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EXHIBIT 10.4
CLOSING AGREEMENT
THIS CLOSING AGREEMENT (this "Agreement") is made and entered into as
of May 18, 2000, by and among XXXXXX MINERAL GROUP, INC., an Oklahoma
corporation ("BMG"), UNITED STATES EXPLORATION, INC., a Colorado corporation
("UXP"), and PRODUCERS SERVICE INCORPORATED, a Kansas corporation which is
wholly-owed by UXP ("PSI"), all with an office at 0000 Xxxxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxx 00000, and HS RESOURCES, INC., a Delaware corporation with an
office at 0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 ("HSR"). BMG, UXP,
PSI and HSR are individually referred to herein as a "Party" and collectively
referred to herein as the "Parties."
Recitals
A. ING (U.S.) Capital LLC ("ING") (as successor in interest by merger
with ING (U.S.) Capital Corporation) and UXP are parties to a loan arrangement
(the "Loan") as evidenced by the loan documents identified on Exhibit A attached
hereto (the "Loan Documents"). PSI guaranteed certain of UXP's obligations under
the Loan Documents. Various of the defined terms used in this Agreement are
defined in Exhibit A.
B. In exchange for certain option payments which have been timely made
(the "Option Payments"), ING has granted UXP (or its designee) an option to
purchase the Loan and Note for a total of $17,000,000.00, less the Option
Payments, pursuant to an Agreement dated April 14, 2000 between ING, UXP and PSI
(the "Option Agreement").
C. HSR desires to purchase certain oil and gas properties and interests
in 60 xxxxx located in the Denver-Julesburg Basin (of which 56 are operated by
HSR) from UXP (the "Properties," as so defined in the Purchase Agreement, and
including all existing burdens thereon as of May 1, 2000 other than those
arising pursuant to the Loan Documents), as evidenced by a Purchase and Sale
Agreement between them of date even herewith (the "Purchase Agreement") which
will be executed concurrent with this Agreement. The Purchase Agreement requires
that the Properties be conveyed to HSR free and clear of the Loan, Note,
Mortgage and Financing Statements.
D. UXP has notified ING that BMG will be UXP's "Permitted Designee"
under the Option Agreement. As designee of UXP, BMG intends to purchase the Loan
and Note from ING.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged, the Parties agree as follows:
Agreement
1. Conditions under the Option Agreement. UXP represents and warrants
that (i) the Loan Documents identified on Exhibit A constitute all of the
agreements, security instruments
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and filings associated with the Loan, (ii) the Option Agreement was properly
authorized and approved by UXP, is in full force and effect, is valid and
binding upon UXP, and does not conflict with any of the agreements binding upon
UXP, (iii) the Option Payments have been timely and properly made to ING under
the Option Agreement, (iv) except for payment of the "Final Payment" under the
Option Agreement which is being made contemporaneous with the payment of the
"Closing Amount' by HSR under the Purchase Agreement, all other conditions
precedent to the obligations of ING as "Agent" and "Lender" under the Option
Agreement are contemporaneously being timely and properly satisfied, and (v) UXP
has notified ING that BMG is UXP's "Permitted Designee" under the Option
Agreement.
2. No Impediments. UXP represents and warrants that except for the Loan
Documents and except for "Permitted Encumbrances" under the Purchase Agreement,
there are no dispositions, liens, encumbrances or security interests affecting
the Properties which have been created by, through or under UXP. BMG represents
and warrants that (i) except for the liens created by the Loan Documents and
except for "Permitted Encumbrances" under the Purchase Agreement, there are no
other liens, encumbrances or security interests affecting the Properties which
have been created by, through or under BMG, and (ii) it has not assigned, has
not entered into any agreement to assign, and will not assign any interest under
the Loan Documents to the extent they relate to the Properties, to anyone other
than HSR. Each of UXP and BMG severally represents that to its knowledge (i)
there are no judicial actions, orders or filings that would result in HSR not
receiving "Defensible Title" to the Properties pursuant to the Purchase
Agreement, or that contemplate the bankruptcy, reorganization, or arrangement of
UXP or BMG, and (ii) subsequent to the Option Agreement, there have been no
claims or notices from ING relating to the Properties under the Loan Documents
or relating to the Option Agreement that could prevent the transactions
contemplated by the Purchase Agreement, the Option Agreement or this Agreement
from being consummated as contemplated herein. The failure of any one or more of
the facts underlying any of the foregoing representations or warranties to be
true shall constitute an "Impediment" if such failure occurs prior to the time
all of the documents referred to in Section 4 below have been recorded in
accordance with Section 4.
3. Conditions Precedent. The closing of the transactions contemplated
by this Agreement and the Purchase Agreement are subject to the satisfaction of
the following conditions precedent, each of which will be deemed to occur if and
only if all occur simultaneously:
(a) Satisfaction of terms of Purchase Agreement. UXP and HSR shall
have executed and delivered to each other the Purchase Agreement, HSR shall have
delivered the "Closing Amount" due under the Purchase Agreement to UXP (or its
designee), and UXP shall have executed and delivered to HSR the assignment(s) of
the Properties, all in accordance with the terms of the Purchase Agreement.
(b) Transfer of Loan and Note. ING shall have transfered and
delivered, and BMG shall have received, the Note, all of the rights of ING under
the Loan, and assignments of the Mortgage and the Financing Statements. The
assignments to BMG shall be valid and binding.
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(c) Partial Release of Mortgage and Financing Statements. BMG shall
have executed and delivered to HSR a partial release of the Mortgage and the
Financing Statements as to all of the Properties which are the subject of the
Purchase Agreement, and to all personal property associated therewith, including
production therefrom. The releases shall be valid and binding.
(d) No Litigation, Filings in Foreclosure or Bankruptcy. There shall
be (i) no pending or threatened litigation involving the Purchase Agreement, the
Option Agreement or the transactions contemplated thereunder, and (ii) no
filings at any court of competent jurisdiction regarding any action against UXP
or BMG in foreclosure, bankruptcy, reorganization or arrangement.
4. Recording. Upon receipt by HSR of the assignments from ING to BMG of
the Mortgage and the Financing Statements, and of the partial releases from BMG
of the Mortgage and the Financing Statements with respect to the Properties, HSR
will or will cause others to promptly, within 2 business days after the closing
contemplated by this Agreement, record the following documents in the following
order in the real property and UCC records of Weld County, Colorado, and with
the Colorado Secretary of State, as appropriate:
(a) the assignments of the Mortgage and the Financing Statements
from ING to BMG;
(b) the partial releases of the Mortgage and the Financing
Statements from BMG insofar as they pertain to the Properties;
and
(c) the assignment(s) of the Properties from UXP to XXX.
0. Covenants and Indemnifications Regarding Impediments. Each Party
hereby individually covenants that it will take no action that could cause an
Impediment to occur, and if an Impediment does occur which relates to such Party
or its interests in the Properties or the Loan Documents, that Party will use
its best efforts to remove, extinguish or release the Impediment. UXP agrees to
defend, indemnify and hold HSR harmless against any claim or action, or any
loss, relating to or arising from any Impediment that arises by, through or
under UXP. BMG agrees to defend, indemnify and hold HSR harmless against any
claim or action, or any loss, relating to or arising from any Impediment that
arises by, through or under BMG. HSR shall not have any claim under this
Agreement unless it has made payment of the "Closing Amount" under the Purchase
Agreement. BMG agrees to execute and deliver to HSR any additional documents or
instruments as may be necessary or reasonably requested by HSR to release and
terminate any lien held or acquired by BMG from ING in the Properties as defined
in the Purchase Agreement or as such Properties and the description thereof may
be clarified, corrected or amended in the future.
6. Miscellaneous.
(a) This Agreement shall be binding on and inure to the benefit of
each of the Parties and their respective successors and assigns. No Party may
assign its rights or duties
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under this Agreement without the prior written consent of the other Parties, and
any attempted assignment without such consent shall be void.
(b) The Parties shall be expressly entitled to the equitable remedy
of specific performance under this Agreement, in addition to any other remedies
available to the Parties at law or in equity.
(c) This Agreement shall be governed by and construed in accordance
with the law of the State of Colorado, without regard to its conflict of laws
principles.
(d) This Agreement may be executed in any number of counterparts,
and after execution hereof by all Parties, all executed copies taken together
shall constitute one and the same instrument and each of which shall be
considered an original for all purposes.
(e) This Agreement is additive and additional to the obligations of
UXP under the Purchase Agreement, and shall not be construed in any manner as
conflicting with the obligations of UXP under the Purchase Agreement.
(f) The Parties agree that, prior to making any public announcement
or statement with respect to the transactions contemplated under and consummated
by this Agreement, the party desiring to make such public announcement or
statement shall consult with the other Parties hereto.
(g) The respective representations, warranties, covenants and
agreements set forth in this Agreement shall survive the execution and delivery
of this Agreement and shall not be merged with any instrument or agreement
hereafter executed or delivered.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the day and year first written above.
XXXXXX MINERAL GROUP, INC. UNITED STATES EXPLORATION, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: President Title: President and Chief Executive
Officer
PRODUCERS SERVICE INCORPORATED HS RESOURCES, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxx Name: Xxxx X. Xxxxxxxx
Title: President Title: Vice President
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EXHIBIT A
LOAN DOCUMENTS
1. Credit Agreement dated as of May 15, 1998 (as amended, supplemented, or
restated to the date hereof) between UXP and ING.
2. Promissory Note executed by UXP in the principal amount of $35,000,000 dated
as of May 15, 1998 (the "Note")
3. Guaranty dated as of May 15, 1998 (as amended, supplemented, or restated to
the date hereof) by Producers Service Incorporated.
4. Pledge Agreement dated as of May 15, 1998 (as amended, supplemented, or
restated to the date hereof) between UXP and ING and recorded May 20, 1998 in
the Colorado Secretary of State records at Reception No. 19982033163.
5. Mortgage, Assignment, Security Agreement, Fixture Filing and Financing
Statement dated May 15, 1998 (as amended, supplemented, or restated to the date
hereof) between UXP and ING, and recorded in various locations, including but
not limited to the recording on May 22, 1998 at Reception No. 2614717 of the
real property records of Weld County, Colorado (the "Mortgage").
6. Various Financing Statements from UXP to ING and filed in various locations
including but not limited to the filings on May 22, 1998 at Reception Nos.
2614718, 2614719 and 2614720 of the real property records, and at Filing Nos.
274720, 274721 and 274722 of the Uniform Commercial Code ("UCC") records of Weld
County, Colorado, and recorded May 20, 1998 in the Colorado Secretary of State
records at Reception No. 19982033164 (collectively, the "Financing Statements").
7. Agreement dated as of April 14, 2000 (as amended, supplemented, or restated
to the date hereof) between ING, UXP and Producers Service Incorporated.
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