Opinion
Civil Action No. 09-CV-000673-WDM-KMT.
May 26, 2010
ORDER
This matter is before me on the parties' joint request for approval of a class action Settlement Agreement, attached as Exhibit 1 ("Agreement"); Plan of Allocation, attached as Exhibit 3; the Preliminary Payment Schedule; and the amount of the attorney fees and expenses payable to class counsel, all of which are based upon the requested class certification as described in the Agreement.
Pursuant to my February 17, 2010 order conditionally approving the settlement (Doc. No. 78) a fairness hearing was scheduled, noticed and held on May 20, 2010, at which evidence was presented, counsel heard, and the public given full opportunity to be heard. Following the hearings held on February 10, 2010, and May 20, 2010, review of all pleadings and being sufficiently advised in the premises, I make the following findings and conclusions and enter the following orders:
1. The definitions in Section 1 of the Agreement are incorporated by reference and identified by capitalizing the first letter of each defined word or phrase.
2. Reasonable notice of this hearing has been given to members of the Settlement Class as Class Counsel mailed the Notice approved by me to all Potential Class Members who could be reasonably identified. In addition, the Notice was published once for two consecutive weeks, in The Durango Herald.
3. No objections were filed, and no objections were raised at the hearings.
4. I find that the requirements for class certification are satisfied, for settlement purposes only, with regard to the Settlement Class.
(a) The Settled Claims as defined in the Settlement Agreement all arise from the same nucleus of operative facts and form part of the same case or controversy as alleged against Samson in the Complaint.
(b) The Settlement Class Members are so numerous that joinder is impractical.
(c) There are questions of law and fact common to the Settlement Class Members and Plaintiffs.
(d) The questions of law and fact common to the Settlement Class Members predominate over any questions affecting only individual members, and a settlement of Settlement Class Members' claims by a class action under Fed.R.Civ.P. 23 is superior to other available methods for the fair and effective settlement and adjudication of the controversy.
(e) Plaintiffs' claims are typical of the Settlement Class Members' claims.
(f) Settlement Class Members have no special interest in individually controlling the prosecution of separate actions.
(g) Class Counsel are experienced and fully qualified.
(h) Plaintiffs are adequate representatives of the Settlement Class and they, along with Class Counsel, will fairly and adequately represent the interests of Settlement Class Members.
(i) No significant difficulties are likely to be encountered in the management of the action as a class action for settlement purposes.
5. Accordingly, I certify, for settlement purposes only, the following Settlement Class:
ALL PERSONS OR ENTITIES WHO HAVE RECEIVED ROYALTY PAYMENTS FROM SAMSON FOR ROYALTY INTERESTS IN GAS PRODUCTION FROM PROPERTIES IN LA PLATA COUNTY, COLORADO, EXCEPT:
(a) those persons or entities whose underlying written oil and gas lease or assignment of overriding royalty interest therein expressly authorizes the deduction of expenses incurred to produce the gas or place it in marketable condition at a marketable location, including expenses of compression, gathering, treatment and dehydration, but such persons or entities are not excluded to the extent their leases or assignments do not contain such express authorization;
(b) The United States of America insofar as its mineral interests are managed by the Minerals Management Service (but including instrumentalities of the United States and federally chartered corporations);
(c) The Southern Ute Indian Tribe;
(d) Samson and its affiliates and subsidiaries;
(e) Elm Ridge Exploration Co., LLC;
(f) Bayless Ranches LLC;
(g) Maralex Resources, Inc.
(h) BP America Production Co.;
(i) TH McElvain Oil Gas Limited Partnership;
(j) San Juan Basin Properties LLC;
(k) Patricia Penrose Schieffer;
(l) McElvain Oil Company;
(m) Vaughn-McElvain Energy;
(n) J M Raymond;
(o) Raymond Sons I LLC;
(p) Tamacam LLC;
(q) XTO Energy Inc.;
(r) Charles W. Gay;
(s) Lorrayn Gay Hacker;
(t) Enervest Operating LLC, Agent for EV Properties LP; and
(u) The affiliates, subsidiaries, divisions, trade names, prior names, predecessors, later names, or successors of any of the persons or entities identified in 7(e) through 7(t) above.
6. Attached hereto as Exhibit 2 is a list of persons, firms and corporations who filed with the Clerk of the District Court their election to opt out of the Class. As explained in the Notice to members of the Class, Fed.R.Civ.P. 23(c)(2) provides that this Court shall exclude any member from the Class if that member so requests. Accordingly, I find that those listed on Exhibit 2 are excluded from the Class and are not bound by this Order nor entitled to the benefits provided in this Order.
7. Rule 23(e) provides that an action brought as a class action "may be settled, voluntarily dismissed, or compromised only with the court's approval" and that "[t]he court must direct notice in a reasonable manner to all class members who would be bound by the proposal." The Court directed appropriate notice, which has been given, and, at the hearing held as noticed, all parties interested have had an opportunity to be heard as to whether or not the settlement as set forth in the Agreement shall be approved by the Court.
8. Plaintiffs and Class Counsel entered into the Agreement: (i) after taking into account the uncertainties, risks and potential delays associated with the continued prosecution of the Action, including those involved in securing a final judgment that would be favorable to the Settlement Class and not be disturbed on appeal; (ii) after taking into account the substantial benefits that will be received as a result of the Settlement; and (iii) after having concluded that the Settlement provided for herein confers substantial benefits on the members of the Settlement Class, and is fair, just, reasonable, adequate and in the best interests of the Class.
9. Defendant Samson has denied and continues to deny the respective claims alleged by Plaintiffs against it in the Class Suit. Samson has asserted and continues to assert many defenses thereto, and Samson expressly denies and continues to deny its own wrongdoing or legal liability arising out of the conduct alleged in the Class. Samson entered into the Agreement solely in order to put to rest the present controversy and all other possible controversies between Plaintiffs, the Settlement Class and Samson and to avoid the further expense, inconvenience and disruption of defending against the Class Suit. Samson has also taken into account the uncertainty and risks inherent in any litigation, especially in complex cases like the Class Suit, and the fact that substantial amounts of time, energy and resources of Samson have been and, unless this Settlement is consummated, will continue to be, devoted to the defense of this Class Suit. Samson has, therefore, determined that it is desirable and beneficial to it that the action be settled in the manner and upon the terms and conditions set forth in the Agreement.
10. A class action settlement should be approved only if it is fair, reasonable and adequate after comparing the terms of the Settlement with the likely rewards of litigation. See Fed.R.Civ.P. 23(e)(2). In assessing the reasonableness and adequacy of a settlement in a class action, the Tenth Circuit has instructed that the trial court should consider the following factors:
(1) whether the proposed settlement was fairly and honestly negotiated;
(2) whether serious questions of law and fact exist, placing the ultimate outcome of the litigation in doubt;
(3) whether the value of an immediate recovery outweighs the mere possibility of future relief after protracted and expensive litigation; and
(4) the judgment of the parties that the settlement is fair and reasonable.Jones v. Nuclear Pharmacy, Inc., 741 F.2d 322, 324 (10th Cir. 1984) (citing In re King Resources Co. Securities Litigation, 420 F.Supp. 610 (D.Colo. 1976)). See also, e.g., In re Integra Realty Resources, Inc., 354 F.3d 1246, 1266 (10th Cir. 2004).
11. The Settlement as set forth in the Agreement was fairly and honestly negotiated through arms-length, vigorous, and extensive negotiations between the parties and their counsel, including a mediation conducted by Magistrate Judge Kathleen M. Tafoya, and that the parties participated directly in the settlement process.
12. I do not decide the merits of this controversy, but I do find that there exist serious questions of law and fact which place the ultimate outcome of this litigation in doubt and that, while the Settlement Class might possibly ultimately receive more if the case was to be prosecuted to its ultimate conclusion, it is also possible that there would be no recovery.
13. I recognize that if this Settlement as set forth in the Agreement had not been reached, even if the Settlement Class had prevailed, any recovery would have been delayed for a lengthy period of time given the high probability of an appeal and, in the event of a reversal or modification, a further delay resulting from another lengthy trial. Accordingly, I conclude that the immediate and substantial recovery provided under the terms of the Settlement outweighs the possibility of additional future relief after protracted and expensive litigation.
14. The Settlement as set forth in the Agreement was arrived at in good faith and was based on a realistic appraisal by the parties and their counsel of the difficulties inherent in a case of this magnitude and complexity, and on their informed judgment that the settlement is fair and reasonable.
15. Based on all of the foregoing, I find the Settlement as set forth in the Agreement to be bona fide, fair, reasonable and adequate.
16. In considering the Plan of Allocation proposed by the Plaintiffs and Class Counsel, a copy of which is attached as Exhibit 3, Defendant Samson took no position as to how the Settlement Amount, as defined in the Agreement, should be allocated among Potential Class Members. The amount paid pursuant to the Agreement settles all of the Settled Claims as defined in the Agreement and provides adequate consideration for dismissal with prejudice of the Class Suit. I conclude that the Plan of Allocation provides a well-defined method to calculate the amount owed to each Potential Class Member.
17. Accordingly, I find that the Plan of Allocation is fair, equitable, reasonable, and capable of implementation without undue administrative expense, and should be approved. In approving the Plan of Allocation, the Court specifically finds that the consideration paid by Samson, as provided in the Agreement, fully discharges Samson from any liability with respect to the Settled Claims.
18. Considering the Preliminary Payment Schedule I find the Preliminary Payment Schedule was prepared in accordance with the methodology set forth in the Plan of Allocation and should be approved.
IT IS THEREFORE CONSIDERED, ORDERED, ADJUDGED AND DECREED that:
1. This action is certified as a class action, for settlement purposes only, with the Settlement Class defined as follows:
ALL PERSONS OR ENTITIES WHO HAVE RECEIVED ROYALTY PAYMENTS FROM SAMSON FOR ROYALTY INTERESTS IN GAS PRODUCTION FROM PROPERTIES IN LA PLATA COUNTY, COLORADO, EXCEPT:
(a) those persons or entities whose underlying written oil and gas lease or assignment of overriding royalty interest therein expressly authorizes the deduction of expenses incurred to produce the gas or place it in marketable condition at a marketable location, including expenses of compression, gathering, treatment and dehydration, but such persons or entities are not excluded to the extent their leases or assignments do not contain such express authorization;
(b) The United States of America insofar as its mineral interests are managed by the Minerals Management Service (but including instrumentalities of the United States and federally chartered corporations);
(c) The Southern Ute Indian Tribe;
(d) Samson and its affiliates and subsidiaries;
(e) Elm Ridge Exploration Co., LLC;
(f) Bayless Ranches LLC;
(g) Maralex Resources, Inc.
(h) BP America Production Co.;
(i) TH McElvain Oil Gas Limited Partnership;
(j) San Juan Basin Properties LLC;
(k) Patricia Penrose Schieffer;
(l) McElvain Oil Company;
(m) Vaughn-McElvain Energy;
(n) J M Raymond;
(o) Raymond Sons I LLC;
(p) Tamacam LLC;
(q) XTO Energy Inc.;
(r) Charles W. Gay;
(s) Lorrayn Gay Hacker;
(t) Enervest Operating LLC, Agent for EV Properties LP; and
(u) The affiliates, subsidiaries, divisions, trade names, prior names, predecessors, later names, or successors of any of the persons or entities identified in 1(e) through 1(t) above.
2. The Agreement is bona fide, fair, reasonable, and adequate to the Settlement Class as required by Fed.R.Civ.P. 23(e). The Agreement is approved and is binding on the Plaintiffs and the other Settlement Class Members.
3. Each Settlement Class Member is deemed conclusively to have released and settled the Settled Claims.
4. All Settlement Class Members are barred and permanently enjoined from commencing or prosecuting either directly, representatively, derivatively or in any capacity, any of the Settled Claims against Samson and Samson's Additional Released Parties.
5. The Plan of Allocation attached as Exhibit 3 is approved as fair, equitable, reasonable and adequate to the Settlement Class.
6. The persons, firms and corporations listed on Exhibit 2 attached hereto have opted out of the Settlement Class and are excluded from the Class pursuant to Fed.R.Civ.P. 23(c)(3).
7. The Preliminary Payment Schedule attached hereto is approved.
8. Plaintiffs' motion for allowance of reasonable attorneys fees and expenses was in proper form. I find that Class Counsel should be reimbursed $19,953.69 for Litigation Costs advanced by Class Counsel in this action, and that Class Counsel should be awarded reasonable attorneys' fees in the amount of 25% of the Settlement Amount remaining after first subtracting the above reimbursements of Litigation Costs and the proportionate amounts attributable to Potential Class Members who opted out. The Court further orders that such fees and Litigation Costs be paid to Class Counsel at the same times that distributions are made to Settlement Class Members.
9. Within forty (40) days following the entry of this Order, Samson shall prepare and file with the Court a Final Payment Schedule (by owner number only) to reflect, in addition to the information contained on the Preliminary Payment Schedule: (1) the accrual interest on the principal settlement amount at the rate of 4 percent per annum from November 1, 2009 through thirty (30) days following the Approval Event attributable to each Settlement Class Member; (2) each Settlement Class Member's pro rata share of the Litigation Costs and attorneys fees awarded to Class Counsel; and (3) the final amount to be paid to each Settlement Class Member pursuant to the terms of the Settlement Agreement after accrual of interest and reduction for Litigation Costs, applicable taxes, and attorney fees. Samson shall also deliver a copy of the Final Payment Schedule to Class Counsel in electronic form.
10. Within forty-five (45) days following the Approval Event, Samson shall mail Distribution Checks to each Settlement Class Member.
11. In the event successor or alternative payees are identified after entry of this Settlement Order and Judgment, Samson shall promptly notify Class Counsel and shall reissue to the new payee a Distribution Check as reasonably requested by Class Counsel within ten (10) business days of said written request. Samson shall have no liability to any Settlement Class Member due to payment of their share of the Settlement Amount to another person or entity based on written (including email) instructions from Class Counsel. Samson may prepare a single Distribution Check for each owner identified on the Preliminary Payment Schedule even though that owner appears on multiple lines with different owner numbers used for identifying the original owner to which the settlement amount relates.
12. Any amounts due and payable pursuant to the Settlement that cannot be distributed by Samson shall be handled as directed in the Settlement Agreement.
13. This Class Suit shall be dismissed with prejudice.
14. Although this Order shall be a final judgment, the Court retains jurisdiction over the implementation and enforcement of the Settlement.
EXHIBIT 1 AGREEMENT FOR SETTLEMENT OF CLAIMS AGAINST SAMSON RESOURCES COMPANY
This Agreement for Settlement of Claims Against Samson Resources Company (" Agreement") is made between LLH Operations LLLP and the Estate of Mary B. Fassett, acting individually and also acting in their capacity as representative plaintiffs on behalf of persons similarly situated (collectively, " Plaintiffs"), and Samson Resources Company (" Samson"), effective on the 1st day of November 2009 (the " Effective Date").
RECITALS
WHEREAS, on February 20, 2009 Plaintiffs filed a suit against Samson in the District Court, La Plata County, State of Colorado, Civil Action No. 09CV59, alleging private claims and class action claims seeking, among other things, declaratory, injunctive and compensatory relief (" Class Suit");
WHEREAS, on March 25, 2009, the Class Suit was removed by Samson to the United States District Court for the District of Colorado (" Court"), in Civil Action No. 1:09-cv-00673 WDM/KMT;
WHEREAS, on June 2, 2009, the Court denied the Plaintiffs' Motion to Remand the Class Suit to state court;
WHEREAS, Samson has produced gas from certain wells within La Plata County, State of Colorado listed in Exhibit A (" Designated Wells"), and has or may produce gas and condensate from wells drilled on the same leases as the Designated Wells or in unit participating areas, communitized areas or pooled areas in which such leases are now or hereafter included, in whole or in part (such wells and the Designated Wells are hereinafter referred to collectively as the " Samson Wells");
WHEREAS, Samson has paid royalties and/or overriding royalties to payees set forth in Exhibit B (" Royalty Payees") for gas, and in the future may pay royalties and/or overriding royalties to such Royalty Payees for gas, condensate and natural gas liquids (collectively, " Hydrocarbons") produced from Samson Wells (" Royalties");
WHEREAS, Samson pays Royalties pursuant to various agreements, leases, royalty conveyances, instruments or other writings that grant or reserve or create or define the royalty or overriding royalty interests owned by the Plaintiffs and by the Royalty Payees (collectively " Instruments");
WHEREAS, the Class Suit raises disagreements between the Parties concerning the intent, meaning, interpretation and/or construction of the Instruments;
WHEREAS, Plaintiffs made claims in the Class Suit against Samson under the common law arising from alleged improper deductions from sales proceeds in the calculation of Royalties for expenses, including gathering, compression, treatment and dehydration, which Plaintiffs claim Samson has incurred to produce Hydrocarbons in a captive state and place them in a marketable condition at a marketable location, and for expenses incurred after the Hydrocarbons have been placed in a marketable condition at a marketable location (herein referred to as the " Disputed Deductions");
WHEREAS, Plaintiffs made claims in the Class Suit against Samson for alleged breach of the Instruments by reason of violating a duty to produce the Hydrocarbons in a captive state at its own expense (herein referred to as " Production Costs");
WHEREAS, Plaintiffs made claims in the Class Suit against Samson for alleged breach of the implied covenant of marketability by reason of attempting to impose on the Royalty Payees the costs which Plaintiffs claim Samson incurred for the purpose of placing the Hydrocarbons in a marketable condition at a marketable location (herein referred to as " Marketability Costs");
WHEREAS, Plaintiffs made claims in the Class Suit against Samson for alleged breach of duty to account with fidelity, by reason of reporting and paying for Hydrocarbons in a manner that allegedly imposes Disputed Deductions and/or Marketability Costs on the Royalty Payees in an improper or unlawful manner (herein referred to as " Accounting Violation");
WHEREAS, Plaintiffs made claims in the Class Suit against Samson for alleged violation of the implied covenant of good faith and fair dealing, by reason of taking the Disputed Deductions in the calculation of royalties and failing to refund them (herein referred to as " Good Faith Violation");
WHEREAS, Plaintiffs made claims in the Class Suit against Samson for costs and interest at the highest rate provided by law, moratory or otherwise, in connection with the Disputed Deductions (herein referred to as " Interest");
WHEREAS, Samson contends that it has fairly, properly and lawfully valued and paid Royalties to the Royalty Payees and believes that it has fully complied with its reporting obligations;
WHEREAS, Samson denies all of the allegations in the Class Suit, denies that it has undervalued Hydrocarbons or violated any other law or breached any of the Instruments or any other contract or other agreement with or obligation owed to the Royalty Payees, and denies any and all liability for the claims the Plaintiffs and Royalty Payees allege;
WHEREAS, on April 21, 2009 Samson asserted a counterclaim (" Counterclaim") in the Class Suit against Plaintiffs, seeking recovery of overpaid royalties by reason of not subtracting Disputed Deductions from sales proceeds for certain periods of time, and a declaratory judgment that it is entitled to subtract such costs;
WHEREAS, the Parties (as defined below) recognize that they will expend substantial resources in continuing this litigation;
WHEREAS, Samson has provided to counsel for Plaintiffs certain royalty accounting data, including data concerning Royalty Payees in the Samson Wells whose particular Instruments either expressly prohibit subtractions of costs from sales proceeds or provide for payment of royalty on the basis of "gross proceeds" without reference to "at the well" or equivalent location (such Instruments being referred to herein as " Gross Proceeds Instruments");
WHEREAS, Samson has made the representations set forth in Paragraph 2.8;
WHEREAS, the Parties desire to settle and resolve all past claims so that the Plaintiffs and the Settlement Class Members (as defined below) are bound by a release of past claims against Samson and Samson's Additional Released Parties (as defined below) associated with the payment and reporting of Royalties to the Royalty Payees for production from the Samson Wells;
WHEREAS, the Parties also desire by this Agreement to establish royalty valuation rules to govern future Royalties paid by Samson to the Settlement Class Members on the production of Hydrocarbons from the Samson Wells so as to eliminate future conflict or litigation over royalty valuation and calculation, and which will be binding on the Parties and on the Settlement Class Members as to future Royalties payable by Samson on production of Hydrocarbons from Samson Wells; and
WHEREAS, the Parties further desire by this Agreement to resolve the Counterclaim.
NOW, THEREFORE, for good and valuable consideration conferred upon the Plaintiffs and Settlement Class Members as provided in this Agreement, the sufficiency of which is expressly acknowledged, and in reliance upon the representations provided by Samson in Paragraph 2.8 of this Agreement, the Parties hereby stipulate and agree as follows:
1. DEFINITIONS
The following definitions shall apply solely for purposes of this Agreement and any pleadings, motions or documents used to implement this Agreement:
1.1 "Administrative Costs" shall mean all actual and reasonable administrative costs of producing and mailing Distribution Checks (as defined below) and form 1099 and form DR-21W tax information.
1.2 "Approval Event" shall mean the earliest date on which all of the following conditions are met:
1.2.1 Settlement Class Notice (as defined below) has been provided to Potential Class Members by mail or as the Court may otherwise determine is appropriate; and
1.2.2 The Settlement Order and Judgment (as defined below) approving the terms of this Agreement has been entered; and
a. The time for appeal of any objections to the Settlement Order and Judgment has expired without appeal; or
b. The Settlement Order and Judgment has been finally affirmed following any appeal by an objecting party. In the event such an appeal is filed but on grounds which the Plaintiffs and Samson mutually agree should not preclude completion of the settlement, they may agree in writing to waive this Paragraph 1.2.2.b and consider the Approval Event to have occurred.
1.3 "Attorney's Fees" shall include any and all claims for attorney's fees in the Class Suit related to any claim in the Class Suit, and for future benefits procured for Settlement Class Members as more fully described in Paragraph 2.4.1 (Future Royalty Payment Methodology) but shall not include fees that might otherwise be incurred in enforcing this Agreement.
1.4 "Demarcation Point" shall have the meaning set forth in paragraph 1.9.3 of this Agreement.
1.5 "Disputed Deductions" shall have the meaning set forth in the Recitals.
1.6 "Distribution Check" shall mean a check payable to a Settlement Class Member to accomplish distribution of the net amount that is payable to such Settlement Class Member pursuant to this Agreement.
1.7 "Distribution Date" shall mean the date of the Distribution Check payable to each Settlement Class Member.
1.8 "Future Hydrocarbon Royalties Claims" shall mean all claims that were asserted as class claims in the Class Suit for the alleged underpayment of Royalties to Settlement Class Members by Samson attributable to Hydrocarbons produced from Samson Wells on or after November 1, 2009, including, without limitation, all claims for alleged Disputed Deductions, Production Costs, Marketability Costs, Accounting Violation, Good Faith Violation, Interest, and Attorney's Fees.
1.9 "Future Royalty Payment Methodology" shall mean for Samson Wells Realized Proceeds (as defined in 1.9.1) less Permitted Deductions (as defined in 1.9.2).
1.9.1 " Realized Proceeds" shall mean the weighted average of proceeds received by Samson from the arms-length sale of Hydrocarbons to non-affiliated third parties. In the event Samson sells the Hydrocarbons to an affiliate, "Realized Proceeds" shall mean the greater of (i) the weighted average of the value attributed to such transfer by Samson (i.e., the "transfer price") or, (ii) the weighted average of the proceeds received by Samson's affiliate from the arms-length sale of Hydrocarbons to non-affiliated third parties. Realized Proceeds shall be increased by the value of Hydrocarbons reasonably and actually consumed, vented, lost, flared, or used as fuel (collectively " Fuel") after Samson delivers the applicable Hydrocarbons to a third party gathering system (such value to be based on Samson's weighted average sales price). In the event Samson sells Hydrocarbons to an affiliate or third party at a point prior to the First Demarcation Point, "Realized Proceeds" shall nonetheless mean the weighted average of proceeds received by Samson from the arms-length sale of Hydrocarbons to non-affiliated third parties at or downstream of the Demarcation Points, but Samson will not be precluded from seeking relief or reformation as provided in Paragraph 1.9.4. In the event Hydrocarbons are processed in a plant for the removal of natural gas liquids upstream or downstream of the First Demarcation Point, Samson will pay royalty on Realized Proceeds received by Samson for the natural gas liquids which are recovered by the processing.
1.9.2 "Permitted Deductions" shall mean (1) the reasonable and actual Fuel incurred downstream of the first Demarcation Point; (2) the reasonable and actual direct costs of transportation; (3) conservation taxes and severance taxes required by law to be withheld from Royalty payments; and (4) in the event Hydrocarbons are processed in a plant for the removal of natural gas liquids downstream of the First Demarcation Point, then "Permitted Deductions" shall include all reasonable and actual Fuel, shrinkage, and costs incurred in connection with said processing only to the extent such Fuel, shrinkage and costs enhance the value of the Hydrocarbons and, thereby, increase actual Royalties in proportion with the Fuel, shrinkage, and costs assessed against the nonworking interests. Provided, however, that the term "Permitted Deductions" shall mean only conservation taxes and severance taxes required to be withheld by Samson with respect to all Gross Proceeds Instruments.
1.9.3 "Demarcation Point" shall mean any of the delivery points identified in Exhibit C.
1.9.4 The Parties specifically acknowledge that nothing contained herein expands or limits or otherwise alters any right, cognizable in law or equity by reason of any supervening or changed circumstance, to seek or obtain relief from or reformation of the provisions of Paragraph 2.4.1 or to contend or establish such provisions should no longer apply.
1.10 "Hydrocarbon Royalties Claims" shall mean all claims that were asserted as class claims in the Class Suit for the alleged underpayment of Royalties to Settlement Class Members by Samson attributable to Hydrocarbons produced from Samson Wells prior to the Effective Date including, without limitation, all claims for alleged Disputed Deductions, Production Costs, Marketability Costs, Accounting Violation, Good Faith Violation, Interest, and Attorney's Fees.
1.11 "Litigation Costs" shall mean all costs of whatever kind incurred by the Plaintiffs and their counsel in bringing or prosecuting or settling the claims against Samson that are approved by the Court in the Class Suit. "Litigation Costs" shall include, but not be limited to, reasonable expenses incurred in providing notice to Potential Class Members (including costs of printing, publishing and mailing Settlement Class Notice (as defined below)), and any reasonable expenses incurred by Plaintiffs' counsel in performance of any function assigned to or undertaken by them under Paragraphs 2.2 and 2.3 of this Agreement.
1.12 "Opt-Out Claimant" shall mean a Potential Class Member who submits a timely and valid request for exclusion in accordance with the Order of Preliminary Approval and the Notice of Settlement, and who does not revoke that request for exclusion from the Settlement Class in writing at least 7 days prior to the Settlement Hearing. Such requests for exclusion shall apply to all Opt-Out Claims that an Opt-Out Claimant has against Samson.
1.13 "Opt-Out Claims" shall mean those Settled Claims that belong to Opt-Out Claimants. Opt-Out Claims are not settled by this Agreement.
1.14 "Parties" shall mean Samson and Plaintiffs.
1.15 "Permitted Deductions" shall have the meaning set forth in paragraph 1.9.2 of this Agreement.
1.16 "Potential Class Members" shall mean all persons or entities who have received royalty payments from Samson for royalty interests in gas production from properties in La Plata County, Colorado, except:
(a) those persons or entities whose underlying written oil and gas lease or assignment of overriding royalty interest therein expressly authorizes the deduction of expenses incurred to produce the gas or place it in marketable condition at a marketable location, including expenses of compression, gathering, treatment and dehydration, but such persons or entities are not excluded to the extent their leases or assignments do not contain such express authorization;
(b) The United States of America insofar as its mineral interests are managed by the Minerals Management Service (but including instrumentalities of the United States and federally chartered corporations);
(c) The Southern Ute Indian Tribe;
(d) Samson and its affiliates and subsidiaries;
(e) Elm Ridge Exploration Co., LLC;
(f) Bayless Ranches LLC;
(g) Maralex Resources, Inc.;
(h) BP America Production Co.;
(i) TH McElvain Oil Gas Limited Partnership;
(j) San Juan Basin Properties LLC;
(k) Patricia Penrose Schieffer;
(l) McElvain Oil Company;
(m) Vaughn-McElvain Energy;
(n) J M Raymond;
(o) Raymond Sons I LLC;
(p) Tamacam LLC;
(q) XTO Energy Inc.;
(r) Charles W. Gay;
(s) Lorrayn Gay Hacker;
(t) Enervest Operating LLC, Agent for EV Properties LP; and
(u) The affiliates, subsidiaries, divisions, trade names, prior names, predecessors, later names, or successors of any of the persons or entities identified in Paragraphs 1.16(e) through 1.16(t) above.
"Potential Class Members" specifically includes those Royalty Payees identified in Exhibit B, and their predecessors or successors (if any) to the extent such predecessors or successor are entitled to any portion of the Settlement Amount or the calculation and payment of Royalties pursuant to the Future Royalty Payment Methodology after the Effective Date pursuant to Paragraph 2.4.1 of this Agreement.
1.17 "Preliminary Approval Order" shall mean the order in a form similar to Exhibit D entered by the Court conditionally certifying the Settlement Class, preliminarily approving this Settlement Agreement, approving the form of the Settlement Class Notice, and directing that notice be provided to the Potential Class Members.
1.18 "Realized Proceeds" shall have the meaning set forth in paragraph 1.9.1 of this Agreement.
1.19 "Representations" shall mean those representations made by Samson in Paragraph 2.8 of this Agreement.
1.20 "Samson Wells" shall have the meaning found in the Recitals.
1.21 "Samson's Additional Released Parties" shall mean (i) Samson's affiliates and any of Samson's or its affiliates' officers, directors, shareholders, employees, agents, and attorneys, and (ii) the working interest owners in Samson's Wells on whose behalf Samson paid or pays Royalties, but only for those time periods and to the extent Samson has actually paid or pays Royalties on behalf of such working interest owners.
1.22 "Settled Claims" shall mean claims that were asserted as class claims in the Class Suit, and shall mean any and all such claims, causes of action, demands, rights, and liabilities, of any kind or nature, and any and all such claims of breaches of express provisions, breaches of implied covenants, breaches of statutory duties, breaches of common law duties, omissions, failures to act, conflicts of interest, tortious acts, intentional acts, negligent acts, grossly negligent acts, acts of unjust enrichment, or any other duties or obligations or claims of damage, including claims for punitive damages, which arise out of or are based upon any of the following:
1.22.1 Hydrocarbon Royalties Claims;
1.22.2 Future Hydrocarbon Royalties Claims;
1.22.3 Attorney's Fees; and
1.22.4 Litigation Costs.
1.23 "Settlement Amount" shall be the sum of (1) Three Million Six Hundred Twenty Six Thousand Dollars) plus (2) simple interest at 4.0% per annum on $3,626,000.00 from November 1, 2009, until the thirtieth (30th) day following the Approval Event.
1.24 "Settlement Class" shall mean the class consisting of the Settlement Class Members including without limitation the Plaintiffs.
1.25 "Settlement Class Members" shall mean Potential Class Members other than Opt-Out Claimants.
1.26 "Settlement Class Notice" shall mean that notice as approved by the Court at the Preliminary Approval Hearing pursuant to Fed.R.Civ.P. 23(e)(1) and to be mailed to Potential Class Members.
1.27 "Settlement Hearing" shall mean that hearing held by the Court after the Preliminary Approval Hearing and the mailing of the Settlement Class Notice at which the Parties shall request the Court, pursuant to Fed.R.Civ.P. 23(e)(2), to determine that (i) the terms of this Agreement, including the Exhibits, are fair, adequate, and reasonable; (ii) the Settlement Class should be finally certified; and (iii) the Settlement Order and Judgment should be entered; and Plaintiffs shall request the Court to approve the application of Class Counsel for Attorney's Fees and Litigation Costs.
1.28 "Settlement Order and Judgment" shall mean the order and judgment to be entered after the Settlement Hearing and pursuant to Fed.R.Civ.P. 23(c)(3), in substantially the form of Exhibit E, finding that the Settlement Class Members are bound by the settlement approved by the Court; finding that the Settlement Class should be finally certified; approving the terms of the settlement as set forth in this Agreement; entering judgment as to the composition of the Settlement Class; and approving Class Counsel's application for Attorney's fees and Litigation Costs to be paid from the Settlement Amount. The Plaintiffs and Samson agree that the "Settlement Order and Judgment" entered pursuant to this Agreement shall be a Final Judgment as defined by Fed.R.Civ.P. 54(a), and further agree that the form of order will so provide for entry of final judgment as to disposition of the Settled Claims and the Counterclaim.
Any defined terms contained in the Recitals of this Agreement are incorporated by reference in this Paragraph 1 ("Definitions") unless otherwise defined in the Definitions.
2. SETTLEMENT
The Parties agree to the settlement and release of all Settled Claims and of the Counterclaim, under the following terms and conditions:
2.1 Preliminary Approval Hearing
The Parties agree (i) no other parties except Samson and the Settlement Class Members will be bound by holdings made in the Class Suit to effectuate this Agreement and said Parties shall be bound only as to those matters related to the Settled Claims; (ii) no other parties except Settlement Class Members may rely upon the Representations; and (iii) the formation of a Settlement Class for the Settled Claims is only for purposes of this Agreement in the event the Approval Event occurs, and is not and shall not be construed or used as an admission regarding any fact or any substantive or procedural issue nor as an agreement to the certification of a class with respect to any other claims.
Samson shall timely provide to counsel for the Plaintiffs the names and last known addresses of Potential Class Members and other pertinent information to effectuate this settlement and the notices required hereunder as reasonably requested.
On or before January 15, 2010, the Parties shall file a Motion for Preliminary Approval of this Agreement and request the Court enter Exhibit D as soon as practically possible.
2.2 Permissible Attorney's Fees; Payment of Litigation Costs and Payment of Administrative Costs
2.3 Samson's Obligation to Pay Settlement Amount
2.2.1 Plaintiffs represent and warrant to Samson that any Attorney's Fees and Litigation Costs shall be paid out of the Settlement Amount subject to approval by the Court as embodied in the Settlement Order and Judgment. Plaintiffs further agree that such fees shall not exceed the amounts approved by the Court.
2.2.2 Samson shall be responsible for Administrative Costs, namely of producing, printing and mailing Distribution Checks, and the form 1099 and form DR-21W tax information. Counsel for Plaintiffs shall handle and be responsible for the administrative task — and costs associated with such administrative task — of actually mailing the Settlement Class Notices in the manner approved by the Court.
2.3.1 Samson acknowledges that it has received from Plaintiffs a methodology for the allocation of the Settlement Amount sufficient to produce a preliminary payment schedule (the " Preliminary Payment Schedule"). The methodology is attached hereto as Exhibit F. Samson agrees to prepare the Preliminary Payment Schedule, which shall allocate the Settlement Amount among the Potential Class Members and shall specifically show the name of each Potential Class Member, his Samson Owner Number, his Tax Identification Number, the amount of the Settlement Amount allocated to him (without reduction for any Attorney's Fees and Litigation Costs and applicable taxes and without the interest provided for under Paragraph 1.23) and whether such calculation relates to a Gross Proceeds Instrument. Samson further agrees to distribute the Preliminary Payment Schedule as specified in the Preliminary Approval Order, and Plaintiffs agree to take steps with respect to the Preliminary Payment Schedule as specified in the Preliminary Approval Order.
2.3.2. Within ten (10) days after the Approval Event, Samson shall provide to Plaintiffs a final payment schedule (the " Final Payment Schedule") in electronic format, which shall specifically show the name of each Settlement Class Member, his Samson Owner Number, his Tax Identification Number, the amount of the Settlement Amount allocated to him, and the amounts of proportionate reductions for any court-awarded amount of Attorney's Fees and Litigation Costs and applicable taxes and the amounts of the increase for interest provided for under Paragraph 1.23 through the thirtieth (30th) day following the Approval Event, and whether such calculation relates to a Gross Proceeds Instrument. The Final Payment Schedule shall exclude any Opt-Out Claimant, and the amount attributable to each Opt-Out Claimant on the Preliminary Payment Schedule shall be retained by Samson, including the proportionate share of Attorney's Fees attributable to each such Opt-Out Claimant. Samson further agrees to file with the Court the Final Payment Schedule, showing only Samson's Owner Number, the amount of the Settlement Amount allocated to that Owner Number, the amounts of proportionate reductions for any court-awarded Attorneys Fees and Litigation Costs and applicable taxes and the amounts of interest provided for under Paragraph 1.23 through the thirtieth (30th) day following the Approval Event, and whether such calculation relates to a Gross Proceeds Instrument. Upon receipt of the Final Payment Schedule, Plaintiffs shall post the Final Payment Schedule on Plaintiffs' counsel's website, www.fleeson.com., showing only Samson's Owner Number, the amount of the Settlement Amount allocated to that Owner Number, and the amounts of proportionate reductions for any court-awarded Attorneys Fees and Litigation Costs and applicable taxes and the amounts of interest provided for under Paragraph 1.23 through the thirtieth (30th) day following the Approval Event, and whether such calculation relates to a Gross Proceeds Instrument.
2.3.3. Within forty-five (45) days after the Approval Event, Samson shall prepare and mail the Distribution Checks to the Settlement Class Members in accordance with the Final Payment Schedule and deliver a check, representing the amount of Attorney's Fees and Litigation Costs approved by the Court and applicable to the Settlement Class Members, to Plaintiffs' counsel.
2.3.4. Within sixty (60) days after the mailing of Distribution Checks, Samson shall file with the Court and furnish to Plaintiffs, in electronic format, an accounting, detailing the status of the Distribution Checks by indicating which have been cashed, which have been returned to Samson, and which are outstanding and uncashed. After the filing of the accounting, Plaintiffs' counsel shall take reasonable steps to furnish information to Samson, including a current address for a Settlement Class Member or information that evidences the identity of any heir or successor to any deceased Settlement Class Member, and, upon receipt of such suitable information, Samson shall reissue the Distribution Check to the Settlement Class Member or his heirs or successors. The Parties agree to cooperate with the goal of disbursing as much of the amount represented by the Distribution Checks as possible. Samson agrees to timely provide information from its files as reasonably requested by Plaintiffs' counsel to achieve this goal. Plaintiffs agree to use the Tax Identification Number of a Class Member for the sole purpose of carrying out their responsibility of locating Settlement Class Members or otherwise accomplishing the goal of disbursing as much of the amount represented by the Distribution Checks as possible.
2.3.5. Samson shall escheat to the applicable state any amount represented by any Distribution Check, which remains uncashed as of the date said escheatment is required by the laws of such state.
2.3.6. On or before the end of the sixth (6th) full month following the filing of the accounting required by Paragraph 2.3.4, Samson shall file with the Court a final accounting showing the status of all Distribution Checks. Such accounting shall not indicate owner names.
2.3.7. Samson shall not take any position on the request by Plaintiffs' counsel for an award of Attorney's Fees and Litigation Costs.
2.4.1 Payment of Royalties to Settlement Class Members For Gas Produced After Effective Date:
For Hydrocarbons produced after the Effective Date, Samson agrees to pay Royalties to Settlement Class Members pursuant to the Future Royalty Payment Methodology with the following conditions:
a. Samson and Plaintiffs acknowledge that Samson needs or may need to make system changes to accommodate alterations to accounting methodology; and Samson agrees to make such system changes by not later than ninety (90) days after the Approval Event. For the production periods commencing upon the Effective Date, through the second full production month after the month in which the Approval Event occurs, Samson may pay according to its present methodology but shall make prior period adjustments on or before the day Samson distributes Royalties for the third full production month after the month in which the Approval Event occurs, to conform payments for those periods to the Future Royalty Payment Methodology.
b. If prior period adjustments are made on or before the time specified in Paragraph 2.4.1.a. above for the production periods commencing upon the Effective Date, through the second full production month after the month in which the Approval Event occurs, no interest, including Statutory Interest, shall be due. If Samson fails to timely make such adjustments, then simple interest shall be charged at 4% per annum from sixty (60) days after the last day of the production month to the date of the payment which results in the Settlement Class Members being paid according to the Future Royalty Payment Methodology.
2.4.2 Recordation:
After the Approval Event, either of the Parties may, at its option and expense, file and/or record a copy of the Settlement Order and Judgment, including this Agreement and all Exhibits, and may also file and/or record at its sole election and expense a short form of notice of the Settlement Order and Judgment with the appropriate County Clerk and Recorder, accompanied by the legal descriptions of the lands or leases under which the Samson Wells produce, and which includes a reference to the Settlement Order and Judgment in the Court's docket, in order to assure that constructive notice of this Agreement is provided to successors and assigns of the Settlement Class Members and Samson.
2.5 Entry of Settlement Order and Judgment
Plaintiffs and Plaintiffs' counsel acknowledge that they will take all steps necessary, individually and jointly, to promptly obtain entry of (1) the Preliminary Approval Order with respect to the Settled Claims, and (2) the Settlement Order and Judgment on the Settled Claims for the Class Suit.
2.6 Requests for Exclusion by Potential Class Members
Any Potential Class Member may request not to participate as a Settlement Class Member by submitting a timely request for exclusion in accordance with the Preliminary Approval Order and the Settlement Class Notice, provided however, a Potential Class Member shall not be entitled to Opt-Out as to only a part or portion of the Settled Claims belonging to such Potential Class Member(s).
2.6.1 Any Potential Class Member who submits a timely request for exclusion, and who does not revoke that request for exclusion in writing at least seven (7) days prior to the Settlement Hearing, is an Opt-Out Claimant. An Opt-Out Claimant is deemed to have waived any and all claims to any part of the Settlement Amount.
2.6.2 A Potential Class Member who submits a timely request for exclusion, but who thereafter revokes that request for exclusion in writing at least seven (7) days prior to the Settlement Hearing, will be deemed to be a Settlement Class Member and not an Opt-Out Claimant.
2.6.3 The Plaintiffs agree to (i) participate as Settlement Class Members; (ii) not request exclusion; (iii) not object to the Court's approval of this Agreement; and (iv) affirmatively present their support for final judicial approval of this Agreement.
2.6.4 Neither Plaintiffs, Plaintiffs' counsel, Samson nor Samson's counsel shall in any way encourage or counsel any Potential Class Member to opt out of the class, object to the class, appeal from an order approving the class or seek to reduce the size of the class.
2.6.5 Plaintiffs and Samson waive any right to appeal or collaterally attack the Settlement Order and Judgment if entered substantially in the form of Exhibit E to this Settlement Agreement.
2.6.6 In the event Plaintiffs' counsel receive a request for exclusion from a Potential Class Member which has not been filed with or submitted to the Court, within five (5) days after receipt Plaintiffs' counsel shall file the request with the Court and deliver to Samson's counsel a copy of the request.
2.7 Entry of Judgment
It is intended that the Settlement Order and Judgment shall be a final and appealable judgment that will effectuate this Settlement Agreement, including, but not limited to, the release of the Settled Claims and the payment of the Settlement Amount. The entry of judgment shall not affect Samson's obligations in this Agreement as to future payment and reporting of Royalties to Settlement Class Members and the Parties' and Settlement Class Members' agreements to be bound by same. Samson and Plaintiffs and Settlement Class Members agree the Court shall retain jurisdiction over the Parties, Settlement Class Members and their heirs, successors and assigns, for purposes of enforcing performance under this Agreement, including to resolve any disputes concerning Samson's compliance with the Future Royalty Payment Methodology.
2.8 Representations by Samson
Samson makes the following representations:
2.8.1 For purposes of this settlement, Samson has classified as "expressly authorize" those Instruments under which it has paid Royalties at any time from and after December 2004 using the definition set forth in paragraph 3 of Plaintiffs' Complaint and has classified as "gross proceeds" Instruments under which it has paid Royalties at any time from and after December 2004 using the definition of "Gross Proceeds Instruments" set forth in the 18th "Whereas" provision of this Agreement.
2.8.2 Samson's August 5, 2009 responses to Plaintiffs' informal settlement questions number 2, 3, 4, and 5 were true and correct as of August 5, 2009 and as of the execution of this Agreement. Such informal settlement questions numbered 2, 3, 4, and 5, and Samson's responses thereto, were as follows:
" 2. A description of the activities undertaken by or on behalf of Samson in connection with the movement of the gas at issue between the wellhead and the place of sale by Samson, including any compression, treatment, processing, dehydration, gathering and transportation activities.
There are several different types of setups regarding the movement of the gas at issue between the wellhead and the place of sale by Samson. All of the gas at issue is delivered to third party gathering systems which are discussed in Paragraph 3 below. As used throughout this document, `gather(s)' and `gathering' are generic terms denoting any transportation prior to FERC regulated interstate mainline transportation, and are not intended to imply any characterization regarding the condition of, location of, or market for gas at any point. This Paragraph 2 describes the activities prior to the point at which the gas at issue enters the third party gathering systems, such point being described as the initial delivery point.
(a) Direct Connect Wells: Some wells are connected directly to the initial delivery point with some combination of the following equipment on the lease or unit between the wellhead and the initial delivery point: production unit (consisting of some combination of a separator, dump valves, control valves, and/or meter run), separator, compressor, and/or a dehydrator.
(b) Wellhead Equipped CDP Wells: Some wells are configured where they each have their own production unit, separator, compressor, and/or dehydrator and the gas from such wells is combined at a central delivery point for delivery into the initial delivery point. Gas from each well is separately metered before being delivered into the initial delivery point.
(c) Centrally Equipped CDP Wells: Some wells are connected directly to a Samson central delivery point. After flowing through an allocation meter, the gas is then sent into some combination of separators, compressors, dehydrators, and/or check meters before being delivered into the central delivery point.
There may be other limited situations which do not fall entirely within the descriptions above.
3. The identification and description of the gathering system(s) used by Samson with respect to the gas at issue, together with applicable gas gathering agreements and system maps.
(a) Red Cedar Gathering Company (Red Cedar System): Red Cedar provides low and intermediate pressure compression, gathers, and treats the gas and redelivers the gas to Samson.
(b) Maralex Resources, Inc. (Unnamed flowlines): Maralex provides low pressure compression and flows the gas for Samson for redelivery into Red Cedar.
(c) Williams Field Services Company (Ignacio System): Williams provides intermediate pressure compression, gathers, and treats the gas and redelivers the gas to Samson.
(d) BP America Production Company (Florida Plant): BP provides intermediate pressure compression, gathers, and treats the gas and redelivers the gas to Samson.
[INAPPLICABLE LANGUAGE OMITTED]
4. A description of Samson's royalty payment methodology from the date Samson acquired the royalty instruments to date with respect to the gas at issue, including changes made over time.
Samson makes royalty and overriding royalty payments based on gross values determined separately for each gathering system by multiplying (i) the price received by Samson from its gas sales to non-affiliated third-party purchasers at point(s) downstream from the wellheads by (ii) the combined gas volumes at the initial delivery points from all wells connected to such gathering system. Except in those instances commencing December 2007 as discussed below, Samson subtracts from these gross values, as applicable, amounts for severance taxes and certain costs incurred and fuel consumed, as reported on our check detail, for services furnished between the initial delivery point and Samson's point of sale in order to increase the value of the gas. The resulting values are allocated back to each well flowing into such gathering system based on the respective volumes produced from each well. Effective with December 2007 sales Samson stopped subtracting from the gross value amounts for costs incurred and fuel consumed prior to the tailgate of the third party gathering systems with respect to non-working interest owners.
5. A description of how Samson markets the gas at issue from the date Samson acquired the royalty instruments to present, including changes made over time.
Samson markets the gas at issue by selling the gas in any of the following pipelines.
(a) El Paso Pipeline: Gas sold on the El Paso pipeline is sold into the pipeline.
(b) Transwestern Pipeline: Gas sold on the Transwestern Pipeline is sold into the pipeline or at downstream points on such pipeline.
(c) TransColorado Pipeline: Gas sold on the TransColorado Pipeline is sold into the pipeline or at downstream points on such pipeline."
In addition, Samson has marketed gas at issue by selling in the Northwest Pipeline. Gas sold on the Northwest Pipeline is sold into the pipeline or at downstream points on such pipeline.
2.8.3 Samson provided electronic data to Plaintiffs concerning amounts of subtractions from sales proceeds on August 17, 2009 (royalties, overriding royalties, and overriding royalties carved from Tribal leases), September 9, 2009 (royalty interest owners who also own working interests), September 11, 2009 (working interest owners who indicated an intent to opt out, aggregated) and October 21, 2009 ("by month" information). Samson has excluded from such electronic data only data related to those Instruments classified as "expressly authorize" and owners who are identified in subparagraphs (b) through (u) of Paragraph 1.19. The electronic data did not include subtractions for any amount required to be withheld by Samson for Colorado conservation or severance taxes.
2.8.4 Samson has excluded from Exhibit B only those persons and entities who are either paid Royalties exclusively under Instruments classified as "expressly authorize" or are owners who are identified in subparagraphs (b) through (u) of Paragraph 1.19.
2.8.5 The electronic data described above was prepared as set forth in Samson's August 5, 2009 response to Plaintiffs' informal settlement question number 6. Plaintiffs' informal settlement question number 6, and Samson's response, were as follows:
" 6. The amounts of deductions or subtractions from royalty payments with respect to the gas at issue, on a mcf or mmbtu basis, including volumetric reductions, from the date Samson acquired the royalty instruments to date, by separately identifying deductions or subtractions incurred for activities before the gas enters the mainline transmission pipeline and those incurred thereafter.
Samson will provide accounting spreadsheets detailing the amount of subtractions from sales proceeds made by Samson when calculating royalty payments with respect to the gas at issue. The spreadsheets will be provided separately for royalties, overriding royalties carved from fee leases, and overriding royalties carved from tribal leases. The spreadsheets will identify all subtractions from the value for costs incurred between the initial delivery point to third parties and the tailgate of the applicable plant separately from the subtractions from such value for costs incurred after such tailgates, and will also identify the value of gas used as fuel downstream of the initial delivery point for the same segments of the transportation process. Finally, the schedules will break out the costs incurred within the three-year statute of limitations separately from the amounts beyond such cutoff date."
2.8.6 The wells identified on Exhibit A are all the wells located in La Plata County, Colorado for which Samson has paid Royalties to a Potential Class Member at any time from December 1, 2004 through November 1, 2009.
2.8.7 The persons or entities listed on Exhibit B are all of the Potential Class Members.
2.8.8 Each person or entity identified in Paragraph 1.16(e) through (t) has provided to Samson written notice of its intent to opt out of the Class Suit or its desire to be excluded from the Class Suit, with the exception of the entity identified in Paragraph 1.16(m) who has provided oral notice. Samson represents that it has not provided any consideration to such persons or entities in order to either obtain such indications of intention or desire, or to settle all or part of any Settled Claims.2.9 Settlement Class Members' Release of Settled Claims and Agreement to Be Prospectively Bound
Upon the Approval Event, Plaintiffs and each Settlement Class Member, and their respective heirs, successors, assigns, trustees, executors, administrators, personal representatives and agents, agree:
2.9.1 That they and each of them shall release, acquit, hold harmless and forever discharge Samson and Samson's Additional Released Parties to the fullest extent permitted by law, for and from any and all Settled Claims as well as any claims regarding the allocation of the Settlement Amount among the Settlement Class Members. This release includes any costs, expenses or losses associated therewith. They and each of them shall be bound by the provisions of Paragraph 2.4.2 and shall release all Future Hydrocarbon Royalties Claims.
2.9.2 The above release of Future Hydrocarbon Royalties Claims for production months commencing upon the Effective Date through the second full production month after the month in which the Approval Event occurs shall be effective only if and to the extent Samson complies with the provisions of Paragraphs 2.4.1 and 1.9 of this Agreement.
2.9.3 The above release of Future Hydrocarbon Royalties Claims other than for production months commencing upon the Effective Date through the second full production month after the month in which the Approval Event occurs shall be effective only if and to the extent Samson complies with the provisions of Paragraphs 1.9 and 2.4.1 of this Agreement.
2.9.4 Settlement Class Members shall be bound prospectively by the Future Royalty Payment Methodology, provided Samson's payment of Royalties conforms to the Future Royalty Payment Methodology.
2.9.5 The provisions of Paragraph 2.9.4 shall be appurtenant to and run with the respective interests of Samson, Plaintiffs and the Settlement Class Members in the Hydrocarbons produced or to be produced for Samson's account from the Samson Wells.
2.10 Court's Settlement Orders
The Plaintiffs and Samson further agree, and the Court's orders shall provide, that:
2.10.1 As of the Approval Event, any Settlement Class Member who has not timely and properly opted out of the Settlement Class shall be deemed, by that fact, to have released Samson and Samson's Additional Released Parties whether or not the Settlement Class Member endorses and presents a Distribution Check.
2.10.2 The foregoing release of the Settled Claims made by Plaintiffs and Settlement Class Members is effective to release any interests or claims of Plaintiffs' counsel against Samson with respect to the Settled Claims.
2.10.3 As of the Approval Event, any Settlement Class Member shall be deemed, by that fact, to have agreed to and accepted prospectively the provisions of Paragraph 2.9.
The releases and agreements set forth herein shall constitute a full and complete defense to any action, claim or proceeding brought by any Settlement Class Members, and to the fullest extent permitted by law their predecessors, heirs, personal representatives, successors and assigns for such claims, except for any action to enforce the terms of this Agreement.
2.11 Taxes
Plaintiffs and Settlement Class Members shall be responsible for filing any tax returns and for paying any taxes that may be due on their proportionate share of the Settlement Amount. Samson will withhold Colorado Severance Tax from Distribution Checks, to the extent such withholding is required by Colorado law, and will pay any such amounts to the State of Colorado in accordance with Colorado law. Samson shall have no other liability or responsibility for filing any tax returns or for paying any taxes with respect to amounts paid under this Agreement. Samson shall file any and all tax forms and provide any reports to Settlement Class Members and others as Samson is required by either state or federal law or regulation.
3. EFFECT OF DISAPPROVAL
The Parties further agree as follows:
3.1 Court Disapproval
If for any reason the Preliminary Approval Order is not approved or entered by the Court in a form substantially similar to Exhibit D, or the Settlement Order and Judgment is not approved or entered by the Court in a form substantially similar to Exhibit E, or is entered but approval thereof is not upheld on appeal:
3.1.1 This Agreement shall terminate;
3.1.2 Any order(s) or judgment(s) entered pursuant to this Agreement shall be vacated;
3.1.3 The Class Suit against Samson shall proceed as if this Agreement and its terms had never been executed;
3.1.4 This Settlement Agreement, its terms and all negotiations relating thereto and documents produced in connection therewith (including all motions and orders for preliminary or final certification of the Settlement Class or approval of this Agreement), may not be used in the Class Suit, any other proceedings or otherwise for any purpose.3.2 Appeal Following Court Approval
In the event that the Settlement Order and Judgment entered by the Court is followed by an appeal taken by any person, then the Parties may agree to waive any unsatisfied condition for release of the Settlement Amount and otherwise agree to consummate this Agreement, if no stay of the Settlement Order and Judgment has been entered.
4. MISCELLANEOUS
Samson Resources Company
4.1 For the purposes of this Agreement, any notice required or permitted to be given pursuant to this Agreement shall only be deemed to have been given if provided in writing by (i) personal delivery, (ii) certified mail, return receipt requested or (iii) overnight delivery (with delivery confirmation), addressed to the respective party at the address below:John R. Cooney Michael G. Daniel Charles A. Armgardt Vice President Modrall, Sperling, Roehl, Harris General Counsel Sisk, P.A. Samson Investment Company 500 Fourth Street, NW, Suite 1000 Samson Plaza Albuquerque, NM 87102 Two West Second Street (505) 848-1800 Tulsa, OK 74103 (505) 848-1891 (fax) (918) 591-1009 jcooney@modrall.com (918) 591-7009 (fax) carmgardt@modrall.com
Plaintiffs/Class Counsel:
th Thomas D. Kitch G.R. Miller Gregory J. Stucky Miller Agro Robbins LLC David G. Seely 101 W. 11 Street, Suite 112 Fleeson Gooing Coulson Kitch, Durango, CO 81032 LLC (970) 247-1113 1900 Epic Center (970) 259-2690 (fax) Wichita, KS 67201-0997 miller@marattys.com (316) 267-7361 (316) 267-1754 (fax) tkitch@fleeson.com gstucky@fleeson.com dseely@fleeson.com The Parties agree that all notices shall also be sent by facsimile to the fax numbers noted above (with receipt confirmed) or by e-mail in addition to the other required notice. The persons to receive notice or the addresses for any party may be changed by providing notice in the same manner as set forth above.Notice to Settlement Class Members shall be given in the manner agreed to by the Court in its Order Preliminarily Approving this Settlement.
4.2 Nothing in this Agreement shall be construed to create a partnership or other association between the Parties or the Settlement Class Members with respect to the actions contemplated in this Agreement.
4.3 This Agreement and the attached Exhibits set forth the entire agreement among the Parties concerning the Class Suit and the resolution of the claims asserted therein. This Agreement and the attached Exhibits are intended to be a fully integrated agreement of the Parties. All previous covenants, promises, agreements, conditions or other understandings, either oral or written, with respect to the subject matter are deemed superseded by this Agreement. No subsequent amendments or alterations of the terms of this Agreement shall be valid unless made in writing and signed by the authorized representatives of all the Parties. The following Exhibits referred to herein are incorporated by this reference and are made a part of the Agreement as though fully stated in the Agreement:Exhibit A — List of Existing Samson Wells Exhibit B — List of Potential Class Members Exhibit C — List of Demarcation Points Exhibit D — Order Conditionally Certifying a Settlement Class, Preliminarily Approving Settlement Agreement, Approving Form of Notice, and Scheduling Fairness Hearing Exhibit E — Settlement Order and Judgment Exhibit F — Plan of Allocation
4.4 The Parties agree to execute documents or instruments as may be required and take whatever action may be reasonably necessary to effectuate the purpose and intent of this Agreement.
4.5 This Agreement shall survive any Judgment entered by the Court, and shall be binding upon and inure to the benefit of the Parties, the Settlement Class Members and their respective heirs, successors, assigns, trustees, executors, administrators, personal representatives and agents. In the event any of Samson's working interest in the Samson Wells is assigned, this Agreement shall be deemed to be a separate agreement as to the assignee and a default hereunder by one assignee shall not be deemed to be a default by Samson or any other assignee.
4.6 The waiver by any Party to this Agreement of the breach of any provision shall not constitute a waiver of any subsequent breach of the same or any other provision.
4.7 The Parties have entered into this Agreement after investigation of the facts, examination of the respective claims, controversies and disputes (whether asserted or unasserted) and defenses, due consultation with counsel and other experts, have read and fully understand the terms of this Agreement, and are fully advised and satisfied with the terms of the settlement and release and represent that the person signing on behalf of each such party has full authority to bind such party to the terms set forth herein.
4.8 The Parties agree that the settlement embodied in this Agreement, and all actions taken pursuant hereto, is made to compromise and settle the Settled Claims without further litigation. It is not and shall not be interpreted as an admission of any liability or wrongdoing by Samson or that a class should be certified other than in connection with this Agreement, nor shall it be construed as an admission of any strength or weakness in the claims or defenses asserted in the Class Suit, Samson believes that it has properly paid and reported royalties in Colorado, and Samson denies any wrongdoing or liability. No statement appearing in this Agreement or in any Exhibit to this Agreement or any other document to carry out the terms of this Agreement is, or should be interpreted as, an admission or statement against interest by Samson. Prior to a Party filing any suit, motion or action to enforce the terms of this Agreement the party shall give notice of any alleged breach or default to the other party pursuant to the notice provisions of Paragraph 4.1 and give that Party thirty (30) days within which to cure or resolve any dispute.
4.9 Each of the Parties shall bear its own costs, expenses, and attorney's fees in connection with this settlement and performance of the obligations imposed hereunder, except as otherwise specifically provided in this Agreement.
4.10 In construing this Agreement and in determining the rights of the Parties and Settlement Class Members, no Party shall be deemed to have solely drafted or created the Agreement.
4.11 This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado without regard to any conflict of laws principle that would cause this Agreement to be construed in accordance with the laws of any other State.
4.12 The provisions of this Agreement are not severable.
4.13 This Agreement may be signed in original counterparts, and when so executed by each party shall for all purposes be considered an original. A signature provided by facsimile or by other electronic means shall for all purposes be considered an original.
4.14 The provisions of this Agreement shall, where possible, be interpreted in a manner to sustain their legality and enforceability.SAMSON RESOURCES COMPANY By: _________________________________ Michael G. Daniel Title: General Counsel STATE OF OKLAHOMA ) ) ss. COUNTY OF TULSA ) The foregoing instrument was acknowledged before me this 15th day of January, 2010 by Michael G. Daniel as General Counsel of Samson Resources Company, an Oklahoma corporation, on behalf of the corporation.
Witness my hand and official seal.
My commission expires: __________________________
______________________________________ Notary Public ______________________________________ ______________________________________ APPROVED: Modiall, Sperling, Roehl, Harris Dugan Associates Sisk, P.A. By: ________________________________ By: ______________________________ John R. Cooney Thomas P. Dugen Charles A. Armgardt 900 Main Avenue, Suite A Post Office Box 2168 (87103-2168) Durango, CO 81301 Bank of America Centre (970) 259-1770 500 Fourth Street NW, Suite 1000 (970) 259-1882 (fax) Albuquerque, New Mexico 87102 (505) 848-1800 (505) 848-1891 (fax) Counsel for Samson LLH Operations LLLP By: _________________________________ Alton Hess as Class Representative Title: _____________________________ STATE OF Colorado ) ) ss. COUNTY OF La Plata ) The foregoing instrument was acknowledged before me this 15th day of January, 2010, by Alton Hess, Individually and asManager of LLH Operations LLLP, Individually and as Class Representative.Witness my hand and official seal.
My commission expires: 9/17/2013. Notary Public 1099 Main Ave Duranqo, Co 81301 Address
____________________ The Estate of Mary B. Fassett Personal Representation By: ____________________________ Title: STATE OF COLORADO ) ) ss. COUNTY OF LA PLATA) The foregoing instrument was acknowledged before me this 15th day of January, 2010, by Harry L. Fassett, as Personal Representation of The Estate of Mary B. Fassett, Individually and as Class Representative.Witness my hand and official seal.
My commission expires: 9/17/2013. Notary Public 1099 Main Ave Durarqo, Co 81301 Address th
___________________ APPROVED: Fleeson Gooing Coulson Kitch, LLC Miller Agro Robbins LLC By: ____________________ By: _____________________ Thomas D. Kitch G.R. Miller Gregory J. Stucky 101 W. 11 Street David G. Seely Suite 112 1900 Eplo Center Durango, CO 81302 Wichita, KS 67201-0997 (970) 247-1113 (316) 267-7361 (970) 259-2690 (fax) (316) 267-1754 (fax) Counsel for PlaintiffsEXHIBIT 2
LLH Operations v. Samson OPT OUTS Filing Date Name Owner Number 04/12/2010 Frederick M. McDaniel 086588 04/26/2010 Rita Rowe 087015 04/26/2010 Marathon Oil Company 241679 05/04/2010 Chevron U.S.A. Inc. 158633 05/04/2010 Four Star Oil and Gas Co. 086533 05/04/2010 Chevron North American 086553 05/05/2010 Williams Production Company, LLC 229885EXHIBIT 3 PLAN OF ALLOCATION
With reference to the Excel spreadsheet sent to us via email, dated October 21, 2009, entitled "By Month Settlement(W1066974).XLSX," (the Spreadsheet) perform the following calculations:A. For each month shown under the "Gross Proceeds" and the "Silent Leases" Tab on the Spreadsheet, dissassemble the data for each month to show each interest owner whose payments are reflected in such data (Royalty Owner) and that Royalty Owner's information for each of the columns shown the Spreadsheet (Owner Information By Month);
B. Under the "Gross Proceeds" Tab of the Spreadsheet, for each Owner Information by Month, sum the amounts in columns H and O (Gross Proceeds Principal Amount-Owner Information by Month) and then compute interest on each such Gross Proceeds Principal Amount-Owner Information by Month at 8% compounded per annum (Owner Monthly Amount for Gross Proceeds Leases) through November 1, 2009; and total all Owner Monthly Amounts for Gross Proceeds Leases (the Grand Total for Gross Proceeds Leases);
C. Under the "Silent Leases" Tab of the Spreadsheet, for each Owner Information by Month, sum the amounts in columns D and K (Silent Leases Principal Amount-Owner Information by Month); calculate 80% of each such Silent Leases Principal Amount-Owner Information by Month; and then compute interest on each such Silent Leases Principal Amount-Owner Information by Month at 8% compounded per annum (Owner Monthly Amount for Silent Leases) through November 1, 2009; total all Owner Monthly Amounts for Silent Leases (the Grand Total for Silent Leases);
D. Total the Grand Total for Gross Proceeds Leases and the Grand Total for Silent Leases (Formula Grand Total);
E. Divide 3,626,000 by the Formula Grand Total to Arrive at Adjustment Factor;
F. Multiply the Adjustment Factor by each Owner Monthly Amount for Gross Proceeds Leases (Adjusted Owner Monthly Amount for Gross Proceeds Leases);
G. Multiply the Adjustment Factor by each Owner Monthly Amount for Silent Leases (Adjusted Owner Monthly Amount for Silent Leases);
H. For each Royalty Owner, total each Adjusted Owner Monthly Amount for Gross Proceeds Leases and each Adjusted Owner Monthly Amount for Silent Leases.