EXHIBIT 10.16
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (referred to herein as the
"Agreement") is between XXXXX HOLDING LP, a Texas limited partnership whose
address is 0000 Xxxxxxx Xxxxxxx, Xxxxxxx, XX 00000, (collectively referred to
herein as the "Seller") and LEGACY RESERVES OPERATING LP, a Delaware limited
partnership whose address is 000 Xxxx Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx
00000, (referred to herein as the "Buyer") is made and entered this 13th day of
June 2006, to be effective for all intents and purposes as of the Effective Time
designated herein.
Seller and Buyer for and in consideration of the mutual promises and
covenants under this Agreement, the benefits to be derived by each party, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, agree as follows:
ARTICLE 1
RECITALS
Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, certain oil and gas properties and related assets on the terms and
conditions set forth in this Agreement.
Seller and Buyer for and in consideration of the mutual promises and
covenants under this Agreement, the benefits to be derived by each party, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, agree as follows:
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase and Sale. Seller agrees to sell and convey all of its right, title
and interest in and to the Property or Properties (as defined in Article 2.2)
and Buyer agrees to purchase the Property or Properties (as defined in Article
2.2), subject to the terms and conditions of this Agreement.
2.2 Properties Defined. The undivided interest described as follows and on
Exhibit "A" (hereafter called the "Property or Properties"):
(a) Leases, Lands, Xxxxx and Pooling and Unitization Agreements. All of
Seller's right, title, and interest of whatever nature in all
leasehold and other interests in; (i) the oil, gas and mineral leases
described on Exhibit "A" (the "Leases"), insofar and only insofar as
said Leases include and pertain to and cover the lands and depths as
specifically described herein on Exhibit "A" (the "Lands"); (ii) the
oil and gas xxxxx located on the Leases or on Lands pooled or unitized
therewith (the "Xxxxx"); and (iii) the units, pooled acreage, spacing
or proration units or other allocation of acreage applicable to the
Xxxxx established by or in accordance with the applicable state,
federal or local law;
(b) Production. Hydrocarbons produced from or allocable to the Xxxxx, and
all proceeds of production subsequent to the Effective Time (as
defined in Article 2.3);
(c) Equipment. Personal property, equipment, fixtures, and improvements
appurtenant to or located on the Leases or the Lands, or used or
in connection with the ownership or operation of the
Properties, and
(d) Easements, Contracts, Land Files and Records. (i) appurtenances,
surface leases, easements, permits, licenses, servitudes and
rights-of-way; (ii) all leases, farmout agreements, unitization
agreements, pooling agreements, unit declarations, division orders,
transfer orders, joint interest xxxxxxxx, accounting, production
payment/payout records, operating contracts and any other agreements
and instruments, (iii) lease files, land files, well files, lease
operating statements for the period covering 2003 through April 30,
2006, title opinions and reports and other records used in connection
with the ownership of the Properties.
2.3 Effective Time. The transfer of the Properties shall occur at Closing, which
is defined in Article 7.1, effective as of 12:01 a.m., local time, May 1, 2006,
(the "Effective Time") on the Properties as described herein.
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2.4 Allocation of Revenues and Operating Expenses
Oil in Storage All oil in storage at the Effective Time, including working
inventory, belongs to Seller.
"Oil in Storage" for purposes of this Agreement, will mean all oil in
storage above the outlet flange in tanks as of the Effective Time and shall not
include oil in the system downstream of the wellhead at the Effective Time, or
oil below the outlet flange in stock tanks or in wash tanks, heater treaters,
flowlines, and pipelines.
Oil inventories will be valued based on the realized price received by
Seller for oil sales, from the Properties on the Effective Date.
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price.
(a) Amount. The Purchase Price of the Properties shall be a consideration
equal to fourteen million dollars ($14,000,000.00) cash consideration
and a minimum of one hundred thirty-eight thousand (138,000) Legacy
Reserves LP ("Legacy") units. (Subject to adjustment only as
hereinafter provided). There shall be a "Registration Rights
Agreement" substantially in the form of that attached hereto as
Exhibit "C", as amended and discussed by attorneys for Cotton,
Xxxxxxx, Xxxxx and Xxxxxx and Xxxxxxx Xxxxx LLP as it relates to the
Legacy units.
(b) All cash amounts required under this Article 3 to be paid by Buyer to
Seller shall be made by wire transfer of immediately available funds
to an account(s) designated by Seller which designation shall be made
no later than two (2) business days prior to the date said payment is
due. These amounts are subject to further adjustment after the Closing
as provided in this Agreement. Seller may delay or refuse to proceed
with the Closing should Buyer refuse or fail to comply with payment
provisions as set forth by Seller. This right on the part of Seller is
in addition to all other rights and remedies Seller may have under
this Agreement, at law, or in equity.
(c) Buyer and Seller hereby agree that Seller, in lieu of the sale of the
Properties to Buyer for the cash consideration provided herein, shall
have the right at any time prior to the Closing to assign all or a
portion of its rights under this Agreement to a qualified
intermediary, in order to accomplish the transaction in a manner that
will comply, either in whole or in part with the requirements of a
like kind exchange pursuant to Section 1031 of the Internal Revenue
Code of 1986, as amended. In the event Seller does assign its rights
under this Agreement pursuant to this Article 3.1(c), Seller agrees to
notify Buyer in writing of such assignment not less than seven (7)
days before Closing. If Seller assigns its rights under this
Agreement, Buyer (i) consents to Seller's assignment of its rights in
this Agreement, and (ii) deposit the Purchase Price with the qualified
escrow or qualified trust account at the Closing.
(d) Buyer has deposited with Seller, and Seller acknowledges receipt of, a
performance deposit in the amount of eight hundred fifty thousand
dollars ($850,000.00) (the "Deposit"), which amount shall be held by
Seller and distributed as follows:
(i) if this Agreement is terminated by mutual consent of the parties
as provided in Article 8.1, the Deposit shall be returned by
Seller to Buyer, with interest at a rate of three percent (3%)
per annum;
(ii) if this Agreement is terminated by either party pursuant to the
termination right provided in Article 8.1 and at such time all of
Buyer's conditions to Closing as set forth in Article 7.3 have
not been satisfied (and such failure is not due to a breach
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by Buyer of its obligations hereunder), the Deposit shall be
returned by Seller to Buyer with interest at a rate of three
percent (3%) per annum;
(iii) if this Agreement is terminated by either party pursuant to the
termination right provided in Article 8.1 and at such time all of
Buyer's conditions to Closing as set forth in Article 7.3 have
been satisfied, the Deposit and accrued interest, at a rate of
three percent (3%) per annum, thereon shall be retained by
Seller, and
(iv) if Closing occurs, Seller shall apply the Deposit towards the
Purchase Price. The performance deposit is not an xxxxxxx money
deposit and if retained by Seller, will be treated as liquidated
damages. The forfeiture of the performance deposit as provided in
this Agreement will be the sole remedy of Seller, in lieu of any
other, the rights and remedies Seller may have under law or in
equity for Buyer's failure to perform as provided in this
Agreement.
(e) At Closing, Buyer shall pay to Seller the total Purchase Price set
forth in Article 3.1(a) and deliver evidence of ownership of one
hundred thirty-eight thousand (138,000) Legacy Units, less an amount
equal to the deposit set forth in Article 3.1(d) and less any
adjustments as set forth in Article 4.6(b), plus that amount owing to
Seller under the provisions of Article 6.4.
ARTICLE 4
TITLE & ENVIRONMENTAL
4.1 General Access. Immediately upon execution of this Agreement and prior to
Closing, Seller will provide Buyer, at Buyer's sole risk, cost and expense,
access to the files, records, contracts, correspondence, maps, data, reports,
plats, title opinions and title reports and other documents of Seller pertaining
to the Properties for purposes of determining the existence of any Title
Defects.
4.2 Seller's Title. Seller hereby warrants and represents by through and under
Seller, but not otherwise, to Buyer that Seller's title to the Properties as of
the Effective Time is (and as of the Closing will be) free of "Title Defects",
as defined below. The term "Title Defect" as read herein
4.3 Title Defect. The term "Title Defect" as used herein shall mean any
encumbrance, encroachment, irregularity, defect in or objection to Seller's
title to the Properties (except Permitted Encumbrances) that alone or in
combination with other defects renders Seller's title to the Properties less
than Defensible Title, as defined in Article 5.1(d) below, including; (i) liens
securing unpaid indebtedness or taxes; (ii) preferential rights, consents to
assignment and similar provisions of the type commonly encountered in the oil
and gas industry; (iii) matters indicating that Buyer, or Buyer's successor
could not successfully defend against a claim by any person or entity that a
defect exists as to any Property; (iv) differences between the net revenue
interest or the working interest as set out on Exhibit "A", and the net revenue
interest and working interest determined by Buyer pursuant to its review of
title; (v) obligations to deliver production at a future date without payment
for the production; and/or (vi) a default by Seller under some material
provision of a lease, farmout agreement or agreement affecting any Property.
4.4 Permitted Encumbrances. "Permitted Encumbrances" shall mean: (i) minor
defects in title which do not require the payment of money and otherwise do not
have a material adverse effect on the value or operation of the Properties; (ii)
liens for labor, services, materials or supplies furnished to the Properties
which are not delinquent and which will be paid or discharged in the ordinary
course of business; (iii) liens for taxes or assessments not yet due and not
delinquent; (iv) Lessor's royalties, overriding royalties, division orders and
similar burdens if the net cumulative effect of such burdens does not operate to
reduce the net revenue interest in any of the Properties stipulated on Exhibit
"A" attached hereto by more than five tenths of one percent (0.5%); and (v)
production sale contracts, so long as the prices payable under the contracts are
representative of general arms length market prices being paid for similar
production in the area, unitization and pooling declarations and agreements and
any operating agreements, insofar as such contracts and agreements do not
operate to increase the working interest or decrease the net revenue interest of
Buyer from that stipulated on Exhibit "A" attached hereto; (vi) preferential
rights to purchase and required third party consents to assignments and similar
agreements with respect to which, prior to Closing, (A) waivers or consents are
obtained from the appropriate parties, (B) the appropriate time period for
asserting such rights has expired without an exercise of such rights, or (C)
with respect to consent, failure to obtain consent does not affect the validity
of an assignment to Buyer; (vii) all rights to consent
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by, required notices to, filings with, or other actions by Governmental Bodies
in connection with the sale or conveyance of oil and gas leases or interests
therein if the same are customarily obtained subsequent to such sale or
conveyance; (viii) rights reserved to or vested in any municipality or
governmental, statutory, or public authority to control or regulate any of the
Properties in any manner, and all applicable laws, rules and orders of any
governmental authority; (ix) such Title Defects as Buyer shall have waived; and
(x) liens released at Closing.
4.5 Notice of Title Defects and Environmental Defects. Buyer shall give Seller
notice of any Title Defects and Environmental Defects as soon as practicable.
The notice shall:
(a) be in writing;
(b) describe in sufficient detail the nature of Title Defect and/or
Environmental Defects and include appropriate evidence to substantiate
the Title Defect and/or Environmental Defect;
(c) describe the steps and actions (in reasonable detail) which are
necessary in Buyer's opinion for the curing of identified Title
Defects and recommended options for handling Environmental Defects;
(d) be delivered to Seller as soon as possible, but in no event later than
three (3) business days prior to the Closing.
Buyer shall be deemed to have waived all Title Defects and Environmental Defects
of which Seller has not been given such notice.
4.6 Remedies for Title Defects. Seller shall have two (2) business days after
receipt of Buyer's notification as to a specific Title Defect in which to
provide Buyer written evidence that the subject Title Defect has been either
cured or removed. Should Seller fail or be unable to provide evidence of Title
Defect curative or removal then Buyer may at its option:
(a) waive such Title Defect; or
(b) (i) terminate this Agreement without further liability hereunder, if
Buyer has, in good faith, determined that a Title Defect individually
(or Title Defects in the aggregate) will materially and adversely
reduce the net value of the Properties affected by an amount equal to
or greater than six hundred thousand dollars ($600,000.00); or (ii)
agree with Seller to a mutually agreeable adjustment to the Purchase
Price, or (iii) take such other action as may be mutually agreed by
the parties hereto.
Should Seller be unable to provide evidence of Title Defect curative or
desire to not make adjustment to the Purchase Price and it is determined by
Seller that such Title Defect will materially and adversely reduce the net value
of the Properties affected by an amount equal to or greater than $500,000.00,
Seller may terminate this Agreement.
If Buyer notifies Seller of a Title Defect, as provided for in Article 4.5,
which Buyer desires to have cured, Seller agrees to cooperate with Buyer prior
to the Closing in endeavoring to cure any such defects (but Seller shall have no
obligation shall not include the obligation to pay money or to undertake any
legal obligation). Buyer agrees to bear the cost of examining the title data
furnished by Sellera as curative hereunder, if any, or obtained by Buyer.
4.7 Environmental Defects. Buyer is aware that the interests and property have
been used for exploration, development, and production of oil and gas and that
there may be petroleum, produced water, wastes, or other materials located on or
under the Property or associated with the interests. Equipment and sites
included in the interests or property may contain asbestos, hazardous
substances, or NORM. Not withstanding anything to the contrary in this Agreement
(including, without limitation, the provisions of Article 5.6 hereof), (a) this
Article 4.7 and Article 5.5 contains all representations and warranties with
regard to any Environmental Laws (as hereinafter defined) and, except as
expressly set forth in this Article 4.7 Article 5.5, SELLER EXPRESSLY DISCLAIMS
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, REGARDING OR IN ANY WAY
RELATING TO OBLIGATIONS OR LIABILITIES UNDER ANY ENVIRONMENTAL LAWS OR THE
ENVIRONMENTAL
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CONDITION OF THE PROPERTIES, and (b) it makes no representation or warranty of
any kind whatsoever regarding the presence or absence of any naturally occurring
radioactive materials ("NORMs") on or near any of the Properties, and Buyer
shall not be entitled to any adjustment to the Purchase Price or any other
remedy or settlement of any kind whatsoever except as provided for in this
Article 4.7, and it shall have no obligation or liability of any kind whatsoever
to Buyer or any of its successors or assigns, with respect to any NORMs. To the
best of Seller's knowledge, (i) neither the Properties nor the operation thereof
are in violation of any Environmental Laws in any material respect and (ii) it
has not received any notice from any Governmental Authority (as hereinafter
defined) of any violation of any Environmental Laws. For purposes of this
Agreement, the term "Environmental Laws" shall mean, as to any given Property,
all laws, statutes, ordinances, rules and regulations of any Governmental
Authority pertaining to protection of the environment in effect as of the
Effective Time and as interpreted by court decisions or administrative orders as
of the Effective Time in the jurisdiction in which such Property is located. For
purposes of this Article 4.7 the term "Governmental Authority" shall mean, as to
any given Property, the United States and the state, county, parish, city and
political subdivisions in which such Property is located and which exercises
jurisdiction over such Property, and any agency, department, board or other
instrumentality thereof that exercises jurisdiction over such Property.
When elected operator or upon Closing, Buyer will assume all liability for the
assessment, remediation, removal, transportation, and disposal of wastes,
asbestos, hazardous substances, and NORM from the interests and property and
associated activities and will conduct these activities in accordance with all
applicable laws and regulations, including the Environmental Laws.
Buyer will have until twelve (12) days after the Execution Date of this
Agreement or five (5) days before the Closing Date, whichever is earlier, to
notify Seller of any material adverse environmental condition associated with
the Property that Buyer finds unacceptable and that has an estimated cost net to
the Property greater than $250,000.00 and is documented by third party evidence
of said condition for which remediation is required under any Environmental Law.
Upon Seller's receipt of such notification, Seller will have until two (2) days
before the Closing Date in which to either:
(a) proceed with Closing and account for said costs for the remediation of
the condition contained in Buyer's notification as a normal Unit
operating expense item in the Post Closing Adjustment, or
(b) terminate this Agreement.
Seller may, at Seller's option, delay Closing, if necessary, to remedy the
Environmental Matter.
Should Seller elect to remedy the condition set forth in Article 4.7 (a)
above, Seller shall remain as operator of the Property and continue remediation
of the condition until the first of the following occur:
(I) the appropriate governmental authorities provide written notice to
Seller or Buyer that no further remediation of the condition is
required to comply with the applicable Environmental Laws; or
(II) An independent third party determines that the condition has been
remediated to the level required by the Environmental Laws or as
mutually agreed to by Buyer and Seller.
Upon the occurrence of either (I) or (II) above, Seller will notify Buyer
that remediation of the condition is complete and provide a copy of the
notification provided in (I) above, if applicable. Upon delivery of Seller's
notice, Seller will be released from all liability and have no further
obligations under Article 4.7 and Article 5.5 of this Agreement.
Buyer, for that period of time for which Buyer is operator of the
Properties, Buyer will store, handle, transport, and dispose of or discharge all
materials, substances, and wastes from the interests and property (including
produced water, drilling fluids, NORM, and other wastes), whether present before
or after the Effective Time, in accordance with applicable local, state, and
federal laws and regulations. Buyer will keep records of the types, amounts, and
location of materials, substances, and wastes that are transported, handled,
discharged, released, or disposed of onsite and offsite.
Notwithstanding any other provision within this Article 4.7, Buyer shall
have the right to waive all such Environmental Matters and proceed with Closing.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Seller's Representations and Warranties. Seller represents and warrants to
Buyer as follows:
(a) Description and Title. Seller represents and warrants that Exhibit "A"
sets forth a true, complete and legally sufficient description of the
Properties. It is understood that pursuant to this Agreement, Seller
warrants title to the Properties as set forth on Exhibit "A" by,
through and under Seller only, but not otherwise.
(b) Organization, Standing and Power. Seller is validly existing and in
good standing under the laws of the States of Texas and New Mexico and
has all requisite powers and authority to own, lease, operate, sell
and convey the Properties and to carry on its business as is now being
conducted.
(c) Authority and Enforceability. The execution and delivery of this
Agreement, and the consummation of the transactions contemplated
hereby, have been duly and validly authorized by all necessary action
on the part of Seller. This Agreement is the valid and binding
obligation of Seller, enforceable against Seller in accordance with
its terms. Neither the execution and delivery by Seller of this
Agreement nor the consummation of the transactions contemplated hereby
nor the compliance by Seller with any of the provisions hereof will
conflict with or result in a breach of any provision of Seller's
organization documents or by-laws. The execution and delivery hereof
by Seller does not, and the fulfillment and compliance with the terms
and conditions hereof, and the consummation of the transactions
contemplated hereby, will not result in the creation or imposition of
any lien, charge or other encumbrance on the Properties.
(d) Seller's Title to Properties. Seller has Defensible Title to the
Properties. The term "Defensible Title" shall mean in the case of the
leasehold interests listed on Exhibit "A", such right, title and
interest (owned beneficially or of record) that, except for Permitted
Encumbrances:
(i) is free from reasonable doubt that a prudent person engaged in
the business of purchasing and owning, developing and operating
producing oil and gas properties with knowledge of all of the
facts and their legal effect would be willing to accept the
title;
(ii) entitles Seller to receive not less than the interest set forth
in Exhibit "A" as the net revenue interest 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, that
relates to Seller's producing interval in the lands and depths
included within each property identified in Exhibit "A";
(iii) obligates Seller to pay costs and expenses relating to the
operations on and the maintenance and development of each unit
or well, as the case may be, that relates to Seller's producing
interval in the lands and depths included within each property,
in an amount not greater than the working interest set forth in
Exhibit "A";
(iv) is free and clear of any mortgages, pledges, deeds of trust,
hypothecations and production payments;
provided, however, that with respect to clauses (ii) and (iii) above
Seller's title shall nevertheless be deemed to constitute "Defensible
Title" if (a) the difference between Seller's actual interest and the
interest set forth in Exhibit "A" for each unit or well included
within an individual property is proportionately reduced by 0.5% or
less than the interest set forth in Exhibit "A" (by way of example,
and without limiting the generality of the foregoing, if the net
revenue interest shown on Exhibit "A" for each unit or well included
within a property is 13.11%, Seller shall have Defensible Title to
such leasehold interest if it is entitled to receive not less than
13.04445% of all oil and gas produced from such property) or (ii) the
value of any difference between Seller's actual interest in the
interest set forth in Exhibit "A" is less than $85,000.00. For
purposes of this Article
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5.1(d), "owned beneficially or of record" means Seller's ownership
interest reflected of record in the office of the county clerk in the
county where the relevant lands are located, ownership interests
reflected with respect to federal or state owned lands, in the office
of the federal or state agency having jurisdiction, subject to and as
impacted by the terms and provisions of the Permitted Encumbrances.
5.2 Buyer's Representations and Warranties. Buyer represents and warrants to
Seller as follows:
(a) Organization, Standing and Power. Buyer is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite powers and authority to own,
lease and operate the Properties and to carry on its business as is
now being conducted in the jurisdictions where the nature of its
properties or business so requires such qualification.
(b) Authority and Enforceability. The execution and delivery of this
Agreement, and the consummation of the transactions contemplated
hereby, have been duly and validly authorized by all necessary
corporate action on the part of Buyer. This Agreement is the valid and
binding obligation of Buyer, enforceable against Buyer in accordance
with its terms. Neither the execution and delivery by Buyer of this
Agreement nor the consummation of the transactions contemplated hereby
nor the compliance by Buyer with any of the provisions hereof will
conflict with or result in a breach of any provision of Buyer's
limited partnership agreement. The execution and delivery hereof by
Buyer does not, and the fulfillment and compliance with the terms and
conditions hereof and the consummation of the transactions
contemplated hereby will not, result in the creation or imposition of
any lien, charge or other encumbrance on the Properties.
(c) Warranty Maintenance. Buyer shall cause all the representations and
warranties of Buyer contained in this Agreement to be true and correct
on and as of the Closing Date. To the extent the conditions precedent
to the obligations of Seller are within the control of Buyer, Buyer
shall cause such conditions to be satisfied on or prior to the Closing
Date and, to the extent the conditions precedent to the obligations of
Seller are not within the control of Buyer, Buyer shall use its best
efforts to cause such conditions to be satisfied on or prior to the
Closing Date.
(d) Buyer represents that it did not solely rely upon representations or
materials provided to Buyer by Seller or Seller's marketing agents in
evaluating the Properties, but rather has relied upon its individual
evaluations and due diligence.
(e) Buyer represents that it has sufficient funds on hand or commitments
from one or more banking institutions to fund payment of the cash
consideration of the Purchase Price at the Closing.
5.3 Gas Imbalances. To the best of Seller's knowledge, no gas imbalance exists
with respect to the Properties.
5.4 Leases. To the best of Seller's knowledge, the Leases have been maintained
according to their material terms, in compliance with the agreements to which
the Leases are subject, and are presently in full force and effect. To the best
of Seller's knowledge, there has not occurred any event, fact or circumstance
which with the lapse of time or the giving of notice, or both, would constitute
such a material breach or default on behalf of Seller under the provisions of
the Leases.
5.5 Environmental Matters: Buyer agrees and acknowledges that (i) it has had, or
prior to the Closing will have access to and the opportunity to inspect the
Properties for all purposes, including without limitation, for the purposes of
detecting the presence of hazardous or toxic substances, pollutants or other
contaminants, environmental hazards, naturally occurring radioactive materials
(NORM) and produced water contamination of the surface and/or subsurface, (ii)
it has, or prior to the Closing will have, satisfied itself as to the physical
and environmental condition of the Properties, both surface and subsurface, and
their method of operation and except as set forth herein, agrees to accept an
assignment of the Properties at Closing on an "AS IS, WHERE IS" basis, "WITH ALL
FAULTS", save and except as provided for in Article 4.7, and (iii) in making the
decision to enter into this Agreement and consummate the transactions
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contemplated hereby, Buyer has relied solely on the basis of its own independent
investigation of the Properties and the records related thereto.
If the Closing occurs, Buyer hereby assumes and shall be responsible for
and agrees to indemnify, defend and hold harmless Seller from and against any
and all claims, liability or losses, (including, without limitation, losses from
damage to property, alleged groundwater contamination, injury to or death of
persons or other living things, natural resource damages, CERCLA response costs,
environmental remediation and restoration costs or fines) or penalties arising
out of or attributable to, in whole or in part by a violation of, failure to
fulfill duties imposed by or incurrence of liability under any common law
relating to human health, safety or the environment or any Environmental Laws
(an "Environmental Matter") occurring at any time before, at or after the
Effective Time WITHOUT REGARD TO THE SOLE, PARTIAL OR CONCURRENT NEGLIGENCE,
STRICT LIABLITY OR OTHER FAULT OF THE SELLER; provided, however, that Seller
shall indemnify, defend and hold harmless the Buyer from and against any and all
losses resulting from any Environmental Matter occurring at any time prior to
the Effective Time to the extent that such losses result from the gross
negligence or willful misconduct of Seller or that have been asserted in a
third-party lawsuit or administrative proceeding or order that is filed, issued
or commenced against Seller or has been documented by Buyer to Seller in writing
on or before the Closing Date.
5.6 Litigation. To the best of Seller's knowledge, there are no actions, suits,
claims, proceedings, agency enforcement actions or investigations pending, or to
the best knowledge of Seller, threatened against or affecting the Properties.
There is no suit, action, claim, investigation or inquiry by any person or
entity or by any administrative agency or governmental body and no legal,
administrative or arbitration proceeding pending, or, to the best knowledge of
Seller threatened against Seller which has affected or could affect Seller's
ability to consummate the transaction contemplated by this Agreement.
ARTICLE 6
COVENANTS
6.1 Covered Area. This Agreement is limited to the Properties and interest
described on Exhibit "A".
6.2 Existing Agreements, Assignments and Conveyances. This Agreement and the
Assignment of Oil and Gas Leases are further subject to the terms and conditions
of all existing agreements, assignments and conveyances.
6.3 New Agreements and Sales. Unless this Agreement is terminated as provided
for herein, Buyer and/or Seller will not, without the prior written consent of
the other: a) enter into any new agreements or commitments with respect to the
Properties which extend beyond the Effective Time; b) drill any new xxxxx,
abandon any existing xxxxx or release or abandon all or any portion of the lands
included within any lease or modify or terminate any contracts and agreements
affecting the Properties and sell or otherwise dispose of any of the Properties
or any part thereof, other than personal property and equipment unless it is
replaced with personal property and equipment of equivalent quality and value.
From the date hereof until the Closing, Seller shall maintain the Properties in
a good and workmanlike manner consistent with past practice.
6.4 Maintenance of Seller's Business. Seller shall carry on the business of
Seller with respect to the Properties in substantially the same manner as Seller
has heretofore and shall not introduce any new method of management, operation
or accounting with respect to the Properties. Xxxxx Petroleum LP shall continue
as operator of the Properties until such time as a successor operator has been
named. Buyer agrees to pay Seller an amount equal to $30,000.00/month for each
month, (partial or whole month), for each succeeding month following the
Effective Time for which Xxxxx Petroleum LP continues to operate the Properties.
6.5 Notification of Breach. Seller shall promptly notify Buyer (i) if any
representation or warranty of Seller contained in this Agreement is discovered
to be or becomes untrue or (ii) if Seller fails to perform or comply with any
covenant or agreement contained in this Agreement or it is reasonably
anticipated that Seller will be unable to perform or comply with any covenant or
agreement contained in this Agreement.
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ARTICLE 7
CLOSING
7.1 Date and Place of Closing The purchase by Buyer and the sale by Seller of
the Properties as contemplated by this Agreement (the "Closing") shall be
held on or before June 30, 2006, at the offices of Xxxxx Petroleum LP,
placeCityMidland, StateTexas. However, Buyer may, at its option and upon
approval by Seller, accelerate the date of the Closing upon giving Seller
three (3) business days prior written notice, if, on or before the date of
such notice, Buyer has also notified Seller of any Title Defects as
provided for herein. Additionally, the parties may mutually agree in
writing on a different date and place for the Closing.
Delay in Closing. In the event that Closing is delayed beyond July 15,
2006, and such delay is not due to failure to close on the part of Seller,
then interest at the rate of three percent (3%) per annum shall accrue to
the Purchase Price until the date of actual Closing or termination of this
Agreement and shall be payable to Seller by Buyer at the time of Closing or
termination.
7.2 Conditions of Closing by Seller. The obligation of Seller to close is
subject to the satisfaction of the following conditions:
(a) All representations and warranties of Buyer contained in this
Agreement shall be true, correct, and not misleading in all material
respects, and Buyer shall have performed and satisfied all agreements
and covenants in all material respects required by this Agreement to
be performed and satisfied by Buyer; and
(b) No suit or other proceeding shall be pending or threatened before any
court or governmental agency seeking to restrain, prohibit, or declare
illegal, or seeking substantial damages in connection with the
transaction contemplated hereby.
(c) Should there be downward adjustments to the Purchase Price in excess
of $500,000.00, due to asserted Title Defects and Environmental
Defects, Seller has the option to terminate this Agreement with no
liability to Buyer other than return of the Deposit and interest at
the rate of 3% per annum.
7.3 Conditions of Closing by Buyer. The obligation of Buyer to close is subject
to the satisfaction of the following conditions:
(a) All representations and warranties of Seller contained in this
Agreement shall be true, correct, and not misleading in all material
respects, and Seller shall have performed and satisfied all agreements
and covenants in all material respects required by this Agreement to
be performed and satisfied by Seller;
(b) No suit or other proceeding shall be pending or threatened before any
court or governmental agency seeking to restrain, prohibit, or declare
illegal, or seeking substantial damages in connection with the
transaction contemplated hereby; and
(c) No material adverse change in the condition of or title to the
Properties shall have occurred subsequent to the Effective Time,
except depletion through normal production within authorized
allowables, ordinary changes in rates of production, and depreciation
of equipment through ordinary wear and tear.
(d) Seller will make available to Buyer's auditors for up to one year
after Closing, at reasonable business hours and at the offices of
Seller, those accounting files, (including but not limited to monthly
statements of revenues derived from sales of hydrocarbons from the
Properties and the operating expenses and capital costs related to the
Properties, monthly XXXXX charges and associated expenses, invoices
and hydrocarbon purchaser statements related to the Properties over
the period beginning January 1, 2003 through April 30, 2006) necessary
for Buyer to construct a three (3) year history of property level
revenues and expenses for the Properties.
(e) Xxxxx Petroleum LP ("HPLP"), Xxxxx Heirs, and Buyer will continually
vote their combined seventy-five and twenty seven one hundredths
percent (75.27%) voting interest
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in the South Xxxxxx Unit for Buyer to become the successor operator to
Xxxxx Petroleum LP for as long as Buyer, Xxxxx Petroleum LP and Xxxxx
Heirs own an interest in the Properties.
(f) Seller has provided Buyer or its legal counsel all material documents
related to the HPLP-ARCO/BP South Xxxxxx Unit transaction.
(g) HPLP acquired certain surface acreage as recorded in Volume 1081 at
page 000 xx xxxxxXxxxXxx Xxxxxx, XxxxxXxx Xxxxxx records from Atlantic
Richfield Company ("ARCO") under that certain Assignment, Xxxx of Sale
and Surface Deed effective May 1, 2001. HPLP will hold title to the
surface for the benefit of HPLP and the South Xxxxxx Unit working
interest owners until such time that HPLP conveys its working interest
and ARCO conveys its net profits interest in the South Xxxxxx Unit, or
such time as the South Xxxxxx Unit is terminated. At such time as HPLP
and ARCO convey their South Xxxxxx Unit ownership to a third party,
HPLP will convey title to the subject surface to the South Xxxxxx Unit
operator for the benefit of the South Xxxxxx Unit working interest
owners. No costs will be charged by HPLP to the working interest
owners for the use of the subject land.
7.4 Closing Obligations. At the Closing, the following shall occur:
(a) Seller shall execute, acknowledge and deliver to Buyer, the original
Assignment of Oil and Gas Leases and Xxxx of Sale attached hereto as
Exhibit "B" (the "Assignment"), conveying title to the Properties to
Buyer, as well as such certificates or other documents as are required
to effect the transfer of the Properties, and support the election of
Buyer as operator of the South Xxxxxx Unit as provided for in Article
7.3(e).
(b) Buyer and Seller shall execute, acknowledge and deliver to each other
the Registration Rights Agreement in the form attached hereto as
Exhibit "C".
(c) Seller will provide Buyer with copies of all lease, land and well
files pertaining to the Properties in the possession of Seller. All
books, records and files or copies of such data, in the possession of
Seller pertaining to the Properties, including, without limitation,
all well files, correspondence, title opinions and title reports,
geological, geophysical and engineering information, except for that
data prohibited by third party confidentiality agreements, shall be
made available for delivery to Buyer, at Buyer's cost, at Seller's
offices where currently maintained, within fifteen (15) business days
after the Closing. Seller shall have the right to retain originals or
copies of any or all of such books, records and accountingfiles and to
retain canceled checks and general ledger, purchasing and other
general accounting records of Seller. Buyer's reliance on same shall
be at Buyer's sole risk.
(d) Seller shall deliver to Buyer exclusive possession of the Exhibit "A"
interests.
(e) Seller and Buyer shall execute, acknowledge and deliver such transfer
orders or letters in lieu thereof as Buyer may request, directing all
purchasers of production to make payment of proceeds attributable to
production from the Properties after the Effective Time to Buyer.
(f) Xxxxx Petroleum LP ("HPLP") shall resign as Operator and HPLP and
Xxxxx Heirs shall vote for Buyer as successor operator.
(g) Buyer shall deliver the cash consideration of Article 3.1(e) portion
of the purchase price to Seller by Wire Transfer on the date of
Closing less an amount equal to the proceeds received less costs paid
by Seller attributable to the operation of and production from the
Properties after the Effective Time and less any adjustments due to
Title Defects and/or Environmental Matters as applicable as set out in
Article 4. Additionally Buyer shall shall provide Seller with evidence
of Seller's ownership of a minimum of one hundred thirty-eight
thousand (138,000) Legacy Units to Seller.
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7.5 Post Closing Adjustment and Accounting . Any adjustments pursuant to this
Article will be made at Closing, if possible. Should adjustment amounts be
indeterminable as of Closing, Seller shall prepare a Post Closing settlement
statement containing adjustments, including but not limited to the following,
and will be made within, and only within, ninety (90) days of Closing:
(a) Upward Adjustments. The Purchase Price shall be adjusted upward by the
following:
(i) The amount of all direct costs and expenditures chargeable to
Seller's interest incurred and paid by Seller:
(A) that are attributable to the drilling, completion,
recompletion, reworking, operation and maintenance of
the Properties on and after the Effective Time;
(B) bonuses, lease rentals and shut-in payments due after
(and expressly excluding those due before) the
Effective Time;
(C) ad valorem, property and other taxes that are allocated
to the Buyer pursuant to Article 7.5(d) herein below;
and
(D) amounts relating to obligations arising under the
Contracts relating to the Properties with respect to
operations or production after the Effective Time;
(ii) The value of all Hydrocarbons, which have been produced and are
merchantable, and are in storage in tanks above the outlet
flange delivery point and credited to the Properties as of the
Effective Time, net of all severance taxes, and less an
appropriate deduction based on industry practice for basic
sediment, water and other non-merchantable liquids;
(iii) Any other amount agreed upon by Seller and Buyer, and
(iv) Additional Legacy Reserves, LP units will be issued to Seller if
the 3rd quarter distribution, on an annualized basis, is less
than $1.74 per unit. If such distribution is less, the amount of
additional shares will be calculated by comparing the actual 3rd
quarter 2006 annualized distribution to $1.74 per unit, and
adjusting the number of units issued upward by taking the ratio
of $1.74 to the new annualized distribution rate for the 3rd
quarter, less one, with the result multiplied by the minimum of
138,000 units. Such additional shares would be issued to Seller
no later than December 1, 2006.
(v) That amount described in Article 6.4.
(b) Downward Adjustments. The Purchase Price shall be adjusted downward by
the following:
(i) The amount of all proceeds received by Seller that are
attributable to the ownership and operation of the Properties on
or after the Effective Time;
(ii) The following amounts:
(A) all direct unrelated costs and expenditures chargeable
to Seller's interest that are attributable to the
drilling, completion, recompletion, reworking,
operation and maintenance of the Properties prior to
the Effective Time,
(B) all bonuses, lease rentals and shut-in payments due
prior to the Effective Time, and
(C) amounts relating to obligations arising under the
Property Contracts, all with respect to operations and
production prior to the Effective Time.
(iii) Those amounts resulting from Title Defects and/or Environmental
Defects, as provided in Article 4 and
(iv) Any other amount agreed upon by Seller and Buyer.
(c) Seller shall be entitled to all proceeds and shall be responsible for
all expenses and other liabilities prior to said Effective Time, and that
Buyer shall be entitled to all proceeds and shall be responsible for all
expenses and liabilities, including plugging of the xxxxx, after the
Effective Time.
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(d) All taxes, real property taxes and similar obligations for the current
year shall be prorated based upon the prior year's tax rates if tax
statements for the current year have not been received by Seller within
ninety (90) days following Closing.
7.6 Buyer will furnish to Seller monthly the necessary records and information
to allow Seller to continue to calculate the Net Profit Overriding Royalty
Interest between HPLP and ARCO.
7.7 The parties have determined that the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 does not apply to this transaction.
ARTICLE 8
TERMINATION
8.1 Termination. This Agreement and the transactions contemplated may be
terminated in the following instances:
(a) by Buyer or Seller in accordance with Article 4.6, concerning Remedies
for Title Defects;
(b) by the mutual written agreement of Buyer and Seller;
(c) by Buyer if the conditions set forth in Article 5.1 and or Article 7.3
are not satisfied in all material respects or waived prior to the
Closing Date, and notwithstanding any other provisions of this
Agreement to the contrary, by Buyer if the Buyer is not in default
hereunder and the Closing has not occurred onor before July 15, 2006;
(d) by Seller if the conditions set forth in Article 5.2 and/or Article
7.2 are not satisfied in all material respects or waived prior to the
Closing Date, and notwithstanding any other provisions of this
Agreement to the contrary, by the Seller if the Seller is not in
default hereunder and the Closing has not occurred on or before the of
July 15, 2006.
8.2 Remedies. If Closing does not occur on the Closing Date, as that may be
extended by Seller and Buyer hereunder, due to Seller's breach of the terms of
this Agreement, then Buyer may seek such legal or equitable remedies to which
Buyer may be entitled including the right to enforce specific performance of
this Agreement. If Closing does not occur due to Buyer's breach of the terms of
this Agreement, Seller may retain the Deposit plus interest at the rate of 3%
per annum as its sole remedy hereunder.
ARTICLE 9
DISCLAIMER
ANY ASSIGNMENT AND XXXX OF SALE EXECUTED PURSUANT HERETO SHALL BE EXECUTED
WITHOUT ANY EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION AS TO THE
MERCHANTABILITY OF ANY OF THE XXXXX OR EQUIPMENT OR THEIR FITNESS FOR ANY
PURPOSE, AND WITHOUT ANY OTHER EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION
WHATSOEVER EXCEPT AS EXPRESSLY SET FORTH IN SAID ASSIGNMENT AND XXXX OF SALE. IT
IS UNDERSTOOD AND AGREED THAT BUYER SHALL HAVE INSPECTED THE PROPERTY AND
PREMISES AND SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION,
BOTH SURFACE AND SUBSURFACE, AND THAT BUYER SHALL ACCEPT ALL OF THE SAME IN
THEIR "AS IS, WHERE IS" CONDITION. IN ADDITION NEITHER, SELLER, NOR SELLER'S
REPRESENTATIVE (XXXXX PETROLEUM LP), MAKES ANY WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA, INFORMATION
OR MATERIALS HERETOFORE OR HEREAFTER FURNISHED BUYER IN CONNECTION WITH THE
PROPERTIES, OR AS TO THE QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY)
ATTRIBUTABLE TO THE PROPERTIES OR THE ABILITY OF THE PROPERTIES TO PRODUCE
HYDROCARBONS. ANY AND ALL SUCH DATA, INFORMATION AND OTHER MATERIALS FURNISHED
BY SELLER AND SELLER'S REPRESENTATIVE IS PROVIDED BUYER AS A CONVENIENCE AND ANY
RELIANCE ON OR USE OF THE SAME SHALL BE AT BUYER'S SOLE RISK. BUYER EXPRESSLY
WAIVES THE PROVISIONS OF CHAPTER XVII,
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SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN SECTION
17.555, WHICH IS NOT WAIVED), VERNON'S TEXAS CODE ANNOTATED BUSINESS AND
COMMERCE CODE (THE "DECEPTIVE TRADE PRACTICES ACT").
ARTICLE 10
MISCELLANEOUS
10.1 Notices. All notices required or permitted under this Agreement shall be in
writing, and any notice hereunder shall be deemed to have been made if
delivered by: (i) hand; (ii) overnight delivery service; (iii) telecopy; or
(iv) when placed in first class certified mail, postage prepaid, with
return receipt requested to the address as set forth below. Either party
may, by written notice deliver to the other, change the address to which
notices shall be delivered.
Seller: Xxxxx Holding LP
----------------------------
0000 Xxxxxxx Xxxxxxx
----------------------------
Xxxxxxx, XX 00000
----------------------------
Attn: Land Manager
----------------------------
Buyer: Legacy Reserves Operating LP
----------------------------
000 Xxxx Xxxx, Xxxxx 0000
----------------------------
----------------------------
Xxxxxxx, Xxxxx 00000
-----------------------------------
Attn: Xx. Xxxx X. Xx Xxxx
----------------------------
With Copy to: Xxxxx, Xxxxxxxx & Xxxxx
----------------------------
000 X. Xxxxxxxxxx, Xxxxx 000
----------------------------
Xxxxxxx, Xxxxx 00000
-----------------------------------
Attn: Xx. Xxxxx X. Xxxxx
----------------------------
10.2 Reservations and Exceptions. Sale and purchase of the Properties is made
subject to all reservations, exceptions, limitations, contracts and other
burdens or instruments which are of record or of which Buyer has notice,
including any matter included or referenced in the materials made available by
Seller to Buyer.
10.3 Entire Agreement. This instrument states the entire agreement between Buyer
and Seller and supersedes all other agreements, either written or oral, between
Seller and Buyer concerning the sale and purchase of the Properties. This
Agreement may be supplemented, altered, amended, modified or revoked in writing
only, signed by all of the parties. No material representation, warranty,
covenant, agreement, promise, inducement or statement, whether oral or written,
has been made by Seller or Buyer and relied upon by the other that is not set
forth in this Agreement or in the instruments referred to herein, and neither
Seller nor Buyer shall be bound by or liable for any alleged representation,
warranty, covenant, agreement, promise, inducement or statement not so set
forth.
10.4 Survival of Agreements. All agreements, indemnities, representations and
warranties of the parties provided herein shall survive the Closing and delivery
of the closing document to the parties.
10 5 Assignability. This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and assigns; provided,
however, neither Buyer or Seller may, prior to the Closing, assign its rights or
delegate its duties or obligations under this Agreement without the prior
written consent of the other party.
10.6 Publicity. Seller and Buyer shall consult with each other with regard to
all publicity and other releases at or prior to the Closing concerning this
Agreement and the transaction contemplated hereby and except as required by
applicable law or other applicable rules or regulations of any governmental body
or stock exchange, neither party shall issue any publicity or other release
without the prior written consent of the other party.
10.7 Further Assurance. After Closing each of the parties shall execute,
acknowledge and deliver to the other such further instruments, and take such
other actions as may be reasonably necessary to carry out the provisions of this
Agreement. However, Buyer shall assume all responsibility for notifying the
purchaser
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of oil and gas production from the Properties, and such other designated persons
who may be responsible for disbursing payments for the purchase of such
production, of the change of ownership of the Properties. Buyer shall take all
actions necessary to effectuate the transfer of such payments to Buyer as of the
Effective Time.
10.8 Destruction. For a period of five (5) years after the Closing Date (or for
such longer period as may be required by law or governmental regulation), Buyer
shall not intentionally destroy or give up possession of any original or final
copy of the documents delivered by Seller to Buyer hereunder without first
offering Seller the opportunity (by delivery of written notice to Seller), at
Seller's expense (without any payment to Buyer), to obtain such original or
final copy or a copy thereof.
10.9 Headings. The headings are for guidance only and shall have no significance
in the interpretations of this Agreement.
10.10 Counterpart Execution. This Agreement may be executed by Buyer and Seller
in any number of counterparts, no one of which need be executed by all parties.
Each of such counterparts shall be deemed an original instrument, and all
counterparts shall together constitute but one and the same instrument. This
agreement shall become operative when each party has executed at least one
counterpart.
10.11 Severance. If any provision of this Agreement shall be determined void,
illegal or unenforceable, all of the other provisions of this Agreement shall
remain in full force and effect, and the provision or provisions that are
determined to be void, illegal or unenforceable shall be limited so that they
shall remain in effect to the extent permitted by law.
10.12 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO CONFLICT OF LAWS. THE PARTIES
AGREE THAT ANY LITIGATION RELATING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT MUST
BE BROUGHT BEFORE AND DETERMINED BY A COURT OF COMPETENT JURISDICTION WITHIN THE
STATE OF TEXAS.
10.13 Disclosure of Information. Seller agrees (i) to provide Buyer with
Disclosure Information (as defined below for a 36-month period ending no later
than June 30, 2006 and (ii) to reasonably cooperate with and assist Buyer in an
audit of the Properties which audit shall be performed at no cost to Seller. As
used herein, "Disclosure Information" means, as to the Properties, the net
revenues, direct operating expenses (including production and property taxes),
exploratory and development costs and production volume disclosures required
under Statement of Financial Accounting Standards No. 69 and balance sheet and
other income statement data in Seller's possession that Buyer reasonably
believes are required to be included in any report filed by Buyer with the
Securities and Exchange Commission. Buyer shall complete the audit no later than
one year from Closing.
ARTICLE 11
INDEMNIFICATIONS
11.1 Buyer's Indemnification. BUYER SHALL DEFEND, INDEMNIFY, AND SAVE AND HOLD
HARMLESS SELLER AGAINST ALL CLAIMS, COSTS, EXPENSES, AND LIABILITIES WITH
RESPECT TO THE PROPERTIES, (BUT NOT INCLUDING THOSE INCURRED BY SELLER WITH
RESPECT TO THE SALE OF THE PROPERTIES TO BUYER OR THE NEGOTIATIONS LEADING TO
SUCH SALE OR THOSE THAT RESULT FROM OR ARE ATTRIBUTABLE TO THE NEGLIGENCE OR
WILLFUL MISCONDUCT OF SELLER, ITS EMPLOYEES OR AGENTS WITH RESPECT TO THE
OPERATION AND MAINTENANCE OF THE PROPERTIES, AND NOT INCLUDING THOSE THAT RESULT
FROM OR ARE ATTRIBUTABLE TO ANY REPRESENTATION OF SELLER CONTAINED IN THIS
AGREEMENT BEING UNTRUE OR A BREACH OF ANY WARRANTY OR COVENANT OF SELLER
CONTAINED IN THIS AGREEMENT).
11.2 ARBITRATION AND MEDIATION. In case of a disagreement between the Parties to
this Agreement as to any right, obligation, term or provision hereof or
involving a total disputed amount or claim(s) equal to or greater than
$25,000.00, the Parties shall make an xxxxxxx effort to settle such disagreement
to their mutual satisfaction. If any such dispute regarding this Agreement
cannot be reconciled by the Parties to this Agreement, then any Party may
provide notice to the other specifying with particularity the items of
disagreement and a request that the matter be resolved by mediation. Such
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notice shall include the name of a mediator acceptable to the Party requesting
mediation. If the dispute is not resolved by mediation to the satisfaction of
the Parties, or if the Parties are unable to agree upon a mediator, within
thirty (30) days after receipt of such written notice, then any such dispute
shall be settled by arbitration and the results of such arbitration shall be
binding upon all Parties to this Agreement in all respects as set forth below.
Arbitration may be initiated by written notice from any Party to this Agreement
to the other that the previously noticed dispute has not been resolved by
mediation and is being submitted to arbitration under the terms of this
Agreement. A single arbitrator shall be chosen by the Parties to the dispute by
submitting names of eleven (11) arbitrators experienced in the area of the
dispute from a listing of twenty (20) arbitrators supplied by the American
Arbitration Association. Said selection by both Parties shall take place within
ten (10) days after the Parties have received the listing from the American
Arbitration Association. The lists of the Parties shall be compared and the
first name to appear on both lists shall be the arbitrator of the dispute.
Should either Party fail or refuse to submit a list of eleven arbitrators then
the other Party shall select an arbitrator who shall be the sole arbitrator and
shall resolve the dispute as set out herein. All arbitrators shall be
individuals who have had prior experience in oil and gas exploration and
production and shall function as independent and neutral arbitrators. In the
selection of arbitrators, the Parties shall take into consideration the nature
of the matter submitted for arbitration. (Thus, for example, professional
engineers should be selected to arbitrate issues which are primarily engineering
in nature and accountants who are members of the Council of Petroleum
Accountants Societies should be selected to arbitrate matters which are
primarily accounting in nature.) Arbitrations under this paragraph shall be
conducted under the Texas Arbitration Statute (Xxxxxx'x Xxx. Tex. Civ. St. Arts.
224 to 238-6) and shall apply Texas law. All matters concerning the conduct of
the arbitrators shall be governed by the provisions of the American Arbitration
Association. No dispute related to this Agreement shall be brought before any
court of law or equity; however, judgment upon the award or decision rendered by
the arbitrators may be entered in any court having jurisdiction.
EXECUTED this 13 day of June, 2006.
SELLER:
XXXXX HOLDING XX
XXXXX & XXXXXXX INVESTMENT LLC, GENERAL PARTNER
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
---------------------------------------
Title: President
---------------------------------------
BUYER:
LEGACY RESERVES OPERATING LP
LEGACY RESERVES OPERATING GP LLC, GENERAL PARTNER
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------------
Title: President
---------------------------------------
STATE OF TEXAS
COUNTY OF MIDLAND
The foregoing instrument was acknowledged before me this 14th day of
June, 2006, by Xxxxxx X. Xxxxxxx, President of Xxxxx & Xxxxxxx Investment LLC,
General Partner of Xxxxx Holding LP a Texas Limited Partnership, on behalf of
said limited partnership.
My Commission Expires:
4-26-2009
--------------------
/s/ Romae X. Xxxx
-----------------------------------------------
Notary Public in and for the State of Texas
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STATE OF TEXAS
COUNTY OF MIDLAND
The foregoing instrument was acknowledged before me this 14th day of
June, 2006, by Xxxxxx X. Xxxxxx, President of Legacy Reserves Operating GP
LLC, General Partner of Legacy Reserves Operating LP, a Delaware limited
partnership, on behalf of said partnership.
My Commission Expires:
4-26-2009
----------------------
/s/ Romae X. Xxxx
---------------------------------------------
Notary Public in and for the State of Texas
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EXHIBIT "A"
ATTACHED TO AND MADE A PART OF THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED JUNE 8, 2006 BETWEEN XXXXX HOLDING LP, (REFERRED TO AS SELLER) AND
LEGACY RESERVES OPERATING LP, (REFERRED TO AS BUYER)
SOUTH XXXXXX UNIT
LEA COUNTY, NEW MEXICO
I. (XXXXX ACQUISITION) WORKING INTEREST .14674140
SOUTH XXXXXX UNIT: (OIL) NET REVENUE INTEREST .12730574
(IN ACCORDANCE WITH THE TRACT WORKING (GAS) NET REVENUE INTEREST .12730278
INTEREST AND TRACT PARTICIPATION FACTORS
APPLICABLE TO THE FOLLOWING OIL AND GAS LEASES)
OIL AND GAS LEASES:
Exhibit "A"
LESSOR DATE DESCRIPTION OF LANDS / RIGHTS RECORDING
-------------------------------- -------------- ----------------------------------------------------- ---------------------------
USA BLM LC-032650-A 7/20/1935 INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: n/a
T25S-R37E, Section 24: SE/4SW/4, 40 acres more or
less Limited to the Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx
Pool. (Unit Tract 1)
-------------------------------- -------------- ----------------------------------------------------- ---------------------------
USA BLM LC-032650-B 4/24/1936 T25S-R37E, Section 24: E/2, SE/4NW/4, NE/4SW/4, n/a
400 acres more or less Limited to the Xxxxxx
Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 12)
-------------------------------- -------------- ----------------------------------------------------- ---------------------------
USA BLM NMNM-7487 2/1/88 INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: n/a
renewal T25S-R37E, Section 23: SW/4NE/4, 40 acres more or
less Limited to the Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx
Pool. (Unit Tract 26)
-------------------------------- -------------- ----------------------------------------------------- ---------------------------
USA BLM LC-049439-B 10/3/1938 INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: n/a
T26S-R37E, Section 1: N/2 NE/4, 80 acres more or
less Limited to the Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx
Pool. (Unit Tract 27)
-------------------------------- -------------- ----------------------------------------------------- ---------------------------
USA BLM NM-0349956 6/1/1947 INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: n/a
T25S-R38E, Section 19: W/2NW/4, 80 acres more or
less Limited to the Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx
Pool. (Unit Tract 28 & 28A)
-------------------------------- -------------- ----------------------------------------------------- ---------------------------
State of New Mexico 2/10/1942 INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: n/a
Lease B-9521 T25S-R38E, Section 30: W/2NW/4, 80 acres more or
less Limited to the Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx
Pool. (Unit Tract 32)
-------------------------------- -------------- ----------------------------------------------------- ---------------------------
Xxxxx X. Xxxxxxxxxx et al 1/20/1953 INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: VOL 108
T25S-R38E, Section 19: W/2SW/4, Limited to the PG 345
Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 52)
-------------------------------- -------------- ----------------------------------------------------- ---------------------------
X.X. Xxxx et ux 2/12/1953 INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: VOL 108
T25S-R38E, Section 19: W/2SW/4, Limited to the PG 341
Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 52)
-------------------------------- -------------- ----------------------------------------------------- ---------------------------
Xxxxxxx X. Xxxx et ux 2/17/1953 INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: VOL 108
T25S-R38E, Section 19: W/2SW/4, Limited to the PG 337
Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 52)
-------------------------------- -------------- ----------------------------------------------------- ---------------------------
Xxxxxxxx Xxxxxx 3/18/1953 INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: VOL 108
T25S-R38E, Section 19: W/2SW/4, Limited to the PG 329
Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 52)
-------------------------------- -------------- ----------------------------------------------------- ---------------------------
Xxxxxxx X. Read et ux 4/30/1953 INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: VOL 108
T25S-R38E, Section 19: W/2SW/4, Limited to the PG 354
Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 52)
-------------------------------- -------------- ----------------------------------------------------- ---------------------------
Xxxxxxx X. Xxxxxx et ux 3/31/1959 INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: VOL 174
T25S-R38E, Section 19: W/2SW/4, Limited to the PG 362 &
Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 52) VOL 175
PG 301
-------------------------------- -------------- ----------------------------------------------------- ---------------------------
Page 2 of 3
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II. (BASS ACQUISITION)
SOUTH XXXXXX UNIT: WORKING INTEREST .00320101
(IN ACCORDANCE WITH THE (OIL) NET REVENUE INTEREST .0037996
TRACT WORKING INTEREST AND TRACT (GAS) NET REVENUE INTEREST .0037996
PARTICIPATION FACTORS APPLICABLE TO THE
FOLLOWING OIL AND GAS LEASES)
* * T25S-R37E, Section 12: W/2 and W/2 SE/4 *
(Unit Tracts 41, 42, 42A, 43, 44, 44A, 45 & 45A)
*Contractual Rights obtained in: (i) that certain Assignment and Xxxx of Sale
effective January 1, 2004 from The BASS MANAGEMENT TRUST, a Texas Trust, XXX X.
XXXX, INC., THRU LINE INC., XXX X. XXXX, INC., KEYSTONE, Inc., and XXXXXXXX
TRAIL VENTURES, L.P. to LEEDE OPERATING COMPANY, LLC recorded in Book 1278 at
Page 860 and (ii) that certain Assignment and Xxxx of Sale effective January 1,
2004 from Leede Operating Company, LLC to Xxxxx Holding LP recorded in Book
1285, at page 301 in the Lea County, New Mexico records that was created as a
result of that certain Unit Agreement and Unit Operating Agreement effective
September 1, 1992 between Atlantic Richfield Company, as Operator, and Xxx X.
Xxxx, Inc. et al, as Non-Operators, covering the South Xxxxxx Unit Tract Nos.
41, 42, 42A, 43, 44, 44A, 45 & 45A out of the W/2 and W/2 XX/0 Xxxxxxx 00,
X00X-X00X, Xxx Xxxxxx, Xxx Xxxxxx.
III. (XXXXXXXX ACQUISITION)
SOUTH XXXXXX UNIT: WORKING INTEREST - 0 -
(IN ACCORDANCE WITH THE (OIL) NET REVENUE INTEREST .00006092
TRACT WORKING INTEREST AND TRACT (GAS) NET REVENUE INTEREST .00006092
PARTICIPATION FACTORS APPLICABLE
TO THE FOLLOWING OIL AND GAS LEASE)
USA LC-0349956 6/1/1947 T25S, R38E Section 19: W/2 NW/4 n/a
(Unit Tracts 28, 28A)
IV. (ESTIMATED TOTAL)
SOUTH XXXXXX UNIT INTEREST:
WORKING INTEREST .14994241
(OIL) NET REVENUE INTEREST .13116626
(GAS) NET REVENUE INTERST .13116330
V. SOUTH XXXXXX UNIT AGREEMENT DATED SEPTEMBER 1, 1992
VI. SOUTH XXXXXX UNIT OPERATING AGREEMENT DATED SEPTEMBER 1, 1992
Exhibit "A"
Page 3 of 3
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OIL AND GAS LEASES:
XXXXXXXX
(A/K/A XXXXX -- WIMBERLEY UNIT)
LEA COUNTY, NEW MEXICO
X.X. XXXXXXXX: WORKING INTEREST .2550000
NET REVENUE INTEREST .2029278
X.X. XXXXXX FED COM
LESSOR DATE DESCRIPTION OF LANDS / RIGHTS RECORDING
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE
COVERS: XX/0XX/0 Xxxxxxx 00, X00X-X00X, Less
and Except the Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx
Xxx X. Xxxxxxxxx et ux 4/16/1938 Pool. (Unit Tract 50) VOL 35-PG 156
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
Xxxxxx Xxxx Xxxxxx et vir 12/12/1939 SAME AS ABOVE VOL 41-PG 330
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
Xxxxxx X. Xxxx et ux 12/12/1939 SAME AS ABOVE VOL 41-PG 312
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
Xxxx X. Xxxxx et ux 12/12/1939 SAME AS ABOVE VOL 41-PG 326
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
S.E. Cone et ux 12/12/1939 SAME AS ABOVE VOL 41-PG 328
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
X.X. Xxxxx et ux 12/12/1939 SAME AS ABOVE VOL 41-PG 314
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
O.L. Nislar et ux 12/12/1939 SAME AS ABOVE VOL 41-PG 335
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
Xxx X. Xxxxxx et ux 12/12/1939 SAME AS ABOVE VOL 41-PG 332
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE
COVERS: SW/4NE/4 Xxxxxxx 00, X00X-X00X, Xxxx
XXX XX-000000 2/7/1938 and Except the Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx
(NMNM-7487) (2/1/1978) Pool n/a
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
X.X. XXXXXX: WORKING INTEREST .2500000
NET REVENUE INTEREST .2500000
----------------------------------- --------------- -------------------------------------------- ---------------------------------
E/2, SE/4 NW/4, NE/4 SW/4 XXX 00,
X X -- 000000 (B) 4/24/1936 T25S, R37E n/a
----------------------------------- --------------- -------------------------------------------- ---------------------------------
End of Exhibit "A"
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EXHIBIT "B"
ATTACHED TO AND MADE A PART OF THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED JUNE 8, 2006 BETWEEN XXXXX HOLDING LP, (REFERRED TO AS SELLER) AND
LEGACY RESERVES OPERATING LP, (REFERRED TO AS BUYER)
STATE OF NEW MEXICO )
)
COUNTY OF LEA )
ASSIGNMENT AND XXXX OF SALE
THIS ASSIGNMENT AND XXXX OF SALE ("Assignment"), effective as of 12:01 a.m.,
local time, on May 1, 2006, the ("Effective Time") is made by XXXXX HOLDING LP,
whose address is 0000 Xxxxxxx Xxxxxxx, Xxxxxxx, XX 00000 ( referred to herein as
the "Assignor") LEGACY RESERVES OPERATING, LP, a Delaware limited partnership
whose address is 000 Xxxx Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000
(referred to herein as the "Assignee"). For good and valuable consideration, the
receipt, adequacy and sufficiency of which is hereby acknowledged by Assignor,
Assignor does hereby grant, bargain, transfer, convey, set over, assign, and
deliver unto Assignee, its successors and assigns, the following (collectively,
the "Assets"):
(a) ALL OF ASSIGNOR'S RIGHT, TITLE, AND INTEREST OF WHATEVER NATURE IN ALL
LEASEHOLD AND OTHER INTERESTS IN; (i) THE OIL, GAS AND MINERAL LEASES
DESCRIBED ON EXHIBIT "A" (THE "LEASES"), INSOFAR AND ONLY INSOFAR AS SAID
LEASES INCLUDE AND PERTAIN TO AND COVER THE LANDS AND DEPTHS AS
SPECIFICALLY DESCRIBED HEREIN ON EXHIBIT "A" (THE "LANDS"); (II) THE OIL
AND GAS XXXXX LOCATED ON THE LEASES OR ON LANDS POOLED OR UNITIZED
THEREWITH (THE "XXXXX"); AND (III) THE UNITS, POOLED ACREAGE, SPACING OR
PRORATION UNITS OR OTHER ALLOCATION OF ACREAGE APPLICABLE TO THE XXXXX
ESTABLISHED BY OR IN ACCORDANCE WITH THE APPLICABLE STATE, FEDERAL OR LOCAL
LAW;
(b) all of Assignor's petroleum, hydrocarbons and gases produced from or
attributable to the Leases, or any unit of which a Lease is a part, after
the Effective Time;
(c) all of Assignor's petroleum, hydrocarbons and gases produced from or
attributable to the Leases, or any unit of which a Lease is a part, which
at the effective time are owned by Assignor and are in storage;
(d) all of Assignor's permits, licenses, servitudes, contracts and agreements
directly related to the Leases, including all operating agreements; oil,
gas and condensate purchase and sale agreements; processing, treating,
fractionating, compression and transportation agreements; water rights
agreements; farmout, farmin, dry hole, bottom hole, acreage contribution,
salt water disposal agreements; easements, surface use and/or right-of-way
agreements; unitization or pooling agreements, declarations and orders and
the properties covered and the units created thereby; and all other
executory contracts and agreements directly related to the Leases, INSOFAR
AND ONLY INSOFAR as the same cover and affect the Leases; and
(e) all of Assignor's producing, shut-in, temporarily abandoned, abandoned,
plugged, water supply, injection and disposal xxxxx, tank batteries,
structures, pipe lines, fixtures, equipment, spare parts, tools, pipelines,
buildings, personal property, appurtenances and improvements now or as of
the Effective Time, located on or appurtenant to the Leases and used in
connection with the operation of the Leases, or the gathering, treating,
compression, transportation and processing of production from the Leases,
whether or not operating or abandoned.
THERE IS EXCEPTED FROM THIS ASSIGNMENT AND RESERVED UNTO ASSIGNOR THE FOLLOWING,
WHICH ARE SPECIFICALLY EXCLUDED FROM THE ASSETS:
(a) all of Assignor's trade credits, accounts receivable, notes receivable and
other receivables attributable to Assignor's interest in the Assets with
respect to any period of time prior to the Effective Time; all deposits,
cash, checks in process of collection, cash equivalents and funds
attributable to Assignor's interest in the Assets with respect to any
period of time prior to the
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Effective Time; and all proceeds, benefits, income or revenues accruing
(and any security or other deposits made) with respect to the Assets prior
to the Effective Time;
(b) all of Assignor's claims and causes of action of Assignor arising from
acts, omissions, events or damage to or destruction of the Assets,
occurring prior to the Effective Time;
(c) all of Assignor's amounts due or payable to Assignor as adjustments or
refunds under any contracts or agreements, including take-or-pay claims and
all claims arising from open and any future audits affecting the Assets,
respecting periods prior to the Effective Time;
TO HAVE AND TO HOLD the Asset unto Assignee, its successors and assigns,
forever. This Assignment is made and accepted subject to the following:
1. This Assignment is made and accepted subject to all royalties, overriding
royalties, burdens and encumbrances affecting the Assets and WITHOUT ANY
WARRANTY OF TITLE, EXPRESS OR IMPLIED OTHER THAN LIMITED WARRANTY BY,
THROUGH AND UNDER ASSIGNOR.
2. The Assets herein assigned are subject to all the terms and provisions of
the Leases which are of public record as to their proportionate share of
all overriding royalty interests, lessor's royalties, net profit interests,
carried interests, reversionary interests and other interests, encumbrances
and burdens on the production therefrom; to all covenants, conditions,
obligations, and conditions in instruments and assignments in the chain of
title of the Leases; and to all other encumbrances affecting the Assets in
existence on the date this Assignment is executed. Assignee hereby assumes
and agrees to pay, perform and discharge its proportionate share of all
obligations under the Leases and the agreements relating to the Leases
herein assigned. The references herein to obligations and encumbrances
shall not be deemed to ratify or create any rights in third parties.
3. Assignee accepts the Assets in their present condition "AS IS, WHERE IS and
WITH ALL FAULTS". Without limiting the generality of the foregoing,
Assignor makes no representation or warranty as to (i) the amount, value,
quality, quantity, volume or deliverability of any oil, gas or other
minerals or reserves in, under or attributable to the Assets; (ii) the
physical, operating, regulatory compliance, safety or environmental
condition of the Assets; (iii) any geological, engineering or other
interpretations of economic valuation; (iv) the status of any payout
accounts; or (v) predictions as to when any event will or will not occur or
is likely to occur. The items of personal property, equipment,
improvements, fixtures and appurtenances conveyed as part of the Assets are
sold "AS IS, WHERE IS," and Assignor MAKES NO, AND DISCLAIMS ANY,
REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR IMPLIED, AND WHETHER BY
COMMON LAW, STATUTE OR OTHERWISE, AS TO (i) MERCHANTABILITY, (II) FITNESS
FOR ANY PARTICULAR PURPOSE, (III) CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS, AND (IV) CONDITION. ASSIGNEE ACKNOWLEDGES THAT IT HAS BEEN
INFORMED THAT OIL AND GAS PRODUCING FORMATIONS CAN CONTAIN NATURALLY
OCCURRING RADIOACTIVE MATERIAL ("NORM"). SOME OR ALL OF THE EQUIPMENT,
MATERIAL, APPURTENANCES, IMPROVEMENTS AND FIXTURES SUBJECT TO THIS
ASSIGNMENT MAY HAVE LEVELS OF NORM ABOVE BACKGROUND LEVELS. A HEALTH HAZARD
MAY EXIST IN CONNECTION WITH THIS EQUIPMENT. THEREFORE, ASSIGNEE MAY NEED
TO FOLLOW SAFETY PROCEDURES WHEN HANDLING THIS EQUIPMENT. Assignee hereby
assumes its proportionate share, based upon its percentage ownership in the
Leases acquired herein, of any and all liabilities, obligations, costs and
expenses, including environmental damages and remediation, attributable to
or arising out of the ownership or operation of the Leases by Assignee or
Assignor, whether or not caused in whole or in part by the sole or
concurrent negligence or strict liability of Assignor (other than gross
negligence or willful misconduct)or Assignee or condition of the Leases.
4. It is specifically provided that if the assignment or attempted assignment
of any of the Leases which are of record without the consent of the lessor,
or any party from whom consent to assign is necessary, would constitute a
breach or result in a forfeiture thereof, this Agreement shall become
effective with respect thereto only upon receipt of such consent. This
Assignment is made subject to the terms and provisions of Purchase and Sale
Agreement between Assignor and Assignee dated June 13, 2006, and in the
event of conflict the terms and conditions of the Purchase and Sale
Agreement shall control. The covenants, indemnities and
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Page 21 of 27
other terms and provisions of the Purchase and Sale Agreement are
incorporated into this Agreement.
5. Assignee shall comply with all current and subsequently amended applicable
laws, ordinances, rules, and regulations applicable to the Asset and
Assignee's ownership or operation thereof, and shall promptly obtain and
maintain all permits required by governmental authorities in connection
with the Assets.
6. This Assignment and all of the terms, provisions, covenants, indemnities,
obligations and conditions herein contained shall be binding upon and inure
to the benefit of and be enforceable by the Assignor, Assignee and their
respective successors, legal representatives, heirs and assigns; PROVIDED,
HOWEVER, no assignment, transfer, conveyance or encumbrance of the Assets
shall be made unless the same is expressly subject to this Assignment, and
unless the assignee or transferee assumes all or the applicable part of the
obligations hereunder. All the terms, provisions, covenants, indemnities,
obligations and conditions provided in this Assignment shall be deemed to
be covenants running with the land and Leases, and any transfer or other
disposition of the Leases shall be made subject to all such terms,
provisions, covenants, indemnities, obligations and conditions herein
contained.
7. This Assignment may be executed by Assignor and Assignee in any number of
counterparts, each of which shall be deemed an original instrument, but all
of which together shall constitute one and the same Assignment.
ASSIGNOR:
XXXXX HOLDING XX
XXXXX & XXXXXXX INVESTMENT LLC, GENERAL PARTNER
By:
------------------------------
Name: Xxxxxx X. Xxxxxxx
------------------------------
Title: President
------------------------------
ASSIGNEE:
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
STATE OF TEXAS
COUNTY OF MIDLAND
The foregoing instrument was acknowledged before me this _____ day of
__________________________, 2006, by Xxxxxx X. Xxxxxxx, President of Xxxxx &
Xxxxxxx Investment LLC, General Partner of Xxxxx Holding LP, a Texas Limited
Partnership, on behalf of said limited partnership.
-------------------------------------------
Notary Public in and for the State of Texas
My Commision Expires:
---------------------
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STATE OF ____________
COUNTY OF ____________
The foregoing instrument was acknowledged before me this _____ day of
__________________________, 20___, by ______________________.
-------------------------------------------
Notary Public in and for the State of Texas
My Commision Expires:
---------------------
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EXHIBIT "A"
ATTACHED TO AND MADE A PART OF THAT CERTAIN ASSIGNMENT AND XXXX OF SALE
DATED _____________, 2006, BY AND BETWEEN XXXXX HOLDING LP, REFERRED TO AS
("SELLER") AND _____________________ ("BUYER")
SOUTH XXXXXX UNIT
LEA COUNTY, NEW MEXICO
I. (XXXXX ACQUISITION)
SOUTH XXXXXX UNIT: WORKING INTEREST .14674140
(IN ACCORDANCE WITH THE (OIL) NET REVENUE INTEREST .12730574
TRACT WORKING INTEREST AND TRACT (GAS) NET REVENUE INTEREST .12730278
PARTICIPATION FACTORS APPLICABLE TO THE
FOLLOWING OIL AND GAS LEASES)
OIL AND GAS LEASES:
LESSOR DATE DESCRIPTION OF LANDS / RIGHTS RECORDING
---------------------------------------- --------------- -------------------------------------------------------------- ------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: T25S-R37E,
Section 24: SE/4SW/4, 40 acres more or less Limited to the
USA BLM LC-032650-A 7/20/1935 Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 1) n/a
---------------------------------------- --------------- -------------------------------------------------------------- ------------
T25S-R37E, Section 24: E/2, SE/4NW/4, NE/4SW/4, 400 acres
more or less Limited to the Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx
USA BLM LC-032650-B 4/24/1936 Pool. (Unit Tract 12) n/a
---------------------------------------- --------------- -------------------------------------------------------------- ------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: T25S-R37E,
2/1/88 Section 23: SW/4NE/4, 40 acres more or less Limited to the
USA BLM NMNM-7487 renewal Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 26) n/a
---------------------------------------- --------------- -------------------------------------------------------------- ------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: T26S-R37E,
Section 1: N/2 NE/4, 80 acres more or less Limited to the
USA BLM LC-049439-B 10/3/1938 Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 27) n/a
---------------------------------------- --------------- -------------------------------------------------------------- ------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: T25S-R38E,
Section 19: W/2NW/4, 80 acres more or less Limited to the
USA BLM NM-0349956 6/1/1947 Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 28 & 28A) n/a
---------------------------------------- --------------- -------------------------------------------------------------- ------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: T25S-R38E,
Section 30: W/2NW/4, 80 acres more or less Limited to the
State of New Mexico Lease B-9521 2/10/1942 Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 32) n/a
---------------------------------------- --------------- -------------------------------------------------------------- ------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: T25S-R38E,
Section 19: W/2SW/4, Limited to the Xxxxxx VOL 108
Xxxxx X. Xxxxxxxxxx et al 1/20/1953 Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 52) PG 345
---------------------------------------- --------------- -------------------------------------------------------------- ------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: T25S-R38E,
Section 19: W/2SW/4, Limited to the Xxxxxx VOL 108
X.X. Xxxx et ux 2/12/1953 Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 52) PG 341
---------------------------------------- --------------- -------------------------------------------------------------- ------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: T25S-R38E,
Section 19: W/2SW/4, Limited to the Xxxxxx VOL 108
Xxxxxxx X. Xxxx et ux 2/17/1953 Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 52) PG 337
---------------------------------------- --------------- -------------------------------------------------------------- ------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: T25S-R38E,
Section 19: W/2SW/4, Limited to the Xxxxxx VOL 108
Xxxxxxxx Xxxxxx 3/18/1953 Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 52) PG 329
---------------------------------------- --------------- -------------------------------------------------------------- ------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: T25S-R38E,
Section 19: W/2SW/4, Limited to the Xxxxxx VOL 108
Xxxxxxx X. Read et ux 4/30/1953 Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 52) PG 354
---------------------------------------- --------------- -------------------------------------------------------------- ------------
VOL 174
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS: T25S-R38E, PG 362 &
Section 19: W/2SW/4, Limited to the Xxxxxx VOL 000
Xxxxxxx X. Xxxxxx et ux 3/31/1959 Xxxxxxxx-Xxxx-Xxxxxxxx Pool. (Unit Tract 52) PG 301
---------------------------------------- --------------- -------------------------------------------------------------- ------------
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Exhibit "A"
Page 2 of 3
II. (BASS ACQUISITION)
SOUTH XXXXXX UNIT: WORKING INTEREST .00320101
(IN ACCORDANCE WITH THE E (OIL) NET REVENUE INTEREST .0037996
TRACT WORKING INTEREST AND TRACT (GAS) NET REVENUE INTEREST .0037996
PARTICIPATION FACTORS APPLICABLE TO THE
FOLLOWING OIL AND GAS LEASES)
------------------------------ --------------- --------------------------------------------------------------- ------------------
T25-R37E, Section 12: W/2 and W/2 SE/4
* * (Unit Xxxxxx 00, 00, 00X, 00, 00, 00X, 00 & 00X) n/a
------------------------------ --------------- --------------------------------------------------------------- ------------------
*Contractual Rights obtained in: (i) that certain Assignment and Xxxx of Sale
effective January 1, 2004 from The BASS MANAGEMENT TRUST, a Texas Trust, XXX X.
XXXX, INC., THRU LINE INC., XXX X. XXXX, INC., KEYSTONE, Inc., and XXXXXXXX
TRAIL VENTURES, L.P. to LEEDE OPERATING COMPANY, LLC recorded in Book 1278 at
Page 860 and (ii) that certain Assignment and Xxxx of Sale effective January 1,
2004 from Leede Operating Company, LLC to Xxxxx Holding LP recorded in Book
1285, at page 301 in the Lea County, New Mexico records that was created as a
result of that certain Unit Agreement and Unit Operating Agreement effective
September 1, 1992 between Atlantic Richfield Company, as Operator, and Xxx X.
Xxxx, Inc. et al, as Non-Operators, covering the South Xxxxxx Unit Tract Nos.
41, 42, 42A, 43, 44, 44A, 45 & 45A out of the W/2 and W/2 XX/0 Xxxxxxx 00,
X00X-X00X, Xxx Xxxxxx, Xxx Xxxxxx.
III. (XXXXXXXX ACQUISITION)
SOUTH XXXXXX UNIT: WORKING INTEREST - 0 -
(IN ACCORDANCE WITH THE (OIL) NET REVENUE INTEREST .00006092
TRACT WORKING INTEREST AND TRACT (GAS) NET REVENUE INTEREST .00006092
PARTICIPATION FACTORS APPLICABLE TO
THE FOLLOWING OIL AND GAS LEASE)
------------------------------ --------------- --------------------------------------------------------------- ----------------
X00X, X00X Section 19: W/2 NW/4
USA LC-0349956 6/1/1947 (Unit Tracts 28, 28A) n/a
------------------------------ --------------- --------------------------------------------------------------- ----------------
IV. (ESTIMATED TOTAL)
SOUTH XXXXXX UNIT INTEREST:
WORKING INTEREST .14994241
(OIL) NET REVENUE INTEREST .13116626
(GAS) NET REVENUE INTERST .13116330
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Exhibit "A"
Page 3 of 3
OIL AND GAS LEASES:
XXXXXXXX
(A/K/A XXXXX -- WIMBERLEY UNIT)
LEA COUNTY, NEW MEXICO
X.X. XXXXXXXX: WORKING INTEREST .2550000
NET REVENUE INTEREST .2029278
LESSOR DATE DESCRIPTION OF LANDS / RIGHTS RECORDING
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE
COVERS: XX/0XX/0 Xxxxxxx 00, X00X-X00X, Less
and Except the Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx
Xxx X. Xxxxxxxxx et ux 4/16/1938 Pool. (Unit Tract 50) VOL 35-PG 156
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
Xxxxxx Xxxx Xxxxxx et vir 12/12/1939 SAME AS ABOVE VOL 41-PG 330
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
Xxxxxx X. Xxxx et ux 12/12/1939 SAME AS ABOVE VOL 41-PG 312
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
Xxxx X. Xxxxx et ux 12/12/1939 SAME AS ABOVE VOL 41-PG 326
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
S.E. Cone et ux 12/12/1939 SAME AS ABOVE VOL 41-PG 328
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
X.X. Xxxxx et ux 12/12/1939 SAME AS ABOVE VOL 41-PG 314
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
O.L. Nislar et ux 12/12/1939 SAME AS ABOVE VOL 41-PG 335
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
Xxx X. Xxxxxx et ux 12/12/1939 SAME AS ABOVE VOL 41-PG 332
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
INSOFAR AND ONLY INSOFAR AS SAID LEASE
COVERS: SW/4NE/4 Xxxxxxx 00, X00X-X00X, Xxxx
XXX XX-000000 2/7/1938 and Except the Xxxxxx Xxxxxxxx-Xxxx-Xxxxxxxx
(NMNM-7487) (2/1/1978) Pool n/a
-------------------------------------- ----------------- ------------------------------------------------ ------------------------
X.X. XXXXXX FED COM
X.X. XXXXXX: WORKING INTEREST .2500
NET REVENUE INTEREST .2500
----------------------------------- --------------- -------------------------------------------- ---------------------------------
E/2, SE/4 NW/4, NE/4 SW/4 XXX 00, X00X,
X X -- 000000 (B) 4/24/1936 R37E n/a
----------------------------------- --------------- -------------------------------------------- ---------------------------------
End of Exhibit "A"
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EXHIBIT "C"
ATTACHED TO AND MADE A PART OF THAT CERTAIN PURCHASE AND SALE
AGREEMENT DATED JUNE 8, 2006, BY AND BETWEEN XXXXX HOLDING LP,
REFERRED TO AS ("SELLER") AND LEGACY RESERVES OPERATING LP ("BUYER")
SOUTH XXXXXX UNIT
LEA COUNTY, NEW MEXICO
REGISTRATION RIGHTS AGREEMENT
(To be furnished by Buyer for review by Seller)
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