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EXHIBIT 10
EXECUTION COPY
EQUITY PARTICIPATION AND BUSINESS OPPORTUNITY AGREEMENT
This Equity Participation and Business Opportunity Agreement
("Agreement") is made and entered into as of December 9, 1997, by and between
Enron Oil & Gas Company, a Delaware corporation, and Enron Corp., an Oregon
corporation.
WHEREAS, EOG is engaged in the exploration for and the development,
production and marketing of natural gas and crude oil in the United States and
internationally; and
WHEREAS, a majority of the outstanding capital stock of EOG is owned
by Enron; the remaining shares are owned by the public; and Enron may have
certain duties to EOG resulting from its ownership of EOG; and
WHEREAS, ECT (as defined below) and EII (as defined below) are
wholly-owned subsidiaries of Enron; ECT and EII are engaged in the Finance and
Trading Business (as defined below), and their activities in such business
include without limitation activities involving the E&P Business (as defined
below) and may have an impact on EOG; and
WHEREAS, Enron engages in other activities that may have an impact on
EOG; and
WHEREAS, the application of the law relating to duties that Enron may
owe to EOG in particular circumstances is often difficult to predict; and if a
court were to hold that Enron breached any such duty Enron could be held liable
for damages in a legal action brought on behalf of EOG; and
WHEREAS, EOG and Enron desire to enter into this Agreement in order
(i) to define duties that Enron will owe to EOG with respect to business
opportunities and rights that Enron will have with respect to business
opportunities and (ii) to specify circumstances in which no breach of duty will
be deemed to have occurred; and
WHEREAS, Enron and EOG desire to enter into other agreements that
relate to matters of concern to each of them; and
WHEREAS, Enron desires to provide valuable consideration to EOG,
including options to purchase Common Stock of Enron that will give EOG the
opportunity to participate in future appreciation in value of Enron and
including other financial benefits;
NOW, THEREFORE, in consideration of the mutual covenants, rights, and
obligations set forth in this Agreement, and the benefits to be derived
herefrom, and other good and valuable consideration, the receipt and the
sufficiency of which each of the parties hereto acknowledges and confesses, the
parties hereto agree as follows:
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1. Certain Defined Terms; Exhibits. In addition to the
terms defined in this Agreement, the capitalized terms used in this Agreement
will have the meanings ascribed to such terms in Exhibit A hereto. Exhibit A
and each other exhibit to this Agreement are hereby made a part of this
Agreement as if set forth in full in this Agreement
2. Representation by Enron. Enron represents and warrants
to EOG that it has disclosed to the chief executive officer and the other
directors of EOG all information in Enron's possession that is material to a
decision by EOG to enter into this Agreement. Enron also represents that it has
furnished to the chief executive officer of EOG, to the other directors of EOG
and to the attorneys and financial advisers retained by the special committee
of the Board of Directors of EOG access to all information in Enron's
possession necessary to permit such persons to verify the accuracy of the
information furnished.
3. Agreement by EOG Regarding Enron Business Activities.
EOG acknowledges and agrees that, so long as such activities are conducted in
compliance with this Agreement in all material respects (including the
provisions of Section 4 hereof), Enron is free to conduct business activities
that are within Enron's traditional lines of business and any other lines of
business in which Enron chooses to engage in the future. Without limiting the
foregoing, EOG acknowledges and agrees that, so long as such activities are
conducted in compliance with this Agreement in all material respects (including
the provisions of Section 4 hereof), Enron may engage in the Finance and
Trading Business, including without limitation activities in such business
involving the E&P Business, and that such Finance and Trading Business may
include without limitation activities such as those conducted by ECT directly
or through ECT Securities Corp. ("ECT Securities"), Joint Energy Development
Investments Limited Partnership and Cactus Hydrocarbon III Limited Partnership,
pursuant to which ECT provides funds to third parties in return for production
payments or other property interests, including without limitation capital
stock, partnership interests, debentures, notes or oil and gas royalty,
overriding royalty, net profits or working interests or other securities or
property, or pursuant to which ECT Securities arranges for transactions in
securities for the account of others or underwrites securities. EOG also agrees
that, so long as such activities are conducted in compliance with this
Agreement in all material respects (including the provisions of Section 4
hereof), such Finance and Trading Business may include without limitation
activities such as those proposed to be conducted by EII. In connection with
the foregoing, EOG acknowledges that such activities may result in the
acquisition by Enron of E&P Business Assets, and in certain cases Enron or
entities in which Enron has an interest may acquire E&P Business Assets
pursuant to bidding or auction processes in which EOG is also a bidder. EOG
acknowledges and agrees that such activities may have an impact on EOG or the
price it pays for properties or securities it purchases from others. EOG
acknowledges and agrees that Enron or entities in which it has an interest may
acquire direct or indirect interests in E&P Business Assets as a result of the
activities described above, may own, operate and control any such assets in
connection therewith, and may acquire additional E&P Business Assets or pursue
opportunities related thereto in connection therewith, in each case without any
duty to offer all or any portion of such assets or opportunities to EOG.
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4. Agreement by Enron Regarding Separate Conduct of
Business. Enron agrees that, except with respect to business opportunities
pursued jointly by Enron and EOG and except as otherwise agreed to between
Enron and EOG, Enron's business will be conducted through the use of its own
personnel and assets and not with the use of any personnel or assets of EOG.
Without limiting the foregoing, Enron agrees that, without the consent of EOG,
the Finance and Trading Business conducted by ECT, EII or other Enron entities
will only involve business opportunities identified by or presented to ECT
personnel, EII personnel or other Enron personnel and developed and pursued
solely through the use of the personnel and assets of ECT, EII or other Enron
entities. Enron agrees that it will not pursue any business opportunity that
involves E&P Business Assets that is first presented to an officer or director
of Enron who is also an officer or director of EOG at the time such opportunity
is presented (i.e. the first officer or director of Enron to receive notice of
such opportunity from a third party is also an officer or director of EOG),
unless Enron first offers such opportunity to EOG and EOG notifies Enron in
writing that EOG elects not to pursue such opportunity; provided that the
foregoing agreement will not be applicable to opportunities first presented on
or after the first date on which Enron no longer controls EOG and no longer
owns directly or indirectly at least 40% of the capital stock of EOG having
ordinary voting power for the election of directors. For purposes of the
foregoing, (a) a business opportunity that involves E&P Business Assets shall
not include any opportunity where E&P Business Assets represent less than a
majority of the value of the opportunity, as determined by the officer or
director of Enron to whom such opportunity is first presented, based on
information available to such officer at the time such opportunity is first
presented (which determination shall be conclusive if made in good faith), (b)
senior officers of EOG who are members or ad hoc members of the Management
Committee of Enron or any similar committee shall not, by virtue of such
membership or ad hoc membership, be deemed to be Enron personnel, and (c) it
will not be a breach of Enron's agreement to develop and pursue business
opportunities solely through the use of the personnel and assets of ECT, EII or
other Enron entities if one or more senior officers of Enron who serve on the
Board of Directors of EOG participate, as officers of Enron, in evaluating,
developing or approving business opportunities that were identified by other
Enron personnel or first presented to other Enron personnel (i.e. the first
Enron person to receive notice of such opportunity from a third party was not
also an officer or director of EOG). The provisions of this Section 4 relate
exclusively to the duties that Enron owes EOG, and nothing herein shall affect
the fiduciary or other duties owed to EOG by any individual director or officer
of EOG in his or her capacity as such. In this connection, Enron agrees that
its representatives on the Board of Directors of EOG will not, for the purpose
of enabling Enron to pursue an opportunity in the E&P Business, vote in such a
manner as to effectively prevent, prohibit or restrict EOG from pursuing such
opportunity.
5. Agreement and Waiver. In further consideration of the
benefits received and to be received by EOG pursuant to this Agreement, EOG
acknowledges and agrees that, if any business opportunity is presented to or
identified by Enron, except as otherwise provided in Section 4 of this
Agreement Enron may pursue such opportunity without any obligation to offer it
to EOG, provided that Enron's activities in pursuing such business opportunity
are conducted in compliance with this Agreement in all material respects
(including the provisions of Section 4 hereof). EOG acknowledges and agrees
that in such case, to the extent that a court might hold that the conduct of
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such activity is a breach of a duty to EOG (and without admitting that the
conduct of such activity is such a breach of duty), EOG hereby waives any and
all claims and causes of action that EOG may have to claim that the conduct of
such activity is a breach of a duty to EOG. The waivers and agreements herein
apply equally to activities to be conducted in the future and activities that
have been conducted in the past.
6. Agreement to Supply Information. Enron agrees that, in
connection with any opportunity presented to EOG pursuant to Section 4 of this
Agreement, Enron will furnish to EOG all information in Enron's possession or
reasonably available to Enron regarding the opportunity in question that is
material to a decision by EOG whether or not to pursue such opportunity.
7. Options to Purchase Enron Common Stock. In
consideration of EOG's agreements herein, Enron hereby grants to EOG options to
purchase Common Stock of Enron as follows:
(a) The total number of shares issuable upon exercise of
such options is 3,200,000 shares.
(b) The option exercise price shall be $39.1875 per share.
(c) Options shall become vested and exercisable as follows:
options have vested on the date hereof and are exercisable as to 25%
of the total shares covered by the options on or following the date
hereof. Subject to the provisions of Section 7(e) below, additional
options will vest and will become exercisable on the anniversary of
the date of this Agreement as follows:
Number of Shares Covered
Year in Which By Options that Vest
Anniversary Occurs and Become Exercisable
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1998 15%
1999 10%
2000 10%
2001 10%
2002 10%
2003 10%
2004 10%
(d) Vested options may be exercised in whole or in part at
any time and from time to time until the tenth anniversary of this
Agreement.
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(e) If there is a change of control of EOG, then any
remaining unvested options will vest. For such purposes a "change of
control" means that (a) Enron no longer owns capital stock of EOG
representing at least 35% of the voting power for the election of
directors and (b) a majority of the members of the board of directors
of EOG consists of persons who are not officers or directors of Enron
or any affiliate of Enron other than EOG.
(f) Enron will afford EOG registration rights with respect
to the shares of Common Stock acquired by EOG upon exercise of options
granted herein. Such registration rights will be set forth in the
Stock Restriction and Registration Agreement in the form attached as
Exhibit B. Enron and EOG hereby agree to enter into such Stock
Restriction and Registration Agreement promptly upon execution of this
Agreement.
8. Agreements Regarding Certain Foreign Projects. In
further consideration of EOG's agreements herein, Enron hereby agrees to enter
into, or to cause its appropriate subsidiaries to enter into, agreements with
EOG relating to existing projects in Qatar, Mozambique and Uzbekistan on the
terms and conditions set forth in Exhibits C, D and E, respectively. Such
agreements will be subject to the Standard Cost Sharing and Co-Ownership
Matters set forth in Exhibit F. EOG agrees to enter into, or to cause its
appropriate subsidiaries to enter into, such agreements with Enron. EOG
acknowledges and agrees that Exhibits C, D, E and F set forth all terms and
conditions of such agreements that are material to a decision by EOG to enter
into this Agreement. The parties acknowledge and agree that the failure by
either party to agree on any term or provision of any such agreement (as long
as such failure to agree is not inconsistent with C, D, E or F) shall not serve
as a basis for invalidating this Agreement (through lack of consideration or
otherwise) or for any claim that a party breached this Agreement.
9. Agreement Regarding Enron Name and Marks. In further
consideration of EOG's agreements herein, Enron hereby agrees to enter into a
Non-Exclusive License Agreement with EOG in the form attached as Exhibit G.
Enron and EOG hereby agree to enter into such NonExclusive License Agreement
promptly upon execution of this Agreement.
10. Agreements Relating to Houston Pipe Line Company. In
further consideration of EOG's agreements herein, Enron hereby agrees to cause
its subsidiary, Houston Pipe Line Company ("HPL"), to enter into agreements
with EOG upon the terms and conditions set forth in Exhibit H to this
Agreement. Enron and EOG hereby agree that such agreements will be entered into
promptly upon execution of this Agreement.
11. Further Consideration. In further consideration of the
agreements herein, the parties agree as follows:
(a) Enron and EOG will enter into a Services Agreement, in
the form attached as Exhibit I to this Agreement, which services
agreement will replace the 1994 Services Agreement dated as of January
1, 1994.
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(b) Enron and EOG will enter into an amendment to the Stock
Restriction and Registration Agreement dated as of August 23, 1989,
between Enron Oil & Gas Company and Enron Corp., as amended, in the
form attached as Exhibit J to this Agreement, to provide that all
Registration Expenses (as defined therein) incident to any
registration of stock or other action by EOG under the Stock
Restriction and Registration Agreement dated as of August 23, 1989,
that is primarily for the benefit of Enron will be borne by Enron.
(c) If at any time following the date of this Agreement
Enron takes any action that results in the loss by EOG of its status
as an "independent producer" under the provisions of Xxxxxxx 000X xx
xxx Xxxxxx Xxxxxx Internal Revenue Code, Enron shall pay to EOG within
120 days following the end of the calendar year in which the loss of
such status occurs, and within 120 days following the end of each
subsequent calendar year during which EOG would otherwise be eligible
for independent producer status but for the actions of Enron, the
lesser of (a) $1 million and (b) an amount which, after payment of
applicable taxes, will compensate EOG for the additional income tax
liability of EOG for such calendar year because of EOG's loss of
independent producer status. The provisions of this Section 11(c) will
not apply to any calendar year after the year ending December 31,
2006.
(d) If Enron requests that EOG relocate its offices, and if
EOG agrees to do so, Enron will pay EOG's direct, out-of-pocket
expenses associated with such relocation of EOG's offices, including,
without limitation, moving expenses, expenses incurred in building out
or refurbishing the space in its new offices so that it is comparable
to EOG's existing space in the Enron Building, and expenses of
removing and reinstalling EOG's telecommunications and information
systems facilities. The agreement in this Section 11(d) will terminate
on the tenth anniversary of the date of this Agreement.
12. Equity Participation Agreement. EOG agrees that, in the
event that for any purpose EOG desires to issue additional shares of its
authorized but unissued capital stock or to sell treasury shares to any party
other than Enron, it will notify Enron at least thirty days in advance of such
issuance or sale (except in the case of shares issued or sold pursuant to
benefit plans or the exercise of any conversion option by holders of
convertible securities, in which case EOG will notify Enron promptly after EOG
is notified that the right to receive such stock will be or has been
exercised), and Enron will have the right to purchase additional shares of
capital stock of EOG as follows:
(a) If (i) at the time of such notice Enron owns capital
stock representing a majority of the ordinary voting power for the
election of directors of EOG and (ii) such issuance or sale to the
party other than Enron would cause Enron's ownership interest in EOG
to represent less than a majority of such voting power, Enron will
have the right to purchase such number of additional shares of Common
Stock of EOG as will cause it to own capital stock of EOG representing
a majority of the ordinary voting power for the election of directors
of EOG following the issuance or sale to the party other than Enron.
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(b) If (i) at the time of such notice Enron accounts for
the assets and operations of EOG on a consolidated basis for financial
reporting purposes but owns capital stock representing less than a
majority of the ordinary voting power for the election of directors of
EOG and (ii) such issuance or sale to the party other than Enron would
cause Enron's ownership interest in EOG to represent less than an
amount that Enron in its reasonable judgment deems appropriate to
permit it to continue to account for the assets and operations of EOG
on a consolidated basis for financial reporting purposes, then Enron
will have the right to purchase such number of additional shares of
Common Stock of EOG as will cause it to own capital stock of EOG
representing an amount that Enron in its reasonable judgment deems
appropriate to permit it to continue to account for the assets and
operations of EOG on a consolidated basis for financial reporting
purposes following the issuance or sale to the party other than Enron.
(c) If (i) at the time of such notice Enron accounts for
the assets and operations of EOG using the equity method for financial
reporting purposes and (ii) such issuance or sale to the party other
than Enron would cause Enron's ownership interest in EOG to represent
less than an amount that Enron in its reasonable judgment deems
appropriate to permit it to continue to account for the assets and
operations of EOG using the equity method for financial reporting
purposes, then Enron will have the right to purchase such number of
additional shares of Common Stock of EOG as will cause it to own
capital stock of EOG representing an amount that Enron in its
reasonable judgment deems appropriate to permit it to continue to
account for the assets and operations of EOG using the equity method
for financial reporting purposes following the issuance or sale to the
party other than Enron.
(d) Any purchase by Enron of additional shares of Common
Stock of EOG pursuant to this Section 12 shall be for cash, and the
consideration shall be payable and the shares issuable
contemporaneously with the issuance or sale to the party other than
Enron (except in the case of stock issued pursuant to benefit plans or
the exercise of any conversion option by holders of convertible
securities, in which case such closing shall occur on the fifth
business day after EOG has received timely notice from Enron that it
elects to exercise its right under this Section 12). The purchase
price thereof payable by Enron shall be 97% of the average closing
price per share of Common Shares in EOG reported at the close of
trading on the New York Stock Exchange for the 20 trading days
immediately preceding the second trading day prior to the issuance or
sale to the party other than Enron (reflecting a 3% private placement
discount). Enron will have registration rights with respect to such
shares that are identical to those it now has with respect to its
shares of capital stock of EOG, taking into consideration Section
11(b).
(e) Enron shall notify EOG in writing within five business
days after receipt of notice of the proposed issuance or sale of
capital stock by EOG whether Enron will exercise any right granted in
this Section 12 to purchase such additional shares of capital stock of
EOG. The failure of Enron to notify EOG of its election within such
five day period shall conclusively be deemed an election not to
exercise its right to purchase such stock.
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13. Existing Agreements. Except as expressly provided
herein, nothing in this Agreement shall impair or otherwise affect the duties
or obligations of Enron or EOG under existing agreements.
14. Confidentiality Agreements, etc. Each of the parties
agrees that if it or any of its subsidiaries or any other affiliate directly or
indirectly controlled by it executes any confidentiality agreement, area of
mutual interest agreement, standstill agreement or other agreement to which
neither the other party nor any of its affiliates is a party, but which
nevertheless purports to bind the other party or any of its affiliates, (i)
such agreement shall not be binding on the other party or any of its affiliates
(each party acknowledging that neither it nor any of its subsidiaries or
controlled affiliates has any authority to bind the other party or the other
party's affiliates), (ii) the other party and its affiliates shall have no
liability for any breach of such agreement, and (iii) it will indemnify, defend
and hold harmless the other party and its affiliates against any claims arising
from or relating to such agreement or any alleged breach thereof. In the event
that any third party requires that EOG execute any confidentiality or
standstill agreement as a condition to Enron's right to furnish to EOG the
information required by this Agreement in order to permit EOG to exercise any
right of first refusal granted by this Agreement, Enron's obligation in this
Agreement to furnish such information and its obligation to afford EOG such
right of first refusal will be conditioned upon the execution of such agreement
by EOG.
15. Outside Advisers. Each of the parties agrees that the
other may engage any investment banker or engineering, accounting, legal or
other professional adviser to perform services for it, notwithstanding the fact
that the other party may also employ such person, and each party waives the
right to claim that the other party breached any duty to it in connection with
such engagement. Nothing herein shall be deemed to grant any rights to any
person performing investment banking or other professional services for Enron
or EOG or to preclude any claim by either Enron or EOG against any person that
violates any duty owed by such person to Enron or EOG.
16. Right of EOG to Engage in Other Activities. The parties
acknowledge that nothing in this Agreement is intended to limit or restrict the
present or future lines of business of EOG and that this Agreement imposes upon
EOG no duty to refrain from competing with Enron in any line of business.
17. Notices. Without limiting any other manner in which
such an election may be made, any election by EOG under Section 4 not to pursue
a business opportunity involving E&P Business Assets may be made by the Chief
Executive Officer of EOG or such officer's designee.
18. Certain Expenses. Enron agrees to reimburse EOG for any
costs and expenses incurred by EOG in respect of consultants (including,
without limitation, legal and financial consultants) retained to assist any of
the independent directors of Enron Oil & Gas Company in their due diligence and
analysis in connection with this Agreement.
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19. Governing Law and Venue. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware without regard to principles of conflicts of law. The Parties agree
that the courts of the State of Delaware shall be the exclusive venue for any
judicial proceeding relating to the validity, interpretation or enforcement of
this Agreement.
EXECUTED as of the date first set forth above.
ENRON OIL & GAS COMPANY
By: /s/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
ENRON CORP.
By: /s/ J. XXXXXXXX XXXXXX
--------------------------------------
Name: J. Xxxxxxxx Xxxxxx
Title: Senior Vice President,
Corporate Development
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EXHIBIT A
CERTAIN DEFINED TERMS
In addition to such other defined terms as may be set forth in the
Agreement of which this Exhibit A is a part, as used in such Agreement or in
this Exhibit A, the following terms have the following respective meanings:
"E&P Business" means the oil and gas exploration, exploitation,
development and production business and includes without limitation (a) the
ownership of oil and gas property interests (including concessions and
production sharing agreements, and including agreements referred to in the
international oil and gas industry as "service contracts" whereby a company
involved in the E&P Business agrees to explore, develop and operate oil and gas
properties in return for a fee for each unit of production), (b) the ownership
and operation of real and personal property used or useful in connection with
exploration for Hydrocarbons, development of Hydrocarbon reserves upon
discovery thereof and production of Hydrocarbons from xxxxx located on oil and
gas properties and (c) debt of or equity interests in corporations,
partnerships or other entities engaged in the exploration for Hydrocarbons, the
development of Hydrocarbon reserves and the production and sale of Hydrocarbons
from xxxxx located on oil and gas properties in which the entity conducting the
E&P Business owns an interest; but such term does not include the oilfield
service business.
"E&P Business Assets" means interests in oil and gas properties
(including concessions, production sharing agreements and service contracts, as
such terms are used in clause (a) of the definition of E&P Business), real and
personal property used or useful in connection with the production and sale of
Hydrocarbons from xxxxx located on oil and gas properties and notes and
securities issued by corporations, partnerships or other entities engaged in
the E&P Business.
"ECT" means Enron Capital & Trade Resources Corp., together with its
subsidiaries and other affiliated entities directly or indirectly controlled by
it.
"EII" means Enron International Inc., together with its subsidiaries
and other affiliated entities directly or indirectly controlled by it.
"Enron" means Enron Corp. together with its subsidiaries and other
affiliated entities directly or indirectly controlled by it, other than EOG and
entities directly or indirectly controlled by it.
"EOG" means Enron Oil & Gas Company together with its subsidiaries and
other affiliated entities directly or indirectly controlled by it.
"Finance and Trading Business" means the business of trading in
securities, arranging transactions in securities for the accounts of others,
providing funds or other assets to third parties
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in return for securities or other assets, underwriting securities or making
investments in securities or other assets.
"Hydrocarbons" means oil, gas or other liquid or gaseous hydrocarbons.
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EXHIBIT B
STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT
THIS STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT (the
"Agreement") dated as of December 9, 1997, is between ENRON CORP., an Oregon
corporation (the "Company"), and ENRON OIL & GAS COMPANY, a Delaware
corporation (the "Holder").
W I T N E S S E T H:
WHEREAS, the Holder owns a substantial number of options to purchase
shares of common stock, without par value (the "Common Stock"), of the Company
(the "Options");
WHEREAS, the Options are, and the Common Stock to be issued upon
exercise of such Options will be, "restricted securities" under the Securities
Act of 1933 (the "Securities Act"); and
WHEREAS, under the provisions of the Securities Act and the General
Rules and Regulations promulgated by the Securities and Exchange Commission
(the "SEC") thereunder, the Holder may be limited in the manner of selling the
shares of Common Stock owned by the Holder, absent registration under the
Securities Act of the sale of such Common Stock or the availability of another
exemption from the registration requirements of the Securities Act; and
WHEREAS, the Company and the Holder desire to set forth certain
registration rights as to such shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereby agree as follows:
1. Agreement Not to Sell or Transfer Restricted Stock For a
Period of Time. The Holder agrees that it will not offer, sell, contract to
sell or otherwise dispose of any Options or shares of Common Stock except
pursuant to a registration statement under the Securities Act or an applicable
exemption therefrom.
2. Demand Registration.
a. Request for Registration. As used in this Agreement,
"Restricted Stock" shall mean all shares of Common Stock issued upon exercise
of the Options, together with any securities issued or issuable with respect to
any such Common Stock by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Restricted Stock, once issued
such securities shall cease to be Restricted Stock when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been
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disposed of in accordance with such registration statement, (b) such securities
shall have been sold pursuant to Rule 144 (or any successor provision) under
the Securities Act, or (c) such securities shall have been otherwise
transferred, new certificates representing such securities not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of such securities shall not require registration or
qualification of such securities under the Securities Act or any similar state
law then in force. The Holder and any permitted assignee of the Holder's rights
and duties hereunder are referred to herein as the "Holders." Unless the
context otherwise requires, any reference herein to a Holder or Holders of
Restricted Stock shall be deemed to include reference to a holder of Options,
and any reference herein to a number of shares of Restricted Stock, to a
majority in number of shares of Restricted Stock or to all or a portion of
shares of Restricted Stock of any Holder or Holders shall be deemed to include
reference to a number of shares of Restricted Stock issuable upon exercise
thereof or to a combination of shares of Restricted Stock issuable and issued
upon exercise of Options (provided that the Company shall not be required to
file any registration statement covering resales of Options). Subject to the
conditions and limitations set forth in Section 5 of this Agreement, the Holder
or Holders of Restricted Stock holding in the aggregate at least 500,000 shares
of Restricted Stock may make a written request for registration under the
Securities Act of all or part of its or their Restricted Stock pursuant to this
Section 2 ("Demand Registration"), provided that the number of shares of
Restricted Stock proposed to be sold shall be at least 500,000 shares (subject
to appropriate adjustment for any stock dividend, stock split, combination,
recapitalization, merger, consolidation, reorganization or other occurrence
affecting the number of shares of Restricted Stock). Such request will specify
the aggregate number of shares of Restricted Stock proposed to be sold and will
also specify the intended method of disposition thereof. Within ten days after
receipt of such request, the Company will give written notice of such
registration request to all other Holders of Restricted Stock and include in
such registration all Restricted Stock with respect to which the Company has
received written requests for inclusion therein within fifteen business days
after the receipt by the applicable Holder of the Company's notice. Each such
request will also specify the aggregate number of shares of Restricted Stock to
be registered and the intended method of disposition thereof. No other party,
including the Company (but excluding another Holder of Restricted Stock), shall
be permitted to offer securities under any such Demand Registration unless the
Holder or Holders requesting the Demand Registration shall consent in writing.
b. Priority on Demand Registrations. If the Holders of a
majority in number of shares of the Restricted Stock to be registered in a
Demand Registration so elect, the offering of such Restricted Stock pursuant to
such Demand Registration shall be in the form of an underwritten offering. In
such event, if the managing underwriter or underwriters of such offering advise
the Company and the Holders in writing that in their opinion the aggregate
amount of Restricted Stock requested to be included in such offering is so
large that it will materially and adversely affect the success of such
offering, the Company will include in such registration the aggregate number of
shares of Restricted Stock which in the opinion of such managing underwriter or
underwriters can be sold without any such material adverse effect, and such
number of shares shall be allocated pro rata among the Holders of Restricted
Stock on the basis of the number of shares of Restricted Stock requested to be
included in such registration by their Holders. To the extent Restricted Stock
so
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requested to be registered are excluded from the offering, then the Holders of
such Restricted Stock shall have the right to one additional Demand
Registration under this Section with respect to such Restricted Stock, provided
that the failure of such Restricted Stock to be registered is through no fault
of such Holder.
c. Selection of Underwriters and Counsel. If any Demand
Registration is in the form of an underwritten offering, the Holders of a
majority in number of shares of Restricted Stock to be registered will select
and obtain the services of the investment banker or investment bankers and
manager or managers that will administer the offering and the counsel to such
investment bankers and managers; provided that such investment bankers,
managers and counsel must be approved by the Company, which approval shall not
be unreasonably withheld.
3. Piggyback Registration. If the Company proposes to file a
registration statement under the Securities Act with respect to an offering for
its own account of any class of its equity securities (other than a
registration statement on Form S-8 (or any successor form) or any other
registration statement relating solely to employee benefit plans or filed in
connection with an exchange offer, a transaction to which Rule 145 under the
Securities Act applies or an offering of securities solely to the Company's
existing stockholders), then the Company shall in each case give written notice
of such proposed filing to the Holders of Restricted Stock as soon as
practicable (but no later than five business days) before the anticipated
filing date, and such notice shall offer such Holders the opportunity to
register such number of shares of Restricted Stock as each such Holder may
request. Each Holder of Restricted Stock desiring to have such Holder's
Restricted Stock included in such registration statement shall so advise the
Company in writing within five business days after the date of Company's
notice, setting forth the amount of such Holder's Restricted Stock for which
registration is requested. If the Company's offering is to be an underwritten
offering, the Company shall, subject to the further provisions of this
Agreement, use its reasonable efforts to cause the managing underwriter or
underwriters of a proposed underwritten offering to permit the Holders of the
Restricted Stock, requested to be included in the registration for such
offering, to include such securities in such offering on the same terms and
conditions as any similar securities of the Company included therein. Moreover,
if the registration of which the Company gives notice does involve an
underwriting, the right of each Holder to registration pursuant to this Section
3 shall, unless the Company otherwise assents, be conditioned upon such
Holder's participation as a seller in such underwriting and its execution of an
underwriting agreement with the managing underwriter or underwriters selected
by the Company. Notwithstanding the foregoing, if the managing underwriter or
underwriters of such offering deliver a written opinion to the Holders of
Restricted Stock that either because of (A) the kind of securities which the
Holders, the Company and any other person or entities intend to include in such
offering or (B) the size of the offering which the Holders, the Company and
other persons intend to make, the success of the offering would be materially
and adversely affected by inclusion of the Restricted Stock requested to be
included, then (i) in the event that the size of the offering is the basis of
such managing underwriter's opinion, the number of shares to be offered for the
accounts of Holders of Restricted Stock shall be reduced pro rata or to the
extent necessary to reduce the total amount of securities to be included in
such offering to the amount recommended by such managing underwriter or
underwriters; provided that if securities are being
B-3
15
offered for the account of other persons or entities as well as the Company,
such reduction shall not represent a greater fraction of the number or kind of
securities intended to be offered by Holders of Restricted Stock than the
fraction of similar reductions imposed on such other persons or entities over
the amount of securities of such kind they intended to offer; and (ii) in the
event that the combination of securities to be offered is the basis of such
managing underwriter's opinion, (x) the Restricted Stock to be included in such
offering shall be reduced as described in clause (i) above (subject to the
proviso in clause (i)) or, (y) if the actions described in clause (x) would, in
the judgment of the managing underwriter, be insufficient to substantially
eliminate the adverse effect that inclusion of the Restricted Stock requested
to be included would have on such offering, such Restricted Stock will be
excluded from such offering. Any Restricted Stock excluded from an underwriting
shall be withdrawn from registration and shall not, without the consent of the
Company and the manager of the underwriting, be transferred in a public
distribution prior to the earlier of 90 days (or such other shorter period of
time as the manager of the underwriting may require) after the effective date
of the registration statement or 150 days after the date the Holders of such
Restricted Stock are notified of such exclusion.
4. Registration Procedures. Whenever, pursuant to Section 2 or 3,
the Holders of Restricted Stock have requested that any Restricted Stock be
registered, the Company will, subject to the provisions of Section 5, use all
reasonable efforts to effect the registration and the sale of such Restricted
Stock in accordance with the intended method of disposition thereof as promptly
as practicable, and in connection with any such request, the Company will:
a. in connection with a request pursuant to Section 2,
prepare and file with the SEC, not later than 60 days after receipt of a
request to file a registration statement with respect to Restricted Stock, a
registration statement on any form for which the Company then qualifies and
which counsel for the Company shall deem appropriate and which form shall be
available for the sale of such Restricted Stock in accordance with the intended
method of distribution thereof, and use its reasonable efforts to cause such
registration statement to become effective; provided that if the Company shall
furnish to the Holders making such a request a certificate signed by either the
chief financial officer or the chief accounting officer of the Company stating
that in his good faith judgment it would be significantly disadvantageous to
the Company for such a registration statement to be filed on or before the date
filing would be required, the Company shall have an additional period of not
more than 90 days within which to file such registration statement; and
provided further, (i) that before filing a registration statement or prospectus
or any amendments or supplements thereto, the Company will furnish to one
counsel selected by the Holders of a majority in number of shares of the
Restricted Stock covered by such registration statement copies of all such
documents proposed to be filed, which documents will be subject to the review
of such counsel, and (ii) that after the filing of the registration statement,
the Company will promptly notify each selling Holder of Restricted Stock of any
stop order issued or, to the knowledge of the Company, threatened by the SEC
and take all reasonable actions to prevent the entry of such stop order or to
remove it if entered;
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b. in connection with a registration pursuant to Section
2, prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective for a period of not
less than 270 days or such shorter period as shall terminate when all
Restricted Stock covered by such registration statement have been sold (but not
before the expiration of the 90-day period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder, if applicable), and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Selling Holders
thereof set forth in such registration statement;
c. as soon as reasonably practicable, furnish to each
selling Holder, prior to filing a registration statement, copies of such
registration statement as proposed to be filed, and thereafter furnish to such
selling Holder such number of copies of such registration statement, each
amendment and supplement thereto (in each case, if specified by such Holder,
including all exhibits thereto), the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
such selling Holder may reasonably request in order to facilitate the
disposition of the Restricted Stock owned by such selling Holder;
d. with reasonable promptness, use its reasonable efforts
to register or qualify such Restricted Stock under such other securities or
blue sky laws of such jurisdictions within the United States as any selling
Holder reasonably (in light of such selling Holder's intended plan of
distribution) requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such selling Holder to consummate
the disposition in such jurisdictions of the Restricted Stock owned by such
selling Holder; provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subsection d., (ii) subject itself to taxation
in any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction;
e. with reasonable promptness, use reasonable efforts to
cause the Restricted Stock covered by such registration statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company to
enable the selling Holder or Holders thereof to consummate the disposition of
such Restricted Stock;
f. promptly notify each selling Holder of such Restricted
Stock, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the occurrence of any event known to the
Company requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Restricted Stock, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and promptly make
available to each selling Holder any such supplement or amendment;
B-5
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g. in connection with a request pursuant to Section 2,
enter into an underwriting agreement in customary form, the form and substance
of such underwriting agreement being subject to the reasonable satisfaction of
the Company;
h. with reasonable promptness make available for
inspection by any selling Holder, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such selling Holder or underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the
"Records"') as shall be reasonably necessary to enable them to exercise their
due diligence responsibility, and cause the Company's officers and employees to
supply all information reasonably requested for such purpose by any such
Inspector in connection with such registration statement; provided, however,
that the selection of any Inspector other than a selling Holder shall be
subject to the consent of the Company, which shall not be unreasonably
withheld. Each Inspector that actually reviews Records supplied by the Company
that include information that the Company determines, in good faith, to be
confidential ("Confidential Information") shall be required, prior to any such
review, to execute an agreement with the Company providing that such Inspector
shall not disclose any Confidential Information unless such disclosure is
required by applicable law or legal process. Each selling Holder of Restricted
Stock agrees that Confidential Information obtained by it as a result of such
inspections shall not be used by it as the basis for any transactions in
securities of the Company unless and until such information is made generally
available to the public. Each selling Holder of Restricted Stock further agrees
that it will, upon learning that disclosure of Confidential Information is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of the Confidential Information. Each selling Holder also agrees
that the due diligence investigation made by the Inspectors shall be conducted
in a manner which shall not unreasonably disrupt the operations of the Company
or the work performed by the Company's officers and employees;
i. in the event such sale is pursuant to an underwritten
offering, use its reasonable efforts to obtain a comfort letter or letters from
the Company's independent public accountants in customary form and covering
such matters of the type customarily covered by comfort letters as the managing
underwriter reasonably requests;
j. otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering a
period of twelve months, beginning within three months after the effective date
of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act; and
k. with reasonable promptness, use its reasonable efforts
to cause all such Restricted stock to be listed on each securities exchange on
which the Common Stock of the Company is then listed, provided that the
applicable listing requirements are satisfied.
B-6
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Each selling Holder of Restricted Stock agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in subsection f. hereof, such selling Holder will forthwith discontinue
disposition of Restricted Stock pursuant to the registration statement covering
such Restricted Stock until such selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subsection f. hereof, and,
if so directed by the Company, such selling Holder will deliver to the Company
(at the Company's expense) all copies, other than permanent file copies then in
such selling Holder's possession, of the prospectus covering such Restricted
Stock current at the time of receipt of such notice. In the event the Company
shall give any such notice, the Company shall extend the period during which
such registration statement shall be maintained effective pursuant to this
Agreement (including the period referred to in subsection b.) by the number of
days during the period from and including the date of the giving of such notice
pursuant to subsection f. hereof to and including the date when each selling
Holder of Restricted Stock covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
subsection f. hereof. Each selling Holder also agrees to notify the Company if
any event relating to such selling Holder occurs which would require the
preparation of a supplement or amendment to the prospectus so that such
prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
5. Conditions and Limitations.
a. The Company's obligations under Section 2 shall be
subject to the following limitations:
i. the Company need not file a registration
statement either (x) during the period starting with the date 60 days prior to
the Company's estimated date of filing of, and ending 90 days after the
effective date of, any registration statement pertaining to securities of the
Company (other than a registration of securities in a Rule 145 transaction or
exchange offer or with respect to an employee benefit plan or dividend
reinvestment plan), provided that if such Company registration statement is not
filed within 90 days after the first date on which the Company notifies a
Holder of Restricted Stock that it will delay a Demand Registration pursuant to
this clause (x), the Company may not further postpone such Demand Registration
pursuant to this clause; or (y) during the period specified in the first
proviso of subparagraph a. of Section 4;
ii. the Company shall not be required to furnish
any audited financial statements other than those audited statements
customarily prepared at the end of its fiscal year, or to furnish any unaudited
financial information with respect to any period other than its regularly
reported interim quarterly periods unless in the absence of such other
unaudited financial information the registration statement would contain an
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
B-7
19
iii. except as provided in Section 2.b., the
Company shall not be required to file more than two Demand Registrations. A
registration statement will not count as a Demand Registration until it has
become effective; and
iv. the Company shall have received the
information and documents specified in Section 6 and each selling Holder shall
have observed or performed its other covenants and conditions contained in such
section and Section 8.
b. The Company's obligation under Section 3 shall be
subject to the limitations and conditions specified in such section and in
clauses (i), (ii) and (iv) of subsection a. of this Section 5, and to the
condition that the Company may at any time terminate its proposal to register
its shares and discontinue its efforts to cause a registration statement to
become or remain effective.
6. Information from and Certain Covenants of Holders of Restricted
Stock. Notices and requests delivered to the Company by Holders for whom
Restricted Stock are to be registered pursuant to this Agreement shall contain
such information regarding the Restricted Stock to be so registered, the Holder
and the intended method of disposition of such Restricted Stock as shall
reasonably be required in connection with the action to be taken. Any Holder
whose Restricted Stock is included in a registration statement pursuant to this
Agreement shall execute all consents, powers of attorney, registration
statements and other documents reasonably required to be signed by it in order
to cause such registration statement to become effective. Each selling Holder
covenants that, in disposing of such Holder's shares, such Holder will comply
with Regulation M of the SEC adopted pursuant to the Securities Exchange Act of
1934 (the "Exchange Act").
7. Registration Expenses. All Registration Expenses (as defined
herein) will be borne by the Company. Underwriting discounts and commissions
applicable to the sale of Restricted Stock shall be borne by the Holder of the
Restricted Stock to which such discount or commission relates, and each selling
Holder shall be responsible for the fees and expenses of any legal counsel,
accountants or other agents retained by such selling Holder and all other
out-of-pocket expenses incurred by such selling Holder in connection with any
registration under this Agreement.
As used herein, the term Registration Expenses means all expenses
incident to the Company's performance of or compliance with this Agreement
(whether or not the registration in connection with which such expenses are
incurred ultimately becomes effective), including without limitation all
registration and filing fees, fees and expenses of compliance with securities
or blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Restricted Stock), rating agency
fees, printing expenses, messenger and delivery expenses incurred by the
Company, internal expenses incurred by the Company (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the fees and expenses incurred in connection with
the listing of the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed, and fees and
disbursements of counsel for the Company and its independent certified public
accountants (including the expenses of any special audit or comfort letters
required by or incident to such
B-8
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performance), securities acts liability insurance (if the Company elects to
obtain such insurance), the reasonable fees and expenses of any special experts
retained by the Company in connection with such registration and the fees and
expenses of other persons retained by the Company.
8. Indemnification; Contribution.
a. Indemnification by the Company. The Company agrees to
indemnify and hold harmless each selling Holder of Restricted Stock, its
officers, directors and agents and each person, if any, who controls such
selling Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in any registration statement or prospectus
relating to the Restricted Stock or in any amendment or supplement thereto or
in any preliminary prospectus relating to the Restricted Stock, or arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of, or are based upon, any such untrue statement or omission
or allegation thereof based upon information furnished in writing to the
Company by such selling Holder or on such selling Holder's behalf expressly for
use therein and provided further, that with respect to any untrue statement or
omission or alleged untrue statement or omission made in any preliminary
prospectus, the indemnity agreement contained in this subsection shall not
apply to the extent that any such loss, claim, damage, liability or expense
results from the fact that a copy of the final prospectus was not sent or given
to the person asserting any such losses, claims, damages, liabilities or
expenses at or prior to the written confirmation of the sale of the Restricted
Stock concerned to such person. The Company also agrees to include in any
underwriting agreement with any underwriters of the Restricted Stock provisions
indemnifying and providing for contribution to such underwriters, their
officers and directors and each person who controls such underwriters on
substantially the same basis as the provisions of this Section 8 indemnifying
and providing for contribution to the selling Holders.
b. Indemnification by Holders of Restricted Stock. Each
selling Holder agrees to indemnify and hold harmless the Company, its officers,
directors and agents and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the
Restricted Stock or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Restricted Stock, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, provided (i) that such losses, claims, damages, liabilities or
expenses arise out of, or are based upon, any such untrue statement or omission
or allegation thereof based upon information furnished in writing to the
Company by such selling Holder or on such selling Holder's behalf expressly for
use therein, (ii) that with respect to any untrue statement or
B-9
21
omission or alleged untrue statement or omission made in any preliminary
prospectus, the indemnity agreement contained in this subsection shall not
apply to the extent that any such loss, claim, damage, liability or expense
results from the fact that a copy of the final prospectus was not sent or given
to the person asserting any such losses, claims, damages, liabilities or
expenses at or prior to the written confirmation of the sale of the Restricted
Stock concerned to such person, and (iii) that no selling Holder shall be
liable for any indemnification under this Section 8 in an aggregate amount
which exceeds the total net proceeds (before deducting expenses) received by
such selling Holder from the offering. Each selling Holder also agrees to
include in any underwriting agreement with underwriters of the Restricted Stock
provisions indemnifying and providing for contribution to such underwriters,
their officers and directors and each person who controls such underwriters on
substantially the same basis as the provisions of this Section 8 indemnifying
and providing for contribution to the Company.
c. Conduct of Indemnification Proceedings. If any action
or proceeding (including any governmental investigation) shall be brought or
asserted against any indemnified party in respect of which indemnity may be
sought from an indemnifying party, the indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such indemnified party, and shall assume the payment of all expenses. Such
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses, or (ii) the
indemnifying party shall have failed to assume the defense of such action or
proceeding and employ counsel reasonably satisfactory to such indemnified party
or (iii) the named parties to any such action or proceeding (including any
impleaded parties) include both such indemnified party and such indemnifying
party, and such indemnified party shall have been advised by counsel that there
may be one or more legal defenses available to such indemnified party which are
different from or additional to those available to the indemnifying party (in
which case, if such indemnified party notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action or proceeding on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with appropriate
local counsel) at any time for such indemnified party, which firm shall be
designated in writing by such indemnified party). The indemnifying party shall
not be liable for any settlement of any such action or proceeding effected
without its written consent, but if settled with its written consent, or if
there is a final judgment for the plaintiff in any such action or proceeding,
the indemnifying party agrees to indemnify and hold harmless such indemnified
party from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
d. Contribution. If the indemnification provided for in
this Section 8 is unavailable to the Company or the selling Holders in respect
of any losses, claims, damages,
B-10
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liabilities or judgments referred to therein, then each such indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and judgments, in such proportion as is
appropriate to reflect the relative fault of each such party in connection with
such statements or omissions, as well as any other relevant equitable
considerations. The relative fault of each such party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the selling Holders agree that it would not
be just and equitable if contribution pursuant to this Section 8.d.
were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigation or
defending any such action or claim. Notwithstanding the provisions of
this Section 8.d., no selling Holder shall be required to contribute
any amount in excess of the amount by which the total price at which
the Restricted Stock of such selling Holder were offered to the public
exceeds the amount of any damages which such selling Holder has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
9. Cashless Exercises. The Company agrees to cooperate with the
Holder in order to permit the Holder to effect "cashless exercises" of Options.
10. Amendments. This Agreement may be amended or modified upon the
written consent thereto of the Company and the Holders of not less than 66-2/3%
of Restricted Stock.
11. Assignments. This Agreement shall be binding on and inure to the
benefit of the respective successors and assigns of the parties hereto.
12. Entire Agreement; Governing Law. This Agreement constitutes the
entire agreement of the parties relating to the subject matter hereof; all
prior or contemporaneous written or oral agreements are merged herein; this
Agreement shall be governed by the laws of the State of Texas.
13. Notices. Any notice, request, instruction, correspondence or
other document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed, postage prepaid, or by telegram or telecopier, as follows:
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If to the Company:
Enron Corp.
0000 Xxxxx Xxxxxx
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Vice President and Secretary
Telecopier No.: 000-000-0000
If to the Holder:
Enron Oil & Gas Company
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Telecopier No.: 000-000-0000
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. Any party may change any address
to which Notice is to be given to it by giving Notice as provided above of such
change of address.
IN WITNESS WHEREOF, the Company and the Holder have caused this
Agreement to be signed by their respective officers thereunto duly authorized.
ENRON CORP.
By: /s/ J. XXXXXXXX XXXXXX
---------------------------------------
Name: J. Xxxxxxxx Xxxxxx
Title: Senior Vice President, Corporate
Development
ENRON OIL & GAS COMPANY
By: /s/ XXXXXXX X. XXXXXXX
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
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EXHIBIT C
AGREEMENTS RELATING TO QATAR PROJECT
Project Ownership
o 80% Enron-20% EOG
Project Scope
o Enron's 35% interest in Project Company to be formed with QGPC which
will own and operate all facilities in Qatar relating to five million
tons per year LNG facility including gas production and transmission
facilities, gas liquefication facilities and export facilities at Ras
Laffan
o any future expansions using the Project Company facilities will also
be split on an 80/20 basis -- all other activities will be outside the
scope of the Project and will be subject to general principles of the
Agreement
o services to be provided by Enron to Project Company pursuant to
Project Services Agreement will be allocated among Enron and EOG based
on available expertise with a goal of an 80/20 allocation
Lead
o Enron will be overall Lead Party for Project
o Enron to select operator of onshore facilities including LNG plant,
condensate stabilization and LNG shipping (if necessary)
o EOG will represent Enron's interest in the selection of the operator
of the License Area, gathering system and transmission system to the
shore
Costs
o all historic and future costs to be shared 80% Enron and 20% EOG in
accordance with Exhibit F provided that:
o costs allocated to Project shall include Marketing Costs including
Israel, Jordan and India, however EOG's share of India Marketing
Costs shall be limited to $8 million of India Marketing Costs
incurred prior to the time that Enron Fuel Services India Limited
is a party to contracts for it to sell at least 5 million tons
per year of LNG or regassified LNG from the Project. The term
"Marketing Costs" means the following costs and expenditures
incurred in connection with the identification and solicitation
of prospective purchasers of LNG produced by the Project or
natural gas obtained from the regasification of such LNG, and the
negotiation and execution of definitive agreements for such
purchases:
1. Salaries, wages and benefit costs (including, without
limitation, costs of holidays, vacation, sickness and
disability benefits, living and housing allowances, travel
time, bonuses and other customary allowances applicable to
such employees, as well as
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25
costs of group life insurance, group medical insurance,
hospitalization, retirement and other benefit plans) of
employees directly engaged in such activities, and
expenditures or contributions made pursuant to assessments
imposed by governmental authorities for payments with respect
to such salaries, wages and benefits or on account of such
employees;
2. Reasonable expenses (including, without limitation, travel
costs) of those employees referred to in clause 1 above
incurred in connection with such activities;
3. Costs of relocating employees to or from the countries in
which such prospective purchasers are located (allocated to
the Project on an equitable basis if such employees will be
engaged in other activities in addition to those referred to
above);
4. Costs of maintaining any offices in the countries in which
such prospective purchasers are located (allocated to the
Project on an equitable basis if such offices are also used
for other activities in addition to those referred to above);
5. Charges for exclusively owned equipment of Enron located in
the countries in which such prospective purchasers are
located, at rates not to exceed the average commercial rates
of non-affiliated third parties then prevailing for like
equipment for use in such area (allocated to the Project on
an equitable basis if such equipment is also used for other
activities in addition to those referred to above);
6. The cost of services provided by third parties, including,
without limitation, fees and expenses of legal, accounting,
tax, public relations, marketing and other consultants that
are reasonably necessary for the activities described above;
and
7. Any other costs and expenditures incurred by Enron that are
reasonably necessary for the activities described above.
If employees are engaged in other activities in addition to the
solicitation of purchasers, the cost of such employees shall be
allocated to the Project on an equitable basis.
o historic costs allocated to Project shall include costs incurred
with respect to Oman (excluding power generation) but shall
exclude costs incurred with respect to Yemen
o each party's interest shall bear its pro rata share of and be
reduced proportionately by all existing commitments, if any,
including pursuant to agreements with Xxxxxxx Xxxxx and his
related entities.
Risks
o all risks incident to the FOB LNG Sales Contract take or pay
commitments which are not funded as due by payments from other sources
shall be borne 80% Enron and 20% EOG
C-2
26
o EOG shall participate in 20% of the costs and benefits of any risk
mitigation strategies employed by Enron with respect to the risk of
the take or pay commitment
o all risks, obligations and credit support relating to Project Company
(including financing of QGPC equity share) and all obligations under
the Project documents to be borne 80% Enron and 20% EOG
o EOG to provide credit support for required Enron guarantees of EOG
share of obligations
Co-Ownership Issues
o as set forth on Exhibit F with respect to joint 35% interest except:
o Enron designates all Enron directors on Project Company board
o Enron votes all shares of Project Company stock owned by Enron or
EOG
Refund of Amounts Paid
o if within six months following the execution of the Agreement Enron
determines not to supply energy from the Project to Enron's Dabhol
power project in India, Enron will refund to EOG the lesser of (a)
$3,000,000 and (b) amounts attributable to the Project and included in
amounts payable by EOG to Enron for purposes of completing the
Settlement Payment (as defined in Exhibit F) and any other amounts
paid by EOG to Enron in respect of the Qatar Project through the date
of such determination.
C-3
27
EXHIBIT D
AGREEMENTS RELATING TO MOZAMBIQUE PROJECT
Project Ownership
o 80% Enron-20% EOG
o each party's interest shall bear its pro rata share of and be reduced
proportionately by all existing commitments including commitments, if
any, to Xxxxxxx X. Xxxxxxxx and related companies
Project Scope
o all operations and activities from the Pande gas reservoir to FOB
sales of steel at Maputo, including exploration, drilling, production,
gathering, gas transmission, gas sales, steel plant construction and
operation and sales of steel production
o any participation interest in iron ore reduction plant in South Africa
using gas from Mozambique gas reservoir
o any future expansions involving the Project Company facilities will be
split 80% Enron-20% EOG
o all other projects in Mozambique (including new License Areas) or
South Africa will not be considered part of the Project and may be
pursued independently by Enron and EOG in accordance with the
Agreement
Lead
o Enron will be the Lead Party in accordance with Exhibit F except:
o Enron will designate the operator of gas pipeline and Maputo
steel plant provided that the terms of such operatorship will be
on an arms-length basis
o EOG will represent Enron's interest in connection with the
designation of the operator of License Area and gathering system
provided that the terms of such operatorship will be on an
arms-length basis
Costs and Risks
o all historic and future costs and risks relating to the Project to be
shared 80% Enron and 20% EOG in accordance with Exhibit F
D-1
28
EXHIBIT E
AGREEMENTS RELATING TO UZBEKISTAN PROJECT
Co-Ownership
o 80% EOG-20% Enron
o Each party's interest will bear its pro rata share of and be reduced
proportionately by the following commitments:
o Uzbekneftegaz has a carried interest of 44.9%
o MD International Petroleum, Inc., has the option to acquire 10%
of the working interest available to Enron and EOG, but MDI's
interest will never be greater than 5% or less than 4.5% of 100%
of all interests. MDI pays its share of Uzbekneftegaz' carried
interest.
o Botas International Ltd. has been offered the right to acquire up
to 40% of the working interest available to Enron and EOG in the
project for the following consideration: (i) cash payment of
$250,000; (ii) the obligation to pay 100% of the incremental
project development costs from the date a joint development
agreement is signed with Botas until cumulative expenditures paid
by Botas equals $3.76 million; and (iii) the obligation to pay
100% of the cost to re-enter and production test two drilled,
cased and suspended gas development xxxxx in Kandym Field. Botas
pays its share of Uzbekneftegaz' carried interest.
Project Scope
o Co-owned activities in Uzbekistan limited to upstream activities:
o Gas reservoir to export pipeline including exploration, drilling,
production, gathering, gas processing, delivery of gas to export
pipeline, marketing of liquids and other valuable products
o Downstream activities including contract services, transmission,
marketing, provision of services to national natural gas
infrastructure projects, procurements of pipeline capacity and
transmission and marketing of natural gas to Gazprom or final market
shall be outside the Project Scope and will be subject to the general
principles of the Agreement
o EOG and Enron agree on transfer pricing of gas at suitable location
(Uzbek-Kazak border or plant tailgate)
Lead
o EOG will be Lead Party for Project
Costs
o all historic and future costs attributable to Project will be shared
80% EOG and 20% Enron in accordance with Exhibit F
Risks
o all historic and future costs and risks associated with the Project
shall be borne 80% EOG- 20% Enron in accordance with Exhibit F
E-1
29
EXHIBIT F
STANDARD COST SHARING AND CO-OWNERSHIP MATTERS
Historic Costs
o all historic third party costs previously incurred by Enron and EOG in
connection with each Project through a date to be agreed upon (the
"Settlement Date") will be pooled and reallocated between EOG and
Enron based on their agreed ownership of the Project, and the party
that has borne less than its share of such costs will make a payment
(the "Settlement Payment") to the other party on the date of execution
of the Agreement so that each party bears its share of the costs
previously incurred
o for purposes of determining the Settlement Payment, internal costs
will be allocated to the Project in accordance with standard Company
procedures and will be reviewed by the parties prior to the date of
execution of the Agreement and, unless otherwise agreed, will be
pooled and redistributed between EOG and Enron based on their agreed
ownership of the Project
o for purposes of determining the Settlement Payment, unless otherwise
agreed, such third party and internal costs incurred prior to the date
of the Agreement will be settled on a project-by-project basis by a
payment from Enron to EOG or from EOG to Enron as the case may be on
the Date of execution of the Agreement
o The settlement on the date of execution of the Agreement of all
historic third party and internal costs incurred prior to and
including the Settlement Date shall be final and binding and shall not
be subject to adjustment or change by either party for any reason
(including, without limitation, accounting errors, the failure to
include costs properly allocable to the Project and the inclusion of
costs not properly allocable to the Project).
Future Costs
o all future costs, risks and liabilities incurred with respect to the
Project from and after the Settlement Date (third party and internal)
will be borne and paid in accordance with ownership interest in the
Project
o future costs will be incurred in accordance with approved development
budgets
o internal costs will be allocated to the Project in accordance with
prior practice
o individual performance bonuses attributable to the Project will be
included as Project Costs
o with respect to each Project, the costs incurred by each party will be
pooled and balanced by appropriate cash transfers on a quarterly basis
Co-Ownership Matters
o all decisions as to Project structure, terms and conditions of project
documents and project financing, selection of third party vendors and
contractors will be made by Lead Party on behalf of both parties
o in the event Lead Party elects to bring a strategic partner into the
Project, both parties' interests will be reduced pro rata
o in the event either party elects to sell down their interest in
Project, it will offer the Other Party the opportunity to participate
in such sale on a pro rata basis if possible
o if Lead Party elects to sell all or a majority of its interest to a
Buyer who requires acquisition of all or a majority of the interest,
Other Party shall participate in such sale on a pro rata basis
F-1
30
o directors attributable to EOG's and Enron's interest in any joint
entity with third parties formed with respect to Project will be
designated by Lead Party
F-2
31
EXHIBIT G
NON-EXCLUSIVE LICENSE AGREEMENT
This Non-Exclusive License Agreement ("Agreement") is entered into as of
December 9, 1997, by and between Enron Corp., a corporation organized and
existing under the laws of the State of Oregon with its headquarters at 0000
Xxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000 ("Licensor"), and Enron Oil & Gas Company, a
corporation organized and existing under the laws of the State of Delaware with
its headquarters at 0000 Xxxxx, Xxxxxxx, Xxxxx 00000, on behalf of itself and
its subsidiaries, whether existing now or in the future (collectively referred
to as "Licensee").
WHEREAS, Licensor is the owner of the names and/or marks listed on
Attachment A, attached hereto and incorporated for all purposes herein ("Names
and/or Marks"), any domestic or foreign Registrations or Applications for
registrations of the Names and/or Marks, as well as the goodwill and business
interest associated with the Names and/or Marks; and
WHEREAS, Licensee is desirous of using the Names and/or Marks in
association with the business, goods and services of Licensee in accordance
with the terms and conditions of this Agreement. Licensee is also desirous of
obtaining a right and license in certain names and/or marks that may be adopted
or acquired in the future by Licensor which become a member of the Enron Corp.
family of names and marks.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the receipt and sufficiency of which are hereby acknowledged,
Licensor and Licensee agree as follows:
1. Except as otherwise provided herein, Licensor hereby grants to
Licensee, and Licensee accepts, a non-exclusive, non-transferable, royalty-free
and worldwide right and license to adopt and use the Names and/or Marks in
connection with Licensee's business, goods and services. Licensee represents
and warrants that it is not now using, and shall not in the future use, any of
Licensor's trade names, trademarks or service marks that are not listed on
Exhibit A. Provided, however, in the case of the names and marks ENRON OIL &
GAS COMPANY, ENRON OIL & GAS, ENRON GAS & OIL, ENRON OIL or ENRON EXPLORATION
Licensee may, without the prior written permission of Licensor, adopt and
commence using any such name and xxxx with various suffixes thereon that denote
countries, geographical areas, or limited liability (e.g., ENRON OIL & GAS
COMPANY--INDIA or ENRON OIL & GAS COMPANY--FAR EAST.) Each such derivation of
any such root name and xxxx shall be a Name and Xxxx owned by Licensor and the
rights and obligations of the parties with respect to such Name and Xxxx shall
be governed by this Agreement. Upon request, Licensee shall provide Licensor
with a listing of all such Names and Marks. If [i] Licensor hereafter adopts
(or acquires) and uses any other terms or logos as trade names, trademarks or
service marks, and [ii] Licensor allows its entire family of companies to use
such trade names, trade marks, or service marks, and [iii] Licensor gives
Licensee prior written authorization to use such terms or logos, Licensee's use
of such terms or logos shall be pursuant to the terms and conditions of this
Agreement; however, until such time as Licensor grants Licensee written
authorization to use such additional trade names, trademarks and/or service
marks, Licensee shall have no right or license to use such additional trade
names, trademarks, and service marks and Licensee agrees that it shall not
G-1
32
use such additional trade names, trademarks and service marks without such
prior written authorization.
2. Notwithstanding anything to the contrary provided herein, Licensee
agrees that it shall not use the Names and/or Marks, or any terms confusingly
similar thereto, in connection with the marketing or distribution of oil, gas
or any other goods or services in India; provided that the foregoing will not
prohibit Licensee from (a) using the Names and/or Marks in performing services
(other than marketing of oil, gas or any other goods or services for third
parties) under any joint operating agreements relating to oil or gas properties
in or offshore of India or (b) entering into contracts providing for sales for
Licensee's own account to the Government of India or entities controlled by it
if and to the extent such sales are required or permitted to be made pursuant
to the terms of any production sharing agreement or similar agreement.
3. Licensee shall use the Names and/or Marks only as authorized herein by
Licensor and in accordance with such standards of quality as Licensor may
establish. Licensor shall at all times remain the owner of the Names and/or
Marks and related Applications and Registrations; all use of the Names and/or
Marks by Licensee shall inure to the benefit of Licensor; and Licensee shall
obtain no right, title or interest in and to the Names and/or Marks or any
other word, words, term, design, name or xxxx that is confusingly similar
thereto other than the non-exclusive license granted herein.
4. The term of this Agreement shall be one year from the date of this
Agreement. The non-exclusive license granted herein shall be renewed and
extended automatically and repetitively for similar terms unless otherwise
terminated in accordance with the provisions set forth herein.
5. This Agreement and the non-exclusive license granted herein shall
terminate as follows:
(a) This Agreement and the non-exclusive license granted herein may be
terminated by either party at any time for Cause, which is defined as a
material breach of the obligations of this Agreement, by the giving of a
written notice of breach to the defaulting party, and, if such breach is
not cured within thirty (30) days, by the giving of a written notice of
termination. This Agreement and the non-exclusive license granted herein
shall then terminate effective upon the receipt of such written notice of
termination.
(b) This Agreement and the non-exclusive license granted herein may be
terminated by Licensor at any time and for any reason if Licensor's stock
ownership in Licensee is less than 35% of the issued and outstanding
common stock of Licensee having the right to vote for directors of
Licensee.
6. Upon termination of this Agreement and the non-exclusive license
granted herein, Licensee shall immediately cease all use of the Names and/or
Marks and shall thereafter make no use of any word, words, term, design, name
or xxxx confusingly similar with any of the Names and/or Marks; provided,
however, that Licensee shall have the right in any contract or other legal
instrument to be identified by its then current name, followed by the words
"formerly known as Enron Oil & Gas Company" or any similar phrase.
G-2
33
7. Licensor agrees that during the term of this Agreement and for a period
of eighteen (18) months after the date of termination, Licensor shall not use
the term ENRON OIL & GAS COMPANY in connection with any business, goods or
services, or license others to do so; thereafter, Licensor may freely use the
term ENRON OIL & GAS COMPANY as a name or xxxx in connection with any and all
businesses, goods or services.
8. Licensor and Licensee acknowledge and agree that the name and xxxx EOG,
when used separate and apart from Licensor's name and xxxx ENRON OIL & GAS,
presents a commercial impression that is different and separate from Licensor's
name and xxxx ENRON OIL & GAS and that the name and xxxx EOGI, when used
separate and apart from Licensor's name and xxxx ENRON OIL & GAS INTERNATIONAL,
presents a commercial impression that is different and separate from Licensor's
name and xxxx ENRON OIL & GAS INTERNATIONAL. Subject to the condition
subsequent that the license granted under this Agreement is terminated,
Licensor quitclaims unto Licensee (a) all of Licensor's right, title and
interest, if any, in and to the name and xxxx EOG, and the goodwill associated
therewith, as used in connection with Licensee's business, goods or services in
a fashion that presents a different and separate commercial impression from
Licensor's name and xxxx ENRON OIL & GAS and (b) all of Licensor's right, title
and interest, if any, in and to the name and xxxx EOGI, and the goodwill
associated therewith, as used in connection with Licensee's business, goods or
services in a fashion that presents a different and separate commercial
impression from Licensor's name and xxxx ENRON OIL & GAS INTERNATIONAL.
However, Licensee agrees that after termination of this Agreement, Licensee
shall not use the names and marks EOG and EOGI in any fashion that is likely to
lead the public to believe that such name and xxxx refers to ENRON OIL & GAS or
ENRON OIL & GAS INTERNATIONAL or that Licensee's business, goods or services
are associated or affiliated with or sponsored by Licensor (e.g., Licensee
shall adopt and commence using some new name, such as EMPIRE OIL & GAS, or EOG,
INC., that is not likely to cause confusion in the marketplace with Licensor's
business, goods and services).
9. The relationship of Licensor and Licensee pursuant to this Agreement
shall be that of independent contractors. Licensor shall not by virtue of this
Agreement control or have the right to control the methods and means by which
Licensee offers its goods or services in association with the Names and/or
Marks.
10. The non-exclusive license granted by Licensor to Licensee is personal
to Licensee and may not be assigned, sub-licensed or transferred by Licensee in
any manner. To the extent that Licensee has subsidiary corporations that
utilize Licensor's Names and/or Marks, each such subsidiary corporation shall
also sign this Agreement.
11. This Agreement constitutes the entire agreement and understanding
between the parties with respect to the subject matter hereof and merges all
prior discussions, representations and negotiations with respect to the subject
matter hereof.
12. This Agreement shall be interpreted, construed and enforced pursuant
to the laws of the State of Texas.
IN WITNESS WHEREOF, Licensor and Licensee, appearing through their duly
authorized representatives, have executed this instrument to be effective as of
the date first set forth above.
X-0
00
XXXXX XXXX.
By: /s/ J. XXXXXXXX XXXXXX
------------------------
Name: J. Xxxxxxxx Xxxxxx
Title: Senior Vice President, Corporate Development
ENRON OIL & GAS COMPANY
By: /s/ XXXXXXX X. XXXXXXX
------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
G-4
35
EXHIBIT A
TO
NON-EXCLUSIVE LICENSE AGREEMENT
BETWEEN
ENRON CORP. AND ENRON OIL & GAS COMPANY
Enron Corp.'s Names and Marks
that Enron Oil & Gas Company is authorized to use:
1. Enron, ENRON AND FANCIFUL O DESIGN logo, and ENRON AND FANCIFUL
E DESIGN logo
2. Enron Corp. and ENRON CORP, ENRON AND FANCIFUL O DESIGN logo, and
ENRON AND FANCIFUL E DESIGN logo
3. Enron Oil & Gas Company, along with various suffixes that
designate countries, geographical areas or limited liability
4. SOCKET AND FLAME logo
5. NATURAL GAS. ELECTRICITY. ENDLESS POSSIBILITIES. slogan
6. ENDLESS POSSIBILITIES slogan
7. Enron Oil & Gas, along with various suffixes that designate
countries, geographical areas or limited liability
8. Enron Gas & Oil, along with various suffixes that designate
countries, geographical areas or limited liability
9. Enron Oil, along with various suffixes that designate countries,
geographical areas or limited liability
10. Enron Exploration, along with various suffixes that designate
countries, geographical areas or limited liability
11. Enron Oil & Gas Capital Management I, Ltd.
12. Enron Oil & Gas Property Management, Inc.
13. Enron Oil & Gas Investments, Inc.
14. Enron Oil & Gas Acquisitions L.P.
15. Enron Oil & Gas Marketing, Inc.
G-5
36
EXHIBIT H
TERMS AND PROVISIONS OF AGREEMENTS BETWEEN HPL AND EOG
H-1
37
HOUSTON PIPE LINE COMPANY/ENRON OIL & GAS COMPANY
TERM SHEET DATED AS OF AUGUST 1, 1997, SUBJECT TO CONSUMMATION OF
EQUITY PARTICIPATION AND BUSINESS OPPORTUNITY AGREEMENT
This term sheet sets out the agreements among Enron Oil & Gas Company ("EOG")
and Houston Pipe Line Company ("HPL"), a wholly owned subsidiary of Enron
Corp., HPL Resources Company ("HPLR"), a wholly owned subsidiary of HPL, and
Intratex Gas Company ("IGC"), a wholly owned subsidiary of HPL, which are being
entered into upon the condition of the consummation of that certain Equity
Participation and Business Opportunity Agreement among EOG and Enron Corp. and
various of its subsidiary companies. HPL, HPLR, IGC and EOG agree to
diligently work toward completion of documentation on or before October 17,
1997 acceptable to all parties reflecting the agreements herein set forth.
VARIOUS IGC/EOG DEDICATED GAS CONTRACTS
1. EOG and IGC agree to terminate the following dedicated gas contracts
between EOG and IGC, identified below by reference to IGC internal
contract number:
IGC # 00-00000-000 Omnibus
IGC # 00-00000-000 Xxxx County
IGC # 00-00000-000 Loving County
IGC # 00-00000-000 Xxxx County
IGC # 00-00000-000 Xxxxxx County
IGC # 00-00000-000 Xxxxxx County
IGC # 00-00000-000 Xxxx County
IGC # 00-00000-000 Loving County
IGC # 00-00000-000 Xxxxxxxxxx County
IGC # 00-00000-000 Xxxxxx Xxxxxx
XXX # 00-00000-000 Xxxx Xxxxxx
IGC # 00-00000-000 Xxxxxx Xxxxxx
XXX # 00-00000-000 Xxxxxx Xxxxxx
IGC # 00-00000-000 Xxxx County
OMNIBUS DEDICATED CONTRACT
2. HPL, HPLR and EOG agree to terminate that certain Gas Purchase
Contract dated effective October 1, 1987, between EOG and HPL (HPL
contract # 12-40228-167), and its related evergreen excess gas
purchase contract dated January 8, 1988, between EOG and HPLR (HPLR
contract # 078-40228-119) (collectively, the "Omnibus Contract");
provided, the termination of the Omnibus Contract relieving the
parties of their rights and obligations thereunder is subject to the
fulfillment of the following conditions:
a. The termination of the Omnibus Contract shall be partial in
that the Omnibus
1
38
Contract shall survive to cover the interests of Black Hawk Oil
Company purchased from EOG as of March 1, 1994 and to which the
Omnibus Contract continues to have effect among Black Hawk Oil
Company, HPL and HPLR.
b. EOG will dedicate for purchase by HPL or its designee all
current and future interests it may own or control in all fields now
committed under the Omnibus Contract for purchase by HPL (and
expressly including the "Xxxxxx Released Gas Properties" described in
that certain Gas Purchase Contract Amendment dated December 1, 1995),
currently connected to HPL's pipeline system or wherein production
attributable to such fields is currently sold to HPL or HPLR under the
Omnibus Contract (the "Omnibus Fields"). The Omnibus Fields are
listed below and more particularly described in Appendix "1"
incorporated herein for all purposes; provided, it is expressly agreed
that there shall be excepted from the Omnibus Fields the well bores,
and production therefrom, identified in Appendix "1-A" (the "Omnibus
Well Bore Exceptions"). It is expressly agreed that the Omnibus
Fields shall include certain fields and xxxxx subject to that certain
Gas Purchase Contract Amendment dated December 1, 1995 identified
therein as the "Xxxxxx Excess Released Gas Properties;" provided, the
"Xxxxxx Excess Released Gas Properties" shall continue to be released
subject to the provision of transportation by HPL of said gas under
the terms of the Gas Transportation Agreement dated April 1,1997,
between HPL and Enron Oil & Gas Marketing, Inc. for the term thereof,
or any similar subsequent agreement. EOG and HPL or its designee will
enter into gas purchase agreements committing the Omnibus Fields,
excepting the Omnibus Well Bore Exceptions, for a primary term through
December 31, 2003 at the contract prices set forth below referring to
the common field name set forth in Appendix "1."
Hundido, Xxxxxx County
Per XXXxx, 000 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.' s Gas Market Report LESS $0.12
X.X. Xxxxxx, Xxxxxx County
Per XXXxx, 00 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.'s Gas Market Report
La Perla, Xxxxxx and Xxxx Counties
Per XXXxx, 00 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.'s Gas Market Report
2
39
Las Ovejas, Xxxxxx County
Per XXXxx, 000 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.'s Gas Market Report LESS $0.12
San Ygnacio, Xxxxxx County
Per XXXxx, 000 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.'s Gas Market Report LESS $0.09 and
LESS the sum of any fees and charges incurred by buyer to have the gas
transported from the applicable points of delivery to the pipeline
system of HPL
Xxxxx, Xxxxxx County
Per XXXxx, 000 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.'s Gas Market Report LESS $0.09 at the
Thompsonville point of delivery
Sprint South, Kleberg County
Per XXXxx, 000 percent of the Houston Ship Channel/Beaumont, Texas
Index for large packages of gas as published in the first publication
of the month in Inside F.E.R.C.'s Gas Market Report LESS $0.15
BIG COWBOY DEDICATED CONTRACT
3. HPL, HPLR and EOG agree to continue throughout its term that certain
Gas Purchase Contract dated effective October 10, 1978, as previously
amended, between EOG and HPL (HPL contract # 12-40228-162), and its
related evergreen excess gas purchase contract dated March 1, 1988, as
previously amended, between EOG and HPLR (HPLR contract #
078-40228-120) (collectively, the "Big Cowboy Contract") in accordance
with the following:
a. All current and future interests owned or controlled by EOG
within the "Area of Mutual Interest" set forth in that certain Big
Cowboy System Construction, Ownership, Operating and Maintenance
Agreement dated August 20, 1992 between HPL and Gulf Energy Pipeline
Co. (HPL contract # 012-35422-40-003) (the "XXX Xxxxxx") will remain
dedicated pursuant to the terms of the Big Cowboy Contract, except as
set forth in item d below.
b. All current and future interests owned or controlled by EOG
now dedicated under the Big Cowboy Contract for purchase by HPL (and
expressly including the "Xxxx Released Gas Properties" described in
that certain Gas Purchase Contract Amendment dated December 1, 1995),
currently connected to HPL's pipeline system or wherein production
attributable to such fields is currently sold to HPL or HPLR under the
Big Cowboy Contract, other than the XXX Xxxxxx, and excepting
therefrom the xxxxx and associated leases identified as the "Xxxxxxx
3
00
Xxxxx Xxxxx" listed in Appendix "2-B" (the "Other Big Cowboy Fields"),
will remain dedicated pursuant to the terms of the Big Cowboy
Contract. The XXX Xxxxxx and the Other Big Cowboy Fields are more
particularly described in Appendix "2" incorporated herein for all
purposes; provided, it is expressly agreed that there shall be
excepted from the XXX Xxxxxx and the Other Big Cowboy Fields the well
bores, and production therefrom, identified in Appendix "2-A" (the
"Big Cowboy Well Bore Exceptions"). It is expressly agreed that the
XXX Xxxxxx and the Other Big Cowboy Fields include certain fields and
xxxxx subject to that certain Gas Purchase Contract Amendment dated
December 1, 1995 identified therein as the "Xxxx Excess Released Gas
Properties;" provided, the "Xxxx Excess Released Gas Properties" shall
continue to be released subject to the provision of transportation by
HPL of said gas under the terms of the Gas Transportation Agreement
dated April 1,1997, between HPL and Enron Oil & Gas Marketing, Inc.
for the term thereof, or a similar subsequent agreement, if any.
c. The contract price for the XXX Xxxxxx and the Other Big Cowboy
Fields, excepting the Big Cowboy Well Bore Exceptions, shall remain as
currently stated in the Big Cowboy Contract for the remaining term
thereof.
d. HPL and HPLR will permanently release from the Big Cowboy
Contract those certain properties recently acquired by EOG and as more
particularly described on Appendix "2-C" (the "Amoco Fields")
coincident with EOG's execution of those certain agreements between
EOG and Xxxx-Xxxxx Gatherers and Exxon Gas Company USA regarding all
production from the South Xxxxxxxxx, Casa Verde, Umbrella and Cinco
Compadres fields which comprise a portion of the Amoco Fields through
a term to December 31, 2003.
e. HPL and HPLR will permanently release all acreage from the Big
Cowboy Contract except (i) the XXX Xxxxxx, (ii) the Other Big Cowboy
Fields, (iii) the Amoco Fields (to be released in accordance with item
d above), (iv) the interests of Black Hawk Oil Company purchased from
EOG as of March 1, 1994 and to which the Big Cowboy Contract continues
to have effect among Black Hawk Oil Company, HPL and HPLR, and (v) the
interests of Sonat Exploration Company purchased from EOG as of August
1, 1994 and to which the Big Cowboy Contract continues to have effect
among Sonat Exploration Company, HPL and HPLR.
XXXXXX DEDICATED CONTRACT
4. HPL, HPLR and EOG agree to terminate that certain Gas Purchase
Contract dated effective August 1, 1966, between EOG and HPL (HPL
contract # 12-40228-168), and its related evergreen excess gas
purchase contract dated March 1, 1988, between EOG and HPLR (HPLR
contract # 078-40228-124) (collectively, the "Xxxxxx Contract");
provided, the termination of the Xxxxxx Contract relieving the
parties of their rights and obligations thereunder is subject to the
fulfillment of
4
41
the following conditions:
a. EOG will dedicate for purchase by HPL or its designee all
current and future interests it may own or control in the Xxxxxx/North
Xxxxxx xxxxxx committed under the Xxxxxx Contract for purchase by HPL
or HPLR (the "Xxxxxx Fields"). The Xxxxxx Fields are more
particularly described in Appendix "3" incorporated herein for all
purposes. EOG and HPL or its designee will enter into a gas purchase
agreement committing the Xxxxxx Fields for a term coincident with the
term of all real property interests attributable to gas production
within the fields owned or controlled by EOG, and any and all
renewals, extensions or replacements of same.
b. The contract price for the Xxxxxx Fields, per MMBtu, is 94
percent of the Houston Ship Channel/Beaumont, Texas Index for large
packages of gas as published in the first publication of the month in
Inside F.E.R.C.'s Gas Market Report.
EOG and HPL or its designee will enter into supporting agreements to
reflect the following matters:
c. At no charge to EOG, HPL will maintain the current conditions
at the Xxxxxx Fields' central delivery point into HPL's compression
facilities (the 8 inch flange) wherein (i) the pipeline operating
pressures shall be maintained at or below 450 psig, except in the
event of emergency circumstances or other short term conditions
wherein the operating pressures may exceed 450 psig up to 490 psig,
and (ii) EOG is able to continue delivering gas that has not been
dehydrated to meet pipeline specifications.
d. At no charge to EOG, HPL will provide gathering lines and
metering for future xxxxx completed in the Xxxxxx Fields based upon a
well-connect criteria of two BCF of recoverable reserves for each mile
of pipeline. This criteria will be reviewed and reestablished by the
parties every two years.
e. At no charge to HPL, EOG will continue to operate and pump in
accordance with prudent operating standards the Xxxxxxx and the Xxxxxx
Nos. 1, 2 and 3 Xxxxx and associated leases for the term of the
contract covering the Xxxxxx Fields provided for above. EOG will
discharge any and all existing claims of EOG against HPL and HPLR for
past performance of these activities.
f. At no charge to HPL, EOG will perform all the necessary
accounting, including, without limitation, royalty check payments,
division order updates and similar activities, associated with HPL's
production on behalf of HPL. EOG will discharge any and all existing
claims of EOG against HPL and HPLR for past performance of these
activities.
5
42
g. EOG commits to remediate, at its sole cost and in a timely
manner, the drilling mud and cuttings disposal sites according to
processes and procedures generally accepted within the industry and by
applicable regulatory bodies and will continue its operations in a
manner acceptable to HPL and in accordance with applicable law and
regulations.
h. HPL will discharge any and all existing claims of HPL against
EOG relating to work performed by HPL or its designee in the Xxxxxx
Fields through July 31, 1997. For the period commencing after July
31, 1997, HPL will invoice EOG for (i) work performed at the written
request of EOG or (ii) work performed that is directly related to, and
reasonably necessary for, the handling of EOG's production from the
Xxxxxx Fields, taking into consideration the location of the Xxxxxx
Fields in relation to the Xxxxxx storage facility owned by HPL (either
category (i) or (ii), a "Condition"). EOG agrees to make payment to
HPL for the performance of work if such work meets a Condition, to the
extent the costs charged therefor are reasonably comparable to
industry standard charges for such work, except with regard to
prospective charges as provided in paragraph 4.d above. HPL agrees to
provide EOG, or cause its designee to provide EOG, reasonable advance
notice of the commencement of the performance of any work directly
related to, and reasonably necessary for, the handling of EOG's
production, except where emergency circumstances exist.
WOODBINE PROSPECT, POLK AND TYLER COUNTIES (TEXAS)
5. EOG agrees to dedicate interests owned or controlled by EOG in the
Woodbine Prospect acreage to HPLR for purchase under the same
contractual arrangements as exist between HPLR and Black Stone Energy
Company by ratification of that certain Gas Purchase Agreement dated
July 1, 1997 between HPLR and Black Stone Energy Company.
FURTHER ASSURANCES
6. With regard to all other areas within the States of Texas or Louisiana
where EOG currently or in the future conducts exploration and
production operations, EOG ensures HPL that HPL will be accorded the
same rights and opportunities to compete for EOG's business as other
third party gatherers, transporters and supply purchasers.
6
43
The parties do hereby execute this term sheet in multiple counterparts
effective as of August 1, 1997.
ENRON OIL & GAS COMPANY
By: /s/ XXXX X. XXXX
----------------------------
Name: Xxxx X. Xxxx
--------------------------
Title: President
-------------------------
Date: August 18, 1997
--------------------------
HOUSTON PIPE LINE COMPANY
By: /s/ XXXXXXX X. XXXXXXXXX
----------------------------
Name: Xxxxxxx X. XxXxxxxxx
--------------------------
Title: President
-------------------------
Date: August 18,1997
--------------------------
INTRATEX GAS COMPANY
By: /s/ XXXXXXX X. XXXXXXXXX
----------------------------
Name: Xxxxxxx X. XxXxxxxxx
--------------------------
Title: President
-------------------------
Date: August 18, 1997
--------------------------
HPL RESOURCES COMPANY
By: /s/ XXXXXXX X. XXXXXXXXX
----------------------------
Name: Xxxxxxx X. XxXxxxxxx
--------------------------
Title: President
-------------------------
Date: August 18, 1997
--------------------------
7
44
APPENDIX "1"
Omnibus Fields
The Omnibus Fields include the acreage and all depths covered by leases, fee
interests and all other real property interests of whatever nature attributable
to gas production from the xxxxx identified herein. The identification of the
particular xxxxx herein is for reference only and does not limit the forgoing.
45
APPENDIX "1"
OMNIBUS FIELDS
EOG PROPERTIES CONNECTED TO HPL
EOG CONTRACT NUMBERS: HPL99001, NGM99001
HPL CONTRACT NUMBER: 00-00000-000
HPLR CONTRACT NUMBER: 000-00000-000
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
----------------- --------- --------- ---------- --------------------------- --------------- ------- ----------
SAN YGNACIO FIELD 297 SAN XXXXXXX XXXXXX XXXXX, AMERICA ET AL 1 125326 4250532351
LA PERLA FIELD 0000 XX XXXXX XXXX XXXX, XXX X. ESTATE 10 144313 4247935653
5155 LA XXXXX XXXXXX XXXXX MINERAL TRUST A-A 1 069973 4250530529
5155 LA XXXXX XXXXXX BRUNI MINERAL TRUST A-A 12 142469 4250532913
5155 LA XXXXX XXXXXX XXXXX MINERAL TRUST A-A 13 144382 4250532950
5155 LA XXXXX XXXXXX BRUNI MINERAL TRUST A-B 3 077960 4250530975
5155 LA XXXXX XXXXXX XXXXX MINERAL TRUST A-B 7 134065 4250532638
5155 LA XXXXX XXXXXX BRUNI MINERAL TRUST A-B 14 144341 4250532975
5155 LA XXXXX XXXXXX XXXXX MINERAL TRUST AA 17 147687 4250533121
5155 LA XXXXX XXXXXX BRUNI MINERAL TRUST AB 9 139464 4250532772
5155 LA XXXXX XXXXXX XXXXX MINERAL TRUST AB 10 141749 0000000000
5155 LA XXXXX XXXXXX BRUNI MINERAL TRUST AB 16 146526 4250533067
5155 LA XXXXX XXXXXX XXXX, X.X. 1 131965 4250530090
5155 LA XXXXX XXXXXX XXXX, X.X. 4 153183 4250533275
0000 XX XXXXX XXXXXX XXXX, XXX X. 4 139223 4250532779
0000 XX XXXXX XXXX XXXX, XXX X. ESTATE 5 141296 4247935386
0000 XX XXXXX XXXX XXXX, XXX X. ESTATE 6 141842 0000000000
0000 XX XXXXX XXXX XXXX, XXX X. ESTATE 7 142849 4247935544
0000 XX XXXXX XXXX XXXX, XXX X. ESTATE 8 142846 4247935563
0000 XX XXXXX XXXXXX XXXX-XXXXX XX 0 000000 4250532937
0000 XX XXXXX XXXXXX XXXXXXXX XXXX 0 000000 4250531084
X.X. XXXXXX 5263 XXXXXXXXX XXXXXX XXXXXX XXXXXXX XXXXXXXX GU 1 161735 NYA
5263 XXXXXXXXX XXXXXX XXXXX-XXXXX XXXXXXXX B GU 2 156455 4250533321
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXXXX X. 3 126242 4250532391
5263 X X XXXXXX XXXXXX XXXXXXXX, A. GAS UNIT 2 075822 4250530940
0000 X X XXXXXX XXXXXX XXXXXXXX, XXXXX 0 000000 0000000000
0000 X X XXXXXX XXXXXX XXXXXXXX, XXXXX 0 000000 4250531299
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXX 3 123140 0000000000
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXX 5 156060 4250533315
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXXX 7 154447 4250533296
5263 X X XXXXXX XXXXXX XXXXXXXX, XXXXXX GAS UNIT 1 074921 0000000000
5263 X X XXXXXX XXXXXX XXXXXXXX, XXXXXX GAS UNIT 4 153625 4250533280
5263 X X XXXXXX XXXXXX XXXXXXXX, XXXXXX GAS UNIT 6 154233 4250533284
0000 X X XXXXXX XXXXXX XXXXXXXX, XXXXXXX 0 000000 4250530869
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXXXX 3 122571 4250532230
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXXXX 8 126685 4250523240
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXXXX 10 157149 4250533353
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXXXX GAS UNIT 2 073452 4250530873
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXXXX GAS UNIT 6 124581 4250532308
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXXXX GAS UNIT 7 125756 4250532376
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXX 1 072247 4250530598
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXX 3 121431 4250532187
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXX-XXXXX GAS UNIT 1 131195 4250532541
5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXX-XXXXXXX XX 1 157155 4250533357
5263 XXXXXXXXX XXXXXX SAN XXXXXXXX MINERALS 1 NYA NYA
5263 XXXXXXXXX XXXXXX SAN XXXXXXXX MINERALS 2 125447 4250532362
5263 XXXXXXXXX XXXXXX SAN XXXXXXXX MINERALS 3 128986 4250532454
5263 XXXXXXXXX XXXXXX XXXXXXX, XXXXXX X. XXXXX 1 125197 4250532337
5263 XXXXXXXXX XXXXXX XXXXXXX, XXXXXX X. XXXXX 2 128406 4250532470
0000 XXX XXX XXXXXX XXXXXXX-XXX XXXXXXXX XXX. XX 0 000000 0000000000
0000 X X XXXXXX XXXXXX XXXXXXXX, XXXXXXX X. 0 000000 4250531833
Page 1
00
XXXXXX XXXXX XXXX XXXXX XXXXX XXXXXX XXXX NAME WELL NUMBER RCI API
----------------- --------- ------------- ---------- --------------------------- --------------- ------- ----------
6103 XXXXXXXXX XXXXXX XXXXXXXX, XXXXXXX X. 3 126242 4250532391
LAS OVEJAS 5353 LAS OVEJAS XXXXXX XXXXXX, XXXXX X. 1 079647 4250530967
5353 LAS OVEJAS XXXXXX XXXXXX, XXXXX X. 4 125956 0000000000
0000 XXXXXXXX XXXX XXXXXX XXXXXX, XXXXXX 0 000000 4250531820
5353 J J & J XXXXXX XXXXXX, XXXXXX 6 144480 4250532893
5353 LAS OVEJAS XXXXXX XXXXXX-STATE 1 079646 4250531003
5353 LAS OVEJAS XXXXXX XXXXX, XXXXXXXXX HEIRS 3 158767 0000000000
5357 HUNDIDO XXXXXX XXXXXXXX, S.G. 3 107214 4250531657
0000 XXXXXXXX XXXXXX XXXXXXXX, X.X. XX XX 0 000000 4250532033
6067 LAS XXXXXX XXXX XXXXXX XXXXXXXX, X.X. 0 000000 0000000000
6067 POK-A-DOT XXXXXX XXXXXXXX, S.G. 8 122768 4250532245
6067 POK-A-DOT XXXXXX XXXXXXXX, S.G. 9 123171 0000000000
6067 POK-A-DOT XXXXXX XXXXXXXX, S.G. 10 124135 4250532303
6067 POK-A-DOT XXXXXX XXXXXXXX, S.G. 11 124659 4250532325
6067 POK-A-DOT XXXXXX XXXXXXXX, S.G. 12 124742 4250532326
6067 POK-A-DOT XXXXXX XXXXXXXX, S.G. 13 125128 4250532341
6067 POK-A-DOT XXXXXX XXXXXXXX, S.G. 15 125358 4250532468
6067 POK-A-DOT XXXXXX XXXXXXXX, S.G. 18 133350 4250532598
6067 POK-A-DOT XXXXXX XXXXXXXX, S.G. 19 135145 4250532659
6067 LAS XXXXXX XXXX XXXXXX XXXXXXXX, X.X. 00 000000 4250532899
6067 POK-A-DOT XXXXXX XXXXXXXX, S.G. 23 143874 4250532956
6067 POK-A-DOT XXXXXX XXXXXXXX, XXXXXXX X. 6 111434 4250531781
6067 J J & J XXXXXX XXXXXXXX, L. 2 114070 0000000000
6067 J J & J XXXXXX XXXXXXXX, L. 3 116773 0000000000
6067 LAS OVEJAS XXXXXX XXXXXXXX, M. 1 119603 4250531662
6067 POK-A-DOT XXXXXX XXXXXXXX, M. 2 136399 4250531920
6067 POK-A-DOT XXXXXX XXXXXXXX, M. 4 122996 0000000000
6067 POK-A-DOT XXXXXX XXXXXXXX, M. 5 124660 4250532302
6067 POK-A-DOT XXXXXX XXXXXXXX, M. 6 129202 4250532491
6067 POK-A-DOT XXXXXX XXXXXXXX, M. 7 132276 4250532592
6067 POK-A-DOT XXXXXX XXXXXXXX, M. 8 133492 4250532611
6067 POK-A-DOT XXXXXX XXXXXXXX, M. 9 135304 4250532660
6067 POK-A-DOT XXXXXX XXXXXXXX, M. 10 136476 4250532719
6067 POK-A-DOT XXXXXX XXXXXXXX, M. 11 137793 4250532754
6067 J J & J XXXXXX XXXXXXXX, M.B. 1 142684 4250532891
6067 J J & J XXXXXX XXXXXXXX, XXXX 1 113497 4250531831
6067 J J & J XXXXXX XXXXXXX, X.X. GU 1 142491 4250532904
6067 J J & J XXXXXX XXXXX, I.C. 1 143000 4250532885
6067 J J & J XXXXXX XXXXX, I.C. 2 142541 4250532914
6067 J J & J XXXXXX XXXXX, I.C. GU 4 159594 4250533447
6067 POK-A-DOT XXXXXX XXXXX, XXXXXXX 1 135497 4250532689
6067 POK-A-DOT XXXXXX XXXXX, XXXXXXX 2 136860 4250532733
6067 POK-A-DOT XXXXXX XXXXX, XXXXXXX 3 138235 0000000000
HUNDIDO 6487 HUNDIDO NE XXXXXX XXXXXX, X.X. 2 131102 4250532501
0000 XXXXXXXX XX XXXXXX XXXXXX 1 NYA NYA
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX B 8 144453 4250532954
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 1 143730 0000000000
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 4 148985 4250531552
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 5 143731 4250531607
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 6 106618 4250531668
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 9 158107 4250533134
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 10 148274 0000000000
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 12 150705 4250533207
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 16 159486 0000000000
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 11L 150718 4250533181
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 13L 156907 4250533230
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 14L 154548 4250533299
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 15L 155904 0000000000
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 15U NYA NYA
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. C 1 149544 4250533172
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. C 3 157441 4250533372
6748 LOS MOGOTES N XXXXXX XXXXXXXXX, XXXXX X. C 1A 074836 4250530601
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. C 4A 082509 4250531067
6760 HUNDIDO XXXXXX XXXXXXXX TRUST 1 NYA 0000000000
Page 2
47
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
----------------- --------- ------------- ---------- --------------------------- --------------- -------- ----------
6776 HUNDIDO XXXXXX XXXXXXXX, S. 1 075828 4250530888
6776 HUNDIDO XXXXXX XXXXXXXX, S. 2 110746 4250530960
6776 HUNDIDO XXXXXX XXXXXXXX, S. 3 142847 4250530998
SPRINT SOUTH 0000 XXXXX XXXXXX XXXXXXX XXXXX XXXXXX XXXXX GU #1 1 046021 4227300064
0000 XXXXX XXXXXX XXXXXXX XXXXX XXXXXX XXXXX XX #0 1 053640 4227330001
0000 XXXXX XXXXXX XXXXXXX XXXXX XXXXXX XXXXX GU #3 1 120342 0000000000
XXXXX 268 XXXXX XXXXXX XXXXXX, XXXXXXXX F 17 NYA NYA
268 XXXXX XXXXXX XXXXXX, XXXXXXXX F 20 NYA NYA
268 XXXXX XXXXXX XXXXXX, XXXXXXXX F 23 NYA NYA
268 XXXXX XXXXXX XXXXXX, XXXXXXXX G 16 NYA NYA
268 XXXXX XXXXXX XXXXXX, XXXXXXXX G 24 NYA NYA
Page 3
00
XXXXXXXX "0-X"
Xxxxxxx Xxxx Bore Exceptions
00
XXXXXXXX "0-X"
Xxxxxxx Xxxx Bore Exceptions
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
------------------------------------------------------------------------------------------------------------------------------
LA PERLA FIELD 5155 LA XXXXX XXXX XXXX, XXX X. ESTATE 10 144313 4247935653
5155 LA XXXXX XXXXXX BRUNI MINERAL TRUST A-A 12 142469 4250532913
5155 LA XXXXX XXXXXX BRUNI MINERAL TRUST A-A 13 144382 4250532950
5155 LA XXXXX XXXXXX BRUNI MINERAL TRUST A-B 14 144341 4250532975
5155 LA XXXXX XXXXXX BRUNI MINERAL TRUST AB 9 139464 4250532772
5155 LA XXXXX XXXXXX BRUNI MINERAL TRUST AB 10 141749 0000000000
0000 XX XXXXX XXXXXX XXXX, XXX X. 4 138223 4250532779
0000 XX XXXXX XXXX XXXX, XXX X. ESTATE 5 141296 4247935386
0000 XX XXXXX XXXX XXXX, XXX X. ESTATE 6 141842 0000000000
0000 XX XXXXX XXXX XXXX, XXX X. ESTATE 7 142849 4247935544
0000 XX XXXXX XXXX XXXX, XXX X. ESTATE 8 142845 4247935563
0000 XX XXXXX XXXXXX XXXX-XXXXX XX 0 000000 4250532937
X.X. XXXXXX 5263 XXXXXXXXX XXXXXX XXXXXXXX, XXXXX 3 121431 4250532187
0000 XXX XXX XXXXXX XXXXXXX-XXX XXXXXXXX XXX. XX 0 000000 0000000000
LAS OVEJAS 5353 JJ & J XXXXXX XXXXXX, XXXXXX 6 144480 4250532893
6067 LAS XXXXXX XXXX XXXXXX XXXXXXXX, X.X. 00 000000 4250532899
6067 POK-A-DOT XXXXXX XXXXXXXX, S.G. 23 143574 4250532956
6067 JJ & J XXXXXX XXXXXXXX, L. 2 114070 0000000000
6067 JJ & J XXXXXX XXXXXXXX, M.B. 1 142584 4250532891
6067 JJ & J XXXXXX XXXXXXX, X.X. GU 1 142491 4250532904
6067 JJ & J XXXXXX XXXXX, I.C. 1 143000 4250532885
6067 JJ & J XXXXXX XXXXX, I.C. 2 142541 4250532914
HUNDIDO 6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX B 8 144453 4250532954
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 1 143730 0000000000
6748 HUNDIDO XXXXXX XXXXXXXXX, XXXXX X. B 5 143731 4250531607
6760 HUNDIDO XXXXXX XXXXXXXX TRUST 1 NYA 0000000000
50
APPENDIX "2"
XXX Xxxxxx and Other Big Cowboy Fields
The XXX Xxxxxx include all acreage and all depths covered by leases, fee
interests and all other real property interests of whatever nature in the "Area
of Mutual Interest" set forth in that certain Big Cowboy System Construction,
Ownership, Operating and Maintenance Agreement dated August 20, 1992 between
HPL and Gulf Energy Pipeline Co. (HPL contract # 012-35422-40-003). The "Area
of Mutual Interest" is shown on the plat included in this Appendix "2" and the
identification of the particular xxxxx herein is for reference only and does
not limit the foregoing.
The Other Big Cowboy Fields include the acreage and all depths covered by
leases, fee interests and all other real property interests of whatever nature
attributable to gas production from the xxxxx identified herein and not located
within the boundaries of the "Area of Mutual Interest." The identification of
the particular xxxxx herein is for reference only and does not limit the
forgoing.
51
APPENDIX "2"
AMI AND OTHER BIG COWBOY FIELDS
EOG PROPERTIES CONNECTED TO HPL
EOG CONTRACT NUMBERS: HPL42028, NGM42001
HPL CONTRACT NUMBER: 00-00000-000
HPLR CONTRACT NUMBER: 000-00000-000
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
----------------- ----- ------------ ------ --------------------- ----------- ------ ----------
RANCHO VIEJO 6546 RANCHO VIEJO XXXX XXXXXXXXX 2367 1 135559 4247934965
6546 RANCHO VIEJO XXXX XXXXXXXXX 2367 2 161116 4247936511
0000 XXXXXX XXXXX XXXX XXXXXXXXX-XXXXX XXX XXXX 0 000000 0000000000
XXXXXXX 6679 XXXXXXX XXXX XXXXXX RANCH 1 140166 4247935298
0000 XXXXXXX XXXX XXXXXX XXXXX 0 000000 0000000000
0000 XXXXXXX XXXX XXXXXX XXXXX 0 000000 0000000000
DESPARADO 6707 DESPARADO XXXX XXXXXXX 40 2 141301 4247934998
6707 DESPARADO XXXX XXXXXXX 40 3 141882 4247935480
6707 DESPARADO XXXX XXXXXXX 40 4 142616 4247935512
6707 DESPARADO XXXX XXXXXXX 44 1 144314 4247935581
BLACK CREEK 6728 BLACK CREEK XXXX XXXXXXX 1 144464 4247935486
6728 BLACK CREEK XXXX XXXXXXX 3 144477 0000000000
6728 BLACK CREEK XXXX XXXXXXX 5 144494 4247935751
6728 BLACK CREEK XXXX XXXXXXX 6 144490 4247935737
6728 BLACK CREEK XXXX XXXXXXX 7 150681 4247935777
6728 BLACK CREEK XXXX XXXXXXX 8 152432 0000000000
0000 XXXXX XXXXX XXXX XXXXXXX 00 000000 0000000000
0000 XXXXX XXXXX XXXX XXXXXXX X 1 144466 4247935618
6742 BLACK CREEK XXXX XXXXXXX D 2 144469 4247935665
6742 BLACK CREEK XXXX XXXXXXX D 3 144471 4247935678
6742 BLACK CREEK XXXX XXXXXXX D 4 144482 4247935680
6742 BLACK CREEK XXXX XXXXXXX D 5 144493 4247935679
6742 BLACK CREEK XXXX XXXXXXX D 6 144491 4247935738
6742 BLACK CREEK XXXX XXXXXXX D 8 150164 4247936094
6742 BLACK CREEK XXXX XXXXXXX D 9 151280 4247936157
6742 BLACK CREEK XXXX XXXXXXX D 10 152403 4247936203
0000 XXXXX XXXXX XXXX XXXXXXX X 00 000000 4247936221
0000 XXXXX XXXXX XXXX XXXXXXX X 00 000000 0000000000
0000 XXXXX XXXXX XXXX XXXXXXX X 00 000000 4247936400
0000 XXXXX XXXXX XXXX XXXXXXX X 00 000000 4247936422
0000 XXXXX XXXXX XXXX XXXXXXX X 00 000000 4247936439
0000 XXXXX XXXXX XXXX XXXXXXX X 00 000000 4247936459
0000 XXXXX XXXXX XXXX XXXXXXX X 00 000000 0000000000
0000 XXXXX XXXXX XXXX XXXXXXX X 00 000000 4247936525
0000 XXXXX XXXXX XXXX XXXXXXX X 0X XXX XXX
XX XXXXXXX 6763 LA MANGANA WEBB 1 XXXX, XX 1 145813 4247935752
0000 XX XXXXXXX WEBB 2 XXXX, XX 2 146395 4250533059
0000 XX XXXXXXX WEBB 3 XXXX, XX 3 158861 4247935980
0000 XX XXXXXXX WEBB 4 XXXX, XX 4 159403 4247936193
0000 XX XXXXXXX WEBB 5 XXXX, XX 5 159602 4247936226
0000 XX XXXXXXX WEBB 6 XXXX, XX 6 160639 0000000000
0000 XX XXXXXXX WEBB 7 XXXX, XX 7 182236 XXX
XXXXXXX M&B 0000 XXXXXXX XXXXX XXXX XXXXXXX X 1 142683 4247935528
8751 CALICHE CREEK XXXX XXXXXXX B 2 143772 4247935582
8751 CALICHE CREEK XXXX XXXXXXX B 3 145693 4247935699
Page 1
00
XXXXXX XXXXX XXXX XXXXX XXXXX XXXXXX XXXX NAME WELL NUMBER RCI API
----------------- ----- ------------ ------ --------------------- ----------- ------ ----------
8751 BLACK CREEK XXXX XXXXXXX M 1 162137 NYA
8751 CALICHE CREEK XXXX XXXXXXX N 2046 2 NYA NYA
8751 CALICHE CREEK XXXX XXXXXXX-OLMITOS 2A NYA NYA
8751 CALICHE CREEK XXXX XXXXXXX-OLMITOS RANCH 1 162162 NYA
8751 CALICHE CREEK XXXX XXXXXXX-OLMITOS XXXXX 0X XXX XXX
Xxxx 0
00
Xxxx of Mutual Interest Plat
[The original contains a detailed map of the Big Cowboy Area of Mutual Interest]
54
APPENDIX "2-A"
Big Cowboy Well Bore Exceptions
55
APPENDIX "2-A"
BIG COWBOW WELL BORE EXCEPTIONS
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
----------------- ------- ------- -------- ----------- -------------- ------ ------
XXXXXXX 6679 XXXXXXX XXXX XXXXXX RANCH 1 140166 4247935292
0000 XXXXXXX XXXX XXXXXX XXXXX 0 000000 0000000000
0000 XXXXXXX XXXX XXXXXX XXXXX 0 000000 0000000000
DESPARADO 6707 DESPARADO XXXX XXXXXXX 40 2 141301 4247934998
6707 DESPARADO XXXX XXXXXXX 40 3 141882 4247935480
6707 DESPARADO XXXX XXXXXXX 40 4 142616 4247935512
6707 DESPARADO XXXX XXXXXXX 44 1 144314 4247935581
BLACK CREEK 6728 BLACK CREEK XXXX XXXXXXX 1 144464 4247935486
6728 BLACK CREEK XXXX XXXXXXX 3 144477 0000000000
6728 BLACK CREEK XXXX XXXXXXX 6 144490 4247935737
6742 BLACK CREEK XXXX XXXXXXX D 1 144466 4247935618
6742 BLACK CREEK XXXX XXXXXXX D 2 144469 4247935665
6742 BLACK CREEK XXXX XXXXXXX D 3 144471 4247935678
6742 BLACK CREEK XXXX XXXXXXX D 4 144482 4247935680
6742 BLACK CREEK XXXX XXXXXXX D 5 144493 4247935679
6742 BLACK CREEK XXXX XXXXXXX D 6 144491 4247935738
XXXXXXX M&B 0000 XXXXXXX XXXXX XXXX XXXXXXX X 1 142683 4247935528
8751 CALICHE CREEK XXXX XXXXXXX B 2 143772 4247935582
8751 CALICHE CREEK XXXX XXXXXXX B 3 145693 4247935699
Page 1
56
APPENDIX "2-B"
Xxxxxxx Field Xxxxx
The Xxxxxxx Field Xxxxx include the acreage and all depths covered by leases,
fee interests and all other real property interests of whatever nature
attributable to gas production from the xxxxx identified herein. The
identification of the particular xxxxx herein is for reference only and does
not limit the forgoing.
00
XXXXXXXX "0-X"
XXXXXXX XXXXX XXXXX
EOG
PROPERTY
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER NUMBER API
----------------- ----- ----- ------ --------- ----------- -------- ---
XXXXXXX 5434 XXXXXXX XXXX, TX BRUNI XXXXXX GAS UNIT 1 2810 4247934820
5434 XXXXXXX XXXX, TX BRUNI MINERAL A 1 2811 4247932255
5434 XXXXXXX XXXX, TX BRUNI MINERAL A 2 2812 4247932323
5434 XXXXXXX XXXX, TX BRUNI MINERAL A 3 2813 4247932410
5434 XXXXXXX XXXX, TX BRUNI MINERAL A 8 2818 4247934645
5434 XXXXXXX XXXX, TX BRUNI MINERAL A 9 2819 4247934838
5434 XXXXXXX XXXX, TX BRUNI MINERAL A NCT 10 1080 0000000000
0000 XXXXXXX XXXX, XX BRUNI MINERAL A 11 1171 4247934959
5434 XXXXXXX XXXX, TX BRUNI MINERAL A 12 1181 4247934967
5434 XXXXXXX XXXX, TX BRUNI MINERAL A 14 19810 4247935242
5434 XXXXXXX XXXX, TX BRUNI MINERAL A NCT 15 21441 4247935463
5434 XXXXXXX XXXX, TX BRUNI MINERAL A NCT 16 21922 4247935541
5434 XXXXXXX XXXX, TX BRUNI MINERAL B 1 2820 4247932514
5434 XXXXXXX XXXX, TX BRUNI MINERAL B 2 2823 4247932637
5434 XXXXXXX XXXX, TX BRUNI MINERAL B 3 2824 4247932515
5434 XXXXXXX XXXX, TX BRUNI MINERAL B 7 2827 4247933368
5434 XXXXXXX XXXX, TX BRUNI MINERAL B 9 2829 4247934484
5434 XXXXXXX XXXX, TX BRUNI MINERAL B 10 2821 0000000000
5434 XXXXXXX XXXX, TX BRUNI MINERAL B 11 2822 4247934919
5434 XXXXXXX XXXX, TX BRUNI MINERAL B 12 19315 0000000000
0000 XXXXXXX XXXX, XX BRUNI MINERAL B 13 19608 4247935196
0000 XXXXXXX XXXX, XX BRUNI MINERAL B 14 19683 4247935210
5434 XXXXXXX XXXX, TX BRUNI MINERAL C 1 2831 4247932045
5434 XXXXXXX XXXX, TX BRUNI MINERAL C 2 2832 4247932556
5434 XXXXXXX XXXX, TX BRUNI MINERAL C 3 2833 0000000000
5434 XXXXXXX XXXX, TX BRUNI MINERAL C 4 2834 0000000000
5434 XXXXXXX XXXX, TX BRUNI MINERAL C 5 1010 4247934927
5434 XXXXXXX XXXX, TX BRUNI MINERAL C 6 2835 4247934859
5434 XXXXXXX XXXX, TX BRUNI MINERAL C 7 1281 4247934979
5434 XXXXXXX XXXX, TX BRUNI MINERAL C 8 19145 4247934990
5434 XXXXXXX XXXX, TX BRUNI MINERAL C 9 19615 4247935197
5434 XXXXXXX XXXX, TX BRUNI MINERAL C 10 19633 0000000000
5434 XXXXXXX XXXX, TX BRUNI MINERAL C 11 19737 4247935228
5434 XXXXXXX XXXX, TX BRUNI MINERAL C 12 22235 0000000000
5434 XXXXXXX XXXX, TX BRUNI MINERAL C 13 24313 4247935919
5434 XXXXXXX XXXX, TX BRUNI MINERAL C GU 1 831 4247934861
5434 XXXXXXX XXXX, TX BRUNI MINERAL D 2 2837 4247932759
5434 XXXXXXX XXXX, TX BRUNI MINERAL TRUST IN B 1 2849 4247931013
Page 1
58
APPENDIX "2-C"
The Amoco Fields
[THE ORIGINAL CONTAINS TWO DETAILED MAPS OF
THE AMOCO FIELDS IN XXXX COUNTY, TEXAS]
59
APPENDIX "3"
Xxxxxx Fields
The Xxxxxx Fields include the acreage and all depths covered by leases, fee
interests and all other real property interests of whatever nature attributable
to gas production from the xxxxx identified herein. The identification of the
particular xxxxx herein is for reference only and does not limit the forgoing.
00
XXXXXXXX "0"
XXXXXX XXXXXX
EOG PROPERTIES CONNECTED TO HPL
EOG CONTRACT NUMBERS: HPL42037, NGM42002
HPL CONTRACT NUMBER: 00-00000-000
HPLR CONTRACT NUMBER: 000-00000-000
COMMON FIELD NAME METER FIELD COUNTY WELL NAME WELL NUMBER RCI API
------------------------------------------------------------------------------------------------------------------------------
NORTH XXXXXX FIELD 3081 XXXXXX NORTH XXXXXX XXXXXXXX (XXXXXX)GU #1 5 150320 4220132363
0000 XXXXXX XXXXX XXXXXX XXXXXXXX XXX XXXX #0 0 000000 4220132328
0000 XXXXXX XXXXX XXXXXX XXXXX 1 162912 4220132456
0000 XXXXXX XXXXX XXXXXX XXXXX 2 NYA 4220132460
0000 XXXXXX XXXXX XXXXXX XXXXXXXX (XXXXXX)GU #1 3 150650 4220132348
0000 XXXXXX XXXXX XXXXXX XXXXXXXX (XXXXXX)GU #1 4 150317 4220132336
0000 XXXXXX XXXXX XXXXXX XXXXXXXX XXXX (XXXXXX) GU #1 1 041633 4220107901
0000 XXXXXX XXXXX XXXXXX XXXXXX X XXXX 0 000000 0000000000
0000 XXXXXX XXXXX XXXXXX XXXXXX X XXXX 0 000000 4220132366
0000 XXXXXX XXXXX XXXXXX XXXXXX X XXXX 0 000000 4220132397
0000 XXXXXX XXXXX XXXXXX XXXXXX XXXXXX (XXXXXX)GU #1 1 154137 0000000000
0000 XXXXXX XXXXX XXXXXX XXXXXX XXXXXX (XXXXXX)GU #1 2 151617 4220132382
0000 XXXXXX XXXXX XXXXXX XXXXXX XXXXXX (XXXXXX)GU #1 3 152691 0000000000
0000 XXXXXX XXXXX XXXXXX XXXXXX XXXXXX (XXXXXX)GU #1 4 153354 4220132398
0000 XXXXXX XXXXX XXXXXX XXXXXX (XXXXXX) XX #0 0 000000 4220132324
0000 XXXXXX XXXXX XXXXXX XXXXXX XXX XXXX #0 0 000000 4220107859
0000 XXXXXX XXXXX XXXXXX XXXXXX XXX XXXX #0 0 000000 0000000000
0000 XXXXXX XXXXX XXXXXX XXXXXX XXX XXXX #0 0 000000 4220120260
0000 XXXXXX XXXXX XXXXXX XXXXXX XXX XXXX #0 0 000000 4220107868
0000 XXXXXX XXXXX XXXXXX XXXXXX XXX XXXX #0 0 000000 4220132369
XXXXXXXXXX 1 160962 4220132442
61
EXHIBIT I
SERVICES AGREEMENT
I-1
62
SERVICES AGREEMENT
This Agreement is made and entered into as of the 1st day of January,
1997, between Enron Corp., an OREGON corporation ("Enron"), and Enron Oil & Gas
Company, a Delaware corporation ("EOG").
For and in consideration of the mutual promises and conditions
contained herein, the parties hereto agree as follows:
1. In order to assist the continued and orderly conduct of
certain corporate functions currently performed by Enron for the benefit of
EOG, Enron agrees to provide and EOG agrees to purchase, subject to the terms
and conditions set forth herein, certain corporate staff and support services
(collectively, the "Services").
2. This Agreement shall become effective and Enron shall make the
Services available to EOG pursuant to the terms of this Agreement commencing on
January 1, 1997, and shall continue thereafter for a period of 10 years (unless
otherwise specified herein) and from year to year thereafter unless terminated
upon written notice by either party 60 days prior to the anniversary date of
this Agreement. IF ENRON'S STOCK OWNERSHIP IN EOG FALLS BELOW 35% OF THE
ISSUED AND OUTSTANDING COMMON STOCK OF EOG HAVING THE RIGHT TO VOTE FOR
DIRECTORS OF EOG, THEN EITHER PARTY SHALL HAVE THE RIGHT TO TERMINATE THIS
AGREEMENT BY GIVING WRITTEN NOTICE TO THE OTHER PARTY, SUCH TERMINATION TO BE
EFFECTIVE AS OF THE DATE SET FORTH IN SUCH NOTICE; PROVIDED,
63
HOWEVER, THAT EOG SHALL HAVE THE RIGHT TO DELAY THE EFFECTIVE DATE OF ANY SUCH
TERMINATION BY ENRON FOR A PERIOD OF UP TO ONE YEAR IN ORDER FOR EOG TO MAKE
NECESSARY ARRANGEMENTS FOR THE SERVICES TO BE PROVIDED BY THIRD PARTIES BY SO
NOTIFYING ENRON WITHIN 15 DAYS AFTER RECEIPT OF ENRON'S NOTICE OF TERMINATION.
3. The parties understand and agree that the Services shall be
substantially identical in nature and quality to the Services provided to EOG
by Enron during the 12-month period prior to the effective date of this
Agreement.
4. EOG, as compensation for the performance of the Services,
agrees to reimburse Enron for: (i) all expenses actually incurred by Enron and
readily identifiable to EOG relating to corporate staff and support services
provided by Enron hereunder ("Direct Charges"), as identified in Exhibit A
attached hereto, which calculation shall be based on the cost incurred by Enron
in providing such Services and charged to EOG, IN EACH INSTANCE, USING THE
METHODOLOGY THAT MOST REASONABLY REFLECTS THE USE OF THE SPECIFIC SERVICE BY
EOG AND ITS SUBSIDIARIES, ON THE ONE HAND, AND BY ENRON AND ITS OTHER
SUBSIDIARIES OR AFFILIATED COMPANIES, ON THE OTHER HAND (excepting the
calculation of charges for "Rent and LHI" as indicated in Exhibit A for any
square footage occupied during the term hereof) , (ii) the actual cost of any
goods or services purchased for EOG by Enron from third parties unaffiliated
with Enron ("Operating Charges"), (iii) the actual cost or charge for
64
outsourced services provided by any third party unaffiliated with Enron for EOG
under an Enron or Enron affiliate agreement with such third party ("Outsourced
Charges") and (iv) AN ALLOCATED PORTION OF ADMINISTRATIVE AND GENERAL EXPENSES
INCURRED BY ENRON FOR CORPORATE STAFF AND SUPPORT SERVICES, COMPOSED OF THOSE
SERVICES AS IDENTIFIED IN EXHIBIT B ATTACHED HERETO (EXCLUDING THOSE SERVICES
ON EXHIBIT B FOR WHICH THE AMOUNT SHOWN UNDER THE HEADING "EOG" IS $0), AND FOR
WHICH EOG DOES NOT RECEIVE DIRECT CHARGES ("ALLOCATED CHARGE"). THE ALLOCATED
CHARGE PAYABLE BY EOG UNDER CLAUSE (IV) OF THE IMMEDIATELY PRECEDING SENTENCE
WILL BE (I) THE PORTION OF THE EXPENSES REFERRED TO IN CLAUSE (IV) ALLOCATED TO
EOG USING THE MODIFIED MASSACHUSETTS FORMULA, MINUS (II) $2,800,000 PER YEAR
BEGINNING JANUARY 1, 1997; PROVIDED, HOWEVER, THAT THE ALLOCATED CHARGE DURING
ANY YEAR SHALL NOT EXCEED THE ALLOCATED CHARGE CEILING (AS DEFINED BELOW). The
$2,800,000 will be adjusted annually, in the same manner that the Allocated
Charge Ceiling is adjusted below, based upon any change in the SEASONALLY
ADJUSTED Consumer Price Index for all Urban Consumers as determined by the U.S.
Department of Labor, Bureau of Labor Statistics (the "CPI-U").
THE ALLOCATED CHARGE CEILING FOR THE YEAR 1997 SHALL BE $5,300,000. THE
ALLOCATED CHARGE CEILING FOR EACH YEAR THEREAFTER SHALL BE ADJUSTED ANNUALLY,
AS HEREINAFTER PROVIDED, FOR CHANGES IN THE CPI-U, AND ROUNDED TO THE NEAREST
$100,000.
65
FOR THE PURPOSE OF COMPUTING THE EFFECTS OF THE CPI-U CHANGE ON THE
ALLOCATED CHARGE CEILING, THE PARTIES HERETO AGREE THAT THE BASE PERIOD FOR THE
CPI-U IS "1982/84 EQUALS 100", AND THE CPI-U INDEX NUMBER FOR DECEMBER 31, 1996
IS 159.2. CPI-U ADJUSTMENTS TO THE ALLOCATED CHARGE CEILING SHALL BE MADE
ANNUALLY, BASED UPON THE CPI-U INDEX NUMBER FOR THE MONTH OF DECEMBER FOR THE
IMMEDIATELY PRECEDING YEAR (SUCH ADJUSTMENTS ARE TO BE EFFECTED UPON
PUBLICATION OF THE CPI-U INDEX NUMBER FOR SUCH MONTH). IN THE EVENT THE BUREAU
OF LABOR STATISTICS SHIFTS THE CPI-U REFERRED TO HEREIN FROM THE "1982/84
EQUALS 100" BASE PERIOD TO A DIFFERENT BASE PERIOD, EOG AND ENRON AGREE TO USE
THE REBASING FACTORS PUBLISHED BY THE BUREAU OF LABOR STATISTICS FOR CONVERTING
THE "1982/84 EQUALS 100" BASE PERIOD TO THE NEW APPLICABLE BASE. IN THE EVENT
(I) WITH RESPECT TO THE CPI-U, REBASING FACTORS ARE NOT PUBLISHED OR (II) THE
CPI-U IS DISCONTINUED, A PROPER INDEX OR CLASSIFICATION WITH APPROPRIATE
ADJUSTMENT FACTORS SHALL BE SUBSTITUTED BY WRITTEN AGREEMENT BETWEEN ENRON AND
EOG.
IF THE COMPENSATION FOR ANY SERVICE DOES NOT INCLUDE SALES, USE, EXCISE
VALUE ADDED OR SIMILAR TAXES, AND IF ANY SUCH TAXES ARE IMPOSED ON THE SERVICES
AFTER THE EFFECTIVE DATE OF THIS AGREEMENT, THEN SUCH TAXES SHALL BE PAID BY
EOG.
THE METHODOLOGIES USED FOR DETERMINING DIRECT CHARGES,
66
OPERATING CHARGES, OUTSOURCED CHARGES AND ALLOCATED CHARGES TO EOG WILL BE
EVALUATED PERIODICALLY TO DETERMINE WHETHER MORE ACCURATE METHODOLOGIES MAY BE
AVAILABLE FOR DETERMINING SUCH CHARGES THAN THOSE BEING USED ON THE EFFECTIVE
DATE OF THIS AGREEMENT. CHANGES IN METHODOLOGIES WILL BE IMPLEMENTED ONLY
AFTER BEING AGREED TO BY BOTH ENRON AND EOG.
5. Enron shall invoice EOG by the 15th working day of each month
for all Direct Charges, Operating Charges, Outsourced Charges and Allocated
Charges, all with respect to the preceding month. All invoices shall reflect
in reasonable detail a description of the Services performed during the
preceding month, and shall be due and payable on the last day of the month of
the invoice. In the event of default in payment by EOG, and if such payment is
not made within thirty days after written notice is sent to EOG by certified
mail to the address specified below, Enron may terminate this Agreement as to
those Services which relate to the unpaid portion of the invoice by giving
written notice of such election to EOG. In the event of a dispute as to the
propriety of invoiced amounts, EOG shall pay all undisputed amounts on each
invoice, but shall be entitled to withhold payment of any amount in dispute and
shall promptly notify Enron of its dispute. Enron shall provide EOG with
records relating to the disputed amount so as to enable the parties to resolve
the dispute. So long as the parties are attempting in good faith to resolve
the dispute, Enron shall not be entitled to terminate the Services related to
and by reason of the disputed charge.
67
6. Any input necessary for Enron or any third party to perform
any Services shall be submitted by EOG in a manner consistent with the
practices utilized during the period prior to the effective date of this
Agreement, which manner shall not be altered except by mutual written agreement
of the parties. Should EOG's failure to supply such input render Enron's or
any third party's performance of any Services unreasonably difficult, Enron or
any third party, upon reasonable notice, may refuse to perform such Services
until such input is supplied.
7. EOG acknowledges that the Services shall be provided only with
respect to the business of EOG. EOG will not request performance of any
Services for the benefit of any entity other than EOG and its subsidiaries or
affiliates. EOG represents and agrees that it will use the Services only in
accordance with all applicable federal, state and local laws and regulations
and communications and common carrier tariffs, and in accordance with the
reasonable conditions, rules, regulations and specifications which may be set
forth in any manuals, materials, documents or instructions in existence on the
effective date of this Agreement and furnished by Enron to EOG. Enron or any
third party reserves the right to take all actions, including termination of
any particular Services, that Enron or any third party reasonably believes to
be necessary to assure compliance with applicable laws, regulations and
tariffs.
8. Enron will assign to EOG all user codes, passwords or numbers,
or other control or identifying cards or numbers, necessary for Enron to
perform the Services. EOG assumes full
68
responsibility for selection and use of any such codes, passwords, cards or
numbers that may be permitted or required in connection with the Services
involved.
9. The Services will be of the same nature and quality as those
provided to EOG during the 12-month period prior to the effective date of this
Agreement.
ALL PRODUCTS OBTAINED FOR EOG ARE AS IS, WHERE IS, WITH ALL FAULTS.
NEITHER ENRON, ANY ENRON AFFILIATE NOR ANY THIRD PARTY PERFORMING ANY SERVICES
HEREUNDER MAKE ANY WARRANTIES OR REPRESENTATIONS WHATSOEVER, EXPRESS OR
IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE WITH RESPECT TO THE SERVICES RENDERED OR PRODUCTS OBTAINED FOR EOG.
IN NO EVENT SHALL ENRON BE LIABLE TO EOG OR ANY OTHER PERSON FOR ANY
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY ERROR IN THE
PERFORMANCE OF SERVICES OR FROM THE BREACH OF THIS AGREEMENT, REGARDLESS OF
ENRON OR ANY THIRD PARTY FAULT. TO THE EXTENT ANY THIRD PARTY HAS LIMITED ITS
LIABILITY TO ENRON FOR SERVICES UNDER AN OUTSOURCING OR OTHER AGREEMENT, EOG
AGREES TO BE BOUND BY SUCH LIMITATION OF LIABILITY FOR ANY PRODUCT OR SERVICE
PROVIDED TO EOG BY SUCH THIRD PARTY UNDER ENRON'S AGREEMENT.
Enron shall have no obligation to perform the Services if its failure
to do so is caused by or results from any act of God, governmental action,
natural disaster, strike, failure of essential equipment or any other cause or
circumstance beyond the control of Enron. Enron agrees that upon restoring
service
69
following any failure of any equipment necessary for Enron to provide any
Services, Enron will allow EOG to have equal priority, in accordance with prior
practice, with respect to access to the restored service. At its election,
Enron may cause one or more of its subsidiaries (other than EOG) , affiliates
or third party contractors to provide the services called for by this
Agreement; however, such action shall not release Enron from its obligations
under this Agreement.
10. In the event any portion of this Agreement shall be found by a
court of competent jurisdiction to be unenforceable, that portion of the
Agreement will be null and void and the remainder of the Agreement will be
binding on the parties as if the unenforceable provisions had never been
contained herein.
11. This Agreement shall not be assignable by either of the
parties hereto except by operation of law.
12. This Agreement constitutes the entire agreement of the parties
relating to the performance of the Services and all prior or contemporaneous
written or oral agreements are merged herein. This Agreement may not be
changed except by a writing signed by both parties. This Agreement shall be
governed by the laws of the State of Texas.
13. Any notice, request, instruction, correspondence or other
document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed, postage prepaid, or by facsimile or telegram, as follows:
70
IF TO ENRON:
Enron Corp.
1400 Smith Street
P. 0. Box 1188
Houston, Texas 77251-1188
Attention: Senior Vice President,
Chief Accounting and Information
Officer
Facsimile No.: 713-853-3920
IF TO EOG:
Enron Oil & Gas Company
1400 Smith Street
P. 0. Box 4362
Houston, Texas 77210-4362
Attention: Senior Vice President and
Chief Financial Officer
Facsimile No.: 713-646-2113
Notice given by personal delivery or mail shall be effective upon actual
receipt by the party to whom addressed. Notice given by facsimile or telegram
shall be effective upon actual receipt if received during the recipient's
normal business hours, or at the beginning of the recipient's next business day
after receipt if not received during the recipient's normal business hours.
Any party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.
71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
on the date(s) noted below on their behalf by their duly authorized officers
effective as of January 1, 1997.
ENRON CORP.
By: /s/ J. CLIFFORD BAXTER
------------------------------------
J. Clifford Baxter,
Senior Vice President,
Corporate Development
Date: December 9, 1997
ENRON OIL & GAS COMPANY
By: /s/ FORREST E HOGLUND
------------------------------------
Forrest E. Hoglund
Chairman of the Board
and Chief Executive Officer
Date: December 9, 1997
72
EXHIBIT A
Major Sub
Cat. Cat. RC# Title Charge Basis
----------------------------------------------------------------------------------------------
PENSION, THRIFT & MEDICAL
2320 Savings Plan Head Count
* 2321 Retirement Plan Demographics (see note below)
2323 EE Life, AD&D Dep Head Count
2324 Long Term Disability Head Count
* 2325 Supp. Exec. Retirement Plan Demographics (see note below)
2326 ESOP Admin. Fees Head Count
2338(2333) Business Travel Insurance Head Count
* 2335 FAS 106 Demographics (see note below)
2356 Adm. Fees For Met Life Head Count
2330 HMO Premiums Head Count
2331 Drug Plan - Admin. Chgs. Head Count
2337 Active Medical/Dental Head Count
*NOTE: The effective date for change in methodology for these items
will be the later of January 1, 1996 or the beginning of the 22nd month
prior to the date of the Equity Participation and Business Opportunity
Agreement between EOG and Enron Corp.
COMPENSATION PLANS
2314 Restricted Stock Actual Participation
0028 Long-term Incentive Plan Actual Participation
1148 Perf. Based Rest. Stock Actual Participation
AVIATION
0781 Aviation Reservation Fee Usage
0782 Aviation Usage Usage
BUILDING FACILITIES & SERVICES
Building Rent & Related
0566 Construction Services Usage
0580 Facility Planning Usage
0581 Facility Maintenance EB Space
0629 Corporate Security EB Space
0666 Recycling Usage
0692 EPCO-Churn Relocation Usage
0898 Office Relocation/Furniture EB Space
1829 International Security Usage
2234 Facilities Operatons EB Space
2441 Building Utilities EB Space
2455 Building Rent and LHI EB Space @ 13.50/sq. ft. up to
170K sq. ft. Amounts over 170K
will be negotiated separately.
Parking Garage Svcs. and Transp. Subs.
0060 Service Garage Employee Election
2478 Parking Employee Election
2334 Transportation Subsidy Employee Election
Copy, Graphics & Audio Visual Services
0224 Forms Management Usage
0228 Copier Center Usage
0339 Artistic Services Usage
0703 Audio Visual Services Usage
2255 Convenience Copiers Usage
73
EXHIBIT A
Major Sub
Cat. Cat. RC# Title Charge Basis
--------------------------------------------------------------------------------------------
BUILDING FACILITIES & SERVICES(continued)
Mail, Shipping & Receiving
0103 Shipping & Receiving Usage
0492 Mail Center Usage
Records Related Costs
0215 Record Center Houston Usage
0489 Record & Info Management Usage
Real Estate Management
0075 EPCO Administration Usage
0508 Real Estate Management Usage
0752 EPCO Legal Services Usage
Health & Employee Services
0647 Health & Employee Services Headcount
0776 Manager - Wellness Headcount
2453 Cafeteria Headcount
2454 Body Shop Headcount
2460 Employee Recreation Headcount
2475 Coffee Headcount
2477 Corporate Special Events Mgt. Comm. Member Head Count
Telecommunications
0117 Enron Information Services % of Total EIS Services
2357 Telecomm. Houston Operations Usage
2358 Computer Services Usage
2359 Ardmore Center Usage
OUTSIDE PROFESSIONAL SERVICES
2349 Outside Auditing Fees Per AA&Co.
0408 Contract Audit Services Per AA&Co.
INSURANCE
2411 Insurance Premiums/Cost Methodology representing
basis for premiums
DATA PROCESSING COSTS
EIS Charges Usage
EDS Charges Usage
Amortization of EDS Pre-paids Historical Usage
HR & BENEFITS RELATED
0071 Alcohol/Drug Testing Usage
0208 Compensation & Benefits Replaced by 2012
0319 Corporate Human Resources Head Count
0246 Payroll Head Count
0649 Benefits Accounting Replaced by 2012
2012 EMI Management Fee Head Count
2242 Fair Employment Head Count
74
EXHIBIT A
Major Sub
Cat. Cat. RC# Title Charge Basis
--------------------------------------------------------------------------------------------
RECRUITING, TRAINING & FAIR EMPLOYMENT PRACTICES
0658 Corp. Org. Development & Trng. Head Count
1150 Corp HR Services Usage-moved from HR
1121 VP - Recruit, Trng. & FEP Head Count
TREASURY, FINANCE & RISK MANAGEMENT
Bank Fees Usage
0410 Risk Management Primarily % of Premiums
0451 Treasury Usage
0041 Corporate Finance Usage
TAX
0441 State Tax Group Usage
0564 Ad Valorem Tax Dept. Usage
LEGAL
0610 Corporate Secretary Usage
0611 Misc. MLP Expenses Usage
0854 Legal Litigation Usage
0860 Corporate Legal Usage
0861 Environmental Legal Usage
2416 Legal Library Attny. Head Count
INVESTOR RELATIONS
0405 Investor Relations Usage
EMPLOYEE MATCHING
2381 Corp. Contributions - Houston Employee Elections
CORPORATE EVENTS
1274 Management Conference Attendees
1137 Enron Earth Day Headcount
1140 Volunteer Events Headcount
1284 Employee Picnic Headcount
2397 Employee Communications Headcount
75
EXHIBIT B
Total Enron
RC Net Oil &
Description* Number Expenses Gas
-------------------------------- ------- ----------- ----------
MMF % 22.10%
Direct Cost In - Shared Services $14,166,000 $3,130,686
Direct Cost In - Other 2,783,457 615,144
Executive Consultants 89 2,000,000 442,000
Corporate Financial Planning 137 1,008,000 222,768
Corporate Accounting & Reporting 138 1,811,000 400,231
Competitive Analysis 150 440,000 0
Sr. Vice President - Corporate Mkt. & Resources 302 1,117,000 246,857
Sr. Vice President - CIAAO 303 602,000 133,042
President and COO 304 1,800,000 397,800
Chief of Staff 305 693,000 153,153
Corporate Affairs 307 619,000 136,799
Executive Reception 308 544,000 120,224
Political Action Committee 309 34,000 7,514
Workforce Diversity 315 383,000 84,643
Investor Relations 405 1,663,000 0
Vice President - Tax 445 2,816,000 0
Corporate Development 460 706,000 156,026
Vice President & Treasurer 588 473,000 104,533
Corporate Secretary 610 1,616,000 0
MLP Services 611 60,000 0
Organizational Development & Testing 658 0 0
Government Affairs & Public Policy 808 0 0
Public Policy Analysis 848 192,000 0
Corporate Legal 860 1,259,000 0
Federal Government Affairs 866 1,283,000 283,543
State Government Affairs 870 913,000 201,773
Chairman and CEO 890 2,100,000 464,100
Corporate Advertising 1109 0 0
Corporate Aircraft Usage 2001 4,365,300 964,731
NQ Stock Plan 2315 0 0
Exec Perqs 2317 0 0
Employee Performance Awards 2318 150,000 33,150
Corporate Contributions - Houston 2381 0 0
Corporate Memberships 2396 490,000 108,290
Employee Communications 2397 359,800 79,516
Corporate Communications 2398 684,600 151,297
Media Relations 2399 1,942,000 429,182
Executive Board Meeting Expenses 2418 1,034,400 228,602
1997 EOG Service Agreement Reduction (2,800,000)
1997 EOG Service Agreement Cap Adjustment 0 (1,186,000)
----------- ----------
TOTAL $50,107,557 $5,309,604 **
=========== ==========
* May vary as new costs centers are created.
** The calculated 1997 amount based on the 1/94 Enron/EOG Service agreement is
$8.1mm.
76
EXHIBIT J
AMENDMENT TO STOCK RESTRICTION AND REGISTRATION AGREEMENT
This amendment (this "Amendment") to the Stock Restriction and
Registration Agreement dated as of August 23, 1989 (the "Agreement") is dated
as of December 9, 1997, and is entered into by Enron Oil & Gas Company, a
Delaware corporation (the "Company"), and Enron Corp., an Oregon corporation
(the "Holder").
WHEREAS, Section 7 of the Agreement provides that the Company will be
obligated to pay Registration Expenses, defined in the Agreement to include
generally all expenses incident to the performance by the Company of its
obligations under the Agreement; and
WHEREAS, the Company and the Holder desire to provide that the Holder will
be obligated to pay the expenses incident to the performance by the Company of
its obligations under the Agreement, with certain specified exceptions;
NOW, THEREFORE, in consideration of the agreements herein and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agree that the Agreement is hereby amended as
follows:
1. AMENDMENT TO SECTION 7. Section 7 of the Agreement is hereby amended to
read as follows:
7. Registration Expenses. All Registration Expenses (as defined
herein) will be borne by the selling Holders in proportion to the
number of shares registered.
As used herein, the term Registration Expenses means (a)
underwriting discounts and commissions applicable to the sale of
Restricted Stock, fees and expenses of any legal counsel, accountants
or other agents retained by any selling Holder and all other
out-of-pocket expenses incurred by any selling Holder in connection
with any registration under this Agreement and (b) all out-of-pocket
expenses incident to the Company's performance of or compliance with
this Agreement (whether or not the registration in connection with
which such expenses are incurred ultimately becomes effective),
including without limitation all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Restricted Stock), rating agency fees,
printing expenses, messenger and delivery expenses incurred by the
Company, the fees and expenses incurred in connection with the listing
of the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed, and
fees and disbursements of counsel for the Company and its independent
certified public accountants (including the expenses of any special
audit or comfort letters required by or incident to such performance),
securities acts liability insurance (if the Company elects to obtain
such insurance), the reasonable fees and expenses of any special
experts retained by the Company in connection with such registration
and the fees and expenses of other persons retained by the Company.
The term Registration Expenses shall not include any portion of
expenses that would have been incurred by the Company in the absence
of registration, such as depreciation or rent or other charges for use
of Company property, and such term shall not include any portion of
the Company's internal expenses, such as salaries
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77
and expenses of its officers and employees performing drafting, due
diligence, legal or accounting duties.
2. CERTAIN DEFINED TERMS. Capitalized terms used but not defined herein
are used as defined in the Agreement.
3. GOVERNING LAW. This Amendment will be governed by and construed in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, this Amendment has been executed as of the date first
written above.
ENRON OIL & GAS COMPANY
By: /s/ FORREST E. HOGLUND
------------------------
Name: Forrest E. Hoglund
Title: Chairman of the Board and
Chief Executive Officer
ENRON CORP.
By: /s/ J. CLIFFORD BAXTER
------------------------
Name: J. Clifford Baxter
Title: Senior Vice President,
Corporate Development
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