Exhibit 10.2
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PRODUCTION PREPAYMENT AGREEMENT
BETWEEN
PANENERGY FINANCIAL SERVICES, INC.,
A DELAWARE CORPORATION
AND
UNIOIL, INC.
A NEVADA CORPORATION
INDEX
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1. PRODUCTION PREPAYMENTS BY PANENERGY................................... 2
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2. USE AND APPLICATION OF PRODUCTION PREPAYMENTS......................... 5
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3. REPAYMENT OF THE PRODUCTION PREPAYMENTS............................... 5
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4. DEDICATION OF XXXXX/OIL AND GAS LEASES................................ 6
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5. COLLATERAL SECURITY................................................... 6
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6. INFORMATION........................................................... 7
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7. DEFAULT............................................................... 8
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8. MISCELLANEOUS......................................................... 9
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PRODUCTION PREPAYMENT AGREEMENT
THIS PRODUCTION PREPAYMENT AGREEMENT (the "Agreement") is made and
entered into this 12th day of December, 1996, between PANENERGY FINANCIAL
SERVICES, INC., a Delaware corporation ("PanEnergy"), and UNIOIL, INC., a Nevada
corporation (hereinafter referred to as "UNIOIL").
R E C I T A L S:
- - - - - - - -
A. UNIOIL owns or owns an interest in the oil and gas leases located in Weld
County, Colorado (the "Leases") set forth in Exhibit "A" attached hereto
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and incorporated herein by reference, which Leases, along with other oil
and gas leases, have been dedicated to PanEnergy Field Services Inc.
("PFS") pursuant to that certain Amended and Restated Gas Purchase and
Processing Agreement between UNIOIL and PFS of even date herewith (the
"GPA").
B. In order to induce PanEnergy to partially finance the costs of drilling,
completing and equipping eight (8) oil and gas xxxxx of the types
described in Section 1.1 herein on the Leases (the "Program Xxxxx") at
the locations set forth on Exhibit "B" attached hereto, UNIOIL desires to
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commit and sell to PanEnergy's affiliate the condensate and crude oil
produced and saved from the Leases attributable to the working interest
of UNIOIL (the "Production").
C. To promote the drilling, completing and equipping of the Program Xxxxx,
PanEnergy is willing to make certain payments to third parties (the
"Production Prepayments") upon the terms and conditions set forth herein
for well drilling or completion services, materials or equipment, as an
advance to UNIOIL and a prepayment for the Production from the Leases, in
return for the premise of repayment by UNIOIL.
D. In connection with and prior to any Production Prepayments by PanEnergy,
UNIOIL shall, among other things, execute and deliver to PanEnergy a
Mortgage, as defined in Section 1.2 herein, which will secure UNIOIL's
repayment of the Production Prepayments, with accrued interest thereon,
in accordance herewith. The security for the Mortgage shall include the
Program Xxxxx and that portion of the Leases within the spacing units for
the Program Xxxxx along with other oil and gas xxxxx, and oil and gas
leases within the spacing units for such xxxxx, that will use common tank
batteries and measurement facilities with the Program Xxxxx and all
equipment used or useful for the operation of such xxxxx (all such xxxxx,
leases, facilities and equipment are referred to collectively as the
"Program Leases").
IN CONSIDERATION of the mutual promises contained herein, the benefits to be
derived by each party hereunder and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, PanEnergy and UNIOILL
agree as follows:
1. PRODUCTION PREPAYMENTS BY PANENERGY
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1.1 Upon receipt of written request from UNIOIL for a Production
Prepayment, which shall not be made for amounts less than $10,000, together with
copies of invoices (the "Invoices") for well drilling or completion services,
materials or equipment performed or supplied by third parties (collectively,
"Vendors") in connection with the drilling and completion of the Programs Xxxxx,
aggregating an amount not less than the requested Production Prepayment, and
subject to the terms and conditions set forth in this Agreement, PanEnergy
agrees to pay the Vendors, as a Production Prepayment for UNIOIL, 95% of the
amount of the Invoices for such Program Well, but not to exceed the Maximum
Advance (as defined below) for such Program Well, as follows:
(a) UNIOIL shall drill, or caused to be drilled, all of the
Program Xxxxx to at least a depth sufficient to test the
Codell formation. If any Program Well is, in UNIOIL's
reasonable judgment as a prudent operator, capable of
producing oil and/or gas in commercial quantities, UNIOIL
shall diligently complete and equip such well. UNIOIL shall
drill and complete the Program Xxxxx by May 31, 1997 and
shall submit all Invoices to PanEnergy by July 31, 1997.
The time limits set out in this paragraph are limits for
the purpose of qualifying to receive Production Prepayments
and are not contractual undertakings by UNIOIL to drill or
complete the Program Xxxxx.
(b) Upon receipt of the Invoices as set forth above, PanEnergy
shall calculate the amount of such Invoices attributable to
UNIOIL's share of the working interest in that Program
Well. If UNIOIL owns less than all of the working interest
in any of the Program Xxxxx, the amount which PanEnergy is
obligated to advance UNIOIL hereunder for such Program Well
shall be proportionately reduced. PanEnergy shall pay to
the Vendors for each Program Well 95% of the amount of
their respective Invoices, proportionately reduced to
UNIOIL's working interest, but not more, collectively, than
the "Maximum Advance" for such Program Well as set forth in
Exhibit "B" (the "Maximum Advance") after taking into
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consideration previous Production Prepayments by PanEnergy
with respect to such Program Well. UNIOIL shall promptly
pay that portion of the Invoices which exceeds the amounts
advanced hereunder by PanEnergy for any Program Well.
(c) To the extent that a Program Well has been drilled,
completed and equipped and the Production Prepayments to
which UNIOIL has become entitled are less than the Maximum
Advance set out in Exhibit "B" for such Program Well, then
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such difference may be carried over and applied to increase
the Maximum Advance of another Program Well; provided,
however, that such difference may only be carried over from
such Program Xxxxx which are, according to reasonably
prudent operator standards, producing hydrocarbons in
commercial quantities.
1.2 In addition to the Invoices, each Production Prepayment
disbursement shall be evidenced by and be contingent upon receipt (and, if
applicable, recording in such county and state government offices which
PanEnergy determines is appropriate), and approval by PanEnergy of the following
documentation:
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(a) Execution and delivery by UNIOIL of a Promissory Note (the
"Note"), in a form acceptable to PanEnergy, in the
principal sum of $1,722,350.
(b) Execution and deliver by UNIOIL of a Mortgage, Security
Agreement, Assignment of Production and Proceeds and
Financing Statement (as the same may be amended or
supplemented from time to time, the "Mortgage") in a form
acceptable to PanEnergy, granting a security interest to
PanEnergy in the Program Leases and the Production and
Production Proceeds (defined in Section 1.5, below)
attributable to the Program Leases.
(c) Execution and delivery by UNIOIL (to both PanEnergy
Transport and Trading Company ("PT&T") and PFS) of transfer
orders and/or Letters-in-Lieu, in a form acceptable to
PanEnergy, transferring payments for Production from the
Program Leases to PanEnergy.
(d) Execution and delivery by UNIOIL of a properly completed
Form UCC-1 Financing Statement (the "Financing Statement"),
in a form acceptable to PanEnergy, covering the Program
Leases and the Production and Production Proceeds from the
Program Leases.
(e) Execution and delivery by UNIOIL of the GPA.
(f) Execution and delivery of a crude oil purchase contract
(the "Crude Contract") between UNIOIL and PT&T, in a form
acceptable to PT&T, for the purchase by PT&T of the crude
oil and/or condensate produced and saved, or to be produced
and saved, from the Program Leases. If, for any reason,
PT&T is not purchasing UNIOIL's crude oil pursuant to the
Crude Contract, UNIOIL shall execute and deliver to
PanEnergy transfer orders and/or letters-in-lieu as
reasonably requested by PanEnergy in order that payments
for such crude oil will be paid directly to PanEnergy or
its designee.
(g) A drilling title opinion by a Colorado licensed attorney
approved by PanEnergy, for each Program Well and approval
of title thereto by PanEnergy prior to PanEnergy making any
Production Prepayments for such Program Well.
(h) Execution and delivery by UNIOIL of a Memorandum of the
GPA, in a form acceptable to PanEnergy.
(i) Execution and delivery by each holder of a mortgage, lien
or other encumbrance on the Leases of a Ratification and
Subordination Agreement, in a form acceptable to PanEnergy,
which covers all of the oil and gas leases and lands
dedicated to gas gathering, processing and/or purchase
agreements between UNIOIL and PFS.
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(j) Execution and delivery by each holder of a mortgage, lien
or other encumbrance on the Program Leases of a Release of
Lien in a form acceptable to PanEnergy.
(k) Delivery by UNIOIL of UNIOIL's (i) most recent year-end
audited financial statements prior to ninety days after the
end of UNIOIL's fiscal years and (ii) most recent month end
financial statements prior to thirty days after the end of
each such months.
(l) Execution and/or delivery by UNIOILL of any other documents
reasonably requested by PanEnerg for the purpose of
perfecting PanEnergy's liens in the Program Leases and the
xxxxx and other equipment located thereon.
1.3 Notwithstanding anything contained herein to the contrary, if
PanEnergy, in its sole judgment, and at any time, determines that UNIOIL's
financial condition is unsatisfactory or that the economics of drilling or
completing any or all of the Program Xxxxx do not meet Panenergy's expectations,
PanEnergy may discontinue making advances of Production Prepayments.
1.4 The Production Prepayments shall be repaid, together with accrued
interest thereon, in accordance with the Note and this Section 1.4. On the
following dates, the following amounts shall become due and payable under the
Note: (a) on April 1, 1998, 45% of the Base Amount (as herein defined); (b) on
April 1, 1999, a cumulative 50% of the Base Amount; (c) on April 1, 2000, a
cumulative 60% of the Base Amount; (d) on April 1, 2001, a cumulative 90% of the
Base Amount; and (e) on April 1, 2002, all remaining unpaid principal hereunder,
together with accrued interest thereon. The total amount of Production
Prepayments advanced to UNIOIL pursuant to the Agreement, plus accrued, unpaid
interest thereon is herein called the "Base Amount." Such amounts shall be
repaid pursuant to the provisions of Section 3.1, 3.2, and 3.3 hereof.
1.5 "Production Proceeds" shall he defined as Gas Proceeds plus Crude
Oil Proceeds. "Gas Proceeds" shall be defined as all UNIOIL's share, pursuant to
the GPA, of the proceeds derived from the sale of natural gas and natural gas
liquids produced and saved from and attributable to the working interest of
UNIOIL in and to the Programs Leases, net of (i) royalties; and (ii) ad valorem
and severance taxes. "Crude Oil Proceeds" shall be defined as all of UNIOIL's
share, pursuant to the Crude Contract, of the proceeds derived from the sale of
crude oil and/or condensate produced and saved, or to be produced and saved,
from and attributable to the working interest of UNIOIL, in and to the Program
Leases, net of (i) royalties; and (ii) ad valorem and severance taxes.
1.6 UNIOIL hereby assigns to PanEnergy all rights to receive proceeds
from insurance coverage on any well on the Program Leases or any related
equipment or production, PanEnergy agrees to use such proceeds to repair or
replace any property damage covered by such insurance (whether as reimbursement
for amounts reasonably expended by UNIOIL for such repair or to pay directly the
reasonable costs for such repair). To the extent any such proceeds exceed the
reasonable cost of repair or are attributable to property which cannot be
repaired or replaced (such as production), then such of the proceeds shall be
applied against the Note or, if the Note has been paid in full, refunded to
UNIOIL.
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2. USE AND APPLICATION OF PRODUCTION PREPAYMENTS
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2.1 Each Production Prepayment shall be disbursed by PanEnergy by
check within five (5) days after receipt and approval by PanEnergy of the
Invoices. In lieu of disbursing Production Prepayments directly to UNIOIL,
PanEnergy will disburse the Production Prepayments by making payments directly
to the Vendors. UNIOIL shall remain liable for and assume all responsibility for
the payment of all invoices related to all xxxxx located on the Program Leases,
and lands pooled therewith. UNIOIL shall defend (with counsel reasonably
acceptable to PanEnergy) and indemnify PanEnergy, its parent company and
affiliates of and from any and all damages, claims, actions, causes of action,
costs and expenses, including attorneys' fees (collectively "Claims"), stemming
from or in any way related to the drilling, completion, equipping or operation
of the xxxxx on the Program Leases, and on lands pooled therewith, and the
payment of all expenses related thereto, including expenses related to the
acquisition of the oil and gas leases upon which any xxxxx are located;
provided, however, that PanEnergy shall not be entitled to indemnity hereunder
to the extent that a Claim is directly attributable to the gross negligence or
willful misconduct of PanEnergy.
2.2 UNIOIL shall obtain and provide to PanEnergy copies of Lien waiver
statements from Vendors and contractors providing labor and/or materials related
to the drilling and completion of the Program Xxxxx.
3. REPAYMENT OF THE PRODUCTION PREPAYMENTS
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3.1 Each month out of the Production Proceeds attributable to the
Program Leases, PanEnergy shall withhold and apply to the repayment of the
outstanding unpaid principal due on the Note, plus accrued interest thereon, the
lesser of (i) all amounts due and owing under the Note, or (ii) ninety five
percent (95%) of the Production Proceeds (as defined in Section 1.5), less the
amount of $450 per Program Well and per each commercial well ("Existing Well")
located on the Program Leases within the prospect area associated with such
Program Well as identified on Exhibit B for operating expenses attributable to
the Program Xxxxx and Existing Xxxxx, proportionately reduced based upon
UNIOIL's working interest in the respective Program Well or Existing Well, which
shall be remitted to UNIOIL, unless otherwise mutually agreed in writing.
Operating expenses to be paid on a Program Well and Existing Well shall be made
by PanEnergy commencing with the month in which initial production from the
Program Well occurred, if such initial production occurred prior to the 15th day
of such month, and commencing with the month following the month in which
initial production occurred, if such initial production occurred on or after the
15th day of such month. In the event such operating expenses ever exceed
Production Proceeds for any month, any excess shall be borne and paid solely by
UNIOIL and shall not he deducted from Production Proceeds attributable to the
month in which the excess occurred or any other month. PanEnergy and UNIOIL
acknowledge that UNIOIL shall have the obligation to continue to operate such
xxxxx in a reasonably prudent manner without taking into consideration the
amounts being paid to PanEnergy under the Note. At such time as all sums due
under the Note have been repaid in full, all Production Proceeds shall be paid
over by PanEnergy to UNIOIL, as its interest may appear, unless a default shall
have occurred under this Agreement, the Note or under the Mortgage, in which
case such Production Proceeds shall continue to be paid over to and applied by
PanEnergy as provided herein.
3.2 All funds withheld and received by PanEnergy hereunder shall be
applied first to late payment fees, if any, provided in the Note and/or the
Mortgage; costs and collection fees provided for in the Note and/or the
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Mortgage; accrued interest on the Note, and the remainder to the outstanding
unpaid principal of the Note. If at the end of the repayment term hereof, all
Production Prepayments made hereunder, plus accrued interest, have not been
repaid in full, PanEnergy may declare a default hereunder and proceed in
accordance with the default procedures provided for herein.
3.3 UNIOIL may at any time without penalty prepay to PanEnergy all or
any portion of the Production Prepayments made by PanEnergy hereunder by
delivery to PanEnergy of cash or certified funds, which sums shall be applied
first to accrued interest, and the remainder to outstanding unpaid principal on
the Note.
3.4 On or before the 20th day of each month until the Note has been
repaid in Full and commencing with the month following the month of the initial
Production Prepayment disbursement, PanEnergy shall provide to UNIOIL a
statement for the prior month showing the balance due under the Note as of the
beginning of such month, the date and amount of any Production Prepayments by
PanEnergy during such month, the application of Production Proceeds to
principal, interest and fees, if any, (which shall include the amount and date
of each such application) during such month, any other payments made by UNIOIL
to PanEnergy during such month, and the balance due to PanEnergy under the Note
as of the end of such month.
4. DEDICATION OF XXXXX/OIL AND GAS LEASES
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4.1 Commencing with the initial Production Prepayment disbursement as
described in Section 1 hereof, all Leases, xxxxx located on the Leases (or lands
pooled or unitized therewith) and Production therefrom, shall become subject to
the GPA and the Crude Contract. All xxxxx, drilled and produced, or to be
drilled and produced, thereon shall be dedicated to and governed by the terms
and provisions contained in the GPA and the Crude Contract.
4.2 As long as there is any outstanding accrued interest and principal
amounts due under the Note, UNIOIL agrees not to sell, assign, transfer or
convey any interest it owns or hereafter acquires in the Program Xxxxx or the
Program Leases or take any other action which would reduce the net revenue
interest of UNIOIL therein without PanEnergy's prior written consent.
5. COLLATERAL SECURITY
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Payment of the Note and all other obligations of UNIOIL hereunder shall
be secured by the following security documents:
5.1 The Mortgage, by which PanEnergy shall obtain a first and prior
right and secured interest, free of any and all liens and encumbrances in and to
the interest of UNIOIL in the Program Leases and the Production and Production
Proceeds attributable to the Program Leases.
5.2 The Financing Statement described in Section 1.2(d) above.
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6. INFORMATION
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6.1 At all times from the date hereof until the termination of this
Agreement, UNIOIL, at its own expense, shall furnish to PanEnergy the following
reports and information at the times indicated below:
(a) Within ninety (90) days after the end of each fiscal year
of UNIOIL, UNIOIL shall furnish UNIOIL's most recent
financial statements as of the end of and for each such
period, including a balance sheet and statements of income,
stockholder's equity and cash flow, each of which shall
have been prepared in accordance with generally accepted
accounting principles and accompanied by a report of
UNIOIL's independent certified public accountants stating
that their examination was made in accordance with
generally accepted auditing standards and that, in their
opinion such financial statements fairly present UNIOIL's
financial condition, results of operations and changes in
financial position in accordance with generally accepted
accounting principles consistently applied.
(b) Within thirty (30) days after the end of each of the first
three (3) fiscal quarters of UNIOIL, UNIOIL shall furnish
UNIOIL's most recent financial statements as of the end of
and for such period, including a balance sheet and
statements of income, stockholder's equity and cash flow,
each of which shall have been prepared in accordance with
generally accepted accounting principles and accompanied by
a certificate of UNIOIL's chief financial officer stating
that such financial statements fairly present UNIOIL's
financial condition, results of operations and changes in
financial position in accordance with generally accepted
accounting principles consistently applied, subject to
changes resulting from year-end audit adjustments.
(c) If any indebtedness under this Agreement remains unpaid on
December 31, 1997, then on April 1, l998 and annually on or
before April 1, of each year thereafter until the Note and
accrued interest thereunder are repaid in full, UNIOIL
shall furnish an engineering report reasonably satisfactory
to PanEnergy (together with UNIOIL's internally prepared
summary of such report), as of January 1 of such year
prepared by an independent petroleum engineering consulting
firm reasonably acceptable to PanEnergy, incorporating all
current information and data available to UNIOIL pertinent
to the estimation of oil and gas reserves attributable to
the Program Leases and setting forth the following;
(i) an estimation of the oil and gas reserves,
classified by appropriate categories, as of such date
attributable to the Program Leases (with that portion of
such reserves attributable to the Production Prepayments
and to UNIOIL's interest in the Program Leases (after
giving effect to the Production Prepayments) being set
forth separately),
(ii) a projection of the rate of production of and net
income from, such reserves,
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(iii) a calculation of the present worth of such net
income discounted at a rate or rates designated from time
to time by ParEnergy, and
(iv) a schedule or complete description of all
assumptions, estimates and projections made or used in the
preparation of such report, including without limitation
estimated future product prices, capital expenditures,
operating expenses and taxes.
Each such report pursuant to this Section 6.1(c)
shall be prepared in accordance with customary and
generally accepted standards and practices for petroleum
engineers, shall be based on such assumptions as to costs,
product prices and similar factors as PanEnergy shall
designate from time to time. PanEnergy shall be furnished a
copy of any other reserve report prepared for UNIOIL, by
any independent petroleum engineering firm covering the
Program Leases.
(d) Upon request, UNIOIL shall furnish such other information
as PanEnergy may reasonably request.
7. DEFAULT
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7.1 Upon the occurrence of an Event or Default as defined in Section
7.2 below, (a) the outstanding unpaid balance of the Note, plus accrued interest
thereon as of the date of the occurrence of the Event of Default, shall become
immediately due and payable, without any further notice, presentment, or demand
of any kind, all of which are expressly waived by UNIOIL, (b) PanEnergy's
obligation to make Production Prepayments shall terminate immediately, and (c)
PanEnergy may proceed immmmediately to exercise all rights it may have at law,
in equity, or under the Mortgage and the Financing Statement.
7.2 For the purposes hereof, an Event of Default shall be defined as
any one or more of the following:
(a) Non-Payment of the Note. UNIOIL fails to timely pay when
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due any payment of principal, interest or other amounts due
under the Note and such failure continues for ten (10) days
after receipt by UNIOIL of notice thereof from PanEnergy.
(b) Default Under the Mortgage. A default occurs under the
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terms of the Mortgage and continues for more than the
applicable period of grace, notice or cure, if any, therein
set forth.
(c) Cessation of Force and Effect of the Mortgage. The Mortgage
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shall at any time and for any reason cease to be in full
force and effect.
(d) Bankruptcy, Insolvency, etc. UNIOIL becomes insolvent or
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generally fails to pay, or admits in writing its inability
to pay, debts as they become due; or UNIOIL applies for,
consents to, or acquiesces in the appointment of a trustee,
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receiver or other custodian for UNIOIL or any property
thereof, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent
or acquiescence, a trustee, receiver or other custodian is
appointed for UNIOIL or for a substantial part of the
property thereof and is not discharged within thirty (30)
days; or any bankruptcy, reorganization, debt arrangement,
or other case or proceeding under any bankruptcy or
insolvency law, or any dissolution or liquidation
proceeding is commenced in respect of UNIOIL and if such
case or proceeding is not commenced by UNIOIL, it is
consented to or acquiesced in by UNIOIL, or is not
dismissed or remains undismissed for thirty (30) days or
UNIOIL takes any action to authorize, or in the furtherance
of, any of the foregoing.
(e) Dissolution of UNIOIL. UNIOIL shall dissolve for any reason
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or shall transfer or assign a majority interest therein, or
transfer or assign substantially all of the assets of
UNIOIL to any other person or entity, without the prior
written consent of PanEnergy.
(f) Liens and Encumbrances. Any lien or encumbrance is placed
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upon any of the Leases (or xxxxx located thereon) and/or
the Production attributable thereto which lien or
encumbrance impairs, or which PanEnergy reasonably believes
impairs the priority and/or of effectiveness of PanEnergy's
security interest therein, notice thereof is given to
UNIOIL and UNIOIL fails to pay off or otherwise resolve
said lien or encumbrance within thirty (30) days from date
of receipt of said notice. In the event UNIOIL fails to
cure such default within the time period specified,
PanEnergy, without waiver of any other rights it may have
hereunder, or at law or in equity, may apply all or any
portion of the Production Proceeds to the payment,
settlement or resolution of such lien or encumbrance and,
to the extent such of the Production Proceeds have
previously been applied to the Note, such advances shall
constitute additional indebtedness of UNIOIL under the
Note.
(g) Default Under the Agreement and/or any Ancillary Agreements
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With PanEnergy. UNIOIL shall have breached any term or
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provision herein contained and having received notice
thereof, fails to remedy said breach within thirty (30)
days (unless an earlier time is specified) from the date of
receipt of said notice, or UNIOIL shall have breached any
term of or defaulted under any other document required or
requested to be executed and delivered to PanEnergy
hereunder and fails to cure such breach or default within
thirty (30) days (unless an earlier time is specified) from
date of receipt of notice thereof.
8. MISCELLANEOUS
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8.1 Notices. All notices and communications required or permitted
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under this Agreement shall be in writing and any communication or delivery
hereunder shall be deemed to have been duly made when delivered personally or
three (3) business days following deposit in the United States mail, certified
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mail, return receipt requested, or one (1) business day following delivery to a
recognized overnight courier service, or one (1) busine day following
transmittal by facsimile, in each such case, addressed as follows:
TO PANENERGY:
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PANENERGY FINANCIAL SERVICES, INC.
000 00xx Xxxxxx, Xxxxx 000
P.O. Box 5493
Xxxxxx, Xxxxxxxx 00000
ATTN: Vice President - Rocky Mountain Region
(000) 000-0000
(000) 000-0000 - FAX
WITH A COPY TO:
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PANENERGY FINANCIAL SERVICES, INC.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
ATTN: Xxxxxxx Xxxxxxx
(000) 000-0000
(000) 000-0000 - FAX
TO UNIOIL:
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UNIOIL INC.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxx Xxx 000
Xxxxx, Xxxxxxxx 00000
ATTN: Xxxx X. Xxxxx
(000) 000-0000
(000) 000-0000 - FAX
Either party may, by written notice so delivered to the other, change the
address or the person to which delivery shall thereafter be made.
8.2 Payment of Costs, Expenses and Taxes. UNIOIL agrees to pay
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PanEnergy on demand for all of PanEnergy's out-of-pocket costs and expenses,
including, without limitation, attorneys' fees, reasonably incurred in
connection with: (i) the administration of this Agreement, the Note, the
Mortgage and all other instruments or documents provided for herein or delivered
or to be delivered hereunder or in connection herewith, (ii) the preparation,
negotiation, execution and delivery of any and all amendments to or replacement
of this Agreement, the Note, the Mortgage and all other instruments or documents
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provided for herein or delivered or to he delivered hereunder or in connection
herewith, (iii) the filing, recording, refiling and re-recording of the Mortgage
and/or any financing statements relating thereto and all amendments or
supplements to any thereof, and any and all other documents or instruments of
further assurance required to he filed or recorded or refiled or re-recorded by
the terms hereof or of the Mortgage, (iv) examination of title to, preparation
of title opinions for, and curing title problems associated with the Program
Leases and other oil and gas leases and lands dedicated by UNIOIL to PanEnergy
under gas purchase, processing and/or gathering agreements as PanEnergy deems
appropriate to verify UNIOIL's title therein, and (v) the enforcement of this
Agreement, the Note and the Mortgage. In addition, UNIOIL agrees to pay, and to
save PanEnergy harmless from all liability for, any stamp or similar taxes which
may be payable in connection with the execution or delivery of this Agreement,
or the issuance of the Note or of any other instruments or documents provided
for herein or delivered or to be delivered hereunder or in connection herewith
(but not for any taxes on income or gross or net receipts). All obligations
provided for in this Section shall survive any termination of this Agreement.
8.3 Amendment; Waiver; Remedies. This Agreement may not be altered or
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amended, nor any rights hereunder be waived, except by written instrument
executed by both parties. No waiver of any term, provision or condition of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing Waiver of any such term, provision or condition or as a
waiver of any term, provision or condition of this Agreement. No failure or
delay on the part of PanEnergy to exercise any right under this Agreement shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right under this Agreement, the Mortgage, the Financing Statement or the Note
preclude any other or further exercise of any right under this Agreement or any
other right. The remedies herein are cumulative and not exclusive of any
remedies provided by law.
8.4 Assignment. This Agreement and the other agreements and
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instruments contemplated hereby may not be assigned by UNIOIL without the prior
written consent of PanEnergy.
8.5 Headings. The headings of the Articles and Sections of this
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Agreement are for guidance and convenience of reference only and shall not limit
or otherwise affect any of the terms or provisions of this Agreement.
8.6 Governing Law. This Agreement and the transactions contemplated
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hereby shall be construed to accordance with, and governed by, the laws of the
State of Colorado without regard to principles of conilicts of law.
8.7 Entirety of Agreement. This Agreement, together with the documents
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described in Section 1.2 above, the Mortgage, the Crude Contract, the Note and
the GPA constitute the entire understanding between the parties with respect to
the subject matter hereof, superseding all negotiations, prior discussions and
prior agreements and understandings, whether written or oral, relating to such
subject matter.
8.8 Binding Agreement. This Agreement shall be binding upon, and shall
-----------------
inure to the benefit of, the parties hereto and their respective successors and
assigns.
11
8.9 Survivor. This Agreement, and the rights and obligations of the
--------
parties herein, shall survive the consummation hereof.
8.10 Counterparts and Telecopies. This Agreement may be executed in any
---------------------------
number of counterparts, each of which shall he deemed an original but all of
which together shall constitute one and the same instrument. Telecopies of
signed copies of this Agreement shall constitute signed original documents for
all purposes.
IN WITNESS WITNESS WHEREOF, the parties have executed this Agreement the date
first above mentioned.
ATTEST: PANENERGY FINANCIAL SERVICES, INC.,
A DELAWARE CORPORATION
BY: /s/ Xxxxxxx X. Xxxxxxx BY: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------- -----------------------------------
XXXXXXX X. XXXXXXX, XXXXXXX X. XXXXXXX,
ASSISTANT SECRETARY VICE PRESIDENT
ATTEST: UNIOIL, INC.
A NEVADA CORPORATION
BY: /s/ Xxxx X. Xxxxx BY: /s/ Xxxxxxx X. Xxxxx, Xx.
----------------------------------- -----------------------------------
XXXX X. XXXXX, XXXXXXX X. XXXXX, XX.,
SECRETARY CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER
12
STATE OF COLORADO )
) ss.
CITY & COUNTY OF DENVER )
Before me, Xxxxxx X. Xxxxxxxxx, a Notary Public in and for said County and
State, on this 12th day December, 1996, personally appeared XXXXXXX X. XXXXXXX
and XXXXXXX X. XXXXXXX, known to me to be the Vice President and Assistant
Secretary, respectively, of PanEnergy Financial Services, Inc., a Delaware
corporation, on behalf of said corporation and acknowledged to me that they
executed this Agreement for the considerations and purposes therein set forth.
Given under my hand and seal of office this 12th day of December, 1996.
MY COMMISSION EXPIRES /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
NOTARY PUBLIC
September 30, 2000
------------------------
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
Before me, Xxxxxx X. Xxxxxxxxx, a Notary Public in and for said County and
State, on this 12th day of December, 1996, personally appeared XXXXXXX X. XXXXX,
XX. and XXXX X. XXXXX, known to me to be the Chairman of the Board, Chief
Executive Officer and Secretary, respectively, of Unioil, Inc., a Nevada
corporation, on behalf of said corporation and acknowledged to me that they
executed this Agreement for the considerations and purposes therein set forth.
Given under my hand and seal of office this l2th day of December, 1996.
MY COMMISSION EXPIRES /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
NOTARY PUBLIC
September 30, 2000
------------------------
13
EXHIBIT A
---------
PROGRAM LEASES
--------------
All recording information is to the Real Property Records of the Clerk and
Recorder of Weld County, Colorado.
Lessor Lessee Lease Date Lands Recording Information
-------------------------------------------------------------------------------------------------------------------
Union Pacific PanAmerican 11-25-70 Township 4 North, Range 64 West, 6th P.M. Book 638
Railroad Company Petroleum Corp. ----------------------------------------- Rec. No. 1559660
Section 7: SW1/4
Township 4 North, Range 65 West, 6th P.M.
-----------------------------------------
Section 25: SW1/4
07-30-70 Township 3 North, Range 66 West, 6th P.M. Book 000
Xxxxx Xxxxxxx XxxXxxxxxxx ----------------------------------------- Reception 1553082
Railroad Company Petroleum Corp. Section 3: S1/2SW1/4
EXHIBIT B
---------
PROGRAM XXXXX AND MAXIMUM ADVANCES
----------------------------------
All legal descriptions are in Weld County, Colorado.
Location of Location of Existing Maximum
Prospect Program Xxxxx Xxxxx Advance Interest Owner Interest and Type
------------------------------------------------------------------------------------------------------------------------
Xxxxx Draw T4N, R65W, Sec. 25: T4N, R65W, Sec. 25: $239,000 Union Pacific Resources 15.0% LOR
XX0/XX0 XX0/XX0 Amoco Production Co. 100% ORRI
SE4/SW4 Pulsar Oil & Gas, Inc. 2.5005% WI
SW4/SW4 1.875% NRI
River Partnership 14.1695% WI
10.625% NRI
Unioil 83.3300% WI
62.50% XXX
Xxxxxx Xxxxxx X0X, X00X, Sec. 3: T3N,R6W,Sec. 3: $239,000 Union Pacific Resources 15.0% LOR
Amoco Production Co. 10.0% ORRI
XX0/XX0 XX0/XX0 Unioil 100.0% WI
75.0% XXX
Xxxxxx X0X, X00X, Sec. 7: T4N, R64W, Sec. 7: $239,000 Union Pacific Resources 15.0% LOR
NE4/SW4 NW4/SW4 for each Amoco Production Co. 10.0% ORRI
Program
Well;
SE4/SW4 (Xxxxxx #7-1) $140,000 Pulsar Oil & Gas, Inc. 16.67% WI
SW4/SW4 for comple- 12.5% NRI
tion of
Existing Unioil 83.33% WI
Well 62.5% NRI
