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EXHIBIT 10.3
PURCHASE AND SALE AGREEMENT
by and between
UNITED STATES EXPLORATION, INC. ("Seller")
and
HS RESOURCES, INC. ("Buyer")
dated
May 18, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions.........................................................1
1.1 Allocated Value(s)................................1
1.2 Basic Documents...................................1
1.3 Closing...........................................2
1.4 Defensible Title..................................2
1.5 Effective Date....................................2
1.6 Lands.............................................2
1.7 Lease or Leases...................................2
1.8 Permitted Encumbrances............................2
1.9 Property or Properties............................3
1.10 Records...........................................4
1.11 Title Defect......................................4
1.12 Xxxxx.............................................4
ARTICLE II
Purchase and Sale...................................................5
2.1 Purchase and Sale.................................5
2.2 Purchase Payment..................................5
2.3 Transfer of Ownership.............................5
ARTICLE III
Purchase Price......................................................5
3.1 Purchase Price....................................5
3.2 Allocation of the Purchase Price..................5
3.3 Manner of Payment of Purchase Price...............6
3.4 Adjustments to Preliminary Purchase Price.........6
ARTICLE IV
Inspection and Title Examinations...................................7
4.1 Inspection of Files and Records...................7
4.2 On-Site Tests and Inspections.....................8
ARTICLE V
Assumption of Obligations; Indemnities..............................8
5.1 Buyer.............................................8
5.2 Seller............................................8
ARTICLE VI
Seller's Representations and Warranties.............................8
6.1 Seller............................................8
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ARTICLE VII
Buyer's Representations and Warranties.............................12
7.1 Buyer............................................12
ARTICLE VIII
Additional Agreements of the Parties...............................12
8.1 Transfer Orders..................................12
8.2 Suspense Accounts................................12
8.3 Closing Obligations..............................13
8.4 Further Assurances...............................13
8.5 Post-Closing Adjustments.........................14
8.6 Support of Pipeline Decertification Efforts......14
ARTICLE IX
Miscellaneous......................................................14
9.1 Notices..........................................14
9.2 Binding Effect...................................15
9.3 Counterparts.....................................15
9.4 Expenses.........................................15
9.5 Section Headings.................................15
9.6 Entire Agreement.................................15
9.7 Governing Law....................................16
9.8 Survival of Representations and Warranties.......16
9.9 Public Announcements.............................16
9.10 Notices After Closing............................16
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EXHIBITS
A Leases
B Xxxxx
C Allocated Values
D Equipment Inventory
E Gas Imbalances
F Pending Litigation
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made
and entered into as of May 18, 2000, by and between UNITED STATES EXPLORATION,
INC., a Colorado corporation with an office at 0000 Xxxxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxx 00000 ("UXP" or "Seller") and HS RESOURCES, INC., a Delaware
corporation with an office at 0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000
("HSR" or "Buyer").
Recitals
A. Seller owns certain interests in oil and gas properties
located in Weld County, Colorado, as more fully described on Exhibit "A" hereto,
with respect to the oil and gas xxxxx identified on Exhibit "B" hereto;
B. Seller desires to sell and assign to Buyer and Buyer
desires to purchase from Seller all of Seller's interest in and to the oil and
gas leases described on Exhibit "A" hereto and in and to the oil and gas xxxxx
identified on Exhibit "B" hereto, upon the terms and conditions and for the
consideration hereinafter set forth.
Agreement
In consideration of these premises, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Seller and Buyer agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms, in
addition to the other capitalized terms used in this Agreement which are defined
elsewhere herein, shall have the meanings set forth below:
1.1 ALLOCATED VALUE(S) - Those values allocated to the Properties
pursuant to the first sentence of Section 3.2 and described on Exhibit "C".
1.2 BASIC DOCUMENTS - The contractually binding arrangements to which
the Properties may be subject and that will be binding on the Properties or on
Buyer after the Closing, including, without limitation, all Leases comprising a
portion of the Properties, assignments of interests or overriding royalties or
similar interests; division orders; operating agreements; oil, gas, liquids,
casinghead gas and condensate purchase, sales, marketing, processing, gathering,
treatment, compression, brokerage, and transportation agreements;
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farmout or farmin agreements; joint venture, limited or general partnership, dry
hole, bottom hole, acreage contribution, purchase and acquisition agreements and
options; area of mutual interest agreements; salt water disposal agreements;
servicing, equipment or materials contracts; unitization, unit operating,
communitization or pooling agreements, declarations or orders; easements,
rights-of-way, surface leases, permits, licenses, servitudes or other interests
pertaining to the Properties.
1.3 CLOSING - The consummation of the purchase and sale transaction
contemplated by this Agreement.
1.4 DEFENSIBLE TITLE - Such record title that: (a) entitles Seller to
receive not less than the "Net Revenue Interest" set forth on Exhibit "B" of all
oil, gas, and associated liquid and gaseous hydrocarbons and other associated
gases covered by the Leases produced, saved and marketed from the Properties for
the productive life of such Properties; (b) obligates Seller to bear costs and
expenses relating to the maintenance, development and operation of the
Properties in an amount not greater than the "Working Interest" set forth on
Exhibit "B" unless there is a proportionate increase in the Net Revenue
Interest; and (c) is free and clear of any and all encumbrances, liens and Title
Defects, subject only to the Permitted Encumbrances.
1.5 EFFECTIVE DATE - May 1, 2000.
1.6 LANDS - The lands covered by the Leases and located in the lands
described on Exhibit "A" under the heading "Units", irrespective if such lands
conform with the spacing units established by order of the Colorado Oil and Gas
Conservation Commission ("COGCC").
1.7 LEASE OR LEASES - Those oil, gas and mineral leases described on
Exhibit "A" and all extensions, renewals, replacements, substitutions,
protective or other leases covering or purporting to cover the interests covered
or purported to be covered by the described leases.
1.8 PERMITTED ENCUMBRANCES
(a) Lessor's royalties, overriding royalties, net profit
interests, carried interests, reversionary interests and other similar
burdens existing of record on the Effective Date, and all agreements
having to do with operating the Properties and marketing hydrocarbons
therefrom if the net cumulative effect of such burdens or agreements
does not operate to (x) reduce the net revenue interest of any Property
to less than the "Net Revenue Interest" set forth on Exhibit "B," or
(y) increase the leasehold working interest of any Property to more
than the "Working Interest" set forth on Exhibit "B" without a
proportionate increase in the Net Revenue Interest;
(b) preferential rights to purchase and required third-party
consents to assignments and similar agreements affecting the transfer
of the interests contemplated herein, with respect to which prior to
the date of this Agreement (i) written waivers or consents are obtained
from the appropriate parties or (ii) the appropriate time period for
asserting such rights has expired without an exercise of such rights;
(c) liens for taxes or assessments not yet due or not yet
delinquent or, if delinquent, that are being and will be contested in
good faith in the normal course of business;
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(d) easements, rights-of-way, servitudes, permits, surface
leases, conditions, covenants or other restrictions and easements for
surface operations, roads, highways, pipelines, telephone lines, power
lines, railways and other easements and rights-of-way, on, over or in
respect of any of the Properties, provided that such rights shall not
have a material adverse effect on the ownership, use, operation or
value of the Properties;
(e) operator's liens granted under operating agreements and
relating to obligations not yet due or pursuant to which Seller is not
in default that are not such as will interfere materially with the
ownership, operation, value or use of the Properties, and other
inchoate liens, including but not limited to mechanics', materialman's
and laborer's liens; and
(f) the "Loan Documents" identified in that certain Closing
Agreement to be executed by Buyer, Seller and others concurrently with
the execution of this Agreement, to the extent that the "Mortgage" and
"Financing Statements" associated with the "Loan Documents" are
properly conveyed to Xxxxxx Mineral Group, Inc. an Oklahoma corporation
("BMG"), and properly released by BMG with respect to the Properties
concurrent with the execution of this Agreement in accordance with the
terms of the Closing Agreement.
1.9 PROPERTY OR PROPERTIES - All of Seller's undivided right, title and
interest in, to and under the Leases as to all depths, insofar and only insofar
as the Leases cover the Lands as set forth on Exhibit "A," including Seller's
working interests, overriding royalty interests, reversionary interests, net
profits interests, net revenue interests and any other similar interests, and
the underlying oil, gas and mineral leasehold estates associated therewith,
including all of Seller's right, title and interest in, to, under and derived
from:
(a) petroleum, hydrocarbons and associated gases stored upon
or produced from the Leases, or allocated thereto in any unit of which
the Leases are a part;
(b) the leasehold estates and rights created by the Leases,
licenses, permits and other agreements affecting the Leases and Lands;
(c) all contractual interests and rights under all
unitization, communitization, and pooling agreements, working interest
units created by operating agreements, and orders covering the Leases,
or any portion thereof, and lands pooled or unitized therewith, and the
units and pooled or communitzed areas created thereby, only insofar as
they cover the Lands;
(d) the Basic Documents;
(e) the Records;
(f) the right to use the surface of any of the Lands or other
properties of Seller which is currently being used for access to the
Leases;
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(g) presently existing and valid pooling, communitization and
unitization agreements and the properties covered and/or the units
created thereby affecting the Leases, Xxxxx or other Properties;
(h) seismic data covering the Lands which is or can be made
assignable to Buyer;
(i) the Xxxxx; and
(j) the equipment and other personal and mixed property,
improvements, structures, buildings, pipelines, related facilities,
easements, rights-of-way, permits, licenses, servitudes, surface
leases, surface use agreements and any other estates in land situated
in or upon, or used or useful, or held for future use in connection
with the exploration, development and production of oil, gas and other
minerals, associated liquid and gaseous hydrocarbons, and other
associated gas from any of the Properties or the treatment, storage or
transportation of such substances therefrom, water lines, gas lines,
buildings, fixtures, machinery, gas gathering or processing systems or
pipelines, power lines, telephone lines, roads and all other fixtures
and improvements now or as of the Effective Date which are appurtenant
to the Leases.
With respect to the Properties, Seller waives and releases all rights it holds
under current agreements, including but not limited to that certain Exploration
Agreement dated as of April 9, 1998 between Union Pacific Resources Company and
Seller, to drill and earn, or otherwise develop for oil and gas, but only
insofar as such agreements cover and affect the Lands.
1.10 RECORDS - With the exception of all of Seller's corporate,
financial and general tax records, computer programs and proprietary seismic or
other such data, such term shall include copies of all non-proprietary seismic
data files, lease files, land files, well files, contract files including gas
and oil sales contract files, gas processing files, division order files,
abstracts, title opinions, and all other books, files and records, information
and data (including engineering and geological data, interpretation and
analysis), and all rights thereto, of Seller, insofar as the same are related to
any of the Properties.
1.11 TITLE DEFECT - Any encumbrance, lien, encroachment, claim,
irregularity, defect in or objection to Seller's title to any portion of the
Properties, expressly excluding Permitted Encumbrances, that alone or in
combination with other defects does or may render Seller's title to any portion
of the Properties less than Defensible Title.
1.12 XXXXX - The xxxxx identified on Exhibit "B," including the
personal property, fixtures and improvements as of the Effective Date, but with
all additions thereto and deletions therefrom occurring in the ordinary course
of the conduct of business from the Effective Date through Closing, located upon
the Lands or lands pooled therewith or appurtenant thereto, or used in the
production, treatment, sale, disposal or injection of hydrocarbons, water or
brine produced therefrom or attributable thereto, including, without limitation:
(a) all xxxxx, equipment, casing, tubing, pumps, lines, separators, wellhead and
in-hole equipment, pipes, tanks, motors, pipelines, meters, regulators,
gathering lines, fixtures, buildings, structures and all other oilfield
equipment and
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material, installed and in inventory, used or useful in the operation of the
Properties; (b) the equipment, materials and supplies described on Exhibit "D";
and (c) crude oil, condensate and products in storage and in pipelines.
ARTICLE II
PURCHASE AND SALE
2.1 PURCHASE AND SALE. Subject to the terms, provisions, conditions and
exceptions set forth in this Agreement, Seller agrees to sell, convey, transfer,
assign, set over and deliver or cause to be sold, conveyed, transferred,
assigned, set over and delivered on the date of this Agreement, but effective as
of the Effective Date, and Buyer agrees to purchase on the date of this
Agreement, but effective as of the Effective Date as provided in this Agreement,
the Properties, subject to the Permitted Encumbrances.
2.2 PURCHASE PAYMENT. Buyer shall deliver to the Seller the Preliminary
Purchase Price set forth in Article III and as adjusted pursuant thereto.
2.3 TRANSFER OF OWNERSHIP. Subject only to final approval by
appropriate governmental agencies, if any, on the date of this Agreement,
ownership of all production attributable to the Properties conveyed to Buyer
shall pass as of the Effective Date and all other attributes of ownership shall
pass as of the date of this Agreement. All costs and expenses incurred by Seller
for operation of the Properties after the Effective Date, including but not
limited to (a) taxes on or measured by production and (b) the fixed rate
overhead charges prescribed by applicable operating agreements or, in the
absence of operating agreements, $500 per month shall be used for each producing
well (and, in each case, excluding any allocable general and administrative
expenses), shall be borne by Buyer. All such costs incurred prior to the
Effective Date shall be borne by Seller.
ARTICLE III
PURCHASE PRICE
3.1 PURCHASE PRICE. The purchase price payable by the Buyer to Seller
for the Properties shall be $7,150,000.00 (the "Preliminary Purchase Price").
3.2 ALLOCATION OF THE PURCHASE PRICE. The Preliminary Purchase Price
shall be allocated to the Properties in the manner set forth on Exhibit "C"
hereto.
3.3 MANNER OF PAYMENT OF PURCHASE PRICE. The Preliminary Purchase
Price, as adjusted pursuant to Section 3.4, shall be paid at the Closing by
Buyer to Seller, or its designee, by wire transfer of immediately available
funds or by such other method as may be agreed to by the parties hereto.
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3.4 ADJUSTMENTS TO PRELIMINARY PURCHASE PRICE. The Preliminary Purchase
Price shall be adjusted at the date of this Agreement and at the Final
Settlement Date (as hereinafter defined) as follows:
(a) The Preliminary Purchase Price shall be adjusted upward by
the following:
(1) the value of all merchantable oil in storage
owned by Seller above the storage tank take-off valve at the
Effective Date, and not previously sold by Seller or the
operator, that is credited to Seller's interest in the
Properties, such value to be the actual price to be received
on the Effective Date (if this price cannot be determined,
then the contract price, or if no contract is in effect, the
market price in effect as of the Effective Date), less taxes
and gravity adjustments deducted by the purchaser of such oil;
(2) an amount equal to the current value (computed on
the basis of the current contract price or market price,
whichever is applicable) of the gas volumes which Seller may
be entitled to take in excess of its working interest share in
the respective Xxxxx as a result of underproduction by Seller
as of the Effective Date under the terms of applicable gas
balancing agreements, if any;
(3) the amount of all expenditures (including
royalties, rentals and other charges and expenses billed under
applicable operating agreements, or in the absence of an
operating agreement, expenses of the sort customarily billed
under such agreements, but excluding Seller's general and
administrative overhead expenses) with respect to the
Properties which relate to the period after the Effective Date
and are paid by or on behalf of Seller in connection with the
operation and development of the Properties from the Effective
Date to the date of this Agreement; and
(4) an amount equal to all prepaid expenses
attributable to the Properties that are paid by or on behalf
of Seller prior to the date of this Agreement and that are, in
accordance with generally accepted accounting principles,
attributable to the period after the Effective Date including,
without limitation, prepaid utility charges which are Buyer's
expenses in accordance with Section 2.3.
(b) The Preliminary Purchase Price shall be adjusted downward
by the following:
(1) proceeds actually received or accrued by or on
behalf of Seller, prior to the date of this Agreement,
attributable to the Properties and that are attributable to
the period of time from and after the Effective Date;
(2) an amount equal to the value (computed on the
basis of the current contract price or market price, whichever
is applicable) of the volumes of gas with respect to which
Seller is overproduced as of the Effective Date, and which
other
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parties may be entitled to recover in excess of their working
interest share in accordance with applicable gas balancing
agreements, if any;
(3) an amount equal to all unpaid ad valorem,
property, production, severance and similar taxes and
assessments based upon or measured by the ownership of the
property or production of hydrocarbons or the receipt of
proceeds therefrom accruing to the Properties in accordance
with generally accepted accounting principles prior to the
Effective Date (it being agreed that any tax measured on the
basis of production shall be deemed to be a tax assessed for
the period during which such production occurred regardless of
the actual year of assessment), which amount shall, to the
extent not actually assessed, be computed based upon such
taxes and assessments for the preceding calendar year, or, if
such taxes or assessments are assessed on other than a
calendar year basis, for the tax related year last ended. Ad
valorem and production taxes for the year 2000 shall be
prorated to the Effective Date based on 1999 production and
the most recent available tax rates. Such adjustments shall be
made on the Final Settlement Date and shall be final
settlement of such taxes between Seller and Buyer; and
(4) an amount equal to the sum of all adjustments
pursuant to Section 4.3 (including adjustments made under
Section 4.3 for the matters covered by Sections 4.4 and 4.5).
ARTICLE IV
INSPECTION AND TITLE EXAMINATIONS
4.1 INSPECTION OF FILES AND RECORDS. Prior to the date of this
Agreement, Seller has made available at Seller's offices for examination and
reproduction by Buyer's authorized representatives all documents (including, but
not limited to, all Basic Documents and Records) of every kind and character in
Seller's possession or to which Seller has access relating or in any way
pertaining to the Properties. Subject to the consent and cooperation of
operators and other third parties, Seller has cooperated with Buyer in Buyer's
efforts to obtain such additional information relating to the Properties as
Buyer desired, to the extent in each case that Seller could do so without
violating legal constraints or obligations of confidence or other contractual
commitments to a third party. Seller has caused its personnel to assist Buyer in
making such investigation and has caused the counsel, accountants, independent
petroleum consultants and engineers, employees and other representatives of
Seller to be reasonably available to Buyer for such purposes. During such
investigation, Buyer was given access to make copies of such records, files and
other materials as Buyer deemed advisable.
4.2 ON-SITE TESTS AND INSPECTIONS. Seller has allowed Buyer's
authorized representatives to consult with Seller's agents and employees and
allowed Buyer's authorized representatives to conduct on-site inspections, tests
and inventories of the Properties and inspect and examine the Xxxxx.
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ARTICLE V
ASSUMPTION OF OBLIGATIONS; INDEMNITIES
5.1 BUYER. Buyer, as owner of the Properties acquired effective as of
the Effective Date, does hereby obligate itself to assume and timely discharge
all duties and obligations of the owner of the Properties which accrue or arise
from operations conducted from and after the Effective Date or relating to taxes
for periods prior to the Effective Date but due and payable after such date as
to which Buyer has received a reduction in the Preliminary Purchase Price
pursuant to Section 3.4, except those obligations accruing or arising from a
breach by Seller of any representation, warranty, covenant or agreement
contained herein, and except the obligation to plug, abandon or restore any well
not identified on Exhibit "B" hereto. Buyer does hereby agree to defend, hold
harmless and indemnify Seller, its officers, directors and stockholders, from
all loss, cost, expense (including attorneys' fees and expenses), penalties and
liabilities (a) arising out of any actions, suits, claims or demands incurred as
a result of or arising from failure of Buyer to discharge such duties and
obligations or (b) resulting from or related to any representation or warranty,
agreement or covenant of Buyer contained herein being breached.
5.2 SELLER. Seller shall defend, hold harmless and indemnify Buyer and
its successors and such parties' directors, officers and stockholders, as
appropriate, from all loss, cost, expense (including attorneys' fees and
expenses), penalties and liabilities (a) arising out of any actions, suits,
claims or demands incurred as a result of or arising from the ownership or
operation of the Properties prior to the Effective Date, except for amounts
resulting from the gross negligence or willful misconduct of Buyer as operator
of the Properties, (b) resulting from or relating to any representation or
warranty of Seller contained herein being untrue or any warranty, agreement or
covenant of Seller contained herein being breached or (c) relating to the
plugging, abandoning or restoration of any well not listed on Exhibit "B"
hereto.
ARTICLE VI
SELLER'S REPRESENTATIONS AND WARRANTIES
6.1 SELLER. Seller represents and warrants to Buyer as of the date
hereof that the following statements are true and complete:
(a) Seller is a duly organized, validly existing Colorado
corporation in good standing under the laws of the State of Colorado.
Seller has all requisite power and authority to execute and deliver
this Agreement and to perform its obligations hereunder, including the
conveyance of the Properties to Buyer in accordance with this
Agreement.
(b) The execution and delivery of this Agreement, the
execution and delivery of all documents and instruments required to be
executed and delivered by Seller, and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by all necessary action on the part of Seller.
(c) This Agreement constitutes the valid, legal and binding
obligation of Seller and is enforceable against Seller in accordance
with its terms. All instruments required
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hereunder to be executed and delivered by Seller constitute valid,
legal and binding obligations of Seller enforceable against Seller in
accordance with their terms.
(d) Seller's execution, delivery and performance of this
Agreement does not and will not conflict with, violate or result in any
liability to Seller or Buyer under any agreement governing Seller's
business or affairs, including its Articles of Incorporation, by-laws
or other governing documents, or any agreements or instruments to which
Seller may be a party or by which Seller or any of Seller's properties
are bound, any Basic Document, or any law, administrative regulation or
rule or court order, judgment or decree applicable to Seller or to the
Properties.
(e) There are no bankruptcy, reorganization, or arrangement
proceedings pending, being contemplated by or, to the best knowledge of
Seller, threatened against Seller.
(f) There is neither any claim, dispute, suit, action,
investigation or other proceeding pending before any court or
governmental agency, except as set forth on Exhibit "F", nor, to the
best knowledge of Seller, threatened against Seller or any affiliate of
Seller or any of the Properties which has or might result in the
impairment or loss of Seller's title to any of the Properties or the
value thereof or impede the operation of the Properties.
(g) To the best of Seller's knowledge there exists no
unrecorded document or agreement which may result in impairment or loss
of Seller's ability to convey the Properties.
(h) Seller warrants Defensible Title to the Properties against
the claims and demands of all persons lawfully claiming the same by,
through or under Seller but not otherwise; provided, however, Seller
shall subrogate Buyer to any warranty claim which Seller may have
against any third party, prior owner, vendor or assignor.
(i) Seller has not directly or indirectly created, reserved or
retained any recorded or unrecorded executory rights, overriding
royalty interests, net profits interests or production payments in any
of the Xxxxx or the underlying Properties which would cause Buyer not
to receive Defensible Title.
(j) All ad valorem, property, production, excise, severance,
and similar taxes and assessments based on or measured by the ownership
of property or the production or removal of hydrocarbons or the receipt
of proceeds therefrom on the Properties, and due and payable as of the
date of this Agreement have been paid timely in all respects.
(k) All gas imbalances affecting the Properties are imbalances
between Seller and Buyer. Reconciliation of gas imbalances shall be
handled as a post-closing adjustment to the Preliminary Purchase Price
in accordance with Section 8.5. Exhibit "E" reflects the gas imbalances
which Buyer believes exist on the Properties as of the date set forth
therein, however, such imbalances have not been confirmed or agreed to
by Seller as of the date of this Agreement.
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(l) All Xxxxx which Seller operates have been, in all material
respects, drilled, completed and operated in compliance with all Basic
Documents, applicable rules, regulations, permits, judgments, orders
and decrees of any court or the federal and state regulatory
authorities having jurisdiction thereof.
(m) The only gas purchase agreement in effect with respect to
the Properties is that certain Letter of Intent, Gas Purchase and Sale
Agreement, Greater Wattenberg Area dated June 17, 1999 between North
American Resources Company ("NARCO") and Seller, and Seller has
obtained from NARCO a release of the Properties from the dedication
thereunder upon expiration and termination of the Letter of Intent on
June 30, 2000.
(n) Except as provided in those Leases from Union Pacific
Resources Company ("UPRC") to Seller and as contained in that certain
Exploration Agreement dated effective June 1, 1998 between UPRC and
Seller, no person has any call upon, option to purchase or similar
rights under any agreement with respect to the Properties or to the
production therefrom which is not terminable within 30 days.
(o) Seller has not in any respect collected any proceeds from
the sale of hydrocarbons produced from the Properties which are subject
to refund.
(p) Proceeds from the sale of oil, condensate and gas from the
Properties are being received in all respects by Seller in a timely
manner and are not being held in suspense for any reason.
(q) The Basic Documents:
(i) all are valid and legally binding obligations of
Seller and are enforceable against Seller in accordance with
their respective terms;
(ii) Seller is not in breach or default with respect
to any of its obligations under any Basic Document or any
regulations incorporated therein or governing same in any
material respect;
(iii) all payments (including, without limitation,
royalties, delay rentals, shut-in royalties, and joint
interest or other xxxxxxxx under unit or operating agreements)
due thereunder from Seller have been made or caused to be made
by Seller;
(iv) to the best of Seller's knowledge no other party
to any Basic Document (or any successor in interest thereto)
is in breach or default with respect to any of its obligations
thereunder;
(v) neither Seller nor, to the best of Seller's
knowledge, any other party to any Basic Document has given or
threatened to give notice of any action to terminate, cancel,
rescind or procure a judicial reformation of any Basic
Document or any provision thereof; and
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(vii) there are no current obligations to drill
additional xxxxx or to engage in other current development
operations.
(r) With respect to the joint unit or other operating
agreements relating to the Properties which Seller operates: (i) there
are no outstanding calls or payments under authorities for expenditures
for payments which are due or which Seller has committed to make which
have not been paid; (ii) Seller has informed Buyer of the status of all
material operations by less than all parties; and (iii) there are no
operations under the operating agreements with respect to which Seller
has become a non-consenting party.
(s) Seller is not aware of any physical change in the Xxxxx
and the Properties which Seller operates since the Effective Date
(other than operations and production in the ordinary course) which
materially affects the value, use or operation of the Xxxxx and the
Properties (other than declines due to normal depletion).
(t) Seller has not incurred any liability, contingent or
otherwise, for brokers' or finders' fees in respect of this transaction
for which Buyer shall have any responsibility whatsoever.
(u) None of the Properties are subject to any tax
partnerships, entities or arrangements for which partnership returns
are or will be required to be filed for federal income tax purposes.
ARTICLE VII
BUYER'S REPRESENTATIONS AND WARRANTIES
7.1 BUYER. Buyer represents and warrants to Seller as follows:
(a) Buyer is a corporation duly organized and existing under
the laws of the State of Delaware.
(b) The execution and delivery of this Agreement, the
execution and delivery of all documents and instruments required to be
executed and delivered by Buyer and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by all necessary action on the part of Buyer.
(c) This Agreement constitutes the valid and binding agreement
of Buyer enforceable against Buyer in accordance with its terms, and
all instruments required hereunder to be executed and delivered by
Buyer constitute valid and binding agreements of Buyer, enforceable
against Buyer in accordance with their respective terms.
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(d) Buyer's execution, delivery and performance of this
Agreement does not conflict with or violate or result in any liability
to Buyer or Seller under any material agreement governing Buyer's
organization, management, business or affairs, including Buyer's
Certificate of Incorporation or, in any material respect, any agreement
or instrument to which Buyer may be a party or by which Buyer is bound,
or any material law, administrative regulation or rule or court order,
judgment or decree applicable to Buyer.
(e) Buyer has incurred no liability, contingent or otherwise,
for brokers' or finders' fees in respect of this transaction for which
Seller shall have any responsibility whatsoever.
ARTICLE VIII
ADDITIONAL AGREEMENTS OF THE PARTIES
8.1 TRANSFER ORDERS. Seller and Buyer shall execute, acknowledge and
deliver Transfer Orders and letters in lieu of such orders within 30 days after
Closing directing all purchasers of production from the Properties to pay to
Buyer the proceeds attributable to production from the Properties from and after
the Effective Date.
8.2 SUSPENSE ACCOUNTS. Seller agrees to pay to Buyer all amounts held
in suspense by Seller (other than amounts held in suspense solely as offsets to
sums owed to Seller for periods prior to the Effective Date or amounts
attributable to the net revenue interest of Seller for periods prior to the
Effective Date) that relate to the Properties, together with a written
explanation (as contained in Seller's files) of why such moneys are held in
suspense. Buyer agrees to take and apply such moneys in a manner consistent with
prudent oil and gas business practices.
8.3 CLOSING OBLIGATIONS. Concurrent with the execution of this
Agreement, the following events shall occur, each being a condition precedent to
the others, and each being deemed to have occurred simultaneous with the others:
(a) Seller, Buyer, Xxxxxx Mineral Group, Inc. and Producers
Service Incorporated shall execute and deliver a Closing Agreement, and
the conditions precedent in the Closing Agreement shall have been fully
satisfied as of the Closing.
(b) Seller shall execute, acknowledge and deliver to Buyer a
mutually acceptable Assignment and Xxxx of Sale in sufficient
counterparts to facilitate recording, and such special forms of
assignment, if any, required for federal and state leases as may be
necessary, conveying the Properties (other than properties excluded
under Section 4.3), effective as of the Effective Date to Buyer;
(c) Seller and Buyer shall execute and deliver a settlement
statement showing the Preliminary Purchase Price adjusted in accordance
with this Agreement (the "Closing Amount");
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(d) Seller shall furnish Buyer evidence of the release or
termination statements, in form and substance satisfactory to Buyer and
its counsel, of the liens on the Properties associated with the Loan
Documents described in Section 1.8(f);
(e) Buyer shall deliver to Seller, or its designee, the
Closing Amount by wire transfer in immediately available funds;
(f) For each of the Properties which Seller operates, Seller
shall execute and deliver to Buyer a COGCC Form 10, Change of Operator,
and cooperate with Buyer and use its best efforts to assist Buyer in
assuming the timely operation and management of such Properties; and
(g) Seller shall deliver to Buyer exclusive possession of the
Properties (other than the Properties excluded under Section 4.3).
8.4 FURTHER ASSURANCES.
(a) From time to time after Closing, Seller and Buyer shall
execute, acknowledge and deliver to the other such further instruments,
and take such other action, as may be reasonably requested, in order
more effectively to assure to said party all of the respective
properties, rights, titles, interests and estates intended to be
assigned and delivered in consummation of the transactions contemplated
by this Agreement. Further, without limiting the generality of the
foregoing, Seller agrees to cooperate fully with Buyer and to assist in
obtaining the consent of the Bureau of Land Management or other
governmental agency to the assignments of working interests and
operating rights covering the Properties.
(b) From and after Closing, promptly after their receipt
thereof, but only to the extent that such proceeds shall not have been
the subject of an adjustment to the Preliminary Purchase Price, (i)
Seller agrees to pay promptly to Buyer any and all proceeds received by
Seller that are attributable to the production of hydrocarbons from the
Properties on or after the Effective Date and (ii) Buyer agrees to pay
to Seller any and all proceeds that are attributable to the production
of hydrocarbons from the Properties prior to the Effective Date. All
such payments to be made to Buyer shall include the royalty or mineral
owners' share of production which may be received by Seller and which
is not distributed to the royalty or mineral owner because of title
defect or other similar reasons.
8.5 POST-CLOSING ADJUSTMENTS. Within 60 days after the Closing, Buyer
shall prepare and deliver to Seller, in accordance with generally accepted
accounting principles, a statement (the "Final Settlement Statement") setting
forth each adjustment or payment, as provided in Section 3.4, that was not
finally determined as of the Closing and showing the calculation of such
adjustments and the resulting final purchase price (the "Final Purchase Price").
Not more than 30 days after receipt of the Final Settlement Statement, Seller
shall deliver to Buyer a written report containing any changes that Seller
proposes to be made to the preliminary Final Settlement Statement. The parties
undertake to agree with respect to the amounts due pursuant to such post-
Closing adjustments no later than 90 days after the date of this Agreement. The
date upon which such agreement is reached, and upon which the Final Purchase
Price is established, shall be herein called the "Final
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Settlement Date." In the event that (a) the Final Purchase Price is more than
the Closing Amount, Buyer shall pay to Seller the amount of such difference, or
(b) the Final Purchase Price is less than the Closing Amount, Seller shall pay
to Buyer the amount of such difference, in either event by wire transfer of
immediately available funds on the Final Settlement Date.
8.6 SUPPORT OF PIPELINE DECERTIFICATION EFFORTS. UXP, for itself and
its successors and assigns, agrees for a period of 5 years from the Effective
Date to not contest any action by Xxxxxx Xxxxxx, Inc., HSR, or any of their
respective affiliates, successors or assigns, or any other person or entity,
seeking to have released, abandoned or otherwise terminated the Natural Gas Act
jurisdictional status of the XX Xxxxxxxxxx Transmission Limited Liability
Company gas pipeline system in the Denver-Julesburg Basin. UXP agrees to use
reasonable commercial efforts to cause its affiliates, agents, employees,
officers and directors to not interfere in any way with such release,
abandonment or termination efforts.
ARTICLE IX
MISCELLANEOUS
9.1 NOTICES. All communications required or permitted under this
Agreement shall be in writing, and any communication or delivery hereunder shall
be deemed to have been duly made when delivered to the address below, or when
facsimile transmission is completed to the fax number shown below, in either
case showing the proper party to whose attention the notice is directed. Any
party may, by written notice so delivered or transmitted to the other, change
the address or fax number to which delivery shall thereafter be made. Notices to
the Seller and Buyer shall be made at the addresses set forth below:
(a) If to Seller, to:
UNITED STATES EXPLORATION, INC.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
ATTENTION: Xxxxx X. Xxxxxx
President
(b) If to Buyer, to:
HS RESOURCES, INC.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
ATTENTION: Xxxxx X. Xxxxxx
Vice President - Land
9.2 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
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9.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, which taken together shall constitute one and the same instrument
and each of which shall be considered an original for all purposes.
9.4 EXPENSES. Each party hereto will bear and pay its own expenses of
negotiating and consummating the transactions contemplated hereby.
9.5 SECTION HEADINGS. The section headings contained in this Agreement
are for convenient reference only and shall not in any way affect the meaning
and interpretation of this Agreement.
9.6 ENTIRE AGREEMENT. This Agreement, the documents to be executed
hereunder, the Five-Party Closing Agreement identified in Section 8.3(a) above,
and the exhibits attached hereto constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties pertaining to the subject matter hereof, and there are
no warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as specifically set forth
herein or in documents delivered pursuant hereto. No supplement, amendment,
alteration, modification, waiver or termination of this Agreement shall be
binding unless executed in writing by the parties hereto. All of the Exhibits
referred to in this Agreement are hereby incorporated in this Agreement by
reference and constitute a part of this Agreement. This Agreement is additive
and additional to the obligations of the parties to the Closing Agreement, and
shall not be construed in any manner as conflicting with the obligations of
Seller under the Closing Agreement.
9.7 GOVERNING LAW. The validity of the various conveyances affecting
the title to real property shall be governed by and construed in accordance with
the law of the State of Colorado. This Agreement, the other documents delivered
pursuant hereto and the legal relations among the parties hereto shall be
governed by and construed in accordance with the law of the State of Colorado,
without regard to its conflict of laws principles.
9.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as expressly
provided herein, the respective representations, warranties, covenants and
agreements set forth in this Agreement shall survive the Closing and shall not
be merged with any instrument or agreement hereafter executed or delivered.
9.9 PUBLIC ANNOUNCEMENTS. The parties hereto agree that, prior to
making any public announcement or statement with respect to the transactions
consummated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other party hereto.
9.10 NOTICES AFTER CLOSING. Buyer and Seller hereby agree that each
party shall notify the other of its receipt, after the date of this Agreement,
of any instrument, notification or other document affecting the Properties while
owned by such other party.
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IN WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the day and year first above written.
SELLER:
UNITED STATES EXPLORATION, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
BUYER:
HS RESOURCES, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
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EXHIBITS OMITTED
