EXHIBIT 99.3
NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT (this "Agreement") is entered into as of
the 3rd day of May, 2004, between Mark Sexton, an individual (the "Restricted
Party"), 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 Restricted Party is Chairman of the Board and Chief
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 Restricted Party; and
WHEREAS, the Restricted Party 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 Restricted Party's agreement to provide services to Parent
as a member of Parent's Board of Directors; and (iv) to induce Parent to enter
into the Merger Agreement and consummate the transactions contemplated thereby,
pursuant to which the Restricted Party will receive consideration for his Equity
Interest in Evergreen and in connection with which the Restricted Party 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;
"Closing" means the closing of the transactions contemplated
by the Merger Agreement;
"Change in Control Agreement" means that certain Change in
Control Agreement dated as of March 1, 2002 between Evergreen and the
Restricted Party 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;
"Derivative Information" means any notes, summaries,
evaluations, analyses and other material derived by the Restricted
Party 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 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
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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 Party Group" means the Restricted Party together
with (a) each member of the Restricted Party's immediate family that
lives in his household and (b) any Business Enterprise in which the
Restricted Party, any one or more members of the Restricted Party's
immediate family or the Restricted Party and one or more members of the
Restricted Party'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 Restricted Party 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 Restricted Party's agreement to provide services to Parent
as a member of Parent's Board of Directors; and (iv) to induce Parent to enter
into the Merger Agreement and consummate the transactions contemplated thereby,
pursuant to which the Restricted Party will receive consideration for his Equity
Interest in Evergreen and in connection with which the Restricted Party will
receive payments under the Change in Control Agreement.
3. Restriction on Activities.
(a) From the Closing Date through the first anniversary
thereof (the "Restricted Period"), no member of the Restricted Party
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;
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(ii) perform for any Business Enterprise engaged in a
Competing Business any duty such member of the Restricted
Party 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) 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
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 Restricted Party, on behalf of the Restricted Party
Group, acknowledges that each of the covenants of Sections 3(a)(i)
through 3(a)(vi) are in addition to, and shall not be construed as a
limitation upon, any other covenant provided in Section 3(a). The
Restricted Party, on behalf of the Restricted Party Group, agrees that
the geographic boundaries, scope of prohibited activities and time
duration of each of the covenants set forth in Sections 3(a)(i) through
3(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 Restricted Party with the Evergreen Companies'
customers, suppliers, licensees and business partners.
(c) The parties hereto intend that the covenants contained in
each of Sections 3(a)(i) through 3(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
3(a)(i) through 3(a)(vi). Furthermore, each of the covenants in
Sections 3(a)(i) through 3(a)(vi) hereof shall be deemed a separate and
independent covenant, each being enforceable irrespective of the
enforceability
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(with or without reformation) of the other covenants contained in
Sections 3(a)(i) through 3(a)(vi) hereof. The Restricted Party admits,
acknowledges, and agrees that the restrictions set forth in this
Section 3 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 3 are
valid and enforceable pursuant to Colorado law.
4. Confidentiality. The Restricted Party hereby acknowledges that, during the
term of the Restricted Party's relationship with the Evergreen Companies, the
Restricted Party Group has developed and had access to Confidential Information
and Derivative Information. The Restricted Party hereby agrees as follows with
respect to all Confidential Information and Derivative Information:
(a) Upon the Closing, the Restricted Party will, and will
cause each member of the Restricted Party Group to, immediately deliver
to Parent all Confidential Information and Derivative Information in
the possession of the Restricted Party Group.
(b) During the Restricted Period, the Restricted Party will,
and will cause each member of the Restricted Party Group to, keep all
Confidential Information and Derivative Information strictly
confidential and will not, and will cause each member of the Restricted
Party 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 Restricted Party's determination of the
need for disclosure.
(c) In the event that the Restricted Party or any member of
the Restricted Party Group becomes legally compelled to disclose any
Confidential Information and/or Derivative Information, the Restricted
Party will provide Parent with prompt notice so that Parent may seek a
protective order or other appropriate remedy and/or waive the
Restricted Party's compliance with the confidentiality and
non-disclosure provisions of this Agreement, and the Restricted Party
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 Party Group will furnish only that portion of
the Confidential Information and/or Derivative Information which it is
advised by counsel is legally required.
5. 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.
6. Responsibility for Restricted Party Group. The Restricted Party will be
responsible for any violation of the provisions hereof by any member of the
Restricted Party Group.
7. 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):
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<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 Restricted Party:
Mark S. Sexton
27160 Craig Lane
Golden, Colorado 80401
Telephone: (303) 526-4567
Fax: (303) 526-2552
</Table>
(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 such
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
3(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).
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(f) Specific Enforcement. The Restricted Party acknowledges on
behalf of the Restricted Party Group that the covenants of the
Restricted Party contained in Sections 3(a), 4 and 6 of this Agreement
are special and unique, that a breach by any member of the Restricted
Party 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 3(a), 4 and 6 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 3(a), 4
and 6 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.
[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
-------------------------------------
Name: Mark L. Withrow
-------------------------------------
Title: Executive Vice President
-------------------------------------
/s/ MARK S. SEXTON
--------------------------------------------
Mark S. Sexton, an individual