INVESTMENT REPRESENTATION AGREEMENT
Delta Petroleum Corporation
X/X 000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Gentlemen:
1. Subscription. The Undersigned, EVERGREEN RESOURCES,
INC. ("Evergreen" or "Undersigned") and its designees, hereby
agrees to acquire from Delta Petroleum Corporation ("Delta" or
the "Company") 116,667 shares of the restricted and legended
common stock of Delta (collectively the "Securities") for an
aggregate of $350,000 in a private negotiated transaction
pursuant to Section 3(b) and/or 4(2) of the Act (and the
regulations promulgated thereunder) and/or other applicable
statute, rule and\or regulation. Closing, including delivery of
the Securities and payment therefore, shall take place as of
January 3, 2001.
2. Representations and Warranties. The Undersigned
warrants and represents to the Company that:
a. The Securities are being acquired by the
Undersigned for investment for its own account, and not with a
view to the offer or sale in connection therewith, or the
distribution thereof, and that the Undersigned is not now, and
will not in the future, participate, directly or indirectly, in
an underwriting of any such undertaking except in compliance with
applicable registration provisions of the Act.
b. The Undersigned will not take, or cause to be
taken, any action that would cause it to be deemed an underwriter
of the Securities, as defined in Section 2(11) of the Securities
Act of 1933, as amended (the "Act").
c. The Undersigned has been afforded an opportunity
to examine such documents and obtain such information concerning
the Company as it may have requested, including without
limitation all publicly available information, and has had the
opportunity to request such other information (and all
information so requested has been provided) for the purpose of
verifying the information furnished to it and for the purpose of
answering any question it may have had concerning the business
affairs of the Company and it has reviewed to the extent desired
by it the Articles, Bylaws and Minutes of the Company,
documentation concerning the Company's financial condition,
assets, liabilities, share ownership and capital structure,
operations, sales, management, public market, public filings,
litigation and other material contracts and matters.
d. The Undersigned (and its officers, directors and/or
agents, as applicable) have had an opportunity to personally ask
questions of, and receive answers from, one or more of the
officers and directors of the Company and/or the attorneys for
the Company to ascertain and verify the accuracy and completeness
of all material information regarding the Company, its business
and its officers, directors, and promoters. The Undersigned has
had an opportunity to ask questions of and receive answers from
duly designated representatives of the Company concerning the
terms and conditions pursuant to which the Securities are being
acquired by it.
e. The Undersigned understands that its acquisition of the
Securities from the Company is a negotiated private transaction.
f. By reason of the knowledge and experience of the
Undersigned (and that of its officers and directors and their
respective advisors and investment bankers) in financial and
business matters in general, and investments in particular, it is
capable of evaluating the merits and risks of an investment in
the Securities.
g. The Undersigned is capable of bearing the economic
risks of an investment in the Securities.
h. The Undersigned's present financial condition is such
that it is under no present or contemplated future need to
dispose of any portion of the Securities to satisfy any existing
or contemplated undertaking, need or indebtedness.
i. If required to do so, it has retained to advise it, as
to the merits and risks of a prospective investment in the
Securities, a purchaser representative, legal counsel, financial
and accounting advisors, investment bankers, etc.
j. The Undersigned hereby represents and warrants to the
Company that all of the representations, warranties and
acknowledgements contained in this agreement, and the agreements,
if any, to which this document is attached as an exhibit are
true, accurate and complete as of the date herein and
acknowledges that the Company, its officers, directors, agents,
and affiliates have relied on its representations and warranties
herein in consenting to the restricted issuance and/or transfer
of the Securities and the Undersigned hereby agrees to indemnify
and hold the Company (together with its officers, directors,
agents and affiliates) harmless with respect to any and all
expenses, claims or litigation (including without limitation
reasonable attorney's fees related thereto) arising from or
related to breach of this agreement including without limitation
breach of any warranty or representation herein.
3. Restrictions. The Undersigned acknowledges and
understands that the Securities are unregistered and must be held
indefinitely by the Undersigned and/or its assignees unless they
are subsequently registered under the Act or an exemption from
such registration is available. The Undersigned further
acknowledges that it is fully aware of the applicable limitations
on the resale of the Securities. For instance, Rule 144 (the
"Rule") permits sales of "Restricted Securities" held for not
less than two years and upon compliance with the requirements of
such Rule. Further, the Securities must be sold in an active
market and appropriate information relating to the Company must
be generally available in order to effectuate a transaction
pursuant to the Rule by an affiliate of the Company. Any and all
certificates representing the Securities and any and all
securities issued in replacement or conversion thereof or in
exchange thereof shall bear the following legend, or one
substantially similar thereto, which the Undersigned has read and
understands:
The Securities represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act") and
are "restricted securities" as that term is defined in Rule
144 under the Act. The Securities may not be offered for
sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act or pursuant
to an exemption from registration under the Act, the
availability of which is to be established to the
satisfaction of the Company.
4. Registration Rights. Subject to the approval of an
underwriter, if any, involved in a registration relating to a
public offering of the Company's securities, in the event that
the Company shall file a registration statement (or similar
document) with the U.S. Securities & Exchange Commission on a
form which would legally allow inclusion of the shares issued
pursuant hereto, the Company shall include such shares in such
registration statement, at the Company's sole cost.
5. Successors and Assigns. This agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and to the successors and assigns of the Company and to the
personal and legal representatives, heirs, guardians, successors
and permitted assignees of the Undersigned.
6. Applicable Law. This agreement shall be governed by
and construed in accordance with the laws of the State of
Colorado and, to the extent it involves any United States
statute, in accordance with the laws of the United States, and
jurisdiction and venue for any dispute related hereto shall be in
the District Court for the City and County of Denver, Colorado.
EVERGREEN RESOURCES, INC.
Evergreen Resources, Inc. By: s/Xxxx X. Xxxxxx
Typed or Printed Name Signature Xxxx X. Xxxxxx
President/CEO
00-0000000 0000 00xx Xxxxxx, Xxxxx 0000
Social Security or Tax Address
Identification Number
Xxxxxx, Xxxxxxxx 00000
City, State and Zip Code
ACCEPTED:
DELTA PETROLEUM CORPORATION
By: s/Xxxxxx X. Xxxxxx, Xx.
Dated: January 3, 2001
OPTION
Effective January 3, 2001 for good and valuable
consideration the receipt of which is hereby acknowledged,
Evergreen Resources, Inc. ("Evergreen") is hereby granted an
option ("Option"), until September 30, 2001 to acquire 50% of
those property interests owned by Delta Petroleum Corporation
("Delta") which are listed on the attached Exhibit A (the
"Properties") by transferring to Delta the 116,667 shares
purchased by Evergreen under an Investment Representation
Agreement of even date herewith. Delta will warrant and defend
title against all persons claiming title thereto through Delta.
In the event that Evergreen exercises its option to acquire the
Properties, Delta will assign 50% of its interest in the
Properties to Evergreen subject to its proportionate share of the
reserved production payment in favor of Xxxxxxxx X. Xxxx ("Xxxx")
described in the copies of the documents attached hereto and
listed below (the "Documents").
The Documents provide for the reservation of an undivided
three percent (3%) of substances produced from the Properties
("Production Payment") until an aggregate amount of $8,000,000
(or a reduced amount as provided in the Documents under certain
circumstances) has been paid to Xxxx or his successors either
from any production attributable to the reserved 3% or the
minimum annual advanced payment ("Minimum Payment") discussed
below. The Documents further provide that, irrespective of
whether the Properties are producing or non-producing at any
time, that Xxxx shall be paid a Minimum Payment in the amount of
$350,000 per year. This Minimum Payment may be composed of the
proceeds from the production of the reserved 3%, a direct cash
payment or a combination thereof. Upon exercise of its option,
Evergreen will assume and agree to pay the direct cash portion of
the Minimum Payment under the terms set forth in the Documents
until the production proceeds from the reserved 3% from 100% of
the Properties are adequate to cover the Minimum Payment. It is
provided, however, that Evergreen shall be responsible only for
payment of the cash portion of the Minimum Payment with respect
to the Properties and that the reserved Production Payment
derived from the reservation of an undivided three percent (3%)
of substances produced from the Properties shall burden and be
paid from 100% of the substances produced from the Properties
equally and proportionately regardless of ownership.
Delta represents that it has paid $1,900,000 to date in
Minimum Payments, thereby correspondingly reducing the maximum
aggregate amount due under the Production Payment from $8,000,000
to $6,100,000. Each successive payment shall further reduce the
remaining amount due under the Production Payment.
The following Document copies are attached hereto:
* Lease interests Purchase Option Agreement between Delta
and Xxxx;
* Purchase and Sale Agreement between Delta and Xxxx;
* Assignments from Xxxx to Delta for interests in OCS-
P409, OCS-P0415,
XXX-X-0000, XXX-X0000, OCS-P0422, OCS-P0460, OCS-P0462,
and OCS-P464;
In the event Evergreen exercises its Option, the parties will
enter into agreements and assignments in the format of those
included in the attached Documents.
Until September 30, 2001, or the exercise of the Option,
whichever occurs first, Delta agrees: 1) that it will pay all
costs associated with or derived from the ownership of the
Properties, including payments to Xxxx as provided in the
attached Documents; 2) that it will not otherwise encumber the
Properties or allow the Properties to be encumbered in any
fashion through operation of law or otherwise except as is
already provided in the attached documents in favor of Xxxx and
his successors.
In the event of any failure by Delta to pay costs associated
with or derived from the ownership of the Properties or in the
event of the placement of any encumbrance upon the Properties,
Delta will notify Evergreen in writing within three business days
of such event. Upon such notification, Evergreen shall have the
option, but not the obligation, to pay such unpaid cost(s) or to
pay the funds necessary to prevent or remove any such
encumbrance. If Evergreen advances funds to Delta or directly to
others for such purposes, Delta will execute a twelve month
promissory note in an amount equal to the funds advanced with
interest at ten percent (10%) per annum in favor of Evergreen and
the Properties shall secure the repayment thereof under
documentation customary in such transactions.
Dated: January 3, 2001
DELTA PETROLEUM CORPORATION
s/Xxxxxx X. Xxxxxx, Xx.
Authorized Officer,
Xxxxxx X. Xxxxxx, Xx.
CEO/Chairman
EVERGREEN RESOURCES, INC.
s/Xxxx X. Xxxxxx
Authorized Officer,
Xxxx X. Xxxxxx,
President, CEO
AGGREGATE LIST OF OIL & GAS LEASES
SUBJECT TO RESERVED PRODUCTION PAYMENTS
1. San Xxxxxx Field
OCS-P 0409: Oil and Gas Lease from the United States of America,
as Lessor, to Oxy Petroleum, Inc., et al, as Lessee, effective
July 1, 1981, designated Serial No. OCS-P 0409 and covering all
of Block 22, OCS Official Protraction Diagram NI 10-6, Santa
Xxxxx (Tract 53-182).
Leasehold Interest: 12.67169%
2. Point Xxx Unit
OCS-P 0415: Oil and Gas Lease from the United States of America,
as Lessor, to Xxxx Petroleum Inc., et al., as Lessee, effective
July 1, 1981 designated Serial No. OCS-P 0415, and covering all
of Block 66, OCS Official Protraction Diagram, NI 10-6, Santa
Xxxxx.
Leasehold Interest: 1.88682%
OCS-P 0416: Oil and Gas Lease from the United States of America,
as Lessor, to Xxxx Petroleum Inc., et al., as Lessee, effective
July 1, 1981 designated Serial No. OCS-P 0416, and covering all
of Block 67, OCS Official Protraction Diagram, NI 10-6, Santa
Xxxxx.
Leasehold Interest: 3.03049%
OCS-P 0421: Oil and Gas Lease from the United States of America,
as Lessor, to Xxxx Petroleum Inc., et al., as Lessee, effective
July 1, 1981 designated Serial No. OCS-P 0421, and covering all
of Block 110, OCS Official Protraction Diagram, NI 10-6, Santa
Xxxxx.
Leasehold Interest: 1.88682%
OCS-P 0422: Oil and Gas Lease from the United States of America,
as Lessor, to Xxxx Petroleum Inc., et al., as Lessee, effective
July 1, 1981 designated Serial No. OCS-P 0422, and covering all
of Block 111, OCS Official Protraction Diagram, NI 10-6, Santa
Xxxxx.
Leasehold Interest: 4.50000%
5. Gato Canyon Unit
OCS-P 0460: Oil and Gas Lease from the United States of America,
as Lessor, to Atlantic Richfield Company, as Lessee, effective
August 1, 1982, designated Serial No. OCS-P 046O, and covering
all of Block 53N 72W, that portion seaward of the Three
Geographical Mile Line, Channel Islands Area, OCS Leasing Map No.
6A.
Leasehold Interest: 1.52930%
OCS-P 0462: Oil and Gas Lease from the United States of America,
as Lessor, to Xxxx Petroleum Inc., et al., as Lessee, effective
August 1, 1982, designated Serial No. OCS-P 0462, and covering
all of Xxxxx 00X 00X, Xxxxxxx Xxxxxxx Xxxx, XXX Leasing Map No.
6A.
Leasehold Interest: 1.52930%
OCS-P 0464: Oil and Gas Lease from the United States of America,
as Lessor, to Atlantic Richfield Company, as Lessee, effective
August 1, 1982, designated Serial No. OCS-P 0464, and covering
all of Block 53N 71W, that portion seaward of the Three
Geographical Mile Line, Channel Islands Area, OCS Leasing Map No.
6B.
Leasehold Interest: 1.52930%
