Exhibit 10.5
AMENDED & RESTATED OPTION TO PURCHASE
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THIS OPTION TO PURCHASE (this "Agreement") is made and entered into this
17th day of October, 2002, by and between J. Xxxxxxx Xxxx, 0000 Xxxxxxx Xxx.,
Xxxxx 000, Xxxxxx, Xxxxx 00000, and Xxxx X. XxXxxxxxx, X.X. Xxx 000000, Xxxxxx,
Xxxxx 00000-0000, (jointly referred to as "Seller") and Legend Operating, LLC, a
Texas limited liability company, 0000 Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000 ("Buyer").
NOW THEREFORE, in consideration of the mutual promises set forth herein,
the parties hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE
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1.1 Property. Subject to the terms, conditions, reservations, and
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exceptions specified in this Agreement and Buyer's exercise of the Option,
Seller shall sell and Purchaser shall purchase as of the Effective Time all of
Seller's right, title and interest in and to the following assets described in
Subarticles 1.1(a) through 1.1(e) (collectively called the "Property"):
(a) The oil, gas and other mineral leasehold interests described in
Exhibit "A", attached hereto and made a part hereof, insofar as such cover
and affect the lands and depths described in Exhibit "A" (hereinafter
called the "Real Property"), together with Seller's interest in any pooled,
communitized, or unitized acreage derived by virtue of Sellers ownership of
the Real Property;
(b) The xxxxx, equipment and facilities located on the Real Property and
used directly and exclusively in the operation of the Real Property
(collectively called the "Equipment") including, but not limited to, pumps,
platforms, well equipment (surface and subsurface), saltwater disposal
xxxxx, water xxxxx, lines and facilities, sulfur recovery facilities,
compressors, compressor stations, dehydration facilities, treating
facilities, pipeline gathering lines, flow lines, and transportation lines,
valves, meters, separators, tanks, tank batteries, office quarters and
other fixtures;
(c) Oil, condensate, natural gas, and natural gas liquids produced after
the Effective Time, including "line fill" and inventory below the pipeline
connection in tanks, attributable to the Property;
(d) To the extent transferable, all contracts and agreements concerning
the Property including, but not limited to, unit agreements, pooling
agreements, areas of mutual interest, farmout agreements, farmin
agreements, pumping agreements, production handling agreements, saltwater
disposal agreements, water injection agreements, line well injection
agreements, road use agreements, operating agreements and gas balancing
agreements; and
(e) To the extent transferable, all surface use agreements, easements,
rights-of-way, licenses, authorizations, permits, and similar rights and
interests applicable to, or used or useful in connection with, any or all
of the Property.
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1.2 Excluded Data and Interpretations. ANY CONFIDENTIAL OR PROPRIETARY
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DATA SHALL BE EXCLUDED FROM THIS PURCHASE AND SALE TRANSACTION.
1.3 Purchase Price. Seller in consideration of $100.00 on or about May 20,
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2002, originally granted Buyer an option, as described in Article 9, to purchase
the Property subject to the terms and conditions herein set forth. The purchase
price for the Property shall be One Million Two Hundred Thousand Dollars
($1,200,000.00) ("the Purchase Price") payable in immediately available funds at
closing, and subject to the conditions contained in Article 8 below.
1.4 The Closing. Closing is conditioned upon Buyer being able to obtain
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operation of the Property from Xxxx Resources, Inc. as evidenced by a duly
executed Texas Railroad Commission Form P-4.
1.5 Assignment of the Property. Seller shall also convey to Buyer all of
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Seller's right, title and interest, if any, in and to (a) all 3-D seismic data
and tapes including the right to analyze, interpret, and use all such data as it
relates to the property and the Property and in and to (b) all Texaco, Pennzoil,
SMK, Palm Production Company, Xxxx Resources, Inc. and any/all related
documents, records, maps, seismic interpretations and data, logs, Scout tickets
and records (the "Records") that relate to, describe or affect the Property
subject to the terms of Xxxxxxxx'x License Agreement. The assignment of the
Property by Seller to Buyer is subject to the terms and provisions of all
instruments of record in Xxxxxx County, Texas, dated prior to the effective
date, affecting the Property. Seller, to the best of its knowledge, has provided
copies of any documents which negatively affect the Property and this interest
prior to closing.
1.6 Review. Buyer, at his sole cost, risk and expense shall conduct such
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title review of the Property, as it deems appropriate.
1.7 Effective Date. In the event Buyer exercises its Option [to purchase
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the] Property, the effective date of the purchase and sale of the Property shall
be the last day of the month in which the Closing occurs at 7:00 a.m. C. S. T.
1.8 Option Period. The Option period under the original Option would have
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expired August 19, 2002, but was extended to October 19, 2002, and is hereby
extended to February 19, 2003. As consideration for such accommodations, Buyer
agrees that if the Option is exercised, that at Closing, in addition to the base
Purchase Price, Buyer will pay an additional $100,000.00 each to Xx. Xxxx and
Xx. XxXxxxxxx.
1.9 Closing Date. The closing date of this agreement will be as agreed
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upon between Seller and Buyer, but in no event later February 19, 2003.
1.10 Buyer agrees to extend this offer to the other working interest owners
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in the Property at a price Buyer finds acceptable. There is no obligation for
the other owners to accept Buyers offer or for Buyer to revise its offer to make
it agreeable to the other owners.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
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2.1 Title. Seller represents the Property shall be delivered to Buyer free
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and clear of all (liens, encumbrances or creditor's claims, by through and under
Seller but not otherwise.
2.2 Disclaimers. Except as expressly set forth in Section 2.1, Seller
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expressly disclaims any and all representations, covenants, or warranties,
expressed, implied, or statutory, of title or as to any other fact or matter.
Seller specifically makes no representation or warranty whatsoever regarding the
value of the Interest, the reserves, future net income, expenses, profitability
or liabilities associated therewith, or the future price of oil or gas produced
from the property or the results of any operations conducted on the property.
2.3 Seller agrees to pay all JIB accounts current through expenses as of
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the effective date of the sale contemplated hereby. All production from the
Property and all proceeds from the sale of production prior to the Effective
Date shall be the property of Seller. Seller shall be responsible for payment of
all expenses attributable to the Property prior to the Effective Date. Buyer
shall be responsible for payment of all expenses attributable to the Property
after the Effective Date.
2.4 Seller represents to Buyer that as of the closing the Property will
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not be (a) the subject of any Bankruptcy Proceeding, (b) demand for development,
(c) default notice under any oil and gas lease, (d) lien or (e) other
encumbrance or claim that has not been disclosed to Buyer.
2.5 This Agreement has been duly executed and delivered on behalf of
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Seller, and this Agreement constitutes a legal, valid and binding obligation of
Seller, enforceable in accordance with its terms, subject, however, to the
effects of bankruptcy, insolvency, reorganization, moratorium and similar laws.
2.6 Seller has all requisite power and authority, corporate and otherwise,
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to carry on its business as presently conducted, to enter into this Agreement,
to sell the Property on the terms described in this Agreement, and to perform
his/its other obligations under this Agreement. The consummation of the
transactions contemplated by this Agreements will not violate, or be in conflict
with, any provisions of Seller's Articles of Incorporation, by-laws or governing
documents or any agreement or instrument to which Seller is a party or by which
it is bound, or any judgment, decree, order, statute, rule or regulation
applicable to Seller.
ARTICLE 3
CLOSING
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3.1 Time and Place of Closing. The consummation of the purchase and sale
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transactions contemplated by this agreement (the "Closing") shall, unless agreed
to otherwise by the parties, take place at the offices of Seller at 00000 Xxxxxx
Xxxx, Xxxxx 000, Xxxxxxx, XX 00000.
3.2 Delivery by Seller at Closing. In the event Buyer exercises its Option
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to purchase the Property, at Closing, Seller shall execute, and deliver to Buyer
an Assignment to the Property in the form attached hereto as Exhibit "B".
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3.3 Delivery by Buyer at Closing. In the event Buyer exercises its option
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to purchase the Property, at Closing, Buyer shall deliver by wire transfer to
(i) the Seller's bank account (to be furnished by Seller to Buyer in writing at
or before Closing) the Purchase Price, and (ii) to Xx. Xxxx'x and Xx.
XxXxxxxxx'x bank accounts the sum of $100,000.00 each.
3.4 In the event Buyer exercises its Option to purchase the Property,
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Seller shall be responsible for all taxes relating to the Property prior to the
Effective Date. Buyer shall be responsible for all taxes (exclusive of federal,
state or local income taxes) relating to the Property from and after the
Effective Date.
3.5 Change of Operator. Seller shall provide Buyer with executed change of
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operator forms on all xxxxx (active or inactive) operated by Xxxx Resources,
Inc. on the property as required by the Texas Railroad Commission, to effect a
change of operator for the Property, effective as of the first day of the month
following the actual Closing, subject to all applicable operating agreement.
3.6 Notice of Sale. Immediately after the Closing, Buyer shall notify all
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non-operators, oil and gas buyers, government agencies and royalty owners that
it has purchased the Property and Seller and Buyer shall execute transfer
orders.
3.7 Copies Of Records and Documents. Seller shall, at or as promptly as
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reasonably possible after the Closing, provide Buyer, at Buyer's expense, with
copies of records and documents in Seller's and/or Xxxx Resources possession
relating to the Property including, but not limited to, land and lease files,
division of interest computer printouts, contract files, well files and well
logs. SELLER SHALL AT IT'S OPTION, RETAIN ALL ORIGINAL FILES, BUT SHALL HAVE NO
OBLIGATION T0 FURNISH BUYER ANY DATA OR INFORMATION WHICH SELLER CONSIDERS
PROPRIETARY OR CONFIDENTIAL OR WHICH SELLER CANNOT PROVIDE BUYER BECAUSE OF
THIRD-PARTY RESTRICTIONS ON SELLER.
ARTICLE 4
RESPONSIBILITY FOR COST'S
4.1 IN THE EVENT BUYER EXERCISES ITS OPTION TO PURCHASE THE PROPERTY, AT
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CLOSING BUYER SHALL RELEASE SELLER, BUT SELLER SHALL CONTINUE TO BE RESPONSIBLE
FOR ALL CLAIMS RELATING TO THE DRILLING, OPERATING, PRODUCTION, AND SALE OF
HYDROCARBONS FROM THE PROPERTY AND THE PROPER ACCOUNTING AND PAYMENT TO PARTIES
FOR THEIR INTERESTS AND ANY RETROACTIVE PAYMENTS, REFUNDS, OR PENALTIES TO ANY
PARTY OR ENTITY AS SUCH CLAIMS RELATE TO PERIODS BEFORE THE EFFECTIVE DATE OF
CLOSING.
BUYER SHALL BE RESPONSIBLE FOR ALL CLAIMS RELATING TO THE DRILLING,
OPERATING, PRODUCTION, AND SALE OF HYDROCARBONS FROM THE PROPERTY AND THE PROPER
ACCOUNTING AND PAYMENT TO PARTIES FOR THEIR INTERESTS AND ANY RETROACTIVE
PAYMENTS, REFUNDS, OR PENALTIES TO ANY PARTY OR ENTITY AS SUCH CLAIMS RELATE TO
PERIODS FROM AND AFTER THE EFFECTIVE DATE OF CLOSING.
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ARTICLE 5
REPRESENTATIONS OF BUYER
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5.1 Buyer represents and warrants with respect to Seller that:
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(a) Buyer is a Limited Liability Company duly organized, validly existing
and in good standing under the laws of the State of Texas.
(b) Buyer has all requisite power and authority, corporate and otherwise,
to carry on its business as presently conducted, to enter into this
Agreement, to purchase the Property on the terms described in this
Agreement, and to perform it other obligations under this Agreement. The
consummation of the transactions contemplated by this Agreements will not
violate, or be in conflict with, any provisions of Buyer's Articles of
Incorporation, by-laws or governing documents or any agreement or
instrument to which Buyer is a party or by which it is bound, or any
judgment, decree, order, statute, role or regulation applicable to Buyer.
(c) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been duly and validly authorized by
all requisite actions, corporate and otherwise, on the part of Buyer, its
board of directors and shareholders.
(d) Buyer has incurred no liability, contingent or otherwise, for brokers'
or finders' fees relating to the transactions contemplated by this
Agreement for which Seller shall have any responsibility whatsoever.
ARTICLE 6
TITLE
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6.1 Warranty of Title. The documents to be executed and delivered by
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Seller to Buyer, transferring title to the Property as required hereby,
including the Assignment and Xxxx of Sale attached hereto as Exhibit "B" (the
"Assignment"), shall be subject to the Existing Encumbrances and, except with
respect to the Property set forth on Exhibit "A" for which Seller shall provide
a special warranty of title, shall be without warranty of title of any kind
whatsoever, express, implied or statutory (even as to the return of Sale Price),
but shall provide full subrogation of Buyer to all representations and
warranties of any predecessors of Seller in title. The term "Existing
Encumbrances" shall mean any of the following matters:
(a) the terms, conditions, restrictions, exceptions, reservations,
limitations and other matters contained in the agreements, instruments and
documents that create or reserve to Seller its interests in any of the
Property;
(b) any (i) undetermined or inchoate liens or charges constituting or
securing the payment of expenses that were incurred incidental to
maintenance, development, production or operation of the Property or for
the purpose of developing, producing or processing oil, gas or other
hydrocarbons (collectively, "Hydrocarbons") therefrom or therein, and, (ii)
materialman's, mechanics', repairman's, employees', contractors',
operators' or other similar liens or charges for liquidated amounts arising
in the ordinary course of business (x) that Seller has agreed to assume or
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pay pursuant to, the terms hereof, (y) for which Seller is responsible for
releasing at Closing, or (z) for which Buyer has agreed to assume or pay
pursuant to the terms hereof;
(c) any liens for taxes and assessments not yet delinquent or, if
delinquent, that are being contested in good faith in the ordinary course
of business;
(d) any liens or security interests created by law or reserved in oil and
gas leases for royalty, bonus or rental, or created to secure compliance
with the terms of the agreements, instruments and documents that create or
reserve to Seller its interests in the Property;
(e) any obligations or duties affecting the Property to any municipality
or public authority with respect to any franchise, grant, license or
permit, and all applicable laws, rules, regulations and orders of any
governmental authority;
(f) any (i) easements, rights-of-way, servitude, permits, surface leases
and other rights in respect of surface operations, pipelines, grazing,
hunting, lodging, canals, ditches, reservoirs or the like, and (ii)
easements for streets, alleys, highways, pipelines, telephone lines, power
lines, railways and other similar rights-of-way, on, over or in respect of
Property owned or leased by Seller or over which Seller owns rights-of-way,
easements, permits or licenses;
(g) all lessors' royalties, overriding royalties, net profits interests,
carried interests, production payments, reversionary interests and other
burdens on or deductions from the proceeds of production created or in
existence as of the Effective Time that do not operate to reduce the net
revenue interest of Seller;
(h) required third party consents to assignments or similar agreements;
(i) all rights to consent by required notices to, filings with, or other
actions by any governmental authority in connection with the sale or
conveyance of oil and gas leases or interests therein:
(j) production sales contracts; division order; contracts for sale,
purchase, exchange, refining or processing of Hydrocarbons; unitization and
pooling designations, declarations, orders and agreements; operating
agreements; agreements of development; area of mutual interest agreements;
gas balancing or deferred production agreements; processing agreements;
plant agreements; pipeline, gathering and transportation agreements;
injection, repressuring and recycling agreements; carbon dioxide purchase
or sale agreements; salt water or other disposal agreements; Seismic or
geophysical permits or agreements; and any and all other agreements that
are ordinary and customary in the oil, gas, sulphur and other mineral
exploration, development or extraction business, or in the business of
processing of gas and gas condensate production for the extraction of
products therefrom; and
(k) all defects and irregularities affecting the Property which
individually or in the aggregate do not operate to reduce the net revenue
interest of Seller, increase the proportionate share of costs and expenses
of leasehold operations attributable to or to be borne by the working
Property of Seller, or otherwise interfere materially with the operation,
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value or use of the Property, taken as a whole.
ARTICLE 7
ENVIRONMENTAL MATTERS
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7.1 Buyer agrees to indemnify Seller against any environmental liability
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arising relative to the Property subsequent to the Closing. Seller agrees to
Indemnify Buyer against any environmental liability arising prior to the
Closing.
ARTICLE 8
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(RESERVED)
ARTICLE 9
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(RESERVED)
ARTICLE 10
PHYSICAL CONDITION OF THE PROPERTY
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10.1 Use of the Property. THE PROPERTY HAS BEEN USED FOR OIL AND GAS
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DRILLING AND PRODUCING OPERATIONS, RELATED (DISPOSAL AND OTHER) OILFIELD
OPERATIONS AND THE STORAGE AND TRANSPORTATION OF OIL AND GAS. PHYSICAL CHANGES
IN THE LAND MAY HAVE OCCURRED AS A RESULT OF SUCH USES. THE PROPERTY ALSO MAY
CONTAIN BURIED PIPELINES AND OTHER EQUIPMENT, WHETHER OR NOT OF A SIMILAR
NATURE, THE LOCATIONS OF WHICH MAY NOT NOW BE KNOWN BY SELLER OR BE READILY
APPARENT BY A PHYSICAL INSPECTION OF THE PROPERTY. BUYER UNDERSTANDS THAT SELLER
DOES NOT HAVE THE REQUISITE INFORMATION WITH WHICH TO DETERMINE THE EXACT NATURE
OR CONDITION OF THE PROPERTY OR THE EFFECT ANY SUCH USE HAS HAD ON THE PHYSICAL
CONDITION OF THE PROPERTY.
10.2 Buyer's Investigation and Liability. BUYER ACKNOWLEDGES THAT (I) IT
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HAS BEEN AFFORDED AN OPPORTUNITY TO (A) EXAMINE THE PROPERTY AND SUCH MATERIALS
AS IT HAS REQUESTED TO BE PROVIDED TO IT BY SELLER, (B) DISCUSS WITH
REPRESENTATIVES OF SELLER SUCH MATERIALS AND THE NATURE AND OPERATION OF THE
PROPERTY AND (C) INVESTIGATE THE CONDITION, INCLUDING SUBSURFACE CONDITION OF
THE REAL PROPERTY AND THE CONDITION OF THE EQUIPMENT, (II) IT HAS ENTERED INTO
THIS AGREEMENT ON THE BASIS OF ITS OWN INVESTIGATION OF THE PHYSICAL CONDITION
OF THE PROPERTY INCLUDING SUBSURFACE CONDITION AND (III) THE PROPERTY HAVE BEEN
USED IN THE MANNER AND FOR THE PURPOSES SET FORTH ABOVE AND THAT PHYSICAL
CHANGES TO THE PROPERTY MAY HAVE OCCURRED AS A RESULT OF SUCH USE AND (IV) IN
ENTERING INTO THIS AGREEMENT, BUYER HAS RELIED SOLELY ON THE EXPRESS
REPRESENTATIONS (SOME OF WHICH REPRESENTATIONS TERMINATE AT THE CLOSING) AND
COVENANTS OF SELLER IN THIS AGREEMENT, ITS INDEPENDENT INVESTIGATION OF AND
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JUDGMENT WITH RESPECT TO, THE EQUIPMENT AND THE OTHER PROPERTY AND THE ADVICE OF
ITS OWN LEGAL, TAX, ECONOMIC, ENVIRONMENTAL, ENGINEERING, GEOLOGICAL, AND
GEOPHYSICAL ADVISORS AND NOT ON ANY COMMENTS OR STATEMENTS OF ANY
REPRESENTATIVES OF, OR CONSULTANTS OR ADVISORS ENGAGED BY SELLER AND (V) LOW
LEVELS OF NATURALLY OCCURRING RADIOACTIVE MATERIAL (NORM) AND MAN-MADE MATERIAL
FIBERS (MMMF) MAY BE PRESENT AT SOME LOCATIONS. BUYER ACKNOWLEDGES THAT NORM IS
A NATURAL PHENOMENON ASSOCIATED WITH MANY OIL FIELDS IN THE U.S. AND THROUGHOUT
THE WORLD. BUYER SHOULD MAKE ITS OWN DETERMINATION OF THIS PHENOMENON AND OTHER
CONDITIONS. SELLER AND MARKETER DISCLAIM ANY LIABILITY ARISING OUT OF OR IN
CONNECTION WITH ANY PRESENCE OF NORM OR MMMF ON THE PROPERTY AND ON THE CLOSING
DATE, BUYER SHALL ASSUME THE RISK THAT THE PROPERTY MAY CONTAIN WASTES OR
CONTAMINANTS AND THAT ADVERSE PHYSICAL CONDITIONS, INCLUDING THE PRESENCE OF
WASTES OR CONTAMINANTS, MAY NOT HAVE BEEN REVEALED BY BUYER'S INVESTIGATION. ON
THE CLOSING DATE, ALL RESPONSIBILITY AND LIABILITY RELATED TO DISPOSAL, SPILLS,
WASTE, OR CONTAMINATION ON AND BELOW THE PROPERTY SHALL BE TRANSFERRED FROM
SELLER TO BUYER.
ARTICLE 11
MISCELLANEOUS
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11.1 During the Option Period, and as requested by Buyer, Seller agrees to
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make available to Buyer in the office of the operator, Xxxx Resources 0000
Xxxxxxx Xxx. Xxxxx 000 Xxxxxx Xxxxx 00000, all data including logs, cores,
velocity surveys, pressure tests on all xxxxx drilled and/or operated on the
Property and documents and correspondence for Buyer to conduct its due diligence
on the Property. Any copies of said data shall be made by Buyer at Buyer's
expense. If the option is not exercised, all copies of said data shall he
returned to the Operator within 5 business days. NO WARRANTY OF ANY KIND IS MADE
BY SELLER AS TO THE INFORMATION SO SUPPLIED OR WITH RESPECT TO INTEREST TO WHICH
THE INFORMATION RELATES, AND BUYER EXPRESSLY AGREES THAT ANY CONCLUSIONS DRAWN
THEREFROM SHALL BE THE RESULT OF ITS OWN INDEPENDENT REVIEW AND JUDGMENT.
11.2 It is understood and agreed by the parties hereto that Seller's
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access to certain Seismic Rights ("Seismic Rights") is subject to an Agreement
to Use Seismic 3-D Seismic Data dated January 14, 1998 covering the Property:
Buyer shall have the same unrestricted access rights, if any, to all 3-D
interpretations and data generated and associated with such seismic rights.
11.3 This Agreement shall inure to the benefit of and be binding upon
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Seller and Buyer and their respective heirs, successors and assigns. However, no
assignment by any party shall relieve any party of any duties or obligations
under this Agreement.
11.4 This Agreement constitutes the complete agreement between the parties
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regarding the purchase and sale of the Property. Where applicable, the terms of
this Agreement shall survive the Closing.
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11.5 Further Distribution. Buyer is acquiring the Property for its own
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account and not with the intent to make a distribution thereof within the
meaning of the Securities Act of 1933, as amended, and the rules and regulations
thereunder or distribution thereof in violation of any other applicable
securities laws.
11.6 Final Accounting. As soon as reasonably practicable after Closing,
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Seller shall prepare, in accordance with this Agreement and with generally
accepted accounting principles consistently applied, and deliver to Buyer, a
final accounting statement showing the proration of credits and payments
obligations of Buyer and Seller. As soon as reasonably practicable thereafter,
Buyer shall deliver to Seller a written report containing any changes that Buyer
proposes to be made to such statement. The parties shall undertake to agree on
the final statement no later than ninety (90) days after Closing.
11.7 Arbitration. Any dispute arising out of or relating to this
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Agreement, including any question regarding its existence, validity or
termination, which cannot be amicably resolved by Seller and Buyer, shall be
settled before three (3) arbitrators, one (1) to be appointed by Seller, one (1)
to be appointed by Buyer and the two so appointed shall appoint the third
arbitrator, in accordance with the Arbitration Rules of the American Arbitration
Association, Dallas, Texas, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. A dispute
shall be deemed to have arisen when either Seller or Buyer notifies the other in
writing to that effect.
11.8 Seller and Buyer agree that Buyer may assign this Option to Purchase
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and all rights and obligations set forth herein to an entity to Buyers election
[, upon written notice to Seller,] at anytime up to and including date of
closing as set forth herein.
11.9 Buyer, its successors and assigns, covenant and agree that any and
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all assignments of the Property made by Buyer and its successors and assigns,
shall be subject to the terms of this agreement.
EFFECTIVE as of the 17th day of October, 2002.
BUYER:
LEGEND OPERATING, LLC,
By: /s/ Xxx Xxxx
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Xxx Xxxx, Manager
SELLER: SELLER:
/s/ J. Xxxxxxx Xxxx /s/ Xxxx X. XxXxxxxxx
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J. Xxxxxxx Xxxx Xxxx X. XxXxxxxxx
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EXHIBIT "A"
ATTACHED HERETO AND MADE A PART OF THAT
OPTION TO PURCHASE
BY AND BETWEEN LEGEND OPERATING, LLC, BUYER
AND J. XXXXXXX XXXX,
AND XXXX X. XXXXXXXXX, SELLER
An undivided 57.8125% working interest, representing a 43.359375%
net revenue interest in the following:
LEASES:
Oil and Gas Lease from X.X. XXXXXXXX to THE TEXAS COMPANY, dated November
13, 1924, recorded in Volume 15, Page 601, Deed Records, Xxxxxx County, Texas,
covering approximately 27,558.4 acres, more or less, out of the X.X. Xxxxxxxx
Ranch, more particularly described in that as to all rights from the surface of
the earth to a depth of 5,560 feet or the base of the Queen City Formation; and
Oil and Gas Lease from X.X. XXXXXXXX, a single man, to THE TEXAS COMPANY,
dated November 13, 1922, recorded in Volume 14, Page 118, Deed Records, Xxxxxx
County, Texas, covering approximately 12,000 acres, more or less, out of the
X.X. Xxxxxxxx Ranch, as to all rights from the surface of the earth to a depth
of 5,560 feet or the base of the Queen City Formation; and
That certain Term Assignment dated January 14, 1998, xxx Pennzoil
Exploration and production Company, to Xxxxxx X. Xxxxxxxx, Agent, recorded in
Volume 588, Page 505 of the Official Records, Xxxxxx County, Texas, as to all
rights from the surface of the earth to a depth of 5,560 feet or the base of the
Queen City Formation.
LANDS EFFECTED BY LEASES:
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TRACT 1: Being 8,125.4 acres, more or less, out of the east part of the
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Xxxxxx Xxxxxx Survey, A-27, also known as the "San Xxxxxxx xx Xxxx Xxxxxx
Xxxxx," Xxxxxx County, Texas, and being the same land described as the
following:
Beginning at the N.W. corner of the Xxxx Xxxxx tract for corner;
thence S. 43 deg. 29 min. W. 1302 varas; thence S. 47 deg. 31 min. E.
5193 varas; thence S. 45 deg. 5 min E. 2380 varas; thence S. 45 W.
2195 varas to a post; thence S. 35 E. 4000 varas to the S. line of the
Xxxx Xxxxxx xxxxx; thence N. 54 deg. 54 min. E. 3796.5 varas; thence
N. 45 deg. 36 min. W. 1236.1 varas; thence N. 45 W. 5739.8 varas;
thence S. 44 deg. 40 min. W. 618 varas to corner; thence S. 45 deg. 36
min. W. 3125.7 varas to the southwest corner of the Blas Xxxxx xxxxx;
thence N. 45 deg. 21 min. W. 5145.3 varas to the place of beginning.
TRACT 2: Being 2,850, more or less, out of the west part of the Antonio
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Xxxxxxxx Xxxxxxxxx Survey, A-33, also known as the "Blas Xxxxx Xxxxx," Xxxxxx
County, Texas, and being the same land described as the following:
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Beginning at the N.E. corner of the Xxxx Xxxxxx grant; thence N. 45
deg. 36 min. E. along the fence and along the N. line of said Blas
Xxxxx xxxxx 3125.7 varas to stone; thence S. 45 deg. 21 min. E. 5145.3
varas to stone in the S. line of the Blas Xxxxx xxxxx; thence S. 45
deg. 36 min. W. 3125.7 varas to the S.W. corner of the Blas Xxxxx
xxxxx; thence N. 45 deg. 21 min. W. 5145.3 varas to the place of
beginning.
TRACT 3: Being 15,941.6 acres, more or less, out of the Xxxx Xxxxxx Xxxxxx
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Survey, A-73, also known as the "Cerrito Xxxxxx Xxxxx," Xxxxxx County, Texas,
and being the same land described as the following:
BEGINNING at the N.E. corner of the Xxxxxxxx Xxxxxx Grant; THENCE
North 55 deg, East 10,714.25 vrs. to the N.W. corner of 1770 acre
grant taken from said Xxxx Xxxxxx Xxxxx; THENCE South 35 deg. East
2800 vrs. to a post, the S.W. corner of said 1770 acre grant, which is
known as the Ranch Colorado; THENCE North 55 degrees East 3571.4 vrs.
to a post in the Eastern bdy. line of the said Xxxx Xxxxxx Xxxxxx
Xxxxx; THENCE South 35 deg. East 4200 vrs. more or less to a stone
being the S. W. corner of the said Xxxx Xxxxxx Xxxxxx Xxxxx, and the
said S.E. corner of the Xxxxxxxx Xxxxxx Grant; THENCE North 35 deg.
West 7000 vrs., more or less, to the place of beginning.
TRACT 4: Being 640.9 acres of land, more or less, and being all of the
-------
G.C. and S.F.R.R. Company Survey, A-137, also known as Xxxxxxx 000, Xxxxxx
Xxxxxx, Xxxxx, and being the same land described as the following:
BEGINNING at the extreme East corner of a grant called "Xxxx Xxxxxx"
for South corner of this, a post; THENCE North 45 deg. West, with line
of said Xxxx Xxxxxx survey at 955 vrs. a large coma tree marked X. 10
vrs. to S. W. at 1250 vrs. corner; THENCE N. 45 deg. East 2467 vrs. to
post for corner on line of said Xxxx Xxxxxx Xxxxx; THENCE S. 45 deg.
East 1678 vrs. to post for corner on line of the Peredena Survey,
granted to Xxxxxx Xxxxxx; THENCE South 55 deg. West with line of said
Xxxxxx Survey 2505 vrs. to the beginning.
11
EXHIBIT "B"
ATTACHED TO AND MADE A PART OF
OPTION AGREEMENT
DATED May __ 2002
ASSIGNMENT AND XXXX OF SALE
STATE OF TEXAS )
)
COUNTY OF XXXXXX )
For value received, XXXX RESOURCES, INC., whose address is 0000 Xxxxxxx
Xxx., Xxxxx 000, Xxxxxx Xxxxx 00000, and XXXX X. XXXXXXXXX, whose address is
X.X. Xxx 000000, Xxxxxx, Xxxxx 00000-0000, (hereinafter called "Assignor"),
hereby sells, transfers, assigns, conveys and delivers unto LEGEND OPERATING,
LLC, whose address is 0000 Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000,
(hereinafter called "Assignee"), effective as of ______, 2002, 7:00 a.m., CST
(the "Effective Time"), all of Assignor's right, title and interest in and to
the assets set forth in subparagraphs (i) through (v) below (hereinafter
collectively called the "Property"):
(i) The oil, gas and other mineral leasehold interests described in
Exhibit "A" attached hereto and made a part hereof, insofar as
such cover and affect the lands described in Exhibit "A" (the
"Real Property);
(ii) The xxxxx, equipment and facilities located on the Real Property
and that are used directly and exclusively in the operation of
the Real Property (collectively called the "Equipment"),
including, but not limited to, pumps, platforms, well equipment
(surface and subsurface), saltwater disposal xxxxx, water xxxxx,
lines and facilities, sulfur recovery facilities, compressors,
compressor stations, dehydration facilities, treating facilities,
pipeline gathering lines, flow lines, and transportation lines
(to the extent such lines are not owned or operated by any
affiliate of Assignor), valves, meters, separators, tanks, tank
batteries and other fixtures;
(iii) Oil, condensate, natural gas, and natural gas liquids produced
after the Effective Time, including "line fill" and inventory
below the pipeline connection in the tanks, attributable to the
Property;
(iv) To the extent transferable, all contracts and agreements
concerning the Property, including, but not limited to, the
instruments identified under paragraph "B" below describing
instruments to which this Assignment and Xxxx of Sale is
delivered "subject to", and all other unit agreements, pooling
12
agreements, areas of mutual interest, farmout agreements, farmin
agreements, saltwater disposal agreements, water injection
agreements, line well injection agreements, road use agreements,
operating agreements and gas balancing agreements concerning the
Property; and
(v) To the extent transferable, all surface use agreements,
casements, rights-of-way, licenses, authorizations, permits, and
similar rights and interests applicable to, or used or useful in
connection with the Property.
TO HAVE AND TO HOLD unto Assignee, its successors and assigns forever.
THIS ASSIGNMENT AND XXXX OF SALE IS MADE, EXECUTED AND DELIVERED WITHOUT
WARRANTY OF TITLE, EXPRESS OR IMPLIED, EXCEPT THAT ASSIGNOR SPECIALLY WARRANTS
AND AGREES TO DEFEND TITLE TO THE REAL PROPERTY AGAINST THE CLAIMS AND DEMANDS
OF ALL PERSONS CLAIMING TITLE THERETO BY, THROUGH AND UNDER ASSIGNOR, BUT NOT
OTHERWISE, UP TO THE ALLOCATED VALUE THEREOF, AND WITH FULL SUBSTITUTION AND
SUBROGATION OF ASSIGNEE IN AND TO ALL CLAIMS ASSIGNOR HAS OR MAY HAVE AGAINST
ALL PRECEDING OWNERS; PROVIDED, HOWEVER, THAT THIS LIMITED SPECIAL WARRANTY OF
TITLE TO THE REAL PROPERTY SHALL SURVIVE FOR A PERIOD OF TWELVE (12) MONTHS FROM
THE DATE OF THIS ASSIGNMENT AND XXXX OF SALE. WITHOUT LIMITING THE FORGOING,
THIS ASSIGNMENT AND XXXX OF SALE IS WITHOUT ANY WARRANTY OR REPRESENTATION OF
TITLE, EITHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITHOUT ANY EXPRESS,
IMPLIED, STATUTORY OR OTHER WARRANTY OR REPRESENTATIONS TO THE CONDITION,
QUANTITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE, CONFORMITY TO MODELS OR
SAMPLES OF MATERIALS OR MERCHANTABILITY OF ANY OF THE EQUIPMENT OR ITS FITNESS
FOR ANY PURPOSE AND WITHOUT ANY OTHER EXPRESS, IMPLIED, STATUTORY OR OTHER
WARRANTY OR REPRESENTATION WHATSOEVER. ASSIGNEE SHALL HAVE INSPECTED OR WAIVED
ITS RIGHT TO INSPECT THE PROPERTY 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, AND THE CONDITION OF ANY WELL
CASING, TUBING OR DOWNHOLE EQUIPMENT. ASSIGNEE IS RELYING SOLELY UPON ITS OWN
INSPECTION OF THE PROPERTY AND ASSIGNEE SHALL ACCEPT ALL OF THE SAME IN THEIR
"AS IS, WHERE IS" CONDITION. THERE ARE NO WARRANTIES THAT EXTEND BEYOND THE FACE
OF THIS ASSIGNMENT AND XXXX OF SALE. IN ADDITION, ASSIGNOR MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR
COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR
MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO ASSIGNEE
IN CONNECTION WITH THIS ASSIGNMENT AND XXXX OF SALE INCLUDING, WITHOUT
LIMITATION, ANY DESCRIPTION OF THE PROPERTY, PRICING ASSUMPTIONS, OR QUALITY OR
QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE PROPERTY OR THE
ABILITY OR POTENTIAL OF THE PROPERTY TO PRODUCE HYDROCARBONS OR THE
13
ENVIRONMENTAL CONDITION OF THE PROPERTY OR ANY OTHER MATTERS CONTAINED IN THE
DATA OR ANY OTHER MATERIALS FURNISHED OR MADE AVAILABLE TO ASSIGNEE BY ASSIGNOR
OR BY ASSIGNOR'S AGENTS OR REPRESENTATIVES. ANY AND ALL SUCH DATA, RECORDS,
REPORTS, PROJECTIONS, INFORMATION AND OTHER MATERIALS FURNISHED BY ASSIGNOR OR
OTHERWISE MADE AVAILABLE TO ASSIGNEE ARE PROVIDED ASSIGNEE AS A CONVENIENCE, AND
SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST ASSIGNOR. ANY
RELIANCE ON OR USE OF THE SAME SHALL BE AT ASSIGNEE'S SOLE RISK TO THE MAXIMUM
EXTENT PERMITTED BY LAW.
ASSIGNEE ACKNOWLEDGES THAT THE PROPERTY HAVE BEEN USED FOR OIL AND GAS
BILLING AND PRODUCING OPERATIONS, RELATED (DISPOSAL AND OTHER) OILFIELD
OPERATIONS, AND THE STORAGE AND TRANSPORTATION OF OIL AND GAS.
This Assignment and Xxxx of Sale is made expressly subject to the
following:
1. That certain Amended & Restated Option Agreement dated October 17,
2002, by and between Assignor and Assignee;
2. Term Assignment from Pennzoil Exploration and Production Company to
Xxxxxx X. Xxxxxxxx, Agent, recorded in Volume 588, Page 505 of the
Official Records of Xxxxxx County, Texas;
3. The agreements, contracts and other items set forth and listed under
the heading "Subject To The Following" on Exhibit "A" hereto, and
Assignee, effective as of the Effective Time, assumes and agrees to
perform any and all obligations of Assignor under said agreements,
contracts and other items relating to the Property herein assigned;
and
4. Any and all other valid and existing contracts, easements and other
instruments affecting the Real Property, or any part thereof, together
with any and all existing royalties, overriding royalties and other
interests payable out of production from the Real Property, or any
part thereof.
The provisions hereof shall bind and inure to the benefit of Assignee and
Assignor and their respective affiliates, heirs, devisees, legal
representatives, successors and assigns.
14
EXECUTED this 18th day of October, 2002, but effective as of the above
---- ------- -
stated Effective Time.
Assignor:
/s/ J. Xxxxxxx Xxxx
--------------------------------
J. Xxxxxxx Xxxx
/s/ Xxxx X. XxXxxxxxx
--------------------------------
Xxxx X. XxXxxxxxx
Assignee:
LEGEND OPERATING, LLC
By: /s/ Xxx Xxxx
-----------------------------
Name & Title Xxx Xxxx - Manager
--------------------
STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before the on the 18th day of 0ctober,
---- -------
2002, by J. Xxxxxxx Xxxx.
/s/ Xxxxx Xxxx Xxxxxx
(NOTARY SEAL) ---------------------------------
Notary Public in and for The State
of Texas
STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before the on the 18th day of 0ctober,
---- -------
2002, by Xxxx X. XxXxxxxxx.
/s/ Xxxxx Xxxx Xxxxxx
(NOTARY SEAL) ---------------------------------
Notary Public in and for The State
of Texas
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