EXHIBIT 99.1
CONSULTING AND NON-COMPETITION AGREEMENT
This CONSULTING AND NON-COMPETITION AGREEMENT (this "Agreement") is
entered into as of the 3rd day of May, 2004, between Dennis Carlton, an
individual (the "Consultant"), and Pioneer Natural Resources Company, a Delaware
corporation ("Parent").
RECITALS:
WHEREAS, contemporaneously herewith, Parent, Evergreen Resources, Inc.
a Colorado corporation ("Evergreen"), and BC Merger Sub, Inc., a Colorado
corporation ("Merger Sub"), are entering into an Agreement and Plan of Merger
that provides for the merger (the "Merger") of Merger Sub with and into
Evergreen (the "Merger Agreement");
WHEREAS, the Consultant is an executive officer of Evergreen and a
stockholder of Evergreen with special expertise in the oil and gas business and
knowledge of the Confidential Information to be acquired by Parent under the
Merger Agreement, and, as a result, the obligation of Parent and Merger Sub to
enter into the Merger Agreement is expressly conditioned upon the execution and
delivery of this Agreement by the Consultant;
WHEREAS, the Board of Directors of Parent has determined that it is in
the best interests of Parent to retain the Consultant on the terms and
conditions set forth herein effective as of the closing of the transactions
contemplated by the Merger Agreement (the "Closing"), and the Consultant has
agreed to serve as a consultant of Parent on the terms and conditions set forth
herein; and
WHEREAS, the Consultant has agreed to execute, deliver and perform its
obligations under this Agreement (i) in connection with the sale of Evergreen by
means of the Merger; (ii) to protect the goodwill and Confidential Information
to be acquired by Parent under the Merger Agreement; (iii) in connection with
the Parent's agreement to retain Consultant to provide consulting services to
Parent; and (iv) to induce Parent to enter into the Merger Agreement and
consummate the transactions contemplated thereby, pursuant to which the
Consultant will receive consideration for his Equity Interest in Evergreen and
in connection with which the Consultant will receive payments under the Change
in Control Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Defined Terms. When used in this Agreement, the following terms will
have the following meanings:
"Affiliate" means, with respect to any Person, each other
Person that directly or indirectly (through one or more intermediaries
or otherwise) controls, is controlled by, or is under common control
with such Person. The term "control" (including the terms "controlled
by" and "under common control with") means the possession, directly or
indirectly, of the actual power to direct or cause the direction of the
management policies of a Person, whether through the ownership of
stock, by contract, credit arrangement or otherwise;
"Evergreen Companies" means Evergreen and each of its
Subsidiaries;
"Evergreen Oil and Gas Interests" means all Oil and Gas
Interests in which any Evergreen Company has any ownership, working,
income and/or net profits interest (including without limitation fee or
leasehold interest);
"Business Enterprise" means any corporation, partnership,
limited liability company, sole proprietorship, joint venture, joint
stock company, bank, association, trust, trust company, land trust,
business trust or other business association or entity;
"Change in Control Agreement" means that certain Change in
Control Agreement dated as of March 1, 2002 between Evergreen and the
Consultant as amended to provide that the area with respect to which
the non-compete provisions apply is the Territory;
"Closing Date" means the date on which the Closing shall
occur;
"Competing Business" means any Oil and Gas Business on or with
respect to the Territory;
"Confidential Information" means all information relating to
the Evergreen Companies and/or the Evergreen Oil and Gas Interests,
including without limitation information relating to title matters,
environmental matters, financial statements and other financial
matters, the engineering reports reflecting the Evergreen Oil and Gas
Interests, estimates of reserves, quality of reserves, geological
matters, asset listings, production and operating costs, production
capabilities, marketing, tax, forecasts and projections, in whatever
form (whether documentary, computer storage or other), in all cases
pertaining to the Territory;
"Consulting Period" means a period from the Closing Date until
6 months after the Closing Date; provided that, at Parent's option,
such period may be extended by an additional 6 months;
"Derivative Information" means any notes, summaries,
evaluations, analyses and other material derived by the Restricted
Group from any of the Confidential Information;
"Equity Interest" means the equity ownership rights in a
Business Enterprise, whether in the form of capital stock, ownership
unit, limited liability company interest, limited or general
partnership interest or any other form of ownership, or any right,
option, warrant, convertible security or indebtedness or other
instrument enabling any Person to acquire any of the same;
"Hydrocarbons" means oil, condensate, gas, casinghead gas and
other liquid or gaseous hydrocarbons;
"Oil and Gas Business" means owning, managing, acquiring,
attempting to acquire, soliciting the acquisition of, operating,
controlling or developing Oil and Gas Interests or engaging in or being
connected with, as a principal, owner, officer, director, employee,
shareholder, promoter, consultant, contractor, partner, member, joint
venturer, agent, equity owner or in any other capacity whatsoever, any
of the foregoing activities or the oil and gas exploration and
production business;
"Oil and Gas Interests" means (a) direct and indirect
interests in and rights with respect to oil, gas, mineral and related
properties (including revenues therefrom) and assets of any kind and
nature, direct or indirect, including without limitation working,
royalty and overriding
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royalty interests, mineral interests, leasehold interests, production
payments, operating rights, net profits interests, other non-working
interests and non-operating interests; (b) interests in and rights with
respect to Hydrocarbons and other minerals or revenues therefrom and
contracts or agreements in connection therewith and claims and rights
thereto (including oil and gas leases, operating agreements,
unitization and pooling agreements and orders, division orders,
transfer orders, mineral deeds, royalty deeds, oil and gas sales,
exchange and processing contracts and agreements and, in each case,
interests thereunder), surface interests, fee interests, reversionary
interests, reservations and concessions; (c) easements, rights of way,
licenses, permits, leases, and other interests associated with,
appurtenant to, or necessary for the operation of any of the foregoing;
and (d) interests in equipment and machinery (including well equipment
and machinery), oil and gas production, gathering, transmission,
compression, treating, processing and storage facilities (including
tanks, tank batteries, pipelines and gathering systems), pumps, water
plants, electric plants, gasoline and gas processing plants, refineries
and other tangible personal property and fixtures associated with,
appurtenant to, or necessary for the operation of any of the foregoing,
regardless of location;
"Parent Companies" means Parent and each of its Subsidiaries,
including, after the Closing, the Evergreen Companies;
"Person" means any natural person, Business Enterprise or
governmental authority;
"Restricted Group" means the Consultant together with (a) each
member of the Consultant's immediate family that lives in his household
and (b) any Business Enterprise in which the Consultant, any one or
more members of the Consultant's immediate family or the Consultant and
one or more members of the Consultant's immediately family collectively
own or have the right to acquire an Equity Interest in excess of 5% or
otherwise have any right, through the ownership of a voting interest or
otherwise, to direct the activities of such Business Enterprise;
"Subsidiary" means, with respect to any party, any entity,
whether incorporated or unincorporated, of which at least a majority of
the securities or ownership interests having by their terms voting
power to elect a majority of the board of directors or other persons
performing similar functions is directly or indirectly owned or
controlled by such party or by one or more of its respective
Subsidiaries; and
"Territory" means the Raton Basin in southern Colorado.
2. Consideration. The Consultant has entered into this Agreement and made
the covenants hereinafter set forth (i) in connection with the sale of Evergreen
by means of the Merger; (ii) to protect the goodwill and Confidential
Information to be acquired by Parent under the Merger Agreement; (iii) in
connection with the Parent's agreement to retain Consultant to provide
consulting services to Parent; and (iv) to induce Parent to enter into the
Merger Agreement and consummate the transactions contemplated thereby, pursuant
to which the Consultant will receive consideration for his Equity Interest in
Evergreen and in connection with which the Consultant will receive payments
under the Change in Control Agreement.
3. Consulting Arrangement.
(a) Consulting Services. Parent hereby retains the Consultant
effective as of the Closing to render such consulting and advisory
services (the "Consulting Services") as Parent
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may reasonably request from time to time during the Consulting Period.
The Consultant hereby accepts such engagement and agrees to perform
such services for Parent upon the terms and conditions set forth in
this Agreement. Consultant shall perform the Consulting Services at
such times and places as an officer designated by Parent or the Board
of Directors of Parent shall from time to time reasonably request.
Consultant shall work on a full time basis during the Consulting
Period.
(b) Office Space. During the Consulting Period, Parent shall
provide the Consultant the use of office space and office equipment
including desk, computer, and telephone, solely to the extent that such
use is incurred by the Consultant in rendering the Consulting Services.
Any such use that is not incurred by the Consultant in rendering the
Consulting Services shall be prohibited
(c) Consulting Fee. As compensation for the Consulting
Services to be rendered by the Consultant, the Consultant shall receive
a consulting fee of $64,000.00 per calendar month during the Consulting
Period for Consulting Services provided to Parent hereunder (the
"Consulting Fee"), which shall be paid in accordance with the customary
payroll practices of Parent. During the initial 6 month period,
Consultant shall be paid such Consulting Fee regardless of Parent's
early termination of this Agreement. Any Consulting Fee payment payable
to Consultant hereunder in respect of any calendar month during which
the Consulting Period ends prior to the end of such calendar month
shall be prorated based on the ratio of the number of days in such
calendar month during which Consultant is retained as a consultant
hereunder to the number of days in such calendar month.
(d) Expense Reimbursement. The Consultant shall be entitled to
receive prompt reimbursement for all reasonable out of pocket expenses
incurred by the Consultant in rendering the Consulting Services during
the Consulting Period in accordance with the policies, practices and
procedures of Parent. Advance approval by Parent for expenses in excess
of $1000.00 per month during the Consulting Period shall be required.
Expenses subject to reimbursement shall include, but shall not be
limited to, travel, lodging, meals, and car rentals or taxi fares when
out of town, long distance telephone calls to or for Parent, facsimile
transmissions charges, and mailing expenses reasonably incurred by the
Consultant in rendering the Consulting Services. The Consultant shall
invoice Parent on a monthly basis for any such out of pocket expenses,
with reasonable supporting documentation of such expenses accompanying
each invoice, and any amounts owed by Parent shall be paid within 30
days after receipt of such invoices.
(e) Terms of Engagement. Notwithstanding anything in this
Agreement, the Consultant is an independent contractor with authority
to select the means and method of performing the Consulting Services.
The Consultant is not an employee or agent of Parent and any action
taken by the Consultant that is not authorized by this Agreement or any
other agreement between Parent and the Consultant will not bind or
create any claim against Parent. Unless otherwise specifically
authorized by this Agreement or any other agreement between Parent and
the Consultant, the Consultant has no authority to transact any
business or make any representations or promises in the name of Parent.
(f) Termination of Consulting Arrangement. Notwithstanding
anything in this Agreement, this Section 3 and the consulting
arrangement created by this Section 3 between Parent and the Consultant
(i) may be terminated prior to the expiration of the Consulting Period
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by Parent for any reason or no reason at all; (ii) shall terminate
automatically upon the death of the Consultant and (iii) shall
terminate automatically at the expiration of the Consulting Period
unless Parent shall exercise its option to extend such Consulting
Period. Termination of this consulting arrangement by Parent shall be
evidenced by a written notice given to the Consultant in accordance
with Section 8 hereof, which notice shall specify the termination date
(which date shall not be less than 30 days after such notice is given
to the Consultant). The Consultant may terminate the consulting
arrangement in the event of a breach by Parent of its obligations under
this Agreement that remains uncured 30 days after written notice
thereof is given to Parent in accordance with Section 8 hereof. Upon a
termination of the consulting arrangement set forth in this Section 3,
neither of the parties hereto shall have any further duty or obligation
under this Section 3; provided, however, that termination of the
consulting arrangement shall not affect the duties and obligations set
forth in the other sections of this Agreement.
4. Restriction on Activities.
(a) From the Closing Date through the first anniversary
thereof (the "Restricted Period"), no member of the Restricted Group
shall, without the prior written consent of Parent, directly or
indirectly:
(i) engage in, carry on or assist, individually or as
a principal, owner, officer, director, employee, shareholder,
promoter, consultant, contractor, partner, member, joint
venturer, agent, equity owner, lender or in any other capacity
whatsoever, directly or indirectly, any (A) Competing Business
or (B) Business Enterprise that is otherwise directly
competitive with any Parent Company or any Affiliate of any
Parent Company on or with respect to the Territory and which
derives more than 5% of its revenues from or has more than 5%
of its book value of assets located in the Territory;
(ii) perform for any Business Enterprise engaged in a
Competing Business any duty such member of the Restricted
Group performed for the Evergreen Companies or their
Affiliates that involved such member's access to, or knowledge
or application of, Confidential Information;
(iii) advise, request, induce or attempt to induce
any customer, supplier, licensee or other business relation of
any Parent Company or any Affiliate of any Parent Company to
curtail, limit or cease doing business with any Parent Company
or any Affiliate of any Parent Company, or in any way
interfere with the relationship between any such customer,
supplier, licensee or business relation and any Parent Company
or any Affiliate of any Parent Company;
(iv) other than for the benefit of Parent pursuant to
the Consultant's arrangement with Parent set forth in Section
3 hereof, individually or as a principal, owner, officer,
director, employee, shareholder, promoter, consultant,
contractor, partner, member, joint venturer, agent, equity
owner of more than 2% of the equity or in any other capacity
whatsoever with or in any Business Enterprise, own, acquire,
attempt to acquire or solicit the acquisition of (or assist
any person or Business Enterprise to own, acquire, attempt to
acquire or solicit the acquisition of) (A) any Oil and Gas
Interest on or with respect to the Territory or (B) any Equity
Interest in any Business Enterprise with any Oil and Gas
Interests on or with respect to the Territory and which
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derives more than 5% of its revenues from or has more than 5%
of its book value of assets located in the Territory;
(v) hire, attempt to hire or contact or solicit with
respect to hiring (A) any person who is an employee of any
Parent Company, or (B) any person who was an employee of any
Parent Company within 180 days after such person ceased to be
so employed; or
(vi) interfere with any of the Evergreen Oil and Gas
Interests or in any way attempt to do any of the foregoing or
assist any other Person to do or attempt to do any of the
foregoing.
(b) The Consultant, on behalf of the Restricted Group,
acknowledges that each of the covenants of Sections 4(a)(i) through
4(a)(vi) are in addition to, and shall not be construed as a limitation
upon, any other covenant provided in Section 4(a). The Consultant, on
behalf of the Restricted Group, agrees that the geographic boundaries,
scope of prohibited activities and time duration of each of the
covenants set forth in Sections 4(a)(i) through 4(a)(vi) are reasonable
in nature and are no broader than are necessary to protect the goodwill
and Confidential Information of the Evergreen Companies, the assets or
Equity Interests of which are being acquired by Parent indirectly
through the merger of Merger Sub with and into Evergreen], and to
protect the other legitimate business interests of the Evergreen
Companies, including without limitation any goodwill developed by the
Consultant with the Evergreen] Companies' customers, suppliers,
licensees and business partners.
(c) The parties hereto intend that the covenants contained in
each of Sections 4(a)(i) through 4(a)(vi) be construed as a series of
separate covenants, one for each county in the Territory. Except for
geographic coverage, each such separate covenant shall be deemed
identical in terms to the applicable covenant contained in Sections
4(a)(i) through 4(a)(vi). Furthermore, each of the covenants in
Sections 4(a)(i) through 4(a)(vi) hereof shall be deemed a separate and
independent covenant, each being enforceable irrespective of the
enforceability (with or without reformation) of the other covenants
contained in Sections 4(a)(i) through 4(a)(vi) hereof. The Restricted
Party admits, acknowledges, and agrees that the restrictions set forth
in this Section 4 are (i) made in connection with a contract for the
purchase and sale of a business as contemplated by C.R.S 8-2-113(2)(a)
and (ii) designed and intended to protect the Parent's trade secrets as
contemplated by C.R.S. 8-2-113(2)(b). As such, the Restricted Party and
the Parent agree that the restriction set forth in this Section 4 are
valid and enforceable pursuant to Colorado law.
5. Confidentiality. The Consultant hereby acknowledges that, during the
term of the Consultant's relationship with the Evergreen Companies, the
Restricted Group has developed and had access to Confidential Information and
Derivative Information. The Consultant hereby agrees as follows with respect to
all Confidential Information and Derivative Information:
(a) Upon the Closing, the Consultant will, and will cause each
member of the Restricted Group to, immediately deliver to Parent all
Confidential Information and Derivative Information in the possession
of the Restricted Group.
(b) During the Restricted Period, the Consultant will, and
will cause each member of the Restricted Group to, keep all
Confidential Information and Derivative Information
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strictly confidential and will not, and will cause each member of the
Restricted Group not to, use (other than in the performance of duties
for or on behalf of the Parent Companies) any of such data, information
or results or disclose any such data, information or results to any
Person unless otherwise required by law or regulation, and then only
after written notice to Parent of the Consultant's determination of the
need for disclosure.
(c) In the event that the Consultant or any member of the
Restricted Group becomes legally compelled to disclose any Confidential
Information and/or Derivative Information, the Consultant will provide
Parent with prompt notice so that Parent may seek a protective order or
other appropriate remedy and/or waive the Consultant's compliance with
the confidentiality and non-disclosure provisions of this Agreement,
and the Consultant will cooperate with Parent to obtain such protective
order or other remedy. In the event that such protective order or other
remedy is not obtained, the Restricted Group will furnish only that
portion of the Confidential Information and/or Derivative Information
which it is advised by counsel is legally required.
6. Termination. In the event the Merger Agreement shall terminate prior to
Closing, this Agreement shall likewise, and thereupon without any action of any
party hereto, terminate, become void ab initio, and have no force or effect.
7. Responsibility for Restricted Group. The Consultant will be responsible
for any violation of the provisions hereof by any member of the Restricted
Group.
8. Miscellaneous. It is further agreed as follows:
(a) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
by telecopy, by facsimile, or mailed by registered or certified mail
(return receipt requested), or sent by Federal Express or other
recognized overnight courier, to the parties at the following addresses
(or at such other address for a party as shall be specified by like
notice):
<Table>
To Parent: With a copy to:
Pioneer Natural Resources USA, Inc. Pioneer Natural Resources USA, Inc.
Attn: Larry Paulsen Attn: Mark Withrow
5205 N. O'Connor Blvd., Suite 900 5205 N. O'Connor Blvd., Suite 900
Irving, Texas 75093 Irving, Texas 75093
Telephone: (972) 969-4014 Telephone: (972) 969-4090
Fax: (972) 969-3581 Fax: (972) 969-3552
To the Consultant:
Dennis Carlton
1401 17th Street
Suite 1200
Denver, Colorado 80202
Telephone: (303) 298-8100
Fax: (303) 295-7895
</Table>
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(b) Severability. In the event that any provision of this
Agreement, or the application thereof to any Person or circumstance, is
held by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such invalid, illegal or unenforceable
provision shall be fully severable, this Agreement shall then be
construed and enforced as if such provision had not been contained in
this Agreement, and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by provision
or by its severance from this Agreement. Furthermore, in lieu of each
such illegal, invalid, or unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar in terms
to such provision as may be possible and be legal, valid and
enforceable. Notwithstanding the above, in the event any such
invalidity, illegality or unenforceability of any portion of Section
4(a) hereof is caused by such provision being held to be excessively
broad as to time, duration, geographical scope, activity or subject in
any jurisdiction, then such provision shall, at the option of Parent,
remain a part of this Agreement and shall be reformed and construed
within such jurisdiction by limiting and reducing it so as to be
enforceable to the extent compatible with then applicable law.
(c) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter
hereof. Neither this Agreement nor any of the provisions hereof can be
changed, waived, discharged or terminated except by an instrument
signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
(d) Waiver. Waiver of performance of any obligation or term
contained in this Agreement by any party, or waiver by one party of the
other's default hereunder, will not operate as a waiver of performance
of any other obligation or term of this Agreement or a future waiver of
the same obligation or a waiver of any future default.
(e) Governing Law. This Agreement will be interpreted,
construed and enforced in accordance with the laws of the State of
Colorado (excluding Colorado choice-of-law principles that might call
for the application of some other state's law).
(f) Specific Enforcement. The Consultant acknowledges on
behalf of the Restricted Group that the covenants of the Consultant
contained in Sections 4(a), 5 and 7 of this Agreement are special and
unique, that a breach by any member of the Restricted Group of any term
or provision of any of such Sections may cause irreparable injury to
Parent and that remedies at law for the breach of any terms or
provisions of Sections 4(a), 5 and 7 hereof may be inadequate.
Accordingly, in addition to any other remedies they may have in the
event of breach, Parent shall be entitled to enforce specific
performance of the terms and provisions of Sections 4(a), 5 and 7
hereof, to obtain temporary and permanent injunctive relief to prevent
the continued breach of such terms and provisions without the necessity
of posting a bond or of proving actual damage, and to obtain attorneys'
fees in respect of the foregoing if Parent prevails in such action or
proceeding.
(g) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the
other party; provided, that nothing in this Agreement shall preclude
the consolidation or merger of Parent or any of its Subsidiaries with
another Person in which Parent or any of its Subsidiaries is not the
continuing Person or the transfer of all or substantially all of the
assets of Parent or any of its Subsidiaries if the successor assumes
(by operation of law or otherwise) the rights and obligations of Parent
or any of its Subsidiaries under this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
PIONEER NATURAL RESOURCES COMPANY
By: /s/ MARK L. WITHROW
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Name: Mark L. Withrow
-------------------------------------
Title: Executive Vice President
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/s/ DENNIS CARLTON
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Dennis Carlton, an individual