EXHIBIT 10.16
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of February /S/ 28_,
1996, among Oxford Consolidated, Inc., a Nevada corporation ("Seller"), AMF
Production Company, a Texas corporation ("Buyer"), and Cliffwood Energy Company,
a California corporation (the "Company").
WHEREAS, Seller owns all of the issued and outstanding shares of the
common stock of the Company; and
WHEREAS, the Company is the General Partner of Cliffwood Exploration
Limited Partnerships 1981, 1982, 1983, 1984-A, and 1984-B; and
WHEREAS, Seller desires to sell and Buyer desires to buy all of the issued
and outstanding shares of the Company on the terms and conditions herein set
forth,
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement and the Exhibits, Schedules and deliveries
pursuant to this Agreement, the following terms shall have the following
meanings.
1.1 CLOSING. "Closing" means the closing referred to in SECTION 2.3
of this Agreement.
1.2 CLOSING DATE. The "Closing Date" is the first business day (other than
a Saturday, Sunday or legal holiday) following the day on which the conditions
to the obligations of the parties to this Agreement shall have been satisfied or
waived but not later than February 29, 1996, or such other time as shall be set
by the parties in writing.
1.3 COMPANY STOCK. "Company Stock" means all of the issued and
outstanding no par common stock of the Company, consisting of 111,500 shares.
1.4 DISCLOSURE SCHEDULE. The "Disclosure Schedule" is the Disclosure
Schedule dated the date of this Agreement and delivered by Seller to Buyer. A
copy of the Disclosure Schedule is attached hereto as EXHIBIT B. Each heading in
the Disclosure Schedule refers to the applicable section of the Agreement.
1.5 EFFECTIVE DATE. The "Effective Date" means the close of business
on January 1, 1996.
1.6 ENCUMBRANCE. An "Encumbrance" is any option, pledge, security
interest, lien, charge or encumbrance.
1.7 FINANCIAL STATEMENTS. The "Financial Statements" are collectively, the
respective financial statements of the Company and each of the Limited
Partnerships for the 1994 fiscal year and the financial statements for the six
month period ended June 30, 1995 for each such entity.
1.8 GAAP. "GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, in statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
1.9 GENERAL PARTNER INTERESTS. "General Partner Interests" means all of
the interests, or any of them, directly or indirectly held by the Company as a
general partner in a particular Limited Partnership or in all of the Limited
Partnerships, as the case may be.
1.10 GOVERNMENTAL ENTITY. A "Governmental Entity" is any federal, state,
municipal, domestic or foreign court, tribunal, administrative agency,
department, commission, board, bureau or other governmental authority or
instrumentality.
1.11 HYDROCARBONS. "Hydrocarbons" mean oil, gas and/or other liquid and
gaseous hydrocarbons or any combination thereof.
1.12 INTERESTS. The "Interests" mean:
(a) All of a Limited Partnership's right, title and interest in and to the
xxxxx described in EXHIBIT A and all of the oil, gas and mineral leases and
other agreements ("the Leases") covering said xxxxx described in EXHIBIT A. To
the extent that the Working Interests and Net Revenue Interests described in
EXHIBIT A are in conflict with those described in any reserve estimates
previously furnished to Buyer by the Company, the interests in EXHIBIT A shall
control and prevail for purposes of this Agreement; and
(b) With respect to the xxxxx described in EXHIBIT A, all of a Limited
Partnership's right, title and interest in and to all of the property, rights
and leasehold interests incident thereto, including without limitation all of
such Limited Partnership's right, title and interest in and to all agreements,
purchase and sale contracts, leases, permits, rights-of-way, easements,
licenses, farmout agreements, options, pooling agreements, orders and rulings of
applicable regulatory agencies, operating agreements, unitization agreements,
xxxxx, lease and well equipment, machinery, production facilities, gathering
systems, fixtures and other items of personal property and improvements now or
as of the Closing Date appurtenant to the Leases or xxxxx or used, obtained or
held for use in connection with the operation of the Leases or xxxxx or with the
production, treatment, sale or disposal of Hydrocarbons or water produced
therefrom or attributable thereto.
1.13 LEASES. The "Leases" are as defined in SECTION 1.11.
1.14 LIMITED PARTNERSHIP OR LIMITED PARTNERSHIPS. Reference to any
"Limited Partnership" or to the "Limited Partnerships" shall mean any limited
partnership listed below:
Cliffwood Exploration Limited Partnership 1981
Cliffwood Exploration Limited Partnership 1982
Cliffwood Exploration Limited Partnership 1983
Cliffwood Exploration Limited Partnership 1984-A
Cliffwood Exploration Limited Partnership 1984-B
1.15 LIMITED PARTNERSHIP AGREEMENT OR LIMITED PARTNERSHIP AGREEMENTS.
Reference to any "Limited Partnership Agreement" or to the "Limited Partnership
Agreements" shall mean any limited partnership agreement listed in SECTION 1.15
of the Disclosure Schedule.
1.16 LOSSES. "Losses" mean any claims, liabilities, damages, loss, cost or
expense (including reasonable attorneys' fees) incurred or suffered by a party
hereto or its affiliates, employees or agents other than the Limited
Partnerships.
1.17 NET REVENUE INTEREST. "Net Revenue Interest" (or "NRI") means the
decimal interest in and to all production of the Hydrocarbons produced and saved
or sold from under or by virtue of each of the leases covered by EXHIBIT A after
giving effect to all valid lessors' royalties, overriding royalties of third
parties and/or other burdens against productions.
1.18 OIL AND GAS CONTRACTS. "Oil and Gas Contracts" means all leases,
licenses, farmout or farmin agreements, bottom hole or acreage contribution
agreements, operating agreements, unit agreements, declarations or orders, joint
venture, exploration, participation or acquisition agreements, division orders,
production, sales, purchase, exchange, processing or transportation agreements
and all other contracts and agreements affecting or relating to the ownership or
operation of the Interests or the disposition of the Hydrocarbons production
therefrom.
1.19 PERMITTED ENCUMBRANCES. "Permitted Encumbrances" means those
Encumbrances identified as such in SECTION 3.8.
1.20 SECURITIES ACT. "Securities Act" means the Securities Act of
1933, as amended, or any successor statute.
1.21 TAXES. "Taxes" means all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise,
property, sales, use, license, payroll and franchise taxes, imposed by any
Governmental Entity and includes any estimated tax, interest and penalties or
additions to tax.
1.22 TAX RETURN. A "Tax Return" is a report, return or other information
required to be supplied to a Governmental Entity in connection with Taxes
including, where permitted or required, combined or consolidated returns for any
group of entities that includes the Company.
1.23 WORKING INTEREST. "Working Interest" (OR "WI") means the decimal
interest in the full and entire leasehold estate created by virtue of the Leases
covered by EXHIBIT A and all rights and obligations of every kind and character
pertinent thereto or arising therefrom, without regard to any valid lessor
royalties, overriding royalties and/or other burdens against production insofar
as interest in said leasehold is burdened with the obligation to bear and pay
the cost of exploration, development and operation and, if different, the
decimal interest of the owner's right, title and interest in and to the lease
and well equipment, machinery, fixtures and other personal property of every
character situated on any Lease or well used or held for use in connection with
the mineral operations thereon.
ARTICLE 2
PURCHASE AND SALE OF STOCK
AND LIMITED PARTNER INTERESTS
2.1 TRANSFER OF STOCK. At the Closing and subject to the terms and
conditions set forth in this Agreement, Seller will sell, assign, transfer and
deliver to Buyer stock certificates representing the Company Stock, endorsed in
blank or accompanied by stock powers endorsed in blank conveying good and valid
title to all of the Company Stock, free and clear of all Encumbrances.
2.2 CONSIDERATION. At the Closing and subject to the terms and conditions
set forth in this Agreement, and in consideration of the sale, assignment,
transfer and delivery of the Company Stock, Buyer will pay an aggregate purchase
price of Five Hundred Thousand and No/100 Dollars ($500,000.00). The payment of
the purchase price shall be by certified or Cashier's check or wire transfer to
an account designated by the Seller.
2.3 THE CLOSING. The Closing shall take place on the Closing Date at the
offices of Seller in Denver, Colorado, at 3:00 p.m. on the 29th day of February,
1996, or such other place or time as Buyer and Seller may agree.
2.4 TRANSFER OF BANK ACCOUNTS. At the Closing, the Seller and the Company
shall transfer to the Buyer control of all bank accounts of the Company which
shall contain a balance of at least $240,000.00. Seller and the Company shall
execute such documents as shall be required to accomplish this transfer.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF SELLER AND THE COMPANY
Seller and the Company hereby represent, warrant and agree, as herein
indicated, except as set forth in the applicable section of the Disclosure
Schedule, as follows:
3.1 CORPORATE ORGANIZATION. The Seller represents and warrants that (i)
the Company is duly organized, validly existing and in good standing under the
laws of the State of California and has the corporate power to own its
properties and conduct its business substantially as it is presently being
conducted, (ii) the Company is duly qualified and in good standing in each of
the jurisdictions in which it is required by the nature of its business or the
ownership of its properties to so qualify except in those jurisdictions where
the failure to so qualify or be in good standing would not have a material
adverse effect upon the business, operations or the financial condition of the
Company and (iii) Seller has delivered to Buyer complete and correct copies of
the Articles of Incorporation and bylaws of the Company as are now in effect.
3.2 CAPITALIZATION. The Company represents and warrants that the
authorized and issued capital stock of the Company is set forth in Section 3.2
of the Disclosure Schedule and that all issued shares of the Company are duly
authorized, validly issued and outstanding, and are fully-paid and
non-assessable. There are in existence no subscriptions, preemptive rights,
calls, options, warrants, agreements, understanding, commitments or rights of
first refusal, or similar rights or any other agreements to which the Company or
the Seller is a party or by which the Company or Seller is bound relating to the
issuance, redemption, transfer, purchase or sale by any of them of any of the
Company's capital stock, or any other securities of the Company convertible into
capital stock or other securities of the Company;
3.3. STOCK OWNERSHIP. Seller represents and warrants with respect to it
that such Seller owns directly all of the capital stock of the Company, as
described in Section 2.1 of the Disclosure Schedule, free and clear of all
Encumbrances, and that upon delivery and payment for such stock as contemplated
by this Agreement, Seller will deliver to Buyer good and valid title thereto
free and clear of all Encumbrances and subject to no legal or equitable
restrictions of any kind.
3.4. AUTHORIZATION. Seller and the Company represent and warrant, with
respect to itself, that (i) such party has full power and authority to enter
into this Agreement and to carry out the transactions contemplated hereby; (ii)
Seller and the Company have taken all actions required by law, their charters,
bylaws or otherwise, to authorize the execution, delivery and performance of
this Agreement and the transactions contemplated hereby and (iii) this Agreement
is a valid and binding Agreement of Seller and the Company enforceable against
Seller and the Company in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, moratorium, reorganization or other laws
or equitable principles relating to or affecting creditors' rights generally.
3.5 NO VIOLATIONS; DEFAULTS. (a) The Company represents that the
execution, delivery and approval of this agreement by the Company the
consummation of the transactions contemplated herein by the Company will not in
any material respect, itself, or after the giving of notice or lapse of time:
(i) violate any provision of the respective charters of the Company; (ii)
violate, or be in conflict with, or constitute a default under, or permit the
termination or adverse amendment or modification of, any agreement or other
instrument to which the Company or any of the Limited Partnerships is a party or
by which it is bound; or (iii) result in the creation of any lien upon any of
the properties or assets of the Company or the Limited Partnerships or upon the
Company Stock.
(b) Seller represents and warrants, with respect to himself or
itself, that the execution, delivery and approval of this Agreement by Seller
and the consummation of the transactions contemplated herein by Seller will not
itself, or after the giving of notice or lapse of time, violate any provisions
of the respective charters or bylaws of Seller.
3.6 FINANCIAL STATEMENTS. (a) The Seller represents and warrants that the
Financial Statements were each prepared on an accrual basis and either an income
tax basis or in accordance with GAAP applied on a consistent basis (except as
stated in such Financial Statements and except for omission of footnotes) and
fairly present the financial position of the Company and the Limited
Partnerships, as the case may be, as of the dates thereof and the results of its
operations and changes in financial position for the respective periods then
ended, subject, in the case of the unaudited financial statements, to normal
year-end audit adjustments which, in the case of the unaudited financial
statements covering periods in 1995, will not be materially adverse to the
Company or the Limited Partnerships, as the case may be. The Financial
Statements do not reflect any non-recurring items except as stated thereon.
(b) The Seller further represents and warrants that except as set
forth elsewhere in this Agreement or in SECTION 3.6 of the Disclosure Schedules,
none of the Company or the Limited Partnerships has any liabilities or
obligations, whether direct, indirect, absolute, contingent, known, unknown,
matured, or otherwise of whatever nature, (including, without limitation,
liabilities as guarantor or otherwise with respect to obligations of others,)
except (i) liabilities that are fully reflected on or reserved against on the
Balance Sheet of the respective entity as of June 30, 1995, (ii) the
year-to-date detailed General Ledger Report as of December 31, 1995, dated
February 7, 1996, or (iii) liabilities incurred in the ordinary course of
business since such date and consistent with past practices of the Company and
the Limited Partnerships.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. The Seller represents and
warrants that since December 31, 1994, the Company and each of the Limited
Partnerships has operated its business only in the ordinary course of business
and there has not been: (a) any material adverse change in its condition
(financial or otherwise), results of operations, properties or business; (b) any
declaration, setting aside or payment of any dividend (whether in cash, stock or
property) with respect to the capital stock of the Company or declaration or
making of any distribution with respect to interests in the Limited Partnerships
other than the distributions paid on January 31, April 30, July 31, October 31,
1995, and January 31, 1996, or other than in the ordinary course of business; or
(c) any borrowing, sale of assets or capital expenditure in excess of $50,000
individually or $100,000 in the aggregate, except for the sale of oil and gas
production in the ordinary course of business, or as set forth in Section 3.7 of
the Disclosure Schedule.
3.8 TITLE TO PROPERTY; ENCUMBRANCES. The Seller represents and warrants
that except as permitted by this Agreement and except as to the xxxxx listed in
SECTION 3.8 of the Disclosure Schedule,
(a) the Limited Partnerships have (and as of the Closing will have) good
and defensible title to the Interests, entitling the relevant Limited
Partnership to receive not less than the Net Revenue Interests set forth in
EXHIBIT A of all Hydrocarbons produced, saved and marketed from the Interests
and obligating such Limited Partnership to bear costs and expenses relating to
the maintenance, development and operations of the interests not greater than
the Working Interests set forth on EXHIBIT A; and
(b) the properties and assets described in (a) above are free and clear of
any and all Encumbrances except the following (collectively the "Permitted
Encumbrances"):
(i) statutory Encumbrances not yet delinquent;
(ii) Encumbrances which do not materially impair the financial
condition, business or operations of the Limited Partnerships; and
(iii) encumbrances for Taxes not yet due or delinquent or the
validity of which are being contested in good faith by appropriate
actions.
3.9 STATUS OF THE INTERESTS. The Seller represents and warrants that,
except as to the xxxxx listed in SECTION 3.9 of the Disclosure Schedule,
(a) no suit, action or other proceeding is pending or, to the
knowledge of the Seller, threatened before any court or governmental agency as
of the date of this Agreement that is likely to result in the impairment or loss
of any Limited Partnership's title to any material part of the Interests or that
might hinder or impede in any material respect the operation or value of the
Leases, and that the Seller shall promptly notify Buyer of any such suit, action
or other proceeding arising or threatened prior to the Closing with respect to
which any Seller receives actual notice;
(b) to the best of the Seller's and Company's knowledge all
royalties (other than royalties held in suspense), rentals and other payments
due under the Interests have been properly and timely paid and no notices have
been received by the Seller, the Company or the Limited Partnerships of any
claim to the contrary;
(c) neither the Company nor the Limited Partnerships are obligated
for any amounts exceeding in the aggregate $1,000 by virtue of any prepayment
arrangement under any contract for the sale of Hydrocarbons containing a "take
or pay" or similar provision or a production payment or any other arrangement to
deliver Hydrocarbons produced from the Interests at some future time without
then or thereafter receiving full payment therefor;
(d) no condition, obligation or other circumstance, including, but
not limited to, any prior overproduction under a gas balancing agreement or
notice of any of these, which would give rise to expenses, losses or liabilities
to the company or the Limited Partnerships exceeding in the aggregate $10,000,
exists which would affect the right of Buyer to receive full payment of proceeds
from the sale of Hydrocarbons attributable to the interests (to the extent of
the Company's interest in such Limited Partnership);
(e) after careful examination and to the best of the Seller's and
Company's knowledge, during the period of time that the Interests have been
owned by any of the Limited Partnerships, all ad valorem, property, production,
severance, windfall profit and similar taxes and assessments based on or
measured by the ownership of property or the production of the Hydrocarbons or
the receipt of proceeds therefrom on the interests have been properly paid
(excluding any such taxes and assessments which are being contested in good
faith by appropriate proceedings and as to which adequate reserves have been
provided), and all such taxes and assessments which become due and payable prior
to the Closing and of which the Seller has actual knowledge shall be properly
paid by such Limited Partnership; and
(f) the leases in which any of the Limited Partnerships hold the
Interests are in full force and effect.
3.10 LITIGATION; NO VIOLATIONS OF LAW.
(a) LITIGATION. Section 3.10 of the Disclosure Statement sets forth
a list and brief description of all litigation to which the Company or the
Limited Partnerships have been named a party during the last five (5) years from
the date hereof, and a list and brief description of material pending or
threatened litigation or administrative or governmental proceeding to which the
Company or the Limited Partnership are or may become a party. The Seller
represents and warrants that there is no action, suit, proceeding or arbitration
at law or in equity or before or by any Governmental Entity pending or, to the
best knowledge of the Seller threatened against the Company or any of the
Limited Partnerships that would result, in the aggregate, in any material
adverse change in the business, operations, properties, assets or condition
(financial or otherwise) of the Company or any of the Limited Partnerships,
taken as a whole, or that would materially adversely affect their ability to
perform their respective obligations hereunder.
(b) NO VIOLATIONS OF LAW. After careful examination and to the best
of Seller's and Company's knowledge, none of the Company or the Limited
Partnerships is: (a) in violation of any applicable law, rule, regulation or
order that individually or in the aggregate materially adversely affects the
business, operations, properties, assets or condition (financial or otherwise)
of the Company or any Limited Partnership, taken as a whole; or (b) subject to
or in default with respect to any judgment, writ, injunction, decree, rule or
regulation of any Governmental Entity that would have a materially adverse
effect on the business, operations, properties, assets or condition (financial
or otherwise) of the Company, taken as a whole.
3.11 MATERIAL CONTRACTS. The Company represents and warrants that SECTION
3.11 of the Disclosure Schedule contains an accurate and complete list of all
contracts, agreements, licenses and instruments, written or oral, to which the
Company or any Limited Partnership is a party or is bound which pertain to the
business, assets, financial condition or results of operations of the Company or
any Limited Partnership, other than with respect to oil and gas operations, and
(i) (A) involve payments of more than $50,000 per year and (B) cannot be
terminated in less than 60 days; (ii) are for capital expenditures for the
acquisition or construction of fixed assets in an amount exceeding $50,000 in
any individual case of $100,000 in the aggregate; or (iii) otherwise materially
affect the operations or business of the Company or any of the Limited
Partnerships. True and correct copies of all items so listed in SECTION 3.11 of
the Disclosure Schedule have been made available by the Company to Buyer.
3.12 GENERAL PARTNER INTERESTS. (a) The Company represents and
warrants that the Company is the sole general partner of the Limited
Partnerships.
(b) The Company further represents and warrants that each of the
Limited Partnerships is duly formed and validly existing as a limited
partnership under the laws of the state of its formation. Each of the Limited
Partnerships is duly qualified and in good standing in each of the jurisdictions
in which it is required by the nature of its business or the ownership of its
properties to so qualify except in those jurisdictions where the failure to so
qualify or be in good standing would not have a material adverse effect upon the
business, operations or the financial condition of the Limited Partnership.
SECTION 3.12 of the Disclosure Schedule sets forth each of the states in which
each of the Limited Partnerships is organized and is qualified to transact
business. Each of the Limited Partnerships has the partnership power to own its
properties and conduct its business as it is presently being conducted.
3.13 EXPENSES OR FINDER'S FEES. Each of the parties hereto shall bear its
own expenses incurred in connection with this Agreement and with the performance
of its obligations hereunder. Except for Xxx Xxxxxxxxxxx of Bay Capital
Corporation whose fee is being paid by Buyer. The Seller and Buyer agree and
represent to each other that no third person has brought the parties together or
been instrumental in this transaction to such an extent as to be entitled to
compensation therefor. Accordingly, each of the parties hereto shall indemnify
the other for any liability to any broker, finder or other third party for any
fees in connection with the transactions contemplated hereby resulting from such
indemnifying party's actions in connection herewith.
3.14 TAXES. Federal, state and local tax returns, reports and estimates
have been filed for the Company and the Limited Partnership in correct form for
all periods in which such were due. All taxes shown thereby to be payable have
been paid or adequate provision has been made therefor. Any additional tax
liability asserted by the Internal Revenue Service as a result of any
examinations has been paid unless contested and disclosed to Buyer in writing.
The provisions for taxes shown on the Financial Statements include liabilities
for all taxes (including but not limited to, employee income tax withholding,
social security, franchise, value added, sales, use, ad valorem and unemployment
taxes) to the date thereof. All withholding taxes or other taxes the Company is
obligated to collect have been withheld or collected. Neither the Seller nor the
Company has made or filed any income tax elections to be taxable as a DISC or
under Subchapter S of the Internal Revenue Code, nor any consents or waivers of
statutes of limitation with respect to the Company.
3.15 INSURANCE. The Company is adequately insured with respect to loss or
damage to buildings, equipment and inventory, public liability, products
liability, worker's compensation and all other risks normally insured against by
companies similarly situated. The Company does not directly own these policies;
therefore, it would be necessary for the Buyer to purchase new policies to cover
these risks.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents, warrants and agrees as follows:
4.1 CORPORATE ORGANIZATION. Buyer is a corporation duly formed, validly
existing and in good standing under the laws of the State of Texas and has full
power and authority to execute and deliver this Agreement and to consummate all
of the transactions contemplated hereby.
4.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement by Buyer have been duly and validly authorized and approved by the
board of directors of Buyer, and Buyer has taken or will take prior to the
Closing Date all action required by law to authorize the execution, delivery and
performance of this Agreement, and this Agreement is a valid and binding
agreement of Buyer, enforceable against Buyer in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws or equitable principles relating to or affecting
creditors' rights generally.
4.3 NO VIOLATIONS; DEFAULTS. The execution and delivery of this Agreement,
the approval of this Agreement and the consummation of the transactions
contemplated hereby by Buyer will not in any material respect: (a) violate any
provision of its charter or bylaws; or (b) violate, or be in conflict with, or
constitute a material default under, or permit the termination of, any material
agreement or other instrument to which Buyer is a party or by which it is bound,
except for violations, conflicts or defaults which, in the aggregate, would not
have a materially adverse effect on the ability of Buyer to perform its
obligations under this Agreement or render this Agreement unenforceable by the
Seller.
4.4 INVESTMENT INTENT. Buyer is acquiring the Company Stock for its own
account, for investment, and with no view to the distribution thereof in any
transaction or transactions that would require registration under the Securities
Act or any state securities law.
ARTICLE 5
CONDUCT OF BUSINESS
During the period from the date of this Agreement and continuing until the
Closing Date, the Company agrees and the Seller, solely with respect to SECTION
5.3, agrees, (except as expressly contemplated by this Agreement or to the
extent that Buyer shall otherwise consent in writing) that:
5.1 REGULAR COURSE OF BUSINESS. The Company will carry on its business and
the business of the Limited Partnerships in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and, to the
extent consistent with such business, use all reasonable efforts to preserve
relationships with customers, suppliers and any others having business dealings
with it. The Limited Partnerships will continue to pay the Company for general
and administrative expenses and to reimburse the Company for expenses incurred
on behalf of the Limited Partnerships through the Closing Date. The parties
hereto will consult as necessary regarding the operations of the Interests.
5.2 CERTAIN COVENANTS WITH RESPECT TO THE INTERESTS. The Company shall,
except as otherwise permitted by this Agreement:
(a) promptly notify Buyer of the receipt of any written notice or
written claim of default or breach by the Company or any of the Limited
Partnerships, or of any termination of cancellation, or written threat of
termination, of any of the Oil and Gas Contracts;
(b) subject to the Oil and Gas Contracts, prior to Closing, cause
the interests to be operated and maintained in a good and workmanlike manner
consistent with prior practices, not abandon any Interests other than in the
ordinary course of business and pay or cause to be paid all costs and expenses
in connection therewith. The Company shall not authorize any operation on any
well included on the leases covering the Interests other than in the ordinary
course of business and will promptly notify the Buyer of its granting any such
authorization;
(c) not enter into any new agreements or commitments with respect to
the Interests, not modify or terminate any of the Oil and Gas Contracts, or
encumber any of the Interests and not commit itself to do any of the foregoing,
other than in the ordinary course of business in each case; and
(d) exercise all due diligence in safeguarding and maintaining all
engineering, geological and geophysical data, reports and maps, contract rights
and like information relating to the Interests.
Notwithstanding the foregoing provisions, nothing contained in this SECTION 5.2
shall limit the rights of the Company (i) to produce, consume or sell
Hydrocarbons from the Interest in the ordinary course of business of (ii) to
perform its obligations under any Oil and Gas Contract or any Limited
Partnership Agreement.
5.3 AMENDMENTS TO CHARTER AND BYLAWS. The Company will not, nor will
Seller cause or permit the Company to, amend (i) the charter or bylaws of the
Company or (ii) any of the Limited Partnership Agreements.
5.4 CAPITAL CHANGES; ISSUANCE OF SECURITIES. The Company will not issue,
deliver, sell or authorize or propose the issuance, deliver, sale or purchase of
any shares of its capital stock of any class or any securities convertible into,
or rights, warrants or options to acquire, any such shares or other convertible
securities.
5.5 DIVIDENDS AND DISTRIBUTIONS. The Company will not declare, set aside
or pay any dividend or distribution with respect to its capital stock or other
ownership interest or, except for the distribution to limited partners for the
fourth calendar quarter of 1995 (paid January 31, 1996), permit the Limited
Partnerships to declare or make any distributions.
5.6 SUBSIDIARIES. Neither the Company nor any of the Limited Partnerships
will organize any new Subsidiary or acquire any capital stock or other equity
securities or ownership interest of any corporation or business entity.
5.7 CERTAIN CHANGES. Except as set forth in SECTION 5.7 of the Disclosure
Schedule, or except with the prior written consent of Buyer, neither the Company
nor any of the Limited Partnerships will:
(a) BORROW FUNDS. Borrow or agree to borrow any funds or incur,
assume or become subject to, whether directly or by way of guarantee or
otherwise, any other obligation or liability (absolute or contingent) except
obligations and liabilities incurred in the ordinary course of business in which
event in connection with any such borrowing, the Company will promptly notify
Buyer of such borrowing;
(b) ENCUMBRANCES. Cause any of its property or assets (real,
personal or mixed, tangible or intangible) to be subjected to any Encumbrance
other than liens for taxes not yet due and payable or which are being disputed
in good faith;
(c) SELL PROPERTY. Sell, transfer, or otherwise dispose of any of
its properties or assets, except for properties and assets plugged and abandoned
or disposed of in accordance with customary practice in the business, and sales,
transfers or other dispositions for fair and equivalent value in the ordinary
course of business and consistent with past practice; provided that if the
Company shall sell, transfer or dispose of any such assets, the Company will
promptly notify Buyer of any such sale, transfer or other disposition; or
(d) MAKE CAPITAL EXPENDITURES. Except in the ordinary course of
business, make capital expenditures or commitments for additions to property,
other than as set forth in SECTION 5.7 of the Disclosure Schedule.
5.8 NON-BREACH. Notwithstanding any provision in this ARTICLE 5, the
failure or inability of the Company to comply with any provision in this ARTICLE
5 as a consequence of (i) its fiduciary duty as general partner to any of the
Limited Partnerships, (ii) its compliance with any requirement under any of the
Limited Partnership Agreements, (iii) its status as a minority owner in any
Interest or other property or (iv) the fulfillment of legal or existing
contractual obligations of any other type, will not constitute a breach by the
Company of such provision.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 ACCESS TO INFORMATION. The Company shall afford to Buyer and to
Buyer's accountants, counsel and other representatives reasonable access during
normal business hours during the period prior to the Closing Date to all
properties, books, documents and records relating to the Company. All
information made available and copies made pursuant hereto shall be subject to
the confidentiality agreement set forth in SECTION 6.5 below.
6.2 EXPENSES. Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the related transactions contemplated will be paid by the party incurring
such expense.
6.3 ADDITIONAL AGREEMENTS; FURTHER ACTIONS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement.
6.4 PUBLIC ANNOUNCEMENTS. Seller and Buyer agree that they will not make
any public announcements regarding the existence of this Agreement or the
transactions contemplated hereby except as required by law, following prior
consultation as to the timing and content of such announcement with the other
party hereto.
6.5 CONFIDENTIALITY. Buyer and Seller will maintain the confidentiality of
any and all confidential information furnished to one of them by the other in
connection with the transactions contemplated by this Agreement, except as may
be required by any Governmental Entity. If this Agreement is terminated, each
party hereto shall, as soon as practicable, return to the other party hereto all
copies of confidential information including, without limitation, summaries and
analyses in the possession of such party obtained from such other party pursuant
to any provision of this Agreement.
6.6 INDEMNIFICATION. (a) Buyer shall indemnify and hold harmless Seller
against and from any Losses incurred or suffered by Seller after the Closing
arising out of or relating to (i) any duty, obligation or liability of the
general partner of the Limited Partnerships arising after the Closing Date; (ii)
with respect to the Interests, all claims, costs, expenses and liabilities which
accrue or relate to times after the Closing Date, and (iii) any breach or
failure by Buyer of any representation or warranty which survives the Agreement.
(b) Seller shall indemnify and hold harmless Buyer against and from
any Losses incurred or suffered by Buyer after the Closing arising out of or
relating to (i) any duty, obligation or liability of the general partner of the
Limited Partnerships arising before the Closing Date; (ii) with respect to the
Interests, all claims, costs, expenses and liabilities which accrue or relate to
times before the Closing Date, and (iii) any breach or failure by Seller of any
representation or warranty which survives the Agreement.
(c) Upon receipt by Seller (for purposes of SECTION 6.6 (B) ) or
Buyer (for purposes of SECTION 6.6 (A) ) (each such party, for such purposes,
being hereinafter referred to as an "Indemnified Party") of notice of any
action, suit, proceeding, claim, demand or assessment against such Indemnified
Party that might give rise to a claim pursuant to SECTION 6.6, the Indemnified
Party shall give written notice thereof within ten days (the "Notice of Claim")
to the Buyer or Seller, as the case may be (each such party, for such purposes,
being hereinafter referred to as an "Indemnifying Party") indicating the nature
of such claim and the basis therefor. The Notice of Claim shall specify all
facts known to Indemnified Party giving rise to such claim and the amount or an
estimate of the amount of the liability arising therefrom.
(d) A claim for indemnity may, at the option of the Indemnified
Party, be asserted as soon as any claim has been asserted by a third party in
writing, regardless of whether actual harm has been suffered or out-of-pocket
expenses incurred, provided that the Indemnified Party shall have reasonably
determined that it may be liable or shall otherwise incur Losses in respect of
such claim.
(e) Promptly after a claim is made for which the Indemnified Party
seeks indemnity, the Indemnified Party shall permit the Indemnifying Party, at
its option and expense, to assume the defense of such action, suit, proceeding,
claim, demand or assessment with full authority to conduct such defense and the
Indemnified Party will cooperate fully in such defense.
(f) Any delay or failure to so notify the Indemnifying Party shall
relieve the Indemnifying Party of its obligations hereunder only to the extent,
if at all, that it is prejudiced by reason of such delay or failure. The
Indemnified Party shall have the right to employ separate counsel in any of the
foregoing actions, claims or proceedings and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Indemnified Party unless both the Indemnified Party and the Indemnifying
Party shall in good faith determine that representation by the same counsel is
inappropriate. In the event that the Indemnifying Party, within ten (10) days
after notice of any such action or claim fails to assume the defense thereof,
the Indemnified Party shall have the right to undertake the defense, compromise
or settlement of such action, claim or proceeding for the account of the
Indemnifying Party, subject to the right of the Indemnifying Party to assume the
defense of such action, claim or proceeding with counsel reasonably satisfactory
to the Indemnified Party at any time prior to the settlement, compromise or
final determination thereof. Anything in this SECTION 6.6 to the contrary
notwithstanding, the Indemnifying Party shall not, without the Indemnified
Party's prior written consent, settle or compromise any action or claim or
proceeding or consent to entry of any judgment with respect to any such action
or claim unless such settlement or compromise requires solely the payment of
money damages by the Indemnifying Party and includes as an unconditional term
thereof the release by the claimant or the plaintiff of the Indemnified Party
from all liability in respect of such action, claim or proceeding.
6.7 TAXES. The Company shall timely prepare and file all Tax Returns of
the Limited Partnerships and of the Company for federal and state tax purposes
for the year ended December 31, 1995. The Company will furnish to the limited
partners of the Limited Partnerships the information necessary for federal and
state tax purposes for such year.
6.8 FURTHER ASSURANCES. After Closing, Seller and Buyer shall execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered such
instruments and take such other action including payment of monies as may be
necessary or advisable to carry out their obligations under this Agreement and
under any document, certificate or other instrument delivered pursuant hereto or
required by law. If at any time subsequent to the Closing, either party comes
into possession of money or property belonging to the other, including revenues
attributable to the Interests, such money or property shall be promptly turned
over to the party entitled thereto.
6.9 DELIVERY OF FILES AND RECORDS. Within sixty (60) business days after
the Closing, Seller shall deliver to Buyer all files and records relating to the
Company and the Interests and not previously delivered to Buyer and information
relating to the Limited Partnerships, including tax, investor and accounting
information. Buyer will make such files and records available to Seller for a
period of three (3) years after the Closing.
ARTICLE 7
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligations of Seller and
Buyer to consummate the closing of the transactions contemplated hereby are
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions:
(a) NO INJUNCTIONS; ORDERS. No preliminary or permanent injunction
or other order shall have been issued by any Governmental Entity of competent
jurisdiction nor shall any statute, rule, regulation or executive order be
promulgated or enacted by any Governmental Entity that prevents the consummation
of the transactions contemplated hereby.
(b) NO LITIGATION. No action or proceeding before any Governmental
Entity and no investigation by any Governmental Entity shall be pending, and no
action or proceeding by any Governmental Entity shall have been threatened
against Seller or Buyer or any of their respective affiliates, associates,
officers or directors seeking to prevent or delay the transactions contemplated
hereby or challenging any of the terms or provisions of this Agreement or
seeking material damages in connection therewith.
7.2 CONDITIONS TO SELLER'S OBLIGATIONS. In addition to the conditions set
forth in SECTION 7.1 hereof, the obligations of Seller to consummate the closing
of the transactions contemplated hereby are subject to the satisfaction, on or
prior to the Closing Date, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Buyer are true and correct in all material respects on the date
hereof and shall be in all material respects true and correct as of the Closing
Date as though such representations and warranties were made at and as of such
date, except for changes expressly permitted or contemplated by this Agreement.
(b) PERFORMANCE. Buyer shall have performed and complied, in all
material respects, with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by it on or prior to
the Closing Date.
(c) CERTIFICATES. Buyer shall have furnished such certificates of
its officers and others to evidence compliance with the conditions set forth in
this Article, as may be reasonably requested by Seller.
(d) DELIVERIES BY BUYER.
At the Closing, Buyer shall deliver or cause to be delivered to Seller the
following:
(1) the cash consideration described in SECTION 2.2 hereof;
(2) instruments evidencing its assumption of all liability on
any state, federal or other surety bond relating to the Interests;
and
(3) such documents as are required pursuant to this Agreement
or as may reasonably be requested by Seller.
7.3 CONDITIONS TO BUYER'S OBLIGATIONS. In addition to the conditions set
forth in SECTION 7.1 hereof, the obligations of Buyer to consummate the closing
of the transactions contemplated hereby are subject to the satisfaction, on or
prior to the Closing Date, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Seller and the Company are true and correct in all material
respects on the date hereof and shall be in all material respects true and
correct as of the Closing Date as though such representations and warranties
were made at and as of such date, except for changes expressly permitted or
contemplated by this Agreement and except for any such representation or
warranty that is expressly made as of the date of this Agreement.
(b) PERFORMANCE. Seller and the Company shall have performed and
complied, in all material respects, with all agreements, covenants, obligations
and conditions required by this Agreement to be performed or complied with by
them on or prior to the Closing Date.
(c) CERTIFICATES. Seller shall have furnished such certificates of
its officers and others to evidence compliance with the conditions set forth in
this Article, as may be reasonably requested by Buyer.
(d) DELIVERIES OF SELLER.
On the Closing Date, Seller shall deliver or cause to be delivered the
following to Buyer:
(1) certificates evidencing all of the Company Stock in form
acceptable for transfer on the books of the Company;
(2) the resignations of all officers and directors of the
Company;
(3) such other documents as are required pursuant to this
Agreement or as may reasonably be requested by Buyer.
ARTICLE 8
TERMINATION AND WAIVER
8.1 GROUNDS FOR TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date, or on the Closing Date, as specified below, under the
circumstances set forth below pursuant to written notice given by the party
wishing to terminate this Agreement given in accordance with the provisions of
SECTION 9.2 hereof.
(a) MUTUAL CONSENT. By mutual written consent of Buyer and
Seller.
(b) BREACH OF WARRANTIES OR COVENANTS; MISREPRESENTATION. By either
Buyer or Seller if there has been a material breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of the
other party set forth in this Agreement and such breach of a covenant or
agreement has not been promptly cured within ten days of receipt of written
notice from the non-breaching party by the breaching party.
(c) EXPIRATION DATE. By either Buyer or Seller if the Closing shall
not have been consummated on or before February 29, 1996, which date may be
extended by mutual written agreement of Buyer and Seller.
(d) DISTRIBUTION RIGHTS. At the option of Buyer, by the failure of
Buyer to acquire the Distribution Rights owned by Belleview Capital Corp. and
Xxxxx X. Xxxx, Xx., on terms and conditions acceptable to Buyer.
8.2 AUTOMATIC TERMINATION. This Agreement shall automatically terminate if
there shall be a final nonappealable order of a Governmental Entity of competent
jurisdiction in effect preventing the Closing.
8.3 EFFECT OF TERMINATION. If this Agreement is terminated by either Buyer
of Seller, or shall be automatically terminated, as provided above, this
Agreement shall forthwith become void and there shall be no liability on the
part of Buyer or Seller, except liabilities then existing as a result of a
breach of any covenant or agreement contained herein, those then existing as a
result of any willful misrepresentation made herein and with respect to SECTION
6.2 and 6.5 hereof.
8.4 AMENDMENT. At any time prior to the Closing Date, this Agreement may
be amended or modified in any respect by the parties hereto only by an agreement
in writing.
8.5 WAIVER. Buyer or Seller may (but are not obligated to), to the extent
legally allowed: (a) extend the time for the performance of any of the
obligations or other acts of the other party; (b) waive any inaccuracies in the
representations and warranties made to such party; or (c) waive compliance with
any of the agreements or conditions for the benefit of such party. No such
agreement shall be effective unless in writing.
ARTICLE 9
MISCELLANEOUS
9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in this Agreement shall survive the Closing. The
covenants and agreements contained in this Agreement shall survive the Closing
Date and shall continue until terminated in accordance with their terms, except
for the agreements in SECTION 6.6 which shall survive for one (1) year following
the Closing Date.
9.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person by telegram, telex or other standard form of
telecommunications, or by registered, addressed as follows:
(a) If to Buyer, to:
AMF PRODUCTION COMPANY
0000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxxxx, Xx.
With a copy to:
Xxxx X. Xxxxxx, Xx.
Xxxxxx & Xxxxxx, LLP
000 Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
(b) If to Seller, to:
Oxford Consolidated, Inc.
00 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxxx X. Xxx
(c) If to Company, to:
Cliffwood Energy Company
00 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxxx X. Xxx
or to such other addresses as may have been furnished to the other in writing.
9.3 ASSIGNMENTS. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor any of the rights,
interest or obligations hereunder shall be assigned by any party without the
prior written consent of the others. Nothing contained herein, express or
implied, is intended to confer on any person other than the parties hereto or
their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
9.4 GOVERNING LAW. THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE
PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED IN THAT STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
9.5 VENUE FOR LEGAL ACTIONS. For purposes of determining venue in the
event that a legal action is brought by either party to this Agreement, this
Agreement shall be deemed performable in Houston, Xxxxxx County, Texas, in all
respects and the parties specifically agree to bring any and all legal actions
regarding interpretation, enforcement, and/or any other aspect of this Agreement
in the state courts of Houston, Xxxxxx County, Texas, or the Federal Courts of
the Southern District of Texas.
9.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute but one agreement.
9.7 ENTIRE AGREEMENT. This Agreement (including the instruments between
the parties referred to herein and any waivers delivered pursuant hereto)
constitutes the entire agreement among the parties and supersedes all other
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof. The Exhibits and
Schedules are a part of this Agreement as if fully set forth herein. All
references to sections, subsections, clauses, exhibits and schedules shall be
deemed references to such part of this Agreement, unless the context shall
otherwise require.
9.8 HEADINGS. The headings contained in this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
9.9 INVALIDITY. If any provision of this Agreement is held invalid or
unenforceable, the remainder of this Agreement shall nevertheless remain in full
force and effect.
9.10 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur if any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, in addition to any other remedy to which they are entitled
at law or in equity.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement.
COMPANY: SELLER:
CLIFFWOOD ENERGY COMPANY OXFORD CONSOLIDATED, INC.
By: /S/ XXXXXXX X. XXX By: /S/ XXXXXXX X. XXX
Its: President Its: President
BUYER:
AMF PRODUCTION COMPANY
By: /S/ XXXXX X. XXXXXXXXX
Its: President
