EXHIBIT 10.9
EXECUTION COPY
MASTER ASSIGNMENT AND ASSUMPTION AGREEMENT
This MASTER ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement") is
entered into effective as of May 22, 2001, by and among ECIC CORPORATION, a
Texas corporation ("ECIC"), ENCAP ENERGY CAPITAL FUND III, L.P., a Texas limited
partnership ("Fund III"), ENCAP ENERGY ACQUISITION III-B, INC., a Texas
corporation ("Acquisition"), BOCP ENERGY PARTNERS, L.P., a Texas limited
partnership ("BOCP"), and PEL-TEX PARTNERS L.L.C., a Delaware limited liability
company ("Pel-Tex"). ECIC, Fund III, Acquisition, and BOCP are referred to
herein individually as an "EnCap Party" and collectively as the "EnCap Parties."
The EnCap Parties and Pel-Tex are referred to herein individually as a "Party"
and collectively as the "Parties."
WITNESSETH:
WHEREAS, the Parties, 3TEC Energy Corporation, a Delaware corporation
("3TEC"), 3TM Acquisition L.L.C., a Delaware limited liability company, and
Magellan Exploration, LLC, a Delaware limited liability company ("Magellan"),
entered into that certain Agreement and Plan of Merger dated December 21, 1999,
as amended on January 14, 2000, and February 2, 2000 (the "Merger Agreement");
WHEREAS, subsequent to the date of the Merger Agreement, 3TEC became
the successor to all of the assets and liabilities of Magellan;
WHEREAS, pursuant to Section 12.4 of the Merger Agreement, the Parties
agreed to certain indemnification obligations as set forth in such section;
WHEREAS, Pel-Tex is the owner of 45,702 Warrants (the "3TEC Warrants"),
each such Warrant evidencing the right to purchase one share of Common Stock of
3TEC, in connection with the transactions set forth in the Merger Agreement;
WHEREAS, Pel-Tex holds certain rights and interests pursuant to that
certain Agreement to Convey Working Interest upon Project Payout, dated
effective February 3, 2000, by and between Magellan, the EnCap Parties, and
Pel-Tex (such agreement is referred to herein as the "Back-In Agreement"), and
Pel-Tex's rights, title and interests in and to such Agreement are referred to
herein as the "Back-In Interests");
WHEREAS, in exchange for the transfer by Pel-Tex to the EnCap Parties
of the 3TEC Warrants and the Back-In Interests, the EnCap Parties desire to
assume Pel-Tex's indemnification obligations pursuant to Section 12.4 of the
Merger Agreement, and Pel-Tex desires to transfer the
3TEC Warrants and Back-In Interests to the EnCap Parties in consideration of the
EnCap Parties' assumption of Pel-Tex's indemnification obligations pursuant to
Section 12.4 of the Merger Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and intending to be legally bound hereby, the
Parties hereto agree as follows:
Section 1. Definitions. Unless otherwise defined in this Agreement, all
terms contained herein shall have the same definitions as that in the Merger
Agreement.
Section 2. Assumption of Liabilities. Subject to the terms of this
Agreement, and in consideration for the assignment, sale and transfer of the
3TEC Warrants and the Back-In Interests, the EnCap Parties hereby expressly
assume, and shall be responsible for and perform and discharge when due,
severally, but not jointly, on a pro rata basis (determined, other than the
indemnification obligations described in Section 12.4(b) of the Merger
Agreement, by reference to and in accordance with the respective Prepayout
Interests of the EnCap Parties as set forth in Exhibit A to the Merger
Agreement, which is hereby replaced as provided below) any and all of the
indemnification obligations and associated liabilities of Pel-Tex as described
in Section 12.4 of the Merger Agreement in accordance with the terms of the
various indemnification obligations set forth in such Section 12.4 whether
heretofore or hereafter accrued or existing (the "Assumed Indemnification
Obligations"). As a result of the assumption by the EnCap Parties of the Assumed
Indemnification Obligations, effective as of the date of this Agreement, Pel-Tex
will not have any obligations or liabilities to indemnify and hold harmless
3TEC, Magellan or any other party or any successors or assigns thereof or any of
their shareholders, directors, officers, employees, agents, successors and
assigns from any and all liabilities, losses, damages, costs and expenses of any
kind as described in Section 12.4 of the Merger Agreement. Pel-Tex does hereby
assign, sell, transfer, and convey to the EnCap Parties on a pro rata basis
(determined in accordance with the Prepayout Interests of the EnCap Parties as
set forth in the Merger Agreement) all of Pel-Tex's rights associated with the
Assumed Indemnification Obligations pursuant to Section 12.4 of the Merger
Agreement. In connection with the assignment and assumption of the Assumed
Indemnification Obligations and the associated rights pursuant to Section 12.4
of the Merger Agreement, the Parties hereby agree that Exhibit A to the Merger
Agreement shall be deleted in its entirety and replaced with Exhibit A attached
hereto.
Section 3. Consideration for Assumption. As consideration for the
assumption by the EnCap Parties of the indemnification obligations as set forth
in Section 2 hereof, Pel-Tex does hereby assign, sell, transfer and convey to
the EnCap Parties on a pro rata basis (determined in accordance with the
Prepayout Interests of the EnCap Parties as set forth in the Merger Agreement)
the 3TEC Warrants and the ownership interests as described in paragraphs 3(a)
and (b) below (the "Assigned Interests"):
(a) The 3TEC Warrants as evidenced by that certain Warrant
Certificate No. W-10 issued by 3TEC representing the 3TEC Warrants,
each warrant representing the right to purchase one share of common
stock of 3TEC at a price of $30.00 per share; the transfer and
assignment of the 3TEC Warrants shall be pursuant to the Assignment of
Warrant in the
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form attached hereto as Exhibit C, which Pel-Tex agrees to execute and
deliver to the EnCap Parties concurrent with the execution and delivery
of this Agreement; and
(b) All of Pel-Tex's rights, title and interest in and to the
Back-In Interests; the transfer and assignment of the Back-In Interests
shall be pursuant to the Assignment of Working Interest upon Project
Payout in the form attached hereto as Exhibit D, which Pel-Tex agrees
to execute and deliver to the EnCap Parties concurrent with the
execution and delivery of this Agreement.
Section 4. Representations and Warranties of Pel-Tex. Pel-Tex makes the
following representations and warranties to the EnCap Parties:
(a) To the best of Pel-Tex's knowledge, Pel-Tex does not know
of any pending or threatened demands, claims, litigation or proceedings
involving or pertaining to matters which would give rise to any
indemnification obligations of Pel-Tex pursuant to Section 12.4 of the
Merger Agreement;
(b) Except for the consent of 3TEC which must be obtained in
connection with the transactions set forth in this Agreement, the
execution, delivery and performance of this Agreement by Pel-Tex (i)
are within the power of Pel-Tex, (ii) have been duly authorized by all
necessary action on the part of Pel-Tex, (iii) require no action by or
in respect of, filing with, any governmental authority, (iv) do not
contravene, or constitute a default under, any provision of applicable
law, Pel-Tex's Charter Documents or any material judgment, injunction,
order, decree, or material agreement binding upon Pel-Tex or its assets
and (v) will not result in the creation or imposition of any Lien on
any assets of Pel-Tex;
(c) This Agreement constitutes the valid and binding agreement
of Pel-Tex, enforceable against it in accordance with the terms hereof,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally, and
(ii) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(d) Pel-Tex is the owner, beneficially and of record, of the
3TEC Warrants and the Back-In Interests, there are no outstanding
Liens, options, warrants or other rights to acquire affecting either
the 3TEC Warrants or the Back-In Interests, and Pel-Tex has the right,
without any restriction, except for the consent of 3TEC and Magellan as
required pursuant to the terms of the 3TEC Warrants and Back-In
Interests, to transfer the 3TEC Warrants and Back-In Interests to the
EnCap Parties as set forth herein.
Section 5. Representations and Warranties of the EnCap Parties. Each
EnCap Party severally (and not jointly) makes the following representations and
warranties to Pel-Tex:
(a) Except for the consent of 3TEC which must be obtained in
connection with the transactions set forth in this Agreement, the
execution, delivery and performance of this Agreement by such EnCap
Party (i) are within the powers of such EnCap Party, (ii) have
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been duly authorized by all necessary action on the part of such EnCap
Party, (iii) require no action by or in respect of, filing with, any
governmental authority, (iv) do not contravene, or constitute default
under, any provision of applicable law, the Charter Documents of such
EnCap Party or any material judgment, injunction, order, decree, or
material agreement binding upon such EnCap Party or its assets and, (v)
except for the transactions expressly set forth in this Agreement, will
not result in the creation or imposition of any Lien on any assets of
such EnCap Party;
(b) This Agreement constitutes the valid and binding agreement
of such EnCap Party, enforceable against it in accordance with the
terms hereof, except as (i) the enforceability thereof may be limited
by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally, and (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability; and
(c) The acquisition of the 3TEC Warrants by such EnCap Party
is for its own investment purposes and not with a view toward the
distribution thereof; that such EnCap Party acknowledges and agrees
that the 3TEC Warrants may not be transferred except pursuant to a
registration in accordance with securities laws of the United States
and all applicable states, or pursuant to an applicable exemption
therefrom.
Section 6. Further Assurances. Each Party hereto agrees to take such
actions and to execute and deliver such documents, agreements and certificates
as may be reasonably requested by any other Party hereto to carry out the
transactions as set forth herein, including, without limitation, the execution,
delivery, and filing of any assignments or other documents as necessary to
evidence the transfer of the 3TEC Warrants and Back-In Interests as set forth
herein.
Section 7. Expenses. Each Party shall be responsible for their own
expenses incurred in connection with the negotiation, execution and delivery of
this Agreement and the documents, agreements and certificates which are required
in connection with the consummation of the transactions as set forth herein.
Section 8. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered in the manner and
to the Parties at the addresses as set forth in the Merger Agreement.
Section 9. Counterparts. This Agreement may be executed in any number
of counterparts each of which will be deemed to be an original but all of which
shall be deemed one and the same document.
Section 10. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas,
without consideration to the conflict of laws principles thereof.
Section 11. Venue. Each Party hereby irrevocably submits to the
exclusive jurisdiction of the United States District Courts for Southern
District located in Houston, Xxxxxx County, Texas,
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and/or the State District Courts of the State of Texas located in Houston,
Xxxxxx County, Texas, in any action, suit or proceeding arising in connection
with this Agreement, and agrees that any such action, suit or proceeding shall
be brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein); provided, however, that
such consent to jurisdiction is solely for the purpose referred to in this
Section 11 and shall not be deemed to be a general submission to the
jurisdiction of said Courts or in the State of Texas other than for such
purpose.
Section 12. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors and
assigns. This Agreement may not be assigned by any Party hereto, without the
prior written consent of each other Party hereto. Any attempted assignment in
violation of the preceding sentence shall be null and void.
Section 13. Final Agreement. This Agreement represents the final
agreement between the Parties and may not be contradicted by evidence of prior
or contemporaneous agreements between the Parties. There are no unwritten or
oral agreements between the Parties.
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IN WITNESS WHEREOF, the Parties hereto have executed and delivered this
instrument as of the date first above written.
ECIC CORPORATION
By:
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D. Xxxxxx Xxxxxxxx, Vice President
ENCAP ENERGY CAPITAL FUND III, L.P.
By: EnCap Investments L.L.C., its
general partner
By:
-------------------------------------
D. Xxxxxx Xxxxxxxx, Senior Vice President
ENCAP ENERGY ACQUISITION III-B, INC.
By:
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D. Xxxxxx Xxxxxxxx, Vice President
BOCP ENERGY PARTNERS, L.P.
By: EnCap Investments L.L.C., Manager
By:
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D. Xxxxxx Xxxxxxxx, Senior Vice President
PEL-TEX PARTNERS L.L.C.
By: DLJ LBO PLANS MANAGEMENT CORPORATION,
Manager
By:
---------------------------------------
Xxxxxxx Xxxxxx, Director
By:
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Xxxxxx X. Xxxxxxxx, Xx., Manager
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EXHIBIT A
LIST OF PRE-PAYOUT MEMBERS
PRE-PAYOUT MEMBER SEVERAL SHARE(1) LIMIT(2)
--------------------------------------------------------------------------------------------------------------------
ECIC Corporation 15.000000% $2,887,500.03
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EnCap Energy Capital Fund III, L.P. 42.479001% $8,177,207.61
---------------------------------------------------- ------------------------------- -------------------------------
EnCap Energy Acquisition III-B, Inc. 32.126900% $6,184,428.26
---------------------------------------------------- ------------------------------- -------------------------------
BOCP Energy Partners, L.P. 10.394099% $2,000,864.10
---------------------------------------------------- ------------------------------- -------------------------------
TOTAL 100.000000% $19,250,000.00
---------------------------------------------------- ------------------------------- -------------------------------
(1) Represents each Pre-Payout Member's several share as referenced in
Section 12.4(e) of the Agreement.
(2) Represents the amount stipulated for each Pre-Payout Member as
referenced in Section 12.4(f)(iii) of the Agreement.
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EXHIBIT B
CONSENT AND RELEASE
By execution of this Consent and Release effective as of May 22, 2001,
the undersigned, 3TEC ENERGY CORPORATION, for itself and as successor to the
interests of MAGELLAN EXPLORATION, LLC, (i) acknowledges and evidences its
consent to the terms and conditions of the attached
Master Assignment and
Assumption Agreement (the "Master Assignment") dated effective as of May 22,
2001 by and among ECIC CORPORATION, a
Texas corporation ("ECIC"), ENCAP ENERGY
CAPITAL FUND III, L.P., a Texas limited partnership ("Fund III"), ENCAP ENERGY
ACQUISITION III-B, INC., a Texas corporation ("Acquisition"), BOCP ENERGY
PARTNERS, L.P., a Texas limited partnership ("BOCP"), and PEL-TEX PARTNERS
L.L.C., a Delaware limited liability company ("Pel-Tex") (ECIC, Fund III,
Acquisition, and BOCP are referred to herein individually as an "EnCap Party"
and collectively as the "EnCap Parties"), including, without limitation, the
assignment of the indemnification obligations described in Section 2 thereof and
the amendment of Exhibit A to the Merger Agreement (as defined therein); (ii) in
consideration of the EnCap Parties' assumption of the Assumed Indemnification
Obligations (as defined in the Master Assignment), hereby forever releases,
acquits and forever discharges Pel-Tex from any and all such liability and
obligations relating to Section 12.4 of the Merger Agreement (whether heretofore
or hereafter accrued or existing) or the Assumed Indemnification Obligations;
and (iii) acknowledges that its only recourse for indemnities and other
obligations under Section 12.4 of the Merger Agreement shall be against the
EnCap Parties in accordance with the Master Agreement. Further, the undersigned
hereby agrees to issue replacement warrants for Warrant Certificate No. W-10 in
connection with the transfer of such warrant as set forth in Section 3(a) of the
Master Agreement upon presentment of such warrant certificate and appropriate
documents for the transfer thereof.
In witness whereof, the undersigned has executed and delivered this
Consent and Release as of the date first above written.
3TEC ENERGY CORPORATION
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
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EXHIBIT C
WARRANT ASSIGNMENT
For Ten Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confirmed, value
received, PEL-TEX PARTNERS L.L.C., a Delaware limited liability company
("Assignor"), hereby sells, assigns and transfers those certain 45,702 Warrants
(each Warrant representing the right to purchase one share of Common Stock of
3TEC Energy Corporation (the "Company") at an exercise price of $30.00 per
share), which are represented by Warrant Certificate No. W-10, together with all
right, title and interest therein, unto the following parties (each an
"Assignee") in the number of Warrants set forth beside their names:
Assignee Number of Warrants
-------- ------------------
ECIC CORPORATION 6,855
ENCAP ENERGY CAPITAL FUND III, L.P. 19,414
ENCAP ENERGY ACQUISITION III-B, INC. 14,683
BOCP ENERGY PARTNERS, L.P. 4,750
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TOTAL 45,702
Assignor does hereby irrevocably constitute and appoint the Secretary of the
Company or such other officer of the Company that is duly authorized by the
Company to effect a transfer of the above-referenced Warrants as attorney for
the undersigned, to transfer said Warrants on the books of the Company, with
full power of substitution.
This Assignment is subject to the terms and provisions of that certain
Master
Assignment and Assumption Agreement dated effective May 22, 2001, by and between
Assignor and Assignees.
PEL-TEX PARTNERS L.L.C.
By: DLJ LBO PLANS MANAGEMENT CORPORATION,
Manager
By:
---------------------------------------
Xxxxxxx Xxxxxx, Director
By:
-------------------------------------------
Xxxxxx X. Xxxxxxxx, Xx., Manager
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Consented to as of May 22, 2001 by the undersigned.
3TEC ENERGY CORPORATION
By:
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Name:
-----------------------------------------
Title:
----------------------------------------
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EXHIBIT D
ASSIGNMENT OF BACK-IN INTEREST
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