AGREEMENT OF SALE AND PURCHASE by and between RBE, LLC (Seller) and PIONEER NATURAL RESOURCES USA, INC. (Buyer) Dated: February 28, 2007
Execution
Copy
by
and between
RBE,
LLC
(Seller)
and
PIONEER
NATURAL RESOURCES USA, INC.
(Buyer)
Dated:
February 28, 2007
TABLE
OF CONTENTS
|
1.
|
Property
to be Sold and Purchased.
|
1
|
|
2.
|
Effective
Date.
|
3
|
|
3.
|
Purchase
Price and Performance Deposit.
|
3
|
|
4.
|
Allocation
of Base Purchase Price.
|
4
|
|
5.
|
Representations
of Seller.
|
4
|
|
6.
|
Representations
of Buyer.
|
8
|
|
7.
|
Certain
Covenants of Seller Pending Closing.
|
9
|
|
8.
|
Due
Diligence Reviews.
|
11
|
|
9.
|
Certain
Price Adjustments.
|
13
|
|
10.
|
Conditions
Precedent to the Obligations of Buyer.
|
15
|
|
11.
|
Conditions
Precedent to the Obligations of Seller.
|
16
|
|
12.
|
The
Closing.
|
17
|
|
13.
|
Certain
Accounting Adjustments.
|
19
|
|
14.
|
Assumption
and Indemnification.
|
20
|
|
15.
|
Disclaimer
of Warranties.
|
24
|
|
16.
|
Commissions.
|
25
|
|
17.
|
Notices.
|
25
|
|
18.
|
Survival
of Provisions. Certain Limitations on Liability.
|
26
|
|
19.
|
Miscellaneous
Matters.
|
26
|
List
of Exhibits:
Exhibit
A - Oil
and
Gas Properties
Exhibit
B - Contracts
Exhibit
1-E - Excluded
Assets
Exhibit
D
- WI/NRI
Exhibit
4 Allocated
Values
Exhibit
5(d) - Scheduled
Consents
Exhibit
5(f) - Actions
Exhibit
5(g) Contested
Liens
Exhibit
5(h) - Liens
and
Encumbrances
Exhibit
5(j) - Tax
Matters
Exhibit
5(l) - Permits
Exhibit
5(m) - Agreements
Exhibit
5(n) - No
Default; Terms
Exhibit
5(o) - Drilling
and Development
Exhibit
7(a) - Confidential
Materials
Exhibit
E - Conveyance
Exhibit
12(a)(6) - Form
of
Closing Statement
Exhibit
12(a)(8)(i) - Seller’s
Officer Certificate
Exhibit
12(a)(8)(ii) - Seller’s
Non-Foreign Affidavit
Exhibit
12(a)(9) - Certificate
of Manager of Seller
THIS
AGREEMENT (“Agreement”)
dated
February 28, 2007 by and between RBE,
LLC (herein
called “Seller”)
and
Pioneer
Natural Resources USA, Inc. (herein
called “Buyer”)
(Seller and Buyer are sometimes referred to collectively as the “Parties” and
each a “Party”);
WITNESSETH:
Seller
desires to sell and assign to Buyer, and Buyer desires to purchase and acquire
from Seller, all of Seller’s rights, titles and interests in the Properties, as
hereinafter defined), in accordance with the terms and provisions of this
Agreement.
Reference
is made to the
following agreements (collectively, the “CoP
Agreements”):
(i) the
Participation Agreement dated as of August 9, 2004, by and between
ConocoPhillips Company and Xxxxxxxxx Petroleum Corporation, as amended, (ii)
Participation Agreement dated as of December 7, 2004, between Xxxxxxxxx
Petroleum Corp. and Xxxxxxx RBE Holdings, LLC, as amended, and (iii)
Participation Agreement dated as of December 17, 2004, between Xxxxxxx RBE
Holdings, LLC and RBE, LLC, as amended,
and the
conveyances or assignments recorded in the Texas counties where the Oil and
Gas
Properties are located and which were executed or delivered in connection with
such agreements in (i),(ii) and (iii) above.
AGREEMENT:
For
the
mutual benefits and obligations set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
Parties hereby agree as follows:
1. Property
to be Sold and Purchased.
Seller
agrees to sell and Buyer agrees to purchase, for the consideration hereinafter
set forth, and subject to the terms and provisions herein contained, the
following described properties, rights and interests (except to the extent
any
of the same constitute any Excluded Assets, as defined below):
(a) The
respective undivided Working Interests (as hereinafter defined) and Net Revenue
Interests (as hereinafter defined) in and to, together with all of Seller’s
rights, titles and interests in and to, the oil, gas and/or mineral leases
or
leasehold interests described in Exhibit
A
hereto
and all lands covered by said leases and leasehold interests, mineral and
surface fee interests, royalty and overriding royalty interests, and any rights
and interests attributable to any of the foregoing interests by virtue of any
pooling, unitization, communitization, operating or other agreements, and in
and
to any ratifications and/or amendments to such leases, all being subject to
any
reservations, depth limitations, or other restrictions in or under the CoP
Agreements (collectively the “Oil
and Gas Properties”);
and
(b) All
rights, titles and interests of Seller in
and to
all contracts
and agreements relating to the Oil and Gas Properties including but not limited
to production sales contracts, operating agreements, unit agreements, processing
agreements, transportation agreements, the
CoP
Agreements and
any
other
contracts and agreements that are listed on Exhibit
B
hereto
which relate to any of the Oil and Gas Properties, to
the
extent and only to the extent,
such
rights, titles and interests are attributable to the Oil and Gas Properties
(collectively the “Contracts”);
and
(c) All
of
Seller’s rights, titles and interests in and to, all xxxxx (including oil and
gas xxxxx and wellbores), materials, supplies, machinery, equipment,
improvements and other personal property and fixtures (including but not limited
to all casing, pipelines, xxxxx, wellhead equipment, pumping units, flowlines,
tanks, buildings, injection facilities, saltwater disposal facilities,
compression facilities, gathering systems, and other inventory and equipment)
located on the Oil and Gas Properties and used in connection with the
exploration, development, operation or maintenance thereof, to
the
extent, and only to the extent,
such
rights, titles and interests are attributable to the Oil and Gas Properties
(collectively the “Personal
Property”);
and
(d) All
rights, titles and interests of Seller in and to all rights of way, easements,
surface leases, and other rights of surface use which relate to any of the
Oil
and Gas Properties or Personal Property, to
the
extent and only to the extent,
such
rights, titles and interests are attributable to the Oil and Gas Properties
(collectively the “Surface
Interests”);
and
(e) All
rights, titles and interests of Seller in and to all natural gas, casinghead
gas, drip gasoline, natural gasoline, natural gas liquids, condensate, products,
crude oil and all other liquid or gaseous hydrocarbons produced from or
otherwise allocable to the Oil and Gas Properties or the Personal Property
on
and after the Effective Date (as defined below) (collectively the “Hydrocarbons”)
and
all the proceeds therefrom or attributable thereto;
(f) All
of
Seller’s files, records, documents, correspondence and data pertaining to the
interests described in subsections (a), (b), (c), (d), (e), (f) and (g) of
this
Section 1 including but not limited to lease files, land files, well files,
contract files, division order files, title opinions, engineering files,
geological, geophysical and seismic records, plats, surveys, maps,
cross-sections, production records, electric logs, cuttings, cores, core data,
pressure data, decline and production curves, well files and all related
matters, but excluding any interpretive information pertaining to economic
or
reserve forecasts (collectively the “Records”)
and
(g) Subject
to any limitation on assignment thereof, all of Seller’s rights, titles and
interests, if any, in and to the benefit of, and full power and right of
substitution and subrogation for, 1) all warranties (including title warranties)
and indemnities provided by third parties in favor of Seller or its
predecessors, subject to any limitations on assignment thereof, pertaining
to
the Oil and Gas Properties, Contracts, Personal Property, Surface Interests,
Hydrocarbons, and Records after the Effective Date and before the Effective
Date) and 2) all other intangible rights, properties or interests of or
pertaining to the Oil and Gas Properties, Contracts, Personal Property, Surface
Interests, Hydrocarbons and Records, to
the
extent and only to the extent,
such
rights, titles and interests are
attributable
to the Oil and Gas Properties(except that as to the period before the Effective
Date to the extent Seller is indemnifying Buyer hereunder Seller may retain
the
concurrent benefit of such indemnities and warranties) (collectively, the
“Tangible
and Intangible Rights”).
The
Oil
and Gas Properties, Contracts, Personal Property, Surface Interests,
Hydrocarbons, Records, and Tangible and Intangible Rights are herein sometimes
collectively called the “Properties”
and
each is a “Property;”
provided, however, that those assets, interests and claims described on
Exhibit
1-E
attached
hereto, or otherwise expressly excluded from the Properties pursuant to Section
7 or Section 9 of this Agreement and listed on a mutually agreed amended
Exhibit
1-E
to be
delivered by Seller at Closing, are excluded from the transactions contemplated
herein and shall not be deemed to be part of the Properties (collectively the
“Excluded
Assets”),
and
Buyer, its successors and assigns, shall have no liability, obligation or
responsibility with regard to the Excluded Assets. For purposes hereof, the
terms (x) “Net
Revenue Interest”
(or
“NRI”)
means the
undivided interest in the Hydrocarbons after deducting all royalties, overriding
royalties, production payments, and other burdens on the Hydrocarbons, expressed
as a percentage or a decimal; and (y) “Working
Interest”
(or
“WI”)
means
that undivided interest in the Hydrocarbons which is burdened by a share of
the
costs, expenses, burdens, and obligations of any type or nature attributable
to
the production and/or recovery of the Hydrocarbons, expressed as a percentage
or
a decimal.“Affiliate”
or
“affiliates”
means,
as to any Party, each other Person that directly or indirectly (through one
or
more intermediaries or otherwise) controls, is controlled by, or is under common
control or ownership with, such Person. “Person” means an individual,
corporation, partnership, association, joint stock company, trust or trustee
thereof, estate or executor thereof, unincorporated organization or joint
venture, court or other governmental unit or other agency or subdivision
thereof, or any other legally recognizable entity.
2. Effective
Date.
The
sale
of the Properties shall be effective as of 7 a.m. Central Time on
January 1, 2007 (the “Effective Date”).
3. Purchase
Price and Performance Deposit.
(a) The
purchase price for the Properties shall be Thirty-Five Million Five Hundred
Thousand and 00/100 Dollars ($35,500,000) (the “Base
Purchase Price”),
as
adjusted pursuant to this Agreement.
(b) As
evidence of its good faith intention to consummate the transactions contemplated
hereby, contemporaneously with the execution of this Agreement, Buyer has
tendered to Seller a cash performance refundable deposit in the amount of five
percent (5%) of the Base Purchase Price, said amount being One Million Seven
Hundred Seventy Five Thousand and 00/100 Dollars U.S. ($1,775,000) (the
“Performance
Deposit”).
In
the event the transactions contemplated herein close, the Performance Deposit
shall be retained by Seller and credited against the Purchase Price payable
by
Buyer hereunder.
4. Allocation
of Base Purchase Price.
Buyer
has
allocated the Base Purchase Price among the Properties as set forth on
Exhibit 4
attached
hereto for the purpose of (1) establishing a basis for certain taxes, and
(2) determining the value of a Defect (defined hereinbelow) for purposes of
adjusting the Base Purchase Price. The allocated amounts are referred to herein
as the “Allocated
Values.”
Buyer
and
Seller agree that the Allocated Values, as adjusted, shall be used by Seller
and
Buyer as the basis for reporting asset values and other items for purposes
of
all federal, state, and local tax returns.
5. Representations
of Seller.
For
purposes of this Section 5, reference to “Seller’s knowledge” means the facts
actually known, or which reasonably should have been known, by Seller. Seller
represents to Buyer that:
(a) Organization;
Qualification.
Seller
is
a limited liability company duly
formed and legally existing and in good standing under the laws
of the
State of Delaware and is duly qualified to own its Properties and to carry
on
its business as now being conducted.
(b) Authority.
Seller
has full power and authority to enter into and perform its obligations under
this Agreement, and has taken all proper
action to authorize Seller to enter into this Agreement and perform its
obligations
hereunder.
(c) No
Breach or Violation.
Other
than (1) requirements (if any) that there be obtained
consents to assignments from third parties (which
will be treated as provided in Section 7(d)) and (2) approvals (“Routine
Governmental Approvals”) required to be obtained from governmental
entities which are customarily obtained post closing, neither the execution
and
delivery of this Agreement by Seller nor the consummation by Seller of the
transactions contemplated hereby, nor the compliance by Seller with the terms
hereof, will
result in any (i) default under any Contract or any other agreement or
instrument to which
Seller is a party or by which Seller’s interest in the Properties is bound, or
violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
such
Seller or
to
Seller’s interest in the Properties, (ii) conflict with or result in a
breach of the regulations,
charter, articles of formation or partnership or other organization
documents of
Seller
or any other governing documents of Seller, (iii) violation of, conflict
with, or constitute a default under, or result in the creation or imposition
of
any security interest, lien, or encumbrance upon any of the Properties or other
property or assets of Seller under any mortgage, indenture, or agreement to
which it is a party or by which any of the Properties are bound, or
(iv) violation of any statute or law or any judgment, decree, order, writ,
injunction, regulation, or rule of any court or governmental
authority.
(d) Consents.
Except
for the consents and approvals listed in Exhibit
5(d)
(the
“Scheduled
Consents”),
no
consent or approval on the part of Seller or any other party, person, party
or
governmental authority is required to authorize the execution and delivery
of
this Agreement by Seller, the sale and transfer of the Properties, or the
consummation of the other transactions contemplated hereby.
(e) Enforceable.
This
Agreement constitutes (and the Conveyance provided for herein to be delivered
at
Closing will, when executed and delivered, constitute) the legal, valid and
binding obligation of Seller, enforceable in accordance with its terms, except
as limited by bankruptcy or other laws applicable generally to creditor’s rights
and as limited by general equitable principles.
(f) Actions.
Except
as shown on Exhibit
5(f),
there
are no pending, or to the best of Seller’s knowledge, threatened, suits,
actions, or other proceedings (including condemnation or similar proceedings)
or
claims which affect Seller’s interest in the Properties (including, without
limitation, any actions challenging or pertaining to Seller’s title to its
interest in any of the Properties) in any material respect, or affect the
execution and delivery of this Agreement by Seller, or the consummation by
Seller of the transactions contemplated hereby, or which could have a material
adverse affect on the use, value or operation of the Properties.
(g) Special
Warranty of Title.
Seller
will warrant and defend title to the interest in the Oil and Gas Properties
stated on Exhibit
A
hereto
against the claims and demands of all parties claiming or to claim the same
by,
through, or under Seller, but not otherwise, subject to the following
(collectively, “Permitted
Encumbrances”):
(i)
liens for taxes or assessments not yet due or delinquent or, if delinquent,
that
are being contested in good faith in the normal course of business;(ii)
conventional rights of reassignment (including, without limitation, any
contemplated in or under the leases constituting any of the Oil and Gas
Properties or in or under the CoP Agreements); (iii) easements, permits,
rights-of-way, and other rights in the Oil and Gas Properties for the purpose
of
surface operations, roads, railways, pipelines or other lines, removal of
timber, grazing, ditches, reservoirs, and other like purposes, or for the joint
or common use of real estate; (iv) vendors, carriers, warehousemen’s,
repairmen’s, mechanics, workmen’s, materialmen’s, construction liens or other
like liens arising by operation of law in the ordinary course of business or
incident to the construction or improvement of any property in respect of
obligations which are not yet due or which are being contested in good faith
by
appropriate proceedings by or on behalf of Seller, and if contested are listed
on Exhibit
5(g)
attached
hereto; and (v) liens created under leases constituting the Oil and Gas
Properties, operating agreements, or the CoP Agreements, or by operation of
law
in respect of obligations that are not yet due or that are being contested
in
good faith by appropriate proceedings by or on behalf of Seller, and if
contested are listed on Exhibit
5(g)
attached
hereto; provided that none of the foregoing subparts (i)-(v) above individually
or in the aggregate materially interfere with the operation or use of any of
the
Oil and Gas Properties (as currently owned and operated), do not reduce the
Net
Revenue Interest of Seller in any well, or lease to an amount less than the
Net
Revenue Interest set
forth
on Exhibit
D
therefor
(or
increase the Working Interest without a corresponding increase in the Net
Revenue Interest);
and (d)
any Defects waived by Buyer.
(h) No
Liens.
Except
as set forth on Exhibit
5(h)
and
except for Permitted Encumbrances (as defined in Section 5(g) above), none
of
the Properties are subject to any liens, security interests or other
encumbrances of any kind.
(i) No
Brokers’ Fees.
Seller
has incurred no liability, contingent, or otherwise, for brokers’ or finders’
fees relating to the transactions contemplated by this Agreement for which
Buyer
or its successors or assigns shall have any responsibility
whatsoever.
(j) Tax
Matters.
Seller
is not a “foreign person” as defined in Section 1445 of the Internal Revenue
Code of 1986 and in any regulations promulgated thereunder. Seller has paid
or
caused to be paid all state and local taxes, rates and like assessments for
periods prior to the Effective Date that have become due and payable which,
if
not so paid, could result in a lien or encumbrance upon any of the Properties,
including, without limitation, excise, property, ad valorem, franchise,
severance and production taxes; but not including (i) taxes, rates and like
assessments which are being contested in good faith, and are shown on
Exhibit
5(j),
(ii) taxes not yet due and payable, and (iii) taxes which are the
responsibility of Buyer.
(k) Compliance
with Laws.
To
Seller’s knowledge, neither Seller, nor the operator of those Properties
operated by third parties, has violated any laws, statutes, regulations, or
orders applicable to any of the Properties or the operation thereof which
violation (i) would have a material adverse affect on the value or
operation of the affected Properties, or (ii) has not been
remedied.
(l) Permits.
Except
as
set forth in Exhibit
5(l),
to the
best of Seller’s knowledge, all material franchises, licenses, permits,
approvals, consents, certificates and other authorizations and other rights
granted by governmental entities, and all certificates of necessity and other
similar rights that relate to the Properties, or the ownership, operation,
or
use thereof (collectively, the “Permits”)
affecting or required with respect to the Properties (i) have been obtained
and maintained (and no material violation exists in respect thereof),
(ii) have been, or at least ten (10) days prior to Closing will be, made
available for Buyer’s review, and (iii) are being transferred to Buyer in
this transaction, to the extent transferable.
(m) Agreements.
Except
as set forth in Exhibit
5(m)
and
other than with regard to the CoP Agreements, there is no provision or
obligation contained in any contract or agreement affecting the Properties
which
(i) is not substantially customary to currently accepted oil and gas
industry standards, (ii) requires an extraordinary and unusual expenditure
in connection with the operation of the Properties, or (iii) would
otherwise have a material adverse affect on Buyer’s ownership and/or operation
of any of the Properties. Except with regard to the CoP Agreements or those
items that would otherwise constitute a Permitted Encumbrance (as defined in
Section 5(g) above), there is no provision or obligation affecting the
Properties contained in any contract or agreement which (1) requires Buyer
to bear a greater share of the costs and expenses relating to the operation
of a
Property than the decimal Working Interest therein, as set forth in Exhibit
D
attached
hereto or (2) would, with respect to a Property, diminish the Net Revenue
Interest (or increase the Working Interest without a corresponding increase
in
the Net Revenue Interest) therein as set forth in Exhibit
D attached
hereto, except as such matters are noted in the “Comments” column of
Exhibit
D,
and
except to the extent resulting from elections made after Closing under customary
“non-consent” or “sole risk” provisions of joint operating agreements or joint
exploration agreements scheduled in Exhibit
5(m).
Exhibit
B
attached
hereto sets forth a true and complete list of all Contracts to which Seller,
any
of
Seller’s
affiliates (including any contracts or agreement between or among Seller and
any
of its affiliates), or any of the Properties are otherwise bound. True, correct
and complete copies of all Contracts (and all amendments or supplements thereto)
have been, or at least ten (10) days prior to Closing will be, provided to
Buyer. Except as set forth in Exhibit
5(m)
and
except with regard to the CoP Agreements, none of the Contracts or other
Properties would subject Buyer to any covenant not to compete, area of mutual
interest, or similar restriction.
(n) No
Default; Terms.
Except
as set forth in Exhibit
(5)(n),
each of
the Oil and Gas Properties and all leases related thereto and all other
Contracts (including, without limitation, those contracts described in
Exhibit
B)
are in
full force and effect and neither Seller nor, to the best of Seller’s knowledge,
any other party thereto is in default thereunder or in breach
thereof.
(o) Drilling
and Development.
Set
forth in the CoP Agreements, together with those items described on Exhibit
5(o),
in the
aggregate, constitute a true, correct and complete list and description of
(i) all obligations that Seller may have to drill xxxxx on any of the
Properties necessary to prevent such Properties from becoming subject to
forfeiture, loss, release, or the obligation to re-assign any acreage, lands,
leases (or portions thereof) affecting such a Property prior to the commencement
of any continuous drilling obligation or similar drilling obligation, and
(ii) a description of any clauses in leases affecting the Properties
requiring continuous drilling activity; SAVE
AND EXCEPT,
however, that Exhibit
5(o)
does not
include any reference to, and no representation is made in this Section 5(o)
with regard to, any lease habendum clauses requiring production in paying
quantities beyond the primary terms of leases to which the Properties are
subject.
(p) Entirety
of Seller’s Interest.
Except
as expressly stated otherwise in this Agreement or in Exhibit
1-E
attached
hereto, Seller is not retaining any interest in the oil, gas and/or mineral
leases or the production or proceeds comprising the Oil and Gas
Properties
(q) No
Calls on Production or Take or Pay. There
are
no calls or xxxxxx on production applicable to the Properties or the production
therefrom, and to the knowledge of Seller, there are no prepayment arrangements
under any contract for the sale of hydrocarbons containing a “take or pay” or
similar provision or a production payment or any arrangement to deliver
Hydrocarbons produced from the Properties at some future time without then
receiving full payment therefor; and, Seller has not produced a share of gas
from the Properties greater than Seller’s ownership percentage and is under no
obligation, and no oil or gas imbalance exists, to reduce Seller’s (or Buyer’s
on or after Closing, with regard to any existing imbalances) share of present
or
future production under any oil or gas balancing agreement or similar contract
or arrangement or otherwise to bring under-produced parties into
balance.
(r) Royalties
Paid. To
the
best of Seller’s knowledge, all royalties, rentals and other payment due with
regard to the Properties or the production therefrom have been properly and
timely paid.
(s) Preferential
Rights to Purchase. There
are
no rights of first refusal or preferential purchase rights that are applicable
to the Properties or any of them that are applicable to Seller or the
transactions contemplated by this Agreement.
(t) Environmental. To
Seller’s knowledge and only to the extent the same would have constituted a
“Defect” if discovered and asserted prior to Closing under Sections 8 and 9,
there is no existing environmental contamination of the surface or subsurface
of
the land underlying the Oil and Gas Properties or the surface water or
groundwater or soil resulting or related to the activities on the Oil and Gas
Properties which requires or will require with the passage of time remediation
under applicable law or regulation by Buyer (or its successors or assigns)
after
the Closing; provided, however, that excluded from this representation is any
matter that is either asserted by Buyer, or actually known by an executive
of
the Buyer who is a manager-level executive or above, on or prior to the date
specified in Section 8(a) below (being the date to submit any Asserted Defects
(as defined therein)).
6. Representations
of Buyer.
Buyer
Represents to Seller that:
(a) Organization.
Buyer
is a corporation duly organized and legally existing under the laws of the
State
of Delaware and is qualified to do business and in good standing in
Texas.
(b) Authority.
Buyer
has
full power to enter into and perform its obligations under this Agreement and
has taken all proper action to authorize entering into this Agreement and
performance of its obligations hereunder.
(c) No
Violation.
Neither
the execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, nor the compliance with the terms hereof,
will
result in any default under any agreement or instrument to which Buyer is a
party, or violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer.
(d) Enforceable.
This
Agreement constitutes (and the Conveyance provided for herein to be delivered
at
Closing will, when executed and delivered, constitute) the legal, valid and
binding obligation of Buyer, enforceable in accordance with its terms, except
as
limited by bankruptcy or other laws applicable generally to creditor’s rights
and as limited by general equitable principles.
(e) Actions.
There
are
no pending suits, actions, or other proceedings in which Buyer is a party which
affect the execution and delivery of this Agreement or the consummation of
the
transactions contemplated hereby.
(f) Securities.
Buyer
is
a knowledgeable purchaser, owner and operator of oil and gas properties, has
the
ability to evaluate (and in fact has evaluated) the Properties for purchase,
and
is acquiring the Properties for its own account and not with the intent to
make
a distribution thereof in violation of the Securities Act of 1933 as amended
(and the
rules
and
regulations pertaining thereto), or in violation of any other applicable
securities laws. Buyer has made its own independent investigation of the
Properties.
(g) No
Brokers.
Buyer
has
incurred no liability, contingent or otherwise, for brokers’ or finders’ fees
relating to the transactions contemplated by this Agreement for which Seller
shall have any responsibility whatsoever.
7. Certain
Covenants of Seller Pending Closing.
Between
the date of this Agreement and the Closing Date:
(a) Access.
To the
extent Seller is in possession, custody or control of the Properties and the
Records, Seller will give Buyer and its attorneys and other representatives
access at all reasonable times to the Properties and the Records, including,
without limitation,
(i) all title opinions and curative materials
related to the Properties
which
are in
its
possession or reasonably available to Seller, (ii) all assignments in its
possession or reasonably available to Seller tracing
its
interest in the Properties,
and
(iii) all joint operating agreements, farmout agreements, gas contracts,
oil and condensate
purchasing agreements, division orders, transportation
agreements and other agreements
to which it is a party, which relate to the Properties, and which are not
“Confidential
Materials”
(herein
so called) as identified on Exhibit
7(a).
Without
limitation of the foregoing, Seller shall furnish copies of all agreements
listed on Exhibit B,
whether
or not the same are currently in possession of Seller. Buyer may make
copies of such items, but shall, if Seller so requests, return all
copies so made if the Closing does not occur. Buyer recognizes and agrees
that, except as otherwise provided in this Agreement or the agreements
and instruments provided in connection herewith
at
Closing,
all materials made available to it (whether pursuant to this Section or
otherwise) in connection with the transaction contemplated hereby are made
available to it as an accommodation, and without representation or warranty
of
any kind as to the accuracy and completeness of such materials.
(b) Pre-Closing
Operations.
From
the date of this Agreement and continuing until the Closing, Seller shall cause
the Properties to be operated and maintained in a good and workmanlike manner,
consistent with past practices and consistent with good industry practices
of a
prudent operator in the oil and gas industry and in accordance with all
applicable laws and rules, keep its books and records true and correct in
accordance with past practices, maintain all of its existing insurance coverage
and pay all of its trade payables and other obligations on a timely basis.
Seller also will pay, or cause to be paid, on or before the time the same are
due, all drilling, completion, operating, transportation, facility, pipeline
and
workover expenditures which are properly billed to it, except for bills which
will not become due prior to Closing and bills being contested in good faith.
It
is recognized that, subject to the terms hereof, expenditures incurred in
connection with the Properties after the Effective Date shall be the
responsibility of Buyer if Closing occurs. If operations or other commitments
are proposed by third parties and the effect of an election not to participate
in the same would be the loss (either for a period of time or permanently)
of an
interest in the Properties (such operations or commitments being herein called
“Certain
Commitments”),
Seller will confer with Buyer as to the appropriate response and if Buyer and
Seller agree upon a response, Seller will respond as agreed.
Notwithstanding
Agreement
of Sale and Purchase
Page
9
anything
stated herein to the contrary, until the Closing Date, (i) Seller shall not
sell, remove or otherwise dispose of any of the Properties, or (ii) except
as necessary in the reasonable opinion of Seller in emergency situations to
preserve life or prevent material damage to property, Seller shall not, without
Buyer’s written consent, (u) authorize or make a capital expenditure,
voluntarily incur any liability or enter into any commitment or agreement with
respect to the Properties which will cost (or which could involve the payment
of
amounts) in excess of $50,000, in the aggregate, with respect to an individual
project or series of related projects (provided that such consent shall not
be
unreasonably withheld or delayed), (v) cancel or terminate any contract,
(w) amend any Contract if such amendment may reasonably be expected to have
any adverse effect on the financial condition or value of any of the Properties,
(x) extend the term of any Contract for a period longer than sixty (60)
days, (y) enter into any additional hedging, forward sales or similar
agreements with respect to production from the Properties, or (z) enter
into any transaction, or take any action, which may reasonably be expected
to
have a material adverse effect on the financial condition or value of any of
the
Properties.
(c) Casualty
Loss.
For
purposes hereof, the term “Casualty Loss” shall mean, with respect to all or any
portion of the Properties, any destruction by fire, blowout, storm,
or
other casualty, or is taken in condemnation or under right
of
eminent domain or
proceedings for such purposes are pending or threatened, between the date of
this Agreement and Closing. Seller shall promptly notify Buyer of any Casualty
Loss of which Seller becomes aware. If any Casualty Loss occurs prior to Closing
to any of the Properties
and
such Casualty Loss may be repaired prior
to
Closing and, when repaired,
the
value of such Properties shall not be materially diminished, then Seller may
repair such Casualty Loss prior to Closing at Seller’s cost and shall notify
Buyer of such election.
If Seller (i) elects to repair such Casualty Loss and such repair is not
completed
prior to
Closing or the repair completed by Seller does not cause the value of such
Properties
to
be substantially the same as such value prior
to
the Casualty Loss, or (ii) is
unable
or unwilling to repair the Casualty Loss, then (x) Buyer may elect to
proceed to Closing
and accept the Properties
affected by the Casualty Loss with no adjustment to the Base
Purchase Price
(in
which case, Seller shall pay to Buyer all amounts and sums paid
or
payable to Seller (or its respective affiliates) by third parties or insurers
by
reason of the Casualty Loss), or (y) if Buyer refuses to waive the claimed
Casualty Loss, the subject Properties affected by the Casualty Loss shall become
Excluded Assets and the Base Purchase Price shall be reduced by the Allocated
Value (or the repair or replacement cost in the case of Personal Property)
for
such Properties.
(d) Consents.
Seller
shall promptly (and in no case later than three (3) days following execution
and
delivery of this Agreement) give notices to all third parties holding any
Scheduled Consents or other consents identified to Seller by Buyer prior to
Closing. Seller shall use all commercially reasonable efforts, but without
obligation to incur any unreasonable cost or expense, to obtain such consents.
Upon Seller’s request, Buyer will provide such information regarding Buyer, its
operations and financial condition as Seller reasonably believes to be necessary
or appropriate in order to obtain such consents. Unless waived by Buyer, if
a
Scheduled Consent or any other consents identified to Seller by Buyer prior
to
Closing is not obtained prior to Closing, such Property shall become an Excluded
Asset and Buyer’s sole remedy therefor shall be a
Agreement
of Sale and Purchase
Page
10
reduction
in the Base Purchase Price by the Allocated Value of the affected Property.
Notwithstanding the foregoing, Buyer may, with respect to any such consent
not
obtained by Seller prior to Closing, elect to waive the requirement that Seller
obtain such consent prior to Closing and proceed to close on the affected
Property and pay Seller the Allocated Value for such Property; provided,
however, that if Seller is unable to obtain such consent prior to the
Post-Closing adjustment provided for in Section 13(c) hereof, then such Property
shall be deemed an Excluded Asset and the provisions of Section 9(b) hereof
shall apply.
(e) Closing
Capability.
Subject
to the terms of this Agreement and the responsibilities of each Party
thereunder, each of Seller and Buyer shall use commercially reasonable efforts
to (i) take or cause to be taken all such actions as may be necessary or
advisable to consummate and make effective the sale and purchase of the
Properties and the transactions contemplated by this Agreement, and (ii) ensure
that as of the Closing Date it will not be under any material partnership,
legal, or contractual restriction that would prohibit or delay the timely
consummation of such transactions.
8. Due
Diligence Reviews.
(a) Buyer
may, to the extent it deems appropriate, conduct, at its sole cost, such title
examination or investigation, and other examinations and investigations,
including environmental or physical, as it may choose to conduct with respect
to
the Properties; provided, however, that it is acknowledged that Seller cannot
guarantee access to those Properties operated by third parties. Seller or its
designees shall have the right to accompany Buyer and Buyer’s representatives
whenever they are on site on the Properties. In the event that Buyer elects
to
conduct a Phase I environmental property assessment, and such Phase I identifies
actual or potential “recognized environmental concerns,” then Buyer must obtain
Seller’s prior written approval, in Seller’s sole discretion, prior to
conducting any such additional Phase II environmental property assessments.
To
the extent that Seller refuses to permit such additional environmental
assessment be conducted by Buyer, then, at Buyer’s written election to Seller
prior to Closing, Buyer may elect to have the affected Properties become
Excluded Assets for purposes of this Agreement and the Base Purchase Price
shall
be reduced by the Allocated Value for such Properties. Should, as a result
of
such examinations and investigations, or otherwise, matters come to Buyer’s
attention which would constitute “Defects”
(as
below defined), and should there be one or more of such Defects with regard
to
any of the Properties
which Buyer is unwilling to waive, Buyer shall notify Seller in writing of
such
Defects
no later than five (5) days prior to Closing. Such Defects of which Buyer so
provides notice are herein called “Asserted Defects.” All Defects with respect
to which Buyer fails to so give Seller notice will be deemed waived for all
purposes of this Section 8 (provided, however, that this shall in no way waive
or release any claims that Buyer may have with respect thereto for a breach
of
any of Seller’s representations, warranties or covenants provided in this
Agreement, the Conveyance or any certificate or instrument delivered in
connection herewith or to the extent otherwise covered by an indemnity from
Seller). In the event that Buyer notifies Seller of Asserted Defects, Seller
shall have the right (but not the obligation) to attempt to cure, prior to
Closing, such Asserted Defects. Buyer agrees to promptly provide Seller, but
in
no less than five (5) days after receipt or creation, copies
Agreement
of Sale and Purchase
Page
11
of
all
final reports and test results, prepared by or for the benefit of Buyer with
regard to its review and diligence of the Properties.
(b) Defects.
The
term
“Defect” as used in this Section shall mean the following:
(1) Seller’s
ownership of the Properties is such that, with respect to a well, lease or
other
Property or Properties listed on Exhibit
D hereto
it
would (A) cause Buyer to receive a decimal share of the oil, gas and other
hydrocarbons produced from, or allocated to, such well which is less than the
decimal share set forth on Exhibit
D in
connection with such well, lease or other Property in the column
headed “Seller’s Net Revenue Interest” or (B) cause Buyer to be obligated to
bear a decimal share of the cost of operation of such well greater than the
decimal share set forth on Exhibit
D
in
connection with such well in the column headed “Sellers Working Interest”
(unless the Sellers Net Revenue Interest for such well, lease or other Property
or Properties listed in Exhibit
D
is
proportionately increased); or
(2) Seller’s
ownership of any well, lease or any of the other Properties is subject to a
lien, security interest, pledge, charge or other encumbrance (including, without
limitation, with respect to the Oil and Gas Properties, any back-in,
reversionary interest, or similar claims that reduce Seller’s Net Revenue
Interest therein or increase Seller’s Working Interest therein), other
than
any
Permitted Encumbrances (as defined in Section 5(g) above); or
(3) Seller’s
ownership of an Oil and Gas Property is subject to a requirement that consent
to
assignment of such Property be obtained, unless (A) a waiver of such right
has been obtained with respect to the transaction contemplated hereby or
(B) such consent has been obtained; or
(4) One
or
more Oil and Gas Property has any
condition in the air, land, soil, surface, surface water, ground water, or
sediments which causes such Properties or the owner or operator thereof to
be
either subject to a legal obligation (or with the passage of time would be
under
such obligation) of remediation, removal, reclamation or restoration under,
or
in non-compliance with, any applicable law, regulation., order, permit,
agreement or lease with regard to pollution, contamination, protection of human
health, natural resources, or the physical environment, or the release, spills
or disposal (whether onsite or offsite) of hydrocarbons or substances produced
in association therewith
including those relating to waste materials and/or hazardous
substances;
or
(5) The
requirements or obligations for drilling xxxxx as referenced or identified
in
Section 5(o) have not been met all or in part, such that Seller will not be
able
to deliver to Buyer at Closing the oil and gas leases listed on Exhibit
A
and
interests and rights therein amounting to at least approximately 9,755 gross
acres and approximately 5,485 net acres.
(c) Liability
Regarding Access.
In
connection with Buyer’s access to the Properties prior to Closing for due
diligence review, Buyer waives and releases all claims
Agreement
of Sale and Purchase
Page
12
against
Seller, Seller’s partners, Seller’s and each such partner’s parent or subsidiary
companies or other affiliates, and directors, officers, employees, consultants
or agents of such parties, respectively, for injury to, or death of, persons
or
for damage to property suffered by Buyer’s agents or representatives arising in
any way from the conduct of Buyer’s investigations and examinations contemplated
by this Section (or the exercise of rights of access under Section 7(a) above)
or the conduct of its employees, consultants, agents or contractors in
connection with such investigations and examinations (or the exercise of such
rights of access). Buyer shall INDEMNIFY,
DEFEND AND HOLD HARMLESS
Seller,
Seller’s partners, members and equity owners, and each of its and their
respective partner’s parent and subsidiary companies and other affiliates, and
directors, officers, employees, consultants and agents of such parties,
respectively, from and against any and all claims, actions, liabilities, losses,
damages, costs or expenses (including court costs and attorneys’ fees)
whatsoever suffered or incurred by Buyer’s employees, agents or representatives
arising out of the exercise of such rights of investigation and examination
(or
exercise of such rights of access); EVEN
IF
SUCH LIABILITIES ARISE OUT OF OR RESULT FROM, SOLELY OR IN PART, THE SOLE,
ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR
OTHER
FAULT OR VIOLATION OF LAW OF SELLER, BUYER OR ANY OTHER PERSON (EXCLUDING ANY
GROSS NEGLIGENCE OF AN INDEMNIFIED PARTY);
provided
that Buyer shall not so indemnify Seller as to any matters arising out of any
Confidential Materials which Seller has declined to furnish to Buyer pursuant
to
Section 7(a).
9. Certain
Price Adjustments.
(a) In
the
event that, as a part of the due diligence reviews provided for in
Section 8 above, Asserted Defects are presented to Seller and Seller
is unable (or unwilling) to cure such Asserted Defects prior to Closing, then
the following shall apply:
(1) If
the
Defect consists of a failure of title to the entirety of Seller’s interest in an
Oil and Gas Property, such Oil and Gas Property shall become an Excluded Asset,
and the Base Purchase Price shall be reduced by the Allocated Value for that
Oil
and Gas Property.
(2) If
the
Defect consists of a lien, including a lien asserted by any suppliers of
material or labor which is not barred from enforcement by limitations and which
is not satisfied prior to Closing, or a security interest, pledge, or collateral
assignment of one or more Oil and Gas Properties (or a portion thereof) which
is
undisputed and liquidated in amount, the Base Purchase Price shall be reduced
by
the amount necessary to remove such lien, security interest, pledge, collateral
assignment or other encumbrance.
(3) If
the
Defect consists of a lesser Net Revenue Interest in an Oil and Gas Property
than
that specified for such Property on Exhibit
D,
the
Base Purchase Price shall be reduced by an amount equal to the product obtained
by multiplying the Allocated Value for each such Oil and Gas Property by a
fraction, the numerator of which is the amount of the reduction of the Net
Revenue interest
Agreement
of Sale and Purchase
Page
13
and
the
denominator of which is the Net Revenue Interest specified for such Oil and
Gas
Property on Exhibit
D.
(4) If
the
Defect consists of a greater Working Interest in an Oil and Gas Property, or
the
burdens attributable to such Working Interest, than that specified for such
Property on Exhibit D without a proportionate increase in the associated Net
Revenue Interest for such Property, then the Base Purchase Price shall be
reduced by the difference in the Allocated Value of such Oil and Gas Property
without such Defect and the recalculated Allocated Value for such Oil and Gas
Property with such Defect, as agreed by Seller and Buyer or, if no agreement
is
reached, then the affected Oil and Gas Property shall be deemed an Excluded
Assets (and excluded from this Agreement), and the Base Purchase Price shall
be
reduced by the Allocated Value therefor).
(5) If
the
Defect is of the type specified in Section 8(b)(4), unless Buyer waives such
Defect, then at Seller’s option (and Seller shall deliver such election to Buyer
in writing prior to Closing) either (i) the Base Purchase Price shall be
reduced by the amount which Buyer and Seller mutually agree is reasonably
required to remediate the affected Properties (net to Seller’s interest) and
such Properties shall be conveyed to Buyer in accordance with the provisions
of
this Agreement, or (ii) the Properties to which such Defect pertains shall
become Excluded Assets and the Base Purchase Price shall be reduced by the
Allocated Value for such Properties; provided, however, that notwithstanding
Seller’s election of (ii) above, Buyer, subsequent to Closing and pursuant to a
written election delivered to Seller, may elect to waive the Defect at any
time
on or prior to the date the Post-Closing adjustments are made pursuant to
Section 13(c), and, in that event, the affected Properties shall be conveyed
to
Buyer and the Allocated Value thereof paid to Seller in accordance with Section
9(b) below.
(6) If
the
Defect is cured by Seller, subject to the reasonable satisfaction of Buyer
(or
waived by Buyer), after Closing but on or before the date the Post-Closing
adjustments are made pursuant to Section 13(c), and such Defect pertains to
a
Property not conveyed to Buyer at Closing, then in conjunction with the
Post-Closing adjustments made pursuant to Section 13(c), such Property shall
be
conveyed to Buyer and the Allocated Value thereof paid to Seller.
(b) If
any
Oil and Gas Property which becomes an Excluded Asset pursuant to the provisions
of this Section 9 (and for which the Base Purchase Price has been reduced by
the
Allocated Value therefor) is inadvertently conveyed to Buyer at Closing (or
if
the last sentence of Section 7(d) applies), Buyer shall re-convey such Excluded
Asset to Seller with similar warranty of title, with an effective date of
January 1, 2007, and with
corresponding expense and revenue
adjustments and the Purchase Price
reduced or refunded by the Allocated Value of such Oil and Gas
Property.
(c) Should
Seller determine (or should Buyer, in the course of its due diligence reviews
contemplated by Section 8 above, determine) that the ownership of the Properties
by Seller entitles Seller to a decimal share of the production from a well
greater than the
Agreement
of Sale and Purchase
Page
14
decimal
share shown for such well under the column headed “NRI” on Exhibit
D,
or is
burdened by a Working Interest that is lower than the decimal share shown for
such well under the column headed “WI’ on Exhibit
D
without
a proportionate reduction in Net Revenue Interest, then Seller may propose
an
upward adjustment to the Base Purchase Price to account for such fact, in which
case such adjustment shall be handled in the same manner as provided in
Subsection (a) above with respect to adjustments for Asserted Defects; provided
that the party making such determination shall notify the other party no later
than three (3) days prior to Closing.
(d) If
the
reduction or increase in the Base Purchase Price or the Purchase Price (as
the
case may be), which would result from all of the adjustments arising out of
the
procedure provided for above does not exceed $10,000, then neither shall be
adjusted pursuant to this Section, and none of the Properties which would be
excluded by such procedure shall be excluded. If, however, the reduction or
increase in the Base Purchase Price, or the Purchase Price (as the case may
be)
which would result from all adjustments arising out of the procedure provided
above exceeds $10,000, then the Base Purchase Price
or
the Purchase Price
(as
the case may be) shall be adjusted by the amount by
which
such
reduction (or increase) exceeds $10,000.
(e) If
there
is any dispute between the Parties regarding either the nature, existence,
value
or adjustment of an Asserted Defect, or with regard to the Properties affected
thereby, and the Parties are unable to resolve such dispute prior to Closing,
then
either Party shall have the right, upon written notice to the other Party not
less than two (2) days prior to Closing, to cause the affected Properties to
be
deemed an Excluded Assets (and excluded from this Agreement), and the Base
Purchase Price shall be reduced by the Allocated Value therefor.
10. Conditions
Precedent to the Obligations of Buyer.
The
obligations of Buyer under this Agreement are subject to each of the following
conditions being met:
(a) Representations.
Each
and
every representation of Seller under this Agreement or in any instrument or
certificate delivered in connection herewith shall be true and accurate in
all
material respects as of the date when made and shall be deemed to have been
made
again at and as of the time of Closing and shall at and as of such time of
Closing be true and accurate in all material respects except as to changes
specifically contemplated by this Agreement or consented to by
Buyer.
(b) Covenants.
Seller
shall have performed and complied in all material respects with (or compliance
therewith shall have been waived by Buyer) each and every covenant, agreement
and condition required by this Agreement to be performed or complied with by
Seller prior to or at the Closing, including, without limitation, delivery
of
those items set forth in Section 12.
(c) Certificates.
Seller
shall have delivered to Buyer certificates signed by authorized representatives
of Seller, dated as of the Closing Date, to the effect that the conditions
set
forth in Section 10(a) and 10(b) above have been satisfied.
Agreement
of Sale and Purchase
Page
15
(d) Aggregate
Adjustments.
The
total of the Purchase Price reductions (if any) which result from the
application of Sections 7 and 9 do not exceed 20% of the Base Purchase
Price.
(e) No
Suit.
No
suit,
action or other proceedings shall, on the date of Closing, be pending or
threatened before any court or governmental agency seeking to restrain,
prohibit, or obtain material damages or other substantial relief in connection
with the consummation of the transactions contemplated by this
Agreement.
(f) Approval.
The
transactions contemplated herein shall have been approved by all of the Members
of Seller.
(g) Consents.
All
material consents, approvals or authorizations required from any governmental
authority to transfer the Properties to Buyer and to consummate the transaction
contemplated herein shall have been obtained except for those which are
customarily obtained post-closing. All material third-party, non-governmental
consents, approvals or authorizations affecting any of the Properties shall,
in
connection with the consummation of the transactions contemplated herein, have
either: (1) been waived, (2) expired in accordance with their terms
without being exercised, or (3) been exercised and an adjustment therefor
made to the Purchase Price in accordance with the provisions of Section 7(d)
hereof.
(h) Loans
and Liens.
All
loans to Seller (or any affiliates of Seller) secured by liens, security
interests, or other encumbrances on or affecting any of the Properties shall
have been, upon or prior to Closing, fully paid and satisfied; and all liens,
security interests
or other encumbrances of
any
kind on or affecting
any
of the Properties
granted
or
assigned in connection therewith or as security therefor shall be fully released
and discharged (other than Permitted Encumbrances, as defined in Section 5(g)
above).
(i) Affiliate
Transfers.
If any
of the Properties are held (of record or beneficially) by any affiliates of
Seller, then such Properties shall have been transferred and conveyed to Seller
prior to Closing, free and clear of all liens, claims and encumbrances of
any
kind, with a special warranty of title
from the transferor and under such
conveyances and instruments that are
satisfactory
to
Buyer in form and substance.
11. Conditions
Precedent to the Obligations of Seller.
The
obligations of Seller under this Agreement are subject to each
of
the
following conditions being met:
(a) Representation.
Each
and
every representation of Buyer under Section 6 of this Agreement shall be true
and accurate in all material respects as of the date when made and shall be
deemed to have been made again at and as of the time of Closing and shall at
and
as of such time of Closing be true and accurate in all respects except as to
changes specifically contemplated by this Agreement or consented to by
Seller.
(b) Covenants.
Buyer
shall have performed and complied in all material respects with (or compliance
therewith shall have been waived by Seller) each and every
covenant,
Agreement
of Sale and Purchase
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16
agreement
and condition required by this Agreement to be performed or complied with by
Buyer prior to or at the Closing.
(c) Aggregate
Adjustments.
The
total
of the Purchase Price reductions (if any) which result from the application
of
Section 7 and Section 9 do not exceed 20% of the Base Purchase
Price.
(d) No
Action.
No
suit,
action or other proceedings shall, on the date of Closing, be pending or
threatened before any court or governmental agency seeking to restrain,
prohibit, or obtain damages or other substantial relief in connection with
the
consummation of the transactions contemplated by this Agreement.
12. The
Closing.
Subject
to the satisfaction of the conditions set forth in Sections 10 and 11 above
and
subject to the other terms and provisions hereof, the closing (herein called
the
“Closing”)
of the
transaction contemplated hereby shall take place in the offices of Xxxxxxx
Xxxxx
LLP, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, on or before April
4,
2007, at 10 a.m. Central Time, or at such other date and time as
the
Buyer and Seller may mutually agree upon (the “Closing
Date”).
Upon
and subject to the terms and conditions of this Agreement and subject to the
simultaneous performance by Buyer and Seller of its respective obligations
below, at the Closing:
(a) Seller’s
Deliveries. Seller shall:
(1) execute,
acknowledge and deliver to Buyer original conveyances (in sufficient quantities
for recording and distribution to each of the Parties) of the Properties
(sometimes herein collectively referred to as the “Conveyance”),
substantially in the form attached hereto as Exhibit
E (appropriately
completed with name of assignor, legally sufficient lease description and other
data, and descriptions of the Properties effective as to runs of oil and
deliveries of gas (and for other purposes) as of the Effective Date, subject
to
the terms of this Agreement;
(2) execute
and deliver to Buyer letters in lieu of transfer orders (or similar
documentation), in form acceptable to both Parties, directing all purchasers
of
production to make future payments of proceeds attributable to production from
the Properties to Buyer;
(3) turn
over
possession of the Properties to Buyer, except as otherwise contemplated in
Section 12(a)(7) below;
(4) execute
all other documents required to transfer possession of the Oil and Gas
Properties;
(5) have
delivered to Buyer all items described in Sections 10(c), (g), (h) and
(i);
Agreement
of Sale and Purchase
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17
(6) in
accordance with Section 13(b), have delivered to Buyer a Preliminary Closing
Statement that shall set forth the Base Purchase Price, each adjustment to
the
Base Purchase Price under this Agreement, and the calculation of
such
adjustments used to determine such amount under this Agreement, and
the
final
Purchase Price, in the form as set forth in Exhibit
12(a)(6);
(7) within
ten (10) days following Closing, deliver to Buyer the Records (but shall be
authorized to keep a copy of the Records at Seller’s cost);
(8) deliver
to Buyer (i) a certificate in the form of Exhibit 12(a)(8)(i),
executed by an authorized representative of Seller, providing for the matters
described in Section 10(c) and confirming that all necessary company approvals
have been obtained, and (ii) a “non-foreign person” affidavit in the form
as set forth in Exhibit
12(a)(8)(ii);
(9) deliver
to Buyer an original certificate in substantially the form attached hereto
as
Exhibit
12(a)(9)
executed
by Seller’s Manager (and notarized), confirming that (i) Seller is a
limited liability company duly formed, validly existing, and in good standing
under the laws of the State of Delaware and has all requisite power and
authority to own, lease, and operate its properties and to carry on its business
as described in this Agreement; (ii) Seller has the requisite power and
authority to execute and deliver, and to incur and perform its obligations
under
this Agreement and under each of the documents and instruments to be executed
and delivered at the Closing to which Seller is a party; (iii) consummation
by Seller of the transactions contemplated by this Agreement has been duly
authorized by all requisite action by or on behalf of Seller; (iv) the
execution, delivery of, and performance by Seller of its obligations under
this
Agreement and each of the documents and instruments to be executed and delivered
at the Closing to which Seller is a party, and the consummation by Seller of
the
transactions contemplated hereunder, will not result in any violation of the
provisions of Seller’s organizational documents; and (v) the person
executing this Agreement on behalf of Seller has the authority on behalf of
Seller to execute and deliver this Agreement and each of the documents and
instruments to be executed and delivered at the Closing to which Seller is
a
party;
and
(10) deliver
to Buyer Exhibit
1-E,
as
amended pursuant to Section 1.
(11) deliver
to Buyer a receipt for the Purchase Price, as adjusted, actually received by
or
on behalf of Seller at the Closing.
(12) execute
such forms (such as P-4’s) and take such other steps as Purchaser may reasonably
require to succeed Seller, (including operatorship) with respect to the Oil
and
Gas Properties under the rules and regulations of applicable
authorities.
(b) Buyer’s
Deliveries. Buyer shall:
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18
(1) deliver
to Seller, by wire transfer to an account designated (with such designated
account information provided to Buyer at least three (3) business days prior
to
Closing) by Seller in a bank located in the United States, an amount equal
to
the Purchase Price; and
(2) execute,
acknowledge and deliver to Seller an original, counterpart of the Conveyances;
and
(3) execute
such forms and take such other steps as Seller may reasonably require to succeed
Seller with respect to the Oil and Gas Properties under the rules and
regulations of applicable authorities.
13. Certain
Accounting Adjustments.
(a) Apportioning
Costs, Expenses; Taxes.
Appropriate adjustments shall be made between Buyer and Seller so that
(i) all expenses (including, without limitation, lease operating expense,
drilling and completion costs, seismic costs, workover costs, capital
expenditures, and overhead charges under applicable operating agreements) or,
liabilities which are attributable to the Properties and are incurred in the
operation of the Properties, or which otherwise relate to the Properties and
are
attributable to periods, before the Effective Date will be borne by Seller,
and
all proceeds (net of applicable production, severance, and similar taxes, and
net of royalties and overriding royalties not included in the Properties) from
sale of oil, gas and/or other minerals produced from the Properties before
the
Effective Date will be received by Seller, and (ii) all expenses
(including, without limitation, lease operating expense, drilling and completion
costs, workover costs, seismic costs, capital expenditures, and overhead charges
under applicable
operating agreements) which are attributable to the Properties and are incurred
in
the
operation of the Properties on or after the Effective Date will be borne by
Buyer, and all proceeds (net of applicable production, severance, and similar
taxes, and net of royalties and overriding royalties not included in the
Properties) from the sale of oil, gas and/or other minerals produced from and
attributable to the Properties after the Effective Date will be received by
Buyer. It is agreed that, in making such adjustments, oil which was produced
from the Properties and which was, on the Effective Date, stored in tanks
located on the Properties (or located elsewhere but used by Seller to store
oil
produced from the Properties prior to delivery to oil purchasers) and above
pipeline connections shall be deemed to have been produced before the Effective
Date. In addition, all ad valorem taxes, real property taxes, and similar
obligations with respect to the tax period in which the Effective Date occurs
(the “Current Tax Period”) shall be apportioned between Seller and Buyer as of
the Effective Date based on the immediately preceding tax period
assessment, and
the
Base Purchase Price shall be reduced by the amount of such taxes estimated
to be
owed by Seller for the portion of the Current Tax Period and such adjustment
shall be treated as part of the Post-Closing adjustments under Section 13(c).
Buyer shall pay, and defend and hold Seller harmless with respect to payment
of
all such taxes on the Properties for the Current Tax Period and thereafter,
together with any interest or penalties assessed thereon.
(b) Preliminary
Closing Statement.
Seller
shall prepare and deliver to Buyer an accounting statement (“Preliminary
Closing Statement”)
no
later than five (5) days prior to Closing (as defined in Section 12), setting
forth the proposed adjustments to the Base
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of Sale and Purchase
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19
Purchase
Price to be made in accordance with this Agreement, it being understood that
actual amounts and costs are to be used, if known, or reasonable estimates,
if
actual amounts and costs are not known, and these amounts will be taken into
account in the Final Settlement Statement (as contemplated in Section 13(c)
below). The Preliminary Closing Statement shall be prepared in accordance with
generally accepted accounting principles used in the oil and gas industry,
consistently applied. The Base Purchase Price, as so adjusted or as may
otherwise be adjusted by mutual agreement of the Parties, shall be the Purchase
Price and shall be paid in cash at the Closing as hereinafter
provided.
(c) Post-Closing
Adjustment.
On
or
before August 2, 2007, the Parties shall undertake to agree with respect to
the
adjustments or payments that were not finally determined as of Closing (or
to
correct any errors made in prior adjustments), and the amount due from Buyer
or
Seller, as the case may be, pursuant to the Post-Closing adjustment. On or
before August 2, 2007, Seller shall provide Buyer with a Final Closing Statement
setting forth the Post-Closing adjustments. Seller shall provide Buyer access
to
such of Seller’s records as may be reasonably necessary to verify the
Post--Closing adjustments. Payment by Buyer or Seller shall be made in
immediately available funds within five (5) days of agreement.
(d) Suspended
Proceeds.
If
Seller
is holding any funds or amounts in suspense for the benefit of third parties
attributable to production sold or removed from the Properties, Seller shall
transfer and pay to Buyer (together with all supporting detail) all such
suspended funds and amounts (collectively, the “Suspended
Proceeds”).
From
and after Closing, Buyer shall be responsible for the proper payment and
distribution of the Suspended Proceeds to those third parties entitled to
receive the Suspended Proceeds and shall indemnify and hold harmless Seller
from
claims asserted by third parties arising from or related to administering the
distribution of such Suspended Proceeds; provided, however, that Buyer’s
aggregate liability and responsibility for such payment, distribution and
indemnity shall not exceed the amount of the Suspended Proceeds actually
received by Buyer at Closing.
14. Assumption
and Indemnification.
(a) Assumption
and
Indemnification.
Except
as
otherwise provided in this Agreement, Buyer agrees upon the occurrence of
Closing (and, upon the delivery to Buyer of the Conveyance shall be deemed
to
have agreed), to assume, and to timely pay and perform, all duties, obligations
and liabilities relating to the ownership and/or operation of the Properties,
insofar and only insofar as such duties, obligations and liabilities arise
and
are attributable to periods from and after the Effective Date and limited (and
attributable) to the interest in the Properties assigned to Buyer by Seller
(including, without limitation, all obligations, Claims and liabilities
regarding properly plugging and abandoning any and all xxxxx existing
on the Oil and Gas Properties on the date of this Agreement which
are described
or referred to on Exhibit
D
attached
hereto, regardless of when drilled, properly abandon or de-commission any
pipelines or other facilities constituting part of the Properties, and clean
up,
restore and/or remediate the premises covered by or related to the Oil and
Gas
Property in accordance with applicable agreements and all applicable law,
regulation, order, permit, agreement or lease with regard to pollution,
contamination, protection of human health, natural resources, or the physical
environment, or the release,
Agreement
of Sale and Purchase
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20
spills
or
disposal (whether onsite or offsite) of hydrocarbons or substances produced
in
association therewith
including those relating to waste materials and/or hazardous
substances
(all of
said obligations and liabilities, herein being referred to as the “Assumed
Liabilities”)
(including, without limitation, those arising under the contracts and agreements
described in Section 1(b) above); provided, however that Buyer in no way assumes
or agrees to be responsible for any of Seller’s liability or obligations
relating to any hazardous wastes regulated under applicable environmental laws
attributable to the Oil and Gas Properties that were disposed of offsite of
the
leases constituting the Oil and Gas Properties prior to the Effective Date.
After Closing, Buyer shall INDEMNIFY, DEFEND AND HOLD HARMLESS Seller and
Seller’s
parent
and subsidiary companies and other affiliates, and directors, officers, members,
partners, shareholders, employees, consultants and agents of such parties,
respectively, harmless from and against any and all claims, actions,
liabilities, losses, damages, costs or expenses (including court costs and
attorneys’ fees) of any kind or character arising out of or otherwise relating
to the Assumed Liabilities, REGARDLESS
OF WHETHER
OR NOT THE LIABILITIES, LOSSES, COSTS, EXPENSES AND DAMAGES IN QUESTION AROSE
OR
RESULTED SOLELY OR IN PART FROM THE SOLE, ACTIVE, PASSIVE, CONCURRENT OR
COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF LAW
OF
OR BY SELLER OR ANY INDEMNIFIED PARTY; provided, however, that Buyer is not
herein assuming any liability attributable to any actions of Seller (or other
indemnified party hereunder) after the Closing Date which constitutes gross
negligence.
In
connection with (but not in limitation of) the foregoing, but subject to the
other provisions of this Agreement (including, without limitation, Section
14(b)
below), it is specifically understood and agreed that Assumed Liabilities shall
also include all obligations to properly plug and abandon, or replug and
re-abandon, any xxxxx drilled on or after the Effective Date and located on
the
Properties.
(b) Potential
Third Party Liabilities.
Notwithstanding the foregoing assumptions
and indemnifications of Buyer, and notwithstanding anything stated herein
to
the
contrary, Seller shall defend, indemnify and hold harmless Buyer, its
affiliates, successors and assigns from and against any claims, losses, damages,
costs, expenses (including, without limitation, attorneys’ fees and other costs
and expenses incurred in connection with investigating or defending any claims
or actions), suits, causes of action, penalties, interest, fines or judgments
of
any kind or character (collectively, “Claims”)
asserted by third parties or governmental authorities relating to the ownership,
condition or operation of the Properties on or prior to, or otherwise
attributable to periods on or prior to, the Effective Date (collectively
“Potential Third Party Liabilities”) and all of such remediation obligations,
fines, assessments, damages and liabilities arising out of Potential Third
Party
Liabilities (collectively “Certain Third Party Obligations”), including, without
limitation, those arising under or by virtue of any lease, contract, agreement,
document, permit, applicable statute or rule or regulation or order of any
governmental authority, specifically including, without limitation, any
governmental request or requirement to take any clean-up or other action with
respect to any of the Properties or premises, including hazardous waste cleanup
costs under the Solid Waste Disposal Act, 42 U.S.C. 6901, et seq., the Resource
Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. 6901, et seq., the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA),
42
Agreement
of Sale and Purchase
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21
U.S.C.
9601, et seq., the Clean Air Act, the Federal Water Pollution Control Act,
the
Toxic Substances Act, the Oil Pollution Act of 1990, and any and all provisions
of the Texas Water Code and the Texas Natural Resources
Code, or similar laws, rules or regulations, WHETHER OR NOT THE CLAIMS IN
QUESTION AROSE FROM THE SOLE, CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE OF THE
BUYER OR ANY THIRD PARTY AND REGARDLESS OF WHO MAY BE AT FAULT OR OTHERWISE
RESPONSIBLE UNDER ANY OTHER CONTRACT, OR ANY STATUTE, RULE, OR THEORY OF LAW,
INCLUDING, BUT NOT LIMITED TO, THEORIES OF STRICT LIABILITY;
provided, however, that notwithstanding anything stated in this Agreement to
the
contrary: (x) Seller shall have no
liability under this Section 14(b) or Section 14(c)(2) below except with respect
to aggregate claims or damages asserted within twelve (12) months following
the
Closing Date, and (y) Seller shall have no liability under this Section
14(b) unless and until the aggregate claims asserted under this Section 14(b)
and Section 14(c)(2) below exceed an amount equal to one-half of one percent
(0.5%) of the Base Purchase Price, and (z) any liability of Seller under
this Section 14(b) and Section 14(c) below shall not exceed, in the aggregate,
an amount equal to one hundred percent (100%) of the Base Purchase Price;
provided further, however, that it is acknowledged and agreed that: (x) the
representations and warranties of title in Section 5(g) above shall terminate
upon Closing and simultaneous with the Closing, Buyer shall receive (and
thereafter have the applicable rights with respect to) the special warranty
of
title granted by Seller under the terms of the Conveyance, (y) the special
warranty of title granted to Buyer in the Conveyance shall survive indefinitely,
and (z) any claim asserted by Buyer (or its successors and assigns) for breach
of the special warranty of title under the Conveyance may be asserted as a
separate claim under the Conveyance, and shall not be required to be asserted
by
Buyer (or its successors and assigns) as an indemnity claim under this Sections
14(b) or 14(c)(2), which indemnification claims are otherwise subject to the
limitations described above.
(c) General
Seller Indemnity.
NOTWITHSTANDING
ANY OTHER PROVISION CONTAINED IN THIS AGREEMENT TO THE CONTRARY, FROM AND AFTER
CLOSING, SELLER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS BUYER, ITS AFFILIATES,
SUCCESSORS AND ASSIGNS FROM AND AGAINST ALL CLAIMS (AS DEFINED IN SECTION 14(B)
ABOVE) INCURRED OR SUFFERED ARISING FROM OR RELATING TO: (1) SELLER’S
BREACH OF ANY OF SELLER’S COVENANTS OR AGREEMENTS CONTAINED HEREIN, OR
(2) SUBJECT TO THE LIMITATIONS AND RESERVATIONS ON SELLER’S INDEMNITY
OBLIGATIONS SET FORTH IN SECTION 14(b) ABOVE, AND SECTION 14(f) BELOW, SELLER’S
BREACH OF ANY REPRESENTATION OR WARRANTY MADE BY SELLER IN THIS AGREEMENT,
OR IN
THE CERTIFICATE OR ANY OTHER INSTRUMENT DELIVERED BY SELLER AT CLOSING (OTHER
THAN THE SPECIAL WARRANTY OF TITLE UNDER THE CONVEYANCE), (3) ALL OIL AND
GAS PRODUCTION, SEVERANCE AND OTHER SIMILAR TAXES (INCLUDING RELATED PENALTY,
INTEREST OR LEGAL COST) APPLICABLE TO OIL AND GAS PRODUCTION OCCURRING AT OR
PRIOR TO THE EFFECTIVE DATE FROM THE PROPERTIES, UNLESS AND EXCEPT TO THE EXTENT
SUCH AMOUNTS ARE MUTUALLY AGREED EXPRESSLY TO BE ACCOUNTED FOR DIFFERENTLY
IN
THE PRELIMINARY
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of Sale and Purchase
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CLOSING
STATEMENT OR THE POST-CLOSING ADJUSTMENT UNDER SECTION 13(c), OR (4) THE
FAILURE OF SELLER TO PROPERLY PAY ROYALTIES AND OVERRIDING ROYALTIES TO PARTIES
ENTITLED THERETO WITH REGARD TO PRODUCTION FROM THE PROPERTIES THAT WAS PRODUCED
AND SAVED PRIOR TO THE EFFECTIVE DATE, UNLESS AND EXCEPT TO THE EXTENT SUCH
AMOUNTS ARE MUTUALLY AGREED EXPRESSLY TO BE ACCOUNTED FOR DIFFERENTLY IN THE
PRELIMINARY CLOSING STATEMENT OR THE POST-CLOSING ADJUSTMENT UNDER SECTION
13(c), WHETHER OR NOT THE CLAIMS IN QUESTION AROSE FROM THE
GROSS, SOLE, CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE OF
THE
BUYER OR ANY OTHER PARTY OR PERSON (BUT
EXCLUDING GROSS NEGLIGENCE OF BUYER OR ITS AFFILIATES),
AND
REGARDLESS OF WHO MAY BE AT FAULT OR OTHERWISE RESPONSIBLE UNDER ANY OTHER
CONTRACT, OR ANY STATUTE, RULE, OR THEORY OF LAW, INCLUDING, BUT NOT LIMITED
TO,
THEORIES OF STRICT LIABILITY.
(d) General
Buyer Indemnity. NOTWITHSTANDING
ANY OTHER PROVISION CONTAINED IN THIS AGREEMENT TO THE CONTRARY, FROM AND AFTER
CLOSING, BUYER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS SELLER, ITS AFFILIATES,
SUCCESSORS AND ASSIGNS FROM AND AGAINST ALL CLAIMS (AS DEFINED IN SECTION 14(B)
ABOVE) INCURRED OR SUFFERED ARISING FROM OR RELATING TO: (1) BUYER’S BREACH
OF ANY OF BUYER’S COVENANTS OR AGREEMENTS CONTAINED HEREIN, (2) ANY BREACH
OF ANY REPRESENTATION OR WARRANTY MADE BY BUYER HEREIN, OR (3) ALL OIL AND
GAS PRODUCTION, SEVERANCE AND OTHER SIMILAR TAXES (INCLUDING RELATED PENALTY,
INTEREST OR LEGAL COSTS) APPLICABLE TO OIL AND GAS PRODUCTION OCCURRING AFTER
THE EFFECTIVE DATE, EXCEPT THAT SELLER SHALL BE RESPONSIBLE FOR ANY PENALTY,
INTEREST, OR LEGAL COSTS OCCASIONED BY SELLER’S FAILURE TO PAY SUCH TAXES
PROPERLY AND TIMELY FOR PRODUCTION FROM THE EFFECTIVE DATE UNTIL CLOSING, OR
(3) THE FAILURE OF BUYER (OR ITS SUCCESSORS OR ASSIGNS) TO PROPERLY PAY
ROYALTIES AND OVERRIDING ROYALTIES TO PARTIES ENTITLED THERETO WITH REGARD
TO
PRODUCTION FROM THE PROPERTIES THAT IS PRODUCED AND SAVED ON OR AFTER THE
EFFECTIVE DATE, UNLESS AND EXCEPT TO THE EXTENT SUCH AMOUNTS ARE MUTUALLY AGREED
EXPRESSLY TO BE ACCOUNTED FOR DIFFERENTLY IN THE PRELIMINARY CLOSING STATEMENT
OR THE POST-CLOSING ADJUSTMENT UNDER SECTION 13(c), WHETHER OR NOT THE CLAIMS
IN
QUESTION AROSE FROM THE GROSS, SOLE, CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE
OF
THE SELLER, OR ANY OTHER PARTY OR PERSON (BUT
EXCLUDING GROSS NEGLIGENCE OF SELLER OR ITS AFFILIATES),
AND
REGARDLESS OF WHO MAY BE AT FAULT OR OTHERWISE RESPONSIBLE
UNDER ANY OTHER CONTRACT, OR ANY STATUTE, RULE, OR
THEORY
OF LAW, INCLUDING, BUT NOT LIMITED TO, THEORIES OF STRICT
LIABILITY.
Agreement
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(e) Limitations
on Damages. Notwithstanding
anything to the contrary in this Agreement, including without limitation
Sections 14(c) and 14(d) above, neither Party shall be liable to the other
Party
for any exemplary, punitive, special, indirect, consequential, remote, or
speculative damages of any other Party arising out of or relating to, in any
manner, this Agreement, the transaction contemplated hereunder, or the
Properties; provided, however that this waiver shall not apply to the claims
of
third parties for which one Party is obligated to indemnify the other hereunder.
(f) Exclusive
Remedy. NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT,
with
respect to the matters and Claims specifically covered or addressed under
Sections 14(b) or 14(c) above, the indemnification provisions set forth in
Sections 14(b) and 14(c), together with the rights and Claims that Buyer may
have with regard to the special warranty of title granted under the Conveyance,
shall contain
and constitute Buyer’s (and Buyer’s affiliates and permitted successors and
assigns) exclusive remedy against Seller with respect thereto.
(g) Occasional
Sale.
Since
this transaction is an isolated or occasional sale, no sales tax will be
collected from Buyer. If, however, this transaction is later deemed to be other
than an occasional sale, Buyer agrees to be solely responsible, and shall
indemnify and hold Seller harmless, for any and all sales or transfer taxes
or
fees (including related penalty, interest or legal costs) due by virtue of
this
transaction on the equipment, material and property hereby assigned and
conveyed, and the Buyer shall remit such sales or transfer taxes at that time.
Seller and Buyer agree to cooperate with each
other in demonstrating that the requirements for an occasional or isolated
sale
or any
other
sales tax exemption have been met.
15. Disclaimer
of Warranties.
Except
as
set forth in this Agreement, the Conveyance or any other instrument or
certificate provided in connection herewith, the Properties are being sold
“WHERE IS” and “AS IS”, and Seller hereby expressly disclaims any and all other
representations or warranties (other than those expressly set out in this
Agreement, the Conveyance or any other instrument or certificate provided in
connection herewith) with respect to the Properties. Except as set forth in
this
Agreement, the Conveyance or any other instrument or certificate provided in
connection herewith, specifically as a part of (but not a limitation of) the
foregoing, Buyer acknowledges that Seller has not made, and Seller hereby
expressly disclaims, any other representation or warranty (express, implied,
under common law, by statute or otherwise) relating to (i) the physical
condition of the Properties (INCLUDING
WITHOUT LIMITATION ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, OR CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS)
or
(ii) the extent of oil, gas and/or other mineral reserves, the
recoverability of or the cost of recovering any of such reserves,
the value of reserves, prices (or anticipated prices) at which production has
been or will be sold and the ability to sell oil or gas production from the
Properties or (iii) the accuracy or completeness
of geological and/or geophysical information or reserve estimates contained
in
any reserve
report made available to Buyer, the same being predictions to future events
which are
inherently subject to incompleteness and inaccuracy. Buyer is aware that the
Properties have been used for exploration, development, production, handling,
transporting and/or processing of oil and gas
Agreement
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24
and
that
there may be petroleum, produced water, wastes, or other materials located
on or
under the Properties or associated with the premises. Some equipment and sites
included in the Properties may contain asbestos, hazardous substances, or
naturally occurring radioactive material (“NORM”). NORM may affix or attach
itself to the inside of xxxxx, materials, and equipment
as scale, or in other forms; the xxxxx, materials, and equipment located on
the
Properties or included in the Properties may contain NORM and other wastes
or
hazardous substances; and NORM containing material and other wastes or hazardous
substances may have been buried, come in contact with the soil or water, or
otherwise been disposed of on the Properties. Special procedures may be required
for the remediation, removal, transportation, or disposal of wastes, asbestos,
hazardous substances, and NORM from the Properties.
16. Commissions.
Seller
agrees to indemnify and hold harmless Buyer from and against any and all claims,
obligations, actions, liabilities, losses, damages, costs or expenses (including
court costs and attorneys’ fees) of any kind or character arising out of or
resulting from any agreement, arrangement or understanding alleged to have
been
made by, or on behalf of, Seller with any broker or finder in connection with
this Agreement or the transaction contemplated hereby. Buyer agrees to
indemnify, defend and hold harmless Seller from and against any and all claims,
obligations, actions, liabilities, losses, damages, costs or expenses (including
court costs and attorneys’ fees) of any kind or character arising out of or
resulting from any agreement, arrangement or understanding alleged to have
been
made by, or on behalf of, Buyer with any broker or finder in connection with
this Agreement or the transaction contemplated hereby.
17. Notices.
All
notices and other communications required under this Agreement shall (unless
otherwise specifically provided herein) be in writing and be delivered
personally, by recognized commercial courier or delivery service (which provides
a receipt), by telex or telecopier (with receipt acknowledged), or by registered
or certified mail (postage prepaid), at the following addresses:
If
to
Buyer:
Pioneer
Natural Resources USA, Inc.
Attn:
Vice President- Land
0000
X.
X’Xxxxxx Xxxx., Xxxxx 000
Xxxxxx,
Xxxxx 00000-0000
FAX:
000-000-0000
If
to
Seller: RBE,
LLC
Attention:
Xxxxx X. Xxxx
00000
Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
FAX:
000-000-0000
and
shall
be considered delivered on the date of receipt. Either Buyer or Seller may
specify as a proper address any other post office address within the continental
limits of the United States by
Agreement
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25
giving
notice to the other party, in the manner provided in this Section, at least
ten
(10) days’ prior to the effective date of such change of address.
18. Survival
of Provisions. Certain Limitations on Liability.
All
representations and warranties and covenants made herein by Buyer and Seller
shall be continuing and shall be true and correct on and as of the date of
Closing with the same force and effect as if made at that time (and shall inure
to the benefit of the respective successors and assigns of Buyer and Seller),
and all of such representations and warranties and covenants shall, subject
to
the limitations set forth below, survive the Closing and the delivery of the
Conveyance. The provisions of Section 13 and Section 14, subject to the
limitations set forth below (and also subject to any additional limitations
otherwise provided therein), shall also survive the Closing and the delivery
of
the Conveyance. Notwithstanding the foregoing, consistent with the provisions
of
Sections 14(b) and 14(c)(2) above, the representations and warranties of Seller
under this Agreement or any certificate delivered in accordance with Section
10(c) above shall terminate twelve (12) months after Closing (other than the
representations and warranties set forth in Sections 5(a), 5(b), 5(c), 5(d)
and
5(e) which shall survive indefinitely, and other than the representations and
warranties set forth in Section 5(j), which shall survive for the applicable
statute of limitations period plus 90 days, and other than the representation
set forth in Section 5(o) which shall terminate immediately upon Closing),
and
any liability of Seller (or any party claimed to be liable by, through or under
Seller) for any damages, losses, costs or Claims alleged to arise from the
breach, falsity, failure or violation of such representations and warranties
shall be limited as described in Sections 14(b) and 14(c)(2)above;
provided, however, that it also acknowledged and agreed that: (x) the
representations and warranties of title in Section 5(g) above shall terminate
upon Closing and simultaneous with the Closing, Buyer shall receive (and
thereafter have the applicable rights with respect to) the special warranty
of
title granted by Seller under the terms of the Conveyance, (y) the special
warranty of title granted to Buyer in the Conveyance shall survive indefinitely,
and (z) any claim asserted by Buyer (or its successors and assigns) for breach
of the special warranty of title under the Conveyance may be asserted as a
separate claim under the Conveyance, and shall not be required to be asserted
by
Buyer (or its successors and assigns) as an indemnity claim under Sections
14(b)
or 14(c)(2), which indemnification claims are otherwise subject to the
limitations described therein.
|
19.
|
Miscellaneous
Matters.
|
(a) Further
Assurances. After
the
Closing, Seller agrees that it shall execute and deliver, and shall otherwise
cause to be executed and delivered, from time to time, such further instruments,
notices, division orders, transfer orders, letters in lieu of division orders,
and other documents, and do such other and further acts and things, as may
be
reasonably necessary to more fully and effectively grant, convey and assign
its
interest in the Properties to Buyer.
(b) No
Assignment.
Neither
party shall have the right to assign its rights under this Agreement, without
the prior written consent of the other party first having been
obtained.
(c) Public
Announcements.
Seller
and Buyer shall consult with each other prior to the release of any press
releases and other announcements concerning this Agreement or the transactions
contemplated hereby, and for a period ending 30 days after Closing
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26
neither
Buyer nor Seller shall issue any such press release or other publicity without
the prior consent of the other Party.
(d) Severability.
If any
term or other provision of this Agreement is invalid, illegal, or incapable
of
being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and
effect
so
long as the economic or legal substance of the transactions contemplated
hereby
is not
affected in any adverse manner to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the
Parties hereto shall negotiate in good faith to modify this Agreement so as
to
effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
(e) INTENTIONALLY
DELETED.
(f) No
Third-Parry Beneficiaries.
This
Agreement is not intended to confer upon any person not a party hereto any
rights or remedies hereunder, and no person other than the Parties hereto is
entitled to rely on any representation, covenant, or agreement contained
herein.
(g) DTPA.
To the
extent applicable to the transaction contemplated hereby or any portion thereof,
Buyer waives the provisions of the Texas Deceptive Trade Practices Act, Chapter
17, Subchapter E, Sections 17.41 through 17.63, inclusive (other than Section
17.555, which is not waived), of the Texas Business and Commerce Code. In
connection with such waiver, Buyer hereby represents and warrants to Seller
that
Buyer is in the business of seeking or acquiring by purchase or lease, goods,
or
services, for commercial or business use, (ii) has assets of $5,000,000 or
more according to its most recent financial statement, (iii) has knowledge
and experience in financial and business matters that enable it to evaluate
the
merits and risks of the transaction contemplated hereby and (iv) is not in
a
significantly disparate bargaining position.
(h) Expenses.
Each
Party shall bear and pay all expenses incurred by it in connection with the
transaction contemplated by this Agreement.
(i) Entire
Agreement.
This
Agreement (together with the exhibits attached or to be attached hereto, the
Conveyance, and the other agreements and instruments to be delivered in
connection herewith) contains the entire understanding of the Parties with
respect to subject matter hereof and supersedes all prior agreements,
understandings, negotiations, and discussions among the Parties with respect
to
such subject matter; provided however that any confidentiality agreements
heretofore executed by Buyer and Seller, or their representatives, shall remain
in full force and effect until Closing (at which time any confidentiality
obligation imposed on Buyer relating to the Properties -except to the extent
pertaining to Excluded Assets - shall automatically terminate) and are not
superseded or modified by this Agreement. The descriptive headings contained
in
this Agreement are for convenience only and shall not control or affect the
meaning or construction of any provision of this Agreement. Within this
Agreement words of any gender shall be held and construed to cover any other
gender, and words in the singular shall be held and construed
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to
cover
the plural, unless the context otherwise requires. Time is of the essence in
this Agreement.
(j) Waiver.
This
Agreement may be amended, modified, supplemented, restated or discharged (and
provisions hereof may be waived) only by an instrument in writing signed by
the
party against whom enforcement of the amendment, modification, supplement,
restatement or discharge (or waiver) is sought.
(k) Binding.
The
Agreement shall be binding on the Parties and their respective successors and
assigns.
(l) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Texas.
(m) Counterparts.
This
Agreement may be executed in counterparts, all of which are identical and all
of
which constitute one and the same instrument. It shall not be necessary for
Buyer and Seller to sign the same counterpart.
(n)
Failure to Close; Performance Deposit.
Subject
to the other provisions of this Section 19(n), if all of the conditions to
the
Closing set forth in Sections 10 and 11 hereof have not been satisfied when
due
or waived by the Party entitled to waive the same on or before May 1, 2007
(or
such later date as hereafter may be mutually agreed upon by Buyer and Seller
in
writing); either Party (Buyer
only as to Section 10; Seller only as to Section 11) may
terminate this Agreement upon written notice to the other; provided, however,
that if this Agreement is terminated under circumstances other than those
specified in the immediately following sentence, then Seller shall promptly
after termination return the Performance Deposit to Buyer, together with a
reasonable rate of interest thereon (not to exceed the prime interest rate
specified by JPMorgan Chase Bank, N.A during such period, plus 1%) accruing
with
regard to the period commencing upon the payment of the Performance Deposit
by
Buyer to Seller under Section 3(b) above and expiring on the date of payment
thereof by Seller, to Buyer; and neither Party shall have any further
obligations or any liability to the other Party under this Agreement (other
than
the obligations under Section 8(c) and Section 16 hereof, which shall survive
such termination). In the event that this Agreement is terminated by Seller
due
to Buyer’s willful failure to close and consummate the transactions hereunder on
or before the date specified herein above notwithstanding the satisfaction
(or
express waiver by Buyer) of all of Buyer’s conditions to close set forth under
this Agreement, then Seller shall be entitled to retain and keep the Performance
Deposit as liquidated damages; provided that the failure to consummate the
transactions contemplated hereby on or before such date did not result from
a
failure
to perform by Seller of any of its material covenants in this Agreement required
to be performed at or prior to Closing or a breach of its representations or
warranties under this Agreement.
Neither
Party may terminate this Agreement if it is in breach or default in any material
respect of its undertakings or commitments provided for in this Agreement that
are required to be fulfilled by such Party; and
in
the
event Seller retains such Performance Deposit, as described above, such
retention shall be Seller’s sole and exclusive remedy against Buyer for any
claims, losses or damages of any nature
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arising
from the termination of this Agreement or the breach hereof or for the failure
to close the contemplated transactions (provided, however, that any retention
of
the Performance Deposit shall not affect or relieve Buyer of any obligations
or
liabilities post-termination under Section 8(c) and Section 16
above).
Retention of the Performance Deposit shall be as liquidated damages representing
Seller’s sole remedy for Buyer’s failure to consummate the transaction
contemplated herein (without waiving any indemnification obligation of Buyer).
The Parties agree that the Performance Deposit is a reasonable sum considering
all the circumstances existing on the date of this Agreement, including the
relationship of the sum to the range of harm to Seller that reasonably could
be
anticipated and the anticipation that proof of actual damages would be costly
or
inconvenient. In all other terminations of this Agreement the Performance
Deposit with interest earned shall be returned to Buyer. Upon any termination
of
this Agreement, under this Section 19(n) or otherwise, Seller shall immediately
be free to enjoy all rights of ownership of the Oil and Gas Properties and
to
sell, transfer, encumber, or otherwise dispose of the Oil and Gas Properties
to
any party without any restriction under this Agreement.
20. Notification
of Breaches;
Supplementing Disclosure Schedules.
Until
the Closing,
(a) Buyer
shall use commercially reasonable efforts to notify Seller promptly after Buyer
obtains actual knowledge that any representation or warranty of Seller contained
in this Agreement is untrue in any material respect or will be untrue in any
material respect as of the Closing Date or that any covenant or agreement to
be
performed or observed by Seller prior to or on the Closing Date has not been
so
performed or observed in any material respect.
(b) Seller
shall use commercially reasonable efforts to notify Buyer promptly after Seller
obtains actual knowledge that any representation or warranty of Buyer contained
in this Agreement is untrue in any material respect or will be untrue in any
material respect as of the Closing Date or that any covenant or agreement to
be
performed or observed by Buyer prior to or on the Closing Date has not been
so
performed or observed in a material respect.
(c) If
any of
Buyer’s or Seller’s representations or warranties is untrue or shall become
untrue in any material respect between the date of execution of this Agreement
and the Closing Date, or if any of Buyer’s or Seller’s covenants or agreements
to be performed or observed prior to or on the Closing Date shall not have
been
so performed or observed in any material respect, but if such breach of
representation, warranty, covenant or agreement shall (if curable) be cured
by
the Closing (or, if the Closing does not occur, by the date set forth in Section
19 n above) then such breach shall be considered not to have occurred for all
purposes of this Agreement. If such matter may not be cured on or prior to
Closing, Seller may, from time to time, prior to the Closing (but in no case
later than three (3) business days prior to Closing), by delivering a written
copy thereof to Buyer, supplement or amend the exhibits and schedules attached
to this Agreement (“Seller
Disclosure
Schedules”)
to
correct any matter that would constitute a breach of any representation or
warranty of Seller herein contained (but such supplement or amendment would
be
effective only on and after Closing). If Seller proposes to supplement or amend
any Seller Disclosure Schedule within ten (10) business days of the Closing,
then Buyer shall have the right to postpone the Closing Date for a
reasonable
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period
to
evaluate the amendments and supplements (but in no case to a date later than
May
1, 2007). Regardless of any proposed amendment or supplement, Buyer shall have
the right to defer Closing or not close the transactions until its closing
conditions set forth in Section 10(a) are satisfied, if applicable; and to
the
extent Closing does not occur on or before May 1, 2007 by reason thereof (and
Seller has not otherwise cured the matter in a manner such that the proposed
supplement or amendment would no longer be required), then Buyer shall have
the
right to thereafter terminate this Agreement, and in accordance with (and
subject to) the provisions of Section 19(n) above, Buyer would have the right
to
receive from Seller the Performance Deposit, plus interest thereon, to the
extent provided in Section 19(n) above. Buyer may, from time to time, prior
to
the Closing (but in no case later than three (3) business days prior to
Closing), by delivering a written copy thereof to Seller, propose to supplement
or amend the exhibits and schedules attached to this Agreement (“Buyer
Disclosure Schedules”)
to
correct any matter that would constitute a breach of any representation or
warranty of Buyer herein contained (but such supplement or amendment would
be
effective only on and after Closing). If Buyer proposes to supplement or amend
any Buyer Disclosure Schedule within ten (10) business days of the Closing,
then
Seller shall have the right to postpone the Closing Date for a reasonable period
to evaluate the amendments and supplements (but in no case to a date later
than
May 1, 2007). Regardless of any proposed amendment or supplement, Seller shall
be free to defer Closing or not close the transactions until its closing
conditions set forth in Section 11(a) are satisfied, if applicable; and to
the
extent Closing does not occur on or before May 1, 2007 by reason thereof (and
Buyer has not otherwise cured the matter in a manner such that the proposed
supplement or amendment would no longer be required), then Seller shall have
the
right thereafter to terminate this Agreement, and in accordance with (and
subject to) the provisions of Section 19(n) above, Seller may have the right
to
retain and keep the Performance Deposit, but only to the extent the other
conditions for retention of such Performance Deposit are met and
only to
the extent provided in Section 19(n) above. If the Closing occurs, any such
supplement or amendment of any such Seller Disclosure Schedules or Buyer
Disclosure Schedules will be effective to cure and correct any breach of any
representation or warranty that would have existed absent such amendment or
supplement but not any breach of covenants, and the applicable Party shall
have
no right, and hereby waives any and all rights, to bring any claim in respect
of
or relating to such breach of representation or warranty. If the Closing, or
termination of this Agreement, has not occurred on or prior to May 15, 2007,
then this Agreement shall automatically terminate and the Performance Deposit
plus interest specified in Section 19(n) above shall be returned to
Buyer.
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IN
WITNESS WHEREOF,
this
Agreement is executed by the Parties hereto on the date set forth
above.
SELLER:
RBE,
LLC
By:
/s/ Xxxxx X.
Xxxx
Title:
CEO of
Manager
BUYER:
PIONEER
NATURAL RESOURCES USA, INC.
By:
/s/ A.R.
Almandine
Title: EVP
Agreement
of Sale and Purchase
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