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EXHIBIT 7(a)
[Apache Corporation Letterhead]
October 23, 1995
Key Production Company, Inc.
Suite 2050 One Norwest Center
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Key Production Company, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇
Suite 2050 One Norwest Center ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
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RE: Purchase by Key Production Company, Inc. ("Key"), of 331,000
shares of Key common stock from Apache Corporation ("Apache")
Ladies and Gentlemen:
This letter is to confirm our understandings with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("Merelli") and Key concerning the sale of 331,000 shares of Key common stock
by Apache to Key. Apache recently informed Merelli of its desire to sell up to
331,000 shares of Key common stock in open market transactions. Pursuant to
Section 7 of the Stock Purchase Agreement dated September 1, 1992, between
Apache and Merelli (the "1992 Agreement") concerning the purchase by Merelli of
70,000 shares of Key common stock from Apache, Apache has agreed to provide
Merelli with the opportunity to purchase, or to designate another party to
purchase, certain shares of Key common stock proposed to be sold by Apache.
This letter shall serve to confirm that notice and opportunity to purchase were
provided in accordance with the 1992 Agreement with respect to 331,000 shares
of Key common stock (the "Shares") to be sold by Apache, that Merelli and
Apache have agreed that the purchase price of the shares shall be $5.00 per
share, that ▇▇▇▇▇▇▇ has elected to designate Key as the purchaser of the
Shares, and that Key, Merelli and Apache have agreed that Key will purchase and
Apache will sell the Shares under the following terms and conditions:
1. Payment; Delivery of Shares. In consideration of the transfer
and conveyance of the Shares to Key, Key will deliver to Apache at Closing (as
hereinafter defined), against delivery of the Share certificates, an aggregate
consideration of $1,655,000 in cash (the "Purchase Price") which shall be paid
by wire transfer to the account identified on Schedule "A" hereto for the
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Key Production Company, Inc.
October 23, 1995
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benefit of Apache. At Closing, Apache shall deliver certificates for the
Shares, accompanied by stock powers duly endorsed for transfer of the Shares to
Key, against payment of the Purchase Price.
2. Purchase for Own Account. Key represents and warrants that the
Shares are being purchased for its own account, that the Shares are not being
purchased with a view to sale, distribution or other disposition.
3. Apache's Representations and Warranties. Apache represents and
warrants to Key as follows:
(a) Corporate Organization. Apache is a corporation duly
organized and validly existing, in good standing, under
the laws of the State of Delaware. Apache has the
corporate power and authority to own its property and to
carry on its business as now conducted and to enter into
and to carry out the terms of this agreement.
(b) Authorization. The execution and delivery of this
agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action on behalf Apache and Apache is
not subject to any charter, by-law, lien or encumbrance of
any kind, agreement, instrument, order or decree of any
court or governmental body which would prevent
consummation of the actions contemplated by this
agreement.
(c) Stock. Apache is the sole owner of the Shares free and
clear of all liens, encumbrances, restrictions, voting
trusts or other adverse claims or rights, except rights of
Merelli under the 1992 Agreement, and except as otherwise
noted on the face of the stock certificates.
4. Key's Representations and Warranties. Key represents and
warrants to Apache as follows:
(a) Corporate Organization. Key is a corporation duly
organized and validly existing, in good standing, under
the laws of the State of Delaware. Key has the corporate
power and authority to own its property and to carry on
its business as now conducted and to enter into and to
carry out the terms of this agreement.
(b) Authorization. The execution and delivery of this
agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action on behalf Key and Key is not
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Key Production Company, Inc.
October 23, 1995
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subject to any charter, by-law, lien or encumbrance of
any kind, agreement, instrument, order or decree of any
court or governmental body which would prevent
consummation of the actions contemplated by this
agreement.
5. Closing. The closing of the purchase and sale contemplated
hereby shall occur at 10:00 a.m. local time on October 24, 1995 (the "Closing")
at Key's offices in Denver, Colorado, or at such other time and place as the
parties may agree in writing. All representations and warranties of each party
hereto shall be deemed to be restated in their entirety on and as of the date
of Closing.
6. General Provisions. The transactions and agreements contemplated
by this letter will be subject to the following provisions:
(a) Amendment. The agreements contained herein may be amended
only by written instrument executed by each of Key,
▇▇▇▇▇▇▇ and Apache.
(b) Brokers. Each party hereto indemnifies the other against
any liability or expense for brokerage fees, finder's
fees, agent's commissions or other similar forms of
compensation incurred by the indemnifying party in
connection with the agreements contained herein or any
transaction contemplated hereby.
(c) Expenses. Each party shall be solely responsible for
expenses incurred in connection with the agreements
contained herein and any transaction contemplated hereby
and shall not be entitled to reimbursement by the other
party.
(d) Successors. This agreement shall be binding upon and
shall inure to the benefit of the parties hereto and the
respective successors and assigns of Key, ▇▇▇▇▇▇▇ and
Apache.
(e) Notices. All notices which are required or may be given
pursuant to this letter shall be given in writing and
delivered personally or by registered or certified mail,
postage prepaid to the addresses of the parties first set
forth above. All notices shall be deemed to have been
given as of the date of receipt.
(f) Entire Agreement. This letter constitutes the entire
agreement between the parties hereto and supersede all
prior agreements, negotiations and understandings.
(g) Governing Law. The agreements contained herein shall be
interpreted in accordance with the laws of the state of
Texas.
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Key Production Company, Inc.
October 23, 1995
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(h) Announcements. The parties shall consult with each other
with regard to all press releases and other announcements
issued after the date of this letter and prior to the date
of Closing concerning the agreements contained herein or
the transactions contemplated hereby and, except as may be
required by applicable laws or the applicable rules and
regulations of any governmental agency or stock exchange,
none of Apache, Key or Merelli shall issue any such press
release or other publicity without the prior written
consent of the other parties, which consent shall not be
unreasonably withheld.
If the foregoing accurately sets forth our agreement with respect to the
matters described above, please sign where indicated below and return a copy of
this letter for our files.
APACHE CORPORATION
/s/ Z. S. Kobiashvili
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By: Z. S. ▇▇▇▇▇▇▇▇▇▇▇
Its: Vice President and
General Counsel
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Vice President, Finance
ACCEPTED and AGREED:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
a citizen and resident of Colorado
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Key Production Company, Inc.
October 23, 1995
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KEY PRODUCTION COMPANY, INC
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its: Senior Vice President
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SCHEDULE "A"
APACHE CORPORATION
WIRING INSTRUCTIONS
FIRST BANK OF MINNEAPOLIS
ABA #▇▇▇-▇▇▇-▇▇▇
APACHE CORPORATION MASTER
ACCOUNT #1-502-5008-9953
