PURCHASE AND SALE AGREEMENT
Exhibit
10.1
This
Purchase and Sale Agreement (“Agreement”)
is
made and entered into this 31st
day of
August, 2007, by and between Prime Natural Resources, Inc., a Texas corporation,
(“Seller”),
and
ICF Energy Corporation, a Texas corporation (“Purchaser”)
(sometimes herein Seller and Purchaser are collectively called the “Parties”
and
individually called a “Party”).
RECITALS
Seller
desires to sell to Purchaser, and Purchaser desires to purchase from Seller,
certain oil and gas properties and related assets on the terms and conditions
set forth in this Agreement.
NOW,
THEREFORE,
for and
in consideration of the premises and of the mutual covenants and agreements
contained herein, Seller and Purchaser hereby agree as follows:
ARTICLE
1
PURCHASE
AND SALE
1.1 Purchase
and Sale of Assets.
On the
Closing Date (as defined below), but effective as of 7 a.m. Central Standard
Time on the 1st day of July, 2007 (the “Effective
Time”),
subject to the terms and conditions of this Agreement, Seller agrees to sell,
transfer, convey and deliver to Purchaser, and Purchaser agrees to purchase
and
pay for, the following assets:
(a) The
oil,
gas and mineral leases and other mineral rights and interests described in
Exhibit
A-l,
together with all of Seller’s rights and interests in respect of any pooled,
communitized or unitized acreage of which any such interest described in this
Section
1.1(a)
is a
part and Seller has the right to transfer (collectively, the “Leasehold
Interests”);
(b) All
of
Seller’s right, title, and interest in and to all of the immovable, movable and
mixed property of Seller, or in which Seller owns an interest, that is
attributable or allocable to the Leasehold Interests and used or held for use
in
connection with the exploration, development, operation or maintenance of any
of
the Leasehold Interests or the production, treatment, measurement, storage,
gathering, transportation or marketing of oil, gas or other hydrocarbons
attributable to the Leasehold Interests (or the interests of others therein),
including, without limitation: (i) all xxxxx, platforms, equipment and
facilities that, as of the Effective Time were used or held for use in
connection with the exploration, development, operation or maintenance of any
Leasehold Interests or the production, treatment, measurement, storage,
gathering, transportation or marketing of oil, gas or other hydrocarbons
attributable to the Leasehold Interests, including, without limitation, the
xxxxx described in Exhibit
A-2,
any
other xxxxx (including saltwater disposal xxxxx), well equipment, casing, tanks,
gas separation and field processing units, portable and permanent well test
equipment, buildings, tubing, pumps, motors, fixtures, machinery, materials,
supplies, inventories, telephone and communication equipment, computing
equipment and other equipment, pipelines, gathering systems, power lines,
telephone and telegraph lines, roads, vehicles, gas processing plants and other
property used in the operation thereof; (ii) all oil and gas and other
hydrocarbon volumes produced on or after the Effective Time; and (iii) all
other
rights, privileges, benefits, powers, tenements, hereditaments and appurtenances
conferred upon Seller or the owner and holder of the Leasehold Interests,
including, without limitation, all rights, privileges, benefits and powers
of
Seller with respect to the use and occupation of the surface of, and subsurface
depths under, the land covered by each Leasehold Interest, which may be
necessary, convenient or incidental to the possession and enjoyment of such
Leasehold Interest (collectively, the “Related
Property”);
(c) All
of
Seller’s right, title, and interest in and to all original files, records, data,
information and documentation of Seller (or if originals are not available,
copies of such items) pertaining to or evidencing Seller’s use, ownership or
operation of any of the assets, or the maintenance or operation thereof, or
to
any units in which any of the Leasehold Interests may be included or to the
producing, treating, measuring, processing, storing, gathering, transporting
or
marketing of oil and gas and other hydrocarbons attributable to the Leasehold
Interests or such units and water, brine or other minerals and products produced
in association therewith, including, without limitation, lease files, land
files, well files, production sales agreement files, division order files,
title
opinions and abstracts, legal records (excluding any records or information
the
disclosure of which would result in the waiver of an attorney-client privilege
or the breach of any confidentiality obligations for which no waiver has been
granted), tax records, financial and accounting records, governmental, tribal
and regulatory filings and permits, licenses, environmental records, geological
and geophysical data, seismic records, production reports, maps, and computer
software (collectively, the “Records,”
but
further excluding therefrom the transfer of any of the foregoing that would
violate any applicable contractual restrictions); and
(d) All
rights of Seller in and to those instruments and agreements listed on
Exhibits
A-l and A-3
hereto,
the other instruments and agreements under which Seller’s interests in the
Leasehold Interests arise, and all other agreements and contractual rights,
easements, rights-of-way, servitudes, and other rights, privileges, and benefits
to the extent relating to any asset described in clauses (a)
through
(c)
above,
including, without limitation, all rights of Seller in, to and under or derived
from all production sales contracts, operating agreements, pooling, unitization
or communitization agreements, purchase, exchange or processing agreements,
production handling agreements, surface leases, easements or rights-of-way,
farmout or farmin agreements, dry hole or bottom hole contribution agreements,
seismic agreements, options, orders and all other contracts, agreements and
instruments relating to the exploration for, or the development, production,
storage, gathering, treatment, transportation, processing, or sale or disposal
of oil, gas, other hydrocarbons, other minerals, water, brine or other
substances from any Leasehold Interest or any units of which they are a part
(collectively, the “Rights”).
The
Leasehold Interests, the Related Property, the Records, and the Rights are
herein collectively called the “Assets.”
ARTICLE
2
PURCHASE
PRICE
2.1 Purchase
Price; Method of Payment.
The
amount payable by Purchaser to Seller for the Assets shall be an aggregate
amount equal to the Purchase Price (as defined below), plus or minus, as
applicable, the adjustments made in accordance with Section
2.2.
(a) The
“Purchase
Price”
for
the
Assets shall be THREE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($3,500,000) to be paid at Closing, as follows: (i) TWO MILLION EIGHT HUNDRED
THOUSAND AND NO/100 DOLLARS ($2,800,000) in cash; and (ii) SEVEN HUNDRED
THOUSAND AND NO/100 DOLLARS ($700,000) in the common stock of True North Energy
Corporation, parent of Purchaser (the “Parent”),
subject to Section
2.1(c)
of this
Agreement.
(b) All
cash
amounts required under this Article
2
to be
paid by any Party hereto to another Party hereto shall be made by wire transfer
of immediately available funds to an account designated by the payee thereof,
which designation shall be made not later than two (2) Business Days prior
to
the date such payment is due (as used herein, the term “Business
Day”
shall
means any day that is not a Saturday, Sunday or other day on which commercial
banks in Houston, Texas are authorized or required by law to remain
closed).
(c) All
amounts required under this Article
2
to be
paid to Seller by Purchaser in the form of shares of common stock of the Parent
shall be paid by delivery on the Closing Date by the Parent of one or more
stock
certificates representing the number of shares derived by dividing SEVEN HUNDRED
THOUSAND AND NO/100 DOLLARS ($700,000) by the average closing trading price
of
the common stock of the Parent for the ten (10) trading days immediately
preceding the day on which this Agreement is executed. Seller shall be granted
“piggyback” rights pursuant to which Seller may request that the Parent include
the common stock consideration provided as part of the Purchase Price in any
registration statement filed with the Securities and Exchange Commission to
register other common stock of the Parent (other than a registration on Form
S-4
or S-8, or any successor or other forms promulgated for similar
purposes).
For
purpose of clarification, the common stock portion of the Purchase Price shall
not be subject to any adjustments provided in Section
2.2.
2.2 Adjustments
to Purchase Price.
The cash
portion of the Purchase Price for the Assets shall be adjusted as follows (the
resulting amount, together with the common stock portion of the Purchase Price,
being herein referred to as the “Adjusted
Purchase Price”):
(a) The
Purchase Price shall be increased by an amount equal to the sum of the following
amounts (determined without duplication):
(i) the
amount of all costs and expenses paid by Seller that are attributable to the
ownership, maintenance, development, production or operation of the Assets
during the period between the Effective Time and the Closing Date;
and
(ii) all
reasonable prepaid costs and expenses attributable to the Assets that were
actually paid by Seller prior to the Effective Time and which are attributable
to the period of time from and after the Effective Time;
provided,
however, that the following shall be excluded from the amounts referred to
in
this Section
2.2(a):
(1)
general corporate overhead and administrative expenses of Seller (but not the
overhead charges paid by Seller to any third party operator
of any of the Leasehold Interests operated by such third party operator, or
the
overhead charges allocated by Seller for any of the Leasehold Interests operated
by Seller), (2) franchise and income taxes, Property Taxes and other taxes
covered by Sections
2.2(d), 12.1
and
12.3,
(3)
interest on funds borrowed by Seller not related to the ownership, maintenance,
development, production or operation of the Assets and attributable to any
period of time prior to the Effective Time, (4) capital expenditures or
operating expenses attributable to the period of time prior to the Effective
Time, (5) that portion of payments to Affiliates of Seller for services or
properties that exceeds the amount that would reasonably have been charged
to
Seller in an arm’s-length transaction with a third party that was not an
Affiliate of Seller, (6) delay rentals, bonuses or shut-in royalties due prior
to the Effective Time, (7) expenses and expenditures incurred in violation
of
the terms of this Agreement, (8) insurance premiums or the allocated cost of
insurance covering risks associated with the Assets, other than any such costs
that are included as direct charges under joint interest xxxxxxxx received
by
Seller from third party operators
of any of the Leasehold Interests, (9) costs and expenses with respect to the
negotiation and consummation of this Agreement and the transactions contemplated
hereby, and (10) costs and expenses for which Seller is liable pursuant to
the
indemnification provisions set forth in Section 10.3(c)
hereof.
As used in this Agreement, the term “Affiliate”
shall
mean, with respect to any person, any other person that, directly or indirectly,
controls, is controlled by or is under common control with such first person.
As
used in the definition of “Affiliate,”
the
term “person” shall mean any natural person, partnership, joint venture, limited
partnership, corporation, limited liability partnership, limited liability
company, trust, estate, association or other entity.
(b) The
Purchase Price shall be decreased by an amount equal to the sum of the following
amounts (determined without duplication):
(i) the
amount of all proceeds received by Seller that are attributable to the
ownership, maintenance, development, production or operation of the Assets
after
the Effective Time, it being agreed that such amount shall not include proceeds
from any sale subsequent to the Effective Time of merchantable hydrocarbons
in
storage above the pipeline connection at the Effective Time;
and
(ii) the
aggregate amount of all suspended funds described in Exhibit
3.14,
as may
be increased or decreased by Seller prior to Closing in accordance with Seller’s
accounting practice consistently applied (the “Suspended
Funds”).
(c) The
Purchase Price shall also be adjusted by an amount equal to any net gas
imbalance (including production, sales, processing and transportation
imbalances) existing as of the Effective Time with respect to the Leasehold
Interests, valuing the quantities of imbalance gas at $3.00 per MMBtu. If Seller
is in a net overproduced production position as of the Effective Time, the
Purchase Price shall be reduced by such amount; and if Seller is in a net
underproduced position as of the Effective Time, the Purchase Price shall be
increased by such amount. Notwithstanding the preceding, the Parties agree
that
the $3.00 per MMBtu amount is to be used solely for the purpose of purchase
price adjustments for any net gas imbalance and is not intended to limit or
stipulate the amount that may be otherwise sought or collected by Purchaser
or
Seller on the basis of any breach of representations and warranties and/or
pursuant to any indemnities under this Agreement.
(d) In
addition to the adjustments specified in Sections
2.2(a)-(c)
above,
the Purchase Price shall be further adjusted by an amount equal to the estimated
net liability of Purchaser to Seller, or Seller to Purchaser, as applicable,
in
respect of Property Taxes and other taxes pursuant to Sections
12.1
and
12.3.
2.3 Payment
and Calculation of Adjusted Purchase Price; Payment at
Closing.
(a) At
least
three (3) Business Days prior to the Closing Date, Seller shall prepare and
deliver to Purchaser the statement attached as Exhibit
2.3(a)
identifying the adjustments specified in Sections
2.2(a)
-
2.2(d)
up to
then (together with such backup or supporting information as may be necessary
to
permit Purchaser to understand how Seller determined the adjustments contained
therein, the “Settlement
Statement”).
(b) On
the
Closing Date, Seller shall deliver to Purchaser any adjustments to the
Settlement Statement (together with such backup or supporting information as
may
be necessary to permit Purchaser to understand how Seller determined the
adjustments contained therein) in
the
form of Exhibit
2.3(a)
identifying the adjustments specified in Sections
2.2(a)
-
2.2(d)
from the
date of the Settlement Statement to the Closing Date. The Settlement Statement,
together with the adjustments provided in this Section
2.3(b),
shall
evidence the Adjusted Purchase Price.
(c) At
Closing, Purchaser shall pay to Seller the Adjusted Purchase Price determined
as
set forth in Section
2.3(b).
2.4 Allocation
of Purchase Price.
Seller
and Purchaser agree that the Purchase Price for the Assets sold hereunder for
federal and state income tax purposes only shall be allocated as follows: (i)
TWO MILLION TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($2,200,000) for Devon
Fee
Gas Unit; and (ii) ONE MILLION THREE HUNDRED THOUSAND AND NO/100 DOLLARS
($1,300,000) for X’Xxxxx Unit No.1, both as described in Exhibit
A-1.
The
Parties further agree that, in the event of any adjustment to the Purchase
Price
as provided in Section
2.2,
the
Adjusted Purchase Price shall be allocated for federal and state income tax
purposes only as: (i) the Adjusted Purchase Price multiplied by 22/35 for Devon
Fee Gas Unit; and (ii) the Adjusted Purchase Price multiplied by 13/35 for
X’Xxxxx Unit No.1. The Parties agree not to take a federal or state income tax
reporting position inconsistent with such allocation.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF SELLER
Seller
represents and warrants to Purchaser that, to Seller’s knowledge, the statements
contained in this Article
3
are
complete and correct as of the date of this Agreement and as of Closing, except
as set forth in any exhibits referenced in this Article
3:
3.1 Existence.
Seller
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Texas and is duly qualified to carry on its business in
the
jurisdiction where the Assets are located.
3.2 Power.
Seller
has the corporate power and authority to enter into this Agreement and perform
this Agreement and the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by Seller, and the consummation of the
transactions contemplated hereby, will not: (a) violate or conflict with any
provision of the articles of incorporation, other organizational documents,
or
bylaws of Seller; (b) violate or conflict with any material agreement or
instrument to which Seller is a party or by which Seller or any of the Leasehold
Interests are bound; (c) violate or conflict with any judgment, order, ruling,
or decree applicable to Seller as a party in interest; (d) violate or conflict
with any law, rule or regulation applicable to Seller; or (e) result in the
creation or imposition of any lien, charge or other encumbrance upon the Assets
that is not discharged at Closing.
3.3 Authorization.
The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby have been duly and validly authorized by all requisite
corporate action on the part of Seller. This Agreement has been duly executed
and delivered on behalf of Seller, and at Closing all documents and instruments
required hereunder to be executed and delivered by Seller shall have been duly
executed and delivered. This Agreement does, and such documents and instruments
shall, constitute legal, valid and binding obligations of Seller enforceable
against Seller in accordance with their terms, subject, however, to the effect
of bankruptcy, insolvency, reorganization, moratorium and similar laws from
time
to time in effect relating to the rights and remedies of creditors, as well
as
to general principles of equity (regardless of whether such enforceability
is
considered in a proceeding in equity or at law) and the power of a court to
deny
enforcement of remedies generally based upon public policy.
3.4 Brokers.
Seller
has incurred no obligation or liability, contingent or otherwise, for brokers’
or finders’ fees in respect of the matters provided for in this Agreement that
will be the responsibility of Purchaser; and any such obligation or liability
that might exist shall be the sole obligation of Seller.
3.5 Foreign
Person.
Seller
is not a “foreign person” within the meaning of the Internal Revenue Code of
1986, as amended, (hereinafter called the “Code”),
Section 1445 and 7701 (i.e., Seller is not a nonresident alien, foreign
corporation, foreign partnership, foreign trust or foreign estate as those
terms
are defined in the Code and any regulations promulgated
thereunder).
3.6 Defensible
Title.
Seller
has Defensible Title to all Leasehold Interests. As used herein, the term
“Defensible
Title”
shall
mean, in the case of the Leasehold Interests listed on Exhibit
A-1,
such
right, title and interest that, except for Permitted Encumbrances (as defined
below): (i) entitles Seller to receive, from its record title ownership in
such
Leasehold Interests, not less than the interest set forth in Exhibit
A-2
as the
“Net Revenue Interest” or “NRI” with respect to all of the oil, gas, and
hydrocarbon minerals produced, saved and marketed from each unit or well, as
the
case may be, identified on Exhibit
A-2,
without
reduction, suspension or termination throughout the productive life of such
Leasehold Interests, except as expressly noted on Exhibit
A-2;
(ii)
obligates Seller to bear no more than the percentage set forth in Exhibit
A-2
as the
“Working Interest” or “WI” with respect to all of the costs and expenses
relating to the operations on and the maintenance and development of each unit
or well, as the case may be, identified on Exhibit
A-2,
without
increase throughout the productive life of such Leasehold Interests, except
as
expressly noted on Exhibit
A-2;
and
(iii) is free and clear of all material liens, mortgages, pledges, claims,
charges, options, calls on production, preferential purchase rights,
requirements for consent to assignment which would apply to the transactions
contemplated hereby and other encumbrances and title defects.
3.7 Litigation.
Except
as set forth in Exhibit
3.7:
(a) there
is
no suit, action, investigation, hearing, or other proceeding pending or
threatened against Seller or otherwise involving the Assets (except for suits,
actions, investigations, hearings or proceedings relating to the oil and gas
industry generally to which Seller is not a named party), that could reasonably
be expected to adversely affect any of the Assets, including, without
limitation, Seller’s title thereto, the value thereof, operations thereon, or
the marketing of production therefrom;
(b) there
is
no suit, action, investigation, hearing, or other proceeding pending or
threatened against Seller that could reasonably be expected to adversely affect
the ability of Seller to perform its obligations under this Agreement or that
could reasonably be expected to prevent, delay or hinder the consummation of
the
transactions contemplated hereby; and
(c) Seller
has not received any notice that it has been charged with any violation of,
or
threatened with a charge of a violation of, any Legal Requirement (as defined
below), which violation might reasonably be expected to adversely affect any
of
the Assets, and no third party has been charged with any violation of any Legal
Requirement which violation might reasonably be expected to materially adversely
affect the Assets.
As
used
in this Agreement, “Legal
Requirement”
shall
mean any law, statute, ordinance, decree, requirement, order, judgment, rule
or
regulation of, including the terms of any license, permit or authorization
issued by, any Governmental Authority. For
purposes of this Agreement, the term “Governmental
Authority”
shall
include the United States, any state, county, city, tribal, political
subdivision, agency, department, commission, board, bureau or instrumentality
in
which the Assets are located or which exercises jurisdiction over any of the
Assets or the Parties.
3.8 Basic
Documents.
The
documents and instruments creating or giving rise to the Leasehold Interests
and
all agreements, contracts, easements, rights-of-way and other surface use
rights, and all governmental and tribal licenses, permits, approvals and other
authorizations necessary to own, maintain and operate the Assets in compliance
with applicable laws and in the manner in which they have historically been
owned, maintained and operated (all such documents and instruments being herein
referred to as the “Basic
Documents”),
are
in full force and effect and no breach or default exists thereunder, except
where the breach or default would not have a material adverse effect upon the
value of the Assets. Except as set forth on Exhibit
3.8,
the
Basic Documents: (a) do not subject all or any portion of the Assets to any
tax
partnership or to any obligation requiring a partnership income tax return
to be
filed under the application of Subchapter K of Chapter 1 of Subtitle A of the
Code, or any similar state statute, and Seller has complied with all conditions
necessary to maintain a valid election to be excluded from said Subchapter
K;
and (b) if assumed by Purchaser at Closing, would not subject Purchaser to
any
area of mutual interest, non-competition or similar provision restricting
Purchaser from independently conducting operations in any geographic area,
except where such subjection to any tax partnership or restriction on
Purchaser’s independent operation would not have a material adverse effect upon
the value of the Assets. Except as set forth in Exhibit
3.8,
neither
Seller nor any other party to the Basic Documents: (i) is in breach or default,
or with the lapse of time or the giving of notice, or both, would be in breach
or default, with respect to any of its obligations thereunder; or (ii) has
given
or threatened to give notice of any default under, has made or threatened
inquiry into any possible default under, or begun or threatened action to alter,
terminate, rescind or procure a judicial reformation of, any Basic Document
or
any provision thereof, except where such breach or default or judicial
reformation would not have a material adverse effect upon the value of the
Assets. There are no material amounts claimed to be due to Seller in respect
of
the Assets that are being held in suspense because of a dispute as to title
to
such Assets or for any other reason, and Seller is currently being paid its
Net
Revenue Interest specified on Exhibit
A-2
for each
unit or well listed thereon without indemnity or guarantee other than those
customarily found in division orders and other similar agreements and documents.
The representations and warranties contained in this Section
3.8
shall
not be construed to be representations and warranties with respect to the
accuracy of any estimates, forecasts or conclusions contained in any document,
any such representations and warranties being expressly denied and
disclaimed.
3.9 Compliance
with Laws.
Except
as set forth in Exhibit
3.9
and
except where the failure to comply or conform would not have a material adverse
effect upon the value of the Assets, all Seller’s or third-party operators’
operations (including, without limitation, the exploration and development
of
all leases, the drilling, completion and production of all xxxxx thereon, and
the marketing of all production therefrom) relating to the Leasehold Interests
have been conducted in compliance with, and all items of tangible personal
property and fixtures constituting part of the Assets conform with, all Legal
Requirements, including, but not limited to, any Environmental Laws (as defined
below).
3.10 Governmental
Licenses.
Except
as set forth in Exhibit
3.10,
Seller
has obtained all material permits, licenses and other authorizations required
by
any Governmental Authority to own and operate the Assets; all such
authorizations are in full force and effect; and no material violations exist
thereunder. No proceeding is pending or threatened relating to the challenging,
revocation or limitation of any such permit, license or other authorization,
except where such challenging, revocation or limitation would not have a
material adverse effect on the value of the Assets.
3.11 Lease
Obligations.
Except
as set forth in Exhibit
3.11:
(a)
with respect to the oil, gas and other mineral leases included on Exhibit
A-1,
there
are no royalty provisions (other than those allowing a lessor the right to
take
in kind and other than royalties due to governmental entities) requiring the
payment of royalty on any basis other than proceeds actually received by the
lessee; (b) there are no Leasehold Interests which are subject to a fixed term
of duration; and (c) there are no unfulfilled drilling obligations affecting
the
Leasehold Interests, other than provisions requiring optional drilling as a
condition of maintaining or earning all or a portion of a lease, and all
royalties, rentals and other payments due in respect of the Leasehold Interests
ending on the Closing Date have been or will be by Closing timely paid and
all
other conditions necessary to keep such properties and interests in full force
and effect during their primary term, and thereafter if commercial production
has been established thereon or on lands unitized or pooled therewith, have
been
fully performed in all material respects in accordance with applicable Legal
Requirements.
3.12 Obligations
Relating to Operations.
With
respect to operations relating to the Assets, except as set forth on
Exhibit
3.12:
(a)
there are no gas production, processing, sales, transportation or other
imbalances as of the Effective Time between Seller and any third party; (b)
there are no material non-consent operations with respect to any Leasehold
Interest which have resulted or will result in a temporary or permanent increase
or decrease in Seller’s interest in such Leasehold Interest from that set forth
on Exhibit
A-2
for the
applicable unit or well; (c) there are no binding commitments with respect
to
the Assets that will result in Purchaser incurring after the Closing Date
capital expenditures with respect to any one unit or well in excess of $5,000,
or $25,000 with
respect to the Assets in the aggregate.
3.13 Operations
Since the Effective Time.
Except
as set forth in Exhibit
3.13,
since
the Effective Time:
(a) Seller
has caused the Assets to be developed, maintained and operated in a reasonable
and prudent manner and in substantially the same manner as the Assets were
developed, maintained and operated prior to the Effective Time;
(b) Seller
has not sold, assigned, transferred, farmed out, conveyed or otherwise disposed
of any of the Assets, except for the sale of hydrocarbons in the ordinary course
of business, as required under any agreement or contract existing as of the
Effective Time;
(c) Seller
has not, to the extent related to the Assets, made any major change in the
character of its business or operations or otherwise conducted its business
and
operations other than in accordance with standard industry
practices;
(d) Seller
has not permitted any leases or material rights with respect to the Assets
to
expire, or waived any material rights with respect to the Assets;
(e) Seller
has not entered into any agreement or made any commitment (other than this
Agreement) to take any of the actions referred to in clauses (a)
through
(d)
above;
and
(f) there
have been no fires, blow-outs or other casualties (above or below the surface
of
the ground) which materially affected any of the Assets.
3.14 Marketing
of Production; Suspended Funds.
(a)
Except
as set forth in Exhibit
3.14:
(i) Seller
has not received, as of the Effective Time, any advance, “take-or-pay,” or other
similar payments under production sales contracts that entitle the purchasers
to
“make-up” or otherwise receive deliveries of hydrocarbons at any time after the
Effective Time without paying at such time the full market price therefor,
nor
has Seller received any payments with respect to, or in lieu of or in
satisfaction for any take-or-pay obligations of purchasers of Seller’s
hydrocarbons deliverable under any contracts covering any of the Leasehold
Interests on or after the Effective Time;
(ii) Seller
has not received prior to the Effective Time payments for production which
are
currently subject to refund;
(iii) none
of
the Leasehold Interests are subject to any: (A) dedication under production
sales contracts with terms in excess of 31 days; (B) production gathering
agreements not terminable without cause on 30 days advance written notice;
or
(C) calls on hydrocarbons produced therefrom.
(b) Exhibit
3.14
sets
forth a list of all Suspended Funds held by Seller on the date hereof that
are
attributable to the Leasehold Interests, a description of the source of such
Suspended Funds and the reason they are being held in suspense, the agreement
or
agreements under which such Suspended Funds are being held and the name or
names
of the parties claiming such Suspended Funds or to whom such Suspended Funds
are
owed.
3.15 Taxes.
Except
as set forth in Exhibit
3.15,
all ad
valorem, property, production, severance, sales, use, and similar taxes and
assessments based on or measured by the ownership of the Assets or the
production of hydrocarbons or the receipt of proceeds therefrom that have become
due and payable with respect to the Assets (collectively, “Taxes”)
have
been, or will by Closing be, paid timely and all tax and information returns
to
tax authorities required to be filed with respect to the Assets have been,
or
will by Closing be, filed timely, except as may be contested by Seller in good
faith or where the failure to pay any Taxes or file any tax and information
returns would not have a material adverse effect on the value of the Assets.
Seller shall be responsible for paying all Taxes prorated through June 30,
2007,
based upon all assessments up to and including calendar year 2007, regardless
of
when: (i) the 2007 assessment is issued; and (ii) Taxes for 2007 are paid.
Exhibit
3.15
identifies all audits or examinations pending or presently being conducted
by
any taxing jurisdiction or regulatory authority. Seller and Purchaser shall
cooperate fully, as and to the extent reasonably requested, in connection with
the filing of any tax returns relating to Taxes and any audit, litigation or
other proceeding with respect to such tax returns.
3.16 Preferential
Rights and Restrictions on Assignment.
Except
as set forth in Exhibit
3.16,
none of
the Leasehold Interests are subject to any preferential rights to purchase
or
restrictions on assignment, including, but not limited to, contractual or
statutory requirements for consents from third parties, including, but not
limited to, any Governmental Authority, to any assignment, which consents have
not been obtained or rights have not been waived.
3.17 Improvements,
Personalty, Equipment and Fixtures.
Except
as set forth in Exhibit
3.17,
all
xxxxx, platforms, fixtures, facilities, improvements, pipelines, personal
property and equipment constituting a part of the Assets: (a) are in a
reasonably good and operable state of repair, ordinary wear and tear excepted,
so as to be suitable for normal operations in accordance with standard industry
practice in the areas in which they are operated; (b) have been constructed
and
maintained in accordance with the requirements of all applicable contracts,
including sales contracts; and (c) meet and comply with all applicable Legal
Requirements.
3.18 Xxxxx.
Except
as set forth in Exhibit
3.18,
all of
the xxxxx in which Seller has an interest by virtue of its ownership of the
Leasehold Interests have been drilled and completed within the boundaries of
such Leasehold Interests or within the limits otherwise permitted by contract,
pooling or unit agreement, and by law, or, if any well has not been drilled
or
completed, such failure would not have a material adverse effect on the value
of
the Assets or the validity or ownership of Seller’s interest in the applicable
Assets. Except as set forth on Exhibit
3.18,
no such
drilled and completed well is subject to material penalties on allowables
because of any over production or any other violation of applicable Legal
Requirements that would prevent such well from being entitled to its full legal
and regular allowable from and after the Effective Time as prescribed by any
Governmental Authority. Exhibit
3.18
also
sets forth the current production and allowable for each unit or well comprising
a part of the Assets.
3.19 Environmental
Matters.
Except
as set forth in Exhibit
3.19:
(a) the
Assets do not violate any order or requirement of any Governmental Authority
or
any Environmental Laws, nor are there any agreements or contracts covering
any
of the Assets or conditions existing on or resulting from the operations of
the
Assets that may give rise to any on-site or off-site surface restoration or
remedial obligations under any Environmental Laws or any such agreements or
contracts, except where such violation or agreements or contracts would not
have
a material adverse effect on the value of the Assets;
(b) without
limitation of clause (a)
above,
the Assets are not in violation of or subject to any existing, pending or
threatened action, suit, investigation, inquiry or proceeding by or before
any
court, any applicable tribal authority or any other Governmental Authority,
except where such violation or subjection would not have a material adverse
effect on the value of the Assets;
(c) during
the term of Seller’s ownership of the Assets (and prior thereto to the knowledge
of Seller), all notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed in connection with the Assets, including,
without limitation, those relating to the past or present treatment, storage,
disposal or release of a hazardous substance or solid waste into the
environment, have been duly obtained or filed, and Seller is in compliance
with
the terms and conditions of all such notices, permits, licenses and similar
authorizations, except where the failure to obtain or file or noncompliance
would not have a material adverse effect on the value of the
Assets;
(d) during
the term of Seller’s ownership of the Assets (and prior thereto to the knowledge
of Seller), and since the effective date of the relevant requirements of RCRA,
all hazardous substances or solid waste generated at or as a result of the
Assets have been transported, treated and disposed of only by carriers
maintaining valid authorizations under RCRA and any other Environmental Laws
and
only at treatment, storage and disposal facilities maintaining valid
authorizations under RCRA and any other Environmental Law, except where the
failure to do so would not have a material adverse effect on the value of the
Assets; and
(e) during
the term of Seller’s ownership of the Assets (and prior thereto to the knowledge
of Seller), no hazardous substance or solid waste has been disposed of or
otherwise released (including, without limitation, discharges or releases into
pits) and there has been no threatened release of any hazardous substances
or
solid waste on, to or as a result of the Assets (including the land covered
by
the Assets or on which any of the Assets are situated) except in compliance
with
Environmental Laws, and there are no storage tanks or other containers on or
under any of the Assets from which hazardous substances, petroleum products
or
other contaminants may be released into the surrounding environment, except
where such disposal or release would not have a material adverse effect on
the
value of the Assets.
As
used
herein, the term “Environmental
Laws”
shall
mean any and all Legal Requirements of any Governmental Authority pertaining
to
health or the environment, including, without limitation, the Clean Air Act,
as
amended, the Comprehensive Environmental, Response, Compensation, and Liability
Act of 1980 (“CERCLA”),
as
amended, the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 (“RCRA”),
as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Hazardous & Solid Waste Amendments Act of 1984, as
amended, the Superfund Amendments and Reauthorization Act of 1986, as amended,
the Hazardous Materials Transportation Act, as amended, any state laws
pertaining to the handling of oil and gas exploration or production wastes
or
the use, maintenance and closure of pits and impoundments, and other
environmental conservation or protection laws. For purposes of this Agreement,
the terms “hazardous substance” and “release” (or “threatened release”) have the
meanings specified in CERCLA, and the terms “solid waste” and “disposal” (or
“disposed”) have the meanings specified in RCRA;
provided, however, that (i) to the extent the Legal Requirements of the
jurisdiction wherein the Assets are located establish a meaning for “hazardous
substance,” “release,” “solid waste” or “disposal” that is broader than that
specified in either CERCLA or RCRA,
such
broader meaning shall apply and (ii) the terms “hazardous substance” and “solid
waste” shall include all oil and gas exploration and production wastes that may
present an endangerment to public health or welfare or the environment, even
if
such wastes are specifically exempt from classification as hazardous substances
or solid wastes pursuant to CERCLA
or
RCRA
or the
state statutory analogues to CERCLA
or
RCRA.
3.20 Accuracy
of Information Furnished.
Seller
has not failed to make available any information or knowledge of any fact
relating to the Assets or the transactions contemplated hereby which might
reasonably be expected to affect the Assets materially and adversely. Seller
has
made and will continue to make available to Purchaser all reports, documents
and
other materials of Seller related to the Assets, and the information contained
therein is true and complete and has been prepared in accordance with standards
generally accepted standards in the domestic petroleum industry.
3.21 Solvency.
After
giving effect to the transactions contemplated by this Agreement: (i) Seller
is,
and will be, able to pay its debts and other liabilities, contingent obligations
and other commitments as they mature in the normal course of business; (ii)
Seller does not intend to, and does not believe that it will, incur debts or
liabilities beyond its ability to pay as such debts and liabilities mature
in
their ordinary course; and (iii) excluding the Assets, the present fair saleable
value of the assets of the Company is not, and will not, be less than the amount
that will be required to pay the probable liability on the debts of Seller
as
they become absolute and matured in the normal course of business.
3.22 Other
Warranties Disclaimed. EXCEPT
AS SET FORTH IN SECTIONS
3.1
TO 3.21,
PURCHASER ACKNOWLEDGES THAT SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF ITSELF OR THE ASSETS, INCLUDING,
WITHOUT ANY LIMITATION, WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
Purchaser
represents and warrants (except with respect to Section
4.8,
which
representation and warranty shall be made by Purchase and the Parent together)
to Seller that, to Purchaser’s knowledge, the statements contained in this
Article
4
are
complete and correct as of the date of this Agreement and as of
Closing:
4.1 Existence.
Purchaser is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Texas, and is duly qualified to carry
on
its business in the jurisdiction where the Assets are located.
4.2 Power.
Purchaser has the corporate power and authority to enter into and perform this
Agreement and the transactions contemplated hereby. The execution, delivery
and
performance of this Agreement by Purchaser, and the consummation of the
transactions contemplated hereby, will not violate or conflict with: (a) any
provision of the articles of incorporation, other organizational documents,
or
bylaws of Purchaser; (b) any material agreement or instrument to which Purchaser
is a party or by which Purchaser is bound; (c) any judgment, order, ruling,
or
decree applicable to Purchaser as a party in interest; or (d) any law, rule,
or
regulation applicable to Purchaser.
4.3 Authorization.
The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby have been duly and validly authorized by all requisite
corporate action on the part of Purchaser. This Agreement has been duly executed
and delivered on behalf of Purchaser, and at Closing all documents and
instruments required hereunder to be executed and delivered by Purchaser shall
have been duly executed and delivered. This Agreement does, and such documents
and instruments shall, constitute legal, valid and binding obligations of
Purchaser enforceable against Purchaser in accordance with their terms, subject,
however, to the effect of bankruptcy, insolvency, reorganization, moratorium
and
similar laws from time to time in effect relating to the rights and remedies
of
creditors, as well as to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law) and
the
power of a court to deny enforcement of remedies generally based upon public
policy.
4.4 Brokers.
Purchaser has incurred no obligation or liability, contingent or otherwise,
for
brokers’ or finders’ fees in respect of the matters provided for in this
Agreement which will be the responsibility of Seller; and any such obligation
or
liability that might exist shall be the sole obligation of
Purchaser.
4.5 Litigation.
There is
no action, suit, proceeding, claim or, to Purchaser’s knowledge, investigation
pending or, to Purchaser’s knowledge, threatened in writing against Purchaser in
any court or by or before any Governmental Authority or arbitration or mediation
that would impair Purchaser’s ability to consummate, or that would reasonably be
expected to prevent, delay or hinder the consummation of the transactions
contemplated hereby.
4.6 Satisfaction
With Due Diligence.
Purchaser has retained and taken advice concerning the Assets and transactions
herein from Purchaser’s Representatives (as defined below) which are
knowledgeable about the oil and gas business and Purchaser is aware of its
risks. Prior to entering into this Agreement, Purchaser and Purchaser’s
Representatives have been afforded the access to the books, records and files
of
Seller for Purchaser’s due diligence investigation of the Assets, including, but
not limited to: (a) the operational and environmental condition of the Assets;
and (b) title to the Assets. In entering into this Agreement, Purchaser has
not
relied on any representation or warranty or undertaking which is not expressly
contained in this Agreement.
4.7 Common
Stock.
The
common stock of the Parent has been duly and validly authorized for issuance
by
the Parent and when issued in accordance with the terms and conditions contained
herein, it will be duly authorized, validly issued, fully paid and
non-assessable and will not be subject to any preemptive or similar
rights.
4.8 No
Securities Laws Violation.
The
common stock of the Parent offered as part of the Purchase Price shall be
offered pursuant to: (i) a valid exemption from registration under the
Securities Act of 1933, as amended; (ii) all other applicable federal and state
securities or “blue sky” laws; and (iii) the applicable requirements of any
stock exchange on which the Parent’s common stock may be listed at the time of
such issuance or transfer.
4.9 Other
Warranties Disclaimed. EXCEPT
AS SET FORTH IN SECTIONS
4.1
TO 4.8,
SELLER ACKNOWLEDGES THAT PURCHASER MAKES NO OTHER REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, AND ANY SUCH OTHER REPRESENTATIONS
OR
WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
ARTICLE
5
PRE-CLOSING
OBLIGATIONS OF SELLER
5.1 Operations.
From the
date of this Agreement until Closing (the “Interim
Period”)
except
as otherwise approved by Purchaser, Seller shall comply with the following
covenants:
(a) Subject
to Section
6.1,
Seller
will make available to Purchaser and Purchaser’s Representatives for reasonable
examination and copying, at Purchaser’s expense, at Seller’s offices such
accounting, tax, title, geological, geophysical, legal and other information
relating to the Assets insofar as same are in the possession of Seller or
hereafter acquired by Seller (including, but not limited to, information in
Seller’s computer databases to the extent Seller has the right to do so), to the
extent not otherwise restricted pursuant to the terms of this Agreement and,
subject to the consent and cooperation of the operator or other third party,
will use all commercially reasonable efforts to obtain, at Purchaser’s expense,
such additional information relating to the Assets as Purchaser may reasonably
request, to the extent in each case that Seller may do so without violating
any
obligation of confidence or other contractual commitments of Seller to a third
party (and Seller shall use reasonable efforts to obtain waivers of any
contractual commitments preventing such access).
(b) Except
as
otherwise provided herein and unless specifically waived by Purchaser in
writing:
(i) Seller
shall (or in the case of Assets that are operated by a third party, shall use
reasonable efforts to cause the operator of such Assets to) develop, maintain
and operate the Assets in a good and prudent manner and in substantially the
same manner as such Assets have heretofore been developed, maintained and
operated;
(ii) Seller
shall (or in the case of Assets that are operated by a third party, shall use
reasonable efforts to cause the operator of such Assets to) maintain and keep
the Assets in reasonably good condition and working order, ordinary wear and
tear excepted, preserving the Assets in full force and effect, and shall fully
and timely perform all covenants and conditions imposed upon Seller (and shall
use reasonable efforts to cause all third party operators of the Assets to
perform all covenants and conditions imposed on such operators) in respect
of
the Assets, including, but not limited to, payment of royalties, delay rentals,
shut-in royalties and any and all other required payments;
(iii) Seller
shall advise and consult with Purchaser on all material matters relating to
the
Assets, including, without limitation, all proposed authorizations for
expenditures in excess of $5,000, farmout or farmin proposals or agreements,
and
amendments to agreements;
(iv) Seller
shall promptly notify Purchaser of any notice or threatened notice of which
Seller becomes aware relating to any default, inquiry into any possible default,
or action to alter, terminate, rescind or procure a judicial reformation of
any
Basic Document or any provision thereof; and
(v) Seller
shall pay timely (or in the case of Assets that are operated by a third party,
shall use all reasonable efforts to cause the operator of such Assets to pay
timely) all costs and expenses incurred in connection with the Assets, except
to
the extent such costs and expenses are contested in good faith utilizing
appropriate action.
(c) Unless
specifically waived by Purchaser in writing, Seller shall not take (or in the
case of Assets operated by a third party, shall use reasonable efforts to
prevent such operator from taking) any of the following actions:
(i) sell,
assign, transfer, farmout, convey, mortgage, pledge or otherwise dispose of
any
of the Leasehold Interests or, except in the ordinary course of business and
consistent with past practices, any other Assets, unless the disposition of
any
such Leasehold Interest or other Asset is required under any agreement or
contract existing as of the Effective Time and to which Seller is a
party;
(ii) voluntarily
permit any leases or other material rights with respect to the Assets to expire,
waive or release any material rights with respect to Assets, or relinquish
its
position as operator with respect to any property;
(iii) to
the
extent related to the Assets, make any material change in the character of
its
business and operations or otherwise conduct its business and operations other
than in accordance with standard industry practice or Seller’s prior business
practice;
(iv) enter
into any agreement or contract relating to the Assets requiring, or committing
to make, an expenditure (other than arising as a result of emergencies) in
excess of $5,000 attributable to any individual Asset or $25,000 attributable
to
the Assets in the aggregate or enter into any agreement or contract except
in
the ordinary course of the operation of the Assets;
(v) enter
into any contract for the sale or other disposition, or any call or option
for
such purchase, of oil and gas, other hydrocarbons, minerals or other products
produced or to be produced from the Leasehold Interests that is not terminable
without penalty on thirty (30) days’ notice or less;
(vi) supplement,
modify, or amend in any material respect any of the Basic
Documents;
(vii) commence
any drilling, reworking or completing or similar operations on the Leasehold
Interests (except emergency operations and operations required under presently
existing contractual obligations);
(viii) encumber
any of the Assets other than Permitted Encumbrances (as defined below) or
acquire any additional interests in any of the Assets other than non-consent
interests; or
(ix) commit
to
do any of the foregoing.
As
used
herein, the term “Permitted
Encumbrances”
shall
mean: (a) lessors’ royalties, overriding royalties, reversionary interests and
similar burdens (including calls on production or the right of a lessor to
take
production in kind) affecting a Leasehold Interest if the net cumulative effect
of such burdens does not operate to reduce the interest of Seller with respect
to all oil and gas produced from any units or xxxxx below the “Net
Revenue Interest”
or
“NRI”
set
forth in Exhibit
A-2
for such
units or xxxxx; (b) division orders and sales contracts terminable without
penalty upon no more than 30 days’ notice to the purchaser of production; (c)
subject to the obligations of Seller in Section
10.1,
materialman’s, mechanic’s, repairman’s, employee’s, contractor’s, operator’s,
tax, and other similar liens or charges arising in the ordinary course of
business for obligations that are not yet due; and (d) easements, rights-of-way,
servitudes, permits, surface leases and other rights of third parties in respect
of surface operations, to the extent same do not have a material adverse affect
on any of the Assets and/or the use and enjoyment thereof.
(d) Seller
shall give prompt written notice to Purchaser of (i) any notice of default
(or
written allegation of default, whether disputed or denied by Seller) received
or
given by Seller prior to the Closing Date under any instrument or agreement
relating to the Assets, or (ii) anything else that Seller is or becomes aware
of
that would make any representation or warranty of Seller untrue, incorrect,
or
misleading in any material respect.
(e) Seller
shall afford Purchaser and Purchaser’s Representatives reasonable access to the
Assets operated by Seller and the reasonable right to witness well tests thereon
during normal business hours; provided that Seller shall not be obligated to
give Purchaser more than twenty-four (24) hours advance notice of well tests
if
circumstances do not reasonably allow a longer notice period, and Seller shall
use reasonable efforts to cause the operator of any portion of the Assets not
operated by Seller to allow Purchaser reasonable access to such portion of
the
Assets and the records of such operator and the reasonable right to witness
well
tests thereon.
(f) Prior
to
the Closing, Seller shall use its commercially reasonable efforts to obtain
all
authorizations and consents from applicable third parties, if any, required
of
Seller to permit it to consummate the transaction contemplated by this
Agreement.
(g) Seller
will use its commercially reasonable efforts to cause all of the representations
and warranties of Seller contained in this Agreement to remain true and correct
in all respects.
(h) Seller
shall use its commercially reasonable efforts to satisfy the conditions to
Closing set forth in Article
8,
to the
extent same are within its control.
(i) Seller
shall keep in full force and effect until Closing insurance (including
operator’s extra expense and casualty coverages for the Assets for which Seller
is an operator) comparable in amount and scope of coverage to that now
maintained by Seller.
5.2 No
Shop.
Unless
as otherwise provided in this Agreement, during the Interim Period, Seller
shall
not, directly or indirectly, seek, solicit or entertain competitive offers
to
purchase the Assets, or otherwise discuss the sale of the Assets with any party
other than Purchaser.
5.3 Suspended
Funds. Seller
shall notify Purchaser of any material increases or decreases to the Suspended
Funds.
ARTICLE
6
PRE-CLOSING
OBLIGATIONS OF PURCHASER
6.1 Purchaser’s
Confidentiality Obligation.
Purchaser agrees that information provided by Seller to Purchaser and its
Affiliates and its or their lenders, and their respective officers, directors,
employees, attorneys, accountants, engineers, agents, consultants, counsel
and
other representatives (collectively, “Purchaser’s
Representatives”)
in
connection with this Agreement: (a) will be used only by Purchaser and
Purchaser’s Representatives, and only for Purchaser’s investigation of the
Assets; (b) will be held in strict confidence; (c) will not be used for any
commercial purpose other than what is contemplated hereunder; and (d) will
not,
except as permitted hereunder, be provided to any third party. Purchaser shall
use at least the same degree of care that Purchaser uses in protecting its
own
proprietary materials of a like kind. The foregoing obligation on Purchaser
shall terminate on the earlier to occur of: (v) on the second anniversary of
the
Closing Date; (w) at the time of disclosure, if the information is in the public
domain or hereinafter enters the public domain but not as a result of an
unauthorized disclosure made directly or indirectly by Purchaser; (x) at the
time of disclosure, if the information is or was available to Purchaser from
a
source other than Seller, provided that such source was not known by Purchaser
to be bound by a confidentiality obligation to Seller; (y) the date on which
Purchaser, in its good faith opinion, is required by law or applicable stock
exchange regulation to disclose the information or data in question; or (z)
on
the date on which the information is or was independently acquired or developed
by Purchaser not in violation of its confidentiality obligations hereunder.
Purchaser shall reimburse, indemnify and hold Seller, its Affiliates, their
respective officers, directors, employees, attorneys, accountants, engineers,
agents, consultants, counsel and other representatives harmless from any damage,
loss or expense incurred as a result of the use of the confidential information
provided in connection with this Agreement, unless such damage, loss or expense
arises from the gross negligence of Seller, its Affiliates, their respective
officers, directors, employees, attorneys, accountants, engineers, agents,
consultants, counsel and other representatives. Purchaser’s obligations under
this Section
6.1
shall
survive Closing and shall continue for a period of two (2) years from the
Closing Date. The Parties acknowledge that the confidentiality provisions of
this Agreement shall not apply to any disclosure required of, or reporting
requirement applicable to, Purchaser or the Parent under the Securities and
Exchange Act of 1934 or any other statutory reporting requirements of any
Governmental Authority.
6.2 Efforts
Regarding Closing Conditions.
Purchaser shall use commercially reasonable efforts to satisfy the conditions
to
Closing set forth in Article
7,
to the
extent same are within its control.
6.3 Consents.
Prior to
Closing, Purchaser shall use its commercially reasonable efforts to obtain
all
authorizations, consents and permits from applicable third parties, if any,
required of Purchaser to permit it to consummate the transactions contemplated
by this Agreement.
6.4 Suspended
Funds.
If
Closing occurs, Purchaser agrees to assume responsibility for the disbursement
of all Suspended Funds.
ARTICLE
7
SELLER’S
CONDITIONS OF CLOSING
Seller’s
obligation to consummate the transactions provided for herein is subject to
the
satisfaction or waiver on or before the Closing Date of the following
conditions:
7.1 Representations
and Warranties.
The
representations and warranties of Purchaser contained in Article
4
shall be
true and correct in all material respects on the date of Closing as though
made
on and as of that date.
7.2 Performance.
Purchaser shall have performed in all material respects the obligations,
covenants and agreements required hereunder to be performed by it at or prior
to
the Closing.
7.3 Officer’s
Certificate.
Purchaser shall have delivered to Seller a certificate of a corporate officer,
dated the date of Closing, certifying on behalf of Purchaser that the conditions
set forth in Sections
7.1 and 7.2
have
been fulfilled.
7.4 Pending
Matters.
No suit,
action or other proceeding by a non-affiliated third party or a Governmental
Authority shall be pending or threatened which seeks substantial damages from
Seller in connection with, or seeks to restrain, enjoin or otherwise prohibit,
the consummation of the transactions contemplated by this Agreement.
7.5 Certain
Events.
The sum
of the aggregate reductions and allocated adjustments to the Purchase Price
pursuant to Section
2.3(a) and 2.3(b)
shall
not exceed $350,000.
7.6 Purchaser’s
Registration As Operator.
Purchaser shall have delivered to Seller written evidence of Purchaser’s
registration (subject only to the consummation of the transactions provided
for
herein) with the appropriate regulatory authorities as the operator of the
Leasehold Interests in each instance in which Seller is the
operator.
7.7 Registration
Rights Agreement.
Purchaser shall have caused the Parent to execute and deliver to Seller a
registration rights agreement in a form satisfactory to Seller, providing Seller
“piggyback” registration rights with respect to the portion of the Purchase
Price represented by the Parent’s common stock.
ARTICLE
8
PURCHASER’S
CONDITIONS OF CLOSING
Purchaser’s
obligation to consummate the transactions provided for herein is subject to
the
satisfaction or waiver on or before the Closing Date of the following
conditions:
8.1 Representations
and Warranties.
The
representations and warranties of Seller contained in Article
3
shall be
true and correct in all material respects on the date of Closing as though
made
on and as of that date.
8.2 Performance.
Seller
shall have performed in all material respects the obligations, covenants and
agreements required hereunder to be performed by it at or prior to the
Closing.
8.3 Officer’s
Certificate.
Seller
shall have delivered to Purchaser a certificate of a corporate officer, dated
the date of Closing, certifying on behalf of Seller that the conditions set
forth in Sections
8.1 and 8.2
have
been fulfilled and that none of the Assets nor any portion of them materially:
(i) have been destroyed by fire; (ii) have experienced a blowout or other
casualty; or (iii) have been subjected to any taking, or are subjected to any
pending or threatened taking, in condemnation or under the right of eminent
domain.
8.4 Pending
Matters.
No suit,
action or other proceeding by a non-affiliated third party or a Governmental
Authority shall be pending or threatened which seeks substantial damages from
Purchaser in connection with, or seeks to restrain, enjoin or otherwise
prohibit, the consummation of the transactions contemplated by this Agreement.
8.5 Certain
Events.
The sum
of the aggregate reductions to the Purchase Price pursuant to Sections
2.3(a) and 2.3(b)
shall
not exceed $350,000.
8.6 Operatorship.
Purchaser shall be satisfied in its reasonable discretion that it will succeed
to or will become operator of all units and xxxxx comprising a part of the
Assets that were being operated by Seller at the Effective Time.
8.7 No
Material Adverse Change.
Since
the date of this Agreement, there shall have been no material adverse change
in
the value of the Assets and no event shall have occurred that has had, or is
reasonably likely to have, a material adverse effect on the ability of Purchaser
to own and operate the Assets, and enjoy the benefits associated therewith,
in
the same fashion as Seller has prior to the date hereof.
ARTICLE
9
CLOSING
9.1 Time
and Place of Closing.
Subject
to the conditions stated in this Agreement and unless the Parties agree
otherwise, the consummation of the transactions contemplated hereby
(“Closing”)
shall
occur no later than 10:00 a.m. on September 21, 2007; provided, however, that
if
all of the conditions to Closing set forth in Article
7
and
Article
8
have not
been satisfied or waived by such date or any extended date for Closing, the
Party whose obligation to close is subject to the conditions that have not
been
satisfied or waived shall have the right to extend the date of Closing for
successive periods of up to five (5) Business Days each until such conditions
shall have been satisfied or waived or until this Agreement shall have been
terminated pursuant to Section
11.1.
The
date Closing actually occurs is herein called the “Closing
Date.”
The
Closing shall be held at the Houston offices of counsel to Purchaser, Xxxxxx,
Arata, McCollam, Xxxxxxxxx & Xxxxx, LLP, located at 0000 Xxxx Xxxx Xxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxx 00000, or at such other location as may be mutually
agreed upon by Seller and Purchaser.
9.2 Closing
Obligations.
At the
Closing, the following events shall occur:
(a) Seller
and Purchaser shall execute, acknowledge and deliver to each other the
Assignment, Xxxx of Sale, and Conveyance in the form of Exhibit
9.2(a)
conveying Defensible Title to the Assets to Purchaser (the “Conveyance”).
In
the Conveyance contemplated hereby, Seller shall bind itself and its successors
and assigns to warrant title to the Assets unto Purchaser, its successors and
assigns, against every person whomsoever lawfully claiming or to claim the
same
or any part thereof by, through and under Seller, but not otherwise, and with
full substitution and subrogation of Purchaser in and to all warranties of
title
heretofore made by Seller’s predecessors in title in respect of the
Assets.
The
Parties acknowledge and agree that the Conveyance shall be effective as of
the
Effective Time and recorded only if Closing occurs.
(b) Seller
and Purchaser shall execute, acknowledge and deliver to each other letters
in
lieu of transfer orders directing all parties paying for production to make
payment to Purchaser of proceeds attributable to production from the Leasehold
Interests after the Effective Time (to the extent such proceeds have not
previously been disbursed to Seller);
(c) Purchaser
shall make the payment described in Section
2.3 by
a wire
transfer of immediately available funds to an account designated by
Seller;
(d) Purchaser
shall, or shall cause the Parent to, deliver the stock certificates described
in
Section
2.1(c);
(e) Seller
and Purchaser shall exchange the certificates described in Sections
7.3 and 8.3;
(f) Seller
shall execute and deliver and Purchaser shall cause the Parent to execute and
deliver a registration rights agreement in customary form providing Seller
“piggyback” registration rights with respect to the portion of the Purchase
Price represented by the Parent’s common stock;
(g) Seller
shall execute such other instruments and take such other action as may be
necessary to carry out its obligations under this Agreement; and
(h) Purchaser
shall execute such other instruments and take such other action as may be
necessary to carry out its obligations under this Agreement.
ARTICLE
10
ADDITIONAL
AGREEMENTS
10.1 Receipts,
Credits,
Costs and Expenses.
Unless
otherwise provided in this Agreement, all monies, proceeds, receipts, credits
and income attributable to the Assets: (a) for all periods of time on and
subsequent to the Effective Time (but only if Closing occurs) shall be the
sole
property and entitlement of Purchaser, and, to the extent received by Seller,
Seller shall fully disclose, account for and transmit same to Purchaser
promptly; and (b) for all periods of time prior to the Effective Time, shall
be
the sole property and entitlement of Seller and, to the extent received by
Purchaser, Purchaser shall fully disclose, account for and transmit same to
Seller promptly. Unless otherwise provided in this Agreement, all costs,
expenses, disbursements, obligations and liabilities attributable to the Assets:
(i) for periods of time prior to the Effective Time, regardless of when due
or
payable, shall be the sole obligation of Seller and Seller shall promptly pay,
or if inadvertently paid by Purchaser and not contested by Seller, promptly
reimburse Purchaser for and hold Purchaser harmless from and against same;
and
(ii) for periods of time on and subsequent to the Effective Time (but only
if
Closing occurs), regardless of when due or payable, shall be the sole obligation
of Purchaser and Purchaser shall promptly pay, or if inadvertently paid by
Seller and not contested by Purchaser, promptly reimburse Seller for and hold
Seller harmless from and against same.
10.2 Suspense
Accounts.
Seller
shall transfer to Purchaser only those monies held in suspense by Seller at
Closing that relate to royalties and overriding royalties as to which Purchaser
shall be responsible for distribution after Closing. In addition to the
information set forth on Exhibit
3.14,
Seller
agrees to provide to Purchaser any information reasonably requested by Purchaser
regarding all of Seller’s accounts holding monies in suspense that will be
transferred to Purchaser. Purchaser agrees to take and apply such monies in
a
manner consistent with applicable Legal Requirements and with prudent oil and
gas business practices and to indemnify the Seller Group (as defined below)
against any claim relating to the failure to pay such funds after Closing in
accordance with the instructions or information delivered to Purchaser by
Seller.
10.3 Cross
Indemnity.
If the
Closing occurs, Seller and Purchaser agree as follows:
(a) Subject
to the terms of Article
12,
which
shall control with respect to the tax matters covered thereby, Purchaser agrees
to indemnify, defend and hold harmless Seller and its directors, officers,
employees, agents and representatives (the “Seller
Group”)
from
and against any and all claims, liabilities, losses, costs and expenses
(including, without limitation, court costs and reasonable attorneys’ fees, but
excluding any amounts reimbursed from third party insurance) (collectively,
“Losses”),
including Losses arising from the negligence (but not gross negligence) of
Seller that are attributable to: (i) a breach by Purchaser of its
representations and warranties or a failure by Purchaser to perform in all
respects any of its covenants, agreements, or obligations in this Agreement
or
in any agreement delivered by Seller at Closing (disregarding any qualifications
with respect to materiality or material adverse effect); or (ii) the ownership
or operation of the Assets after the Closing Date.
(b) Subject
to the terms of
Article 12,
which
shall control with respect to the tax matters covered thereby, Seller agrees
to
indemnify, defend and hold harmless Purchaser and its directors, officers,
employees, agents and representatives from and against any and all Losses,
including Losses arising from the negligence (but not gross negligence) of
Purchaser that are attributable to: (i) a breach by Seller of its
representations and warranties or a failure by Seller to perform in all respects
any of its covenants, agreements, or obligations in this Agreement or in any
agreement delivered by Purchaser at Closing (disregarding any qualifications
with respect to materiality or material adverse effect); or (ii) the ownership
or operation of the Assets prior to the Closing Date.
(c) The
indemnity, defense and hold harmless obligations set forth in Sections
10.3(a) and (b)
above:
(i) shall not limit or otherwise affect the scope of any indemnities given
by
Purchaser to Seller, or Seller to Purchaser, pursuant to the terms of this
Agreement; (ii) shall not apply to either Party’s costs and expenses with
respect to the negotiation and consummation of this Agreement and the
transactions contemplated hereby; (iii) shall not apply to any amount that
was
taken into account as an adjustment to the Purchase Price pursuant to the
provisions hereof, and (iv) are independent of and in addition to the rights
and
remedies that the Parties may have at law or in equity or otherwise for any
default.
(d) In
the
event a Party receives written notice of the commencement of any action or
proceeding, the assertion of any claim by a third party or the imposition of
any
penalty or assessment for which indemnity may be sought pursuant to this
Agreement, and such Party intends to seek indemnity from the other Party
pursuant to this Agreement, within a reasonable time after receipt of such
notice (or such earlier time as might be required to avoid prejudicing the
indemnifying Party’s position), such Party (the “Indemnified
Party”)
shall
provide the other Party (the “Indemnifying
Party”)
with
written notice of such action, proceeding, claim, penalty or assessment with
respect to which such indemnity has been invoked, together with a copy of such
claim, process or other legal pleading, and the Indemnified Party shall fully
cooperate with the Indemnifying Party in connection therewith. In the event
that
the Indemnifying Party, by the thirtieth (30th)
day
after receipt of notice of any such claim (or, if earlier, by the tenth
(10th)
day
preceding the day on which an answer or other pleading must be served in order
to prevent judgment by default in favor of the person asserting such claim),
does not elect to defend against such claim, the Indemnified Party shall (upon
further notice to the Indemnifying Party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the account
and risk of the Indemnifying Party and at the Indemnifying Party’s expense,
subject to the right of the Indemnifying Party to assume the defense of such
claims at any time prior to settlement, compromise or final determination
thereof. If the Indemnifying Party chooses to assume the entire defense of
such
claim or action (with counsel selected by it which is reasonably satisfactory
to
the Indemnified Party or person), the Indemnifying Party shall bear the entire
cost of defending such claim or action. The Indemnifying Party shall not have
the right to settle any such claim or action without the prior written consent
of the Indemnified Party, which consent shall not be unreasonably withheld.
In
the event of the assumption of the defense by the Indemnifying Party, the
Indemnifying Party shall not be liable for any further legal or other expenses
subsequently incurred by the Indemnified Party or any person in connection
with
such defense unless otherwise agreed in writing by the Parties or as herein
provided; provided, however, the Indemnified Party shall have the right to
participate in such defense at its own cost. During any period when the
Indemnifying Party is contesting any claim in good faith on behalf of the
Indemnified Party, the Indemnified Party shall not pay, compromise or settle
such claim without the Indemnifying Party’s consent (which shall not be
unreasonably withheld or delayed); provided, that the Indemnified Party may
nonetheless pay, compromise or settle the claim without consent during such
period, in which event it shall be deemed to have, automatically and without
any
further action on its part, waived any right (whether or not pursuant to this
Agreement) to indemnity in respect of all liabilities relating to the claim.
Failure of a Party to give prompt notice of a claim for indemnification
hereunder shall not affect such Party’s right to indemnification hereunder
except to the extent that the Indemnifying Party shall have been materially
prejudiced as a result of such failure.
10.4 Purchaser
Indemnity.
If
Closing occurs, Purchaser agrees as follows:
(a) to
assume
responsibility for the disbursement of all Suspended Funds and to indemnify,
defend, and hold harmless the Seller Group from and against any Losses
attributable thereto; and;
(b) to
assume
responsibility for plugging and abandonment of all xxxxx described on
Exhibit
A-2
and to
indemnify, defend, and hold harmless the Seller Group from and against any
Losses attributable thereto.
10.5 Assumption
of Liabilities.
Upon
Closing, and subject to Seller’s indemnification obligation and limitations set
forth in Sections
10.3, 10.6 and 10.7
for the
period it remains in effect, Purchaser shall assume and timely and fully pay,
perform and otherwise discharge, without recourse to the Seller Group, all
obligations and liabilities, direct or indirect, known or unknown, asserted
or
unasserted, absolute or contingent, arising under or with respect to the
ownership or operation of the Assets on or after the Effective Time, including,
without limitation:
(a) the
condition of the Assets on the date of Closing (including, without limitation,
all obligations to properly plug and abandon, or replug and re-abandon, xxxxx
located on the Leasehold Interests, to restore the surface of the Leasehold
Interests and to comply with, or to bring the Leasehold Interests into
compliance with, Environmental Laws, including conducting any remediation
activities which may be required on or otherwise in connection with activities
on the Leasehold Interests), provided that such condition or the events giving
rise to such condition arose or occurred on or after the Closing, and
(b) the
proper payment of any rentals and royalties with respect to the Leasehold
Interests.
10.6 Limitations
on Indemnification.
Notwithstanding anything herein to the contrary:
(a) Seller
shall have no liability or obligation for any Losses under any indemnification
provided under this Agreement, including Section
12.5,
unless
the aggregate Losses which Purchaser is entitled to recover under this
Agreement, including Section
12.5,
exceed
ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000).
(b) In
addition, in no event shall Seller be obligated under this Agreement to
indemnify Purchaser for an aggregate amount of Losses in excess of the Adjusted
Purchase Price.
10.7 Exclusive
Remedy.
The
sole and exclusive remedy of Purchaser with respect to the Assets shall be
pursuant to the express provisions of this Agreement. Without limitation of
the
foregoing, if Closing occurs, the sole and exclusive remedy of Purchaser, for
any and all (a) claims relating to any representations, warranties, covenants
and agreements that are contained in this Agreement or in any certificate
delivered at Closing, (b) other claims pursuant to or in connection with this
Agreement, and (c) other claims relating to the Assets and the purchase and
sale
thereof, shall be any right to indemnification from such claims that is
expressly provided herein, and if no such right of indemnification is expressly
provided, then such claims are hereby waived to the fullest extent permitted
by
law. If Closing occurs, Purchaser shall also be deemed to have waived, to the
fullest extent permitted under applicable law, any right to contribution against
Seller (including, without limitation, any contribution claim arising under
any
applicable Environmental Law) and any and all other rights, claims and causes
of
action it may have against Seller arising under or based on any Legal
Requirements or common law or otherwise not provided under this
Agreement.
10.8 Indemnification
Despite Negligence.
THE
INDEMNIFICATION PROVIDED IN SECTIONS
10.3 TO 10.7
AND SECTION
12.5 WILL
BE APPLICABLE WHETHER OR NOT THE SOLE, JOINT, OR CONTRIBUTORY NEGLIGENCE (BUT
NOT GROSS NEGLIGENCE), OR STRICT LIABILITY OF THE INDEMNIFIED PARTY IS ALLEGED
OR PROVEN. THE PARTIES AGREE THE PRECEDING SENTENCE IS COMMERCIALLY
CONSPICUOUS.
10.9 Further
Assurances.
After
Closing, Seller and Purchaser agree to take such further actions and to execute,
acknowledge and deliver such additional documents and instruments as may be
necessary or useful in carrying out the purposes of this Agreement or of any
document delivered pursuant hereto.
10.10 Records.
As soon
as reasonably possible following Closing, but in any event prior to the 30th
day
following Closing, Seller shall make all Records available for delivery to
Purchaser at Seller’s offices in Houston, Texas. Prior to the expiration of such
thirty (30) day period, Seller shall give Purchaser full and complete access
to
such Records, except to the extent same have been sent off-site by Seller for
copying. Seller may retain copies of the Records, provided that Seller shall
protect the confidentiality of (i) geophysical and geological information
relating to the Assets; and (ii) the Records, unless (y) such information is
already in the public domain or hereinafter enters the public domain but not
as
a result of an unauthorized disclosure made directly or indirectly by Seller;
or
(z) Seller, in its good faith opinion, is required by law or applicable stock
exchange regulation to disclose the information or data in question. In the
event that Seller does not retain originals or copies of certain Records, Seller
shall have the right to review and copy the Records during normal business
hours
upon reasonable notice for so long as Purchaser retains the Records. Purchaser
agrees that the Records will be maintained in compliance with all applicable
Legal Requirements governing document retention.
10.11 Cooperation
Regarding Operatorship.
Prior
to and following Closing, Seller agrees to use its commercially reasonable
efforts to assist and cooperate with Purchaser in connection with Purchaser’s
efforts to secure operatorship of the xxxxx and units constituting a part of
the
Assets.
10.12 Mediation
and Arbitration.
The
Parties will attempt in good faith to resolve any controversy or dispute arising
out of or relating to this Agreement and all existing contracts between the
Parties promptly by negotiations between themselves. The negotiation process
may
be started by the giving of written notice by any Party to the other Party
in
accordance with the terms of the notice provision of this Agreement, and the
Parties agree to negotiate in good faith, and select an independent mediator
to
facilitate the negotiations and conduct up to eight (8) consecutive hours of
mediated negotiations in Houston, Texas within thirty (30) days after the notice
is first sent. If, within ten (10) days after the initial notice, the Parties
are not able to agree upon a mediator, the Parties shall immediately proceed
to
arbitration. Fees and expenses of the mediator shall be borne equally by the
Parties.
No
litigation or other proceeding may ever be instituted at any time in any court
for any purpose, except as may be set forth in Section
10.12(f)
hereof.
(a) If
a
controversy or dispute is not resolved after completion of the negotiation
process described above, then, upon notice by any Party to the other Party
(an
“Arbitration
Notice”)
and to
the American Arbitration Association (the “AAA”),
the
controversy or dispute arising under or relating to this Agreement and all
existing contracts between the Parties shall be submitted to an arbitration
panel selected in accordance with Section
10.12(b)
for
binding arbitration in Houston, Texas, in accordance with the AAA’s Commercial
Arbitration Rules (the “Rules”).
The
Parties agree that they will faithfully observe this Agreement and the Rules
and
that they will abide by and perform any award rendered by the arbitration panel.
The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C.
Section 1-16. The award or judgment of the arbitration panel shall be final
and
binding on all Parties and judgment upon the award or judgment of the
arbitration panel may be entered and enforced by any court having competent
jurisdiction. If any Party becomes the subject of a bankruptcy, receivership
or
other similar proceeding under the laws of the United States of America, any
state or commonwealth or any other nation or political subdivision thereof,
then, to the extent permitted or not prohibited by applicable law, any factual
or substantive legal issues arising in or during the pendency of any such
proceeding shall be subject to all of the foregoing mandatory mediation and
arbitration provisions and shall be resolved in accordance therewith. The
agreements contained herein have been given for valuable consideration, are
coupled with an interest and are not intended to be executory contracts. The
fees and expenses of the arbitration panel shall be shared by all Parties
engaged in the dispute or controversy on a basis determined to be fair and
equitable by the arbitrators, taking into account the relative fault of each
Party, the relative credibility and merit of all claims and defenses made by
each Party and the cooperation, speed and efficiency of each Party in conducting
the arbitration proceeding and complying with the Rules and with orders and
requests of the arbitrators.
(b) Promptly
after the Arbitration Notice is given, each Party will select an arbitrator
and
the arbitrators so selected will in turn select an independent and impartial
third arbitrator. If the arbitrators selected by the Parties are unable to
agree
on a third arbitrator, then either Party may notify the AAA and the AAA shall
select the third arbitrator. Such third arbitrator selected in such manner
shall
not be entitled to compensation in excess of compensation paid to either of
the
other two arbitrators. The decision of the AAA with respect to the selection
of
the third arbitrator will be final and binding in such case. Such three (3)
arbitrators will constitute the arbitration panel.
(c) Within
ten (10) days after the selection of the arbitration panel, the Parties and
their counsel will appear before the arbitration panel at a place and time
in
Houston, Texas, as may be designated by the arbitration panel for the purpose
of
each Party making a one (1) hour or less presentation and summary of the case.
Thereafter, the arbitration panel shall set dates and times for additional
hearings until the proceeding is concluded. The desire and goal of the Parties
is, and the arbitration panel will be advised that its goal should be, to
conduct and conclude the arbitration proceeding as expeditiously as
possible.
(d) Any
arbitral award may be enforced in a District Court of the State of Texas sitting
in Houston, Texas or in the United States District for the Southern District
of
Texas, Houston Division, and, by execution and delivery of this Agreement,
the
Parties hereby accept for themselves and in respect of their property, generally
and unconditionally, the nonexclusive jurisdiction of the aforesaid courts
for
said purpose and the Parties hereby irrevocably waive to the fullest extent
permitted by law any objection, including, without limitation, any objection
to
the laying of venue or any objection based on the grounds of forum non
conveniens, which they may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions.
(e) The
arbitration panel will have no authority to award punitive or other damages
not
measured by the prevailing Party’s actual damages and may not, in any event,
make any ruling, finding, or award that does not conform to the terms and
conditions of this Agreement. This limitation of damages shall apply to any
arbitration no matter when the proceeding is initiated and shall survive the
termination of this Agreement without limit.
(f) The
provisions of this Section
10.12
relating
to arbitration of disputes shall not apply to litigation that is instituted
for
the sole purpose of either: (i) compelling a Party to submit to arbitration
in
accordance with the provisions of this Section10.12;
or (ii)
obtaining enforcement of any award or judgment of the arbitrator(s) issued
pursuant to this Section
10.12.
10.13 Removal
of Name.
As
promptly as practicable, but in any case within thirty (30) days after the
Closing Date, Purchaser shall eliminate the name “Prime Natural Resources, Inc.”
and any variants thereof from the Assets acquired pursuant to this Agreement
and, except with respect to such grace period for eliminating existing usage,
shall have no right to use any logos, trademarks or trade names belonging to
Seller or any of its Affiliates.
ARTICLE
11
TERMINATION
11.1 Right
of Termination.
This
Agreement and the transactions contemplated hereby may be
terminated:
(a) at
any
time at or prior to Closing by mutual consent of Seller and Purchaser;
(b) by
Seller
if, on the Closing Date, the conditions to the obligations of Seller set forth
in Article
7
have not
been satisfied or have not been waived by Seller;
(c) by
Purchaser if, on the Closing Date, the conditions to the obligations of Buyer
set forth in Article
8
have not
been satisfied or have not been waived by Purchaser; or
(d) at
any
time at or after September 30, 2007, by Seller or Purchaser, by the delivery
of
a written notice to the other Party, if the Closing shall not have occurred
by
such date;
provided,
however, no such Party may exercise any right of termination pursuant to this
Section
11.1
if the
event giving rise to such termination right shall be due to the willful failure
of such Party to perform or observe in any material respect any of the covenants
or agreements set forth herein to be performed or observed by such
Party.
11.2 Effect
of Termination.
If this
Agreement is terminated pursuant to Section
11.1,
this
Agreement shall become void and of no further force or effect (except for the
provisions of Sections
3.4, 4.4, 6.1,
10.12(e), 11.3, 13.1 through 13.8, 13.10 to 13.12,
which
shall survive such termination and continue in full force and effect); provided,
however, that, if either Party is in default of its obligations under this
Agreement at the time this Agreement is so terminated, such defaulting Party
shall continue to be liable to the other Party for damages (but in no event
for
specific performance) in respect of such default and such liability shall not
be
affected by such termination.
11.3 Return
of Data.
Purchaser agrees that if this Agreement is terminated for any reason whatsoever,
Purchaser shall promptly return to Seller all information furnished by or on
behalf of Seller to Purchaser and Purchaser’s Representatives in connection with
this Agreement or Purchaser’s investigation of the Assets, together with all
copies, extracts or excerpts of such information.
ARTICLE
12
TAXES
12.1 Apportionment
of Ad Valorem and Property Taxes.
All ad
valorem taxes, real property taxes, personal property taxes and similar
obligations (“Property
Taxes”)
attributable to the Assets shall be apportioned as of the Effective Time between
Seller and Purchaser as an adjustment to the Purchase Price pursuant to
Section
2.2(d);
provided, however, that any Property Taxes which are calculated based on the
value or amount of production during a given period shall be apportioned to
the
period during which such production occurred, regardless of the date on which
such taxes are assessed and/or payable. The owner of record on the assessment
date shall file or cause to be filed all required reports and returns incident
to the Property Taxes and shall pay or cause to be paid to the taxing
authorities all Property Taxes relating to the tax periods during which such
production occurred. If Seller is the owner of record on the assessment date,
then Purchaser’s pro rata portion, if any, of such Property Taxes shall be taken
into account as an adjustment to the Purchase Price pursuant to Section
2.2.
If
Purchaser is the owner of record as of the assessment date then Seller shall
pay
to Purchaser Seller’s pro rata portion of such Property Taxes, if any, within
fifteen (15) days from the date such taxes are required to be paid to the taxing
authorities and after receipt of Purchaser’s invoice therefor, except to the
extent Seller’s pro rata portion of such Property Taxes has been taken into
account as an adjustment to the Purchase Price pursuant to Section
2.2.
12.2 Transfer
Taxes.
Purchaser shall be liable for all Transfer Taxes (as defined below) required
to
be paid in connection with the sale of the Assets pursuant to this Agreement.
If
the transfer of the Assets pursuant to this Agreement is exempt from applicable
Transfer Taxes, Purchaser shall, at Closing, provide Seller with proof thereof.
As used herein, the term “Transfer
Taxes”
means
any sales, use and excise taxes.
12.3 Other
Taxes.
All
taxes (other than franchise and income taxes and taxes covered by Section
10.1)
attributable to the Assets that are imposed on or with respect to the production
of oil, natural gas or other hydrocarbons or minerals or the receipt of proceeds
therefrom (including but not limited to severance, production, and excise taxes)
shall be apportioned between the Parties based upon the respective shares of
production taken by the Parties. All such taxes that have accrued with respect
to the period prior to the Closing Date have been or will be properly paid
by or
on behalf of Seller and Seller shall be responsible for filing or causing to
be
filed all statements, returns, and documents incident thereto. Purchaser shall
be responsible for paying or withholding or causing to be paid or withheld
all
such taxes which have accrued after the Closing Date and for filing all
statements, returns, and documents incident thereto.
12.4 Cooperation.
Each
Party shall provide the other Party with reasonable access to all relevant
documents, data and other information (other than that which is subject to
an
attorney-client privilege) which may be required by the other Party for the
purpose of preparing tax returns, filing refund claims and responding to any
audit by any taxing jurisdiction with respect to the Assets. Each Party shall
use commercially reasonable effort to cooperate with all reasonable requests
of
the other Party made in connection with contesting the imposition of any taxes
with respect to the Assets. Notwithstanding anything to the contrary in this
Agreement, neither Party shall be required at any time to disclose to the other
Party any tax return or other confidential tax information. Except where
disclosure is required by applicable law or judicial order, any information
obtained by a Party pursuant to this Section
12.4
shall be
kept confidential by such Party, except to the extent disclosure is required
in
connection with the filing of any tax returns or claims for refund or in
connection with the conduct of an audit, or other proceedings in response to
an
audit, by a taxing jurisdiction with respect to the Assets.
12.5 Indemnification
for Tax.
(a) Subject
to the provisions of Sections
10.6, 10.7 and 12.5(b),
Seller
shall indemnify Purchaser for all liabilities for taxes assessed by any
governmental authorities in respect of the ownership or operation of the Assets
prior to the Effective Time, together with penalties and interest thereon
(provided such penalties and interest do not result from the negligence, late
filing, fraud or acts of misfeasance or malfeasance of Purchaser); provided,
however, that such indemnity shall not apply to: (i) income taxes arising out
of
the ownership of the Assets after the Effective Time; (ii) Property Taxes
apportioned to Purchaser pursuant to Section
12.1;
and
(iii) any taxes for any tax period beginning prior to the Closing Date and
ending after the Closing Date which is allocable to the portion of such period
occurring on or after the Closing Date. Seller shall be entitled to all refunds
or rebates of taxes paid in respect of the ownership or operation of the Assets
prior to the Effective Time. Subject to the provisions of Section
12.5(b),
Purchaser shall indemnify Seller for all liabilities for taxes assessed by
any
governmental authorities, together with penalties and interest thereon (provided
such penalties and interest do not result from the negligence, late filing,
fraud or acts of misfeasance or malfeasance of Seller), to the extent such
liabilities relate to the ownership or operation of the Assets from and after
the Effective Time; provided, however, that such indemnity shall not apply
to:
(i) income taxes arising out of the ownership of the Assets prior to the
Effective Time; (ii) Property Taxes apportioned to Seller pursuant to
Section
12.1;
and
(iii) any taxes for any tax period beginning prior to the Closing Date and
ending after the Closing Date which is allocable to the portion of such period
occurring prior to the Closing Date.
(b) In
order
for Seller or Purchaser (“Claimant”)
to
make a claim against the other (“Indemnitor”)
under
this Article
12,
Claimant shall give prompt written notice to Indemnitor of any liability for
which Claimant could claim indemnification under this Article
12,
which
notice shall include the circumstances surrounding such liability. Indemnitor
shall then have the right but not the obligation, to contest such liability
at
its sole cost and expense by giving written notice to Claimant of such election
within thirty (30) days after Indemnitor receives Claimant’s notice. Should
Indemnitor fail to notify Claimant within such 30-day period, Indemnitor shall
be deemed to have elected not to contest such liability. Should Indemnitor
elect
(or be deemed to have elected) not to contest such liability, Indemnitor shall
pay the full amount due under Section
12.5(a)
in
respect of such liability to Claimant in cash within thirty (30) days after
Indemnitor elects (or is deemed to have elected) not to contest such liability.
Except as specifically provided in this Section
12.5
with
respect to certain tax issues which must be combined or joined with other tax
issues, if Indemnitor elects to contest any such liability, Claimant shall
give
Indemnitor full authority to defend, adjust, compromise or settle such liability
and any action, suit, or proceeding in which Indemnitor contests such liability,
in the name of Claimant or otherwise as Indemnitor shall elect. In any
administrative or legal proceeding, Indemnitor shall employ counsel selected
by
it and reasonably acceptable to Claimant. With respect to tax issues incident
to
any such liability that must be combined or joined with one or more other tax
issues which Claimant desires to contest, Claimant and Indemnitor shall
cooperate fully, and control of any administrative legal proceeding shall rest
with the Party having the greater ultimate liability (including liability under
Section
12.5(a))
for the
taxes in dispute. The Party in control may not adjust, compromise or settle
taxes which are contested by or on behalf of the other Party without the written
consent of the other Party. With respect to any liability contested by
Indemnitor under the terms of this Section
12.5(b),
Indemnitor shall pay the full amount due under Section
12.5(a)
in
respect of such liability to Claimant in cash within thirty (30) days after
the
liability is finally determined either by settlement or pursuant to the final,
non-appealable judgment of a court of competent jurisdiction.
ARTICLE
13
MISCELLANEOUS
13.1 Governing
Law.
THIS
AGREEMENT AND ALL INSTRUMENTS EXECUTED IN ACCORDANCE WITH IT SHALL BE GOVERNED
BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT
REGARD TO ITS CONFLICT OF LAW RULES THAT WOULD DIRECT APPLICATION OF THE LAWS
OF
ANOTHER JURISDICTION, EXCEPT TO THE EXTENT THAT IT IS MANDATORY THAT THE LAW
OF
SOME OTHER JURISDICTION, WHEREIN ANY ASSETS ARE LOCATED, SHALL
APPLY.
The laws
of the state wherein the Leasehold Interests are located shall control as to
all
matters pertaining to title and to the evaluation of encumbrances placed upon
such Leasehold Interests.
13.2 Entire
Agreement.
This
Agreement, including all Exhibits attached hereto and made a part hereof
constitute the entire agreement between the Parties with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties with
respect to same (including, without limitation, the Letter of Intent executed
by
Seller and the Parent and dated July 3, 2007). No supplement, amendment,
alteration, modification, waiver or termination of this Agreement shall be
binding unless executed in writing by the Parties hereto.
13.3 Waiver.
No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof (whether or not similar),
nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
13.4 Captions.
The
captions in this Agreement are for convenience only and shall not be considered
a part of or affect the construction or interpretation of any provision of
this
Agreement.
13.5 Assignment.
This
Agreement shall be binding upon and inure to the benefit of the Parties hereto
and their respective successors and assigns.
13.6 Notices.
Any
notice provided or permitted to be given under this Agreement shall be in
writing, and shall either be by Email at the Email address provided below with
sender confirmation of transmission, as provided herein, or by facsimile at
the
facsimile number provided below with sender confirmation of receipt, or by
personal delivery or by depositing same with the U.S. Postal Service, addressed
to the Party to be notified at the municipal street address provided below,
postage prepaid, and registered or certified with a return receipt requested.
Notice deposited with the U.S. Postal Service in the manner hereinabove
described shall be deemed to have been given and received on the date of the
delivery as shown on the return receipt. Notice served in any other manner
shall
be deemed to have been given and received only if and when actually received
by
the addressee (except that notice given by facsimile shall be deemed given
and
received upon receipt only if received during normal business hours and if
received other than during normal business hours shall be deemed received as
of
the opening of business on the next Business Day, and notice by Email shall
be
effective immediately upon transmittal to the other Party, provided that a
printed copy of the Email sent is preserved showing the date and time of
transmission). For purposes of notice, the Email addresses, facsimile numbers,
and municipal street addresses of the Parties shall be as follows:
For
Seller
|
Prime
Natural Resources, Inc.
|
|
0000
Xxxx Xxxx Xxxxxxxxx, Xxxxx 0000
|
|
Xxxxxxx,
Xxxxx 00000
|
|
Attn:
Xxxxxxx X. Xxxx, Land Manager
|
|
Email:
xxxxx@xxxxxxx.xxx
|
|
Facsimile
No.: 713/953-3240
|
For
Purchaser
|
ICF
Energy Corporation
|
|
0000
Xxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
|
|
Xxx
Xxxxxxxxx, Xxxxx 00000
|
|
Attn:
Xxxx X. Folnovic, President and CEO
|
|
Email: xxxx@xxxxxxx.xxx
|
|
Facsimile
No.: 832/553-7244
|
Each
Party shall have the right, upon giving ten (10) days’ prior notice to the other
in the manner hereinabove provided, to change its address and other contact
information for purposes of notice.
13.7 Expenses.
Except
as otherwise provided herein, each Party shall be solely responsible for all
of
its expenses incurred in connection with this Agreement and the transactions
contemplated hereby, in particular, all expenses incurred in connection with
any
registration statement that may be filed, as contemplated in Section
2.1(c)
of this
Agreement (including, without limitation, fees and expenses of its own counsel,
brokers, finders, and consultants).
13.8 Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced under any rule of law, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as
the
economic or legal substance of the transactions contemplated hereby is not
affected in a materially adverse manner with respect to either
Party.
13.9 Publicity.
With
regard to all publicity and other releases issued at or prior to the Closing
concerning this Agreement and the transactions contemplated hereby, neither
Party shall issue any publicity or other release without the prior written
consent of the other Party, except as required by applicable law or the
applicable rules or regulations of any governmental body or stock
exchange.
13.10 No
Third-Party Beneficiary.
Except
as expressly provided herein, this Agreement is not intended to create, nor
shall it be construed to create, any rights in any third party under doctrines
concerning third-party beneficiaries.
13.11 Limitation
of Damages.
Notwithstanding any other provision of this Agreement (or any other agreement
related hereto) to the contrary, in no event shall either Party be liable to
the
other or entitled to recover incidental, consequential, special, indirect,
multiple, statutory, exemplary or punitive damages.
13.12 Survival.
The
warranties, covenants and obligations of the Parties under this Agreement shall
survive Closing. The special warranty of title (and representations of Seller
set forth and contained in to the extent covered by the special warranty of
title in Section
9.2(a))
shall
survive Closing without limit. The representations of the Parties made in this
Agreement shall survive Closing for a period of one (1) year except that: (i)
those certain representations of Seller set forth and contained in Sections
3.8,
3.12
and
3.14
shall
terminate at Closing; and (ii) those certain representations of Seller set
forth
and contained in Sections
3.1
to
3.5,
Section
3.11
(to the
extent covered by the special warranty of title in Section
9.2(a)),
Section
3.22,
Sections
4.1
to
4.9,
Section
10.11(e),
and
Section
13.11
shall
survive Closing or termination of this Agreement and shall not
expire.
13.13 Counterparts;
Exhibits.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. All Exhibits attached hereto are an integral part of this Agreement
and are hereby made a part of this Agreement and incorporated herein by this
reference. Any reference to this Agreement includes such Exhibits. All
references in this Agreement to Exhibits shall be deemed to be references to
the
Exhibits attached hereto, as the same may be amended and supplemented by mutual
agreement of the Parties at or prior to Closing.
IN
WITNESS WHEREOF,
the
Parties have executed this Agreement as of the day and year first set forth
above.
|
SELLER:
|
|
|
Prime
Natural Resources, Inc.
|
|
|
By:
|
/s/
Xxxx
X. Xxxxx
|
|
Printed Name:
|
Xxxx
X. Xxxxx
|
|
Title:
|
Chief
Financial Officer
|
|
PURCHASER:
|
|
|
ICF
Energy Corporation
|
|
|
By:
|
/s/
Xxxx Folnovic
|
|
Xxxx
X. Folnovic,
|
|
|
President
and CEO
|
|
[Signatures
continue on next page]
Signature
Page
The
appearance herein and execution of this Agreement by the Parent is for the
limited purpose of acknowledging the agreements of the Parties with respect
to
Sections ARTICLE
22.1
and 4.8
of this Agreement insofar and only insofar as concerns the portion of the
Purchase Price shall be paid in the common stock of the Parent and to agree
to
issue and deliver such stock in accordance with such provisions. Other than
such
limited appearance herein, the Parent makes no other agreements, covenants,
representations or warranties whatsoever and such limited appearance shall
not
be construed by the Parties to have any other effect and the Parties hereby
agree that such limited appearance by the Parent shall not create any other
obligation or liability of, or with respect to, the Parent under this
Agreement.
|
True
North Energy Corporation
|
|
|
By:
|
/s/
Xxxx Folnovic
|
|
Xxxx
X. Folnovic,
|
|
|
President
and CEO
|
|
Signature
Page
Exhibit
2.3(a)
Settlement
Statement
See
attached.
Exhibit
3.7
Litigation
None.
Exhibit
3.8
Basic
Documents
None.
Exhibit
3.9
Compliance
with Laws
None.
Exhibit
3.10
Governmental
Licenses
None.
Exhibit
3.11
Lease
Obligations
None.
Exhibit
3.12
Obligations
Relating to Operations
None.
Exhibit
3.13
Operations
Since Effective Time
None.
Exhibit
3.14
Marketing
of Production; Suspense Funds
See
attached.
Exhibit
3.15
Taxes
None.
Exhibit
3.16
Preferential
Rights and Restrictions on Assignment
None.
Exhibit
3.17
Improvements,
Personalty, Equipment and Fixtures
None.
Exhibit
3.18
Xxxxx
None.
Exhibit
3.19
Environmental
Matters
None.
Exhibit
9.2(a)
ASSIGNMENT,
XXXX OF SALE AND CONVEYANCE
STATE
OF
TEXAS
COUNTY
OF
BRAZORIA
This
ASSIGNMENT,
XXXX OF SALE AND CONVEYANCE (this
“Assignment”)
is
dated the ______ day of________, 2007, but effective as of the 1st day of July,
2007, at 7:00 a.m., local time where the Properties (as such term is defined
below) are located (the “Effective
Time”),
is
from PRIME
NATURAL RESOURCES, INC.,
a
Texas corporation, whose address is 0000 Xxxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000 (“Seller”)
to ICF
ENERGY CORPORATION, a Texas corporation, whose address is 0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxx 00000 (“Purchaser”).
FOR
Ten
Dollars and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Seller has GRANTED,
BARGAINED, SOLD, CONVEYED, ASSIGNED, TRANSFERRED, SET OVER
and
DELIVERED
and
hereby GRANTS,
BARGAINS, SELLS, CONVEYS, ASSIGNS, TRANSFERS, SETS OVER
and
DELIVERS
unto
Purchaser, effective as of the Effective Time, the following (collectively,
the
“Properties,”
and
individually, a “Property”):
All
of
Seller’s right, title and interest in and to the oil and gas leases described or
referred to in Exhibit
A-1
attached
hereto and made a part hereof, and all other lands described or referred to
in
Exhibit
A-1,
it
being the intent of Seller to convey, and Seller does hereby convey to
Purchaser, all right, title and interest in any xxxxx and plants located on
such
leases and lands, including, without limitation, the xxxxx described or referred
to in Exhibit
A-2
attached
hereto, and it also being the intent of Seller to convey, and Seller does hereby
convey to Purchaser all of Seller’s right, title and interest in, to and under
such leases, even though such interests, the lands covered thereby, or the
leases themselves be incorrectly or qualitatively or quantitatively deficient
and/or insufficiently described in, or a description of any such interest,
leases or lands be omitted from Exhibit
A-1,
together with:
(a)
all
of Seller’s right, title and interest in equipment, personal property and
fixtures in, on and under the property described in Exhibits
A-1 and A-2,
including gas processing plants and gas gathering systems which are used with
oil and/or gas operations thereon or thereunder, held for use in connection
therewith or servicing the same, including, without limitation, the xxxxx,
injection xxxxx, salt water disposal facilities, well heads, casing, tubing,
pumps, motors, gauges, valves, heaters, treaters, gathering lines, flow lines,
gas lines, water lines, vessels, tanks, boilers, equipment, separators,
buildings, compressors, pipelines, power lines, machinery and other
facilities;
(b)
all
of Seller’s right, title and interest in, to and under or derived from
unitization, pooling and operating agreements and the units created thereby
(including any and all units formed under orders, regulations, rules or other
official acts of the Governmental Authority having jurisdiction), whether
recorded or unrecorded, insofar as the same cover or relate to the leases and
lands described in Exhibit
A-1;
(c)
all
of Seller’s right, title and interest, including future income, in, to and under
or received from any production payments sales, purchase and processing
contracts and agreements, including the gas processing rights and agreements
associated with any gas processing plants, insofar as the same relate to any
and
all xxxxx described in Exhibit
A-2,
including, without limitation, all permits, franchises, licenses, surface
leases, servitudes, easements and rights-of-way relating to such xxxxx or gas
plants;
(d)
all
of Seller’s right, title and interest in and to any rights which Seller may have
under indemnifications, warranties, and covenants under prior conveyances
affecting the interests sold, conveyed, transferred and assigned
herein;
(e)
all
of Seller’s right, title and interest in and to all petroleum and hydrocarbons
stored upon or produced from the leases, lands, and xxxxx described in
Exhibits
A-1 and A-2
or from
any property pooled or unitized therewith which are attributable to the leases,
lands, and xxxxx described in Exhibits
A-1 and A-2,
pursuant to contract or otherwise;
(f)
all
of Seller’s right, title and interest in and to all contracts and contractual
rights relating to the leases, lands, and xxxxx described in Exhibits
A-1 and A-2
and to
the foregoing property to the extent valid and subsisting;
(g)
to
the extent not prohibited by third party contracts, all of the files, records
and data relating to the leases, lands, and xxxxx described in Exhibits
A-1 and A-2
and to
the items described in subsections (a) through (f) above (the “Records”),
including, without limitation, title records (including abstracts of title
and
title curative documents); contracts; correspondence; microfiche lists; computer
output; geological, geophysical and seismic records, plats, surveys, maps,
cross-sections, data, and interpretive reports; engineering reports, whether
produced by Seller’s personnel or outside consultants; and production records,
electric logs, cuttings, cores, core data, pressure data and decline curves
and
graphical production curves, well files and all related matters; provided,
that
Seller has rights to make and retain copies of such Records as Seller may desire
prior to the delivery of the Records to Purchaser and access to the Records
as
Purchaser may have in its possession in the future; and
(h)
the
benefit of and the right to enforce the covenants and warranties, if any, which
Seller is entitled to enforce with respect to the items described in the
preceding paragraphs (a) through (g) against Seller’s predecessors in title
thereto; and Purchaser and its successors, assigns and legal representatives
shall be substituted and fully subrogated, to the extent assignable, in and
to
all covenants and warranties, if any, by Seller’s predecessors in title, with
full subrogation of all rights accruing under the statutes of limitation or
prescription.
Excluded
Properties.
The
Properties do not include, and there is hereby expressly excepted and reserved
to Seller (collectively the “Excluded
Properties”):
(A)
all of Seller’s minute books, financial records, and other business records that
relate to Seller’s business generally (excluding the ownership and operation of
the Properties); (B) all trade credits, all accounts, receivables and all other
proceeds, income or revenues attributable to the Properties with respect to
any
period of time prior to the Effective Time; (C) all claims and causes of action
of Seller arising under or with respect to any contracts and agreements that
are
attributable to periods of time prior to the Effective Time (including claims
for adjustments or refunds); (D) all rights and interests of Seller under any
policy or agreement of insurance or indemnity, under any bond or to any
insurance or condemnation proceeds or awards arising, in each case, from acts,
omissions or events, or damage to or destruction of property prior to the
Effective Time; (E) all oil, gas and other hydrocarbons produced and sold from
the Properties with respect to all periods prior to the Effective Time; (F)
all
claims of Seller for refunds of or loss carry forwards with respect to
production or any other taxes attributable to any period prior to the Effective
Time, income or franchise taxes or any taxes attributable to the Excluded
Properties; (G) all of Seller’s proprietary computer software, patents, trade
secrets, copyrights, names, trademarks, logos and other intellectual property;
(H) all documents and instruments of Seller that may be protected by an
attorney-client privilege; (I) all audit rights arising under any of the
contracts and agreements or otherwise with respect to any period prior to the
Effective Time or to any of the Excluded Properties; (J) documents prepared
or
received by Seller with respect to lists of prospective purchasers for such
transactions compiled by Seller, correspondence between or among Seller, its
representatives, and any prospective purchaser other than Purchaser and
correspondence between Seller or any of its respective representatives with
respect to any of such prospective purchaser other than Purchaser, the
prospective purchasers, or the transactions contemplated in that certain
PURCHASE AND SALE AGREEMENT (a copy of which may be obtained from Purchaser
at
the above referenced address) dated the ____ day of August, 2007 by and between
Seller and Purchaser (the “Purchase
Agreement”);
(K)
all of Seller’s employee benefit plans, including all rights, obligations and
assets related thereto; and (L) all of Seller’s rights and obligations under
accounting and human resources outsource contracts.
Purchaser
shall not be responsible for, and Seller expressly retains, all liabilities
related to the Excluded Properties, whether such liabilities arise before or
after the Effective Time. It is understood that certain of the Excluded
Properties may not be embraced by the term “Properties”. The fact that certain
properties, rights and interests have been expressly excluded is not intended
to
suggest that had they not been excluded they would have constituted Properties
and shall not be used to interpret the meaning of any word or phrase used in
describing the Properties.
TO
HAVE
AND TO HOLD
the
Properties unto Purchaser and its successors and assigns forever, and, and
this
Assignment is made with full rights of substitution and subrogation of Purchaser
in and to all indemnifications, covenants, and warranties by others heretofore
given or made with respect to the Properties, subject to the following terms
and
conditions:
1. Special
Warranty of Title.
Except
with respect to matters to which this Assignment is made subject, Seller does
hereby bind itself and its successors and assigns to WARRANT
AND FOREVER DEFEND
the
interests in and to the Properties as set forth on Exhibits
A-1 and A-2
against
every person whomsoever lawfully claiming the same or any part thereof by,
through, or under Seller, but not otherwise, and does otherwise bind itself
and
its successors and assigns to WARRANT
AND FOREVER DEFEND
all and
singular title to the Properties unto Purchaser, its successors and assigns,
against every person whomsoever lawfully claiming the same or any part thereof
by, through or under Seller, but not otherwise, as follows:
(i) Seller
is
entitled to receive (free and clear of all royalties, overriding royalties,
non-participating royalties, net profits interests, production payments, or
other burdens on or measured by production of hydrocarbons) not less than the
interest shown in Exhibit
A-2
(the
decimal interest shown in the column in such Exhibit with the caption,
“NRI”)
of all
hydrocarbons produced, saved, and marketed from the applicable Property and
of
all hydrocarbons produced, saved and marketed from any unit of which the
Property is a part and allocated to such Property, all without reduction,
suspension, or termination of the interests in the relevant Property or Seller’s
right to gross or net proceeds from the relevant Property throughout the
duration of such Property, except as stated in Exhibit
A-2;
(ii) Seller
is
obligated to bear a percentage of the costs and expenses relating to the
maintenance and development of, and operations relating to, the applicable
Property and xxxxx associated with the Property not greater than the working
or
expense-bearing interest shown in Exhibit
A-2
(the
decimal interest shown in the column in such Exhibit with the caption,
“WI”)
without increase of the working interest in the relevant Property throughout
the
duration of such Property, except as stated in Exhibit
A-2;
and
(iii) the
Properties are free and clear (except for Permitted Encumbrances, as such term
is defined in the Purchase Agreement) of liens, encumbrances, obligations,
or
defects which arise as a result of actions taken (or effective) or omitted
at or
prior to the Effective Time, and (A) are otherwise subject only to contractually
binding arrangements which are conventional, which are customarily experienced
in the oil and gas industry, and (B) are not subject to any matters which will
result in a breach of any representation or warranty of Seller made in this
Assignment or to be contained in any documents to be delivered by Seller and
connected with this Assignment.
2. DISCLAIMER.
THE SPECIAL WARRANTY OF SELLER CONTAINED IN SECTION 1 ABOVE IS EXCLUSIVE AND
IS
IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY
OR OTHERWISE, AND, WITHOUT LIMITATION ON THE SPECIAL WARRANTY CONTAINED IN
SECTION 1 ABOVE, SELLER EXPRESSLY DISCLAIMS, AND PURCHASER HEREBY EXPRESSLY
WAIVES ANY RIGHT OR CAUSE OF ACTION ARISING FROM OR RELATING TO, ANY AND ALL
OTHER REPRESENTATIONS AND WARRANTIES. WITHOUT LIMITATION OF THE FOREGOING,
EXCEPT FOR THE SPECIAL WARRANTY CONTAINED IN SECTION 1 ABOVE, THE PROPERTIES
SHALL BE CONVEYED PURSUANT HERETO WITHOUT ANY WARRANTY OR REPRESENTATION WHETHER
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, RELATING TO THE CONDITION, QUANTITY,
QUALITY, FITNESS FOR A PARTICULAR PURPOSE, CONFORMITY TO THE MODELS OR SAMPLES
OF MATERIALS OR MERCHANTABILITY OF ANY EQUIPMENT FOR ITS FITNESS FOR ANY
PURPOSE. SUBJECT TO THE TERMS OF THE PURCHASE AGREEMENT, PURCHASER HAS
INSPECTED, OR WAIVED ITS RIGHT TO INSPECT, THE PROPERTIES FOR ALL PURPOSES
AND
SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE
AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO CONDITIONS SPECIFICALLY RELATED
TO
THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS SUBSTANCES, SOLID WASTES,
ASBESTOS AND OTHER MAN MADE MATERIAL FIBERS, OR NATURALLY OCCURRING RADIOACTIVE
MATERIALS (COLLECTIVELY, “HAZARDOUS
WASTES”).
PURCHASER IS RELYING UPON ITS OWN INSPECTION OF THE PROPERTIES, AND PURCHASER,
SUBJECT TO THE TERMS OF THE PURCHASE AGREEMENT, HEREBY ACCEPTS ALL OF THE SAME
IN THEIR “AS IS, WHERE IS” CONDITION. SELLER DISCLAIMS ALL LIABILITY ARISING IN
CONNECTION WITH THE PRESENCE OF ANY HAZARDOUS WASTES ON THE PROPERTIES. IN
ADDITION, SELLER AND ITS REPRESENTATIVES MAKE NO WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA, INFORMATION
OR MATERIALS HERETOFORE OR HEREAFTER FURNISHED PURCHASER IN CONNECTION WITH
THE
PROPERTIES OR AS TO THE QUALITY OR QUANTITY OF OIL, GAS AND OTHER HYDROCARBON
RESERVES (IF ANY) ATTRIBUTABLE TO THE PROPERTIES OR THE ABILITY OF THE
PROPERTIES TO PRODUCE OIL, GAS AND OTHER HYDROCARBONS. ANY AND ALL SUCH DATA,
INFORMATION AND OTHER MATERIALS FURNISHED BY SELLER AND ITS REPRESENTATIVES
WAS
PROVIDED TO PURCHASER AS A CONVENIENCE AND ANY RELIANCE ON OR USE OF THE SAME
HAS BEEN AND SHALL BE AT PURCHASER’S SOLE RISK TO THE MAXIMUM EXTENT PERMITTED
BY LAW.
3. Agreements.
This
Assignment is made subject to and shall be burdened by the terms, covenants
and
conditions contained in any contracts, agreements and instruments affecting
the
Properties; and at and after the Effective Time, with respect to the contracts,
agreements, and instruments that are described on Exhibit
A-3
attached
hereto, Purchaser agrees to be bound by, assume the obligations and rights
arising under, and, from and after the Effective Time, perform all of the terms,
covenants and conditions contained therein to which Seller is presently a
party.
4. Compliance
With Laws:
This
Assignment is made subject to all applicable laws, statutes, ordinances,
permits, decrees, orders, judgments, rules and regulations which are
promulgated, issued or enacted by a governmental entity having appropriate
jurisdiction, and Purchaser shall comply with the same from and after the date
of this Assignment.
5. Successors
and Assigns.
The
terms, covenants and conditions contained in this Assignment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, assigns, and legal representatives.
6. Covenants
Running with the Land.
The
terms, covenants and conditions hereof shall be covenants running with the
land
and with each subsequent sale, conveyance, transfer or assignment of the
Properties, or any part thereof.
7. Purchase
Agreement.
This
Assignment is made in accordance with and is subject to the terms, covenants
and
conditions contained in the Purchase Agreement. Seller and Purchaser acknowledge
and agree that in the event of any conflict or inconsistency between the terms
and provisions of the Purchase Agreement and the terms and provisions of this
Assignment, the terms and provisions of the Purchase Agreement shall control.
8. Further
Assurances.
Seller
and Purchaser agree to deliver or cause to be delivered to each other any
additional instrument that the other party may reasonably request for the
purpose of carrying out the intent of this Assignment. Seller shall execute,
acknowledge and deliver all such further conveyances, transfer orders, division
orders, notices, assumptions, releases and acquittances, and such other
instruments, and shall take such further actions as may be necessary or
appropriate to assure fully to Purchaser, its successors, assigns, and legal
representatives, the conveyance of all of the Properties intended to be conveyed
to Purchaser by the parties hereto.
9. No
Rights Created in Third Parties.
The
references herein to liens, encumbrances, burdens, defects and other matters
are
for the purpose of defining the nature and extent of Seller’s warranty and shall
not be deemed to ratify or create any rights in third parties. Except as
otherwise provided herein, the terms and conditions of this Assignment shall
inure to the benefit of, and be binding upon, the respective successors,
assigns, and legal representatives of the parties hereto. Neither this
Assignment nor any other agreement contemplated hereby shall be deemed to confer
upon any person not a party hereto or thereto any rights or remedies hereunder
or thereunder.
10. Counterparts;
Exhibits.
This
Assignment may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. All Exhibits attached hereto are an integral part of this Assignment
and are hereby made a part of this Assignment and incorporated herein by this
reference. Any reference to this Assignment includes such Exhibits.
11. Recording.
Purchaser shall, at its own expense, record or cause to be recorded this
Assignment in the county or counties in which the Properties are located.
12. Governing
Law.
THIS
ASSIGNMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF
THE STATE OF TEXAS, WITHOUT REGARD TO ITS CONFLICT OF LAW RULES THAT WOULD
DIRECT APPLICATION OF THE LAWS OF ANOTHER JURISDICTION, EXCEPT TO THE EXTENT
THAT IT IS MANDATORY THAT THE LAW OF SOME OTHER JURISDICTION, WHEREIN ANY OF
THE
PROPERTIES ARE LOCATED, SHALL APPLY.
IN
WITNESS WHEREOF, this Assignment is executed on the day and year first
referenced above, but effective as of the Effective Time.
| SELLER: | |||
| PRIME NATURAL RESOURCES, INC. | |||
| By: | |||
| Printed Name: | |||
| Title: | |||
| PURCHASER: | |||
| ICF ENERGY CORPORATION | |||
| By: | |||
| Xxxx X. Folnovic, | |||
| President and CEO | |||
STATE
OF
TEXAS
COUNTY
OF
XXXXXX
BEFORE
ME,
on this
_____________ day of ______________________, 2007, appeared
________________________, to me personally known, who, being by me duly sworn
did say that he is the ____________________of PRIME
NATURAL RESOURCES, INC.,
a
Texas corporation, and that said instrument was signed on behalf of said
corporation by authority of its Board of Directors and such person acknowledged
said instrument to be the free act and deed of said corporation.
Given
under my hand and seal of office the day and year last above
written.
| Notary Public for the State of Texas | ||
| Printed Name | ||
| My commission expires: |
STATE
OF
TEXAS
COUNTY
OF
XXXXXX
BEFORE
ME,
on this
_____________ day of ______________________, 2007, appeared Xxxx X. Folnovic,
to
me personally known, who, being by me duly sworn did say that he is the
President and CEO
of
ICF
ENERGY CORPORATION,
a Texas
corporation, and that said instrument was signed on behalf of said corporation
by authority of its Board of Directors and such person acknowledged said
instrument to be the free act and deed of said corporation.
Given
under my hand and seal of office the day and year last above
written.
| Notary Public for the State of Texas | ||
| Printed Name | ||
| My commission expires: |
EXHIBIT
A-1
LEASE
SCHEDULE
|
Oil
and Gas Leases and Minerals
|
|||
|
Lessor
|
Lessee
|
Lease
Date
|
Recording
Information |
|
Xxxxxxx
X. Xxxxxxxx Trust
|
Xxxxx
X Xxxxx Inc
|
03/20/00
|
00
018426
|
|
Xxxxxxxx
X. Xxxxxx , et al
|
Xxxxx
X Xxxxx Inc
|
03/20/00
|
00
021735
|
|
Xxxxxx
X. Xxxxxxxx
|
Xxxxx
X Xxxxx Inc
|
03/02/00
|
00
013450
|
|
Xxxxxx
Xxxxx Xxxxxxx
|
Xxxxx
X Xxxxx Inc
|
03/02/00
|
00
015575
|
|
Xxxx
Xxxxxx Xxxxx
|
Xxxxx
X Xxxxx Inc
|
03/02/00
|
00
015576
|
|
Xxxxxx
X. Xxxxxxx, et ux
|
Xxxxx
X Xxxxx Inc
|
03/02/00
|
00
015577
|
|
X.
X. Xxxxxxx Xx, et al
|
Xxxxx
X Xxxxx Inc
|
02/17/00
|
00
013453
|
|
Xxxx
X. Xxxxx
|
Xxxxx
X Xxxxx Inc
|
02/24/00
|
00
024490
|
|
X.
X. Xxxxxxx, Xx.
|
Xxxxx
X Xxxxx Inc
|
02/17/00
|
00
018427
|
|
Xxxx
X. Xxxxx
|
Xxxxx
X Xxxxx Inc
|
07/25/00
|
00
044259
|
|
J.
Xxxxxx Xxxxx
|
Xxxxx
X Xxxxx Inc
|
07/28/00
|
00
044258
|
|
Xxxxxxxxx
X Xxxxxxxxx
|
Xxxxx
X Xxxxx Inc
|
09/18/00
|
01
036412
|
|
Xxx
X. Xxxxxx
|
Xxxxx
X Xxxxx Inc
|
02/05/00
|
00
013451
|
|
Xxxxxxxx
Xxxxxxx, et al
|
Xxxxx
X Xxxxx Inc
|
02/06/00
|
00
013452
|
|
Xxxxxxx
X. Xxxxxx
|
Xxxxx
X Xxxxx Inc
|
03/17/00
|
00
018428
|
|
Xxxxxxx
Xxxx Xxxxxx
|
Xxxxx
X Xxxxx Inc
|
03/17/00
|
00
018429
|
|
Xxxxxx
Xxxxxxxxx, III, et al
|
Xxxxx
X Xxxxx Inc
|
07/17/00
|
00
033346
|
|
Xxxxx
X. Xxxxxxxx
|
Xxxxx
X Xxxxx Inc
|
07/11/00
|
00
039724
|
|
Xxxxxx
X. Xxxxxxx
|
Xxxxx
X Xxxxx Inc
|
08/10/00
|
00
039725
|
|
Xxxxx
Xxxxxx Xxxxxxxxx
|
Xxxxx
X Xxxxx Inc
|
08/15/00
|
00
044257
|
|
Xxxxx
Xxxxxxx Xxxxxxx, et al
|
Xxxxx
X Xxxxx Inc
|
08/26/00
|
00
046881
|
|
Compass
Bank Trustee
|
Prime
Natural Resources Inc
|
12/20/00
|
01
037779
|
|
Xxxx
Xxxx Xxxxx Xxxx
|
Xxxxx
X Xxxxx Inc
|
03/01/03
|
03
017685
|
|
Xxxxxx
X. Xxxxxx Xx., et al
|
Xxxxx
X Xxxxx Inc
|
06/23/00
|
00
033342
|
|
Xxxxxxxxx
X. Xxxx
|
Xxxxx
X Xxxxx Inc
|
07/01/00
|
00
033343
|
|
Xxxxxx
Xxx Xxxxxxxx
|
Xxxxx
X Xxxxx Inc
|
07/01/00
|
00
033344
|
|
Xxxxxxx
X. Xxxxxxx
|
Xxxxx
X Xxxxx Inc
|
07/01/00
|
00
033345
|
|
Xxxx
X. Xxxxx
|
Prime
Natural Resources Inc
|
02/01/02
|
02
025904
|
|
Xxxxx
X. Xxxxxx
|
Prime
Natural Resources Inc
|
02/03/02
|
02
025905
|
|
Xxxx
Xxx Xxxxxxx
|
Prime
Natural Resources Inc
|
02/02/02
|
02
025906
|
|
Xxxxx
Xxx Xxxxxxxxx
|
Prime
Natural Resources Inc
|
02/04/02
|
02
025907
|
|
Xxxx
X. Xxxxx Xx
|
Prime
Natural Resources Inc
|
02/04/02
|
02
025908
|
|
Xxxxxx
Xxxxxx
|
Prime
Natural Resources Inc
|
02/04/02
|
02
025909
|
|
Xxxxx
X. Xxxxxxx
|
Prime
Natural Resources Inc
|
02/04/02
|
02
025910
|
|
Xxxxx
Xxxxxxx
|
Prime
Natural Resources Inc
|
02/04/02
|
02
019489
|
|
Xxxxx
X. Xxxxxxx, Xx.
|
Prime
Natural Resources Inc
|
02/04/02
|
02
019490
|
|
Holy
Comforter Episcopal
|
Prime
Natural Resources Inc
|
02/05/02
|
02
019492
|
|
Xxxx
X Xxxxxx
|
Prime
Natural Resources Inc
|
02/04/02
|
02
019493
|
|
Xxxxxx
X. Xxxxxx
|
Prime
Natural Resources Inc
|
02/04/02
|
02
019494
|
|
Xxxxxx
Xxx
|
Prime
Natural Resources Inc
|
02/04/02
|
02
029006
|
|
Xxxxx
Xxxx Xxxxxx
|
Prime
Natural Resources Inc
|
02/04/02
|
02
000000
|
|
Xxxxx
Xxxxxx Xxxxx
|
Prime
Natural Resources Inc
|
06/03/02
|
02
033084
|
|
Xxxxx
Xxxxx Xxxxxx Xxxx
|
Prime
Natural Resources Inc
|
06/03/02
|
02
039347
|
|
X.
Xxxxxxx Xxxxx
|
Prime
Natural Resources Inc
|
06/03/02
|
02
043286
|
|
Xxxxx
Xxxxx, Xx.
|
Prime
Natural Resources Inc
|
10/23/02
|
03
003092
|
|
Xxxxxxx
Xxxxxx Xxxxxxxx
|
Prime
Natural Resources Inc
|
10/23/02
|
03
003091
|
|
Xxxx
Xxxxxxxx
|
Prime
Natural Resources Inc
|
02/21/03
|
03
022644
|
|
Xxxxxxx
X. Xxxxx, et al
|
Prime
Natural Resources Inc
|
10/23/02
|
03
026623
|
|
Xxxxxx
Xxxx, et ux
|
Prime
Natural Resources Inc
|
03/07/02
|
02
019491
|
|
Xxxxx
Xxxxxxxx, Jr.
|
Prime
Natural Resources Inc
|
03/04/02
|
02
019495
|
|
Xxxxxxx
Xxxxxxxx
|
Prime
Natural Resources Inc
|
03/04/02
|
02
019496
|
|
Xxxxxx
Xxx Xxxxx, Xx., et ux
|
Prime
Natural Resources Inc
|
03/09/02
|
02
029005
|
|
Xxxxx
Xxxxxx Xxxxx
|
Prime
Natural Resources Inc
|
03/21/02
|
02-029001
|
|
Xxxxxxx
Xxxxxx Xxxxx
|
Prime
Natural Resources Inc
|
03/21/02
|
02-029002
|
|
Xxxxx
X. Xxxxxx
|
Prime
Natural Resources Inc
|
03/06/02
|
02
029003
|
|
Xxxxxx
Xxxxxx Xxxxxx
|
Prime
Natural Resources Inc
|
03/18/02
|
02
029004
|
|
Xxxxxxxxxx
Xxxxx Xxxxxx
|
Prime
Natural Resources Inc
|
03/09/02
|
02-029000
|
|
Devon
Energy Production
Co.
|
Prime
Natural Resources Inc
|
04/29/02
|
02
049386
|
|
Xxxxxxx
Xxxxxxxxx, Xx.
|
Prime
Natural Resources Inc
|
04/24/02
|
02
031957
|
|
Xxxxxxxxx
Xxxxxxxxx
|
Prime
Natural Resources Inc
|
04/23/02
|
02
039348
|
|
Xxxx
X. Xxxxx
|
Prime
Natural Resources Inc
|
05/03/02
|
02
039349
|
|
J.
Xxxxxx Xxxxx
|
Prime
Natural Resources Inc
|
06/14/02
|
02
055294
|
|
Xxxxxxx
X. Xxxxxxxx Trust
|
Prime
Natural Resources Inc
|
04/22/02
|
03
010299
|
|
Xxxxx
X. Xxxxxx, Indep. Exec.
|
Prime
Natural Resources Inc
|
11/15/03
|
03
078513
|
|
Devon
Energy Production Co.
|
Prime
Natural Resources Inc
|
04/02/03
|
03
023650
|
|
Fee
Mineral Tract
|
All
of Prime Natural Resources, Inc. interest in 316.85 acres, more
or less
out of the X. X. Xxxxxx League No. 48. being the same lands conveyed
to
Prime Natural Resources, Inc. by Mineral and Royalty Deed from
Xxxxx X.
Xxxxx, Inc. dated July 18, 2003, recorded as Document No. 03 046145
of the
Official Records of Brazoria County,
Texas.
|
|
|
Units
|
|
X’Xxxxx
Unit No. 1
|
662
acres of land, more or less, out of the Xxxxxxx X. Xxxxxx League
No. 48,
A-26 and the Xxxxxx Xxxxxxxx Survey, A-73, Brazoria County, Texas,
described in that certain Designation of Unit (X’Xxxxx Gas Unit) filed
June 13, 2003, recorded under Clerk’s File No. 03-035767, as amended by
documents recorded under Clerk’s File Nos. 03-046147 and 0000000000 of the
Official Records of Brazoria County, Texas.
|
|
Devon
Fee Gas Unit
|
401.85
acres, more or less, out of the Xxxxxxx X. Xxxxxx League No.
48, A-26,
Brazoria County, Texas, being the Devon Fee Gas Unit as described
in that
certain designation of Unit dated April 28, 2004, recorded at
Entry
2004024815, in the Official Records of Brazoria County,
Texas.
|
EXHIBIT
A-2
XXXXX
|
Well
|
API
Well No.
|
Working
Interest
|
Net
Revenue Interest
|
|
X’Xxxxx
Unit No. 1
|
42-039-32803
|
40.6700%
|
29.0120%
|
|
Devon
Fee No. 1
|
42-039-32823
|
75.0000%
|
60.4500%*
Includes
fee minerals
|
EXHIBIT
A-3
CONTRACTS
DEVON
FEE NO. 1
|
1.
|
Gas
Transportation Agreement
dated August 1, 2007, between Xxxxxx Gathering, L.P.. and Prime
Natural
Resources, Inc.
|
|
2.
|
Participation
Agreement
dated October 1, 2003 between Xxxx Xxxxx Gulf Coast and Prime Natural
Resources, Inc.
|
|
3.
|
Joint
Operating Agreement
dated October 1, 2003 between Xxxxx Gulf Coast and Prime Natural
Resources, Inc.
|
|
4.
|
Crude
Oil Sales Contract dated
May 24, 2004 between Xxxxxxx Oil Company and Prime Natural Resources,
Inc.
|
|
5.
|
Gas
Sales Contract
dated May 24, 2004 between Prime Natural Resources, Inc. and Xxxxxxx
Oil
Company
|
X’XXXXX
GAS UNIT
|
1.
|
Crude
Oil Sales Contract dated
June 25, 2007 between Xxxxxxx Oil Company and Prime Natural Resources,
Inc.
|
|
2.
|
Joint
Operating Agreement
dated February 14, 2003 between Xxxxx Gulf Coast and Prime Natural
Resources, Inc.
|
|
3.
|
Letter
Agreement
dated May 2, 2003 between Xxxxx Gulf Coast and Prime Natural Resources,
Inc.
|
|
4.
|
Letter
Agreement
dated March 13, 2003 between Xxxxx Gulf Coast and Prime Natural
Resources,
Inc.
|
|
5.
|
Letter
of Intent
dated February 10, 2003 between Xxxxx Gulf Coast and Prime Natural
Resources, Inc.
|
|
6.
|
Sales
Letter
dated May 1, 2003 between Hilcorp and Prime Natural Resources,
Inc.
|
PROSPECTS
|
7.
|
Letter
Agreement
dated May 1, 2003 between Hilcorp and Prime Natural Resources,
Inc.
|
EXPLORATION
OPPORTUNITIES IN THE OLD OCEAN FIELD
The
following interests are described by and reserved in that certain Assignment,
Conveyance and Xxxx of Sale, dated effective March 1, 2003 between Prime
Natural
Resources, Inc., as Assignor, and Hilcorp Energy I, L. P., as Assignee, filed
for record and recorded May 13, 2003 in the Official Records of Brazoria
County,
Texas and filed for record on June 12, 2003 in the Official Records of Matagorda
County, Texas,
|
South
Sweeny Prospect
|
The
interests described in Exhibit A-4 of the above described Assignment.
This
interest is limited to the depths below the F-21 Sand and Prime
Natural
Resources, Inc. is obligated to P & A the Old Ocean Unit 238 well.
|
|
Old
Ocean Unit 240 Prospect Offset
|
The
interests described in Exhibit A-6 of the above described
Assignment
|
|
Old
Ocean Unit 235 Prospect (F-24 Sand)
|
The
interests described in Exhibit A-7-I of the above described
Assignment
|
