INVESTMENT REPRESENTATION AGREEMENT
Delta Petroleum Corporation
X/X 000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Gentlemen:
1. Subscription. The Undersigned, EVERGREEN RESOURCES, INC.
("Evergreen" or "Undersigned") and its designees, hereby agrees to
acquire from Delta Petroleum Corporation ("Delta" or the "Company")
194,444 shares of the restricted and legended common stock of Delta
(collectively the "Securities") for an aggregate of $350,000 in a
private negotiated transaction pursuant to Section 3(b) and/or 4(2)
of the Act (and the regulations promulgated thereunder) and/or
other applicable statute, rule and\or regulation. Closing,
including delivery of the Securities and payment therefore, shall
take place as of January 1, 1999.
2. Representations and Warranties. The Undersigned warrants
and represents to the Company that:
a. The Securities are being acquired by the Undersigned
for investment for its own account, and not with a view to the
offer or sale in connection therewith, or the distribution thereof,
and that the Undersigned is not now, and will not in the future,
participate, directly or indirectly, in an underwriting of any such
undertaking except in compliance with applicable registration
provisions of the Act.
b. The Undersigned will not take, or cause to be taken,
any action that would cause it to be deemed an underwriter of the
Securities, as defined in Section 2(11) of the Securities Act of
1933, as amended (the "Act").
c. The Undersigned has been afforded an opportunity to
examine such documents and obtain such information concerning the
Company as it may have requested, including without limitation all
publicly available information, and has had the opportunity to
request such other information (and all information so requested
has been provided) for the purpose of verifying the information
furnished to it and for the purpose of answering any question it
may have had concerning the business affairs of the Company and it
has reviewed to the extent desired by it the Articles, Bylaws and
Minutes of the Company, documentation concerning the Company's
financial condition, assets, liabilities, share ownership and
capital structure, operations, sales, management, public market,
public filings, litigation and other material contracts and
matters.
d. The Undersigned (and its officers, directors and/or
agents, as applicable) have had an opportunity to personally ask
questions of, and receive answers from, one or more of the officers
and directors of the Company and/or the attorneys for the Company
to ascertain and verify the accuracy and completeness of all
material information regarding the Company, its business and its
officers, directors, and promoters. The Undersigned has had an
opportunity to ask questions of and receive answers from duly
designated representatives of the Company concerning the terms and
conditions pursuant to which the Securities are being acquired by
it.
e. The Undersigned understands that its acquisition of the
Securities from the Company is a negotiated private transaction.
f. By reason of the knowledge and experience of the
Undersigned (and that of its officers and directors and their
respective advisors and investment bankers) in financial and
business matters in general, and investments in particular, it is
capable of evaluating the merits and risks of an investment in the
Securities.
g. The Undersigned is capable of bearing the economic risks
of an investment in the Securities.
h. The Undersigned's present financial condition is such
that it is under no present or contemplated future need to dispose
of any portion of the Securities to satisfy any existing or
contemplated undertaking, need or indebtedness.
i. If required to do so, it has retained to advise it, as to
the merits and risks of a prospective investment in the Securities,
a purchaser representative, legal counsel, financial and accounting
advisors, investment bankers, etc.
j. The Undersigned hereby represents and warrants to the
Company that all of the representations, warranties and
acknowledgements contained in this agreement, and the agreements,
if any, to which this document is attached as an exhibit are true,
accurate and complete as of the date herein and acknowledges that
the Company, its officers, directors, agents, and affiliates have
relied on its representations and warranties herein in consenting
to the restricted issuance and/or transfer of the Securities and
the Undersigned hereby agrees to indemnify and hold the Company
(together with its officers, directors, agents and affiliates)
harmless with respect to any and all expenses, claims or litigation
(including without limitation reasonable attorney's fees related
thereto) arising from or related to breach of this agreement
including without limitation breach of any warranty or
representation herein.
3. Restrictions. The Undersigned acknowledges and
understands that the Securities are unregistered and must be held
indefinitely by the Undersigned and/or its assignees unless they
are subsequently registered under the Act or an exemption from such
registration is available. The Undersigned further acknowledges
that it is fully aware of the applicable limitations on the resale
of the Securities. For instance, Rule 144 (the "Rule") permits
sales of "Restricted Securities" held for not less than two years
and upon compliance with the requirements of such Rule. Further,
the Securities must be sold in an active market and appropriate
information relating to the Company must be generally available in
order to effectuate a transaction pursuant to the Rule by an
affiliate of the Company. Any and all certificates representing
the Securities and any and all securities issued in replacement or
conversion thereof or in exchange thereof shall bear the following
legend, or one substantially similar thereto, which the Undersigned
has read and understands:
The Securities represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act") and
are "restricted securities" as that term is defined in Rule
144 under the Act. The Securities may not be offered for
sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act or pursuant to
an exemption from registration under the Act, the availability
of which is to be established to the satisfaction of the
Company.
4. Registration Rights. Subject to the approval of an
underwriter, if any, involved in a registration relating to a
public offering of the Company's securities, in the event that the
Company shall file a registration statement (or similar document)
with the U.S. Securities & Exchange Commission on a form which
would legally allow inclusion of the shares issued pursuant hereto,
the Company shall include such shares in such registration
statement, at the Company's sole cost.
5. Successors and Assigns. This agreement shall be binding
upon and shall inure to the benefit of the parties hereto and to
the successors and assigns of the Company and to the personal and
legal representatives, heirs, guardians, successors and permitted
assignees of the Undersigned.
6. Applicable Law. This agreement shall be governed by and
construed in accordance with the laws of the State of Colorado and,
to the extent it involves any United States statute, in accordance
with the laws of the United States, and jurisdiction and venue for
any dispute related hereto shall be in the District Court for the
City and County of Denver, Colorado.
Evergreen Resources, Inc. By: s/Xxxx Xxxxxx
Typed or Printed Name Signature, President & CEO
00-0000000 0000 00xx Xxxxxx, Xxxxx 0000
Social Security or Tax Address
Identification Number
Xxxxxx, Xxxxxxxx 00000
City, State and Zip Code
ACCEPTED:
DELTA PETROLEUM CORPORATION
By: s/Xxxxxx X. Xxxxxx, Xx.
Dated: December 30, 1998
OPTION
and
FIRST RIGHT OF REFUSAL
1. Option:
Effective January 1, 1999 for good and valuable consideration
the receipt of which is hereby acknowledged, Evergreen Resources,
Inc. ("Evergreen") is hereby granted an option ("Option"), until
September 30, 1999 to acquire 50% of those property interests owned
by Delta Petroleum Corporation ("Delta") which are listed on the
attached Exhibit A (the "Properties") by transferring to Delta the
194,444 shares purchased by Evergreen under an Investment
Representation Agreement of even date herewith. Delta will warrant
and defend title against all persons claiming title thereto through
Delta. In the event that Evergreen exercises its option to acquire
the Properties, Delta will assign 50% of its interest in the
Properties to Evergreen subject to its proportionate share of the
reserved production payment in favor of Xxxxxxxx X. Xxxx ("Xxxx")
described in the copies of the documents attached hereto and listed
below (the "Documents").
The Documents provide for the reservation of an undivided
three percent (3%) of substances produced from the Properties
("Production Payment") until an aggregate amount of $8,000,000 (or
a reduced amount as provided in the Documents under certain
circumstances) has been paid to Xxxx or his successors either from
any production attributable to the reserved 3% or the minimum
annual advanced payment ("Minimum Payment") discussed below. The
Documents further provide that, irrespective of whether the
Properties are producing or non-producing at any time, that Xxxx
shall be paid a Minimum Payment in the amount of $350,000 per year.
This Minimum Payment may be composed of the proceeds from the
production of the reserved 3%, a direct cash payment or a
combination thereof. Upon exercise of its option, Evergreen will
assume and agree to pay the direct cash portion of the Minimum
Payment under the terms set forth in the Documents until the
production proceeds from the reserved 3% from 100% of the
Properties are adequate to cover the Minimum Payment. It is
provided, however, that Evergreen shall be responsible only for
payment of the cash portion of the Minimum Payment with respect to
the Properties and that the reserved Production Payment derived
from the reservation of an undivided three percent (3%) of
substances produced from the Properties shall burden and be paid
from 100% of the substances produced from the Properties equally
and proportionately regardless of ownership.
Delta represents that it has paid $1,200,000 to date in
Minimum Payments, thereby correspondingly reducing the maximum
aggregate amount due under the Production Payment from $8,000,000
to $6,800,000. Each successive payment shall further reduce the
remaining amount due under the Production Payment.
The following Document copies are attached hereto:
* Lease interests Purchase Option Agreement between Delta
and Xxxx;
* Purchase and Sale Agreement between Delta and Xxxx;
* Assignments from Xxxx to Delta for interests in OCS-P409,
OCS-P0415,
XXX-X-0000, XXX-X0000, OCS-P0422, OCS-P0460, OCS-P0462,
and OCS-P464;
In the event Evergreen exercises its Option, the parties will
enter into agreements and assignments in the format of those
included in the attached Documents.
Until September 30, 1999, or the exercise of the Option,
whichever occurs first, Delta agrees: 1) that it will pay all costs
associated with or derived from the ownership of the Properties,
including payments to Xxxx as provided in the attached Documents;
2) that it will not otherwise encumber the Properties or allow the
Properties to be encumbered in any fashion through operation of law
or otherwise except as is already provided in the attached
documents in favor of Xxxx and his successors.
In the event of any failure by Delta to pay costs associated
with or derived from the ownership of the Properties or in the
event of the placement of any encumbrance upon the Properties,
Delta will notify Evergreen in writing within three business days
of such event. Upon such notification, Evergreen shall have the
option, but not the obligation, to pay such unpaid cost(s) or to
pay the funds necessary to prevent or remove any such encumbrance.
If Evergreen advances funds to Delta or directly to others for such
purposes, Delta will execute a twelve month promissory note in an
amount equal to the funds advanced with interest at ten percent
(10%) per annum in favor of Evergreen and the Properties shall
secure the repayment thereof under documentation customary in such
transactions.
2. Right of First Refusal:
In the event of a proposed sale or farmout by Delta of any of
its property interests in the offshore Santa Xxxxxxx area, Delta
agrees to afford Evergreen the right, within 30 days of written
notice by Delta to Evergreen, to purchase or farm into such
properties upon the same terms as those proposed; provided that
Evergreen must have exercised or must then exercise the above
described option.
Dated: December 30, 1998
DELTA PETROLEUM CORPORATION
s/Xxxxxx X. Xxxxxx, Xx.
Authorized Officer,
Xxxxxx X. Xxxxxx, Xx.,
Chairman, CEO
EVERGREEN RESOURCES, INC.
s/Xxxx X. Xxxxxx
Authorized Officer, Xxxx X. Xxxxxx,
President, CEO
AGGREGATE LIST OF OIL & GAS LEASES
SUBJECT TO RESERVED PRODUCTION PAYMENTS
1. San Xxxxxx Field
OCS-P 0409: Oil and Gas Lease from the United States of America, as
Lessor, to Oxy Petroleum, Inc., et al, as Lessee, effective July 1,
1981, designated Serial No. OCS-P 0409 and covering all of Block
22, OCS Official Protraction Diagram NI 10-6, Santa Xxxxx (Tract
53-182).
Leasehold Interest: 12.67169%
2. Point Xxx Unit
OCS-P 0415: Oil and Gas Lease from the United States of America, as
Lessor, to Xxxx Petroleum Inc., et al., as Lessee, effective July
1, 1981 designated Serial No. OCS-P 0415, and covering all of Block
66, OCS Official Protraction Diagram, NI 10-6, Santa Xxxxx.
Leasehold Interest: 1.88682%
OCS-P 0416: Oil and Gas Lease from the United States of
America, as Lessor, to Xxxx Petroleum Inc., et al., as
Lessee, effective July 1, 1981 designated Serial No. OCS-P
0416, and covering all of Block 67, OCS Official Protraction
Diagram, NI 10-6, Santa Xxxxx.
Leasehold Interest: 3.03049%
OCS-P 0421: Oil and Gas Lease from the United States of America,
as Lessor, to Xxxx Petroleum Inc., et al., as Lessee, effective
July 1, 1981 designated Serial No. OCS-P 0421, and covering all
of Block 110, OCS Official Protraction Diagram, NI 10-6, Santa
Xxxxx.
Leasehold Interest: 1.88682%
OCS-P 0422: Oil and Gas Lease from the United States of America,
as Lessor, to Xxxx Petroleum Inc., et al., as Lessee, effective
July 1, 1981 designated Serial No. OCS-P 0422, and covering all
of Block 111, OCS Official Protraction Diagram, NI 10-6, Santa
Xxxxx.
Leasehold Interest: 4.50000%
5. Gato Canyon Unit
OCS-P 0460: Oil and Gas Lease from the United States of America, as
Lessor, to Atlantic Richfield Company, as Lessee, effective August
1, 1982, designated Serial No. OCS-P 046O, and covering all of
Block 53N 72W, that portion seaward of the Three Geographical Mile
Line, Channel Islands Area, OCS Leasing Map No. 6A.
Leasehold Interest: 1.52930%
OCS-P 0462: Oil and Gas Lease from the United States of America,
as Lessor, to Xxxx Petroleum Inc., et al., as Lessee, effective
August 1, 1982, designated Serial No. OCS-P 0462, and covering
all of Xxxxx 00X 00X, Xxxxxxx Xxxxxxx Xxxx, XXX Leasing Map No.
6A.
Leasehold Interest: 1.52930%
OCS-P 0464: Oil and Gas Lease from the United States of America,
as Lessor, to Atlantic Richfield Company, as Lessee, effective
August 1, 1982, designated Serial No. OCS-P 0464, and covering
all of Block 53N 71W, that portion seaward of the Three
Geographical Mile Line, Channel Islands Area, OCS Leasing Map No.
6B.
Leasehold Interest: 1.52930%
