After notice from Seller to Buyer of
its election to assume the defense of such claim or action,
Seller shall not be liable to Buyer under this Section 10 for
any legal or other expenses subsequently incurred by Buyer in
connection with the defense thereof other than reasonable
costs of investigation; provided, however, that Buyer shall
have the right to employ counsel if, (i) the employment of
such counsel shall have been authorized by Seller in
connection with the defense of such action, (ii) Seller shall
not have engaged counsel reasonably promptly to take charge of
the defense of such action or (iii) counsel shall have
reasonably concluded that there may be defenses available to
Buyer that are in addition to or in conflict with those
available to Seller, and, in that event, the fees and expenses
of such separate counsel shall be paid by Seller; provided,
further, that in connection with any proceedings or related
proceedings in the same jurisdiction, Seller shall not be
liable for the legal fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel).
Seller shall not (i) without the prior written consent of
Buyer (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, suit
or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not Buyer is
an actual or potential party to such claim or action) unless
such settlement, compromise or consent includes an
unconditional release of Buyer from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable
for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there
be a final judgment of the plaintiff in any such action,
Seller
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<PAGE> 19
agrees to indemnify and hold harmless Buyer from and against
any loss of liability by reason of such settlement or
judgment.
11. Assumption of Obligations and Indemnities of Buyer.
(a) As of the Closing Date, Buyer agrees to assume and perform
(except to the extent expressly retained by Seller under
Section 10(a) (iii) hereof) any and all of the liabilities and
obligations or alleged or threatened liabilities and
obligations of Seller that pertain to the ownership and
operation of the Interests (i) that relate to periods after
the Effective Time and arise under the Trust Agreement or the
Nets Profits Conveyance; (ii) that relate to periods after the
Effective Time and that arise under the existing oil and gas
leases, assignments, deeds, operating agreements, leases,
permits, rights-of-way, licenses, easements, options, orders,
gas purchase contracts, product purchase and sale agreements,
gas gathering agreements, gas processing agreements, or any
other agreements or contracts attributable to, affecting, or
otherwise relating to the Interests, including, but not
limited to, any and all liabilities and obligations to pay and
deliver royalties, overriding royalties, non-participating
royalties, payments due under the Net Profits Conveyance, and
other burdens on production, (iii) except as otherwise
provided in Section 14 hereof, in connection with or arising
out of balancing of overproduction or underproduction from the
Interests whether relating to periods before or after the
Effective Time, (iv) that relate to Environmental Claims, to
the extent the aggregate cost to remediate, correct or satisfy
such Environmental Claims does not exceed TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000), net to Seller's interest in the
affected Interests, and (v) for any violation of Environmental
Laws waived pursuant to Section 13 hereof. As of the Closing
Date, Buyer agrees to assume and perform any and all of the
liabilities and obligations or alleged or threatened
liabilities and obligations of BRI that relate to periods
after the Effective Time and arise under the Trust Agreement
or the Administrative Services Agreement. Additionally, as of
the Closing Date,
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Buyer agrees to assume and perform any and all liabilities and
obligations to comply with all laws and governmental
regulations with respect to the Interests, including, but not
limited to, the lawful plugging and abandonment of oil and gas
wells and the restoration of the surface of the land, or any
governmental request or other requirement to abandon any
pipeline or facility or take any clean-up, remedial or other
action with respect to the Interests, relating to events which
occur after the Effective Time.
(b) Buyer shall, to the fullest extent permitted by law, protect,
defend, indemnify, and hold Seller, BRI and their respective
affiliates, directors, officers, employees, agents, and
representatives of each of them and each person who controls
or is controlled by Seller or BRI (the "Seller Parties"),
harmless from and against any and all Claims attributable to
or arising out of the following (i) the ownership or operation
of the Interests subsequent to the Effective Time, (ii)
Buyer's assumption of any obligation or liability contained in
this Section 11, (iii) the breach by Buyer of the
representations contained in Section 8 hereof, (iv) the breach
by Buyer of any of the agreements and covenants contained in
this Agreement, and (v) any act, omission, event, condition or
circumstance involving or relating to the Interests occurring
or existing before the Effective Time that was waived pursuant
to Section 13 hereof.
(c) Buyer shall, to the fullest extent permitted by law, protect,
defend, indemnify and hold the Seller Parties harmless from
and against any and all Claims attributable to or arising out
of any claims or actions by or through any holder of any
interest in BRU in connection with the transactions
contemplated hereby or the termination or liquidation of BRU
as contemplated hereby.
(d) Buyer shall to the fullest extent permitted by law, defend,
indemnify and hold the Seller Parties harmless from and
against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which Seller,
its officers, employees
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or any controlling person becomes subject, under the
Securities Exchange Act of 1934, as amended, insofar as such
loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary or
definitive proxy statement, information statement, other
solicitation material or any other document filed by or on
behalf of Buyer with the SEC, or any other statement publicly
made by or on behalf of Buyer in connection with the
Termination Proposal (as hereinafter defined) by Buyer or any
actions taken by or behalf of Buyer after the termination of
BRU, or (ii) the omission or alleged omission to state in any
preliminary or definitive proxy statement, information
statement, other solicitation material or any other document
filed by or on behalf of Buyer with the SEC, or any other
statement publicly made by or on behalf of Buyer in connection
with the Termination Proposal by Buyer or any actions taken by
or on behalf of Buyer after the termination of BRU, any
material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however,
that Buyer shall not be liable in any case to the extent that
any such loss, claim, damage, liability or action arises out
of, or is based upon, (A) any fraudulent misrepresentation,
gross negligence or willful misconduct of Seller or (B) any
untrue statement or alleged untrue statement or omission or
alleged omission included in any such preliminary or
definitive proxy statement, information statement or other
solicitation material in reliance upon and in conformity with
written information furnished to Buyer or the trustee of BRU
by or on behalf of Seller or any third party specifically for
inclusion therein.
(e) EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH HEREIN, THE
INDEMNIFICATION, RELEASE AND ASSUMPTION PROVISIONS PROVIDED
FOR IN THIS SECTION 11 SHALL BE APPLICABLE WHETHER OR NOT THE
CLAIMS, LOSSES, COSTS, EXPENSES AND DAMAGES IN QUESTION AROSE
SOLELY OR IN PART FROM THE GROSS, ACTIVE, PASSIVE,
COMPARATIVE, OR CONCURRENT
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NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF THE SELLER
PARTIES.
(f) Promptly after receipt by Seller under this Section 11 of
notice of any claim or the commencement of any action, Seller
shall, if a claim in respect thereof is to be made against
Buyer under this Section 11, notify Buyer in writing of the
claim or the commencement of that action; provided, however,
that the failure to notify Buyer shall not relieve Buyer from
any liability which it may have under this Section 11 except
to the extent Buyer has been materially prejudiced by such
failure and, provided further, that the failure to notify
Buyer shall not relieve Buyer from any liability which it may
have to Seller otherwise than under this Section 11. If any
such claim or action shall be brought against Seller, and
Seller shall notify Buyer thereof, Buyer shall be entitled to
participate therein and, to the extent that it wishes, to
assume the defense thereof with counsel satisfactory to
Seller. After notice from Buyer to Seller of its election to
assume the defense of such claim or action, Buyer shall not be
liable to Seller under this Section 11 for any legal or other
expenses subsequently incurred by Seller in connection with
the defense thereof other than reasonable costs of
investigation; provided, however, that Seller shall have the
right to employ counsel if, (i) the employment of such counsel
shall have been authorized by Buyer in connection with the
defense of such action, (ii) Buyer shall not have engaged
counsel reasonably promptly to take charge of the defense of
such action or (iii) counsel shall have reasonably concluded
that there may be defenses available to Seller that are in
addition to or in conflict with those available to Buyer, and,
in that event, the fees and expenses of such separate counsel
shall be paid by Buyer; provided, further, that in connection
with any proceedings or related proceedings in the same
jurisdiction, Buyer shall not be liable for the legal fees and
expenses of more than one separate firm of attorneys (in
addition to any local counsel). Buyer shall not (i) without
the prior written consent of Seller (which consent shall not
be unreasonably withheld), settle or compromise or consent to
the entry of any judgment with
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respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not Seller is an actual or
potential party to such claim or action) unless such
settlement, compromise or consent includes an unconditional
release of Seller from all liability arising out of such
claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld),
but if settled with its written consent or if there be a final
judgment of the plaintiff in any such action, Buyer agrees to
indemnify and hold harmless Seller from and against any loss
of liability by reason of such settlement or judgment.
(g) If the indemnification provided for in Sections 11(c) or 11(d)
hereof shall for any reason be unavailable to or insufficient
to hold harmless the Seller Parties in respect of any loss,
claim, damage or liability, or any action in respect thereof,
referred to therein, then Buyer shall, in lieu of indemnifying
the Seller Parties, contribute to the amount paid or payable
by the Seller Parties as a result of such loss, claim, damage
or liability, or action in respect thereof, in such proportion
as shall be appropriate to reflect the relative fault of Buyer
with respect to the statements or omissions which resulted in
such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable
considerations. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a
material fact relates to information supplied by Buyer to the
Seller Parties.
12. Due Diligence Review.
(a) Prior to Closing, Seller, in Seller's offices, will make
available to Buyer and Buyer's authorized representatives for
examination as Buyer may reasonably request, all lease files,
land files maintained in the ordinary course of business, well
files, product purchase and sale contracts, division order
files, abstracts,
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drilling or division order title opinions, engineering and
geological data, reports, maps, logs, well records and,
financial and accounting information contained in Seller's
files or to which Seller has reasonable access relating to the
Interests (collectively the "Records"); provided, however, the
Records shall not include any geophysical data or proprietary
analyses. Prior to Closing, Buyer, at Buyer's sole cost, may
copy any portion of the Records as Buyer may reasonably
request.
(b) Seller shall permit Buyer and Buyer's authorized
representatives to consult with Seller's employees during
reasonable business hours and shall assist Buyer in obtaining
access to the Interests to conduct, at Buyer's sole risk and
expense, wellsite inspections and inventories of the
Interests. During such inspections, Buyer shall have the right
to review the Interests to determine the environmental
condition of the Equipment and Lease premises.
13. Purchase Price Adjustments for Environmental Defects.
(a) Buyer may, by delivery of written notice to Seller of the
existence of an alleged Environmental Defect, request
reduction of the Base Purchase Price for the Interest
affected. The Environmental Defect notice shall clearly
indicate the nature and a detailed description of the
Environmental Defect and the Environmental Law allegedly
violated, the Interest to which it relates, and the dollar
amount which Buyer believes it would take to rectify or
remediate the Environmental Defect.
(b) The Environmental Defect notice by Buyer shall be delivered to
Seller on or before the Termination Date except that Buyer
shall, to the extent reasonably practicable, and in addition
to the Environmental Defect notice, notify Seller immediately
as it becomes aware of an Environmental Defect while
performing its due diligence review of the Interests. Seller
shall have the right, but not the obligation, to attempt to
cure any alleged Environmental Defect prior to Closing.
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<PAGE> 25
In the event Seller is unable or unwilling to cure an alleged
Environmental Defect, Buyer and Seller shall meet and use
their reasonable efforts to agree on the validity of the claim
of the Environmental Defect and the amount of any required
adjustment to the Base Purchase Price. Any Environmental
Defect existing with respect to the Interests as of the
Termination Date, and known by or made known to Buyer on or
before such date, but not included in an Environmental Defect
notice delivered by Buyer to Seller on or before such date
shall be deemed waived for all purposes and shall be assumed
by Buyer pursuant to Section 11 hereof.
(c) In the event the parties cannot mutually agree on an
adjustment to the Base Purchase Price for an alleged
Environmental Defect, either Buyer or Seller shall give the
other written notice of intention to refer the matter to a
mutually agreeable third party environmental expert (the
"Environmental Determiner") to resolve the dispute in light of
all relevant circumstances. In the event Seller and Buyer are
unable to agree within five (5) business days after such
notice, then the matter shall be so referred and the amount of
the appropriate adjustment to the Base Purchase Price shall be
determined solely by the Environmental Determiner. The parties
shall submit all relevant information available to the
Environmental Determiner within fifteen (15) days after the
date of such referral and may submit position papers on the
subject to the Environmental Determiner within such period,
but not thereafter. Both parties shall be bound by the
decision of the Environmental Determiner. The Base Purchase
Price shall be reduced by the amount agreed upon by the
parties or established by the Environmental Determiner, as the
case may be. The fees and expenses of such third party
determination shall be borne equally by Buyer and Seller.
(d) There shall be no purchase price adjustment for Environmental
Defects unless the aggregate total of all Environmental
Defects exceeds FIFTY THOUSAND DOLLARS ($50,000), net to
Seller's interest in the affected Interests and thereafter,
only to the extent of such excess.
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<PAGE> 26
14. Gas Imbalances. Seller's estimate of the aggregate gas imbalance as of
the Effective Time for all the Interests is 97,994 MCF, cumulative
working interest underproduced (4,882 MCF net). On or before the
Termination Date, Seller shall provide Buyer with a revised gas
imbalance schedule for all the Interests as of the Effective Time.
There shall be a purchase price adjustment at Closing for the imbalance
calculated on Seller's Net Revenue Interest at a price equal to the
average monthly San Juan Basin Index Price as published in Inside FERC
for the periods from January 1, 1998 to June 30, 1998. To the extent
that there is any difference between Seller's actual aggregate gas
imbalance as of the Effective Time and the imbalance position settled
at Closing, then an adjustment shall be made at the same price set
forth in the previous sentence in the Final Closing Statement. There
shall be no further gas imbalance adjustments after the Post-Closing
adjustment. In the event of a Title Defect affecting all or a portion
of the Interests, the aggregate gas imbalance shown above shall be
adjusted to take into account the affected Interest. Any purchase price
adjustments for gas imbalances shall be made only on those Interests
purchased by Buyer.
15. Other Purchase Price Adjustments.
(a) As used herein, the following terms have the meanings
assigned:
"Casualty Loss" shall mean, with respect to all or any portion
of the Interests, any destruction by fire, blowout, storm or
other casualty of all or any portion of the Interests between
the Effective Time and Closing. Seller shall promptly notify
Buyer of any Casualty Loss of which Seller becomes aware.
"Required Consent" shall mean any rights to consent to an
assignment or transfer of a Lease, other than filings with
governmental entities or notices to third parties
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customarily obtained subsequent to a sale or transfer, where
the failure to receive such consent could reasonably render
the transfer of such Lease to Buyer void or voidable.
(b) If any Casualty Loss occurs prior to Closing to any of the
Interests and such Casualty Loss may be repaired prior to
Closing and, when repaired, the value of such Interests shall
not be materially diminished, then Seller may repair such
Casualty Loss prior to Closing at Seller's cost and shall
notify Buyer of such election. In the event Seller (i) elects
to repair such Casualty Loss and such repair is not completed
prior to Closing or the repair completed by Seller does not
cause the value of such Interests to be substantially the same
as such value prior to the Casualty Loss, or (ii) is unable or
unwilling to repair the Casualty Loss, then Buyer and Seller
shall meet and use their reasonable efforts to agree on the
effect of the Casualty Loss and the amount of any required
adjustment to the Base Purchase Price. In the event the
parties cannot mutually agree on an adjustment to the Base
Purchase Price for the Casualty Loss, either Buyer or Seller
shall give the other written notice of intention to refer the
matter to a mutually agreeable third party expert (the
"Casualty Loss Determiner") to resolve the dispute in light of
all relevant circumstances. In the event Seller and Buyer are
unable to agree within five (5) business days after such
notice, then the matter shall be so referred and the amount of
the appropriate adjustment to the Base Purchase Price shall be
determined solely by the Casualty Loss Determiner. The parties
shall submit all relevant information available to the
Casualty Loss Determiner within fifteen (15) days after the
date of such referral and may submit position papers on the
subject to the Casualty Loss Determiner within such period,
but not thereafter. Both parties shall be bound by the
decision of the Casualty Loss Determiner. The Base Purchase
Price shall be reduced by the amount agreed upon by the
parties or established by the Casualty Loss Determiner, as the
case may be. The fees and expenses of such third party
determination shall be borne equally by Buyer and Seller.
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(c) Seller shall promptly give notices to all third parties
holding any Required Consents known to Seller or identified to
Seller by Buyer prior to Closing. Seller shall use all
reasonable efforts, but without obligation to incur any
unreasonable cost or expense, to obtain such Required
Consents. Unless waived by Buyer, if a Required Consent is not
obtained prior to the Closing, the purchase price shall be
reduced by the amount set forth in Exhibit "B" for the
affected Interest, or where applicable and possible, the
proportionate allocated value, and such Interest shall be
excluded from the purchase and sale under this Agreement. Any
Required Consent waived by Buyer shall be deemed a Permitted
Encumbrance.
16. Confidentiality. All Records, and all other confidential data provided
to Buyer, whether before or after the date of this Agreement, and all
title matters and environmental reports prepared by Buyer or Buyer's
representatives relating to the Interests, shall be treated by Buyer as
strictly confidential, and shall not be disclosed to any person, firm
or corporation without the prior written consent of Seller; provided
however that any information or documentation already in Buyer's
possession or which Buyer may obtain by reason of its ownership of
interests in the Northeast Blanco Unit other than the Interests shall
not be deemed to be confidential. In the event this purchase and sale
does not close, this covenant shall survive termination of this
Agreement for a period of five (5) years after the date hereof, and
Buyer shall promptly return all copies of the Records in its
possession; and in the event the sale closes, this covenant shall
terminate at Closing.
17. DISCLAIMERS. THE INSTRUMENTS OF CONVEYANCE EXECUTED PURSUANT HERETO
SHALL BE EXECUTED WITHOUT ANY REPRESENTATION, WARRANTY OR COVENANT OF
TITLE OF ANY KIND OR NATURE, EITHER EXPRESS, IMPLIED OR STATUTORY;
PROVIDED, HOWEVER, SELLER SHALL SPECIALLY WARRANT AND AGREE TO DEFEND
THE TITLE TO THE INTERESTS AGAINST THE LAWFUL CLAIMS AND DEMANDS OF ALL
PERSONS OR ENTITIES CLAIMING THE SAME OR ANY
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PART THEREOF BY, THROUGH OR UNDER SELLER, BUT NOT OTHERWISE. THE
INTERESTS ARE BEING CONVEYED AND ASSIGNED TO AND ACCEPTED BY THE BUYER
IN THEIR "AS IS, WHERE IS" CONDITION AND STATE OF REPAIR, AND WITH ALL
FAULTS AND DEFECTS, WITHOUT ANY REPRESENTATION, WARRANTY OR COVENANT OF
ANY KIND OR NATURE, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT
LIMITED TO, WARRANTIES OF MARKETABILITY, QUALITY, CONDITION, CONFORMITY
TO SAMPLES, MERCHANTABILITY, AND/OR FITNESS FOR A PARTICULAR PURPOSE,
ALL OF WHICH ARE EXPRESSLY DISCLAIMED BY SELLER AND WAIVED BY BUYER.
THE INTERESTS HAVE BEEN USED FOR OIL AND GAS DRILLING, PRODUCTION AND
RELATED OPERATIONS. PHYSICAL CHANGES IN THE INTERESTS AND IN THE LANDS
BURDENED THEREBY MAY HAVE OCCURRED AS A RESULT OF SUCH USES. THE
INTERESTS MAY ALSO INCLUDE BURIED PIPELINES AND OTHER EQUIPMENT, THE
LOCATIONS OF WHICH MAY NOT BE KNOWN BY SELLER OR READILY APPARENT BY A
PHYSICAL INSPECTION OF THE INTERESTS. IT IS UNDERSTOOD AND AGREED THAT
BUYER SHALL HAVE INSPECTED PRIOR TO CLOSING (OR SHALL BE DEEMED TO HAVE
WAIVED ITS RIGHT TO INSPECT) THE LEASES, THE EQUIPMENT AND THE
ASSOCIATED PREMISES AND SATISFIED ITSELF AS TO THEIR PHYSICAL AND
ENVIRONMENTAL CONDITION, BOTH SURFACE AND SUBSURFACE, AND THAT BUYER
SHALL ACCEPT ALL OF THE SAME IN THEIR "AS IS, WHERE IS" CONDITION AND
STATE OF REPAIR, AND WITH ALL FAULTS AND DEFECTS, INCLUDING, BUT NOT
LIMITED TO, THE PRESENCE OF NATURALLY OCCURRING RADIO ACTIVE MATERIAL
AND MANMADE MATERIAL FIBERS. IN ADDITION, SELLER MAKES NO
REPRESENTATION, COVENANT OR WARRANTY, EXPRESS, IMPLIED OR STATUTORY, AS
TO THE ACCURACY OR COMPLETENESS OF ANY DATA OR RECORDS DELIVERED TO
BUYER WITH RESPECT TO THE INTERESTS, OR CONCERNING THE QUALITY OR
QUANTITY OF HYDROCARBON RESERVES, IF ANY, ATTRIBUTABLE TO THE
INTERESTS, OR THE ABILITY OF THE
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INTERESTS TO PRODUCE HYDROCARBONS, OR THE PRICES WHICH BUYER IS OR WILL
BE ENTITLED TO RECEIVE FOR ANY SUCH HYDROCARBONS.
18. DTPA Waiver. TO THE EXTENT APPLICABLE TO THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT, BUYER HEREBY WAIVES ITS RIGHTS UNDER THE PROVISIONS
OF THE TEXAS DECEPTIVE TRADE PRACTICES ACT, CHAPTER 17, SUBCHAPTER E,
SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN SECTION 17.555,
WHICH IS NOT WAIVED), OF THE TEXAS BUSINESS & COMMERCIAL CODE (A LAW
THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS). AFTER
CONSULTATION WITH AN ATTORNEY OF ITS CHOICE, BUYER VOLUNTARILY CONSENTS
TO THIS WAIVER.
19. Closing. The Closing shall be held on or before that date which is ten
(10) business days following the Termination Date (as hereinafter
defined), at the offices of Seller at 5051 Westheimer, Suite 1400,
Houston, Texas, or at such other time and place as Seller and Buyer may
mutually agree in writing (the "Closing" or the "Closing Date"). For
purposes of this Agreement, the "Termination Date" shall mean the
effective date on which all of the following conditions are fully
satisfied: (i) the unitholders of BRU shall have approved by an
affirmative vote or consent, the termination and liquidation of BRU in
accordance with Article VIII and Section 9.02 of the Trust Agreement,
and (ii) the clearance or approval of the transactions contemplated in
Section 19(i) hereinabove and any filings in connection therewith which
may be required or advisable under applicable laws, rules and/or
regulations by all applicable governmental authorities having
jurisdiction and the compliance of such transactions and filing with
any applicable stock exchange requirements.
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20. Transactions at Closing.
(a) Seller and Buyer shall execute, acknowledge, and deliver the
Assignment and Bill of Sale in the form as set forth in
Exhibit "E" hereto with respect to the Interests;
(b) Seller and Buyer shall execute, acknowledge and deliver the
Oil and Gas Lease in the form as set forth in Exhibit "F"
hereto with respect to the Interests;
(c) Buyer shall execute and deliver and Seller shall cause
Burlington Resources Gathering Inc., as successor-in-interest
to Meridian Oil Gathering Inc. to execute and deliver an
amendment to the Gathering Agreement in the form as set forth
in Exhibit "G" hereto, together with the Memorandum attached
thereto as Annex "1";
(d) Buyer shall execute and deliver, and Seller shall cause
Burlington Resources Trading Inc. ("BRTI"), as
successor-in-interest to Meridian Oil Trading Inc., to execute
and deliver, an assignment of the Gathering Agreement in the
form set forth in Exhibit "H" hereto;
(e) Buyer shall execute and deliver, and Seller shall cause BRTI
to execute and deliver, an agreement in the form set forth in
Exhibit "I" hereto, whereby the Gas Contract will be
terminated on the last day of the month in which the
Termination Date occurs;
(f) Buyer shall execute and deliver, and Seller shall cause BRTI
to execute and deliver, an agreement in the form as set forth
in Exhibit "J" hereto, whereby Buyer shall grant BRTI a right
of first refusal to purchase gas produced from the Interests;
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<PAGE> 32
(g) Seller and Buyer shall execute, acknowledge and deliver the
Assignment of Trust Agreement Rights and Obligations in the
form as set forth in Exhibit "K" hereto;
(h) Buyer shall execute and deliver, and Seller shall cause BRI to
execute and deliver, an Assignment of Contract Rights and
Obligations in the form as set forth in Exhibit "L" hereto;
(i) Seller shall deliver to Buyer the Records (but shall be
authorized to keep a copy of the Records);
(j) Seller and Buyer shall execute, acknowledge and deliver
mutually agreeable transfer orders or letters-in-lieu prepared
by the Seller, directing all purchasers of production to make
future payments of proceeds attributable to production from
the Interests to Buyer;
(k) Seller and Buyer shall execute and deliver a Preliminary
Closing Statement that shall set forth the Base Purchase Price
and each adjustment and the calculation of such adjustments
used to determine such amount (the "Closing Amount") in the
form as set forth in Exhibit "M" hereto;
(l) Seller shall deliver to Buyer (i) a certificate stating that
the representations of Seller contained in Section 7 hereof
are true as of the Closing Date, and (ii) a "non-foreign
person" affidavit in the form as set forth in Exhibit "N"
hereto;
(m) Seller shall deliver to Buyer the legal opinions referenced in
Sections 6(c) and 6(d) hereof;
(n) Buyer shall deliver to Seller a certificate stating that the
representations of Buyer contained in Section 8 hereof are
true as of the Closing Date;
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(o) Buyer shall deliver to Seller the legal opinion referenced in
Section 5(b) hereof;
(p) Buyer shall deliver to Seller a complete copy of Buyer's
environmental assessment, including, but not limited to,
reports, data, valuation, assessments and conclusions;
(q) Seller shall deliver to Buyer possession of the Interests,
subject to any applicable operating agreement or other related
agreement affecting the Interests;
(r) Buyer shall deliver to Seller cash by wire transfer in the
amount of the Closing Amount to the following account:
Bank: Mellon Bank, Pittsburgh, PA.
ABA/Routing Number: 043-000-261
Account: 104-9050
For Credit To: Burlington Resources Services Inc.
(s) Seller shall deliver to Buyer cash by wire transfer in the
amount of all cash held by Seller on the Closing Date that is
payable in respect of the Royalty Interests under the Net
Profits Conveyance into the following non-interest bearing
account (as contemplated under Section 9.03(f) of the Trust
Agreement):
Bank: Bank One Texas, N.A., Houston, Texas
ABA/Routing Number: 111000614
Account: 1560185785
For Credit To: San Juan Partners, L.L.C. Operating
Account
21. Further Assurance. Incidental and subsequent to Closing, each of the
parties shall execute, acknowledge, and deliver to the other such
further instruments, and take such
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other actions as may be reasonably necessary to carry out the
provisions of this Agreement.
22. Post-Closing Adjustments. On or before ninety (90) days following
Closing, the parties shall undertake to agree with respect to the
adjustments or payments that were not finally determined as of Closing,
and the amount due from Buyer or Seller, as the case may be, pursuant
to the Post-Closing adjustment. On or before one hundred twenty (120)
days following Closing, Seller shall provide Buyer with a Final Closing
Statement setting forth the Post-Closing adjustments. Seller shall
provide Buyer access to such of Seller's records as may be reasonably
necessary to verify the Post-Closing adjustments. Payment by Buyer or
Seller shall be made in immediately available funds within five (5)
days of agreement. If the Final Closing Statement has not been agreed
upon on or before the date set forth herein, either party may seek to
enforce any rights it claims pursuant to this Agreement.
23. Proration of Taxes. All ad valorem taxes, real property taxes, and
similar obligations with respect to the tax period in which the
Effective Time occurs (the "current tax period") shall be apportioned
between Seller and Buyer as of the Effective Time based on an estimate
of the immediately preceding tax period assessment, and the Base
Purchase Price shall be reduced at Closing by the amount of such
estimated taxes owed by Seller for that portion of the current tax
period prior to the Effective Time.
24. Proceeds. All proceeds attributable to the Interests and accruing to
the period on and after the Effective Time shall belong to Buyer. In
the event Seller has received proceeds belonging to Buyer after the
Effective Time, Seller will account to Buyer for such proceeds at the
same price Seller received for the production in accordance with its
existing product purchase and sale contracts.
25. Failure to Close. Subject to the other provisions of this Section, if
all of the conditions to Closing set forth in Sections 5 and 6 hereof
have not been satisfied or waived by the
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respective parties on or before April 1, 1999 (or such later date as
hereafter may be mutually agreed upon by the parties in writing), this
Agreement shall terminate automatically, and no party hereto shall have
any further obligations or any liability to the other party pursuant to
this Agreement; provided, however, that (i) this Agreement shall not
terminate automatically on April 1, 1999 if either (A) the conditions
to Closing set forth in Sections 5 and 6 hereof have not been satisfied
solely because the transactions contemplated hereby are still pending
approval or clearance from the SEC or other regulatory agency having
jurisdiction or (B) such approvals or clearances have been received,
but because of the delay involved in obtaining such approvals or
clearances, adequate time does not remain to accomplish the steps
subsequent to receiving such approvals or clearances necessary for all
conditions to have been met and (ii) nothing herein shall relieve any
party from liability for its willful failure to satisfy any conditions
to Closing required to be satisfied by it or for such party's breach of
any of its representations, covenants or other obligation hereunder. In
addition to any other legal or equitable rights or remedies available
to Seller arising from any breach by Buyer of its representations,
covenants or other obligations hereunder, if Buyer fails to timely
initiate proceedings to terminate or liquidate BRU in accordance with
Article VIII and Sections 9.02 and 9.03 of the Trust Agreement, Buyer
shall pay to Seller an amount equal to TWO MILLION DOLLARS ($2,000,000)
as agreed liquidated damages and not as a penalty, it being agreed that
actual damages for such breach would be difficult to ascertain and that
such liquidated damages amount is reasonable. Such payment shall be
made to an account designated by Seller by wire transfer of immediately
available funds. Upon any termination of this Agreement, Seller shall
be free immediately to enjoy all rights of ownership of the Interests
and to sell, transfer, encumber or otherwise dispose of the Interests
to any party without any restriction under this Agreement.
26. Use of Seller Names. Buyer agrees that, as soon as practicable after
Closing, it will remove or cause to be removed the names and marks
Burlington Resources, Meridian Oil, El Paso Production, or Southland
Royalty, where and if they exist, and all variations
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<PAGE> 36
and derivatives thereof and logos relating thereto from the Interests
and will not thereafter make any use whatsoever of such names, marks,
and logos.
27. Operations and Other Covenants Prior to Closing
(a) During the period from the date of this Agreement to Closing,
Seller shall (i) consult with Buyer with respect to all AFE's
over THIRTY-FIVE THOUSAND DOLLARS ($35,000) net to the
Interests of Seller which are received by Seller with respect
to any Interest, and consult with Buyer with respect to all
material decisions to be made with respect to the Interests,
including, without limitation, the incurring of costs for
discretionary expenditures for operations in excess of SEVENTY
THOUSAND DOLLARS ($70,000) net to the interest of Seller for
which AFE's are not prepared, (ii) comply with the terms and
conditions of all applicable contracts, laws and regulations
with respect to the Interests, and (iii) not transfer, sell,
hypothecate, encumber, abandon or otherwise dispose of any
material portion of the Interests (other than the sale of
production in the ordinary course of business) or as required
in connection with the exercise of third parties of
preferential rights to purchase any of the Interests without
the express written consent of Buyer.
(b) In accordance with Section 8.02 of the Trust Agreement, Buyer,
in its capacity as an owner of BRU Units, will timely call a
meeting (or request that a meeting be called) of the holders
of BRU Units (the "Unitholder Meeting") to be held as soon as
reasonably practicable under the circumstances for the purpose
of voting on the termination of BRU in accordance with Article
VIII and Sections 9.02 of the Trust Agreement. Buyer and
Seller agree that, in connection with the Closing and as a
result of the termination of BRU and in accordance with the
approval of the Termination Proposal, the following events
shall occur: (i) the Gas Contract shall terminate, (ii) the
Gathering Agreement shall be amended, (iii) Seller and BRI
shall assign, and Buyer shall assume, all of Seller's and
BRI's rights and
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<PAGE> 37
obligations under the Trust Agreement and the Administrative
Services Agreement, and (iv) the obligations of BRI under the
Trust Agreement and the Administrative Services Agreement
(other than the obligations relating to the windup of BRU and
any such obligations which by their express terms survive the
termination of BRU) shall terminate and BRI shall be released
therefrom (the proposal to terminate the Trust and the events
described in clauses (i) through (iv) hereof to be effected in
connection therewith and as a result thereof being referred to
herein collectively as "Termination Proposal"). In connection
with such meeting, if required in order to obtain the
requisite approval of the Termination Proposal by the holders
of BRU Units and to effect a termination of BRU as soon as
practicable, Buyer will (i) prepare (or cause to be prepared)
and use (alone or with others) its commercially reasonable
efforts to have cleared by the SEC as promptly as practicable
such information regarding the Termination Proposal as is
required to be included in a proxy or information statement of
Buyer or BRU (the "Proxy Statement") and all other proxy or
informational materials to be filed with the SEC for such
meeting and (ii) otherwise comply with all legal requirements
applicable to it under federal (including, without limitation,
the Securities Exchange Act of 1934, as amended), state or
local law and of The New York Stock Exchange, Inc. applicable
to it and to such meeting (including without limitation, the
requirements applicable to it arising under the Trust
Agreement). Such Proxy Statement shall include a statement
that Buyer intends to vote its BRU Units and the BRU Units for
which it controls the voting rights at the Unitholder Meeting
"for" approval of the Termination Proposal. Buyer agrees to
cooperate with the Trustee in the preparation of the Proxy
Statement and any amendment or supplement thereto. Buyer
undertakes and agrees to vote all BRU Units owned by it or for
which it controls the voting rights (including the BRU Units),
for approval of the Termination Proposal at the Unitholder
Meeting. Seller agrees to use its commercially reasonably
efforts to assist Buyer and the Trustee of BRU in connection
with the furnishing of information (in its possession or which
it can obtain without unreasonable effort or expense)
determined by Buyer
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<PAGE> 38
or the Trustee to be required for disclosure in, and seeking
SEC clearance of, the Proxy Statement, if such information is
not otherwise available to Buyer or the Trustee without
unreasonable effort or expense.
(c) As soon as reasonably practicable following Buyer notifying
Seller that Buyer beneficially owns more than 66-2/3% of the
outstanding BRU Units, Seller shall notify the Trustee in
writing, pursuant to Section 5.04(d) of the Trust Agreement,
to (i) prepare and file (or cause to be prepared and filed)
with the SEC, (ii) use its commercially reasonable efforts to
have cleared by the SEC and (iii) thereafter mail (or cause to
be mailed) to BRU's unitholders as promptly as practicable, a
preliminary and definitive Proxy Statement of BRU that
includes the Termination Proposal (which Termination Proposal
and the other information required to be disclosed with
respect thereto shall be prepared and submitted to the Trustee
by Buyer for inclusion in the Proxy Statement) and all other
materials determined by Buyer or the Trustee to be required
for the Unitholder Meeting. Buyer agrees to take such actions
as shall be commercially reasonable to respond to SEC comments
to any such filing and Seller agrees to notify the Trustee in
writing to file same. When the Proxy Statement has been
cleared by the SEC for mailing, Seller (upon Buyer's request)
shall notify the Trustee in writing to mail the definitive
Proxy Statement to BRU Unitholders as of the applicable record
date. Thereafter, Buyer and Seller shall, and shall use
commercially reasonable efforts to cause the Trustee to comply
with all legal requirements applicable to BRU or the
Termination Proposal under federal, state or local law and of
the New York Stock Exchange, Inc. applicable to it (including,
without limitation, the requirements applicable to it arising
under the Trust Agreement).
(d) Buyer will use its reasonable best efforts to assure under the
circumstances that, the Proxy Statement and any amendments or
supplements thereto will, when filed, comply as to form in all
material respects with the applicable requirements of the 1934
Act and applicable to Buyer. Buyer will use its reasonable
best efforts to
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<PAGE> 39
assure under the circumstances that, at the time the Proxy
Statement or any amendment or supplement thereto is first
mailed to BRU's unitholders and at the time such unitholders
vote on the approval of the Termination Proposal, the Proxy
Statement, as supplemented or amended, if applicable, will, to
Buyer's knowledge, not contain any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements contained therein, in the light
of the circumstances under which they were made, not
misleading. The foregoing representations and warranties will
not apply to statements or omissions included in the Proxy
Statement or any amendment or supplement thereto based upon
information furnished to Buyer by Seller or any other Person
for use (or incorporation by reference) therein.
(e) Buyer shall pay all reasonable costs and expenses (other than
fees and expenses of Seller's counsel) incurred by Seller, BRI
and their affiliates related to the preparation of the Proxy
Statement and any amendments and supplements thereto, any
schedule or other document that is required to be filed on
behalf of BRU with the SEC or mailed to unit holders of BRU in
connection with the transactions contemplated hereby,
including, without limitation, any such costs and expenses
Seller, BRI and affiliates are required to pay on behalf of
the BRU trustee.
(f) From the date hereof until the termination of this Agreement,
Seller will not, and will use its commercially reasonable
efforts to cause its officers, directors, employees, financial
or legal advisors not to, directly or indirectly, (i) take any
action to solicit, initiate or encourage any proposal to
acquire from Seller the Interests, or any interest therein,
(ii) engage in negotiations with, or disclose any nonpublic
information relating to the Interests or afford access to the
properties, books or records of Seller or any of its
subsidiaries to, any person that may be considering making, or
has made, a proposal to acquire the Interests, or (iii)
exercise its right under Section 9.03(c) of the Trust
Agreement to make a cash offer to purchase all of the
Remaining Royalty Interests (as defined in the Trust
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<PAGE> 40
Agreement) at any time prior to the Option Period Termination
Date (as defined in the Trust Agreement). Seller shall, and
shall cause its directors, employees, officers and financial
and legal advisors to, cease immediately and cause to be
terminated all activities, discussions or negotiations, if
any, with any persons conducted heretofore with respect to any
proposal by any person to acquire the Interests, or any
interest therein.
28. Occasional Sale. Seller and Buyer believe that this purchase and sale
of the Interests constitutes an isolated or occasional sale and is not
subject to sales tax; provided, however, if any sales, transfer, use
taxes or other similar taxes are due or should hereafter become due
(including penalty and interest thereon) by reason of this transaction,
Buyer shall timely pay and solely bear all such taxes.
29. Recording Documents. Buyer shall pay all documentary, filing, and
recording fees incurred in connection with the filing and recording of
the instruments of conveyance. As soon as practicable after Closing,
Buyer shall provide Seller with recorded copies of all documents
conveying the Interests to Buyer.
30. Notices. All notices hereunder shall be sufficiently given for all
purposes hereunder if in writing and delivered personally, or to the
extent receipt is confirmed by the party charged with notice, sent by
documented overnight delivery service, by United States Mail, telecopy,
telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to Seller or Buyer shall
be addressed to:
<TABLE>
<CAPTION>
SELLER BUYER
------ -----
<S> <C>
Burlington Resources Oil & Gas Company San Juan Partners, L.L.C.
3535 E. 30th Street 910 Travis Street, Suite 2150
P. O. Box 4289 Houston, Texas 77002
Farmington, New Mexico 87402
Attn: John Zent Attn: Scott Smith
Fax: (505) 599-4062 Fax: (713) 759-2040
</TABLE>
-40-
<PAGE> 41
With copy to:
Burlington Resources Oil & Gas Company
5051 Westheimer
Suite 1400
Houston, Texas 77056
Attn: Sally McDonald
Fax: (713) 624-9250
31. Entire Agreement. This instrument states the entire agreement and
supersedes all prior agreements between the parties concerning the
subject matter hereof. This Agreement may be supplemented, altered,
amended, modified or revoked by writing only, signed by both parties.
32. Counterpart. This Agreement may be executed by Buyer and Seller in any
number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute one and the same
instrument.
33. Time of Essence. Time is of the essence in this Agreement.
34. Announcements. Seller and Buyer shall consult with each other prior to
the release of any press releases and other announcements concerning
this Agreement or the transactions contemplated hereby. Any press
release or other announcements will be at a time and in a form
reasonably acceptable to Seller and Buyer.
35. Waiver. Any of the terms, provisions, covenants, representations,
warranties or conditions hereof may be waived only by a written
instrument executed by the party waiving compliance. The failure of any
party at any time or times to require performance of any provisions
hereof shall in no manner affect such party's right to enforce the
same. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
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<PAGE> 42
36. Survival of Representations and Covenants. All representations and
covenants of the parties to the extent not fully performed or waived
prior to Closing shall survive the Closing.
37. Reliance. Prior to executing and/or closing this Agreement, Buyer has
been afforded an opportunity to (i) examine the Interests and all
materials relating thereto provided to it by Seller, (ii) discuss with
representatives of Seller such materials and the nature and operation
of the Interests, and (iii) investigate the condition of the Interests.
In entering into and closing this Agreement, Buyer has relied solely on
the express representations and covenants of Seller in this Agreement,
its independent investigation of, and judgment with respect to, the
Interests, and the advice of its own legal, tax, economic,
environmental, engineering, geological and geophysical advisors, and
not on any comments or statements of Seller or any representatives or
agents of, or consultants or advisors engaged by, Seller.
38. Governing Law. This Agreement and the rights and obligations of the
parties hereto shall be governed, construed, and enforced in accordance
with the laws of the State of Texas. The parties agree that any
litigation relating directly or indirectly to this Agreement must be
brought before and determined by a court of competent jurisdiction in
Houston, Harris County, Texas, except as the laws of the any other
jurisdiction manditorily apply.
39. Legal Fees. The prevailing party in any legal proceeding brought under
or to enforce this Agreement shall be additionally entitled to recover
court costs and reasonable attorneys' fees from the non-prevailing
party.
40. Agreement for the Parties' Benefit Only. Except with respect to the
persons and the entities indemnified hereunder, this Agreement is not
intended to confer upon any person
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<PAGE> 43
or entity not a party hereto any rights or remedies hereunder, and no
person or entity other than the parties hereto is entitled to rely on
any representation, covenant, or agreement contained herein.
41. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is
not affected in any adverse manner to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent
possible.
42. Binding Effect; Assignment. All the terms, provisions, covenants,
representations, and conditions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto
and their respective successors; provided, however, this Agreement or
any portion thereof and the rights and obligations hereunder shall not
be assignable or delegable by any party without the express prior
written consent of the non-assigning or non-delegating party; provided,
however, Seller shall not unreasonably withhold its consent to an
assignment by Buyer of its rights and obligations under this Agreement
to an affiliate of Buyer.
43. Enforcement. Should Buyer or Seller default in the performance of this
Agreement, the non-defaulting party shall be entitled to enforce
specific performance of this Agreement, or exercise any other right or
remedy it may have at law or in equity by reason of such default.
44. Like Kind Exchange - Internal Revenue Code Section 1031. Buyer agrees
to cooperate with and assist Seller as reasonably requested to enable
Seller to comply with the provisions of
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<PAGE> 44
Section 1031 of the Internal Revenue Code and related provisions
thereto; provided however, Buyer shall not be obligated to incur any
expense or other liability in connection with same. Seller shall
indemnify, defend and hold Buyer, its agents, employees, directors,
officers, shareholders, partners, successors and assigns harmless from
and against any and all Claims to the extent same is a result of (i)
any and all transactions contemplated by this Section 43, (ii) any act
or omission of Seller or Buyer relating to any transaction contemplated
by this Section 43, (iii) any obligations (including, without
limitation, any taxes and/or interest assessed thereon, fines,
penalties, punitive damages or liabilities arising under any common law
cause of action) owed to any federal, state or local taxing authority
arising out of or related to the actions or inactions of Seller in
compliance or attempted compliance with the laws and regulations
related to the like kind exchange, and (iv) any and all obligations or
other liabilities owed to or claimed by any escrow agent or other third
party used by Seller as an intermediary in connection with any like
kind exchange.
45. Price Credit Account. As of the Effective Time the amount of "Price
Credits" in the "Price Credit Account" under the Gas Contract equaled
$4,116,000.00 (the "Base Price Credit Amount"). If the amount of Price
Credits in the Price Credit Account on the Closing Date (the "Closing
Price Credit Amount") is less than the Base Price Credit Amount, then
Seller shall cause BRTI to pay to Buyer, at Closing, an amount equal to
such difference, and if the Closing Price Credit Amount is greater than
the Base Price Credit Amount, then Seller shall pay to BRTI, at
Closing, an amount equal to such difference. On or about the 60th day
following the effective date of the termination of the Gas Contract
(such effective date being referred to herein as the "Gas Contract
Termination Date"), Seller shall cause BRTI to deliver to Buyer a
statement setting forth in reasonable detail the amount of Price
Credits in the Price Credit Account on the Gas Contract Termination
Date (the "Termination Price Credit Amount"). If the Termination Price
Credit Amount is less than the Closing Price Credit Amount then Seller
shall cause BRTI to pay to Buyer, on or before the 75th day following
the Gas Contract Termination Date, an amount equal to such difference,
and if the Termination Price Credit Amount is
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<PAGE> 45
greater than the Closing Price Credit Amount, then Buyer shall pay to
BRTI, on or before the 75th day following the Gas Contract Termination
Date, the amount of such difference. All payments required under this
Section 45 shall be made in cash by wire transfer to account designated
in writing by the party receiving such funds.
EXECUTED as of the date first above mentioned.
SELLER
BURLINGTON RESOURCES OIL & GAS COMPANY
By: /s/ MARK E. ELLIS
-------------------------------------------------
Its: Vice President
-------------------------------------------------
BUYER
SAN JUAN PARTNERS, L.L.C.
By: O'Sullivan Oil & Gas Company, Inc., Manager
By: /s/ C. N. O'SULLIVAN
--------------------------------------------------
C. N. O'Sullivan, President
-45-
<PAGE> 1
EXHIBIT (b)(2)
SECOND AMENDMENT TO
LOAN AGREEMENT DATED JANUARY 15, 1998
BY AND AMONG
SAN JUAN PARTNERS, L.L.C.
AND
BANK ONE, TEXAS, N.A.
This Second Amendment to Loan Agreement dated January 15,
1998, is entered into as of October 9, 1998 (this "Second Amendment") by and
among SAN JUAN PARTNERS, L.L.C. ("Borrower"), and BANK ONE, TEXAS, N.A., a
national banking association (the "Bank").
W I T N E S E T H:
Borrower and Bank entered into a Loan Agreement dated January
15, 1998 (the "Loan Agreement") as amended by the First Amendment dated June 3,
1998.
Borrower has requested that Bank increase the face amount of
the Note, increase the amount of the Commitment, and make certain other
modifications to the Loan Agreement, and Bank is willing to do so subject to and
conditioned upon the provisions this Second Amendment.
NOW, THEREFORE, in consideration of the promises herein
contained, and each intending to be legally bound hereby, the parties agree as
follows:
I. Amendments to Loan Agreement.
Article I of the Loan Agreement is hereby amended by adding the
following definitions:
"First Amendment" means the First Amendment to the Loan Agreement
dated January 3, 1998.
"Second Amendment" means the Second Amendment to the Loan Agreement
dated October 9, 1998.
Article I of the Loan Agreement is hereby amended to revise the
definition of "Commitment" by replacing the amount "25,000,000.00" that appears
therein with the amount "$26,500,000.00."
Article I of the Loan Agreement is further amended to revise the
definition of "Note" in its entirety to read as follows:
"Note" means that certain amended and restated advancing term note in
the original face amount of $32,000,000.00, made by Borrower payable
to the order of Bank, in the form attached as Exhibit "A" to the
Second Amendment, together with all deferrals, renewals, extensions,
amendments, modifications or
<PAGE> 2
rearrangements thereof, which promissory note shall evidence the
advances to Borrower by Bank pursuant to Section 2.01 hereof.
Article I of the Loan Agreement is further amended to revise the
definition of "Permanent Brokerage Account" by replacing the account number
"029-102287-105" that appears therein with the account number "019-057453-040."
Section 2.08 of the Loan Agreement is hereby amended by replacing the
phrase "$25,000,000.00 as of January 15, 1998," which appears at the end of the
first sentence thereof, with the phrase "$26,500,000.00 as of October 9, 1998."
Section 2.11 of the Loan Agreement is hereby amended by adding the
following text at the end of such Section:
At such time as the Commitment is increased pursuant to the Second
Amendment, Borrower shall pay to Bank an additional Facility Fee
equal to five tenths of one percent (.5%) of the difference between
the amount of such increased Commitment minus $25,000,000.00.
Section 3.10 of the Loan Agreement is hereby amended in its entirety
to read as follows:
3.10 Cash Collateral Account. Borrower shall have established with
Banc One Securities Corporation as of the closing of the Second
Amendment Account No. 019-057453-040, into which the deposits
required by Section 5.20 shall be made.
Section 5.20(b) of the Loan Agreement is hereby amended by replacing
the date "September 1, 1998," which appears in the first sentence thereof with
the date "December 1, 1998," and by replacing the date "November 30, 1988,"
which also appears in the first sentence thereof, with the date "December 31,
1998".
Section 5.29 of the Loan Agreement is hereby amended in its entirety
to read as follows:
5.29 Deposit of Trust Units in Brokerage Account and Delivery of
Trust Unit Certificates to Bank. Borrower shall cause all Trust Units
to be either: (a) acquired in the name of Banc One Securities
Corporation and held in the Permanent Brokerage Account, provided
that with respect to any Trust Units acquired for the account of
Borrower by Jeffries Corporation, such Trust Units may be held in the
name of Jeffries Corporation in the Pass Through Brokerage Account
for not more than seven days from the date of acquisition until
transferred to the Permanent Brokerage Account, or (b) acquired in
the name of Borrower pursuant to a certificate or certificates issued
by the Trust evidencing Borrower's ownership of a designated number
of Trust Units (herein called, whether one or more, a "Unit
Certificate"), in which case each such Unit Certificate shall be
delivered by Borrower to Bank within two (2) Business Days
-2-
<PAGE> 3
after Borrower's acquisition of the Trust Units evidenced by such
Unit Certificate (or, if later, within two (2) Business Days after
the Unit Certificate evidencing such Trust Unit ownership is
delivered to Borrower or its representative), together with a blank
Trust Unit power executed by Borrower evidencing the transfer of
Borrower's interest in the Trust Units represented by such Unit
Certificate.
Exhibit "A" to the Loan Agreement is hereby amended by replacing such
exhibit with Exhibit "A" to the Second Amendment.
Exhibit "C" to the Loan Agreement is hereby amended by modifying the
description of the "Pledge Agreement" described in Item 2 thereof to read as
follows:
2. PLEDGE AGREEMENT granting Bank a first priority security interest
in: (a) the Pass Through Brokerage Account and the Permanent
Brokerage Account in which all of Borrower's Trust Units that are not
acquired in Borrower's own name pursuant to a Unit Certificate
evidencing Borrower's ownership thereof shall be maintained, and (b)
all Trust Units acquired in Borrower's own name pursuant to a Unit
Certificate designating Borrower as the owner of such Trust Units.
II. Conditions to Second Amendment. This Second Amendment shall not become
effective until the following conditions have been satisfied:
A. Bank shall have received the Note (in the form attached as Exhibit
A to the Second Amendment), multiple counterparts of the Second
Amendment, as requested by Bank, and a Certificate of Compliance (in
the form attached as Exhibit B to the Second Amendment), all duly
executed on behalf of Borrower.
B. Bank shall have received amendments to the Pledge of Brokerage
Account and to the U.C.C.-1 Financing Statement, each previously
executed and delivered by Borrower to Bank pursuant to Section 3.16
of the Loan Agreement, such amendments to be in form and substance
satisfactory to Bank in its discretion, amending the number of the
Permanent Brokerage Account to designate the proper account number,
and also adding to the Collateral covered by such Pledge and
Financing Statement all Trust Units held in Borrower's name pursuant
to one or more Unit Certificates, together with blank Trust Unit
powers in form satisfactory to Bank in its discretion, all duly
executed on behalf of Borrower.
C. Bank shall have received payment of the fee required by Section
2.11 of the Loan Agreement, as amended by the Second Amendment.
D. The requirements of Article III of the Loan Agreement shall be
satisfied to the extent that they applicable with respect to any
Trust Units that are to be added to the Borrowing
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<PAGE> 4
Base Property and any additional advances that are to be made
pursuant to the Second Amendment, including Sections 3.03, 3.04,
3.06, 3.09, 3.11, and 3.13 through 3.17.
III. Extent of Amendments. This Second Amendment shall not be deemed to be an
amendment by Bank of any covenant, condition or obligation on the part of the
Borrower under the Loan Agreement, as amended hereby, except as expressly set
forth herein. In addition, this Second Amendment shall in no respect evidence
any commitment by the Bank to grant any future amendments of any covenant,
condition or obligation on the part of the Borrower under the Loan Agreement, as
amended hereby. Any further amendments, waivers or consents must be specifically
agreed to in writing in accordance with Section 8.12 of the Loan Agreement.
IV. Reaffirmation of Representations and Warranties. To induce the Bank to enter
into this Second Amendment, the Borrower hereby reaffirms, as of the date
hereof, its representations and warranties contained in Article IV of the Loan
Agreement and in all other documents executed pursuant thereto, and additionally
represents and warrants as follows:
A. The execution and delivery of this Second Amendment and the
performance of Borrower of its obligations under this Second
Amendment are within Borrower's power, have been duly authorized by
all necessary corporate action, have received all necessary
governmental approval (if any shall be required), and do not and will
not contravene or conflict with any provision of law or of the
charter or by-laws of the Borrower or of any agreement binding upon
Borrower.
B. This Second Amendment represents the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in
accordance with its terms subject as to enforcement only to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally.
C. Since the date of the Loan Agreement, no change, event or state of
affairs has occurred and is continuing which would constitute an
event of default as described in Section 7.01 of the Loan Agreement.
V. Defined Terms. Terms used herein that are defined in the Loan Agreement shall
have the same meanings herein, unless the context otherwise requires.
VI. Reaffirmation of Loan Agreement. This Second Amendment shall be deemed to be
an amendment to the Loan Agreement, and the Loan Agreement, as amended hereby,
is hereby ratified, adopted and confirmed in each and every respect.
VII. Governing Law. THIS SECOND AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. This Second Amendment has been entered into in Harris
County, Texas, and it shall be performable for all purposes in Harris County,
Texas. Courts within the State of Texas shall have jurisdiction over any and all
disputes
-4-
<PAGE> 5
between the Borrower and the Bank, whether in law or equity, including,
but not limited to, any and all disputes arising out of or relating to this
Second Amendment or any other Loan Documents; and venue in any such dispute
whether in federal or state court shall be laid in Harris County, Texas.
VIII. Severability. Whenever possible each provision of this Second Amendment
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Second Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Second Amendment.
IX. Execution in Counterparts. This Second Amendment may be executed in any
number of counterparts and by the different parties on separate counterparts on
different dates, and each such counterpart shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
agreement.
X. Section Captions. Section captions used in this Second Amendment are for
convenience of reference only, and shall not affect the construction of this
Second Amendment.
XI. Successors and Assigns. This Second Amendment shall be binding upon the
Borrower, the Bank and its respective successors and assigns, and shall inure to
the benefit of the Borrower, the Bank and the respective successors and assigns
of the Bank.
XII. Non-Application of Chapter 346 of Texas Finance Code. The provisions of
Chapter 346 of the Texas Finance Code are specifically declared by the parties
hereto not to be applicable to the Loan Agreement, this Second Amendment or any
of the other Loan Documents or to the transactions contemplated hereby.
XIII. Notice. THE LOAN AGREEMENT, AS HEREBY AMENDED, EMBODIES THE ENTIRE
AGREEMENT BETWEEN THE BORROWER AND THE BANK AND SUPERSEDES ALL PRIOR PROPOSALS,
AGREEMENTS AND UNDERSTANDINGS RELATING TO THE SUBJECT MATTER HEREOF. THE
BORROWER CERTIFIES THAT IT IS RELYING ON NO REPRESENTATION, WARRANTY, COVENANT
OR AGREEMENT EXCEPT FOR THOSE SET FORTH IN THE LOAN AGREEMENT, AS HEREBY
AMENDED, AND THE OTHER DOCUMENTS PREVIOUSLY EXECUTED IN CONNECTION THEREWITH.
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed as of the day and year first above written.
BORROWER:
SAN JUAN PARTNERS, L.L.C
By: O'Sullivan Oil & Gas Company, Inc.
Its Sole Manager
By: /s/ C.N.O'Sullivan
--------------------------------------
C.N. O'Sullivan
President
BANK:
BANK ONE, TEXAS, N.A.
By: /s/ Steve Shatto
---------------------------------------
Steve Shatto
Vice President
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