Exhibit 1
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
AMOCO PRODUCTION COMPANY, SELLER
AND
HS RESOURCES, INC., BUYER
DATED
NOVEMBER 25, 1997
INDEX
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Article 1. DEFINITIONS................................................................................ 1
ARTICLE 2. SALE AND PURCHASE AND EXCHANGE
2.1 SALE AND PURCHASE AND EXCHANGE............................................................. 9
ARTICLE 3. PURCHASE PRICE, DEPOSIT, STOCK, PREFERENTIAL RIGHTS, AND CONSENTS
3.1 PURCHASE PRICE............................................................................. 9
3.2 DEPOSIT.................................................................................... 10
3.3 BUYER'S COMMON STOCK PROVISIONS............................................................ 10
3.4 PREFERENTIAL RIGHTS TO PURCHASE............................................................ 12
3.5 CONSENTS................................................................................... 12
ARTICLE 4. TITLE REVIEW
4.1 REVIEW OF TITLE RECORDS.................................................................... 13
4.2 ALLEGED TITLE DEFECTS...................................................................... 13
4.3 Section 29 Credits......................................................................... 14
4.4 Alleged Gas Imbalance Defects.............................................................. 15
4.5 Waiver..................................................................................... 16
Article 5. INSPECTION OF PREMISES
5.1 INSPECTION OF PREMISES..................................................................... 16
5.2 ALLEGED ADVERSE CONDITIONS................................................................. 16
5.3 WAIVER..................................................................................... 17
ARTICLE 6. ACCOUNTING
6.1 REVENUES, EXPENSES AND CAPITAL EXPENDITURES................................................ 17
6.2 TAXES...................................................................................... 18
6.3 OBLIGATIONS AND CREDITS.................................................................... 18
6.4 MISCELLANEOUS ACCOUNTING................................................................... 18
6.5 FINAL ACCOUNTING SETTLEMENT................................................................ 19
6.6 POST-FINAL ACCOUNTING SETTLEMENT........................................................... 19
ARTICLE 7. LOSS, CASUALTY AND CONDEMNATION
7.1 NOTICE OF LOSS............................................................................. 20
7.2 CASUALTY AND CONDEMNATION.................................................................. 20
ARTICLE 8. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES
8.1 OPPORTUNITY FOR REVIEW..................................................................... 20
8.2 SELLER'S NON-ENVIRONMENTAL INDEMNITY OBLIGATION............................................ 20
8.3 SELLER'S ENVIRONMENTAL INDEMNITY OBLIGATION................................................ 21
8.4 BUYER'S NON-ENVIRONMENTAL INDEMNITY OBLIGATION............................................. 22
8.5 BUYER'S ENVIRONMENTAL INDEMNITY OBLIGATION................................................. 22
8.6 LEGAL CLAIMS AND DEFENSES.................................................................. 23
8.7 ASBESTOS AND NORM.......................................................................... 23
i
8.8 Buyer's Assumption of Obligations........................................................... 23
8.9 Process Safety Management................................................................... 24
8.10 Notice of Claims............................................................................ 24
8.11 Defense of Claims........................................................................... 24
8.12 Waiver of Certain Damages................................................................... 25
8.13 Limitation on Indemnities................................................................... 25
Article 9. SPECIAL WARRANTY AND DISCLAIMERS
9.1 Special Warranty of Title.................................................................... 25
9.2 Disclaimer - Representations and Warranties.................................................. 26
9.3 Disclaimer - Statements and Information...................................................... 26
ARTICLE 10. SELLER'S REPRESENTATIONS AND WARRANTIES
10.1 Organization and Good Standing............................................................... 27
10.2 Corporate Authority; Authorization of Agreement.............................................. 27
10.3 No Violations................................................................................ 27
10.4 Absence of Certain Changes................................................................... 28
10.5 Operating Costs.............................................................................. 28
10.6 Litigation................................................................................... 28
10.7 Bankruptcy................................................................................... 29
10.8 Removal...................................................................................... 29
Article 11. BUYER'S REPRESENTATIONS AND WARRANTIES
11.1 Organization and Good Standing............................................................... 29
11.2 Corporate Authority; Authorization of Agreement.............................................. 29
11.3 No Violations................................................................................ 29
11.4 Sec Disclosure............................................................................... 30
11.5 Independent Evaluation....................................................................... 30
11.6 Buyer's Reliance............................................................................. 30
Article 12. ADDITIONAL COVENANTS AND CONSIDERATIONS
12.1 Subsequent Operations........................................................................ 31
12.2 Transition Agreement......................................................................... 31
12.3 License Agreement(s)......................................................................... 31
12.4 Crude Call................................................................................... 31
12.5 Natural Gas Processing Agreement............................................................. 33
12.6 Rights of Way and Surface Leases............................................................. 33
12.7 Conduct of Business.......................................................................... 33
ARTICLE 13. PROPERTY EXCHANGE
13.1 Property Exchange............................................................................ 36
13.2 HS Exchange Properties....................................................................... 36
13.3 Amoco Exchange Properties.................................................................... 38
13.4 Identification of Amoco Exchange Properties.................................................. 40
13.5 HS Exchange Properties Allocation............................................................ 40
13.6 HS Contracts................................................................................. 40
ii
13.7 Gas Imbalances............................................................................... 40
13.8 Partnerships................................................................................. 40
13.9 Litigation................................................................................... 41
13.10 HS Exchange Properties Transition............................................................ 41
13.11 Title Defects................................................................................ 41
13.12 Adverse Conditions........................................................................... 41
13.13 Amoco Defect Value........................................................................... 42
13.14 Tax Gross-Up................................................................................. 42
13.15 Preferential Rights.......................................................................... 42
13.16 Payout....................................................................................... 42
13.17 Non-Applicable Provisions.................................................................... 42
13.18 Release...................................................................................... 42
13.19 Survival of Representations and Warranties................................................... 43
13.20 Administration of Agreement.................................................................. 43
Article 14. PERSONNEL MATTERS
14.1 Employee Lists............................................................................... 43
14.2 Offers of Employment......................................................................... 43
14.3 Savings Plan................................................................................. 44
14.4 Other Employee Benefits...................................................................... 44
14.5 Accrued and Unused Vacation.................................................................. 45
14.6 Severance.................................................................................... 45
14.7 WARN Act..................................................................................... 46
Article 15. HSR FILINGS
15.1 HSR FILINGS.................................................................................. 46
ARTICLE 16. CONDITIONS PRECEDENT TO CLOSING
16.1 Conditions Precedent to Seller's Obligation to Close......................................... 47
16.2 Conditions Precedent to Buyer's Obligation to Close.......................................... 47
16.3 Conditions Precedent to Obligation of Each Party
to Close.................................................................................. 47
ARTICLE 17. THE CLOSING
17.1 Closing...................................................................................... 48
17.2 Obligations of Seller At Closing............................................................. 48
17.3 Obligations of Buyer At Closing.............................................................. 49
ARTICLE 18. TERMINATION
18.1 Grounds For Termination...................................................................... 50
18.2 Effect of Termination........................................................................ 51
18.3 Dispute Over Right to Terminate.............................................................. 51
18.4 Return of Documents.......................................................................... 51
18.5 Confidentiality.............................................................................. 51
ARTICLE 19. ARBITRATION
19.1 Arbitration.................................................................................. 52
iii
Article 20. MISCELLANEOUS
20.1 Notices................................................................................ 53
20.2 Conveyance Costs....................................................................... 53
20.3 Brokers' Fees.......................................................................... 54
20.4 Records................................................................................ 54
20.5 Further Assurances..................................................................... 54
20.6 Survival of Representations and Warranties............................................. 55
20.7 Amendments and Severability............................................................ 55
20.8 No Multiple Recoveries................................................................. 55
20.9 Successors and Assigns................................................................. 55
20.10 Headings............................................................................... 55
20.11 Governing Law.......................................................................... 55
20.12 No Partnership Created................................................................. 56
20.13 Public Announcements................................................................... 56
20.14 No Third Party Beneficiaries........................................................... 56
20.15 Waiver of Consumer Rights.............................................................. 56
20.16 Not to be Construed Against Drafter.................................................... 56
20.17 Tax Deferred Exchange Election......................................................... 56
20.18 Conspicuousness of Provisions.......................................................... 56
20.19 Execution in Counterparts.............................................................. 57
20.20 Entire Agreement....................................................................... 57
iv
EXHIBITS
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EXHIBIT "A" - WORKING INTERESTS AND NET REVENUE INTERESTS -
AMOCO PROPERTIES
EXHIBIT "B" - WORKING INTERESTS AND NET REVENUE INTERESTS -
HS PROPERTIES
EXHIBIT "C" - MAJOR CONTRACTS
EXHIBIT "D" - GAS IMBALANCES
EXHIBIT "E" - PARTNERSHIPS
EXHIBIT "F" (PART 1) EXCLUDED PROPERTIES - AFFILIATES
(PART 2) EXCLUDED PROPERTIES - OTHER
EXHIBIT "G" - CLAIMS, DISPUTES AND LITIGATION
EXHIBIT "H" - SECTION 29 TAX CREDIT XXXXX
EXHIBIT "I" - ASSIGNMENT AND XXXX OF SALE
EXHIBIT "J" - SURFACE DEED
EXHIBIT "K" - MINERAL DEED
EXHIBIT "L" - CERTIFICATE
EXHIBIT "M" - LETTERS-IN-LIEU
EXHIBIT "N" - OPINION OF COUNSEL
EXHIBIT "O" - NON-FOREIGN AFFIDAVIT
EXHIBIT "P" - TRANSITION AGREEMENT - AMOCO PROPERTIES
EXHIBIT "P-1" - TRANSITION AGREEMENT - HS PROPERTIES
EXHIBIT "Q" - LICENSE AGREEMENT
v
PURCHASE AND SALE AGREEMENT
---------------------------
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is dated the 25th day
of November, 1997, by and between AMOCO PRODUCTION COMPANY, a Delaware
corporation, with an office at 000 XxxxXxxx Xxxx Xxxxxxxxx, Xxxxxxx, Xxxxx 00000
(hereinafter referred to as "Seller") and HS RESOURCES, INC. a Delaware
corporation, with an office at Xxx Xxxxxxxx Xxxxx, 00xx xxxxx, Xxx Xxxxxxxxx, XX
00000 (hereinafter referred to as "Buyer"), and is based on the following
premises:
WHEREAS, Seller desires to sell, assign and convey to Buyer and Buyer
desires to purchase and accept certain oil and gas properties and related
interests; and
WHEREAS, Seller and Buyer also desire to exchange certain oil and gas
properties; and
WHEREAS, the parties have reached agreement regarding such sale, purchase,
and exchange.
NOW, THEREFORE, for valuable consideration and the mutual covenants and
agreements herein contained, Seller and Buyer agree as follows:
ARTICLE 1. DEFINITIONS
----------------------
1. Definitions: In this Agreement, capitalized terms have the meanings
provided in this Article, unless expressly provided otherwise in other Articles.
All defined terms include both the singular and the plural. All references to
Articles refer to Articles in this Agreement, and all references to Exhibits
refer to Exhibits attached to and made a part of this Agreement.
1.1 "Accounting Referee" has the meaning set forth in Article 6.5.
1.2 "Affiliate" means any entity that, directly or indirectly, through one
or more intermediaries, controls or is controlled by or is under common control
with the entity specified. Control means ownership of fifty percent (50%) or
greater of the voting stock of such entity.
1.3 "Alleged Adverse Condition" means an environmental or physical
condition on or migrating from the Properties asserted by Buyer in accordance
with Article 5.2 that, as of Closing (as hereinafter defined), is not in
compliance with the then existing Laws (as hereinafter defined), and the costs
associated with compliance with the pertinent Environmental Laws of such
individual Alleged Adverse Condition exceeds Seventy-Five Thousand and No/100
United States Dollars (US $75,000) net to Seller's interests. Notwithstanding
anything contained in this Agreement to the contrary, Buyer shall not be
entitled to
raise an Alleged Adverse Condition unless the aggregate cost associated with
remediating all such Alleged Adverse Condition(s) exceeds $10,000,000 (it being
acknowledged and agreed that Buyer shall be solely responsible for any and all
Alleged Adverse Condition(s) up to $10,000,000).
1.4 "Alleged Gas Imbalance Defect" shall mean those gas imbalances set
forth on Exhibit "D" attached hereto, which are determined to be incorrect as of
the date set forth therein, which are asserted by Buyer in accordance with
Article 4.4 and the net difference in value for said imbalances, as of the date
set forth therein, valued at $0.75/MCF, is greater than $50,000.
1.5 "Alleged Section 29 Defect" shall have the meaning set forth in
Article 4.3.
1.6 "Alleged Title Defect" means a Title Defect (as hereinafter defined)
which is asserted by Buyer in accordance with Article 4.2 as to a distinct Item
Number listed on Exhibit "A" attached hereto, and the costs associated with
curing such Alleged Title Defect with respect to such Item Number exceeds
Seventy-Five Thousand and No/100 (US $75,000) net to Seller's interests. Except
as expressly stated hereinabove, notwithstanding anything contained in this
Agreement to the contrary, Buyer shall not be entitled to raise an Alleged Title
Defect unless the aggregate cost associated with curing all such Alleged Title
Defect(s) exceeds $10,000,000 (it being acknowledged and agreed that Buyer shall
be solely responsible for any and all Alleged Title Defect(s) up to
$10,000,000).
1.7 "Amoco Severance Plan" has the meaning set forth in Article 14.6.
1.8 "Arbitrable Dispute" has the meaning set forth in Article 19.1.
1.9 "Assignment and Xxxx of Sale" means a document in the form of Exhibit
"I".
1.10 "Business Day" means a Day (as hereinafter defined) excluding
Saturdays, Sundays and U.S. legal holidays.
1.11 "Buyer Group" has the meaning set forth in Article 8.2.
1.12 "Buyer Savings Plan" has the meaning set forth in 14.3.
1.13 "Casualty Loss" means any loss, damage or reduction in value of the
Properties which occurs prior to Closing resulting from mechanical failure or
defects, catastrophic occurrences, acts of God or any other losses which are not
the result of normal wear and tear or of natural reservoir changes.
1.14 "Certificate" means a document in the form of Exhibit "L".
1.15 "Claim" means any and all claims, demands, suits, causes of action,
losses, damages, liabilities, fines, penalties and costs (including attorneys'
fees and costs of litigation) which are brought by or owed to a Third Party (as
hereinafter defined).
1.16 "Claimant" has the meaning set forth in Article 19.1.
1.17 "Claim Notice" has the meaning set forth in Article 8.10.
1.18 "Close" or "Closing" means the consummation of the transfer of title
to the Properties (as hereinafter defined) to Buyer, including execution and
delivery of all documents provided for in this Agreement.
1.19 "Closing Date" means December 15, 1997.
1.20 "Computed Interest" means simple interest of seven and one-half
percent (7.5%) per annum using a three hundred sixty-five (365) Day year.
1.21 "Confidentiality Agreement" has the meaning set forth in Article
18.5.
1.22 "Day" means a calendar day consisting of twenty-four (24) hours from
midnight to midnight.
1.23 "Defensible Title" means, as to the Properties, such title held by
Seller as of Closing that, except for the Permitted Encumbrances (as hereinafter
defined):
1.23.1 Entitles Seller as of Closing to receive not less than the
"Net Revenue Interests" set forth in Exhibit "A" of all oil, gas and
associated liquid and gaseous hydrocarbons and non-hydrocarbons produced,
saved and marketed from the Properties; and
1.23.2 Obligates Seller as of Closing to bear costs and expenses
relating to the ownership, operation, maintenance and repair of the
Properties in an amount not greater than the "Working Interests" set forth
in Exhibit "A", unless there is a corresponding increase in the Net Revenue
Interests.
1.24 "Deposit" has the meaning set forth in Article 3.2.
1.25 "Effective Time" means December 1, 1997, at 7:00 a.m., local time
where the Properties are located.
1.26 "Environmental Claims" means all Claims which are based on breach of
or noncompliance with Environmental Laws (as hereinafter defined).
1.27 "Environmental Laws" means any and all Laws that relate to: (a) the
prevention of pollution or environmental damage, (b) the remediation of
pollution or environmental damage, and/or (c) the protection of the environment
generally; including without limitation, the Clean Air Act, as amended, the
Clean Water Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Federal Water Pollution
Control Act, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, the Safe Drinking Water Act, as amended, the Toxic Substance and
Control Act, as amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, the Hazardous and the Solid Waste Amendments Act of 1984, as
amended, and the Oil Pollution Act of 1990, as amended.
1.28 "ERISA" has the meaning set forth in Article 14.4
1.29 "Final Accounting Settlement" has the meaning set forth in Article
6.5.
1.30 "Final Settlement Date" has the meaning set forth in Article 6.5.
1.31 "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
1.32 "Laws" means laws, statutes, ordinances, permits, decrees, orders,
judgments, rules or regulations (including without limitation Environmental
Laws) which are promulgated, issued or enacted by a governmental entity or
tribal authority having appropriate jurisdiction.
1.33 "Letters-in-Lieu" means a document in the form of Exhibit "M".
1.34 "License Agreement - XXXX" means a document in the form of Exhibit
"Q", and "License Agreement - Seismic" means the document referred to in Article
12.3.
1.35 "Mineral Deed" means a document in the form of Exhibit "K".
1.36 "Non-Environmental Claims" means all Claims, except Environmental
Claims.
1.37 "Non-Foreign Affidavit" means a document in the form of Exhibit "O".
1.38 "NORM" means naturally occurring radioactive materials.
1.39 "Opinion of Counsel" means a document in the form of Exhibit "N".
1.40 "Permitted Encumbrances" means:
1.40.1 Royalties, overriding royalties, production payments,
reversionary interests, convertible interests, net profits interests,
division orders and similar burdens encumbering the Properties to the
extent the net cumulative effect of such burdens do not, as of Closing,
operate to reduce the Net Revenue Interests of the Properties to less than
the Net Revenue Interests set forth in Exhibit "A";
1.40.2 Consents to assignment and similar contractual provisions
encumbering the Properties to which, prior to Closing, waivers or consents
are obtained from the appropriate parties, or which the obligation to
obtain prior to Closing is waived by the Buyer ;
1.40.3 Preferential rights to purchase encumbering any one (1) or
more of the Properties to which, prior to Closing: (a) waivers are obtained
from the appropriate parties, or (b) the time period for exercising said
right has elapsed.
1.40.4 All rights to consent by, required notices to, filings with or
other actions by a governmental entity or tribal authority in connection
with the sale or conveyance of the Properties, if the same are customarily
obtained subsequent to the transfer of title;
1.40.5 Rights reserved to or vested in a governmental entity or
tribal authority having appropriate jurisdiction to control or regulate the
Properties in any manner whatsoever, and all Laws of any such governmental
entity or tribal authority;
1.40.6 Easements, rights-of-way, servitudes, surface leases, sub-
surface leases, grazing rights, logging rights, and surface rights with
respect to canals, ditches, reservoirs, pipelines, utility lines, telephone
lines, power lines, railways, streets, roads, highways and structures on,
over and through the Properties, to the extent such rights, interests or
structures do not materially interfere with the operation of the
Properties;
1.40.7 The terms and conditions of all leases, units, agreements,
contracts, instruments, licenses and permits associated with, attributable
to or encumbering the Properties which have been filed with the appropriate
governmental entity or tribal authority, placed of record in the
appropriate County records or otherwise disclosed by Seller to Buyer that
in the aggregate (a) are not such as to impair or interfere materially with
the operation, value or use of any Property; (b) do not prevent Buyer from
receiving the proceeds of production from any Property; or (c) in the case
of gas purchase or sales contracts, are terminable on thirty (30) days
notice or less;
1.40.8 Liens for taxes or assessments not yet due or not yet
delinquent or, if delinquent, that are being contested by Seller in good
faith in the normal course of business;
1.40.9 Liens of operators relating to obligations not yet due or not
yet delinquent or, if delinquent, that are being contested by Seller in
good faith in the normal course of business;
1.40.10 Alleged Title Defect(s) which do not meet the individual or
aggregate threshold amounts set forth in Article 1.6 or which Buyer has
waived under Article 4.5;
1.40.11 Alleged Adverse Condition(s) which do not meet the individual
or aggregate threshold amounts set forth in Article 1.3 or which Buyer has
waived under Article 5.3;
1.40.12 Gas imbalances associated with the Properties;
1.40.13 Suspense funds associated with the Properties; and
1.40.14 Such defects or irregularities in the title to the Properties
that do not materially interfere with the operation, value or use of the
Properties affected thereby and that would be considered not material when
applying general industry standards.
1.41 "Personnel" has the meaning set forth in Article 14.1
1.42 "Process Safety Management" has the meaning set forth in Article 8.9.
1.43 "Property" or "Properties" means Seller's ownership interests in the
properties (real, personal or mixed) and appurtenant rights (contractual or
otherwise) as follows:
1.43.1 All of Seller's right, title and interests in, to and under,
or derived from, the oil and gas leasehold interests, royalty interests,
overriding royalty interests, mineral interests, production payments, net
profits interests and surface interests which are described in Exhibit
"A", and all rights (contractual or otherwise) that are appurtenant to such
interests.
1.43.2 All of Seller's right, title and interests in, to and under,
or derived from, all of the presently existing and valid unitization,
communitization and pooling declarations, orders, and agreements
(including all units formed by voluntary agreement and those formed under
the rules, regulations, orders or other official acts of any
governmental entity or tribal authority having appropriate jurisdiction) to
the extent they relate to any of the interests which are described in
Exhibit "A", or the production of oil, gas or other hydrocarbon and non-
hydrocarbon substances attributable thereto;
1.43.3 All of Seller's right, title and interests in, to and under,
or derived from, all of the presently existing and valid oil sales
contracts, casinghead gas sales contracts, gas sales contracts, processing
contracts, gathering contracts, transportation contracts, easements,
rights-of-way, servitudes, surface leases, subsurface leases, permits,
licenses, farm-out contracts, farm-in contracts, balancing contracts
(including but not limited to the gas imbalances described in Exhibit "D"),
suspense funds, operating agreements, areas of mutual interest, and other
contracts, agreements and instruments (including but not limited to the
major contracts described in Exhibit "C") to the extent they relate to any
of the interests which are described in Exhibit "A", or the production of
oil, gas or other hydrocarbon and non-hydrocarbon substances attributable
thereto;
1.43.4 All of Seller's right, title and interests in, to and under,
or derived from, the personal property, improvements, fixtures, xxxxx
(whether producing, plugged and abandoned, shut-in, injection, disposal or
water supply), tanks, boilers, buildings, machinery, equipment, pipelines,
utility lines, power lines, telephone lines, roads and other appurtenances,
to the extent the same are situated upon and used or held for use by Seller
in connection with the ownership, operation, development, maintenance or
repair of the interests which are described in Exhibit "A", or the
production of oil, gas or other hydrocarbon and non-hydrocarbon substances
attributable thereto;
1.43.5 All of Seller's right, title and interests in, to and under,
or derived from, the seismic, geologic or geophysical information and data
to the extent the same relates to any of the interests which are described
in Exhibit "A", or the production of oil, gas or hydrocarbon and non-
hydrocarbon substances attributable thereto; and
1.43.6 All of Seller's right, title and interests in, to and under,
or derived from, the partnerships (tax or otherwise) described in Exhibit
"E".
1.43.7 All of Seller's right, title and interest in, to and under (i)
all oil, gas and mineral leases, fee interests, royalties, overriding
royalties, production payments, net profits interests and all other
interest of every kind and character located in Weld, Adams, Boulder and
Arapahoe Counties Colorado and (ii) each type of property interest or right
described in Articles 1.43.1 through 1.43.6 that is related to the property
interest described in (i) above.
1.43.8 All rights and title to Seller's Ft. Xxxxxx office, yard and
related facilities and ground lease, furniture, fixtures and equipment,
except as excluded on Exhibit "F".
SELLER EXCEPTS, RESERVES AND RETAINS, unto itself, its Affiliates,
successors and assigns from the Properties the following properties (real,
personal or mixed) and appurtenant rights (contractual or otherwise):
(a) Any and all seismic, geologic or geophysical information and data that
are: (i) interpretive in nature, (ii) covered an obligation of non-disclosure,
(iii) covered by an obligation of confidentiality, (iv) covered by a prohibition
against transfer (provided Seller shall use its reasonable efforts to remove any
restriction on transferring the information to Buyer), (v) covers (in whole or
in part) retained assets of Seller;
(b) Any and all pipelines, equipment, facilities, permits, contracts,
agreements, easements, rights-of-way, surface leases and subsurface leases owned
by an Affiliate of Seller, including without limitation, the properties (real,
personal and mixed) and appurtenant rights (contractual or otherwise) described
in Exhibit "F";
(c) Any and all records which consist of previous offers and economic
analyses associated with the purchase, sale or exchange of the Properties,
proprietary information, interpretive information, reserve data, internal
communications, personnel information, tax information (except any information
concerning Section 29 Credits relating the Tax Partnerships set forth on Exhibit
"E" necessary to conduct due diligence or effectuate transition), information
covered by a non-disclosure obligation and information covered by a legal
privilege;
(d) The properties (real, personal and mixed) and appurtenant rights
(contractual or otherwise) described in Exhibit "F"; and
(e) A concurrent interest in, to and under, or derived from, the contracts,
agreements, instruments, permits, easements, rights-of-way, servitudes, surface
leases, subsurface leases and any other rights (contractual or otherwise) to the
extent that they relate to or affect the interests not conveyed herein.
1.44 "Purchase Price" has the meaning set forth in Article 3.1.
1.45 "Records" means all of Seller's books, records and files related to
the Properties; provided however, the term Records shall not include (and Seller
shall have no obligation to deliver to Buyer) previous offers and economic
analyses associated with the purchase, sale or exchange of the Properties,
proprietary information, interpretive information, reserve data, internal
communications, personnel information, tax information (except any information
concerning Section 29 Credits relating to the Tax Partnerships set forth on
Exhibit "E" necessary to conduct due diligence or effectuate transition),
information covered by a non-disclosure obligation and information covered by a
legal privilege.
1.46 "Respondent" has the meaning set forth in Article 19.1.
1.47 "Seller Group" has the meaning set forth in Article 8.2.
1.48 "Surface Deed" means a document in the form of Exhibit "J".
1.49 "Third Party" means any person or entity, governmental or otherwise,
other than Seller and Buyer.
1.50 "Title Defect" means any lien, encumbrance, encroachment or defect
associated with Seller's title to the Properties (excluding Permitted
Encumbrances) that would cause Seller, as of Closing, not to have Defensible
Title.
1.51 "Transition Agreement" means a document in the form of Exhibit "P"
and "P-1", as applicable.
1.52 "WARN Obligations" has the meaning set forth in Article 14.7.
ARTICLE 2. SALE AND PURCHASE AND EXCHANGE
-----------------------------------------
2.1 Sale and Purchase and Exchange. On the Closing Date, effective as of
the Effective Time and upon the terms and conditions herein set forth, Seller
agrees to sell and assign the Properties set forth on Exhibit "A" to Buyer and
Buyer agrees to buy and accept the Properties set forth on Exhibit "A", and/or
exchange the Properties set forth in Exhibit "A" and Exhibit "B", as applicable.
Further, Buyer and Seller agree to identify for exchange the properties set
forth on Exhibit "A" ("Amoco Exchange Properties") for the properties set forth
on Exhibit "B" ("HS Exchange Properties").
ARTICLE 3. PURCHASE PRICE, DEPOSIT, STOCK, PREFERENTIAL RIGHTS, AND CONSENTS
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3.1 Purchase Price. The total purchase price, subject to adjustments as
set forth in this Agreement, paid to Seller by Buyer for the Properties set
forth on Exhibit A" shall be (a) TWO HUNDRED NINETY MILLION and No/100 United
States Dollars (US $290,000,000.00) payable in full at Closing in immediately
available funds, and (b) ONE MILLION TWO HUNDRED THOUSAND (1,200,000) shares of
Buyer's common stock ("Buyer Common Stock") and (c) conveyance from Buyer to
Seller of the HS Exchange Properties as defined in Article 13.2 (collectively,
the "Purchase Price"). If Closing occurs on December
15, 1997, or if Closing occurs after December 15, 1997, due to the fault of
Seller, the Deposit shalI be increased by Computed Interest in the amount of Six
Thousand, Seven Hundred Eighty-One and No/100 Dollars ($6,781.00) per Day
calculated from the date of receipt by Seller to Closing and in either
situation, the Purchase Price due Seller is not increased by Computed Interest.
In the event that the Closing occurs after December 15, 1997, due to the fault
of Buyer the Purchase Price shall be increased by the Computed Interest in the
amount of Sixty-Eight Thousand, Four Hundred Twenty and No/100 Dollars
($68,420.00) per Day from the Effective Time until Closing, and the Deposit
shall be increased by the Computed Interest thereon from receipt to December 15,
1997 and shall not be increased by Computed Interest after December 15, 1997.
3.2 Deposit. Upon the execution of this Agreement, Buyer shall pay to
Seller a deposit in the amount of $ 33,000,000 ("Deposit"). In the event of
Closing, the Purchase Price shall be credited by the amount of the Deposit (plus
Computed Interest in the amount of Six Thousand, Seven Hundred Eighty-One and
No/100 Dollars ($6,781.00) per Day on the Deposit from the date of receipt by
Seller until Closing, unless Closing occurs after December 15, 1997, in which
event no Computed Interest will be credited to the Deposit). If Closing does not
occur, the Deposit (plus Computed Interest on the Deposit from the date of
receipt by Seller until termination) will be refunded to Buyer within five (5)
Days of such termination, unless Closing failed to occur as a result of Buyer's
breach of this Agreement (including without limitation Buyer's failure to comply
with Article 15.1) in which case the provisions of Article 18.2 shall apply.
3.3 Buyer's Common Stock Provisions
3.3.1 Registration. Subject to the terms and provisions hereof,
Buyer shall use its best efforts to (i) prepare and file a registration
statement and to have it declared effective for sales of Buyer's Common
Stock, which registration statement shall not be used for sales of
securities for Buyer's account (the "Registration") and (ii) have Buyer's
Common Stock listed for trading on the New York Stock Exchange ("NYSE").
Such Registration Statement shall be on Form S-3, or, if Form S-3 is not
available, on any form available for registration of Buyer's Common Stock,
if available, and shall be filed as promptly as practicable after the date
hereof, provided, however, that should Buyer elect to commence a public
offering of common stock for its own account in December 1997, Buyer shall
not be obligated to file such registration statement until after the
termination of such offering. The obligation under this Article expires at
the expiration of the holding period that would permit a non-affiliate to
sell Buyer's Common Stock without restriction under Rule 144(k) (or any
similar provision then in force).
3.3.2 Lockup Agreement. Seller agrees not to offer, pledge, sell,
contract to sell, grant any option for the sale of, or otherwise dispose
of, directly or indirectly, (i) 1,000,000 of the shares of Buyer's
Common Stock acquired hereunder for a period of ninety (90) days following
the date on which the Closing occurs and (ii) any of the shares of Buyer
Common Stock acquired hereunder during the period in which Buyer is
conducting a public offering of Buyer's common stock, such period to
commence upon notice from Buyer to Seller of such offering, and such period
ending on the earlier of the termination of such offering or forty-five
(45) days following Buyer's notice of commencement of the offering;
provided that the restriction provided in subsection (ii) shall end no
later than ninety (90) days following the Closing. The foregoing provision
shall not restrict Seller from acquiring a put, collar or similar financial
instrument with respect to any of Buyer's Common Stock so long as Seller
has reasonable assurances that the counterparty to the transaction will not
engage in a market transaction affecting Buyer's Common Stock to cover such
counterparty's position during the period of Buyer's public offering
referred to above. Seller acknowledges that it is acquiring the Buyer's
Common Stock for investment and not with a view to distribution thereof
except pursuant to the Registration or as otherwise permitted by law.
3.3.3 Make Whole Provisions. As to the 200,000 shares of Buyer's
Common Stock not subject to the 90 day lockup provision provided for in
Article 3.3.2(i) ("Saleable Shares") during any period Seller is entitled
to sell any of the Saleable Shares as contemplated by Article 3.3.2(ii) of
this Agreement, and the Registration Statement contemplated by Article
3.3.1 has not been declared effective, Seller shall be entitled to give
Buyer a written notice of intent to sell setting forth the number of
Saleable Shares Seller desires to sell on that date. Each notice given is
irrevocable and not amendable. Buyer shall have the option to (i)
repurchase the Saleable Shares set forth in such notice at the closing
sale price, regular way, of Buyer's Common Stock on the NYSE on the date
the notice was given (the "Notice Date Price") or (ii) to defer such
purchase until the date the registration statement has been declared
effective (the "Registration Statement Effective Date"). The option
contemplated by this Article 3.3.3 shall remain exercisable until 5:00 p.m.
San Francisco time on the Registration Statement Effective Date. If the
Registration Statement Effective Date has not occurred by the 50th day
following the Closing, and Buyer has not exercised its option on or before
such date, Buyer's option to purchase shall become a mandatory obligation
on the 51st day following Closing. If Buyer elects to defer and has not
exercised the option contemplated above as to any of the Saleable Shares
subject to the notice, Seller shall have a period of ten NYSE trading days
immediately following the Registration Statement Effective Date to sell, in
a regular way transaction on the NYSE, including block trades on the NYSE,
the Saleable Shares covered by the notice and not purchased by Buyer. In
the event the actual gross sales price resulting from such sale is less
than the Notice Day Price, Buyer shall pay to Seller the difference between
such prices multiplied by the number of
Saleable Shares that were subject to the notice, were not purchased by
Buyer, and were actually sold by Seller, upon receipt of written
information from Seller and the broker/dealer effecting the sale on behalf
of Seller, setting forth the number of shares sold and the actual gross
sales price. The payments to be made pursuant to this Article 3.3.3 shall
be made within five (5) days after the date they become due by wire
transfer of immediately available funds to the account designated by
Seller. If Seller does not sell the shares within the ten trading day
period, Buyer shall have no further "make whole" obligations in connection
with the Saleable Shares.
3.3.4 Anti-Dilution Protection. If from the date of this Agreement
until the Closing, Seller engages in a stock split, reclassification of
Buyer's Common Stock or reorganization transaction, the Buyer's Common
Stock delivered at Closing shall be increased by the number of shares
Seller would have received if it had held the Buyer's Common Stock at the
time of such transaction.
3.4 Preferential Rights To Purchase. Buyer's good faith allocation
of the Purchase Price as set forth in Exhibit "A" shall be used by Seller
to provide any required preferential purchase right notifications. If,
prior to Closing, a holder of a preferential purchase right notifies Seller
that it intends to exercise its rights with respect to a Property to which
its preferential purchase right applies (as determined in accordance with
the agreement in which the preferential purchase right arises), the
Property covered by said preferential purchase right shall be excluded from
the Properties to be conveyed to Buyer, and the Purchase Price shall be
reduced by the value allocated to said Property in Exhibit "A". Buyer
acknowledges and agrees that Seller shall determine (in its sole judgment)
the extent of the preferential purchase rights encumbering the Properties,
and said determination shall be used by Seller to provide the preferential
purchase right notifications. If the holder of the preferential purchase
right fails to consummate the purchase of the Property subject to the
preferential purchase right, Seller shall promptly notify Buyer. Within
ten (10) Business Days after Buyer's receipt of such notice or Closing,
whichever is later, Seller shall sell to Buyer, and Buyer shall purchase
from Seller, such Property under the terms of this Agreement for a price
equal to the value allocated to such Property in Exhibit "A".
Notwithstanding the foregoing, Buyer shall have no obligation under this
Agreement or otherwise to purchase the Property if Buyer is not notified of
the preferential purchase right holder's failure to consummate the purchase
of the Property within ninety (90) Days following Closing.
3.5 Consents. With respect to any leasehold interest for which
consent is not obtained prior to Closing, Seller shall be obligated to use
all reasonable efforts to obtain such consent after Closing and shall
indemnify and hold Buyer harmless from and against any and all claims,
demands,
suits, causes of action, losses, damages, costs and liabilities of
whatsoever nature arising out of Seller's failure to obtain such consent,
provided that Seller's maximum liability under this indemnity shall be
limited to the allocated values per Exhibit "A" or "B", as applicable, plus
interest thereon from the Closing Date at the Prime Rate plus one percent
(1%) less interest at the Prime Rate plus one percent (1%) on the net
proceeds actually received by Buyer from the Properties from and after the
Closing Date until consent is obtained. Seller shall hold title to the
interests as trustee for Buyer, and Buyer shall have all rights and
obligations associated with the ownership and operation of the Properties as
if it were the title holder.
ARTICLE 4. TITLE REVIEW
-----------------------
4.1 Review of Title Records. Upon execution of this Agreement,
Seller shall make available to Buyer during reasonable business hours
Records in Seller's possession relating to the title to the Properties.
Buyer shall be entitled to review said title Records. Buyer shall have the
right to reasonably request copies of any and all such title Records and
upon such request, Seller shall provide the requested copies to Buyer at
Buyer's expense.
4.2 Alleged Title Defects. As soon as reasonably practicable (and on
an ongoing basis), but in no event later than one hundred twenty (120) Days
after Closing, Buyer shall notify Seller of any Properties which are subject
to Alleged Title Defect(s). Buyer's notice asserting Alleged Title
Defect(s) shall include a description and full explanation (including any
and all supporting documentation associated therewith) of each Alleged Title
Defect being claimed and a value which Buyer in good faith attributes to
curing the same. Seller, during said one hundred twenty (120) Day period,
shall have the right to notify Buyer of any increases in Net Revenue
Interest or decreases in Working Interest in the Properties and request a
corresponding adjustment where the increase in value applicable to an
individual well or location listed on Exhibit A exceeds $75,000 ("Title
Increase"); provided, however, that Title Increase shall give rise to
increases to the Purchase Price or be used as credits against adjustments
that would otherwise be made for Title Defects only to the extent the
aggregate value of all Title Increases exceeds $10,000,000. Buyer and Seller
shall meet from time to time as necessary in an attempt to mutually agree on
a proposed resolution with respect to the Alleged Title Defect(s) raised by
Buyer and increases in Net Revenue Interest or decreases in Working Interest
raised by Seller. The value allocated to each Property as set forth on
Exhibit "A" and the costs to cure such title defects shall be used by the
parties to determine the amount of any adjustment, if any, due to the
existence of an Alleged Title Defect. It is recognized that good faith
differences of opinion may exist between Buyer
and Seller in connection with the Alleged Title Defect(s) raised by Buyer
and adjustments to the Net Revenue Interests or Working Interests raised by
Seller, including without limitation, disputes as to: (a) whether or not
the alleged defect constitutes an Alleged Title Defect within the meaning
of this Agreement, (b) whether or not the magnitude of the Alleged Title
Defect exceeds the threshold amount set forth in Article 1.4, (c) whether
or not the Alleged Title Defect raised by Buyer was properly and timely
asserted by Buyer pursuant to this Article, and/or (d) the appropriate
upward or downward adjustment to the Purchase Price, if any, on account of
a change in the Net Revenue Interest or Working Interests from those set
forth in Exhibit "A". If any such differences of opinion are not resolved
by mutual agreement of Buyer and Seller, either party shall have the right,
exercisable within one hundred eighty (180) Days after Closing, to initiate
binding arbitration in accordance with Article 19.1, using arbitrators who
are attorney(s) licensed in the state where the Property at issue is
located and who have at least ten (10) years oil and gas title experience.
4.3 Section 29 Credits
4.3.1 Review of Section 29 Records. Upon execution of this Agreement,
Seller shall make available to Buyer during reasonable business hours
Records in Seller's possession relating to the Section 29 Tax credits
available on the Properties. Buyer shall be entitled to review said
Records. Buyer shall have the right to reasonably request copies of any and
all such title Records and upon such request, Seller shall provide the
requested copies to Buyer at Buyer's expense.
4.3.2 Alleged Section 29 Defects. As soon as reasonably practicable
(and on an ongoing basis), but in no event later than one hundred twenty
(120) Days after Closing, Buyer shall notify Seller of any Properties which
are subject to Alleged Section 29 Defect(s). An "Alleged Section 29
Defect" shall mean Buyer's reasonable assertion that there is a failure of
Seller's Records or public records to support the following statements with
respect to the natural gas produced from the xxxxx and horizons identified
on Exhibit H provided that any such well or horizon that is identified on
such Exhibit as not having a Section 503 of the Natural Gas Policy Act of
1978 ("NGPA") determination shall not be subject to statement (4) below:
1) It shall be produced from tight formations which have been designated as
such in accordance with Section 503 of the NGPA.
2) It shall be produced from xxxxx drilled or recompleted after December 31,
1990 and before January 1, 1993 or such later date as may be permitted by
future amendments to the Code that extend the cut-off date in Code Section
29(f)(1)(A) or it shall be produced from xxxxx which, as of April 20, 1977
were dedicated to interstate commerce.
3) No credit allowed under Section 38 of the Code for any taxable year has been
allowed to Seller or any of its Affiliates by reasons of any enhanced oil
recovery credit under Section 43 of the Code with respect to Properties that
produced the gas.
4) FERC well category determinations under Section 503 of the NGPA have been
issued for the xxxxx listed on Exhibit H with respect to the producing
horizons listed on Exhibit H.
5) It shall be produced from a property from which gas from a tight formation
was not produced in marketable quantities before January 1, 1980, in
accordance with Section 29(d)(4) of the Code, as interpreted by the IRS in
Private Letter Ruling 8950026.
4.3.3 Notice and Adjustment. Buyer's notice asserting Alleged
Section 29 Defect(s) shall include a description and full explanation
(including any and all supporting documentation associated therewith) of
each Alleged Section 29 Defect being claimed and a value which Buyer in
good faith attributes to curing the same. The value of Section 29 Tax
Credits shall be the present value, discounted at 10%, of the tax credits
expected to be received from the Effective Time through December 31, 2002
from the gas stream of the xxxxx and horizons listed on Exhibit H. It is
acknowledged that by virtue of Seller's tax partnerships, certain Section
29 Tax Credit values in particular xxxxx are not in proportion to the
Seller's net revenue interest in the xxxxx. No adjustment shall be made
with respect to Section 29 Defects unless the aggregate value of all
Section 29 Defects exceeds a threshold of $50,000, in which case such
adjustment to the Purchase Price shall be made from first dollar. Buyer
and Seller shall meet from time to time as necessary in an attempt to
mutually agree on a proposed resolution with respect to the Alleged Section
29 Defect(s) raised by Buyer. It is recognized that good faith differences
of opinion may exist between Buyer and Seller in connection with the
Alleged Section 29 Defect(s) raised by Buyer. Either party shall have the
right, exercisable within one hundred eighty (180) Days after Closing, to
initiate binding arbitration in accordance with Article 19.1, to determine
the appropriate adjustment to the Purchase Price due to the defect, using
arbitrators who are attorney(s) licensed in the state where the Property at
issue is located and who have at least ten (10) years oil and gas tax
experience.
4.4 Alleged Gas Imbalance Defects. As soon as reasonably practicable, but
in no event later than one hundred twenty (120) Days after Closing, Buyer shall
notify Seller of any Properties which are subject to Alleged Gas Imbalance
Defects. If the net difference in value of the Alleged Gas Imbalance Defects is
in excess of $50,000, the entire amount of gas imbalance value differential may
be raised as a Gas Imbalance Defect.
4.5 Waiver. Except for claims Buyer asserts under Seller's special
warranty of title contained in Article 9.1, all title objections (including
without limitation Alleged Section 29 Defects, Alleged Gas Imbalance Defects,
and Alleged Title Defect(s)) not raised or referred to binding arbitration, as
applicable, by Buyer within the time period provided in Article 4.2, 4.3 and
4.4, as applicable, shall be waived by Buyer for all purposes, and Buyer shall
have no right to seek an adjustment to the Purchase Price, make a claim (in
accordance with Article 19.1 or otherwise) against Seller or seek
indemnification (in accordance with Article 8 or otherwise) from Seller
associated with the same, and Buyer (on behalf of itself, its officers, agents,
employees, Affiliates, successors and assigns) irrevocably waives such claims.
ARTICLE 5. INSPECTION OF PREMISES
---------------------------------
5.1 Inspection of Premises. Prior to Closing, Buyer shall have access
during reasonable business hours to the Seller-operated Properties, and Seller
shall use reasonable efforts to obtain permission for Buyer to gain access to
the Third Party-operated Properties, for the purpose of inspecting the
environmental and physical condition of the same. Such inspection shall be
conducted in accordance with the terms of the Confidentiality Agreement.
5.2 Alleged Adverse Conditions. As soon as reasonably practical (and on
an ongoing basis), but in no event later than one hundred eighty (180) Days
after Closing, Buyer shall notify Seller of any Properties which are subject to
Alleged Adverse Condition(s). Buyer's notice of Alleged Adverse Condition(s)
shall include a complete description of each individual condition to which Buyer
takes exception (including any and all supporting documentation associated
therewith) and the costs which Buyer in good faith attributes to remediating the
same. Buyer and Seller shall meet from time to time as necessary in an attempt
to mutually agree on a proposed resolution with respect to the Alleged Adverse
Condition(s) raised by Buyer. The value allocated to each Property as set forth
on Exhibit "A" and the costs to cure such Alleged Adverse Condition shall be
used by the parties to determine the amount of any adjustment, if any, due to
the existence of an Alleged Adverse Condition. It is recognized that good faith
differences of opinion may exist between Buyer and Seller in connection with the
Alleged Adverse Condition(s) raised by Buyer, including without limitation,
disputes as to: (a) whether or not the alleged defect constitutes an Alleged
Adverse Condition within the meaning of this Agreement, (b) whether or not the
magnitude of the Alleged Adverse Condition individually or in the aggregate
exceeds the threshold amounts set forth in Article 1.3, (c) whether or not the
Alleged Adverse Condition raised by Buyer was properly and timely asserted by
Buyer pursuant to this Article, and/or (d) the adjustment to the Purchase Price,
if any, on account of the Alleged Adverse Condition. If any such difference of
opinion regarding an Alleged Adverse Condition raised by Buyer is not resolved
by mutual agreement of Buyer and Seller, either party shall have the right,
exercisable within two hundred seventy (270) Days after Closing, to initiate
binding arbitration in accordance with Article 19.1. Notwithstanding anything
contained in this Agreement to the contrary (including Article 19.1), if Seller
disagrees with the decision of the arbitration panel, Seller shall have the
right (but not the obligation) to: (i) remediate, at Seller's sole cost, the
Property at issue to a point where it is in compliance with the Laws, or (ii)
require the reassignment of the Property at issue from Buyer to Seller. If
Seller elects to require the reassignment of the Property at issue, Buyer and
Seller will take all necessary action (including without limitation, execution
of documentation and conducting an accounting) required to place the parties
back into a position with respect to the Property at issue just prior to
Closing.
5.3 Waiver. All adverse conditions (including without limitation Alleged
Adverse Condition(s)) not raised or referred to binding arbitration, as
applicable, by Buyer within the time period provided in Article 5.2 shall be
waived by Buyer for all purposes, and Buyer shall have no right to seek an
adjustment to the Purchase Price, make a claim (in accordance with Article 19.1
or otherwise) against Seller or seek indemnification (in accordance with Article
8 or otherwise) from Seller associated with the same, and Buyer (on behalf of
itself, its officers, agents, employees, Affiliates, successors and assigns)
irrevocably waives such claims.
ARTICLE 6. ACCOUNTING
---------------------
6.1 Revenues, Expenses and Capital Expenditures. All merchantable oil,
liquid hydrocarbon and non-hydrocarbon substances stored in tanks and vessels on
the Properties (including any and all line fill owned by Seller or its
Affiliates downstream of the custody transfer point) will be gauged to the
bottom of the flange by Seller or the operator of the Properties, as applicable,
as of the Effective Time, and Seller shall be entitled to the proceeds
associated with such oil, liquid hydrocarbon and non-hydrocarbon substances so
gauged when sold. Oil, liquid hydrocarbon and non-hydrocarbon substances in
treating equipment and separation equipment below pipeline connections as of the
Effective Time shall not be considered to be merchantable and shall become the
property of Buyer. Seller shall be entitled to all operating revenues and
related accounts receivable arising in the ordinary course of business
attributable to the Properties and shall be responsible for all operating
expenses and related accounts payable (except as provided below) arising in the
ordinary course of business attributable to the Properties, in each case to the
extent they relate to the period of time prior to the Effective Time. Buyer
shall be entitled to all operating revenues and related accounts receivable
arising in the ordinary course of business attributable to the Properties and
responsible for the payment of all operating expenses and related accounts
payable arising in the ordinary course of business attributable to the
Properties, in each case to the extent they relate to time after the Effective
Time. Notwithstanding anything contained in this Agreement to the contrary,
Buyer shall assume and be solely responsible for: (a) any and all suspense funds
associated with the Properties, (b) any and all gas imbalances associated with
the Properties, and (c) any and
all capital expenditures associated with the Properties to the extent said
capital expenditures were incurred (or the obligation to incur said costs and
expenses was undertaken) by Seller within the period of time six (6) months
prior to Closing and exceed Three Million Three Hundred Thousand Dollars and
No/100 ($3,300,000). The actual amounts or values associated with the above
shall be accounted for in the Final Accounting Settlement.
6.2 Taxes. All taxes and assessments, including without limitation,
excise taxes, severance taxes, property taxes, ad valorem taxes and any other
federal, state, local or tribal taxes or assessments attributable to the
ownership, operation, or production of the Properties prior to the Effective
Time shall remain Seller's responsibility, and all deductions, credits or
refunds pertaining to the aforementioned taxes and assessments, and all
additional assessments or delinquencies relating to time periods or production
prior to the Effective Time resulting from audits or otherwise, no matter when
received, shall belong to or be paid by Seller. Ad valorem, severance and other
taxes measured by production shall be allocated to and paid by Seller to the
extent such taxes are measured by production produced prior to the Effective
Time. All taxes and assessments, including without limitation, excise taxes,
severance taxes, property taxes, ad valorem taxes and any other federal, state,
local or tribal taxes and assessments attributable to the ownership, operation,
or production of the Properties after the Effective Time (excluding Seller's
income taxes from the Effective Time through Closing and any associated capital
gains taxes which shall remain Seller's obligation) shall be Buyer's
responsibility, and all deductions, credits or refunds pertaining to the
aforementioned taxes and assessments, and all additional assessments or
delinquencies relating to time periods of production after the Effective Time
resulting from audits or otherwise, no matter when received, shall belong to and
be paid by Buyer. The actual amounts or values associated with the above, to the
extent known or assessed at that time, shall be accounted for in the Final
Accounting Settlement. Ad valorem taxes on tangible personal property shall be
prorated between Seller and Buyer as of the Effective Time. Buyer shall
additionally be solely responsible for all transfer, sales, use or similar taxes
resulting from or associated with the transaction contemplated under this
Agreement. Notwithstanding anything contained in this Agreement to the contrary,
Seller shall be entitled to retain any and all Section 29 tax credits associated
with the Properties from the Effective Time through Closing.
6.3 Obligations and Credits. All prepaid insurance premiums, utility
charges, taxes, rentals, deposits and any other prepaids applicable to the
period of time after the Effective Time, if any, and attributable to the
Properties shall be reimbursed to Seller by Buyer, and all accrued payables
applicable to the period of time prior to the Effective Time, if any, and
attributable to the Properties shall be the responsibility of Seller. The
actual amounts or values associated with the above shall be accounted for in the
Final Accounting Settlement.
6.4 Miscellaneous Accounting. In addition to the items set forth in
Articles 6.1 through 6.3, any other amounts due between Buyer and Seller related
to the ownership or operation of the Properties from the Effective Time through
Closing shall be accounted for in the Final Accounting Settlement.
6.5 Final Accounting Settlement. As soon as reasonably practicable, but
in no event later than one hundred eighty (180) Days after Closing, Seller shall
deliver to Buyer a post-Closing statement setting forth a detailed calculation
of all post-Closing adjustments applicable to the period of time between the
Effective Time and Closing ("Final Accounting Settlement"). As soon as
reasonably practicable, but in no event later than thirty (30) Days after Buyer
receives the post-Closing statement, Buyer shall deliver to Seller a written
report containing any changes which Buyer proposes to be made to such post-
Closing statement. If Buyer fails to timely deliver the written report to
Seller containing changes Buyer proposes to be made to the post-Closing
statement, the post-Closing statement delivered by Seller shall be deemed to be
true and correct and the same shall be final and binding on the parties and not
subject to arbitration hereunder. As soon as reasonably practicable, but in no
event later than fifteen (15) Days after Seller receives Buyer's written report,
the parties shall meet and undertake to agree on the final post-Closing
adjustments. If the parties fail to agree on the final post-Closing adjustments
within such fifteen (15) Day period, the disputed items shall be resolved by
submitting the same to Ernst & Young LLP (the "Accounting Referee"). The
Accounting Referee shall resolve the dispute(s) regarding the post-Closing
adjustments within thirty (30) Days after having the relevant materials
submitted for review. The decision of the Accounting Referee shall be binding
on and non-appealable by the parties. The fees and expenses associated with the
Accounting Referee shall be borne equally by Buyer and Seller. The date upon
which all amounts associated with the Final Accounting Settlement are agreed to
by the parties, whether by decision of the Accounting Referee or otherwise,
shall be herein called the "Final Settlement Date". Any amounts owed by either
party to the other as a result of such post-Closing adjustments shall be paid
within five (5) Business Days after the Final Settlement Date.
6.6 Post-Final Accounting Settlement. Nothing in Section 6.5 is intended
to limit either party's rights with respect to Purchase Price adjustments,
refunds, revenue allocations, expense allocation or any other matters that
cannot or have not been determined with finality. Any revenues received or costs
and expenses paid by Buyer after the Final Accounting Settlement which are
attributable to the ownership or operation of the Properties prior to the
Effective Time, (or in the case of taxes which are based on or measured by
production, attributable to production prior to the Effective Time), and not
assigned to Buyer, shall be billed or reimbursed, as appropriate, to Seller
within thirty (30) Days after receipt by Buyer. Any revenues received or costs
and expenses paid by Seller after the Final Accounting Settlement which are
attributable to the ownership or operation of the Properties after the Effective
Time, (or, in the case of taxes which are based on or measured by production,
attributable to production after the Effective Time) and not reserved by Seller,
shall be billed or reimbursed, as appropriate, to Buyer within thirty (30) Days
after receipt by Seller.
ARTICLE 7. LOSS, CASUALTY AND CONDEMNATION
-------------------------------------------
7.1 Notice of Loss. From the date hereof until Closing, Seller shall
promptly notify Buyer of any loss or damage to the Properties, or any part
thereof, known to Seller exceeding Fifty Thousand and No/100 United States
Dollars (US $50,000) net to Seller's interest.
7.2 Casualty and Condemnation. If, prior to Closing, a substantial part
of the Properties shall: (a) be destroyed by a Casualty Loss, or (b) be taken in
condemnation or if proceedings for such purposes shall be pending; then Seller
and Buyer shall attempt to mutually agree on a reduction in the Purchase Price
reflecting the reduction in the value of the Properties affected by the Casualty
Loss or taking. If Seller and Buyer are unable to mutually agree on such
reduction, either party shall have the right, exercisable within ninety (90)
Days after Closing, to initiate binding arbitration in accordance with Article
19.1. Seller shall retain any and all sums paid to Seller, unpaid awards,
insurance proceeds or other payments associated with or attributable to such
Casualty Loss or taking.
ARTICLE 8. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES
---------------------------------------------------------
8.1 Opportunity for Review. Each party represents that it has had an
adequate opportunity to review the following indemnity and release provisions,
including the opportunity to submit the same to legal counsel for review and
comment. Based upon the foregoing representation, the parties agree to the
provisions set forth below.
8.2 Seller's Non-Environmental Indemnity Obligation. Seller shall,
subject to the limitations set forth below, release Buyer from and shall fully
protect, indemnify and defend Buyer, its officers, agents, employees and
Affiliates ("Buyer Group") and hold them harmless from and against any and all
Non-Environmental Claims, and any and all occurrences and conditions which would
otherwise constitute Non-Environmental Claims but which are asserted by Seller,
its officers, agents, employees and Affiliates ("Seller Group"), relating to,
arising out of, or connected, directly or indirectly, with the ownership or
operation of the Properties, or any part thereof, pertaining to the period of
time prior to Closing, including without limitation, Non-Environmental Claims
relating to: (a) injury or death of any person or persons whomsoever, (b)
damages to or loss of any property or resources, (c) common law causes of action
such as negligence, gross negligence, strict liability, nuisance or trespass,
and/or (d) fault imposed by statute, rule, regulation or otherwise. The
indemnity obligation and release provided herein shall apply regardless of cause
or of any negligent
acts or omissions of Buyer Group. Notwithstanding anything contained in this
Agreement to the contrary, Seller shall have no obligation under this Agreement
or otherwise to protect, indemnify, defend and hold harmless Buyer Group from
and against any one or more of the following: (i) Non-Environmental Claims for
which Buyer has not provided Seller with written notice of such Non-
Environmental Claim in accordance with Article 8.10 within two (2) years after
Closing (it being acknowledged and agreed that Buyer shall be solely responsible
for any and all Non-Environmental Claims not raised within such two (2) year
period, (except as expressly set forth below), and (ii) Non-Environmental Claims
up to $10,000,000 (it being acknowledged and agreed that Buyer shall be solely
responsible for any and all Non-Environmental Claims up to $10,000,000 except as
expressly set forth below); provided, however, there shall be no monetary
threshold or deductible requirement, and the time period within which notice
must be given shall be six (6) years from Closing for (i) any Claims with
respect to the proper payment of royalty amounts due (other than errors in
payment due to clerical errors, or title or division order mistakes or
variances), including, without limitation, any Claims relating to posted pricing
and sales to, or processing or similar agreements with, Seller's Affiliates, and
(ii) any Claims by any person who is or was an employee of Seller, the basis of
which Claim is Seller's hiring, retention, labor or benefits, actions, policies,
or procedures, relating to the period of such person's employment with Seller.
Further, there shall be no time limit and no monetary threshold or deductible
for any litigation, arbitration, mediation or other existing action or
proceeding or Claims required to be disclosed pursuant to Section 10.6.
8.3 Seller's Environmental Indemnity Obligation. Seller shall, subject to
the limitations set forth below, release Buyer from and shall fully protect,
indemnify and defend Buyer Group and hold them harmless from and against any and
all Environmental Claims, and any and all occurrences and conditions which would
otherwise constitute Environmental Claims but which are asserted by Seller
Group, relating to, arising out of, or connected, directly or indirectly, with
the ownership or operation of the Properties, or any part thereof, pertaining to
the period of time prior to Closing, including without limitation, Environmental
Claims relating to: (a) injury or death of any person or persons whomsoever, (b)
damages to or loss of any property or resources, (c) pollution, environmental
damage or violation of Environmental Laws, (d) common law causes of action such
as negligence, gross negligence, strict liability, nuisance or trespass, and/or
(e) fault imposed by statute, rule, regulation or otherwise. The indemnity
obligation and release provided herein shall apply regardless of cause or of any
negligent acts or omissions of Buyer Group. Notwithstanding anything contained
in this Agreement to the contrary, Seller shall have no obligation under this
Agreement or otherwise to protect, indemnify, defend and hold harmless Buyer
Group from and against any one or more of the
following: (i) Environmental Claims for which Buyer has not provided Seller with
written notice of said Environmental Claim in accordance with Article 8.10
within twelve (12) months after Closing (it being acknowledged and agreed that
Buyer shall be solely responsible for any and all Environmental Claims not
raised within such twelve month period, except as expressly provided below),
(ii) Environmental Claims up to $10,000,000 (it being acknowledged and agreed
that Buyer shall be solely responsible for any and all Environmental Claims up
to $10,000,000), or (iii) Environmental Claims greater than $166,500,000.00 (it
being acknowledged and agreed that Buyer shall be solely responsible for any and
all Environmental Claims greater than $166,500,000.00. Further, there shall be
no time limit and no monetary threshold, deductible or cap for any litigation,
arbitration, mediation or other existing action or proceeding or Claims required
to be disclosed pursuant to Article 10.6.
8.4 Buyer's Non-Environmental Indemnity Obligation. Buyer shall release
Seller from and shall fully protect, indemnify and defend Seller Group and hold
them harmless from and against any and all Non-Environmental Claims, and any and
all occurrences and conditions which would otherwise constitute Non-
Environmental Claims but which are asserted by Buyer Group, relating to,
arising out of, or connected, directly or indirectly, with the ownership or
operation of the Properties, or any part thereof, pertaining to the period of
time prior to Closing, no matter when asserted, for which Seller's indemnity
obligation has ceased, terminated (in accordance with Article 8.2 or otherwise)
or did not exist, and from and against any and all Non-Environmental Claims
relating to, arising out of, or connected, directly or indirectly, with the
ownership or operation of the Properties, or any part thereof, pertaining to the
period of time at and after Closing, no matter when asserted; including without
limitation, Non-Environmental Claims relating to: (a) injury or death of any
person or persons whomsoever, (b) damages to or loss of any property or
resources, (c) common law causes of action such as negligence, gross negligence,
strict liability, nuisance or trespass, and/or (d) fault imposed by statute,
rule, regulation or otherwise. The indemnity obligation and release provided
herein shall apply regardless of cause or of any negligent acts or omissions of
Seller Group.
8.5 Buyer's Environmental Indemnity Obligation. Buyer shall release Seller
from and shall fully protect, indemnify and defend Seller Group and hold them
harmless from and against any and all Environmental Claims, and any and all
occurrences and conditions which would otherwise constitute Environmental Claims
but which are asserted by Buyer Group, relating to, arising out of, or
connected, directly or indirectly, with the ownership or operation of the
Properties, or any part thereof (but not disposal off the Properties),
pertaining to the period of time prior to Closing, no matter when asserted, for
which Seller's indemnity obligation
has ceased, terminated (in accordance with Article 8.3 or otherwise) or did not
exist, and from and against any and all Environmental Claims relating to,
arising out of, or connected, directly or indirectly, with the ownership or
operation of the Properties, or any part thereof, pertaining to the period of
time at and after Closing, no matter when asserted; including without
limitation, Environmental Claims relating to: (a) injury or death of any person
or persons whomsoever, (b) damage to or loss of any property or resource, (c)
pollution, environmental damage or violation of Environmental Laws, (d) common
law causes of action such as negligence, gross negligence, strict liability,
nuisance or trespass, and/or (e) fault imposed by statute, rule, regulation or
otherwise. The indemnity obligation and release provided herein shall apply
regardless of cause or of any negligent acts or omissions of Seller Group.
8.6 Legal Claims and Defenses. Each indemnifying party shall be deemed to
be entitled to all of the indemnified party's legal claims and defenses that
relate to any claim for which the indemnifying party provides indemnification
under Articles 8.2, 8.3, 8.4 or 8.5 with respect to any liability the respective
parties assume thereunder.
8.7 Asbestos and NORM. Buyer acknowledges that the Properties may
currently or have in the past contained asbestos or NORM and that special
procedures may be required for the assessment, remediation, removal,
transportation or disposal of such asbestos and NORM. Notwithstanding anything
contained in this Agreement to the contrary (including without limitation
Articles 5.2, 8.2 or 8.3), Buyer agrees to accept full responsibility for and
shall pay all costs and expenses associated with the assessment, remediation,
removal, transportation and disposal of the asbestos or NORM associated with the
Properties, and shall not be entitled to claim the fact the assessment,
remediation, removal, transportation or disposal of the asbestos or NORM is not
complete or that additional cost will be required to complete the assessment,
remediation, removal, transportation or disposal of the asbestos or NORM as an
Alleged Title Defect, Alleged Adverse Condition, breach of Seller's
representations and warranties or breach of Seller's indemnity obligation under
this Agreement, and Buyer (on behalf of itself, its officers, agents, employees,
Affiliates, successors and assigns) irrevocably waives such claims. In
conducting the duties and obligations contained in this Article, Buyer shall
comply with the applicable Laws.
8.8 Buyer's Assumption of Obligations. Buyer agrees to assume and shall
shall timely perform and discharge all duties and obligations of Seller
associated with the Properties (including without limitation any contractual
obligations excepting obligations assumed by Seller relating to the Transition
Agreement) assumed by Seller relating to the period of time at and after
Closing, and Seller shall incur no liability for Buyer's failure to properly
perform or
discharge any such duties and obligations. Notwithstanding anything contained in
this Agreement to the contrary (including without limitation Articles 5.2, 8.2
or 8.3), Buyer agrees to accept full responsibility for and shall pay all costs
and expenses associated with the plugging and abandonment of the xxxxx and
facilities included in the Properties, and shall not be entitled to claim the
fact that plugging and abandonment operations are not complete or that
additional cost will be required to complete the plugging and abandonment
operations as an Alleged Title Defect, Alleged Adverse Condition, breach of
Seller's representations and warranties or breach of Seller's indemnity
obligation under this Agreement, and Buyer (on behalf of itself, its officers,
agents, employees, Affiliates, successors and assigns) irrevocably waives such
claims. In conducting the duties and obligations contained in this Article,
Buyer shall comply with the applicable Laws.
8.9 Process Safety Management. Buyer acknowledges that Process Safety
Management of Highly Hazardous Chemicals; Explosives and Blasting Agents (i.e.,
29 CFR 1910) (collectively "Process Safety Management") associated with the
Properties is an ongoing process. Notwithstanding anything contained in this
Agreement to the contrary (including without limitation Articles 5.2, 8.2 or
8.3), Buyer agrees to accept full responsibility for and shall pay all costs and
expenses associated with the Process Safety Management process (including
without limitation the identification, evaluation and remediation), and shall
not be entitled to claim the fact that Process Safety Management is not complete
or that additional cost will be required to comply with or complete the Process
Safety Management process as an Alleged Title Defect, Alleged Adverse Condition,
breach of Seller's representations and warranties or breach of Seller's
indemnity obligation under this Agreement, and Buyer (on behalf of itself, its
officers, agents, employees, Affiliates, successors and assigns) irrevocably
waives such claims. In conducting the duties and obligations contained in this
Article, Buyer shall comply with the applicable Laws.
8.10 Notice of Claims. If a Claim is asserted against a party for which
the other party may have an obligation of indemnity, it shall be a condition
precedent to the indemnifying party's obligations under this Article 8 that the
indemnified party give the indemnifying party written notice of such Claim
setting forth full particulars of the Claim (including a copy of the written
Claim, if any) as then known by the indemnified party. The indemnified party
shall make a good faith effort to notify the indemnifying party within one (1)
month of receipt of a Claim and shall in all events effect notice within such
time as will allow the indemnifying party a reasonable period of time in which
to evaluate and timely respond to said Claim. The notice of Claim provided
hereunder is referred to as a "Claim Notice."
8.11 Defense of Claims. Upon receipt of a Claim Notice, the indemnifying
party may assume the defense of said Claim with counsel selected by the
indemnifying party and reasonably satisfactory to the indemnified party. The
indemnified party shall cooperate in all reasonable respects in such defense.
If any Claim involves a fact pattern wherein Buyer may have an obligation to
indemnify Seller and Seller may have an obligation to indemnify Buyer, each
party shall have the right to assume the defense of and hire counsel for that
portion of the Claim for which it may have an obligation of indemnity. In all
instances, the indemnified party shall have the right to employ separate counsel
and to participate in the defense of any Claim; provided however, the fees and
expenses of counsel employed by the indemnified party shall be borne solely by
the indemnified party. If the indemnifying party does not notify the
indemnified party within the earlier to occur of: (a) five (5) Business Days
before the time a response is due in any litigation matter, or (b) sixty (60)
Days after receipt of the Claim Notice, that the indemnifying party elects to
undertake the defense of a Claim, the indemnified party shall have the right to
defend, at the expense of the indemnifying party, the Claim with counsel of the
indemnified party's choosing, subject to the right of the indemnifying party to
assume the defense of the Claim at any time prior to settlement or final
determination thereof. In such event, the indemnified party shall promptly send
a written notice to the indemnifying party of any proposed settlement of a
Claim, which settlement the indemnifying party may accept or reject, in its
reasonable judgment, within thirty (30) days of receipt of such notice, unless
the settlement offer is limited to a shorter period of time in which case the
indemnifying party shall have such shorter period of time in which to accept or
reject the proposed settlement. Failure of the indemnifying party to accept or
reject such settlement within the applicable period of time shall be deemed to
be its rejection of such settlement. Notwithstanding the foregoing, the
indemnified party may settle any matter over the objection of the indemnifying
party, but in so doing the indemnified party shall be deemed to have waived any
right to indemnity therefor as to (and only as to) liabilities with respect to
which the indemnifying party has acknowledged in writing its indemnity
obligation.
8.12 Waiver of Certain Damages. Each of the parties hereby waives and
agrees not to seek indirect, consequential, punitive or exemplary damages of
any kind with respect to any Claim or dispute arising out of or relating to this
Agreement or breach hereof. This provision shall not diminish or affect in any
way the parties' rights and obligations under any indemnities provided for in
this Agreement.
8.13 Limitation on Indemnities. In no event shall an indemnifying party
have any obligation of indemnification to the indemnified party, if the Claim
for which indemnity is sought was caused by the gross negligence, willful
misconduct, reckless conduct, fraud, misrepresentation, or criminal violation,
of the indemnified party or its officers, directors, employees, agents,
Affiliates, successors and assigns, nor shall any indemnity provisions in this
Agreement apply to or be deemed to apply to matters
affecting properties (real, personal or mixed) and appurtenant rights
(contractual or otherwise) other than those which are covered by this Agreement
or to matters disclosed on Exhibit "G" hereto which have been disclosed and
excluded from these Indemnities.
ARTICLE 9. SPECIAL WARRANTY AND DISCLAIMERS
--------------------------------------------
9.1 Special Warranty of Title. Seller shall warrant title to and forever
defend title to the Properties conveyed to Buyer against every person whomsoever
lawfully claiming title to the Properties, or any part thereof by, through or
under Seller, but not otherwise.
9.2 Disclaimer - Representations and Warranties. Buyer acknowledges and
agrees that the Properties are being transferred, assigned and conveyed from
Seller to Buyer "AS-IS, WHERE-IS", and with all faults in their present
condition and state of repair, without recourse. Except as expressly set forth
in Article 10 below, Seller hereby expressly disclaims any and all
representations and warranties concerning the Properties, express, statutory,
implied or otherwise, including without limitation: (a) any warranty of title
(except for the special warranty of title set forth in Article 9.1), (b) the
existence of any and all prospects, (c) the geographic, geologic or geophysical
characteristics associated with any and all prospects, (d) the existence,
quality, quantity or recoverability of hydrocarbon reserves associated with the
Properties, (e) the costs, expenses, revenues or receipts associated with the
Properties, (f) the contractual, economic or financial data associated with the
Properties, (g) the continued financial viability or productivity of the
Properties, (h) the environmental or physical condition of the Properties, (i)
the federal, state, local or tribal income or other tax consequences associated
with the Properties, or the agreements to which the Properties are subject, (j)
the absence of patent or latent defects, (k) safety, (l) state of repair, (m)
merchantability, and (n) fitness for a particular purpose; and Buyer (on behalf
of itself, its officers, agents, employees, Affiliates, successors and assigns)
irrevocably waives such claims.
9.3 Disclaimer - Statements and Information. Seller expressly disclaims
any and all liability and responsibility for and associated with the quality,
accuracy, completeness or materiality of the data, information and materials
furnished (electronically, orally, by video, in writing or any other medium) at
any time to Buyer, its officers, agents, employees or Affiliates in connection
with the transaction contemplated herein, including without limitation: (a) the
existence of any and all prospects, (b) the geographic, geologic or geophysical
characteristics associated with any and all prospects, (c) the existence,
quality, quantity or recoverability of hydrocarbon reserves associated with the
Properties, (d) the costs, expenses, revenues or receipts associated with the
Properties, (e) the
contractual, economic or financial data associated with the Properties, (f) the
continued financial viability or productivity of the Properties, (g) the
environmental or physical condition of the Properties, and (h) the federal,
state, local or tribal income or other tax consequences associated with the
Properties, or the agreements to which the Properties are subject; and Buyer (on
behalf of itself, its officers, agents, employees, Affiliates, successors and
assigns) irrevocably waives such claims. However, the provision of this Article
9.3 shall not be deemed to waive the obligations of Seller as set forth in
Article 8 or Seller's Representations and Warranties in Article 10.
ARTICLE 10. SELLER'S REPRESENTATIONS AND WARRANTIES
----------------------------------------------------
Seller represents and warrants to Buyer that, to the best of Seller's
knowledge, on the date hereof and as of Closing:
10.1 Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, and has all requisite corporate power and authority to own and lease
the Properties. Seller is duly licensed or qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which the
Properties are located.
10.2 Corporate Authority; Authorization of Agreement. Seller has all
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated herein and to perform all of the
terms and conditions to be performed by it as provided for in this Agreement.
The execution and delivery of this Agreement by Seller, the performance by
Seller of all of the terms and conditions to be performed by it and the
consummation of the transactions contemplated herein have been duly authorized
and approved by all necessary corporate action. This Agreement has been duly
executed and delivered by Seller and constitutes the valid and binding
obligation of Seller, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency or other
Laws relating to or affecting the enforcement of creditors' rights and general
principles of equity (regardless of whether such enforceability is considered in
a proceeding at law or in equity). For purposes of this Article 10.2 only, the
term "Agreement" shall also be deemed to include the documents executed by the
parties at Closing (including such documents that are Exhibits to this
Agreement).
10.3 No Violations. Assuming expiration or termination of the applicable
waiting period under the HSR Act, if applicable, the execution and delivery of
this Agreement by Seller does not, and the fulfillment and compliance with the
terms and conditions hereof and the consummation of the transactions
contemplated herein, will not:
10.3.1 Conflict with or require the consent of any person or entity
under any of the terms, conditions or provisions of the certificate of
incorporation or bylaws of Seller;
10.3.2 Violate any provision of, or require any filing, consent or
approval under any Law applicable to or binding upon Seller (assuming
receipt of all consents and approvals of governmental entities or tribal
authorities customarily obtained subsequent to the transfers of title);
10.3.3 Conflict with, result in a breach of, constitute a default
under or constitute an event that with notice or lapse of time, or both,
would constitute a default under, accelerate or permit the acceleration of
the performance required by, or require any consent, authorization or
approval under: (i) any mortgage, indenture, loan, credit agreement or other
agreement, evidencing indebtedness for borrowed money to which Seller is a
party or by which Seller is bound, or (ii) any order, judgment or decree of
any governmental entity or tribal authority; or
10.3.4 Result in the creation or imposition of any lien or
encumbrance upon the Properties.
10.4 Absence of Certain Changes. Between the date of execution of this
Agreement and Closing, there has not been without Buyer's prior written consent:
10.4.1 A waiver of any right of material value relating to the
Properties, other than in the ordinary course of business;
10.4.2 A sale, lease or other disposition of the Properties, other
than in the ordinary course of business;
10.4.3 A mortgage, pledge or grant of a lien or security interest in
any of the Properties; or
10.4.4 A contract or commitment to do any of the foregoing.
10.5 Operating Costs. All costs incurred in connection with the operation
of the Properties have been fully paid and discharged by Seller, except normal
expenses incurred in operating the Properties within the previous sixty (60)
Days or as to which Seller has not yet been billed.
10.6 Litigation. Except as set forth in Exhibit "G" or disclosed prior to
Closing, there is no action, suit or proceeding pending, or to the best
knowledge of the management team of Seller's Fort Xxxxxx Operations Center,
("Management"), threatened against Seller which would have a material adverse
effect on the value or ownership or operation of the Properties or that would
prevent the consummation of the transaction contemplated by this Agreement.
Nor to the best of Seller's Management's knowledge has there been any occurrence
that would be likely to give rise to a Claim that would have a material adverse
effect on the value, or ownership or operation of the Properties or that could
give rise to a material Claim against Seller for which Buyer could be liable
under Article 8.4 or 8.5. Seller shall retain responsibility for the claims,
disputes, and litigation matters referenced in Exhibit "G" or that are disclosed
prior to Closing to the extent the underlying Claims relate to the period of
time prior to Closing. Buyer shall be solely responsible for such matters to
the extent the underlying Claims relate to: (a) the Properties, and (b) the
period of time subsequent to Closing. Seller shall keep Buyer informed with
respect to and shall consult with and allow reasonable participation of Buyer in
litigation for which Seller retains responsibility and that affect the
Properties, with respect to future ownership and operation of the Properties.
10.7 Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by or threatened against Seller.
10.8 Removal. Except in the ordinary course of operating the Properties in
a manner consistent with Seller's prior operations, no significant equipment,
material or inventory will be removed from the Properties or exchanged for
equipment or inventory of lesser value from the date of execution of this
Agreement until Closing without the consent of Buyer, excluding the assets set
forth on Exhibit "F".
ARTICLE 11. BUYER'S REPRESENTATIONS AND WARRANTIES
--------------------------------------------------
Buyer represents and warrants to Seller that, to the best of Buyer's
knowledge, on the date hereof and as of Closing:
11.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware and has all requisite corporate power and authority to own and lease
the Properties. Buyer is duly licensed or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the Properties
are located.
11.2 Corporate Authority; Authorization of Agreement. Buyer has all
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated herein and to perform all the terms
and conditions to be performed by it as provided for in this Agreement. The
execution and delivery of this Agreement by Buyer, the performance by Buyer of
all the terms and conditions to be performed by it and the consummation of the
transactions contemplated herein have been duly authorized and approved by all
necessary corporate action. This Agreement has been duly executed and delivered
by Buyer and constitutes the valid and binding obligation of Buyer, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other
Laws relating to or affecting the enforcement of creditors' rights and general
principles of equity (regardless of whether such enforceability is considered in
a proceeding at law or in equity).
11.3 No Violations. Assuming expiration or termination of the applicable
waiting period under the HSR Act, if applicable, the execution and delivery of
this Agreement by Buyer does not, and the fulfillment and compliance with the
terms and conditions hereof and the consummation of the transactions
contemplated herein, will not:
11.3.1 Conflict with or require the consent of any person or entity
under any of the terms, conditions or provisions of the certificate of
incorporation or bylaws of Buyer;
11.3.2 Violate any provision of, or require any filing, consent or
approval under any Law applicable to or binding upon Buyer; or
11.3.3 Conflict with, result in a breach of, constitute a default
under or constitute an event that with notice or lapse of time, or both,
would constitute a default under, accelerate or permit the acceleration of
the performance required by, or require any consent, authorization or
approval under: (i) any mortgage, indenture, loan, credit agreement or
other agreement evidencing indebtedness for borrowed money to which Buyer
is a party or by which Buyer is bound, or (ii) any order, judgment or
decree of any governmental entity or tribal authority.
11.4 SEC Disclosure. Buyer is acquiring the Properties for its own account
for use in its trade or business, and not with a view toward or for sale in
connection with any distribution thereof, nor with any present intention of
making a distribution thereof within the meaning of the Securities Act of 1933,
as amended.
11.5 Independent Evaluation. Buyer represents that it is sophisticated in
the evaluation, purchase, ownership and operation of oil and gas properties and
related facilities. In making its decision to enter into this Agreement and to
consummate the transaction contemplated herein, Buyer represents that: (a) it
has relied solely on its own independent investigation and evaluation of the
Properties, and (b) it has satisfied itself as to the physical and
environmental condition of the Properties.
11.6 Buyer's Reliance. Buyer acknowledges and agrees that it is entitled
to rely only on the express representations and warranties set forth in this
Agreement.
ARTICLE 12. ADDITIONAL COVENANTS AND CONSIDERATIONS
---------------------------------------------------
12.1 Subsequent Operations. Seller makes no representations or warranties
to Buyer as to the transferability or assignability of operatorship of the
Properties. Buyer acknowledges that the rights and obligations associated with
operatorship of the Properties are governed by the applicable agreement(s) and
that operatorship of the Properties will be decided in accordance with the terms
of said agreement(s). Within ten (10) Days after Closing, Seller shall send out
notices, where applicable, advising working interest owners of the Properties it
operates that it has transferred its interests in the Properties to Buyer.
Within fifteen (15) Days after Closing, Buyer shall send out ballots, where
applicable, associated with the selection of a successor operator of the
Properties. Seller shall have no obligation under this Agreement or otherwise
to send out notices balloting for the selection of a successor operator.
12.2 Transition Agreement. At Closing, Buyer and Seller shall execute the
applicable Transition Agreements.
12.3 License Agreement(s). At Closing, Buyer and Seller shall execute the
License Agreement - XXXX, covering certain proprietary technology of Seller,
including the "XXXX" automation system. If requested by Seller, Buyer shall
execute and deliver to Seller a License Agreement - Seismic in a mutually agreed
form, granting to Seller, at no cost to Seller, a right and license to use the
seismic data, or any portion thereof, conveyed to Buyer under the terms of this
Agreement.
12.4 Crude Call.
12.4.1 Seller reserves the continuing right and option (but shall not have
the obligation) to purchase on the terms set forth herein all or part of the oil
and/or other liquid hydrocarbons, including but not limited to, condensate,
distillate, and other liquids recovered from the well stream by normal lease
separation methods (the "Oil") produced and saved from any of the Properties
identified on Exhibit "A" (excluding Oil used for ordinary leasehold operations
thereon.)
12.4.2 Seller herein elects to purchase the Oil from the Properties, to be
effective as of the Closing Date. Seller's obligation to purchase the Oil under
the above election shall continue for a period of thirty (30) Days, and unless
terminated by Seller by giving Buyer at least thirty (30) Days prior written
notice of Seller's intent to discontinue such purchases, shall continue on a
month to month basis thereafter.
12.4.3. If Seller notifies Buyer that Seller elects to discontinue purchases
of the Oil in accordance with Article 12.4.2, at the end of the thirty (30) Day
notice period, Buyer shall be free for a period not to exceed six (6) months to
market the Oil to Third Parties; provided however, at the end of the six (6)
month
period Seller shall have the right to recommence purchasing the Oil by providing
Buyer at least thirty (30) Days written notice prior to the end of the six (6)
month period of Seller's intent to recommence purchasing the Oil. In the event
Seller does not elect to recommence purchasing the Oil, then Buyer shall be free
to market the Oil to Third Parties for an additional six (6) month period.
Seller's right to elect to purchase and/or discontinue purchase of the Oil shall
be an ongoing and reoccurring right during the duration of the crude call.
During the period of xxxx Xxxxxx is not purchasing the Oil under the terms of
this Article 12, Seller shall have no obligation to purchase or furnish a market
for all or any part of the Oil associated with Properties.
12.4.4. During the period of xxxx Xxxxxx elects to purchase the Oil under
the terms of this Article 12, subject to the Ceiling and Floor Pricing
Limitations set forth below in Article 12.4.5, Seller shall pay Buyer the Amoco
Eastern Colorado Sweet Posting plus $0.80 per barrel of Oil produced and saved.
Buyer's Oil shall be deemed to be 53 degree API gravity Oil.
12.4.5 Ceiling and Floor Pricing Limitations
Notwithstanding the above, in no event shall the price paid by Seller to Buyer
for the Oil be greater than the Wattenberg Sweet Ceiling Price or less than the
Wattenberg Sweet Floor Price, as defined below:
a. The Wattenberg Sweet Ceiling Price will be Xxxxx'x Wyoming Sweet Monthly
Average, Calendar Month Price, Including Weekends and Holidays minus $0.50 per
barrel. If in any month of delivery, the average monthly calculated price
exceeds the Wattenberg Sweet Ceiling Price, then the price paid for all
production produced by Buyer and purchased by Seller for the month of delivery
shall be the Wattenberg Sweet Ceiling Price.
b. The Wattenberg Sweet Floor will be Xxxxx'x Wyoming Sweet Monthly Average,
Calendar Month Price, Including Weekends and Holidays minus $1.50 per barrel.
If in any month of delivery, the average monthly calculated price falls below
the Wattenberg Sweet Floor Price, then the price paid for all the production
produced by Buyer and purchased by Seller for the month of delivery shall be the
Wattenberg Sweet Floor Price.
12.4.6 In the event one of the indexes referenced above is discontinued,
the parties shall meet and attempt to mutually agree on a replacement which is
similar to the discontinued index. If the parties are unable to agree on the
replacement index the same shall be submitted to binding arbitration in
accordance with Article 18.
12.4.7 Seller's rights under this Article 12 shall not terminate, and shall
be for the life of the Properties, so long as they are producing Oil and
condensate.
12.4.8 Notwithstanding anything contained in this Agreement to the
contrary, Seller reserves the right to assign the rights and obligations arising
under this Article 12 to an Affiliate of Seller. If Seller elects to assign the
rights and obligation under this Article 12 to an Affiliate of Seller, then
Seller shall provide Buyer with a mutually agreeable corporate guarantee wherein
Seller guarantees the performance of Seller's Affiliate under the terms of this
Article 12. Notwithstanding anything contained in this Agreement to the
contrary, after the termination of the Transition Agreement, Seller shall have
no obligation to provide accounting services associated with the crude call
retained herein. Any and all notifications to Seller associated with this crude
call provision shall be directed to Amoco Oil Company, Crude Supply and
Logistics, X.X. Xxx 000, Xxxxxx, Xxxxxxxx 00000.
12.5 Natural Gas Processing Agreement. Prior to Closing, Seller shall
amend Article 8.2 of the Gas Processing Agreement dated August 1, 1997 between
Amoco Production Company (as producer) and Amoco Production Company (in its
capacity as operator of the Wattenberg Gas Processing Plant) to provide an
option to Seller, as operator of the Wattenberg Plant, which may be exercised
each year on or before April 30, and which shall be effective for the
immediately following calendar year from June 1 through May 31 to (a) replace
shrinkage gas with equivalent BTU's of gas of like kind and quality, at Seller's
election (i) into PSCO's distribution system or (ii) into Colorado Interstate
Gas Co's DJ Basin system or (b) to pay for shrinkage at Colorado Interstate Gas
Co.-Rocky Mountains as reported in the first issue of Inside F.E.R.C's Gas
Market Report under the "Prices of Spot Gas Delivered to Pipelines table for the
applicable month, plus $0.15/MMBTU for such shrinkage gas. In addition, the
amendment will provide that in the event Seller's Wattenberg Plant is unable in
any month to process all of Buyer's gas dedicated under the Gas Processing
Agreement in that month due to capacity constraints, Seller will temporarily
release the gas attributable to the excess capacity from the Gas Processing
Agreement for the next month. Further, the amendment will provide that Buyer
shall provide Seller, as operator of the Wattenberg Plant, on a periodic, timely
basis, at least once per year, with development plans and other pertinent
information to apprise Seller of Buyer's plans with respect to future production
and capacity needs.
12.6 Rights-Of -Way and Surface Leases. Buyer herein grants to Seller (and
its Affiliates) non-exclusive cost-free right(s)-of-way and surface lease(s) on,
over and through the Properties (including but not limited to, pipeline,
utility, and road usage rights-of-way, facility surface leases and all necessary
rights of ingress and egress), necessary to allow Seller (and its Affiliates) to
continue to conduct operations on or across the Properties in connection with
properties and assets not being conveyed herein, which were being conducted by
Seller (and its Affiliates) prior to Closing. Buyer agrees to execute any and
all instruments deemed necessary by Seller (or its Affiliate) to further
delineate the rights granted herein.
12.7 Conduct of Business.
12.7.1 Waiver of Claims. From the date hereof until Closing, Seller
shall not and will not agree to cancel any debts or waive any claims or
rights of value, except for fair and equivalent value in the ordinary
course of business and consistent with past practice.
12.7.2 Operations. From the date hereof until Closing, Seller shall
keep and maintain the Properties in full force and effect except
abandonments consistent with prudent operation and shall perform and shall
comply with the material covenants and conditions contained in the oil and
gas leases and the material agreements included in or affecting the
Properties.
From the date hereof until Closing, Seller shall promptly inform
Buyer of all requests by third parties for commitments to expend funds for
capital expenditures with respect to the Properties in excess of $50,000
(net to Seller) for any single operation. From the date hereof until
Closing, without the prior written consent of Buyer, Seller shall not (i)
commit to or incur any capital expenditures in excess of $50,000 (net to
Seller's interest) with respect to any part of the Properties; (ii) make
any material non-consent elections with respect to operations affecting the
Properties involving a proposal expected to cost in excess of $50,000 (net
to Seller's interest); (iii) except in accordance with prudent operations
or previous contractual requirements, abandon any well or release or
abandon all or any material portion of any of the leases, or modify or
terminate any of the material agreements; (iv) agree to any renegotiated
price, take or other terms under existing gas purchase agreements extending
more than thirty (30) Days beyond the Closing; (v) agree to any credit or
prepayment arrangement that would reduce the share of gas to which Seller
would be entitled with respect to the Properties following the execution
date of this Agreement; or (vi) enter into any agreement or instrument for
the sale, treatment, or transportation of production from the Properties
(except for such agreements terminable on no more than thirty (30) Days
notice).
From the date hereof until Closing, Seller shall use reasonable
efforts to keep Buyer currently and completely informed as to all material
developments affecting or potentially affecting the Properties. Seller and
Buyer shall develop a mutually agreeable procedure for Buyer's
representatives to have access to Seller's operations in order to remain
informed about the status of the Properties.
Notwithstanding the foregoing, Seller may take any action it believes
in good faith and in accordance with prudent operations to be advisable to
protect persons and property or to prevent the loss of a valuable right,
interest or opportunity, and shall give notice to Buyer as soon as possible
that Seller intends to or has taken such action.
12.7.3 Access.
12.7.3.1. Historical Financial and Operating Data. Between
execution of this Agreement and Closing, Seller shall furnish Buyer with
such unaudited historical financial and operating data and other
information with respect to the Properties as Buyer shall reasonably
request, including without limitation, historical data and information
requested by Buyer or any of its Affiliates in connection with the
preparation of any financial statements, reports or other documents
(including exhibits thereto) to be filed with or provided to the Securities
and Exchange Commission, any state securities commission, any other
applicable governmental authorities or an applicable securities exchange.
12.7.3.2. From the Closing until the delivery of the Records and
completion of the transition pursuant to the Transition Agreement, Seller
shall afford to Buyer and its authorized representatives reasonable access,
during normal business hours, to the Properties operated by Seller and the
Records; provided, however, that with respect to properties not operated by
Seller, Seller will use its reasonable efforts to obtain from the operator
such access as Buyer requests and provided that access to such properties
and/or Records to be licensed to Buyer pursuant to the License Agreement
shall be in accordance with the provisions thereof. Seller shall furnish
to Buyer such existing financial and operating data and other information
relating to the Properties as it may reasonably request, except to the
extent that such access and disclosure would violate the terms of any
agreement to which Seller or any of its Affiliates is bound or any
applicable law or regulation. Seller may also restrict access to Records
to the extent providing access to Buyer would destroy Seller's attorney-
client or work product privilege as to such Records. Except as limited in
the foregoing sentence, Seller will during the term of the Transition
Agreement furnish Buyer with such additional historical financial and
operating data and other information as to the business and properties of
Seller relating to or in connection with the Properties as Buyer shall from
time to time reasonably request including copies of historical financial
data for the Properties for the years 1995, 1996 and 1997 year to date
information up to the date of Closing (including monthly and calendar
quarter summaries within those periods) including but not limited to, lease
operating statements and lease operating costs reports (detailed by
property with related summaries), and shall allow Buyer's employees and
representatives reasonable access upon prior written notice to supporting
records, invoices and other source documents insofar as required to
complete necessary audits and due diligence procedures, and shall
reasonably cooperate with Buyer to enable Buyer to complete audits and due
diligence on a timely basis, provided, however, that Seller shall provide
only such data as it has in its possession and shall not be obligated to
generate such data in any particular form or format. Seller shall permit
or, in case of any third-party operated xxxxx, use its reasonable efforts
to cause the operator thereof to permit Buyer's
authorized representatives to consult with agents and employees of Seller
and/or third-party operator with respect to the Properties during
reasonable business hours and to conduct, at Buyer's sole risk and expense,
on-site inspections, tests and inventories of the Properties. Buyer is not
authorized to investigate any matter with any governmental agency having
jurisdiction over any aspect of Seller's business or operations without
Seller's prior written consent, which shall not be unreasonably denied.
The confidentiality of any data or information so accessed by Buyer shall
be maintained by Buyer and its representatives in accordance with the
Confidentiality Agreement.
ARTICLE 13
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PROPERTY EXCHANGE
-----------------
13.1 Property Exchange. Seller and Buyer agree that it may be beneficial
to structure a portion of the transaction contained in this Agreement as a like-
kind exchange of properties under Section 1031 of the Internal Revenue Code of
1986, as amended. Accordingly, under the terms and conditions set forth in this
Agreement (as modified, clarified or limited in this Article 13): (a) Seller
agrees to assign and convey to Buyer at Closing, all of Seller's right, title
and interests in and to the Amoco Exchange Properties (as hereinafter defined),
effective as of the Effective Time, and Buyer agrees to accept the Amoco
Exchange Properties at Closing, effective as of the Effective Time, and (b)
Buyer agrees to assign and convey to Seller at Closing, all of Buyer's right,
title and interests in and to the HS Exchange Properties (as hereinafter
defined), effective as of the Effective Time, and Seller agrees to accept the HS
Exchange Properties at Closing, effective as of the Effective Time. Seller and
Buyer agree that the aggregate fair market values of the real property portions
of the HS Exchange Properties and Amoco Exchange Properties are equal, and that
the aggregate fair market values of the personal property portions of the HS
Exchange Properties and Amoco Exchange Properties are equal.
13.2 HS Exchange Properties. For the purpose of this Article 13, the term
"HS Exchange Properties" shall mean Buyer's ownership interests in the
properties (real, personal or mixed) and appurtenant rights (contractual or
otherwise) as follows:
13.2.1 All of Buyer's right, title and interests in, to and under, or
derived from, the oil and gas leasehold interests, royalty interests,
overriding royalty interests, mineral interests, production payments, net
profits interests and surface interests which are attributable to the
interests described in Exhibit "B" and all rights (contractual or
otherwise) that are appurtenant to such interests;
13.2.2 All of Buyer's right, title and interests in, to and under, or
derived from, all of the presently existing and valid unitization,
communitization and pooling declarations, orders, and agreements
(including all units formed by voluntary agreement and those formed under
the rules, regulations, orders or other official acts of any governmental
entity or tribal authority having appropriate jurisdiction) to the extent
they relate to any of the interests which are described in Exhibit "B", or
the production of oil, gas or other hydrocarbon and non-hydrocarbon
substances attributable thereto;
13.2.3 All of Buyer's right, title and interests in, to and under, or
derived from, all of the presently existing and valid oil sales contracts,
casinghead gas sales contracts, gas sales contracts, processing contracts,
gathering contracts, transportation contracts, easements, rights-of-way,
servitudes, surface leases, subsurface leases, permits, licenses, farm-out
contracts, farm-in contracts, balancing contracts, suspense funds,
operating agreements, areas of mutual interest, and other contracts,
agreements and instruments to the extent they relate to any of the
interests which are described in Exhibit "B", or the production of oil, gas
or other hydrocarbon and non-hydrocarbon substances attributable thereto;
and
13.2.4 All of Buyer's right, title and interests in, to and under, or
derived from, the personal property, improvements, fixtures, xxxxx (whether
producing, plugged and abandoned, shut-in, injection, disposal or water
supply), tanks, boilers, buildings, machinery, equipment, pipelines,
utility lines, power lines, telephone lines, roads and other appurtenances,
to the extent the same are situated upon and used or held for use by Seller
in connection with the ownership, operation, development, maintenance or
repair of the interests which are described in Exhibit "B", or the
production of oil, gas or other hydrocarbon and non-hydrocarbon substances
attributable thereto;
13.2.5 All of Buyer's right, title and interests in, to and under, or
derived from, the seismic, geologic or geophysical information and data to
the extent the same relates to any of the interests which are described in
Exhibit "B", or the production of oil, gas or hydrocarbon and non-
hydrocarbon substances attributable thereto; and
BUYER EXCEPTS, RESERVES AND RETAINS, unto itself, its Affiliates,
successors and assigns from the HS Exchange Properties the following properties
(real, personal or mixed) and appurtenant rights (contractual or otherwise):
(a) Any and all seismic, geologic or geophysical information and data that
are: (i) interpretive in nature, (ii) covered by an obligation of non-
disclosure, (iii) covered by an obligation of confidentiality, (iv) covered by a
prohibition against transfer (provided Buyer shall use its reasonable efforts
to remove any
restriction or transferring the information to Buyer), (v) covers (in whole or
in part) retained assets of Buyer;
(b) Any and all pipelines, equipment, facilities, permits, contracts,
agreements, easements, rights-of-way, surface leases and subsurface leases owned
by an Affiliate of Buyer;
(c) Any and all records which consist of previous offers and economic
analyses associated with the purchase, sale or exchange of the HS Exchange
Properties, proprietary information, interpretive information, reserve data,
internal communications, personnel information, tax information, information
covered by a non-disclosure obligation and information covered by a legal
privilege; and
(d) A concurrent interest in, to and under, or derived from, the contracts,
agreements, instruments, permits, easements, rights-of-way, servitudes, surface
leases, subsurface leases and any other rights (contractual or otherwise) to the
extent that they relate to or affect the interests not conveyed herein.
13.3 Amoco Exchange Properties. For the purpose of this Article 13, the
term "Amoco Exchange Properties" shall mean Seller's ownership interests in the
properties (real, personal and mixed) and appurtenant rights (contractual or
otherwise) as follows:
13.3.1 All of Seller's right, title and interests in, to and under,
or derived from, the oil and gas leasehold interests, royalty interests,
overriding royalty interests, mineral interests, production payments, net
profits interests and surface interests which are attributable to the
interests which will be identified in accordance with Article 13.4 below,
and all rights (contractual or otherwise) that are appurtenant to such
interests;
13.3.2 All of Seller's right, title and interests in, to and under,
or derived from, all of the presently existing and valid unitization,
communitization and pooling declarations, orders, and agreements
(including all units formed by voluntary agreement and those formed under
the rules, regulations, orders or other official acts of any governmental
entity or tribal authority having appropriate jurisdiction) to the extent
they relate to any of the interests which will be identified in accordance
with Article 13.4 below, or the production of oil, gas or other hydrocarbon
and non-hydrocarbon substances attributable thereto;
13.3.3 All of Seller's right, title and interests in, to and under,
or derived from, all of the presently existing and valid oil sales
contracts, casinghead gas sales contracts, gas sales contracts, processing
contracts, gathering contracts, transportation contracts, easements,
rights-of-way, servitudes, surface leases, subsurface leases, permits,
licenses, farm-out contracts, farm-in contracts, balancing contracts,
suspense funds, operating agreements, areas of mutual interest, and other
contracts, agreements and instruments to the extent they relate to any of
the interests which will be identified in accordance with Article 13.4
below, or the production of oil, gas or other hydrocarbon and non-
hydrocarbon substances attributable thereto;
13.3.4 All of Seller's right, title and interests in, to and under,
or derived from, the personal property, improvements, fixtures, xxxxx
(whether producing, plugged and abandoned, shut-in, injection, disposal or
water supply), tanks, boilers, buildings, machinery, equipment, pipelines,
utility lines, power lines, telephone lines, roads and other appurtenances,
to the extent the same are situated upon and used or held for use by Seller
in connection with the ownership, operation, development, maintenance or
repair of the interests which will be identified in accordance with Article
13.4 below, or the production of oil, gas or other hydrocarbon and non-
hydrocarbon substances attributable thereto;
13.3.5 All of Seller's right, title and interests in, to and under,
or derived from, the seismic, geologic or geophysical information and data
to the extent the same relates to any of the interests which will be
identified in accordance with Article 13.4 below, or the production of oil,
gas or hydrocarbon and non-hydrocarbon substances attributable thereto; and
SELLER EXCEPTS, RESERVES AND RETAINS, unto itself, its Affiliates,
successors and assigns from the Amoco Exchange Properties the following
properties (real, personal or mixed) and appurtenant rights (contractual or
otherwise):
(a) Any and all seismic, geologic or geophysical information and data that
are: (i) interpretive in nature, (ii) covered by an obligation of non-
disclosure, (iii) covered by an obligation of confidentiality, (iv) covered by a
prohibition against transfer (provided Seller shall use its reasonable efforts
to remove any restriction on transferring the information to Buyer) (v) covers
(in whole or in part) retained assets of Seller;
(b) Any and all pipelines, equipment, facilities, permits, contracts,
agreements, easements, rights-of-way, surface leases and subsurface leases owned
by an Affiliate of Seller, including without limitation, the properties (real,
personal and mixed) and appurtenant rights (contractual or otherwise) described
in Exhibit "F";
(c) Any and all records which consist of previous offers and economic
analyses associated with the purchase, sale or exchange of the Properties,
proprietary information, interpretive information, reserve data, internal
communications, personnel information, tax information (except any information
concerning Section 29 Credits relating to the Tax Partnerships set forth on
Exhibit "E" necessary to conduct due diligence or effectuate transaction),
information covered by a non-disclosure obligation and information covered by a
legal privilege;
(d) The properties (real, personal and mixed) and appurtenant rights
(contractual or otherwise) described in Exhibit "F"; and
(e) A concurrent interest in, to and under, or derived from, the contracts,
agreements, instruments, permits, easements, rights-of-way, servitudes, surface
leases, subsurface leases and any other rights (contractual or otherwise) to the
extent that they relate to or affect the interests not conveyed herein.
13.4 Identification of Amoco Exchange Properties. Five (5) Days prior to
Closing, Seller shall provide Buyer with a list of properties (which shall be a
subset of Exhibit "A") with an allocated defect value of at least Twenty-Three
Million and No\100 Dollars ($23,000,000) ("Amoco Defect Value"), which list of
properties will comprise the Amoco Exchange Properties.
13.5 HS Exchange Properties Allocation. Within seven (7) Days after
execution of this Agreement, Seller shall provide Buyer with an allocated value
for the HS Exchange Properties which shall be used for administration of this
Agreement, including without limitation, Articles 3.4, 4.2, 5.2 and 7.2. Buyer
shall have the right to review and approve the allocated value, which approval
shall not be unreasonably withheld.
13.6 HS Contracts. Within ten (10) Days after execution of this
Agreement, Buyer shall provide Seller with a list of material marketing and non-
standard contracts and agreements encumbering the HS Exchange Properties. Buyer
additionally represents and warrants to Seller that there are no undisclosed
contracts or agreements encumbering the HS Exchange Properties which contain
provisions which are: (a) non-standard from an oil and gas operations
perspective, and (b) would in aggregate have a material adverse impact on the
value of one or more of the HS Exchange Properties. For the purpose of this
Article 13.6, "material adverse impact" shall mean an impact greater than Fifty
Thousand and No\100 Dollars ($50,000).
13.7 Gas Imbalances. For evaluation purposes it has been deemed that the
gas imbalance position with respect to the HS Exchange Properties is zero.
Within one hundred twenty (120) Days after Closing, Buyer shall deliver to
Seller information which sets forth the actual gas imbalance information as then
known by Buyer. If it is determined (prior to finalization of the Final
Accounting Settlement) that a gas imbalance exists with respect to any one or
more of the HS Exchange Properties, the parties shall settle as part of the
Final Accounting
Settlement any and all gas imbalance overages or underages net to Buyer's
interest using a deemed gas price of One Dollar per Mcf ($1.00/Mcf); provided
however, there shall be no adjustment if the aggregate value of the gas
imbalance does not exceed Fifty Thousand and No\100 Dollars ($50,000) .
13.8 Partnerships. Buyer represents and warrants to Seller that, either
(i) no partnerships exist or are encumbering the HS Exchange Properties, or (ii)
as to any partnerships that exist, Buyer has the right to and shall convey the
HS Exchange Properties out of the partnerships.
13.9 Litigation. Except as disclosed prior to Closing, there is no action,
suit or proceeding pending or to the best knowledge of Buyer's Senior Management
Team ("Management"), threatened against Buyer which would have a material
adverse effect on the value or ownership or operation of the HS Exchange
Properties or that would prevent the consummation of the transaction
contemplated by this Agreement, nor has there been any occurrence that would be
likely to give rise to a Claim that would have a material adverse effect on the
value or ownership or operation of the HS Exchange Properties or that could give
rise to a material claim against Buyer for which Seller would be liable under
Article 8.2 or 8.3. Buyer shall retain responsibility for the claims, disputes
and litigation matters or that are disclosed prior to Closing to the extent the
underlying Claims relate to the period of time prior to Closing. Seller shall
be solely responsible for such matters to the extent the underlying Claims
relate to: (a) the HS Exchange Properties, and (b) the period of time subsequent
to Closing. Buyer shall keep Seller informed with respect to and shall consult
with and allow reasonable participation of Seller in litigation for which Buyer
retains responsibility and that affect the HS Exchange Properties with respect
to future ownership and operation of the HS Exchange Properties.
13.10 HS Exchange Properties Transition. At Closing, Buyer and Seller
shall execute the HS Exchange Properties Transition Agreement. For the purpose
of this Agreement, "HS Exchange Properties Transition Agreement" means a
document in the form of Exhibit "P-1".
13.11 Title Defects. Notwithstanding anything contained in this Agreement
to the contrary, Article 1.4 shall not apply to the HS Exchange Properties. In
determining whether an alleged title defect exists with respect to the HS
Exchange Properties, the term "Alleged Title Defect " shall mean a Title Defect
which is asserted by Seller in accordance with Article 4.2, and the costs
associated with curing such individual Alleged Title Defect exceeds TWENTY-FIVE
THOUSAND and No/100 United States Dollars (US $25,000) net to Buyer's interests.
Notwithstanding anything contained in this Agreement to the contrary, Seller
shall not be entitled to raise an Alleged Title Defect unless the aggregate cost
associated with curing all such Alleged Title Defect(s) exceeds three percent
(3%) of the Amoco Defect Value (it being acknowledged and agreed that Seller
shall be solely responsible for any
and all Alleged Title Defect(s) up to three percent (3%) of the Amoco Defect
Value).
13.12 Adverse Conditions. Notwithstanding anything contained in this
Agreement to the contrary, Article 1.3 shall not apply to the HS Exchange
Properties. With respect to the HS Exchange Properties, the term "Alleged
Adverse Condition" shall mean an environmental or physical condition asserted by
Seller in accordance with Article 5.2 that, as of Closing, is not in compliance
with the then existing Laws, and the costs associated with remediating such
individual Alleged Adverse Condition exceeds FIFTY THOUSAND and No/100 United
States Dollars (US $50,000) net to Buyer's interests. Notwithstanding anything
contained in this Agreement to the contrary, Seller shall not be entitled to
raise an Alleged Adverse Condition unless the aggregate cost associated with
remediating all such Alleged Adverse Condition(s) exceeds three percent (3%) of
the Amoco Defect Value (it being acknowledged and agreed that Seller shall be
solely responsible for any and all Alleged Adverse Condition(s) up to three
percent (3%) of the Amoco Defect Value).
13.13 Amoco Defect Value. With respect to the HS Exchange Properties,
wherever the term "Unadjusted Purchase Price" is used in this Agreement, the
words "Amoco Defect Value" shall be inserted in lieu thereof, except to the
extent the term is used in non-applicable provisions (as set forth in Article
13.17).
13.14 Tax Gross-Up. If the Alleged Title Defect value associated with
Article 13.11 exceeds twenty-five percent (25%) of the Amoco Defect Value, then
the amount to which Seller is entitled associated with such defects shall be
multiplied by 1.56 to compensate Seller for the loss in tax efficiency.
13.15 Preferential Rights. In recognition of the tax efficiencies
associated with the exchange of properties contemplated herein, the parties
agree that Buyer shall multiply the value used to provide any and all
preferential right to purchase notices by 1.56 to compensate Seller for the loss
in tax efficiency. Buyer shall pay to Seller at Closing an amount equal to the
Amoco Defect Value multiplied by 1.56 for any and all properties wherein a valid
election to purchase a property is received by Buyer from a Third Party under
the terms of the applicable preferential purchase right provisions.
13.16 Payout. To the extent a payout affects the Working Interests or Net
Revenue Interests reflected on Exhibit "B", such matter shall be treated as an
Alleged Title Defect, with the thresholds and deductibles as set for in 13.11.
13.17 Non-Applicable Provisions. Articles 3.1, 3.2, 3.3, 10.1, 10.2,
10.3, 11.1, 11.2, 11.3, 12.3, 12.4, 12.5, 12.7.3, all of Article 14, 17.2.11 and
17.3.10 shall not apply to the administration of this Agreement with respect to
the HS Exchange Properties.
13.18 Release. Seller herein agrees to release Buyer Group from and
against any and all claims associated with Seller's inability, for any reason
whatsoever, to obtain like-kind exchange tax treatment under Section 1031 of the
Internal Revenue Code of 1986, as amended, associated with the exchange
contemplated herein. Buyer herein agrees to release Seller Group from and
against any and all claims associated with Buyer's inability, for any reason
whatsoever, to obtain like-kind exchange tax treatment under Section 1031 of the
Internal Revenue Code of 1986, as amended, associated with the exchange
contemplated herein.
13.19 Survival of Representations and Warranties. Notwithstanding anything
contained in this Agreement to the contrary, the representations and warranties
contained in this Article 13 shall terminate one (1) year after Closing.
13.20 Administration of Agreement. Except where expressly modified (or
indicated to be not applicable in accordance with Article 13.17) in this Article
13, the terms and conditions set forth in this Agreement shall apply to the
exchange of properties contemplated herein. In administering this Agreement
(excluding this Article 13 which shall apply as drafted) with respect to the HS
Exchange Properties: (a) HS Resources, Inc. shall, to the extent applicable, be
deemed to be the Seller and Amoco Production Company shall be deemed to be the
Buyer, and (b) HS Exchange Properties shall, to the extent applicable, be deemed
to be Properties.
ARTICLE 14. PERSONNEL MATTERS
-----------------------------
14.1 Employee Lists. Prior to Closing, Seller will make available to Buyer
a list of employees who are directly engaged in the operation, maintenance,
administration, measurement, automation and similar functions for the Properties
subject to this Agreement, who are available for immediate employment by Buyer
commencing at the termination of the Transition Agreement (for purposes of this
Article 13 only, the first day of the month following the month in which Buyer
notifies Seller of termination of the Transition Agreement or March 1, 1998,
whichever is earlier, shall be referred to as the "Transition Date"). In
addition, prior to Closing, Seller will make available to Buyer a separate list
of employees who are engaged in management, analysis, engineering, supervision,
accounting and similar functions who are available for immediate employment by
Buyer commencing on or after the Transition Date. For the purposes of this
Agreement, the above-referenced employees of Seller shall collectively be
referred to as "Available Personnel" and such Available Personnel that accept an
offer of employment from Buyer in accordance with the provisions of Section 13.2
shall be collectively referred to as "Personnel". Buyer shall not solicit
employment of any employees of Seller without obtaining the advance written
permission of Seller, except that Buyer may solicit employees of Seller who did
not work in Seller's business groups in Denver or Fort Xxxxxx
directly associated with operations on the Properties. This restriction shall
remain in effect for twelve (12) months after Closing.
14.2 Offers of Employment. Buyer may make offers of employment effective
as of the Transition Date to any one or more of the Available Personnel. Any
offers of employment made by Buyer to Available Personnel shall be for similar
salaries or wages, and shall include the same employee benefit plans and
policies provided employees of Buyer performing similar duties and
responsibilities, consistent with the other provisions of this Article. To the
extent any Available Personnel are on military, family, or medical leave on the
Transition Date, Buyer shall give such Available Personnel consideration for
employment in the same manner as it does for other employees; provided however,
Buyer may condition such offer upon the employee's return from leave within one
(1) year of the Transition Date and, in the case of medical leave, that such
return to work is approved by Buyer's physician.
14.3 Savings Plan. Buyer shall allow Personnel to participate in Buyer's
savings plan or other similar plans established pursuant to Section 401(k) of
the Internal Revenue Code ("Buyer Savings Plan"). Buyer shall recommend to its
Board of Directors that effective January 1, 1998, the board approve an
amendment to Buyer Savings Plan to eliminate the one year waiting period for
Personnel and that Personnel thereby be allowed to immediately participate fully
in Buyer Savings Plan. Notwithstanding whether the waiting period is eliminated
by Buyer, Buyer shall credit Personnel's prior service with Amoco and its
Affiliates for all other purposes under Buyer Savings Plan. Buyer shall permit
Personnel at their option to transfer their Amoco Savings Plan accounts to Buyer
Savings Plan pursuant to a trust to trust transfer within ninety (90) days of
the Transition Date, and to transfer any outstanding loan balances to Buyer
Savings Plan under terms and conditions established by Buyer's plan.
14.4 Other Employee Benefits. Buyer shall recognize the prior service with
Seller and its Affiliates of Personnel for all purposes, including, without
limitation, eligibility, vesting, and benefit determination and accrual, in
connection with Buyer's policies covering vacations, bonuses, sickness and
disability leave and all other employee benefits and policies, but excluding
Buyer's profit sharing plan. Except as otherwise provided in this Agreement,
Personnel and their eligible dependents who are enrolled in medical, dental,
life insurance and long-term disability plans available to such Personnel as a
result of their employment by Seller immediately prior to the Transition Date
shall be eligible to enroll in any plan or plans established by Buyer which
provide similar benefits to its employees as of the Transition Date. If
Personnel enroll in such plans, no physical examination or other proof of
insurability shall be required. Also, all coverage exclusions and limitations
relating to waiting periods or pre-existing conditions with respect to such
personnel or their dependents shall be waived. Buyer shall be responsible for
perpetuating the group health plan continuation coverage pursuant to Section
4980B of the Internal Revenue Code of 1986, as amended, and Sections 601 through
609 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") for all Personnel
and their eligible dependents and shall cover such Personnel under Buyer's own
group health plan to accommodate this requirement. Buyer shall indemnify and
hold Seller and its Affiliates harmless from and against any and all liability
Seller or its Affiliates incur after Closing under the provisions of Section
4980B or the Code or Sections 601 through 609 of ERISA with respect to any
Personnel, or dependent or spouse of such Personnel, who had or has a
"qualifying event" (within the meaning of Section 4980B(f)(3) of the Code) on or
after the Transition Date. Any expenses incurred prior to and including the
Transition Date which are used to satisfy deductibles or co-pay amounts for 1997
under the welfare benefit plans (as defined under Section 3(1) of ERISA) that
Personnel or their dependents participated in as a result of their employment
with Seller immediately prior to the Transition Date may be used to satisfy any
deductibles and co-pay amounts for Buyer's current plan year under the
corresponding plans of Buyer. Seller shall provide necessary information to
Buyer pertaining to deductibles and co-pays incurred by Personnel prior to the
Transition Date. Seller shall also provide information to Buyer regarding the
amount of prior service and the credited service date with Seller and its
Affiliates of any Personnel.
14.5 Accrued and Unused Vacation. Between the Transition Date and the end
of the calendar year in which transition occurs, Buyer shall credit Personnel's
prior service with Amoco and its Affiliates to determine their vacation
eligibility under Buyer's vacation policy and allow Personnel to take off
without pay the same number of hours of unused vacation they would have been
eligible for with Seller but only up to the maximum allowed by Buyer's vacation
policy.
14.6 Severance. Buyer acknowledges that Personnel would have been
eligible to receive the severance benefits described in the current 1997 Amoco
Corporation and Participating Affiliates Severance Benefits Plan (the "Amoco
Severance Plan"), had they not been offered comparable positions with Buyer.
Therefore, Buyer agrees to provide severance benefits that are comparable to or
better than the severance benefits described in the Amoco Severance Plan,
including, without limitation, a severance allowance, medical benefits, life
insurance, and educational assistance, to Personnel whose employment is
terminated by Buyer or who are offered positions with Buyer that require a
geographical relocation or who suffer wage cuts effected by Buyer during the
period of twelve (12) months after the Closing Date under circumstances that
would make such Personnel eligible for the severance benefits described in the
Amoco Severance Plan. During this same twelve (12) month period, Buyer also
agrees to provide an additional sixty (60) Days on the payroll after such
Personnel are notified of eligibility for severance benefits, which is
consistent with the past practice and policy of Seller, and to provide up to
Five Thousand Dollars ($5,000) in outplacement benefits to each of such
Personnel, with the level of outplacement benefits actually provided being
commensurate with the level of benefits provided by Seller. For purposes of
calculating the severance
allowance described in the Amoco Severance Plan, "credited service" shall
include service with Seller and/or its Affiliates in addition to service with
Buyer and/or its Affiliates for Personnel. In addition, in the event that Buyer
terminates any Personnel within twelve (12) months of the Closing Date in such a
manner that triggers further severance obligations of Buyer for such Personnel
under the Amoco Severance Plan or under any severance plan of Buyer and said
personnel who received severance benefits from Seller or from Buyer on behalf of
Seller at the time of their termination from Seller, Buyer may offset the amount
of any benefits paid by Seller from the severance benefits set forth in the
Amoco Severance Plan. Buyer also agrees to include Seller and its Affiliates as
third party beneficiaries in any release executed by Personnel in order to
receive the severance benefits described in the Amoco Severance Plan. Lastly,
Buyer agrees not to require Personnel to execute a release in order to receive
the sixty (60) Days on the payroll and the outplacement benefits described
above. Buyer shall reimburse Seller for all severance obligations of Seller
incurred up to a maximum amount of $250,000, for Personnel whose employment by
Buyer triggers a severance obligation for Seller under paragraphs (5) or (7) of
the "Involuntary terminations" provisions of the Amoco Severance Plan because
the base salary or base hourly pay rate for the position accepted by that person
is less than 80% of that person's final base salary or base hourly pay rate
while employed at Seller. Any severance amounts regarding Personnel under the
Amoco Severance Plan triggered as a result of employment of such Personnel by
Buyer in excess of $250,000 shall be the obligation of Seller.
14.7 WARN Act. Buyer and Seller represent and warrant to each other that
no major employment losses are anticipated as a consequence of the transactions
contemplated by this Agreement that might trigger obligations under the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. Section 2101 et seq., or
under any similar provision of any federal, state, regional, foreign, or local
law, rule, or regulation (referred to collectively as "WARN Obligations").
Moreover, to the extent that any WARN Obligations might arise as a consequence
of the transactions contemplated by this Agreement, it is agreed that Seller
shall be responsible for any WARN Obligations arising as a result of any
employment losses occurring prior to or upon the Transition Date, and Buyer
shall be responsible for any WARN Obligations arising as a result of any
employment losses occurring after the Transition Date. Furthermore, for the
first ninety (90) Days following the Transition Date, Buyer shall not engage in
any mass layoff, plant closing, or other action that might trigger obligations
of Seller under the WARN Act or under any similar provision of any federal,
state, regional, foreign, or local law, rule, or regulation.
ARTICLE 15. HSR FILINGS
-----------------------
15.1 HSR Filings. If compliance with the HSR Act is required in connection
with the transaction contemplated under this Agreement, as promptly as
practicable and in any event not more than fifteen (15) Business Days following
the date on which the parties have executed this Agreement, both
parties will file with the Federal Trade Commission and the Department of
Justice, as applicable, the notification and report forms required for the
transactions contemplated herein and will as promptly as practicable furnish any
supplemental information which may be reasonably requested in connection
therewith. Each party shall request expedited treatment of such filing. If
failure by either party to obtain timely authorization from the Federal Trade
Commission or the Department of Justice results in the inability of the parties
to Close on the Closing Date, the time for Closing shall automatically be
extended until such date as Closing can occur in compliance with the HSR Act.
ARTICLE 16. CONDITIONS PRECEDENT TO CLOSING
-------------------------------------------
16.1 Conditions Precedent to Seller's Obligation to Close. Seller shall
be obligated to consummate the sale of the Properties as contemplated by this
Agreement on the Closing Date, provided the following conditions precedent have
been satisfied or have been waived by Seller:
16.1.1 All representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at and as of
Closing as though such representations and warranties were made at and as
of such time; and
16.1.2 Buyer shall have complied in all material respects with all
obligations and conditions contained in this Agreement to be performed or
complied with by Buyer on or prior to Closing.
16.2 Conditions Precedent to Buyer's Obligation to Close. Buyer shall be
obligated to consummate the purchase of the Properties as contemplated by this
Agreement on the Closing Date, provided the following conditions precedent have
been satisfied or have been waived by Buyer:
16.2.1 All representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects at and as of
Closing as though such representations and warranties were made at and as
of such time; and
16.2.2 Seller shall have complied in all material respects with all
obligations and conditions contained in this Agreement to be performed or
complied with by Seller on or prior to Closing.
16.3 Conditions Precedent to Obligation of Each Party to Close. The
parties shall be obligated to consummate the sale and purchase of the Properties
as contemplated in this Agreement on the Closing Date, provided the
following conditions precedent have been satisfied or have been waived by the
applicable party:
16.3.1 No suit, action or other proceedings shall be pending before
any court or governmental entity in which it is sought by a person or
entity other than the parties hereto or any of their Affiliates, officers,
directors or employees to restrain, enjoin or otherwise prohibit the
consummation of the transactions contemplated by this Agreement, or to
obtain substantial damages in connection with the transaction contemplated
herein, nor shall there be any investigation by a governmental entity
pending which might result in any such suit, action or other proceedings
seeking to restrain, enjoin or otherwise prohibit the consummation of the
transaction contemplated by this Agreement;
16.3.2 If applicable, consummation of the transaction contemplated
herein shall not have been prevented from occurring by (and the required
waiting period, if any, shall have expired under) the HSR Act and the rules
and regulations of the Federal Trade Commission or the Department of
Justice;
16.3.3 With respect to Properties which have not been excluded from
this Agreement because of exercise of a preferential purchase right, if
any, the preferential purchase rights applicable to such Properties shall
have been waived, or the time to elect under such preferential purchase
rights shall have elapsed, prior to Closing.
ARTICLE 17. THE CLOSING
-----------------------
17.1 Closing. Five (5) Business Days prior to the Closing Date, Seller
shall provide Buyer with a Closing statement setting forth the Purchase Price
adjusted in accordance with the terms of this Agreement. Seller shall
additionally provide Buyer with wiring instructions designating the account or
accounts to which the Closing funds are to be delivered in accordance with
Article 17.3.1. Closing shall be held in Seller's office at the 4th Floor, 000
XxxxXxxx Xxxx Xxxxxxxxx, Xxxxxxx, Xxxxx 00000, or such other location as
mutually agreed in writing by Seller and Buyer.
17.2 Obligations of Seller at Closing. At Closing, Seller shall deliver
to Buyer, unless waived by Buyer, the following:
17.2.1 A document conveying all of Seller's right, title and
interests in and to the Properties substantially in the form of the
Assignment and Xxxx of Sale attached hereto as Exhibit "I". The Assignment
and Xxxx of Sale shall be executed and acknowledged in four (4) multiple
originals or such greater number as agreed between the parties;
17.2.2 A document conveying all of Seller's right, title and
interests in and to surface interests which are included in the Properties
substantially in the form of the Surface Deed attached hereto as Exhibit
"J". The Surface Deed shall be executed and acknowledged in four (4)
multiple originals or such greater number as agreed between the parties;
17.2.3 A document conveying Seller's interest in its Ft. Xxxxxx
office building, furniture, fixtures, equipment, and inventory, ground
lease and related property rights, except those assets excluded on Exhibit
"F" attached hereto.
17.2.4 A document conveying all of Seller's right, title and
interests in and to the mineral interests which are included in the
Properties substantially in the form of the Mineral Deed attached hereto as
Exhibit "K". The Mineral Deed shall be executed and acknowledged in four
(4) multiple originals or such greater number as agreed between the
parties;
17.2.5 Executed and acknowledged assignments of all of Seller's
right, title and interest in and to federal, state or tribal interests
included in the Properties on approved forms for such purpose;
17.2.6 A Certificate executed by an Attorney-in-Fact of Seller
certifying as to the matters specified in Articles 16.2.1 and 16.2.2 above
substantially in the form of Exhibit "L";
17.2.7 Letters-in-Lieu of division orders or transfer orders
executed by an Attorney-in-Fact of Seller substantially in the form of
Exhibit "M";
17.2.8 An Opinion of Counsel executed by an attorney for Seller
substantially in the form of Exhibit "N";
17.2.9 A Non-Foreign Affidavit executed by an Attorney-in-Fact of
Seller substantially in the form of Exhibit "O";
17.2.10 Transition Agreements executed by an Attorney-in-Fact of
Seller substantially in the form of Exhibit "P" and Exhibit "P-1";
17.2.11 A License Agreement - XXXX substantially in the form of
Exhibit "Q", and a License Agreement - Seismic in a mutually agreed form,
as provided for in Article 12.4, executed by an Attorney-in-Fact of Seller.
17.2.12 Evidence that all consents and approvals prerequisite for the
sale and conveyance of the Properties (except for consents and
approvals of governmental entities or tribal authorities customarily
obtained subsequent to the transfer of title) have been obtained, as well
as evidence of waiver or lapse of any unexercised preferential purchase
rights applicable to the Properties; and
17.2.13 Such other instruments as necessary to carry out Seller's
obligations under this Agreement.
17.3 Obligations of Buyer at Closing. At Closing, Buyer shall deliver to
Seller, unless waived by Seller, the following:
17.3.1 The adjusted Purchase Price, less Deposit plus Computed
Interest, if applicable, calculated in accordance with Article 3 by wire
transfer.
17.3.2 The Assignment and Xxxx of Sale, executed and properly
acknowledged, referred to in Article 17.2.1;
17.3.3 The Surface Deed, executed and properly acknowledged, referred
to in Article 17.2.2;
17.3.4 The Mineral Deed, executed and properly acknowledged, referred
to in Article 17.2.3;
17.3.5 The federal, state and tribal assignments, executed and
properly acknowledged, referred to in Article 17.2.4;
17.3.6 A Certificate executed by an authorized officer or Attorney-
in-Fact of Buyer certifying as to the matters specified in Articles 16.1.1
and 16.1.2 substantially in the form of Exhibit "L";
17.3.7 Letters-in-Lieu of division orders or transfer orders executed
by an authorized officer or Attorney-in-Fact of Buyer substantially in the
form of Exhibit "M";
17.3.8 An Opinion of Counsel executed by an attorney for Buyer
substantially in the form of Exhibit "N";
17.3.9 Transition Agreement executed by an authorized officer or
Attorney-in-Fact of Buyer substantially in the form of Exhibit "P-1";
17.3.10 A License Agreement - XXXX substantially in the form of
Exhibit "Q", and a License Agreement - Seismic in a mutually agreed form,
as provided for in Article 12.4, executed by an authorized officer or
Attorney-in-Fact of Buyer;
17.3.11 Evidence of compliance with all governmental and tribal
requirements, if any, for the posting of plugging or other applicable bonds
relating to the ownership or operation of the Properties; and
17.3.12 Such other instruments as necessary to carry out Buyer's
obligations under this Agreement.
ARTICLE 18. TERMINATION
-----------------------
18.1 Grounds for Termination. This Agreement may be terminated at any
time prior to Closing:
18.1.1 By the mutual written agreement of Seller and Buyer;
18.1.2 By either Seller or Buyer if the consummation of the
transactions contemplated herein would violate any nonappealable final
order, decree or judgment of any court or governmental entity having
appropriate jurisdiction enjoining or awarding substantial damages in
connection with the consummation of the transactions contemplated herein;
18.1.3 Notwithstanding anything contained in this Agreement to the
contrary, either party may terminate this Agreement if Closing shall not
have occurred by December 31, 1997.
18.2 Effect of Termination. If this Agreement is terminated in accordance
with Article 18.1, such termination shall be without liability to any party,
except return of the Deposit (plus Computed Interest if applicable on the
Deposit from the date of receipt by Seller until termination of this Agreement)
and performance of the obligations provided in Articles 18.3, 18.4, 18.5, 19.1,
20.3, 20.11, 20.13, 20.14, 20.15 and 20.17 (which provisions shall survive
termination of this Agreement). If this Agreement is terminated as a result of
Buyer's failure or refusal to perform an obligation hereunder (including without
limitation Closing on the Closing Date), Seller shall be entitled to retain the
Deposit as liquidated damages (and not as a penalty) to reimburse Seller for its
out-of-pocket fees and expenses incurred in connection with the transactions
contemplated by this Agreement. In such event, if Seller believes reasonably and
in good faith that Buyer breached this Agreement in failing to close, Seller may
immediately proceed after termination to offer and sell the Properties to
another Purchaser, and Buyer shall release and waive all rights and remedies it
may have against Seller, its employees, agents, officers, and affiliates,
including but not limited to, lien or other equitable remedies, and Buyer
expressly agrees that it will not interfere with or enjoin or seek damages with
respect to any potential sale of the Properties to a third party after December
31, 1997.
18.3 Dispute over Right to Terminate. If there is a dispute between the
parties over either party's right to terminate this Agreement under Article 18.1
or
otherwise, Closing shall not occur, as scheduled. The party which disputes the
other party's right to terminate the Agreement may initiate binding arbitration
proceedings in accordance with Article 19.1 within thirty (30) Days of the date
on which Closing was scheduled to occur and, if arbitration is so initiated, the
dispute will be resolved through such binding arbitration proceeding. If the
party which disputes the termination right does not initiate arbitration to
resolve the dispute within the time period specified hereinabove, such party
shall be deemed to have waived for all purposes its right to object to or
dispute such termination.
18.4 Return of Documents. If this Agreement is terminated prior to
Closing, Buyer shall return Seller all books, records, maps, files, papers and
other property in Buyer's possession relating to the transaction contemplated by
this Agreement.
18.5 Confidentiality. Notwithstanding the termination of this Agreement
or any other provision of this Agreement to the contrary, the terms of the
Confidentiality Agreement dated the 29th day of July, 1997, by and between
Seller and Buyer ("Confidentiality Agreement"), shall remain in full force and
effect. If Closing of the transaction contemplated herein occurs, the
Confidentiality Agreement shall terminate (which termination shall be effective
as of the Closing).
ARTICLE 19. ARBITRATION
-----------------------
19.1 Arbitration. Unless expressly provided otherwise in this Agreement,
any and all disputes arising under the terms of this Agreement ("Arbitrable
Dispute") shall be referred to and resolved through the use of binding
arbitration using three (3) arbitrators, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and the Federal
Arbitration Act (Title 9 of the United States Code). If there is any
inconsistency between this Article and any statute or rules, the terms of this
Article shall control the rights and obligations of the parties. Arbitration
shall be initiated within the applicable time limits set forth in this Agreement
and not thereafter or if no time limit is given, within the time period allowed
by the applicable statute of limitations. Arbitration shall be initiated by one
(1) party ("Claimant") serving written notice on the other party ("Respondent")
that the Claimant elects to refer the Arbitrable Dispute to binding arbitration,
and that the Claimant has appointed an arbitrator, who shall be identified in
such notice. The Respondent shall respond to the Claimant within thirty (30)
Days after receipt of Claimant's notice, identifying the arbitrator Respondent
has appointed. The two (2) arbitrators so chosen shall select a third
arbitrator (who must have not less than ten (10) years experience as an oil and
gas lawyer) within thirty (30) Days after the second arbitrator has been
appointed. Seller shall pay the compensation and expenses of the arbitrator
named by or for it, and Buyer shall pay the compensation and expenses of the
arbitrator named by or for
it. Seller and Buyer shall each pay one-half of the compensation and expenses
of the third arbitrator. Unless expressly provided otherwise in this Agreement,
all arbitrators must be neutral parties who have never been officers, directors
or employees of the parties or any of their Affiliates. Additionally, unless
expressly provided otherwise in this Agreement, the two (2) arbitrators named by
the parties must have not less than ten (10) years experience in the oil and gas
industry, and must have a formal education in the area of dispute (i.e.,
accounting for an accounting dispute, etc.). The hearing shall be commenced
within thirty (30) Days after the selection of the third arbitrator. The
parties and the arbitrators shall proceed diligently and in good faith in order
that the award shall be made as promptly as possible. The decision of the
arbitrators shall be binding on and non-appealable by the parties. The
arbitrators shall not have the authority to grant or award indirect,
consequential, punitive or exemplary damages.
ARTICLE 20. MISCELLANEOUS
-------------------------
20.1 Notices. All notices and other communications required, permitted or
desired to be given hereunder must be in writing and sent by: (a) U.S. mail,
properly addressed as shown below, and with all postage and other charges fully
prepaid, (b) hand delivery, (c) facsimile transmission, or (d) national courier
service. Date of service by mail, courier and hand delivery is the date on
which such notice is received by the addressee and by facsimile is the date sent
(as evidenced by fax machine confirmation of receipt), or if such date is not on
a Business Day, then on the next date which is a Business Day. Each party may
change its address by notifying the other party in writing.
If to Seller Amoco Production Company
by mail: X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: General Manager of Business Development
AEGNA Acquisitions and Divestments
If to Seller by Amoco Production Company
hand delivery: 000 XxxxXxxx Xxxx Xxxxxxxxx, 0xx xxxxx
Xxxxxxx, Xxxxx 00000
Attn: General Manager of Business Development
AEGNA Acquisitions and Divestments
If to Seller Amoco Production Company
by facsimile: Number: 000-000-0000
Attn: General Manager of Business Development
AEGNA Acquisitions and Divestments
If to Buyer HS Resources, Inc.
by mail: 0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Vice President, Acquisitions and Divestitures
With copy to: General Counsel
If to Buyer Vice President, Acquisitions and Divestitures
by facsimile: Number: (000)000-0000
Attn: Vice President, Acquisitions and Divestitures
With copy to: General Counsel
20.2 Conveyance Costs. Buyer shall be solely responsible for filing and
recording documents related to the transfer of the Properties from Seller to
Buyer and for all costs and fees associated therewith, including, without
limitation, filing the assignment of the Properties with appropriate federal,
state,
local and tribal authorities as required by applicable Law. As soon as
practicable after recording or filing, Buyer shall furnish Seller with all
recording data and evidence of all required filings.
20.3 Brokers' Fees. Neither Buyer nor Seller has retained any brokers,
agents or finders the payment to whom the other party would be responsible.
Each party agrees to release, protect, indemnify, defend and hold the other
party harmless from and against any and all Claims with respect to any
commissions, finders' fees or other remuneration due to any broker, agent or
finder claiming by, through or under such party
20.4 Records. As soon as possible after termination of the Transition
Agreement but no later than sixty (60) Days thereafter (except as provided
below), Seller shall furnish to Buyer all Records which are maintained by
Seller; provided however, Seller shall be entitled to retain: (a) copies of any
or all such Records, (b) originals of any Records required in connection with
litigation or other proceedings pending or threatened against Seller and
associated with the Properties, (c) originals of any Records required in
connection with title or environmental due diligence, (d) originals of any
Records required in connection with the Final Accounting Settlement, (e)
originals of any Records required in connection with any transition activities,
and/or (f) originals of any Records associated with any retained properties or
interests. Any and all original Records retained by Seller shall be furnished
to Buyer within thirty (30) Days after Seller's reasonable need for said Records
ceases. Buyer agrees to maintain the Records received from Seller in accordance
herewith for a period of seven (7) years after the Closing and shall afford
Seller full access to the Records as reasonably requested by Seller. If Buyer
desires to destroy the Records, or any portion thereof, it shall notify Seller
prior to such destruction, and provide Seller the opportunity to take possession
of the same.
20.5 Further Assurances. From and after Closing, at the request of Seller
but without further consideration, Buyer will execute and deliver or use
reasonable efforts to cause to be executed and delivered such other instruments
of conveyance and take such other actions as Seller reasonably may request to
more effectively put Seller in possession of any property which was not intended
by the parties or should not have been conveyed by Buyer (including without
limitation, reassignment from Buyer to Seller of any Properties which were
conveyed in violation of a valid preferential right to purchase or consent to
assignment). From and after Closing, at the request of Buyer but without
further consideration, Seller shall execute and deliver or use reasonable
efforts to cause to be executed and delivered such other instruments of
conveyance and take such other actions as Buyer reasonably may request to more
effectively put Buyer in possession of the Properties. If any of the Properties
are incorrectly described, the description shall be corrected upon proof of the
proper description. From and after Closing, Buyer and Seller shall each
execute, acknowledge and deliver to the other such further instruments and take
such further action as may be reasonably requested in order to more effectively
assure to the other the full beneficial use and enjoyment of the Properties and
otherwise to accomplish the purposes of the transaction contemplated by this
Agreement.
20.6 Survival of Representations and Warranties. The representations and
warranties contained in Article 10 of this Agreement shall terminate one (1)
year after Closing, except those in Articles 10.1, 10.2, 10.3, 11.1, 11.2, and
11.3 which shall survive indefinitely. Except as otherwise provided in this
Agreement, all other representations, warranties, indemnities, covenants and
agreements contained in this Agreement shall survive the Closing indefinitely.
The parties have made no representations or warranties, except those expressly
set forth in this Agreement. The termination of representations and warranties
shall not affect the express indemnities set forth in Article 8.
20.7 Amendments and Severability. No amendments or other changes to this
Agreement shall be effective or binding on either of the parties unless the same
shall be in writing and signed by both Seller and Buyer. The invalidity of any
one or more provisions of this Agreement shall not affect the validity of this
Agreement as a whole, and in case of any such invalidity, this Agreement shall
be construed as if the invalid provision had not been included herein.
20.8 No Multiple Recoveries. Notwithstanding anything contained in this
Agreement to the contrary, there shall be no multiple recoveries for breach of
any representation, warranty or covenant or under any indemnity provision
contained in this Agreement or such other documents to be executed and delivered
at Closing as provided for in this Agreement related to the same act, event or
circumstance.
20.9 Successors and Assigns. This Agreement shall not be assigned, either
in whole or in part, without the express written consent of the non-assigning
party. The terms, covenants and conditions contained in this Agreement shall be
binding upon and shall inure to the benefit of Seller and Buyer and their
respective successors and assigns, and such terms, covenants and conditions
shall be covenants running with the land and with each subsequent transfer or
assignment of the Properties.
20.10 Headings. The titles and headings set forth in this Agreement have
been included solely for ease of reference and shall not be considered in the
interpretation or construction of this Agreement.
20.11 Governing Law. This Agreement (including administration of the
binding arbitration provision set forth in Article 19.1) shall be governed by
and construed under the Laws of the State of Colorado, excluding any choice of
law rules which may direct the application of the Laws of another jurisdiction.
20.12 No Partnership Created. It is not the purpose or intention of this
Agreement to create (and it shall not be construed as creating) a joint venture,
partnership or any type of association, and the parties are not authorized to
act as agent or principal for each other with respect to any matter related
hereto.
20.13 Public Announcements. Neither Seller nor Buyer (including any of
their Affiliates in either case) shall issue a public statement or press release
with respect to the transaction contemplated herein (including the price and
other terms) without the prior written consent of the other party, which shall
not be unreasonably withheld, except as required by Law or listing agreement
with a national security exchange and then only after prior consultation with
the other party.
20.14 No Third Party Beneficiaries. Nothing contained in this Agreement
shall entitle anyone other than Seller or Buyer or their authorized successors
and assigns to any claim, cause of action, remedy or right of any kind
whatsoever.
20.15 Waiver of Consumer Rights. As partial consideration for the parties
agreeing to enter into this Agreement, the parties each can and do expressly
waive the provisions of the Texas Deceptive Trade Practices Consumer Protection
Act, Article 17.41 et seq., Texas Business and Commerce Code, a law that gives
consumers special rights and protection, and all other consumer protection Laws
of the State of Texas, or any other state, applicable to this transaction that
may be waived by the parties. It is not the intent of the parties to waive and
the parties shall not waive any applicable Law or provision thereof which is
prohibited by Law from being waived. The parties hereto represent that they have
had an adequate opportunity to review the preceding waiver provision, including
the opportunity to submit the same to legal counsel for review and comment and
after consultation with an attorney of their own selection voluntarily consent
to this waiver, and understand the rights being waived herein.
20.16 Not to be Construed Against Drafter. The parties acknowledge that
they have had an adequate opportunity to review each and every provision
contained in this Agreement and to submit the same to legal counsel for review
and comment, including without limitation the waivers and indemnities in
Articles 4.5, 5.3, 8, 9, 20.3, 20.6 and 20.15. Based on said review and
consultation, the parties agree with each and every term contained in this
Agreement. Based on the foregoing, the parties agree that the rule of
construction that a contract be construed against the drafter, if any, shall not
be applied in the interpretation and construction of this Agreement.
20.17 Tax Deferred Exchange Election. Either party may elect to structure
the conveyance of the Properties as part of an exchange under Article
1031 of the Internal Revenue Code of 1986, as amended. The parties agree to
execute all documents, conveyances or other instruments necessary to effectuate
an Article 1031 exchange, provided that such party indemnify the cooperating
part in effectuating the like kind exchange.
20.18 Conspicuousness of Provisions. The parties acknowledge that the
provisions contained in this Agreement that are set out in "bold" satisfy the
requirement of the express negligence rule and any other requirement at law or
in equity that provisions contained in a contract be conspicuously marked or
highlighted.
20.19 Execution in Counterparts. This Agreement may be executed in
counterparts, which shall when taken together constitute one (1) valid and
binding agreement.
20.20 Entire Agreement. This Agreement and the Confidentiality Agreement
supersede all prior and contemporaneous negotiations, understandings, letters of
intent and agreements (whether oral or written) between the parties relating to
the Properties and constitute the entire understanding and agreement between the
parties with respect to the sale and purchase of the Properties.
The parties have executed this Agreement on the day and year first set
forth above.
AMOCO PRODUCTION COMPANY
By: /s/ XXX X. XXXXXXX
--------------------------
Name: Xxx X. Xxxxxxx
Title: Attorney-in-Fact
HS RESOURCES, INC.
By: /s/ XXXXXX X. XXXXXX
--------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President, Acquisitions and
Divestitures
