Exhibit 10.19
PURCHASE AND SALE AGREEMENT
BETWEEN XXXXXXXX ASSOCIATES, INC.
AND
PETROLEUM DEVELOPMENT CORPORATION
DATED
JULY 16, 1996
TABLE OF CONTENTS
Paragraph Page
No. No.
1. Sale and Purchase 1
2. Sale Price 1
3. Deposit 2
4. Seller' Representations 2
5. Buyer's Representations 3
6. Access to Records 3
7. Title Defects 3
8. Notice of Title Defects 4
9. Preferential Rights 4
10. Physical and Environmental Inspection 4
11. Sale Price Adjustments 5
12. Effect of Failure to Close 5
13. Special Warranty of Title 6
14. Conditions of Closing by Buyer 6
15. Conditions of Closing by Seller 6
16. Preliminary Closing Statement 7
17. Closing 7
18. Reservations and Exceptions 8
19. Assumption of Liabilities; Indemnification 8
20. Taxes 9
21. Operations and Accounting After the Effective Time 9
22. Sales Tax: Transfer Fees 11
23. Notices 11
24. Further Assurances 11
25. Disclaimer of Warranties 12
26. Risk of Loss 12
27. Securities Laws 12
28. Due Diligence 13
29. Material Factor 13
30. Press Release 13
31. Entire Agreement 13
32. Tax Reporting 13
33. Assignability 13
34. Survival 13
35. Choice of Law 14
36. Counterpart Execution 14
37. Knowledge 14
38. Interests Held by Affiliates 14
39. Premerger Notification 14
THIS AGREEMENT, dated as of July 16, 1996 is between Xxxxxxxx
Associates,Inc., a Pennsylvania corporation, (hereinafter referred to as
"Seller"), with offices at 000 Xxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, and
PETROLEUM DEVELOPMENT CORPORATION, a Nevada corporation (hereinafter referred to
as "Buyer") with offices at 000 X. Xxxx Xxxxxx, Xxxxxxxxxx, XX 00000.
WHEREAS, Seller desires to sell and Buyer desires to purchase, upon and
subject to the terms, conditions, reservations and exceptions hereinafter set
forth, Seller's interest in and to those properties described on Exhibit "A"
attached hereto and made a part hereof, being (i) all of Seller's right, title
and interest in the oil and gas leases, fee oil and gas properties, and other
property interests and unit rights described on Exhibit "A-1" (collectively, the
"Properties"), (ii) all of Seller's right, title and interest in all xxxxx
listed on Exhibit "A-2", attached hereto and made a part hereof (collectively,
the "Xxxxx"), (iii) all of Seller's right, title and interest in all equipment,
materials, fixtures and facilities and other personal property now associated
with and used in connection with the production, gathering, storing, measuring,
treating, operating, maintaining or transportation of production from the Xxxxx
together with those certain tools, supplies, vehicles, inventories, equipment
and other personal property described on Exhibit "A-3", attached hereto and made
a part hereof (collectively, the "Equipment"), (iv) all of Seller's right, title
and interest in all contracts and contract rights, whether or not of record,
insofar and only insofar as they relate to the Properties, Xxxxx and Equipment
including without limitation, unit agreements, surface leases, operating
agreements, easements, rights of way, farm-out and farm-in agreements, and all
similar rights leased or owned by Seller, and oil and gas sales, purchase,
exchange and processing contracts and agreements, listed on Exhibit "A-4",
attached hereto and made a part hereof (collectively, the "Contracts"), and (v)
all of Seller's right, title and interest in the pipelines, fixtures, equipment
and other personal property associated with the gathering systems described on
Exhibit "A-5", attached hereto and made a part hereof (collectively, the
"Gathering Systems"). Seller's interests in the Properties, Xxxxx, Equipment,
Contracts and Gathering Systems shall hereinafter together and individually be
called the "Interests" or "Interest"; provided, however, that in the event any
Interest is deleted from the sale pursuant to the provisions of this Agreement,
such Interest shall not thereafter be deemed an Interest or one of the
Interests.
THEREFORE, in consideration of the above recitals and of the covenants and
agreements herein contained and with the intent to be legally bound hereby,
Seller and Buyer agree as follows:
1. Sale and Purchase. Subject to and upon all of the terms, conditions,
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reservations and exceptions hereinafter set forth, Seller shall sell, transfer,
assign, convey and deliver the Interests to Buyer, and Buyer shall purchase,
receive, pay for and accept the Interests from Seller, effective as of 12
o'clock, noon, on May 1, 1996 (the "Effective Time").
2. Sale Price. The sale price for the Interests shall be Three Million
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Six Hundred Fifty Thousand Dollars ($3,650,000) ("Sale Price"), and shall accrue
interest thereon from
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June 1, 1996 until Closing, as hereinafter defined, at an annual rate of 8-3/4%,
such interest to be paid in full at Closing. The Sale Price shall be allocated
among the Interests as set forth on Xxxxxxxx "X", "X-0", "X-0", "X-0", "X-0" and
"A-5", attached hereto (the "Allocated Values").
3. Deposit. Upon execution of this Agreement, Buyer shall pay, by
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certified check or wire transfer, to Seller a deposit ("Deposit") in the amount
of Two Hundred Fifty Thousand Dollars ($250,000). Seller shall deposit the
Deposit in an interest bearing escrow account at PNC Bank. The Deposit, plus all
accrued interest thereon, shall be credited against the Sale Price at Closing,
provided, however, that if Closing does not occur as and when provided herein,
the Deposit plus all accrued interest thereon shall be paid as set forth in
Paragraph 12 hereof.
4. Seller's Representations. Seller represents and warrants to Buyer that
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as of the Closing:
(a) Seller is a duly organized corporation, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania, is duly qualified
to carry on its business in the state(s) in which the Interests are located, and
has full power and authority to enter into and perform this Agreement according
to its terms. This Agreement has been duly executed and delivered by Seller and
constitutes the legal, valid, and binding obligation of Seller, enforceable
against Seller in accordance with its terms;
(b) Seller's execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on Seller's part and will
not violate or conflict with any agreement, law, rule, regulation, charter or
instrument governing Seller's organization, management or business affairs;
(c) To the best knowledge of Seller, there is no proceeding, action, suit,
claim or investigation pending or threatened before any federal, state or other
government court, department, board, agency or other instrumentality or any
arbitrator, board of arbitration or similar entity, and there are no orders,
writs, judgments, stipulations, injunctions, decrees, determinations, awards or
other decisions of any court, arbitrator or governmental authority outstanding
against Seller or the Interests, that have or could have, individually or in the
aggregate, any material adverse effect on the ownership or value of the
Interests as a whole other than as shown on Exhibit "B"; and
(d) To the best knowledge of Seller, all Contracts material to the
ownership or value of the Interests, are either of record or have been, or
within ten (10) days after the date hereof, will be disclosed or made available
to the Buyer by the Seller.
(e) To the best knowledge of Seller, the historical data provided to Buyer
as part of the bid package and subsequent information requests regarding
production, revenue, outstanding gas sales, and interests and property owned by
Seller are materially correct.
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5. Buyer's Representations. Buyer represents and warrants to Seller that
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as of the Closing:
(a) Buyer is a duly organized corporation validly existing and in good
standing under the laws of the State of Nevada, is duly qualified to carry on
its business in the state(s) in which the Interests are located, and has full
power and authority to enter into and perform this Agreement according to its
terms. This Agreement has been duly executed and delivered by Buyer and
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms;
(b) Buyer's execution, delivery and performance of this Agreement has been
duly authorized by all necessary corporate action on Buyer's part and will not
violate or conflict with any agreement, law, rule, regulation, charter or
instrument governing Buyer's organization, management or business affairs; and
(c) In entering into this Agreement and closing this transaction, Buyer
has relied solely on (i) the express representations, warranties and covenants
of Seller in this Agreement, (ii) Buyer's independent investigation and
evaluation of, and judgment with respect to, the Interests and (iii) the advice
of Buyer's own land, legal, title, tax, economic, environmental, engineering,
geological and geophysical advisors. Buyer has not relied on any
representations, warranties, comments or statements of Seller or of any
representative of, or consultants or advisors engaged by, Seller except as
expressly set forth in this Agreement. The Buyer together with Buyer's advisors
has the knowledge and experience to properly evaluate the merits and risks of
purchasing the Interests from Seller.
6. Access to Records. After execution of this Agreement, Seller shall
-----------------
give Buyer and its authorized representatives, during regular business hours, at
Buyer's sole risk, cost and expense, access, with copying privileges, to all
geological, geophysical, production, engineering and other technical data and
records, and to all contract, land, title and lease records, to the extent such
data and records are in Seller's possession and relate to the Interests, and to
such other information relating to the Interests as Buyer may reasonably
request; provided, however, Seller shall have no obligation to provide Buyer
such access to any data or information which Seller cannot legally provide Buyer
because of third-party restrictions on Seller. Seller agrees to use its best
efforts to obtain the consent of any such third-party to furnish such
information to Buyer. Buyer expressly agrees that Buyer's rights under this
Agreement are subject to all of the terms and conditions of the Confidentiality
Agreement previously executed by Buyer and Seller, a copy of which is attached
hereto as Exhibit "C" and incorporated herein by this reference. The foregoing
obligation of confidentiality shall survive the Closing or Closing Failure, as
hereinafter defined.
7. Title Defects. For the purpose of this Agreement, a title defect shall
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mean any material deficiency in title (i) which prevents the Buyer's enjoyment
of the Interests in the same manner as the Interests are enjoyed by the Seller
immediately prior to the Closing
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Date, and (ii) which would significantly affect the Allocated Values of the
subject Interests (a "Title Defect").
8. Notice of Title Defects.
-----------------------
(a) Upon the discovery of a Title Defect by Buyer, Buyer shall immediately
notify Seller in writing. Any such notice by Buyer shall include appropriate
evidence and documentation to substantiate its position and shall be delivered
to Seller on or before five (5) business days prior to the Closing Date. Any
Title Defect which is not disclosed to Seller on or before five (5) business
days prior to the Closing Date shall conclusively be deemed waived by Buyer for
all purposes. Buyer thereafter shall be deemed to have fully inspected and
accepted the Interests "as is" in their then current condition and the Interests
shall be deemed to be free of Title Defects except for those noticed by Buyer to
Seller as provided in this Paragraph 8.
(b) Upon receipt by Seller of notice pursuant to Paragraph 8(a), either
Buyer or Seller may, upon written notice delivered to the other party not later
than two (2) business days of the receipt of said notice, terminate this
Agreement.
9. Preferential Rights. If any of the Interests are subject to
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preferential purchase rights, rights of first refusal, consents to assign,
Lessor's approvals, or similar rights (collectively, "Preferential Rights"),
Seller shall, on a best efforts basis (which shall not require a payment of any
cash or other consideration) attempt to obtain all waivers, consents, releases
and the like (collectively, "Waivers") necessary for the transfer of the
Interests to Buyer.
Interests subject to Preferential Rights for which Seller obtains Waivers
prior to Closing shall be sold to Buyer at Closing pursuant to the provisions of
this Agreement. Interests subject to Preferential Rights for which Waivers are
not obtained prior to Closing, or for which said Preferential Rights are
exercised by the holder of the Preferential Rights, shall, at the option of
Buyer or Seller, be deleted from Exhibits "A", X-0", "X-0, "X-0", "X-0", and
"A-5" and the Sale Price shall be reduced by the Allocated Values of the deleted
Interests.
10. Physical and Environmental Inspection.
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(a) After the execution of this Agreement, Seller shall give Buyer and its
authorized representatives during regular business hours physical access to the
Interests at Buyer's sole cost, risk and expense for the purpose of inspecting
the same, conducting such tests, examinations, investigations and assessments as
may be reasonable and necessary or appropriate to evaluate the physical and
environmental condition of the Interests. For those Interests which are not
operated by Seller, Buyer shall obtain permission from the operator to conduct
such inspections. Buyer shall defend and indemnify Seller against and from any
and all liability, claims, causes of action, injury to Buyer's property,
employees, agents, contractors, subcontractors or invitees, and/or injury to
Seller's property, employees, agents, contractors, subcontractors or invitees
which may arise out of Buyer's
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inspections, but only to the extent of Buyer's negligence or the negligence of
Buyer's agents, employees, contractors, subcontractors, and/or invitees. Buyer
agrees to provide to Seller, upon request, a copy of any environmental
assessments, including any reports, data, and conclusions for Buyer's operation
and/or remediation of the Interests. Buyer agrees that all such information
shall be subject to the Confidentiality Agreement and shall be kept confidential
and shall not be disclosed excepted as permitted therein, unless required to do
so by applicable law, or as necessary, after Closing, for Buyer's operation
and/or remediation of the Interests. The foregoing obligation of confidentiality
shall survive Closing or Closing Failure, as hereinafter defined.
(b) Upon the discovery of an Environmental Condition (as hereinafter
defined) by Buyer, Buyer shall immediately notify Seller in writing. Any such
notice by Buyer shall include appropriate evidence and documentation to
substantiate its position and shall be delivered to Seller on or before five (5)
business days prior to the Closing Date. Any Environmental Condition which is
not disclosed to Seller on or before five (5) business days prior to the Closing
Date shall conclusively be deemed waived by Buyer for all purposes. Buyer
thereafter shall be deemed to have fully inspected and accepted the Interests
"as is" in their then current condition and the Interests shall be deemed to be
free of Environmental Conditions except for those noticed by Buyer to Seller as
provided in this Paragraph 10(b). As used in this paragraph 10(b), Environmental
Condition is one in which Seller is not in compliance with laws, rules or
regulations pertaining to health or the environment with respect to an Interest
and in which a failure to comply would adversely affect the Allocated Value of
such Interest.
(c) Upon receipt by Seller of notice pursuant to Paragraph 10(b), either
Buyer or Seller may, upon written notice delivered to the other party not later
than two (2) business days of the receipt of said notice, terminate this
Agreement.
11. Sale Price Adjustments. Buyer and Seller expressly agree that, in the
----------------------
event Seller is determined to own a greater interest in any of the Interests
than shown on Xxxxxxxx "X-x", "X-0", "X-0", "X-0" and "A-S", the Sale Price
shall be increased, based on the Allocated Value(s) of such Interest(s).
12. Effect of Failure to Close. The following provisions shall apply in
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the event Closing shall not occur as and when provided herein (a "Closing
Failure").
(a) If Closing Failure occurs as the result of the mutual agreement of the
Seller and the Buyer or if Closing Failure is not the result of the failure of
either party to perform its obligations hereunder or is a result of either
Buyer's or Seller's termination pursuant to Paragraph 8(b) or 10(c) hereof, this
Agreement shall, without liability of any party to this Agreement or any
shareholder, director, officer, employee, agent or representative of such party,
become null and void and the Seller shall promptly return the Deposit together
with all accrued interest thereon to the Buyer;
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(b) If Closing Failure occurs as a result of the failure of Buyer to
perform its obligations hereunder, then Seller shall be entitled to terminate
this Agreement and retain the Deposit together with all accrued interest thereon
as liquidated damages and as reimbursement for Seller's out-of-pocket fees and
expenses incurred in connection with the transactions contemplated by this
Agreement. The parties hereby acknowledge that the extent of damages to Seller
occasioned by such breach or default or failure to proceed by Buyer would be
impossible or extremely impractical to ascertain and that the amount of the
Deposit plus all accrued interest thereon is a fair and reasonable estimate of
such damage; and
(c) If Closing Failure occurs as a result of the failure of Seller to
perform its obligations hereunder, then, and in that event, this Agreement shall
terminate and Seller shall be liable to Buyer for the return of the Deposit
together with all accrued interest thereon.
13. Special Warranty of Title. In all conveyances executed and delivered
-------------------------
hereunder, Seller shall specially warrant to Buyer and its successors and
assigns that it has not previously conveyed the Interests and warrant and defend
title to the Interests against the claims and demands of all persons whomsoever
claim the same or any part thereof by, through or under Seller, but not
otherwise. Seller makes no other warranty or representation as to the quantity
or quality of title to the Interests.
14. Conditions of Closing by Buyer. The obligation of Buyer to close is
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subject to the satisfaction of the following conditions:
(a) All representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the Closing;
(b) Seller shall have performed and satisfied in all material respects all
of those agreements and covenants which are required by this Agreement to be
performed and satisfied prior to Closing by Seller; and
(c) No suit or other proceeding shall be pending before any court or
governmental agency seeking to restrain or prohibit this transaction, or to
declare this transaction illegal, or to obtain substantial damages in connection
with this transaction.
15. Conditions of Closing by Seller. The obligation of Seller to close is
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subject to the satisfaction of the following conditions:
(a) All representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as of the Closing;
(b) Buyer shall have performed and satisfied in all material respects all
of those agreements and covenants which are required by this Agreement to be
performed and satisfied prior to Closing by Buyer;
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(c) No Suit or other proceeding shall be pending before any court or
governmental agency seeking to restrain or prohibit this transaction, or to
declare this transaction illegal, or to obtain substantial damages in connection
with this transaction; and
(d) Buyer shall have delivered to Seller evidence of its state plugging
bonds, surety letters, or letters of credit acceptable to such authorities to
authorize Buyer's conduct of operations and to effect the release and discharge
of the Seller's obligation under any such financial assurances with respect to
the Interests.
16. Preliminary Closing Statement. Seller shall prepare and furnish to
-----------------------------
Buyer at least two (2) business days prior to the Closing Date a preliminary
closing statement setting forth the adjustments to the Sale Price and the total
amount of funds to be paid by Buyer at Closing. Such statement shall reflect
each adjustment and the calculation used to determine such amount. The adjusted
Sale Price shall mean the Sale Price adjusted as provided herein.
17. Closing. The closing (the "Closing") shall occur on the earlier of
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August 30, 1996 or five (5) days after Buyer completes its title examinations,
at 9:00 a.m. at the offices of Seller at 000 Xxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx 00000, or at such other time and place as Seller and Buyer may
mutually agree in writing (the "Closing Date").
At Closing the following shall occur:
(a) Seller shall execute, acknowledge and deliver, as appropriate, (i) an
Assignment and Xxxx of Sale substantially in the form and substance of Exhibit
"D", attached hereto, and (ii) a Deed of Special Warranty substantially in the
form and substance of Exhibit "E", attached hereto, covering all of the
Interests to be sold pursuant hereto;
(b) Buyer shall deliver to Seller by wire transfer (i) the total Sale
Price, plus interest accrued thereon, as provided in Paragraph 2, less (ii) the
Deposit plus interest accrued thereon, as provided in Paragraph 3, subject to
adjustments in accordance with this Agreement;
(c) Seller and Buyer shall execute and Seller shall file with the
appropriate regulatory authorities all necessary forms concerning the change of
ownership and operatorship of the Interests;
(d) Seller shall, subject to the terms of any applicable operating
agreements and to the provisions hereof, deliver to Buyer exclusive possession
of the Interests, effective as of the Effective Time; however, Seller does not
warrant or represent that Buyer will succeed it as operator where Seller
presently operates under an operating agreement;
(e) Seller shall promptly after Closing provide Buyer the original
geological, geophysical, production, engineering and other technical data and
records, and all contract,
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land, title, and lease records to the extent such records are in Seller's
possession and relate to the Interests ("Records"), unless Seller cannot legally
transfer such data or information due to third party restrictions on Seller.
Notwithstanding any provision to the contrary contained herein, Seller, or its
employees, officers, owners and directors, may retain or use copies of the
Records without restriction; and
(f) Seller shall promptly after Closing prepare and mail all notices to
third party working interest owners of the change of ownership.
(g) Seller will release any payments being held for oil and gas sales made
subsequent to the Effective Time.
18. Reservations and Exceptions. Sale and purchase of the Interests
---------------------------
pursuant to this Agreement is made subject to all reservations, exceptions,
limitations, contracts and other burdens or instruments which are or may be
applicable to the Interests including, but not limited to, the specific
reservations, exceptions, limitations, contracts and other burdens or
instruments as shown on Xxxxxxxx "X", "X-x", "X-0", "X-0", "X0" and "A5". This
Paragraph does not, and shall not be interpreted to, limit, modify or otherwise
affect any disclaimer of warranty (as to title, condition or otherwise) with
respect to the Interests contained in this Agreement or any document executed
and delivered pursuant hereto. Notwithstanding any provision to the contrary
contained herein, the Interests transferred under this Agreement shall not
include and Seller hereby expressly reserves from this Agreement (i) any Claim
(as defined in Paragraph 19(b) hereof) of Seller against third parties for
refunds, damages, losses, recoveries, penalties, or other remedies arising out
of or with respect to Seller's ownership, operation, management or marketing of
the Interests and/or the production therefrom prior to the Effective Time and
(ii) all equipment, vehicles, computers, furnishings, contracts, fixtures and
all other assets and properties of Seller operated relating to Seller's
headquarters and supervisory functions.
19. Assumption of Liabilities: Indemnification.
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(a) Effective as of Closing, Buyer assumes, takes over and agrees to pay
and to perform (i) all liabilities, duties and obligations of Seller arising at
any time on or after the Effective Time with respect to the Interests under or
by virtue of any Contract, (ii) all liabilities, duties and obligations arising
at any time before, on or after the Effective Time on account of or with respect
to the physical condition of the Interests or the application to such physical
condition of any federal, state or local legislative, administrative or judicial
laws, ordinances, rules, regulations, decrees, orders or rulings irrespective
whether or not any governing, regulatory or judicial bodies recognize the
transfer of the Interests from Seller to Buyer (including without limitation
such of the foregoing as shall relate to protection of the environment or to
plugging, replugging or abandoning of active, inactive or abandoned oil and gas
xxxxx on the Interests), and (iii) all other liabilities, duties and obligations
arising at any time after Closing with respect to the Interests. All
liabilities, duties and obligations described in this Paragraph 19(a) are
sometimes referred to in this Agreement as the "Assumed Liabilities". Seller and
Buyer agree that liabilities, duties and
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obligations of the type specified in Paragraph 19 (a)(i) arising on or after the
Effective Time but prior to Closing or Closing Failure will be paid and/or
performed as set forth in Paragraph 21 and Paragraph 26;
(b) As used in this Agreement, "Claims" shall include any and all claims,
demands, causes of action, liabilities, damages, penalties and judgments of any
kind or character and all costs and fees in connection therewith, including
attorney's fees, (i) on account of personal injury, death, or damage to property
or the environment or otherwise or (ii) for money or for equitable or any other
form of relief. Effective as of Closing, Buyer shall defend, indemnify and hold
harmless Seller from and against, and Buyer shall as of Closing release and
discharge Seller from, any and all Claims arising directly or indirectly from,
or incident to, the failure of Buyer to assume, take over or pay or perform any
or all of the Assumed Liabilities; and
(c) Buyer expressly agrees that Buyer's agreements and obligations under
this Paragraph 19 shall not be modified, amended, reduced or mitigated in the
event any Claim in whole or in part, directly or indirectly, arises from or in
connection with any act or omission (intentional, negligent or otherwise) of
Seller or any officer, employee, owner, agent, contractor or representative of
Seller.
20. Taxes. All severance taxes for production prior to the Effective Time
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shall be paid by Seller. All severance taxes for production after the Effective
Time shall be paid by Buyer. Buyer shall pay all 1996 real property taxes and
all future real property taxes with respect to the Interests beginning with the
installment due on or before September 1, 1996. Furthermore, Buyer shall pay any
other 1996 and all future ad valorem taxes, personal property taxes,
registration certificates and similar obligations with respect to the Interests.
Buyer shall pay, and defend and hold Seller harmless with respect to payment of,
all such taxes on the Interests to be paid by Buyer as provided above and
thereafter, together with any interest or penalties assessed thereon.
21. Operations and Accounting After the Effective Time.
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(a) Operations after Effective Time. From the Effective Time until Closing
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or until Closing Failure (the "Interim Period"), Seller has operated and will
continue to operate the Interests for which Seller is the operator in the same
general manner as Seller operated such Interests prior to the date of this
Agreement. During the Interim Period, Seller will not undertake any single
project pertaining to the maintenance or operation of the Interests reasonably
estimated to require an expenditure in excess of Three Thousand Dollars ($3,000)
without prior authorization of the Buyer, provided however, that in case of
explosion, fire, flood, or any other sudden emergency, whether of the same or
different nature, Seller may take such actions and incur such expenses as the
Seller deems necessary to deal with such emergency and to protect and safeguard
the Interests, the public and the environment, all for the account of the Buyer
in the event of Closing (collectively, the "Special Expenses"). The Seller, as
promptly as practical, shall notify the Buyer of any such emergency.
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(b) Administrative Overhead Fee. In the event Closing occurs, Buyer shall
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pay to Seller at Closing an Administrative Overhead Fee of (i) Ten Thousand
Dollars ($10,000) multiplied by (ii) the number of calendar months in the
Interim Period. A portion of a month during the Interim Period shall be
calculated on a daily basis. Buyer understands and agrees that the
Administrative Overhead Fee is intended to compensate Seller for Seller's
headquarters supervisory and administrative overhead costs incurred by Seller
during the Interim Period in connection with the Interests.
(c) Definition of Interim Expenses. As used in part (d) of this Paragraph
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21, Interim Expenses shall mean expenses incurred in the ordinary course of
ownership, operation and maintenance of the Interests by the holders thereof
together with Special Expenses incurred, but shall not include the
Administrative Overhead Fee separately payable by Buyer to Seller at Closing in
accordance with part (b) of this Paragraph 21.
(d) Accounting After the Effective Time. In the event Closing occurs, all
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operations of and production from the Interests, and all Interim Expenses and
revenues incurred or accrued during the Interim Period by the holders of the
Interests in connection with such operations and production, shall be deemed to
be for the account of Buyer, as if Buyer had closed on the purchase of the
Interests pursuant to this Agreement at the Effective Time. In the event of
Closing Failure, all operations of and production from the Interests, and all
expenses and revenues incurred or accrued by the holders of the Interests in
connection with the operation and production of the Interests during the Interim
Period, shall be for the accounts of the holders of the Interests, as if Buyer
and Seller had not entered into this Agreement. All oil, condensate or liquid
hydrocarbons and any products (liquid, gas or solid) separated or processed
therefrom (hereinafter in this Paragraph called "oil") in storage shall be
measured or gauged and all gas meter charts shall be replaced at the Effective
Time. Buyer shall pay Seller for such oil at the posted field price currently
prevailing for oil of like grade and gravity in the field, provided that Buyer
shall not pay Seller for oil in storage below the level of the tank cut off
valve (tank bottoms). Revenues received by or expenses paid by either Buyer or
Seller for the account of the other party shall be settled at Closing, or by
invoicing such other party for expenses paid or by remitting to such other party
any revenues received after Closing. Exhibit "F" attached hereto and made a part
hereof is a listing of accounts from which all revenues and expenses will be
allocated to reflect the intent of the parties hereto pursuant to this Paragraph
21(d). Said Exhibit "F" is provided hereunder for guidance.
(e) Selection of Operator. Seller may poll the parties to any applicable
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operating agreement or plan of unitization before Closing to select a successor
Operator. The poll may stipulate that the parties' selection of a successor
Operator will not be effective unless Closing occurs. If Seller does not poll,
then Buyer will do so. Buyer's selection as Operator is not a condition to
Buyer's obligation to perform under this Agreement;
(f) Removal of Signs. Seller may either remove its name and signs from the
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Seller-operated Interests or require Buyer to do so. Buyer grants Seller a right
of access to the
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Interests to remove Seller's signs and name from all Xxxxx, facilities and
Properties, or to confirm that Buyer has done so. If Seller's name or signs
remain on the Interests after Closing, Buyer will promptly, but no later than
required by applicable rules and regulations or forty-five (45) days after
Closing, whichever is earlier, remove all remaining signs and references to
Seller and erect or install signs complying with applicable rules and
regulations, including signs showing the Buyer as operator or owner of the
Interests.
22. Sales Tax: Transfer Fees. The Sale Price provided for hereunder
------------------------
excludes any sales taxes or other taxes in connection with the sale of property
pursuant to this Agreement. If a determination is ever made that a sales tax or
other transfer tax applies, Buyer shall be solely liable for such tax as well as
any applicable conveyance, transfer and recording fees, well bond transfer fees
and real estate transfer stamps or taxes imposed on any transfer of property
pursuant to this Agreement. Buyer shall pay, and defend and hold Seller harmless
with respect to the payment of, all such taxes, if any, including any interest
or penalties assessed thereon.
23. Notices. All communications required or permitted under this Agreement
-------
shall be in writing and any communication or delivery hereunder shall be deemed
to have been fully made if actually delivered, or if mailed by registered or
certified mail, postage prepaid, to the address as set forth below:
SELLER
Xxxxxxxx Associates, Inc.
000 Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
BUYER
Petroleum Development Corporation
000 X. Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Phone: (000)000-0000
Fax: (000)000-0000
24. Further Assurance. After Closing each of the parties shall execute,
-----------------
acknowledge and deliver to the other such further instruments, and take such
other actions as may be reasonably necessary to carry out the provisions of this
Agreement. However, Buyer shall after Closing assume all responsibility for
notifying the purchaser of oil and gas production from the Interests, and such
other designated persons who may be responsible for disbursing payments for the
purchase of such production, of the change of ownership of the Interests. Buyer
shall after Closing take all actions necessary to effectuate the transfer of
such payments to Buyer.
Page 11
25. DISCLAIMER OF WARRANTIES. EXCEPT AS PROVIDED IN PARAGRAPH 13 HEREOF,
------------------------
THIS AGREEMENT AND ANY INSTRUMENT OF CONVEYANCE EXECUTED PURSUANT HERETO IS AND
SHALL BE EXECUTED (i) WITHOUT ANY WARRANTY OF TITLE OR CONDITION, EXPRESS,
IMPLIED, STATUTORY, OR OTHERWISE, (ii) WITHOUT ANY EXPRESS OR IMPLIED WARRANTY
OR REPRESENTATION AS TO THE MERCHANTABILITY OF ANY OF THE EQUIPMENT OR OTHER
PERSONAL PROPERTY INCLUDED IN THE INTERESTS OR ITS FITNESS FOR ANY PARTICULAR
PURPOSE, AND (iii) WITHOUT ANY OTHER EXPRESS OR IMPLIED WARRANTY OR
REPRESENTATION WHATSOEVER. IT IS UNDERSTOOD AND AGREED THAT BUYER ON OR BEFORE
CLOSING SHALL HAVE INSPECTED THE INTERESTS FOR ALL PURPOSES AND SATISFIED ITSELF
AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE AND SUBSURFACE,
INCLUDING BUT NOT LIMITED TO CONDITIONS RELATED TO THE PRESENCE, RELEASE, OR
DISPOSAL OF HAZARDOUS SUBSTANCES, AND THAT BUYER IS RELYING SOLELY UPON THE
RESULTS OF SUCH INSPECTION OF THE INTERESTS AND SHALL ACCEPT ALL OF THE
INTERESTS IN THEIR "AS IS, WHERE IS" CONDITION EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT. SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED,
AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA, INFORMATION OR MATERIALS
HERETOFORE OR HEREAFTER FURNISHED BUYER IN CONNECTION WITH THE INTERESTS, OR AS
TO THE QUALITY OR QUANTITY OF HYDROCARBON RESERVES IF ANY) ATTRIBUTABLE TO THE
INTERESTS OR THE ABILITY OF THE INTERESTS TO PRODUCE HYDROCARBONS. ANY AND ALL
SUCH DATA, INFORMATION AND OTHER MATERIALS FURNISHED BY SELLER IS PROVIDED TO
BUYER AS A CONVENIENCE AND ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT
BUYER'S SOLE RISK. ALL INSTRUMENTS OF CONVEYANCE TO BE DELIVERED BY SELLER AT
CLOSING SHALL EXPRESSLY SET FORTH THE DISCLAIMERS OF REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS PARAGRAPH.
26. Risk of Loss. Upon Closing, the risk of casualty loss relating to the
------------
Interests will pass from Seller to Buyer as of the Effective Time.
27. Securities Laws. The solicitation of offers and the sale of the
---------------
Interests by Seller have not been registered under any securities laws. Buyer
represents that at no time has it been presented with or solicited by or through
any public promotion or any form of advertising in connection with this
transaction. Buyer represents that it intends to acquire the Interests for its
own benefit and account and that it is not acquiring the Interests with the
intent of distributing fractional, undivided interests or otherwise dealing with
the Interests in a manner that would be subject to regulation by federal or
state securities laws, and that if it sells, transfer, or otherwise disposes of
the Interests or fractional, undivided interests, it will do so in compliance
with all applicable federal and state securities laws.
Page 12
28. Due Diligence. Buyer represents that it has performed, or will
-------------
perform prior to Closing, sufficient review and due diligence with respect to
the Interests. Such review and due diligence includes without limitation
reviewing well data, title, and other files, and performing necessary
evaluations and assessments, and independently investigating and verifying all
of the foregoing and other tasks involved in evaluating the Interests, to
satisfy its requirements completely and to enable it to make an informed
decision to acquire the Interests under the terms of this Agreement.
29. Material Factor. Buyer acknowledges that each and all of Buyer's
---------------
agreements, covenants, representations, obligations and duties under this
Agreement are a material inducement to Seller to enter into this Agreement with,
and close the sale to, Buyer.
30. Press Release. There shall be no press release or public communication
-------------
concerning this purchase and sale by either party, except as required by law or
with the written consent of the party not originating said release or
communication. Parties will endeavor to consult each other in a timely manner on
all press releases required by law.
31. Entire Agreement. This instrument states the entire agreement between
----------------
the parties. It may be supplemented, altered, amended, modified or revoked only
in writing signed by both parties. This Agreement supersedes any prior
agreements (other than the Confidentiality Agreement) between the parties
concerning sale of the Interests. The headings are for guidance only and shall
have no significance in the interpretations of this Agreement.
32. Tax Reporting. Seller and Buyer agree that this transaction is not
-------------
subject to the reporting requirement of Section 1060 of the Internal revenue
Code of 1986, as amended, and that, therefore, IRS Form 8594, Asset Acquisition
statement, is not required to be and will not be filed for this transaction. In
the event the parties mutually agree that a filing of Form 8594 is required, the
parties will confer and cooperate in the preparation and filing of their
respective forms to reflect a consistent reporting of the agreed upon
allocation.
33. Assignability. This Agreement and the rights and obligations hereunder
-------------
(i) shall not be assignable or delegable by Buyer without the prior written
consent of Seller, (ii) shall be assignable by Seller, in whole or in part, upon
written notice to Buyer, and (iii) shall be binding upon the parties hereto and
their respective successors and assigns and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
34. Survival. Unless expressly limited by this Agreement, all of the
--------
representations, warranties, and agreements of or by the parties hereto shall
survive the execution and delivery of the Assignment and Xxxx of Sale and Deed
of Special Warranty, and all other instruments of conveyance delivered
hereunder.
Page 13
35. Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
-------------
COMMONWEALTH OF PENNSYLVANIA.
36. Counterpart Execution. This Agreement may be executed in counterparts
---------------------
and counterparts bearing the signature of all parties shall together constitute
a binding agreement as if the parties had executed a single document.
37. Knowledge. As used in this Agreement the words "knowledge" or "to the
---------
best knowledge" and all words of similar effect with respect to the Seller shall
mean actual knowledge of the executive officers of Seller and shall not include
any knowledge of any other employee, contractor, agent or representative of the
Seller or any other third party.
38. Interests Held by Affiliates. Buyer understands that certain of the
----------------------------
Interests as of the date hereof, and during the Interim Period, are and will be
held by certain affiliates of Seller as noted on Exhibit" G". Seller intends,
and will use its best efforts, to acquire such Interests from such affiliates
for the Allocated Values of such Interests and then to sell those Interests to
Buyer pursuant to this Agreement. Buyer shall, however, for all purposes under
this Agreement (i) deal only with Seller, (ii) recognize Seller as the exclusive
agent and representative of all such affiliates for purposes of this Agreement
and (iii) not assert as a defense to any Claim with respect to the enforcement
of this Agreement that any such affiliate was not a party to this Agreement. In
the event Seller is unable to so acquire any of such Interests, the unacquired
Interests will be deleted from the sale and the Sale Price shall be reduced by
the Allocated Values thereof.
39. Premerger Notification. Buyer and Seller each agree to promptly
----------------------
prepare and file the Report and Notification required by the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 with the Premerger Notification Office,
Bureau of Competition of the Federal Trade Commission. Neither party shall be
obligated to close until all necessary filings have been made and all waiting
periods have expired under the Act. At Seller's option and with Seller's
cooperation, Buyer shall prepare all necessary filings required of both Buyer
and Seller after execution of this Agreement and Buyer shall bear the cost of
filings and any fees or expenses associated therewith.
Page 14
BUYER ACKNOWLEDGES THAT IT HAS READ THIS AGREEMENT IN ITS ENTIRETY, AND
THAT IT UNDERSTANDS ALL THE PROVISIONS SET FORTH THEREIN, INCLUDING BUT NOT
LIMITED TO, ALL PROVISIONS OF PARAGRAPHS 19 AND 25.
EXECUTED as of the date first above mentioned.
SELLER: BUYER:
XXXXXXXX ASSOCIATES, INC. PETROLEUM DEVELOPMENT CORPORATION
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
------------------------ -------------------------
Its: President Its: President
----------------------- -------------------------
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