PURCHASE AND SALE AGREEMENT
Dated as of March 30, 1998
Between
SEAGULL ENERGY E&P INC., AS BUYER
and
The shareholders of BRG Petroleum, Inc.;
BRG 1998 Consolidated Limited Partnership, BRG 1997 Consolidated Limited
Partnership, BRG 1996-I Oil & Gas Limited Partnership, BRG 1996-II Oil & Gas
Income Fund Limited Partnership, BRG 1993-I Oil and Gas Limited Partnership, BRG
1992-I Oil & Gas Income Fund Limited Partnership, BRG 1990-II Oil and Gas
Limited Partnership and BRG 1989-II Oil & Gas Income Fund Limited Partnership;
and
The participants in the BRG 1997-I Oil and Gas Program,
AS SELLERS
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION....................................1
1.1 Definitions.................................................1
1.2 Interpretation.............................................12
ARTICLE II PURCHASE AND SALE; PURCHASE PRICE; XXXXXXX MONEY................12
2.1 Purchase and Sale..........................................12
2.2 Purchase Price; Xxxxxxx Money..............................13
2.3 Payment of Xxxxxxx Money...................................13
2.4 Allocation and Adjustment of Purchase Price................14
2.5 Purchase Price Adjustments.................................14
2.6 Calculation of Closing Statement...........................15
2.7 Adjusted Working Capital and Gas Balancing Reconciliation..16
ARTICLE III CLOSING........................................................17
3.1 Closing Date...............................................17
3.2 Sellers' Deliveries........................................17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS........................18
4.1 Ownership of Shares; Organization and Authority............19
4.2 No Conflict................................................20
4.3 Organization and Capital Structure of BRG..................21
4.4 Subsidiaries...............................................21
4.5 Financial Statements.......................................22
4.6 Absence of Material Adverse Effect.........................22
4.7 Compliance with Agreements.................................23
4.8 Taxes......................................................24
4.9 Governmental Permits.......................................25
4.10 No Default.................................................25
4.11 Environmental Matters......................................25
4.12 Books and Records..........................................26
4.13 Oil and Gas Properties.....................................27
4.14 Compliance with Requirements of Laws.......................27
4.15 Payments...................................................27
4.16 Benefit Plans..............................................27
4.17 Litigation.................................................29
4.18 Insurance..................................................29
4.19 Gas Imbalances.............................................29
4.20 Public Utility Holding Company Act.........................30
4.21 Investment Company Act.....................................30
4.22 Xxxxx......................................................30
4.23 Condition of Equipment.....................................30
4.24 Evaluation Data............................................30
4.25 Interaffiliate Transactions and Relationships..............31
4.26 Well Status................................................31
4.27 Section 29 Status of Certain Properties....................31
4.28 Liabilities; Indebtedness..................................32
4.29 No Material Misstatements or Omissions.....................32
4.30 Bankruptcy.................................................32
4.31 Representations Apply to Subsidiaries of BRG...............32
4.32 Allocation of Purchase Price...............................32
4.33 BRG 1997-I Oil and Gas Program Funds.......................32
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER...........................32
5.1 Organization of Buyer......................................32
5.2 Authority of Buyer.........................................33
5.3 No Conflict................................................33
5.4 No Finder..................................................33
5.5 Investment Representation..................................33
5.6 Financial Ability..........................................33
ARTICLE VI ACTIONS PRIOR TO THE CLOSING DATE................................34
6.1 Investigation of the Company by Buyer......................34
6.2 Preserve Accuracy of Representations and Warranties........34
6.3 Consents to Third Parties; Governmental Approvals..........34
6.4 Excluded Assets............................................35
6.5 BRG .......................................................35
6.6 Covenants Regarding Employee Benefit Plan and Employees....36
6.7 Other Interim Covenants....................................36
6.8 Title Defects..............................................38
6.9 Audited Financials.........................................40
ARTICLE VII ADDITIONAL AGREEMENTS...........................................40
7.1 Access to Records after Closing............................40
7.2 Confidentiality Agreement..................................40
7.3 No Public Announcement.....................................41
7.4 Expenses and Sales Taxes...................................41
7.5 Further Assurances.........................................41
7.6 Change of Corporate Name...................................41
7.7 Indemnification of Sellers for Environmental Liabilities...42
7.8 Tax Returns; Payments and Refunds..........................42
7.9 Employee Relations and Benefits............................42
7.10 Release and Indemnification of Resigning
Officers and Directors...................................43
7.11 Insurance Coverage..........................................43
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES.................43
8.1 Conditions to Buyer's Obligations..........................43
8.2 Conditions to Sellers' Obligations.........................45
ARTICLE IX TERMINATION.....................................................46
9.1 Termination................................................46
9.2 Notice of Termination......................................46
9.3 Effect of Termination......................................46
ARTICLE X GENERAL PROVISIONS...............................................47
10.1 Survival of Representations, Warranties,
Covenants nad Agreemtns/Indemnities......................47
10.2 No Reliance................................................50
10.3 Notices....................................................50
10.4 Representation of Sellers by Sellers' Representative.......51
10.5 Successors and Assigns.....................................52
10.6 Entire Agreement; Amendments...............................52
10.7 Waivers....................................................53
10.8 Partial Invalidity.........................................53
10.9 Execution in Counterparts..................................53
10.10 Governing Law..............................................53
10.11 Certain Individuals........................................53
EXHIBIT A - Form of Conveyance, Assignment and Xxxx of Sale
Schedule 2.4 - Allocation of Purchase Price
Schedule 4.2 - No Conflict
Schedule 4.3 - Organization and Capital Structure of BRG
Schedule 4.5 - Financial Statements of BRG and the BRG Partnerships
Schedule 4.6 - Absence of Material Adverse Effect
Schedule 4.7 - Material Agreements
Schedule 4.8 - Taxes
Schedule 4.9 - Governmental Permits
Schedule 4.11 - Environmental Matters
Schedule 4.13 - Oil and Gas Properties
Schedule 4.14 - Compliance With Requirements of Laws
Schedule 4.15 - Payments
Schedule 4.16 - Benefit Plans
Schedule 4.17 - Litigation
Schedule 4.18 - Insurance
Schedule 4.19 - Gas Imbalances
Schedule 4.25 - Interaffiliate Transactions and Relationships
Schedule 4.26 - Plugging and Abandonment Obligations
Schedule 4.27 - Section 29 Xxxxx
Schedule 4.28 - Undisclosed Liabilities
Schedule 6.4 - Excluded Assets
Schedule 7.9 - Severance Plan
Schedule 10.1 - Principal Sellers
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT, dated as of March30, 1998, is between
Seagull Energy E&P Inc. ("Buyer"); and the shareholders of BRG Petroleum, Inc.,
an Oklahoma corporation ("BRG") listed on the signature page hereto (being
hereinafter collectively called the "BRG Shareholders"); BRG 1998 Consolidated
Limited Partnership, BRG 1997 Consolidated Limited Partnership, BRG 1996-I Oil &
Gas Limited Partnership, BRG 1996-II Oil & Gas Income Fund Limited Partnership,
BRG 1993-I Oil and Gas Limited Partnership, BRG 1992-I Oil & Gas Income Fund
Limited Partnership, BRG 1990-II Oil and Gas Limited Partnership and BRG 1989-II
Oil & Gas Income Fund Limited Partnership (being hereinafter collectively called
the "BRG Partnerships"); and the participants in the BRG 1997-I Oil and Gas
Program ("1997-I Program Participants") (BRG Shareholders, BRG Partnerships and
1997-I Program Participants being hereinafter collectively called "Sellers").
PRELIMINARY STATEMENTS
The BRG Shareholders are the owners, beneficially and of record, of all of
the issued and outstanding capital stock of BRG. The BRG Shareholders desire to
sell to Buyer, and Buyer desires to purchase from the BRG Shareholders, all of
the capital stock of BRG on the terms and subject to the conditions set forth
herein.
The BRG Partnerships each desire to sell to Buyer, and Buyer desires to
purchase from each of the BRG Partnerships, all of the oil and gas properties
and related assets of the BRG Partnerships (collectively, the "BRG Partnership
Properties," as more particularly described below) on the terms and subject to
the conditions set forth herein.
BRG, as the Program Administrator is the record owner of the interests
acquired on behalf of the 1997-I Program Participants in certain oil and gas
properties and related interests (collectively, the "1997-I Properties," as more
particularly described below). The 1997-I Program Participants desire to sell to
Buyer, and Buyer desires to purchase from the 1997-I Program Participants, the
1997-I Properties on the terms and subject to the conditions set forth herein.
Accordingly, in consideration of the mutual agreements hereinafter set
forth, Buyer and Sellers agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Definitions. In this Agreement, the following terms have the meanings
specified or referred to in this Section 1.1 and shall be equally applicable to
both the singular and plural forms.
"Adjusted Working Capital" as of any date means the current assets less
current liabilities of BRG, any BRG Partnership, or any 1997-I Program
Participant on a consolidated basis (except that the balance sheets of BRG
Holding Company, inc. and BRG Production Company shall not be deemed to be part
of the BRG consolidated group for purposes of determining the Closing Adjusted
Working Capital) at such date determined in accordance with GAAP, except that
current assets will include amounts equal to (i) the estimate of the aggregate
of quantity of the crude oil attributable to BRG, the BRG Partnerships, or the
1997-I Program Participant, as the case may be, contained at such date in each
of the storage tanks in which production from the BRG Oil and Gas Properties or
the relevant BRG Partnership Properties or 1997-I Properties is stored pending
sale and/or transportation to the purchaser thereof multiplied by the price at
which the crude oil from each of such storage tanks is then being sold to such
purchaser, plus (ii) the amounts paid or payable to BRG in connection with
consummation of the sale of the stock of BRG Holding Company, Inc. and BRG
Production Company as contemplated by Section 6.4 and current liabilities will
include (i) the outstanding amount of all long-term debt (both the current and
long-term portions thereof at such date), (ii) the amounts necessary to pay all
state franchise taxes that are or will become payable by BRG and are
attributable to, or computed by reference to the income, operations, assets or
capital of BRG arising or existing during the period prior to and including the
Closing Date, (iii) the amounts paid or payable in respect of the BRG Options as
contemplated by Section 6.5, plus (iii) all Transaction Expenses paid or payable
on behalf of BRG, the BRG Partnerships or the 1997-I Program Participants, as
the case may be. The amount of the accrued federal, state and local tax
liability included in the current liabilities of BRG shall be determined after
taking into account the deductions arising by virtue of the amounts paid or
payable by BRG in respect of the BRG Options as set forth in Section 6.5 and the
gain realized by BRG in connection with the sale of the stock of BRG Holding
Company, Inc. and BRG Production Company and the gain allocated to BRG as the
general partner of each of the BRG Partnerships by virtue of the sale of the BRG
Partnership Properties. For purposes of this Agreement, the Adjusted Working
Capital of (i) each 1997-I Program Participant shall be limited to the assets
and liabilities which are directly attributable to his or her interests in the
1997-I Properties and the production and marketing activities conducted in
connection therewith and (ii) the BRG Partnerships shall be limited to the BRG
Partnership Properties and the liabilities directly attributable thereto and
production and marketing activities conducted in connection therewith.
"Accounting Firm" has the meaning specified in Section 2.7(c).
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"Benefit Plans" has the meaning specified in Section 4.16.
"Benefit Program or Agreement" has the meaning specified in Section
4.16(a).
"BRG" means BRG Petroleum, Inc., an Oklahoma corporation.
"BRG Petroleum Corporation" has the meaning specified in Section 6.4.
"BRG Oil and Gas Properties" collectively means that portion of the BRG
Property which consists of Leases, Xxxxx, Units and other interests in
Hydrocarbons prior to severance.
"BRG Option" has the meaning specified in Section 6.5.
"BRG Partnerships" has the meaning specified in the first paragraph of this
Agreement.
"BRG Partnership Properties" means (i) the interests in and to the Xxxxx
described or referred to in Schedule 4.13, together with all of the BRG
Partnerships' respective rights, titles and interests in and to all property,
interests and rights incident or in any way relating to the Xxxxx or which are
useful or appropriate in exploring for, developing, operating, producing,
treating, storing, marketing and transporting oil, gas and other minerals in,
under and that may be produced from the Xxxxx, including but not limited to
contracts, agreements, rights-of-way, easements, licenses, permits and orders;
(ii) all of the BRG Partnerships' respective rights, titles and interests in and
to all physical property, including but not limited to xxxxx, well and lease
equipment and surface equipment such as casing, tubing, connections, rods,
pipelines, gathering systems, compressors, separators, tanks, connections,
pumps, machinery, tools, materials, supplies, inventory, buildings and other
property and equipment of every kind, located upon or used in connection with
the Xxxxx or the Leases relating thereto; (iii) without limiting and in addition
to the foregoing, all of the BRG Partnerships' respective rights, titles and
interests in and to the Xxxxx and to the Leases and/or lands described or
referred to in Schedule 4.13 or relating to such Xxxxx, and the physical
property thereon or used in connection therewith, even though such rights,
titles and interests be incorrectly or insufficiently described or referred to
in Schedule 4.13, and (iv) the additional assets and rights which are included
in the Adjusted Working Capital of the BRG Partnerships.
"BRG Property" means any and all real property (including, but not limited
to, surface estates and mineral fees and leaseholds), plant, building, facility,
structure, underground storage tank, personal property, equipment, unit, or
other asset owned, leased or operated by BRG or Charter Servicing Company as of
or prior to the Closing Date including without limitation the interests in
Leases, Units and Xxxxx described or referred to in Schedule 4.13.
"BRG Shareholders" has the meaning specified in the first paragraph of this
Agreement.
"Buyer" has the meaning specified in the first paragraph of this Agreement.
"Buyer Ancillary Agreements" means all agreements, instruments and
documents being or to be executed and delivered by Buyer under this Agreement or
in connection herewith.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. xx.xx. 9601 et seq.
"Closing" means the closing of the transfer of (i) the Shares from the BRG
Shareholders to Buyer, (ii) the BRG Partnership Properties from the BRG
Partnerships to Buyer, and (iii) the 1997-I Program Properties from the 1997-I
Program Participants to Buyer.
"Closing Adjusted Working Capital" has the meaning specified in Section
2.7(a).
"Closing Balance Sheet" has the meaning specified in Section 2.6.
"Closing Date" has the meaning specified in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"Common Stock" has the meaning specified in Section 4.3(b).
"Confidentiality Agreement" means the Confidentiality Agreement between
Buyer and BRG and delivered to BRG under cover of a transmittal letter dated
February 18, 1998.
"Contaminant" means any contaminant, waste, pollutant, petroleum waste,
used oil, hazardous or toxic substance or waste (as such terms are currently
defined in Environmental Laws), and any other substances that are regulated by
any Governmental Body under any Environmental Laws or any Hazardous Material.
"Court Order" means any judgment, order, award or decree of any foreign,
federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"Damages" shall mean the amount of any actual liability, loss, cost,
expense, claim, award or judgment incurred or suffered by any indemnified party
(after taking into account any insurance proceeds actually received) arising out
of or resulting from the indemnified matter, including reasonable Expenses
incidental to matters indemnified against, and the costs of enforcement of the
indemnity.
"Xxxxxxx Money" has the meaning specified in Section 2.2.
"Encumbrance" means any lien (statutory or other), claim, charge, security
interest, mortgage, deed of trust, pledge, hypothecation, assignment,
conditional sale or other title retention agreement, preference, priority or
other security agreement or preferential arrangement of any kind or nature, and
any easement, encroachment, covenant, restriction, right of way, defect in or
cloud on title or other encumbrance of any kind.
"Environmental Encumbrance" means an Encumbrance in favor of any
Governmental Body for (i) any liability under any Environmental Law or (ii)
damages arising from, or costs incurred by such Governmental Body in response
to, a Release or threatened Release of a Contaminant into the environment.
"Environmental Laws" means all applicable Requirements of Laws derived from or
relating to foreign, federal, Indian, state and local laws and regulations
relating to or addressing the environment or occupational health or safety,
including but not limited to (i) CERCLA, OSHA and RCRA and any state equivalent
thereof and (ii) all applicable Requirements of Laws relating to the emission,
discharge, disposal, treatment, recycling, reclamation, permitting, manufacture,
processing, distribution, generation, storage, transportation, Release or
threatened Release of, or exposure of persons or property to, contaminants,
wastes, pollutants, petroleum wastes, used oil, hazardous or toxic substances or
wastes, or any other regulated substances.
"Environmental Liabilities" means any and all costs (including remedial,
removal, response, abatement, cleanup, investigative, and/or monitoring costs),
damages, liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), settlements, expenses (including charges and assessments, and
expenses and costs of investigating, preparing or defending any action or
proceeding), liens, penalties, fines, taxes, prejudgment and post-judgment
interest, court costs and attorneys' fees incurred or imposed in connection with
an Environmental Matter or any Environmental Law, including, without limitation,
any of the foregoing which are incurred or imposed (i) pursuant to any
agreement, order, notice of responsibility, directive (including requirements
embodied in Environmental Laws), injunction, judgment or similar documents
(including settlements) attributable to or arising out of or under Environmental
Laws, or (ii) pursuant to any claim by a Governmental Body or other entity or
Person for personal injury, property damage, damage to natural resources,
remediation or response costs arising out of or attributable to any
Environmental Matter.
"Environmental Matters" means matters (i) resulting from or attributable to
actual, threatened, or alleged emissions, discharges, or releases of
Contaminants into ambient air, surface water, groundwater or land, (ii)
otherwise resulting from or attributable to the manufacture, generation,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of Contaminants or (iii) otherwise relating to any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and the regulations promulgated thereunder.
"Evaluation Data" has the meaning specified in Section 4.24.
"Excluded Assets" means the assets of BRG as set forth on Schedule 6.4,
which will be transferred to BRG Holding Company, Inc. as contemplated by
Section 6.4.
"Expenses" means any and all expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including court filing
fees, court costs, arbitration fees or costs, witness fees, and reasonable fees
and disbursements of legal counsel, investigators, expert witnesses,
consultants, accountants and other professionals).
"Financial Statements" has the meaning specified in Section 4.5. "GAAP"
means United States generally accepted accounting principles as in effect from
time to time.
"Good and Defensible Title" means, with respect to BRG's, the BRG
Partnerships' or the 1997-I Program Participants' respective ownership of
interests in a Lease, Unit or well, a record or beneficial title that (a)
entitles BRG, the BRG Partnerships or the 1997-I Program Participants, as the
case may be, to receive, throughout the life of a Lease, Unit or well, at least
the NRI for (i) the Xxxxx shown in Schedule 4.13 (Producing Xxxxx) and (ii) any
well drilled within the surface area of the Units or Leases shown in Schedule
4.13 (Undeveloped) as to the objective formation(s) identified, except for (x)
decreases in connection with those operations to which BRG or Buyer elects after
Closing or with Buyer's consent to become a non-consenting co-owner and (y)
decreases resulting from those xxxxx where the owner is obligated to allow
others to make up past underproduction; (b) obligates either BRG, the BRG
Partnerships or the 1997-I Program Participants to bear, throughout the life of
a Lease, Unit or well (and the plugging, abandonment and salvage thereof), no
greater WI than the WI shown (i) for the Well in question on Schedule 4.13
(Producing Xxxxx) or (ii) any well drilled within the surface area of the Unit
or Lease in question on Schedule 4.13 (Undeveloped) as to the objective
formation(s) identified, except increases in such WI that result in at least a
proportionate increase in BRG's, the BRG Partnerships', or the 1997-I Program
Participants' NRI for such Well or xxxxx (including, without limitation,
increases resulting from co-owner non-consents) and increases that result from
contribution requirements with respect to defaulting co-owners, (c) is free and
clear of all Encumbrances except for Permitted Encumbrances, and (d) is held of
record by BRG. "Good and Defensible Title" means, with respect to any BRG Oil
and Gas Properties, BRG Partnership Properties or the 1997-I Properties which is
not a Lease attributable to a Well, a record title that (x) is free from
reasonable doubt as to all matters of law and fact such that a reasonably
prudent person, engaged in the ownership, development and operation of oil and
gas properties or assets (including gas plants, treating and measurement
facilities, and pipelines), with knowledge of all the facts and appreciation of
their legal significance, would be willing to accept title to such property
without a reduction in the value of such property and (y) is free and clear of
all Encumbrances, except for Permitted Encumbrances.
"Governmental Body" means any foreign, federal, Indian, state, local or
other governmental authority or regulatory body.
"Governmental Permits" has the meaning specified in Section 4.9(a).
"Hazardous Material" means (a) any "hazardous substance," as defined by
CERCLA, (b) any "hazardous waste," as defined by the Resource Conservation and
Recovery Act, as amended, (c) any hazardous, dangerous or toxic chemical,
material, waste or substance, within the meaning of and regulated by any
Environmental Law, (d) any radioactive material, including any naturally
occurring radioactive material, and any source, special or byproduct material as
defined in 42 U.S.C. 2011 et seq. and any amendments or authorizations thereof,
(e) any asbestos-containing materials in any form or condition, or (f) any
polychlorinated biphenyls in any form or condition.
"Hydrocarbons" means oil, condensate, natural gas, casinghead gas and
liquid and gaseous hydrocarbons and any combination or mixture of the foregoing.
"Individual Shareholder Interests" has the meaning specified in Section
2.1.
"Insurance Policies" has the meaning specified in Section 4.18.
"IRS" means the Internal Revenue Service.
"Leases" means the interests in the oil and gas leases, oil, gas and
mineral leases, royalties, overriding royalties, production payments, net
profits interests, fee minerals, and other oil, gas or mineral interests
(together with contractual rights, options or interests in and to any of the
foregoing) owned by either BRG, the BRG Partnerships or the 1997-I Program
Participants, including those associated with the Xxxxx listed in Schedule 4.13.
"Losses" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
"Material Adverse Effect" means any condition, circumstance, change or
effect that is materially adverse to the assets (or title thereto or the value
thereof), business, condition (financial or otherwise), results of operations or
prospects of BRG, the BRG Partnerships, the 1997-I Program Participants (as a
group) or the BRG Property other than (i) general industry, economic or
regulatory conditions or developments that affect oil and gas companies or their
assets or operations, or (ii) conditions affecting oil and gas companies
generally in the areas in which BRG or any of the BRG Partnerships conduct their
operations or where their properties or assets, or the 1997-I Properties, are
located.
"1997-I Program Participants" has the meaning specified in the first
paragraph of this Agreement.
"1997-I Properties" means (i) the interests in and to the Xxxxx described
or referred to in Schedule 4.13 that are owned in the name of BRG on behalf of
the 1997-I Program Participants, together with all of the rights, titles and
interests in and to all property, interests and rights incident or in any way
relating to such Xxxxx or which are useful or appropriate in exploring for,
developing, operating, producing, treating, storing, marketing and transporting
oil, gas and other minerals in, under and that may be produced from such Xxxxx,
including but not limited to contracts, agreements, rights-of-way, easements,
licenses, permits and orders; (ii) all of the rights, titles and interests in
and to all physical property that is owned in the name of BRG on behalf of the
1997-I Program Participants, including but not limited to xxxxx, well and lease
equipment and surface equipment such as casing, tubing, connections, rods,
pipelines, gathering systems, compressors, separators, tanks, connections,
pumps, machinery, tools, materials, supplies, inventory, buildings and other
property and equipment of every kind, located upon or used in connection with
such Xxxxx or the Leases relating thereto; (iii) without limiting and in
addition to the foregoing, all of the rights, titles and interests in and to the
Xxxxx and to the Leases and/or lands described or referred to in Schedule 4.13
or relating to such Xxxxx that are owned in the name of BRG on behalf of the
1997-I Program Participants, and the physical property thereon or used in
connection therewith, even though such rights, titles and interests be
incorrectly or insufficiently described or referred to in Schedule 4.13, and
(iv) the additional assets and rights which are included in the Adjusted Working
Capital of the 1997-I Program Participants.
"NRI" means a fractional or percentage interest in and to all Hydrocarbons
produced from or allocated to (i) a Well described in Schedule 4.13 (Producing
Xxxxx) or (ii) any well drilled within the surface area of a Unit or Lease
identified on Schedule 4.13 (Undeveloped) as to the objective formation(s)
identified, after deduction of all lessors' royalties, overriding royalties, and
other burdens and payments out of production that burden such fractional or
percentage interest in such Well.
"Offsite Environmental Liability" means an Environmental Liability arising
from or relating or attributable to either (i) Contaminants that have been
transported (whether for treatment, storage, disposal, reclamation, recycling or
otherwise), or that have otherwise migrated or been moved, from any BRG
Property, the BRG Partnership Properties or the 1997-I Properties to any other
property owned by a third party or (ii) a property previously owned by BRG, the
BRG Partnerships or the 1997-I Program Participants and conveyed or alienated by
BRG, the BRG Partnerships or the 1997-I Program Participants prior to Closing.
"Onsite Environmental Liability" means an Environmental Liability (i) that
arises from or relates or is attributable to BRG Property, the BRG Partnership
Properties or the 1997-I Properties as of the Closing Date, but (ii) is not an
Offsite Environmental Liability.
"Organizational Document" means the charter, bylaws, partnership agreement,
limited partnership agreement, certificate of limited partnership, certificate
of organization, regulations or other organizing or constituent document
governing the general affairs or existence of a corporation, partnership,
limited liability company or other entity.
"OSHA" means the Occupational Safety and Health Act, 29 X.X.X.xx.xx. 651
et seq.
"Permitted Encumbrances" means:
(i) liens for taxes and other governmental charges and assessments arising
in the ordinary course of business which are not yet due and payable,
or, if due, are being challenged in good faith by appropriate
proceedings and as to which adequate reserves have been established
and are reflected on the Financial Statements;
(ii) liens of landlords, carriers, warehousemen, mechanics and materialmen
and other like liens arising in the ordinary course of business for
sums not yet due and payable, and that will be paid or discharged in
the ordinary course of business or, if delinquent, that are being
contested in good faith in the ordinary course of business and as to
which adequate reserves have been established and are reflected on the
Financial Statements;
(iii)liens under operating agreements, unitization and pooling arrangements
and Hydrocarbon sales contracts that secure payment of amounts not yet
due and payable, or, if due, being contested in good faith in the
ordinary course of business, which are of a nature and scope customary
in connection with oil and gas drilling and producing operations and
as to which adequate reserves have been established and are reflected
on the Financial Statements;
(iv) easements, rights-of-way, servitudes, permits, surface leases, and
other rights in respect of surface operations that do not materially
interfere with BRG's, the BRG Partnerships' or the 1997-I Program
Participants' operations of the portion of the property burdened
thereby or otherwise have a Material Adverse Effect on the ownership,
operation, value or use of such Person's property;
(v) rights reserved to or vested in any Governmental Body to control or
regulate any of the Xxxxx or Units and all applicable laws, rules,
regulations, and orders of such authorities so long as the same do not
(i) decrease BRG's, the BRG Partnerships' or the 1997-I Program
Participants' NRI below the NRI shown in Schedule 4.13, or increase
BRG's, the BRG Partnerships' or the 1997-I Program Participants' WI
above the WI shown in Schedule 4.13, without at least a proportionate
increase in BRG's, the BRG Partnerships' or the 0000-X Xxxxxxx
Xxxxxxxxxxxx' XXX, (xx) create any liens in respect of such Xxxxx or
Units, or (iii) otherwise have a Material Adverse Effect on the
ownership, operation, value or use of such Xxxxx or Units.
(vi) any title defects that Buyer may have expressly waived in writing;
(vii)the terms and conditions of contracts and agreements relating to the
Leases, Xxxxx and Units including, without limitation, exploration
agreements, gas sales contracts, processing agreements, farmins,
farmouts, operating agreements, and right-of-way agreements, to the
extent such terms and conditions (i) do not decrease BRG's, the BRG
Partnerships' or the 1997-I Program Participants' NRI below the NRI
shown in Schedule 4.13, or increase BRG's, the BRG Partnerships' or
the 1997-I Program Participants' WI above the WI shown in Schedule
4.13, without at least a proportionate increase in BRG's, the BRG
Partnerships' or the 0000-X Xxxxxxx Xxxxxxxxxxxx' XXX, (xx) are normal
and customary in the oil and gas industry, and (iii) do not have a
Material Adverse Effect on the ownership, operation, value or use of
such Leases, Xxxxx or Units;
(viii) royalties, overriding royalties, net profits interests, production
payments, reversionary interests, and similar interests that do not
decrease BRG's, the BRG Partnerships' or the 1997-I Program
Participants' NRI below the NRI shown in Schedule 4.13, or increase
BRG's, the BRG Partnerships' or the 1997-I Program Participants' WI
above the WI shown in Schedule 4.13, without at least a proportionate
increase in the owner's NRI;
(ix) conventional rights of reassignment requiring notice to the holders of
the rights prior to surrendering or releasing a Lease; and
(x) consents to assignment and preferential rights to purchase any or all
of the BRG Property, the BRG Partnership Properties or the 1997-I
Properties so long as (a) any required consents or waivers are
obtained from the appropriate Persons prior to Closing, (b) the
appropriate time period for asserting such rights, if any, has expired
without an exercise of such rights prior to Closing, or (c) such
consents or rights are not triggered or put into effect as a result of
the transactions provided for in this Agreement.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"Post-Closing Taxable Period" means (i) any taxable period beginning after
the Closing Date and (ii) with respect to any taxable period beginning on or
before the Closing Date and ending after the Closing Date, the portion of such
taxable period that is after the Closing Date.
"Pre-Closing Taxable Period" means all or a portion of (i) any taxable
period up to and including the Closing Date or (ii) any taxable period with
respect to which the Tax is computed by reference to Tax items, assets, capital
or operations of BRG or any BRG Partnership arising on or before, or existing as
of, the Closing Date.
"Purchase Price" has the meaning specified in Section 2.2.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C. xx.xx.
6901 et seq.
"Release" means any release, spill, emission, leaking, pumping, pouring,
emitting, emptying, injection, deposit, disposal, discharge, dispersal,
escaping, leaching, dumping (including the abandonment or discarding of barrels,
containers, and other closed receptacles containing any Contaminant), or
migration of a Contaminant into the environment or into or out of any BRG
Property, the BRG Partnership Properties or the 1997-I Properties, including the
movement of Contaminants through or in the air, soil, surface water,
groundwater, BRG Property, the BRG Partnership Properties or the 1997-I
Properties.
"Remedial Action" means actions required under Environmental Laws to (i)
clean up, remove, treat or in any other way address Contaminants in the indoor
or outdoor environment, (ii) prevent the Release or threatened Release or
minimize the further Release of Contaminants or (iii) investigate and determine
if a remedial response is needed and to design such a response and post-remedial
investigation, monitoring, operation and maintenance and care.
"Requirements of Laws" means (i) any foreign, federal, Indian, state and
local laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body, (ii) any injunctions, judgments,
orders, decrees, or rulings of any court or Governmental Body, and (iii) common
law, including, in each case, any such requirements of laws pertaining to
electrical, building, zoning, subdivision, land use, environmental, or
occupational safety and health requirements, in all cases as currently enacted,
interpreted, enforced or implemented by the Governmental Bodies having
jurisdiction thereunder.
"Section 29 Well" has the meaning specified in Section 4.27.
"Sellers" has the meaning specified in the first paragraph of this
Agreement.
"Sellers Ancillary Agreements" means all agreements, instruments and
documents being or to be executed and delivered by the Sellers under this
Agreement or in connection herewith.
"Sellers' Representative" has the meaning specified in Section 10.4.
"Shares" means all of the issued and outstanding Common Stock of BRG.
"Subsidiary Transfer" has the meaning specified in Section 6.4.
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") shall mean any
federal, Indian, state, local or foreign income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, value added, transfer or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, imposed by
any Governmental Body.
"Tax Return" means any return, report or similar statement (including any
attached schedules), required to be filed with respect to any Tax including any
information return, claim for refund, amended return or declaration of estimated
Tax.
"Transaction Expenses" has the meaning specified in Section 7.4.
"Units" means (i) all unitization, communication, and pooling agreements
and orders covering the lands subject to the Leases, or any portion thereof, and
the units and pooled or communitized areas created thereby, and (ii) all
existing or projected future units and pooled or communitized areas, including
those described in, or associated with the Xxxxx listed in, Schedule 4.13.
"Xxxxx" means xxxxx for the production of Hydrocarbons which are listed in
Schedule 4.13.
"WI" means a fraction or percentage of the costs and expenses associated
with the maintenance, exploration, development, operation and abandonment of the
BRG Oil and Gas Properties, the BRG Partnership Properties or the 1997-I
Properties as it applies to a (i) Well described in Schedule 4.13 (Producing
Xxxxx) or (ii) any well drilled within the surface area of a Unit or Lease
identified on Schedule 4.13 (Undeveloped) as to the objective formation(s)
identified.
1.2 Interpretation. As used in this Agreement, the word "including" means
without limitation, the word "or" is not exclusive and the words "herein",
"hereof", "hereby", "hereto" and "hereunder" refer to this Agreement as a whole.
Unless the context otherwise requires, references herein: (i) to Articles,
Sections, Exhibits and Schedules mean the Articles and Sections of and the
Exhibits and Schedules attached to this Agreement; (ii) to an agreement,
instrument or other document means such agreement, instrument or other document
as amended, supplemented and modified from time to time to the extent permitted
by the provisions thereof and by this Agreement; and (iii) to a statute means
such statute as amended from time to time and includes any successor legislation
thereto. The Schedules and Exhibits referred to herein shall be construed with
and as an integral part of this Agreement to the same extent as if they were set
forth verbatim herein. Titles to Articles and headings of Sections are inserted
for convenience of reference only and shall not be deemed a part of or to affect
meaning or interpretation of this Agreement. References herein to the knowledge
of a party or matters or information known to a party mean the actual knowledge
or conscious awareness, after reasonable investigation, of such party or a
director or an officer of such party or a direct or indirect subsidiary of such
party or a manager or employee of such party or a direct or indirect subsidiary
of such party in charge of a discrete business area or function having
responsibility for the referenced matter. References herein to BRG's knowledge
shall include the knowledge of each of the Sellers who has signed this Agreement
personally (as opposed to signing it by an attorney-in-fact).
ARTICLE II
PURCHASE AND SALE; PURCHASE PRICE; XXXXXXX MONEY
2.1 Purchase and Sale. Upon the terms and subject to the conditions of this
Agreement, at the Closing, the following transactions shall occur, in the
sequence set forth below:
(a) First, the BRG Partnerships shall sell and convey to Buyer, and
Buyer shall purchase from the BRG Partnerships, the BRG Partnership
Properties and the 1997-I Program Participants shall sell and convey to
Buyer, and Buyer shall purchase from the 1997-I Program Participants, the
1997-I Properties;
(b) Second, immediately following the foregoing transaction, BRG shall
transfer as a capital contribution to BRG Holding Company, Inc. all of its
rights, obligations and liabilities as a general partner of the BRG
Partnerships (less and except any proceeds distributed or distributable to
such general partner in connection with the sales described in Section
2.1(a) above) and, in consideration for such contribution, BRG Holding
Company, Inc. shall assume all of BRG's obligations and liabilities
(whether attributable to the time period prior to or after the
contribution) arising from its serving as a general partner of the BRG
Partnerships;
(c) Third, immediately following the foregoing transactions, BRG and
BRG Petroleum Corporation shall consummate the Subsidiary Transfer
described in Section 6.4; and
(d) Fourth, immediately following the foregoing transactions, the BRG
Shareholders shall sell, transfer, assign, convey and deliver to Buyer, and
Buyer shall purchase from the BRG Shareholders, the Shares, free and clear
of all Encumbrances;
It is understood and agreed that certain of the BRG Shareholders own
interests in certain of the BRG Oil and Gas Properties and such interests are
not being sold hereto but are to be retained by such BRG Shareholders (the
"Individual Shareholder Interests").
2.2 Purchase Price; Xxxxxxx Money. Upon the terms and subject to the
conditions of this Agreement and the adjustment provided for in Section 2.5
hereof, the Buyer shall pay to Sellers an aggregate of $102,000,000 (the
"Purchase Price") for the Shares, the BRG Partnership Properties and the 1997-I
Properties, to be allocated and paid as provided in Schedule 2.4 below.
Contemporaneous with Buyer's execution of this Agreement, Buyer shall pay the
sum of $1,000,000 (the "Xxxxxxx Money") to Sellers' Representative (as defined
in Section 10.4) for the benefit of Sellers. In the event the Closing occurs,
the Xxxxxxx Money shall be applied upon the Purchase Price but held and
distributed in accordance with Section 2.3, or if the Closing does not occur,
the Xxxxxxx Money shall be paid in accordance with Section 2.3. The Purchase
Price, less the Xxxxxxx Money, and as adjusted pursuant to Sections 2.4 and 2.5,
shall be payable in immediately available funds at Closing as specified by the
Sellers' Representative and shall be held and distributed by the Sellers'
Representative to the Sellers in accordance with the allocation set forth in
Schedule 2.4. Sellers agree that Buyer shall have no responsibility or liability
for the distribution of the adjusted Purchase Price by Sellers' Representative.
As further consideration, the Buyer will assume and agree to pay all of the
liabilities, obligations, indebtedness and commitments of each of the BRG
Partnerships and 1997-I Program Participants to the extent specifically included
in the Adjusted Working Capital of such BRG Partnership or 1997-I Program
Participant calculated for purposes of Section 2.5 hereof in accordance with the
allocation set forth in Schedule 2.4.
2.3 Payment of Xxxxxxx Money. Upon its receipt, the Sellers' Representative
shall deposit the Xxxxxxx Money in a segregated account (which may be interest
paying) and shall pay out and distribute it only in accordance with this Section
2.3. In the event Buyer breaches this Agreement by failing or refusing to close
the sale contemplated hereby on the Closing Date and provided that the
conditions contained in this Agreement to which the duties and obligations of
Buyer are subject as set forth in Section 8.1 shall have been fulfilled in all
material respects and not waived by Buyer, Sellers shall retain the Xxxxxxx
Money as liquidated damages in lieu of all other damages (and as Sellers' sole
remedy in such event). The parties hereby acknowledge that the extent of damages
to Sellers occasioned by such failure or refusal by Buyer would be impossible or
extremely impractical to ascertain and that the amount of the Xxxxxxx Money is a
fair and reasonable estimate of such damages under the circumstances. In the
event the Closing does not occur and the Xxxxxxx Money is not applied pursuant
to Section 2.2 or retained pursuant to the foregoing provisions of this Section
2.3, the Xxxxxxx Money shall be returned to Buyer without interest. In the event
the Closing occurs, Sellers' Representative will retain the Xxxxxxx Money in the
segregated account until such time as the Adjusted Working Capital
reconciliation contemplated by Section 2.7 has been completed and the final
Closing Adjusted Working Capital has been determined. If, as a result of such
determination, any amount is owing to Buyer, Sellers' Representative shall pay
such amount to Buyer on behalf of Sellers and shall distribute the balance of
the Xxxxxxx Money to the Sellers as appropriate.
2.4 Allocation and Adjustment of Purchase Price. The allocation of the
Purchase Price for the Shares, the BRG Partnership Properties of each BRG
Partnership and the 1997-I Properties being acquired by Buyer, from Sellers
shall be as set forth in Schedule 2.4. Sellers and Buyer agree that they will
not take any position inconsistent with such allocation in preparing all Tax
Returns and reports to Governmental Bodies. Sellers and Buyer shall duly prepare
and timely file such reports and information returns as may be required under
Section 1060 of the Code and any corresponding or comparable provisions of
applicable foreign, state and local Tax laws to report the allocation of the
Purchase Price. The Purchase Price is based on all of the Shares, the BRG
Partnership Properties owned by all BRG Partnerships and the interests of all
1997-I Program Participants in the 1997-I Properties. Should any of the BRG
Partnership Properties or the 1997-I Properties not be included in the purchase
and sale hereunder because the requisite approvals of the limited partners in
any of the BRG Partnerships or any of the 1997-I Program Participants are not
obtained and Buyer agrees in writing to waive the condition to closing set forth
in Section 8.1(f), then the Purchase Price shall be decreased by the amount of
such property not included in the purchase and sale as such amount is set forth
in Schedule 2.4.
2.5 Purchase Price Adjustments. At Closing the aggregate Purchase Price
payable to the BRG Shareholders for the Shares, to each of the BRG Partnerships
for the BRG Partnership Properties and to each of the 1997-I Program
Participants for his or her interests in the 1997-I Properties shall be adjusted
as follows:
(a) upward by the amount of the positive Adjusted Working Capital
attributable to BRG, the BRG Partnership or the 1997-I Program Participant,
as the case may be, as of the Closing Date, or downward by the amount of
the negative Adjusted Working Capital attributable to BRG, each of the BRG
Partnerships or the 1997-I Program Participant, as the case may be, as of
such date;
(b) downward by the aggregate Defect Value of all uncured Title
Defects determined in accordance with Section 6.8 below if and to the
extent that such aggregate Defect Value (as offset by the aggregate value
of any increase in the NRI of any Well/objective formation(s) listed on
Schedule 4.13 because the actual NRI of such Well/objective formation(s) is
determined to be greater than the NRI indicated therefor on Schedule 4.13)
exceeds $100,000, and upward by an amount equal to the aggregate value of
any increase in the NRI of any Well/objective formation(s) listed on
Schedule 4.13 because the actual NRI of such Well/formation(s) is
determined to be greater than the NRI indicated therefor on Schedule 4.13,
if and to the extent that such aggregate value (as offset by the aggregate
Defect Value of all uncured Title Defects determined in accordance with
Section 6.8 below) exceeds $100,000; and
(c) downward by the amount of $1.00 per Mcf to the extent of any net
gas overproduction attributable to the BRG Oil & Gas Properties, BRG
Partnership Properties of any BRG Partnership or all of the 1997-I
Properties as a group as of the Closing Date, and upward by the amount of
$1.00 per Mcf to the extent of any net gas underproduction attributable to
the BRG Oil & Gas Properties, BRG Partnership Properties of any BRG
Partnership or the 1997-I Properties, as a group, as of the Closing Date.
After taking into account the foregoing adjustments, the aggregate Purchase
Price payable to the BRG Shareholders shall then be reduced by the amount, if
any, paid or payable by BRG to the holders of outstanding options to purchase
Shares as contemplated by Section 6.5 hereof. The per share price payable for
the Shares after the adjustments provided for herein shall be determined as
follows:
(y) The aggregate Purchase Price payable for the Shares after taking
into account the adjustment provided for in the first sentence of this
Section 2.5 shall be increased by an amount equal to the total purchase
price that would be payable by the holders of all of the options referred
to in Section 6.5 upon exercise of all of the options for the total number
of Shares subject thereto.
(z) The amount determined in accordance with subparagraph (y) above
shall then be divided by an amount equal to the total number of Shares that
would be issued upon exercise of all of such options for the full number of
Shares covered thereby plus the total number of Shares that are issued and
outstanding on the Closing Date. The resulting amount shall be the per
share Purchase Price paid to the BRG Shareholders for each of the Shares
purchased pursuant to this Agreement.
2.6 Calculation of Closing Statement. On the day that is two (2) business
days prior to the date scheduled for Closing, Sellers shall furnish to Buyer a
pro forma consolidated balance sheet of BRG (provided that the subsidiaries of
BRG being sold pursuant to Section 6.4 hereof shall not be deemed part of the
BRG consolidated group and will be shown separately), balance sheets reflecting
the Adjusted Working Capital of each of the BRG Partnerships and a balance sheet
reflecting the Adjusted Working Capital of the BRG 1997-I Oil and Gas Program to
be determined for Purchase Price adjustments (each, a "Closing Balance Sheet")
at the date scheduled for Closing, certified by Sellers' Representative as
having been prepared in good faith using the best information then available. On
the day that is one business day prior to the Closing, Sellers and Buyer will
cooperatively prepare a Closing statement listing each of the Purchase Price
adjustments to be effected at the Closing pursuant hereto and the estimated
Purchase Price after such Adjustments. Such estimate, less the Xxxxxxx Money,
shall be paid by Buyer to Sellers at Closing in accordance with Section 2.2
above.
2.7 Adjusted Working Capital and Gas Balancing Reconciliation.
(a) Within the period ending ninety (90) days after the Closing Date,
Buyer shall furnish to Sellers' Representative (i) a Closing Balance Sheet
of BRG, of each of the BRG Partnerships and of the 1997-I Oil and Gas
Program, together with a calculation of the actual Adjusted Working Capital
for each determined for Purchase Price adjustments (the "Closing Adjusted
Working Capital") and (ii) a statement of the net gas overproduction or
underproduction for BRG, each of the BRG Partnerships and the 1997-I
Properties, each certified by the chief financial officer of the Buyer as
having been prepared based upon the best information reasonably available.
Sellers' Representative shall have such access to the offices, records,
files, books of account and other information of BRG and the Buyer as may
be reasonably necessary to audit and verify the information set out on the
balance sheets and gas production statements furnished by Buyer. Buyer
shall cause its and BRG's personnel to reasonably assist Sellers'
Representative in conducting such audit. Upon completion of such audit,
Sellers' Representative and Buyer shall meet and attempt to reach agreement
on the actual Adjusted Working Capital of each as of the date of such
balance sheet and as to the accuracy of the gas production statements. Any
such agreement shall be evidenced by a written memorandum of agreement
executed by Sellers' Representative and Buyer and shall be final,
conclusive and binding on the parties.
(b) If within 30 days after receipt by Sellers' Representative of the
Closing Balance Sheet or the gas production statements furnished by Buyer
pursuant to (a) above, the parties are unable to reach agreement on the
actual amount of the Adjusted Working Capital or gas overproduction or
underproduction figures, then (i) if the parties so agree, the period for
attempting to reach agreement shall be extended for an additional specified
period, or (ii) if the parties cannot or do not choose to agree on an
extension, the amount of the Adjusted Working Capital or the gas net
overproduction or underproduction shall be determined pursuant to
subsection (c) of this Section 2.7.
(c) Buyer shall submit to Sellers' Representative the names of two
national independent public accounting firms, neither of which shall have
been engaged by Sellers or the Buyer during the three-year period ending on
the Closing Date. Sellers' Representative shall select one of said firms by
written notice to Sellers within three business days after receipt of
Buyer's nomination. The independent public accounting firm selected by
Sellers' Representative (the "Accounting Firm") shall be engaged jointly by
Buyer and Sellers' Representative and shall meet with representatives of
Buyer and Sellers' Representative and his representatives and be apprised
of their respective calculations of the Closing Adjusted Working Capital
and the gas overproduction or underproduction. The Accounting Firm then
shall make such independent study as it shall deem appropriate to
determine, as nearly as possible, the actual Closing Adjusted Working
Capital or gas overproduction or underproduction. Sellers' Representative
and Buyer shall make available to the Accounting Firm all information
reasonably requested by the Accounting Firm to make such determination.
Said determination when made shall be conveyed to Sellers' Representative
and Buyer in writing and shall be final, conclusive and binding on the
parties with respect to such issue. All fees and expenses charged by the
Accounting Firm in connection with the above-described engagement and the
costs and expenses of any audit performed pursuant to subparagraph 2.7(a)
above, shall be paid by the party whose calculation of the Closing Adjusted
Working Capital or gas overproduction or underproduction originally
submitted to the Accounting Firm bears the greatest difference from the
Closing Adjusted Working Capital or gas overproduction or underproduction
determined by the Accounting Firm.
(d) Promptly after the Closing Adjusted Working Capital or net gas
overproduction or underproduction is determined by agreement of the parties
pursuant to (b) above or by the Accounting Firm pursuant to (c) above, a
revised Closing statement shall be prepared with the only changed entry
being the adjustment for Closing Adjusted Working Capital or the net gas
overproduction or underproduction, as the case may be. Promptly thereafter
the party in whose favor such changed entry is made shall be paid by the
other party the amount of the change, to the same end as if the revised
Closing statement had been the Closing statement upon which the payments at
Closing were based.
ARTICLE III
CLOSING
3.1 Closing Date. The Closing shall take place at 10:00 A.M., local time,
on June 1, 1998, or such other date as may be agreed upon by Buyer and Sellers
at the offices of BRG, 0000 Xxxxx Xxxx, Xxxxx 000, Xxxxx, Xxxxxxxx 00000, or at
such other place or at such other time as shall be agreed upon by Buyer and
Sellers. The time and date on which the Closing is actually held are sometimes
referred to herein as the "Closing Date".
3.2 Sellers' Deliveries. At the Closing, Sellers shall deliver to Buyer all
of the following:
(a) Copy of the certificate of incorporation of BRG certified as of a
recent date by the Secretary of State of the State of Oklahoma;
(b) Certificate of good standing of BRG issued as of a recent date by
the Secretary of State of the State of Oklahoma;
(c) Certificate of the secretary or an assistant secretary of BRG,
dated the Closing Date, in form and substance reasonably satisfactory to
Buyer, as to (i) no amendments to the certificate of incorporation of BRG
other than as attached and (ii) the By-laws of BRG, together with all
amendments thereto;
(d) All consents, waivers or approvals obtained by the Sellers or BRG
with respect to the consummation of the transactions contemplated by this
Agreement, including without limitation, evidence of (i) the requisite
approval of the limited partners of each of the BRG Partnerships (ii) the
requisite approval of each of the participants in the 1997-I Program, and
(iii) any required consents or waivers of preferential purchase rights
applicable to the transfer of assets by the BRG Partnerships and the 1997-I
Program Participants.
(e) The certificates contemplated by Sections 8.1(a) and 8.1(b), duly
executed by Sellers' Representative;
(f) A signed resignation by each of the directors and officers of BRG
and terminations of all powers of attorney granted by BRG;
(g) The Organizational Documents of BRG and the books of minutes of
meetings of the boards of directors, committees thereof, shareholders,
managers, management committees and other similar records of BRG certified
as true and correct by the secretary or assistant secretary of BRG;
(h) Certificates representing the Shares duly endorsed for transfer to
Buyer or with duly executed stock powers attached;
(i) The entities/persons included within the group comprising Sellers
that own interests in the BRG Partnership Properties and the 1997-I
Properties shall execute and deliver a Conveyance, Assignment and Xxxx of
Sale in substantially the form set forth in Exhibit A attached hereto and
made a part hereof in as many counterparts as may be required to convey the
beneficial ownership of such properties to BRG;
(j) The BRG Partnerships and the 1997-I Program Participants shall
deliver possession of the BRG Partnership Properties and the 1997-I
Properties, respectively, to Buyer;
(k) An executed statement described in Treasury Regulation ss.
1.1445-2(b)(2) from or on behalf of each party constituting Sellers
certifying that such party Seller is not a foreign person within the
meaning of the Code;
(l) A copy of the executed stock purchase agreement entered into by
BRG pursuant to Section 6.4; and
(m) A copy of the executed form of assignment and assumption agreement
or other instrument referred to in Section 8.1(g).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, each of the Persons that make up Sellers,
severally, but not jointly, represents and warrants to Buyer (i) if such Seller
is a BRG Shareholder, as to himself/herself/itself, BRG and his/her/its Shares,
(ii) if such Seller is a BRG Partnership, as to such partnership and such
partnership's assets , or (iii) if such Seller is a 1997-I Program Participant,
as to himself/herself/itself and its interests in the 1997-I Properties, as
follows:
4.1 Ownership of Shares; Organization and Authority.uthority
(a) Each of the BRG Shareholders is the owner, free and clear of any
lien, charge or Encumbrance, of the number of Shares set opposite his or
her name in Schedule 2.4 and each has full right and authority to transfer
the Shares to Buyer. Schedule 2.4 also reflects each holder of the
outstanding BRG Options and the amounts payable to such holder as
contemplated by Section 6.5. None of the BRG Shareholders is a party to any
option, warrant, purchase right, or other contract or commitment (other
than this Agreement) that could require him or her to sell, transfer, or
otherwise dispose of any Shares. None of the BRG Shareholders is a party to
any voting trust, proxy, or other agreement or understanding with respect
to the voting of any of the Shares. Upon the consummation of the
transaction described herein, Buyer will have good and valid title to the
Shares free and clear of all liens, charges and Encumbrances and the Shares
will be validly issued, fully paid and nonassessable.
(b) Each of the BRG Partnerships is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Oklahoma and is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business
activities or its ownership or leasing of property makes such qualification
necessary and in which the failure to qualify would not or could not
reasonably be expected to have a Material Adverse Effect. Each of the BRG
Partnerships has full power and authority to own or lease and to operate
and use its properties and to carry on its business as now conducted. True
and correct copies of each of the partnership agreements of the BRG
Partnerships, as amended to date, have been delivered to Buyer.
(c) Each of the BRG Partnerships has full power and authority to
execute, deliver and perform this Agreement and all of the Sellers
Ancillary Agreements. The execution, delivery and performance of this
Agreement and the Sellers Ancillary Agreements by the BRG Partnerships have
been duly authorized and approved by all requisite action on the part of
the BRG Partnerships, subject to the requirement that this Agreement be
approved by the limited partners of each BRG Partnership. Each Person
executing this Agreement as attorney in fact for a BRG Shareholder or a
1997-I Program Participant has the full power and authority to execute this
Agreement and any of the Sellers Ancillary Agreements on behalf of such
party. This Agreement has been duly authorized, executed and delivered by
each of Sellers and, subject to the requirement that this Agreement be
approved by the limited partners of each BRG Partnership in accordance with
the terms of its partnership agreement, is the legal, valid and binding
obligation of each of Sellers enforceable in accordance with its terms.
Each of the Sellers Ancillary Agreements has been duly authorized by each
of Sellers and upon execution and delivery by each of Sellers who is a
party thereto will be a legal, valid and binding obligation of each of
Sellers enforceable in accordance with its terms.
(d) BRG has full power and authority to execute, deliver and perform
this Agreement and all of the Sellers Ancillary Agreements as Program
Administrator and Attorney-In-Fact for the 1997-I Program Participants
under the terms of the BRG 1997-I Oil and Gas Program Agreement. This
Agreement has been duly authorized, executed and delivered by BRG as
Program Administrator and Attorney-In-Fact for the 1997-I Program
Participants and is the legal, valid and binding obligation of the 1997-I
Program Participants enforceable in accordance with its terms (subject to
normal equitable principles and subject to bankruptcy, insolvency,
fraudulent conveyance and similar laws affecting the rights of creditors),
and upon execution and delivery by BRG as Program Administrator and
Attorney-In-Fact for the 1997-I Program Participants will be a legal, valid
and binding obligation of the 1997-I Program Participants enforceable in
accordance with its terms (subject to normal equitable principles and
subject to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting the rights of creditors).
(e) BRG Holding Company, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oklahoma and
it has full power and authority to own or lease and to operate and use its
properties and to carry on its business as now conducted and to become and
serve as the substitute general partner of the BRG Partnerships. Neither
the consummation of any of the transactions contemplated hereby nor the
substitution of or service by BRG Holding Company, Inc. as a general
partner of the BRG Partnerships will conflict with, result in a breach of
the terms, conditions or provisions of, or constitute a default, an event
of default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under, or result in the creation or
imposition of any Encumbrance upon any of the assets or properties of BRG
Holding Company, Inc. under (i) the Organizational Documents of BRG Holding
Company, Inc., (ii) any note, instrument, agreement, mortgage, lease,
license, franchise, permit or other authorization, right, restriction or
obligation to which BRG Holding Company, Inc. is a party or any of its
assets or properties or by which BRG Holding Company, Inc. is bound, (iii)
any Court Order to which BRG Holding Company, Inc. is a party or any of its
assets or properties or by which it is bound, or (iv) any Requirements of
Laws affecting BRG Holding Company, Inc. or its assets or properties; or
require the approval, consent, authorization, order or act of, or the
making by BRG Holding Company, Inc. of any declaration, filing or
registration with, any Person or court.
4.2 No Conflict. Except as set forth in Schedule 4.2, neither (i) the
execution and delivery of this Agreement or any of the Sellers Ancillary
Agreements to which it is a party, (ii) the consummation of any of the
transactions contemplated hereby or thereby nor (iii) compliance with or
fulfillment of the terms, conditions and provisions hereof or thereof will:
(a) violate or conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of default
or an event creating rights of acceleration, termination or cancellation or
a loss of rights under, or result in the creation or imposition of any
Encumbrance upon any of the assets or properties of BRG, the BRG
Partnerships or the 1997-I Program Participants, under (i) the
Organizational Documents of BRG or the BRG Partnerships, (ii) any note,
instrument, mortgage, lease, license, franchise, permit or other
authorization, right, restriction, obligation or agreement to which BRG,
the BRG Partnerships or the 1997-I Program Participants is a party or any
of the respective assets or properties of BRG, the BRG Partnerships or the
1997-I Program Participants is subject or by which BRG, the BRG
Partnerships or the 1997-I Program Participants is bound, (iii) any Court
Order to which BRG, the BRG Partnerships or the 1997-I Program Participants
is a party or any of the respective assets or properties of BRG, the BRG
Partnerships or the 1997-I Program Participants is subject or by which BRG,
the BRG Partnerships or the 1997-I Program Participants is bound, or (iv)
any Requirements of Laws affecting BRG, the BRG Partnerships or the 1997-I
Program Participants or their respective assets or properties; or
(b) require the approval, consent, authorization, order or act of, or
the making by BRG, the BRG Partnerships or the 1997-I Program Participants
of any declaration, filing or registration with, any Person or court.
4.3 Organization and Capital Structure of BRG.e of BRG.
(a) BRG is a corporation duly organized, validly existing and in good
standing under the laws of the State of Oklahoma. BRG is duly qualified to
transact business as a foreign corporation and is in good standing in each
of the jurisdictions set forth in Schedule 4.3, and there are no other
jurisdictions in which the ownership or leasing of any of BRG's assets or
the conduct of its business requires such qualification, except where the
failure to be so qualified would not or could not reasonably be expected to
have a Material Adverse Effect. BRG has full corporate power and authority
to own or lease and to operate and use its properties and assets and to
carry on its business as now conducted.
(b) The authorized capital stock of BRG consists of 50,000
shares of Common Stock, par value $1.00 per share (the "Common Stock"),
of which 9,500 shares are issued and outstanding, 500 shares are issued
and held in the Company's treasury (all of which are reserved for
issuance upon the exercise of currently outstanding stock options) and
40,000 shares are unissued and not reserved for any purpose. Except for
this Agreement and as set forth in Schedule 4.3, there are no
agreements, arrangements, options, warrants, calls, rights or
commitments of any character relating to the issuance, sale, purchase
or redemption of any shares of capital stock of BRG. No holder of the
Common Stock has any preemptive, stock purchase or other rights to
acquire Common Stock. All of the outstanding shares of the Common Stock
are validly issued, fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights. The BRG Shareholders are
the record and beneficial owners of all of the issued and outstanding
shares of the Common Stock.
(c) Attached hereto as part of Schedule 4.3(c) are true and
complete copies of the certificate of incorporation and all amendments
thereto and of the By-laws, as amended to date. A true and complete
copy of the stock ledger of BRG has been delivered to Buyer prior to
the execution hereof.
4.4 Subsidiaries. Other than BRG Holding Company, Inc., BRG Production
Company, Charter Servicing Company, the BRG Partnerships and the Excluded
Assets, BRG does not own, directly or indirectly, any interest or investment in
any corporation, association, joint venture, partnership, limited liability
company or other business organization, firm or enterprise of any character
whatsoever. Charter Servicing Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has full corporate power and authority to conduct its business
as it is now being conducted and to own, operate or lease the properties and
assets it currently owns, operates or holds under lease. Charter Servicing
Company is duly qualified to do business and is in good standing in each
jurisdiction where the character of its business or the nature of its properties
makes such qualification necessary and in which the failure to qualify would
have a Material Adverse Effect. All of the outstanding shares of capital stock
or similar equity interests of Charter Servicing Company are validly issued, are
fully paid and nonassessable, and are owned by BRG free and clear of any
Encumbrance. Charter Servicing Company is not a party to, or otherwise subject
to any legal restriction or any agreement (other than this Agreement and
customary limitations imposed by corporate law statutes) restricting the ability
of such entity to pay dividends out of profits or make any other similar
distributions of profits to BRG.
4.5 Financial Statements. Attached as Schedule 4.5 are the following
financial statements of BRG and the BRG Partnerships (collectively the
"Financial Statements"): (i) the audited consolidated financial statements for
the year ended December 31, 1996, and (ii) the unaudited consolidated financial
statements for the year ended December 31, 1997. The Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby (except, in the
case of (ii), for normally recurring audit adjustments) and present fairly the
financial condition as of such dates and the results of operations for such
periods.
4.6 Absence of Material Adverse Effect. Except as disclosed in Schedule 4.6
or as contemplated by this Agreement, since December 31, 1997:
(a) To the knowledge of BRG, there has been no Material Adverse
Effect;
(b) Each of BRG, the BRG Partnerships and the 1997-I Program
Participants has conducted its business in the ordinary course and in
conformity with past practice; and
(c) Each of BRG, the BRG Partnerships and the 1997-I Program
Participants has not (i) discharged or satisfied any Encumbrance or
paid any obligation or liability, absolute or contingent, other than
current liabilities incurred and paid in the ordinary course of
business and consistent with past practices;
(d) Except for Permitted Encumbrances, each of BRG, the BRG
Partnerships and the 1997-I Program Participants has not suffered or
permitted any Encumbrance to arise or be granted or created against or
upon any of its assets;
(e) None of BRG or any of the BRG Partnerships has amended its
Organizational Documents;
(f) None of BRG, any of the BRG Partnerships or the 1997-I
Program Participants has agreed, whether in writing or otherwise, to
do any of the foregoing.
4.7 Compliance with Agreements.reements
(a) None of BRG, any of the BRG Partnerships or the 1997-I
Program Participants is in violation of, or in default in any material
respect under, and no event has occurred that (with notice or the
lapse of time or both) would constitute a violation of or default
under, (i) its Organizational Documents, as applicable, or (ii) any
agreement, except for any violation or default that would not or could
not reasonably be expected to, individually or in the aggregate, have
a Material Adverse Effect.
(b) Set forth in Schedule 4.7 hereto are the following agreements
to which BRG or Charter Servicing Company are subject or to which
their respective properties or the BRG Partnership Properties or the
1997-I Program Properties are bound: (i) all employment or consulting
contracts; (ii) all capital redemption or purchase agreements; (iii)
all agreements providing for the indemnification of others against any
liabilities or the sharing of the tax liability of others (except for
such obligations incurred in the ordinary course of business as an
operator of oil and gas properties under service, drilling or other
similar agreements); (iv) all license agreements (as licensor or
licensee); (v) all material operating agreements; (vi) all production
sales or purchase contracts that are not terminable without penalty on
30 days notice or less; (vii) all material transportation and gas
balancing agreements; (viii) all agreements for the purchase of any
commodity, material or equipment except purchase orders in the
ordinary course of business consistent with past practice; (ix) all
other agreements creating any obligations that require aggregate
future payments in excess of $100,000 by (a) BRG, (b) Charter
Servicing Company, (c) the BRG Partnerships with respect to the BRG
Partnership Properties, or (d) the 1997-I Program Participants with
respect to the 1997-I Properties; (x) all agreements containing
covenants limiting or restricting the freedom of BRG, the BRG
Partnerships or their respective affiliates to compete in any line of
business or territory or with any person or entity; (xi) area of
mutual interest agreements, (xii) all agreements for capital
expenditures or the acquisition or construction of fixed assets that
requires aggregate future payments in excess of $100,000, (xiii) all
agreements for or that contemplate the sale of any of the BRG
Properties, the BRG Partnership Properties or the 1997-I Properties,
and (xiv) all indentures, mortgages, promissory notes, loan
agreements, guaranties or other agreements or commitments for the
borrowing of money or any related security agreements. Except as set
forth in Schedule 4.7 hereof, none of the contracts described in such
schedule have been amended or modified except as set forth in Schedule
4.7. BRG has no knowledge of any notice or threat of or basis for the
termination, expiration or modification of any contract described in
Schedule 4.7 within one year from the date hereof, which termination,
expiration or modification would have a Material Adverse Effect. Buyer
has been provided with access to true and complete copies of each
contract, agreement and instrument listed in Schedule 4.7.
4.8 Taxes.
(a) Except as set forth in Schedule 4.8, (i) all Tax Returns of or
with respect to any Tax which are required to be filed on or before the
Closing Date by or with respect to BRG or any BRG Partnership or the
business operations of BRG or any BRG Partnership have been or will be duly
and timely filed, (ii) all items of income, gain, loss, deduction and
credit or other items required to be included in each such Tax Return have
been or will be so included and all information provided in each such Tax
Return is true, correct and complete, (iii) all Taxes which have become or
will become due with respect to the period covered by each such Tax Return
have been or will be timely paid in full, (iv) all withholding Tax
requirements imposed on or with respect to BRG or any BRG Partnership have
been or will be satisfied in full in all respects, and (v) no penalty,
interest or other charge is or will become due with respect to the late
filing of any such Tax Return or late payment of any such Tax.
(b) There is no claim against BRG or any BRG Partnership for any
Taxes, and no assessment, deficiency or adjustment has been asserted or
proposed with respect to any Tax Return of or with respect to BRG or any
BRG Partnership.
(c) Except as set forth in Schedule 4.8, there is not in force any
extension of time with respect to the due date for the filing of any Tax
Return of or with respect to BRG or any BRG Partnership or any waiver or
agreement for any extension of time for the assessment or payment of any
Tax of or with respect to BRG or any BRG Partnership.
(d) The total amounts set up as liabilities for current and deferred
Taxes in the December 31, 1997 Balance Sheet are sufficient to cover the
payment of all Taxes, whether or not assessed or disputed, which are, or
are hereafter found to be, or to have been, due by or with respect to BRG,
its subsidiaries and their business up to and through the periods covered
thereby.
(e) None of BRG or any BRG Partnership is a party to any Tax
allocation or sharing agreement and no payments are due or will become due
by BRG or any BRG Partnership pursuant to any such agreement or
arrangement.
(f) Except as set forth in Schedule 4.8, none of the property of BRG
(other than its interests in the BRG Partnerships and the 1997-I
Properties) or any BRG Partnership is held in an arrangement that could be
classified as a partnership for Tax purposes.
(g) Except as set forth in Schedule 4.8, neither BRG nor any BRG
Partnership will be required to include any amount in income for any
taxable period beginning after or including the Closing Date as a result of
a change in accounting method for any taxable period ending on or before
the Closing Date or pursuant to any agreement with any Tax authority with
respect to any such taxable period.
(h) BRG has not consented to have the provisions of section 341(f)(2)
of the Code apply with respect to a sale of its stock.
4.9 Governmental Permits.
(a) Except as set forth on Schedule 4.9, each of BRG, the BRG
Partnerships and the 1997-I Program Participants owns, holds or possesses
all material licenses, franchises, permits, privileges, immunities,
concessions, approvals and other authorizations from all Governmental
Bodies which are necessary to entitle it to own or lease, operate and use
its assets and to carry on and conduct its business as currently conducted
(herein collectively called "Governmental Permits").
(b) Each of BRG, the BRG Partnerships and the 1997-I Program
Participants has fulfilled and performed their respective obligations under
each of the
Governmental Permits, and no event has occurred or condition or state of
facts exists which constitutes or, after notice or lapse of time or both,
would constitute a breach or default under any such Governmental Permit or
which permits or, after notice or lapse of time or both, would permit
revocation or termination of any such Governmental Permit, and which would
or reasonably could be expected to have a Material Adverse Effect.
4.10 No Default. There is no uncorrected event of default by BRG or the BRG
Partnerships under the terms of their Organizational Documents. In addition,
there is no uncorrected event of default or breach by BRG, the BRG Partnerships
or the 1997-I Program Participants or, to Sellers' knowledge, by any other party
which has occurred under the terms of any contract, agreement, document, lease,
commitment, license, franchise, permit, authorization, concession, order, law,
rule or regulation, which violation could reasonably be expected to have a
Material Adverse Effect, and no event has occurred that is, or which with notice
or lapse of time or both would constitute, such a default under any such
contract, agreement, documents, lease, commitment, license, franchise, permit,
authorization, concession, order, law, rule or regulation.
4.11 Environmental Matters. Except as set forth in Schedule 4.11:
(a) Each of BRG and the BRG Partnerships has conducted its business
and operated its assets, and is conducting its business and operating its
assets, in material compliance with all Environmental Laws and the BRG
Properties, the BRG Partnership Properties and the 1997-I Properties are in
material compliance with all applicable Environmental Laws;
(b) Each of BRG and the BRG Partnerships has not been notified by any
Governmental Body that any of the operations or assets of BRG or the BRG
Partnerships is the subject of any investigation or inquiry by any
Governmental Body evaluating whether any remedial action is needed to
respond to a release of any Contaminant or to the improper storage or
disposal (including storage or disposal at offsite locations) of any
Contaminant;
(c) Neither BRG, the BRG Partnerships nor any other Person has filed
any notice under any federal, state or local law indicating that (i) BRG,
any of the BRG Partnerships or any of the 1997-I Program Participants is
responsible for the improper release into the environment, or the improper
storage or disposal, of any Hazardous Material, or (ii) any Contaminant is
improperly stored or disposed of upon any BRG Property, BRG Partnership
Property or 1997-I Property;
(d) None of BRG, any of the BRG Partnerships nor any of the 1997-I
Program Participants has any material contingent liability in connection
with (i) the release into the environment at or on (x) any property now or
previously owned or leased by BRG, or any BRG Partnerships or (y) any
1997-I Program Property, or (ii) the storage or disposal of, any
Contaminant;
(e) Neither BRG nor the BRG Partnerships has received any claim,
complaint, notice, inquiry or request for information which remains
unresolved as of the date hereof with respect to any alleged material
violation of any Environmental Law or regarding potential liability under
any Environmental Law relating to operations or conditions of any
facilities or property owned, leased or operated by BRG, the BRG
Partnerships or the 1997-I Program Participants (to the extent of their
interests in the 1997-I Properties);
(f) No property now or previously owned, leased or operated by BRG ,
the BRG Partnerships or the 1997-I Program Participants (to the extent of
their interests in the 1997-I Properties) is listed on the National
Priorities List pursuant to CERCLA or on any other federal or state list as
sites requiring investigation or cleanup;
(g) Neither BRG nor the BRG Partnerships is directly transporting, has
directly transported, is directly arranging for the transportation of, or
has directly transported, any Contaminant to any location which is listed
on the National Priorities List pursuant to CERCLA or on any similar
federal or state list or which is the subject of federal, state or local
enforcement actions or other investigations that may lead to material
claims against such company for remedial work, damage to natural resources
or personal injury, including claims under CERCLA; and
(h) There are no sites, locations or operations at which either BRG or
the BRG Partnerships is currently undertaking, or has completed, any
remedial or response action relating to any such disposal or release, as
required by Environmental Laws.
4.12 Books and Records. To BRG's knowledge, all books, records and files of
BRG, the BRG Partnerships and the BRG 1997-I Oil and Gas Program (including
those pertaining to the BRG Oil and Gas Properties, the BRG Partnership
Properties, the 1997-I Properties, xxxxx and other assets, those pertaining to
the production, gathering, transportation and sale of Hydrocarbons, and
corporate, accounting and financial records) (a) have been prepared, assembled
and maintained in accordance with usual and customary policies and procedures
and (b) fairly and accurately reflect the ownership, use, enjoyment and
operation of BRG and the BRG Partnerships of their respective assets and the
1997-I Program Participants of the 1997-I Properties.
4.13 Oil and Gas Properties
(a) Each of BRG, and the BRG Partnerships and the 1997-I Program
Participants has Good and Defensible Title to its respective interests in
the BRG Oil and Gas Properties, the BRG Partnership Properties and the
1997-I Properties. None of the reserve or financial information relating to
the transactions described herein and provided to Buyer cover the
Individual Shareholder Interests.
(b) Each of BRG and the BRG Partnerships and the 1997-I Program
Participants has complied in all material respects with the terms of its
Leases and other agreements relating to the BRG Oil and Gas Properties, the
BRG Partnership Properties and the 1997-I Properties, and no claim adverse
to the rights of BRG or the BRG Partnerships and the 1997-I Program
Participants as lessee or assignee under any of such Leases or questioning
their respective rights to the continued possession of the lands subject to
the Leases has been asserted by any party.
4.14 Compliance with Requirements of Laws. Except as listed or referred to
in Schedule 4.14, and except as to matters not having a Material Adverse Effect,
to BRG's knowledge, BRG, the BRG Partnerships and the 1997-I Program
Participants and their respective properties are in compliance with all
applicable Requirements of Laws.
4.15 Payments. Except as set forth in Schedule 4.15, all accrued rentals,
royalties, operating costs and expenses and other costs and expenses which are
due from or are the responsibility of owners of the BRG Properties, the BRG
Partnership Properties or the 1997-I Properties, as the case may be, have been
timely paid, or if not paid, are being contested in good faith in the normal
course of business under circumstances where adequate reserves have been
established therefor and reflected in all appropriate financial statements.
Schedule 4.15 lists all outstanding payments or obligations exceeding the sum of
$1,000 which are being contested by BRG, the BRG Partnerships or the 1997-I
Program Participants.
4.16 Benefit Plans.
(a) Schedule 4.16(a) provides a description of each of the following
which is sponsored, maintained or contributed to by BRG for the benefit of
the employees of BRG, or has been so sponsored, maintained or contributed
to within six years prior to the Closing Date:
(i) each "employee benefit plan," as such term is defined in
Section 3(3) of ERISA (including, but not limited to, employee benefit
plans, such as foreign plans, which are not subject to the provisions
of ERISA) ("Benefit Plan");
(ii) each personnel policy, stock option plan, collective
bargaining agreement, bonus plan or arrangement, incentive award plan
or arrangement, vacation policy, severance pay plan, policy, or
agreement, deferred compensation agreement or arrangement, executive
compensation or supplemental income arrangement, consulting agreement,
employment agreement, and each other employee benefit plan, agreement,
arrangement, program, practice, or understanding which is not
described in Section 4.16(a)(i) ("Benefit Program or Agreement").
(b) True, correct, and complete copies of each of the Benefit Plans,
and related trusts, if applicable, including all amendments thereto, have
been furnished or made available to Buyer. There has also been furnished or
made available to Buyer, with respect to each Benefit Plan required to file
such report and description, the most recent report on Form 5500 and the
summary plan description. True, correct, and complete copies or
descriptions of all Benefit Programs and Agreements have also been
furnished or made available to Buyer.
(c) Except as otherwise set forth on Schedule 4.16(c),
(i) BRG does not contribute to or have an obligation to
contribute to, and has not at any time within six years prior to the
Closing Date contributed to or had an obligation to contribute to, a
multiemployer plan within the meaning of Section 3(37) of ERISA;
(ii) All reports and disclosures relating to the Benefit Plans
required to be filed with or furnished to governmental agencies,
Benefit Plan participants or Benefit Plan beneficiaries have been
filed or furnished in accordance with applicable law in a timely
manner, and each Benefit Plan and each Benefit Program or Agreement
has been administered in substantial compliance with its governing
documents;
(iii) Each of the Benefit Plans intended to be qualified under
Section 401 of the Code, (A) satisfies in form and operation the
requirements of such Section except to the extent amendments are not
required by law to be made until a date after the Closing Date, (B)
has received a favorable determination letter from the Internal
Revenue Service regarding such qualified status, (C) has not, since
receipt of the most recent favorable determination letter, been
amended, and (D) has not been operated in a way that would adversely
affect its qualified status;
(iv) No Benefit Plan subject to Title IV of ERISA is sponsored,
maintained or contributed to or has been sponsored, maintained or
contributed to within six years prior to the Closing Date by BRG or
any corporation, trade business or entity under common control with
BRG, within the meaning of Section 414(b), (c) or (m) of the Code or
Section 4001 of ERISA;
(v) As to any Benefit Plan intended to be qualified under Section
401 of the Code, there has been no termination or partial termination
of the Benefit Plan within the meaning of Section 411(d)(3) of the
Code;
(vi) No act, omission or transaction has occurred which would
result in imposition on BRG of (A) breach of fiduciary duty liability
damages under Section 409 of ERISA, (B) a civil penalty assessed
pursuant to subsections (c), (i) or (l) of Section 502 of ERISA, or
(C) a tax imposed pursuant to Chapter 43 of Subtitle D of the Code;
(vii) No Benefit Plan is or has been funded by BRG through a trust
which is intended to be exempt from federal income taxation pursuant
to Section 501(c)(9) of the Code;
(d) Except as otherwise set forth in Schedule 7.9, BRG is not a party
to any agreement, nor has it established any policy or practice, requiring
it to make a payment or provide any other form of compensation or benefit
to any person performing services for BRG upon termination of such services
which would not be payable or provided in the absence of the consummation
of the transactions contemplated by this Agreement.
(e) Each Benefit Plan which is an "employee welfare benefit plan," as
such term is defined in Section 3(1) of ERISA, may be unilaterally amended
or terminated in its entirety without liability except as to benefits
accrued thereunder prior to such amendment or termination.
4.17 Litigation. Except as set forth in Schedule 4.17, there is no
judgment, order, decree, injunction or award, or claim, suit, action or
administrative, arbitration or other proceeding (including but not limited to
bankruptcy proceedings) or any kind of investigation pending or, to BRG's
knowledge, threatened against or relating to BRG, the BRG Partnerships, the BRG
Properties, the BRG Partnership Properties or the 1997-I Properties which seeks
injunctive or other equitable relief or which reasonably may be expected to have
a Material Adverse Effect, and none of BRG, the BRG Partnerships, any of their
present directors, officers or employees, or, to the knowledge of BRG, any of
their former directors, officers or employees or the 1997-I Program Participants
has received or been advised of any unsatisfied request for information, notice,
administrative inquiry or claim that could reasonably be expected to result in
such judgment, order, decree, injunction, award, claim, suit, action or
proceeding.
4.18 Insurance. Schedule 4.18 sets forth a true and correct description of
the insurance policies maintained by BRG and the BRG Partnerships (the
"Insurance Policies"), including the amounts and type of coverage, applicable
deductibles and any material exclusions thereto. No notice of cancellation or
termination has been given to BRG or the BRG Partnerships by an insurer and none
of BRG and the BRG Partnerships have any reason to believe that any insurer is
contesting or intends to contest the validity, enforceability or collectibility
of any of the Insurance Policies or intends to deny coverage thereunder. All
premiums required to be paid have been paid in full through the Closing Date. No
claims have been made against BRG or the BRG Partnerships with respect to the
types of loss or damage covered by any of the Insurance Policies in excess of
coverage under such policies or in excess of adequate reserves established
therefor and reflected on the proper financial statements.
4.19 Gas Imbalances. Schedule 4.19 sets forth (a) imbalances for
overproduction and underproduction of Hydrocarbons from the BRG Oil and Gas
Properties, the BRG Partnership Properties and the 1997-I Properties as of the
dates shown on such Schedule 4.19, or as a result of the sale or transportation
of Hydrocarbons by BRG, the 1997-I Program Participants or the BRG Partnerships
or the pipeline operations of Charter Servicing Company, and (b) obligations of
BRG, the 1997-I Program Participants and the BRG Partnerships as of the dates
shown on such Schedule 4.19, for the delivery of Hydrocarbons attributable to
the BRG Oil and Gas Properties, the BRG Partnership Properties and the 1997-I
Properties in the future on account of prepayment, advance payment, take-or-pay
or similar obligations without then or thereafter being entitled to receive full
value therefor.
4.20 Public Utility Holding Company Act. Neither BRG nor any subsidiary of
BRG is subject to regulation under the Public Utility Holding Company Act of
1935, as amended, and the rules and regulations thereunder.
4.21 Investment Company Act.panNeither BRG nor any of Sellers is an
"investment company" or a company "controlled" by an "investment company," in
each case within the meaning of the Investment Company Act of 1940, as amended.
4.22 Xxxxx. During any period operated by BRG, and to the knowledge of BRG,
during other periods (a) all of the xxxxx in which BRG, the BRG Partnerships and
the 1997-I Program Participants have an interest have been drilled and completed
within the boundaries of the Leases or Units relating to such xxxxx or within
the limits otherwise permitted by contract, pooling or unitization agreement and
by applicable law and (b) all such xxxxx have been produced in compliance with
allowables allocated thereto by the applicable governmental authority, except
for such violations that would not or could not reasonably be expected to have a
Material Adverse Effect.
4.23 Condition of Equipment. To the knowledge of BRG, all xxxxx, platforms,
facilities, equipment, machinery and personal property owned or leased by BRG,
the BRG Partnerships and the 1997-I Program Participants (a) are in an operable
state of repair, subject to ordinary wear and tear, so as to be adequate for
normal operations in accordance with standard industry practice, and to comply
with the requirements of all applicable contracts, and (b) meet and comply with
all Requirements of Law, in each case except where any such failure to be in
good repair or comply with Requirements of Law would not or could not reasonably
be expected to have a Material Adverse Effect. NOTWITHSTANDING THE FOREGOING,
BUYER UNDERSTANDS AND AGREES THAT THE CONVEYANCE OF THE PERSONAL PROPERTY
REFERRED TO HEREIN AT THE CLOSING SHALL BE MADE ON AN "AS IS, WHERE IS" BASIS,
WITHOUT ANY WARRANTIES AS TO THE CONDITION OF THE PERSONAL PROPERTY INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
4.24 Evaluation Data. BRG, the BRG Partnerships, and the 1997-I Program
Participants own or have the right to use without any limitations or
restrictions adversely affecting the use of the same in the ordinary conduct of
its business, all material technology, processes, maps, seismic records, shot
points, field notes, interpretations and programs, all seismic, geological and
geophysical information and libraries, and other proprietary information
relating to the BRG Properties, the BRG Partnership Properties and the 1997-I
Properties (collectively, "Evaluation Data"), and this Agreement has not altered
or impaired, nor will alter or impair, any such rights or has breached, or will
breach, any agreements with third party vendors or has required, or may require
(whether in Sellers' or BRG's opinion or a third party vendor's opinion),
payments of additional sums thereto, or has required, or may require (whether in
BRG's opinion or a third party vendor's opinion), the return of any records or
information, except in each case as would not or could not reasonably be
expected to have a Material Adverse Effect. No person has any right to use or
obtain access to any of the Evaluation Data, and no person has overtly
challenged or questioned the validity or effectiveness of any license or
agreement relating to the same or the right of BRG, the BRG Partnerships or the
1997-I Program Participants, as applicable, to use the same, except for such
challenges or questions that could not reasonably be expected to have a Material
Adverse Effect.
4.25 Interaffiliate Transactions and Relationships. Except as set forth in
Schedule 4.25, BRG is not a party to and none of the BRG Properties, BRG
Partnership Properties or the 1997-I Program Properties is subject to any
agreement with any of Sellers, or BRG Holding Company or BRG Production Company
that survive the Closing.
4.26 Well Status. Except as set forth in Schedule 4.26, there are no xxxxx
located on the Leases or included in the BRG Properties, the BRG Partnership
Properties or the 1997-I Properties:
(i) that any of BRG, the BRG Partnerships or the 1997-I Program
Participants is currently obligated by law or contract to plug and abandon
or will be obligated by law or contract to plug and abandon with the lapse
of time or notice or both because the xxxxx are not currently capable of
producing in commercial quantities;
(ii) are subject to exceptions to a requirement to plug and abandon
issued by a regulatory authority having jurisdiction over the BRG
Properties, the BRG Partnership Properties or the 1997-I Properties; or
(iii) to the knowledge of BRG, have been plugged and abandoned but
have not been plugged or reclaimed in accordance with all applicable
requirements of each regulatory authority having jurisdiction over such
properties.
4.27 Section 29 Status of Certain Properties. (a) Each Well listed in
Schedule 4.27 (a "Section 29 Well") (i) was drilled and fully completed as a
well capable of producing from the formation(s) specified on such schedule after
December 31, 1979 and prior to January 1, 1993, and (ii) produces gas that is a
"qualified fuel" under section 29(c) of the Code and that qualifies for the
maximum production tax credit under section 29(a) of the Code and is not subject
to any limitation under section 29(b) of the Code; (b) no property (as such term
is used in section 29(d)(4) of the Code) included in the properties listed on
Schedule 4.27 produced gas in marketable quantities from Devonian shale, coal
seams, geopressurized brine or tight formation(s) prior to January 1, 1980; and
(c) the Section 29 Xxxxx are perforated only in the formation(s) specified on
such schedule and the gas produced from each Section 29 Well is not commingled
with any gas that is not produced from such formation(s).
4.28 Liabilities; Indebtedness. Except for liabilities incurred in the
ordinary course of business and not material individually or in the aggregate to
BRG and the BRG Partnerships on a consolidated basis, none of BRG, its
subsidiaries or the BRG Partnerships (with respect to the BRG Partnership
Properties) have any material (individually or in the aggregate) liabilities,
direct or contingent except as provided for the Financial Statements or
disclosed in Schedule 4.28 or any of the other Schedules hereto.
4.29 No Material Misstatements or Omissions. Neither this Agreement nor any
certificates or documents made or delivered in connection herewith contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein not misleading, in view of the
circumstances in which they were made. To the knowledge of BRG, there is no fact
or information relating to the business, prospects, condition (financial or
otherwise), affairs, operations, or assets of BRG that has not been disclosed to
Buyer in writing by Sellers' Representative which could result in a Material
Adverse Effect.
4.30 Bankruptcy. There is no bankruptcy, reorganization or arrangement
proceedings pending, being contemplated by or, to the knowledge of Sellers,
threatened against any of Sellers or their respective affiliates.
4.31 Representations Apply to Subsidiaries of BRG. The representations and
warranties contained in this Article IV to the extent applicable to BRG or its
assets shall also be deemed to cover and extend to Charter Servicing Company and
its assets in all respects.
4.32 Allocation of Purchase Price. The allocation of the Purchase Price
with respect to each of the BRG Partnerships and to the BRG 1997-I Oil and Gas
Program has been independently made by BRG and has been made (i) in accordance
with the partnership agreements of the BRG Partnerships and the program
agreement of the BRG 1997-I Oil and Gas Program, and (ii) in full satisfaction
of BRG's fiduciary responsibilities and duties to the limited partners of the
BRG Partnerships and the 1997-I Program Participants.
4.33 BRG 1997-I Oil and Gas Program Funds. All monies in program funds
relating to the BRG 1997-I Oil and Gas Program have been expended and no further
drilling obligations by BRG as program administrator, exist or are continuing
under the BRG 1997-I Oil and Gas Program
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Sellers to enter into this Agreement and to consummate
the transactions contemplated hereby, Buyer hereby represents and warrants to
Sellers and agrees as follows:
5.1 Organization of Buyer. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified to do business and is in good standing in each jurisdiction in
which the nature of its business activities or its ownership or leasing of
property makes such qualification necessary. Buyer has full corporate power and
authority to own or lease and to operate and use its properties and assets and
to carry on its business as now conducted.
5.2 Authority of Buyer. Buyer has full power and authority to execute,
deliver and perform this Agreement and all of the Buyer Ancillary Agreements.
The execution, delivery and performance of this Agreement and the Buyer
Ancillary Agreements by Buyer have been duly authorized and approved by Buyer's
board of directors and do not require any further authorization or consent of
Buyer or its stockholders. This Agreement has been duly authorized, executed and
delivered by Buyer and is the legal, valid and binding agreement of Buyer
enforceable in accordance with its terms, and each of the Buyer Ancillary
Agreements has been duly authorized by Buyer and upon execution and delivery by
Buyer will be a legal, valid and binding obligation of Buyer enforceable in
accordance with its terms.
5.3 No Conflict. Neither the execution and delivery of this Agreement or
any of the Buyer Ancillary Agreements or the consummation of any of the
transactions contemplated hereby or thereby nor compliance with or fulfillment
of the terms, conditions and provisions hereof or thereof will:
(a) violate or conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of default
or an event creating rights of acceleration, termination or cancellation or
a loss of rights under (i) the certificate or articles of incorporation or
By-laws of Buyer, (ii) any material note, instrument, agreement, mortgage,
lease, license, franchise, permit or other authorization, right,
restriction obligation or agreement to which Buyer is a party or any of its
properties is subject or by which Buyer is bound, (iii) any Court Order to
which Buyer is a party or by which it is bound or (iv) any Requirements of
Laws affecting Buyer; or
(b) require the approval, consent, authorization or act of, or the
making by Buyer of any declaration, filing or registration with, any Person
or court.
5.4 No Finder. None of Buyer, any of its Affiliates nor any Person acting
on behalf of any of them has paid or become obligated to pay any fee or
commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement.
5.5 Investment Representation. The Shares, the BRG Partnership Properties
and the 1997-I Properties are being acquired by Buyer for its own account for
investment purposes only, and not with a view to the sale or distribution of any
part thereof.
5.6 Financial Ability. Buyer has sufficient cash, commitments from
responsible lending institutions, available lines of credit or such other
sources of immediately available cash, to enable it to deliver the Purchase
Price (less the Xxxxxxx Money) at the Closing.
ARTICLE VI
ACTIONS PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Closing Date:
6.1 Investigation of the Company by Buyer. Sellers shall afford to the
officers, employees and authorized representatives of Buyer (including its
independent public accountants and attorneys) complete access during normal
business hours to the offices, properties, employees, books, contracts,
documents and business and financial records of BRG and the BRG Partnerships
(and the 1997-I Program Participants to the extent relating to the 1997-I
Properties) to the extent Buyer shall deem necessary or desirable and shall
furnish to Buyer or its authorized representatives such additional information,
including an opportunity to discuss such information with senior management,
concerning the assets, business and the operations of BRG and the BRG
Partnerships (and the 1997-I Program Participants to the extent relating to the
1997-I Properties) as shall be reasonably requested, including all such
information as shall be necessary to enable Buyer or its representatives to
verify the accuracy of the representations and warranties contained in this
Agreement, to verify that the covenants of Sellers contained in this Agreement
have been complied with, to determine whether the conditions set forth herein
have been satisfied or to satisfy due diligence requirements of Buyer's lender,
if any, or as may otherwise be necessary to enable Buyer to obtain financing.
Without limiting the foregoing, Buyer shall have the right to conduct an
environmental audit of the BRG Properties, the BRG Partnership Properties and
the 1997-I Properties. Buyer agrees that all such investigations shall be
conducted in such a manner as not to interfere unreasonably with the operations
of BRG or the BRG Partnerships. All inspections pursuant to this Section 6.1
shall be at Buyer's sole risk, cost and expense and Buyer agrees to comply with
the rules, regulations and instructions issued by Sellers and other operators
regarding the actions of Buyer while upon, entering or leaving the property of
BRG and the BRG Partnerships.
6.2 Preserve Accuracy of Representations and Warranties. Each of the
parties hereto shall refrain from taking any action which would render any
representation or warranty contained in Article IV or V of this Agreement
inaccurate as of the Closing Date. Each party shall promptly notify the other of
any action, suit, claim, investigation or proceeding that shall be instituted or
threatened against such party to restrain, prohibit or otherwise challenge the
legality of any transaction contemplated by this Agreement. Sellers shall
promptly notify Buyer of any lawsuit, claim, proceeding or investigation that
may be threatened, brought, asserted or commenced against BRG or the BRG
Partnerships or affecting the BRG Properties, the BRG Partnership Properties or
the 1997-I Properties.
6.3 Consents to Third Parties; Governmental Approvals. During the period
prior to the Closing Date, Sellers and Buyer shall act diligently and
reasonably, and shall cooperate with each other, in making any required filing
or notification and in securing any consents, approvals and waivers of any
Governmental Body or any third Persons required to be obtained in order to
permit the consummation of the transactions contemplated by this Agreement.
Sellers' Representative shall use its reasonable efforts to obtain the consents
and approvals to the applicable transactions contemplated hereby from all of the
limited partners of the BRG Partnerships and all of the 1997-I Program
Participants. Sellers' Representative shall consult with Buyer regarding the
form and substance of requests for consents, waivers and approvals.
6.4 Excluded Assets. Prior to the Closing, BRG shall contribute to BRG
Holding Company, Inc. the Excluded Assets specifically set forth in Schedule 6.4
and BRG Holding Company, Inc. shall assume all liabilities associated with such
Excluded Assets, whether attributable to the time period prior to or after such
contribution. It is understood and acknowledged that BRG and BRG Petroleum
Corporation have entered into, or will enter into, a stock purchase agreement
reasonably acceptable in form and substance to Buyer, pursuant to which, at the
time specified in Section 2.1 hereof, BRG Petroleum Corporation will purchase
from BRG all of the outstanding capital stock of BRG Holding Company, Inc. and
BRG Production Company for an aggregate purchase price of $2,472,000 and the
indemnification of BRG, its affiliates, shareholders, officers, directors,
employees and agents for all liabilities associated with the ownership of BRG
Holding Company, Inc. or BRG Production Company or the assets or operations of
such companies (the "Subsidiary Transfer"). Also, the Principal Sellers will
guarantee unto BRG (and each indemnified party above mentioned) the performance
and payment of all obligations of BRG Petroleum Corporation under the terms of
such stock purchase agreement. In addition, prior to the Closing, BRG Holding
Company, Inc. shall be substituted for, to the extent reasonably possible, as
program administrator of the 1997-I Oil and Gas Program with respect to the
1997-I Program Participants. To the extent BRG Holding Company, Inc. is not
substituted as program administrator of the 1997-I Oil and Gas Program, at
Buyer's request prior to the Closing, it shall contract with BRG to perform all
of the services required of the program administrator. BRG Holding Company, Inc.
shall indemnify BRG, its affiliates, shareholders, officers, directors,
employees and agents and hold it harmless from any liability, loss, cost,
expenses or damages BRG may incur or suffer after Closing as a current or former
general partner of any of the BRG Partnerships or as program administrator of
the 1997-I Oil and Gas Program (whether such liability, loss, cost, expenses or
damages relate to periods of time prior to or after the Closing Date). Buyer and
the BRG Shareholders specifically acknowledge and consent to such transfer and
assignment of assets and the proposed sale of BRG Holding Company, Inc. and BRG
Production Company to BRG Petroleum Corporation.
6.5 BRG Options. On the Closing Date, each outstanding employee stock
option to purchase shares of the capital stock of BRG (a "BRG Option") shall be
converted into the right to receive a cash amount equal to (i) the product of
the number of the shares which are issuable upon exercise of such BRG Option in
full, multiplied by the Purchase Price per Share as set forth on Schedule 2.4
after taking into account the adjustments provided for in Section 2.5 above,
less (ii) the aggregate exercise price of such BRG Option. BRG shall take all
necessary action prior to the Closing Date to facilitate the conversion and
payment in consideration for the BRG Options described in this Section 6.5,
including without limitation, the agreement and consent from each holder of a
BRG Option agreeing to exchange his or her BRG Options at the Closing Date for
the cash payment set forth above. BRG shall withhold all income or other taxes
as required under applicable law prior to distribution of the cash amount
received under this Section 6.5 to the holders of BRG Options.
6.6 Covenants Regarding Employee Benefit Plan and Employees. BRG shall:
(a) not adopt, amend (other than amendments that reduce the amounts
payable by BRG, or amendments required by law to preserve the qualified
status of a Benefit Plan) or assume an obligation to contribute to any
Benefit Plan or collective bargaining agreement or enter into any
employment, severance or similar contract with any person (including
without limitation, contracts with management of BRG that might require
that payments be made upon the consummation of the transactions
contemplated hereby) or amend any such existing contracts to increase any
amounts payable thereunder or benefits provided thereunder;
(b) not grant any increase in compensation or pay any bonus to any
employees except for bonuses or other payments to employees which result in
corresponding adjustments to the Adjusted Working Capital of BRG at the
Closing Date;
(c) not (i) engage in any transaction (either acting alone or in
conjunction with Seller, any Benefit Plan or trust created thereunder) in
connection with which BRG could be subjected (directly or indirectly) to
either breach of fiduciary duty liability damages under Section 409 of
ERISA, a civil penalty assessed pursuant to subsections (c), (i) or (1) of
Section 502 of ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D
of the Code, (ii) terminate any Benefit Plan in a manner, or take any other
action with respect to any Benefit Plan, that could result in the liability
of BRG to any person, (iii) take any action that could adversely affect the
qualification of any Benefit Plan or its compliance with the applicable
requirements of ERISA or (iv) fail to make full payment when due of all
amounts which, under the provisions of any Benefit Plan, any agreement
relating thereto or applicable law, BRG is required to pay as contributions
thereto; and
(d) file, on a timely basis, all reports and forms required by federal
regulations with respect to any Benefit Plan.
6.7 Other Interim Covenants. Until the Closing, BRG and its subsidiaries
and the BRG Partnerships shall comply, and Sellers shall cause BRG and its
subsidiaries and the BRG Partnerships to comply, with the provisions set forth
below except as may otherwise be agreed to by Buyer in writing:
(a) BRG and the BRG Partnerships shall operate their respective
businesses and the BRG Properties and the BRG Partnership Properties in the
ordinary course;
(b) None of BRG, the BRG Partnerships (with respect to the BRG
Partnership Properties) or the 1997-I Program Participants (with respect to
the 1997-I Properties) will, without the prior written consent of Buyer,
which consent shall not be unreasonably withheld, commit to any operation
reasonably anticipated by Sellers to require future capital expenditures by
any of such parties, individually or in the aggregate, in excess of
$100,000, or terminate, materially amend, execute or extend any material
agreements affecting the BRG Properties, the BRG Partnership Properties or
the 1997-I Properties;
(c) none of BRG or any BRG Partnership shall (i) amend its
Organizational Documents or enter into any merger or consolidation
agreement, (ii) acquire or agree to acquire all or substantially all of the
assets of another entity, (iii) authorize for issuance, issue, sell,
deliver or agree or commit to issue, sell or deliver (whether through the
issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any capital stock of any class or any
other securities or equity equivalents or amend any of the terms of any
such securities or agreements or enter into any voting agreements with
respect to any capital stock of the Company, (iv) except for distribution
and/or dividends of cash (without duplication) (A) not in excess of the
amount of cash in bank accounts immediately prior to May 1, 1998, or (B)
from revenues, proceeds and/or receivables attributable to the period of
time prior to May 1, 1998, declare or pay of any dividend on, or make any
other distribution with respect to, the BRG Shares or BRG Partnerships;
(d) none of BRG, the BRG Partnerships or the 1997-I Program
Participants shall transfer, sell, hypothecate, encumber or otherwise
dispose of any of the material BRG Properties, BRG Partnership Properties
or the 1997-I Properties, or incur or assume any material liabilities
except for dispositions made, or liabilities incurred, in the ordinary
course of business consistent with past practices;
(e) none of BRG, the BRG Partnerships or the 1997-I Program
Participants shall, with respect to the BRG Properties, the BRG Partnership
Properties or the 1997-I Properties, assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person or entity except in the
ordinary course of business consistent with past practices and in amounts
not material taken as a whole or make any loans, advances or capital
contributions to or investments in any other Person, other than in the
ordinary course of business consistent with past practices and in amounts
not material taken as a whole;
(f) Sellers shall maintain generally insurance coverage on the BRG
Properties, the BRG Partnership Properties and the 1997-I Properties
presently furnished by nonaffiliated third parties in the amounts and of
the types currently in force;
(g) BRG shall not implement or adopt (i) any material change in its
accounting methods or principles or the application thereof (including
depreciation lives) or (ii) any material change in its tax methods or
principles or the application thereof (including depreciation lives) except
as may be required by Requirements of Law;
(h) BRG shall not identify any additional prospects to become subject
to the terms of those certain participation program agreements dated
various dates between BRG and Xxxxx X. Xxxxxxxx, X. X. Xxxx, Xxxxxx X. Xxx,
Xxxxxxx X. Xxxxxxxx and J. Xxxxx Xxxxxxxx; and
(i) during the period prior to the Closing Date, Sellers'
Representative shall use its reasonable efforts to obtain a release of
liability from the 1997-I Program Participants associated with BRG acting
in the capacity as program administrator of the BRG 1997-I Oil & Gas
Program in a form acceptable to Buyer.
No provisions of this Section 6.7 shall prohibit Sellers from performing
any of their respective obligations under any of the provisions of this
Agreement.
6.8 Title Defects.
(a) At least 15 days prior to Closing (the "Notification Deadline"),
Buyer shall notify BRG in writing (such notice being herein referred to as
a "Defect Notice") of any matter that causes the title of BRG or any of the
BRG Partnerships or any of the 1997-I Program Participants to any of the
Units, Lease or Xxxxx not to be Good and Defensible Title (a "Title
Defect"). Such Defect Notice shall include:
(i) a description of the Title Defect and the basis for claiming
same;
(ii) the Lease, Unit or Well (or portions thereof) affected by
such Title Defect;
(iii) the Buyer's proposed Designated Value of the property
subject to such Title Defect; and
(iv) the amount that Buyer believes to be the Defect Value
attributable to such Title Defect.
Additionally, from the date hereof until the fifth day prior to the
Notification Deadline, BRG shall, and shall cause their respective
officers and employees to, notify Buyer in writing of any Title Defects
discovered by such Person promptly following such discovery.
(b) BRG shall use its best efforts to cure, at BRG's sole cost
and expense (which costs and expenses will be reflected in the
Adjusted Working Capital reflected in the Closing Balance Sheet), all
Title Defects of which it becomes aware prior to Closing, and in each
case with respect to any Title Defects that are cured, shall provide
Buyer with reasonably satisfactory proof thereof; provided, however,
that Sellers shall not be required to use such best efforts with
respect to any Title Defects for which Sellers' Representative and
Buyer have agreed upon a Defect Value.
(c) The "Designated Value" for any Lease, Unit or Well shall be
the amount agreed upon by Buyer and BRG which the parties commit to
negotiate in good faith, provided, however, that in the event that the
parties are unable to reach agreement on the Designated Value after a
period of one full business day after the receipt by BRG of the Defect
Notice containing Buyer's proposed Designated Value, the Designated
Value shall be determined by the independent petroleum engineering
firm of Xxxxx Xxxxx Company. Each of the parties commits to promptly
provide all information and material relevant to the issue in its
possession to such firm as promptly as practical. Such firm shall
provide its opinion of the Designated Value within two business days
from the date of receipt of the information and materials from all
parties and the decision of such firm shall be final and binding on
all parties. The costs and expenses of obtaining such determination
shall be paid and borne by the parties equally.
(d) As used herein, the term "Defect Value" shall mean with
respect to each Title Defect, the reduction in the Designated Value of
the affected Lease, Unit or Well, as applicable, as a result of the
existence of such Title Defect.
(e) If BRG does not agree with Buyer's proposed Defect Value with
respect to a Title Defect or the parties are unable to agree upon
whether a Title Defect exists, then Buyer and BRG shall enter into
good-faith negotiations and shall attempt to agree upon such matter,
and any values to be agreed upon shall be based on the allocated value
on Schedule 2.4 for the group of properties to which such Lease, Unit,
or Well relates; provided that if the Title Defect is the result of a
discovery that BRG, any of the BRG Partnerships or any of the 1997-I
Program Participants owns less than the NRI for such Well or Unit,
then Buyer and BRG agree that the reduction to the Purchase Price
shall be equal to the product of the Designated Value of such Well or
Unit and the percentage reduction in such NRI as a result of the Title
Defect.
(f) If Buyer and BRG cannot reach agreement on the existence of a
Title Defect, or the Defect Value attributable to a Title Defect, in
any case within 10 days after the commencement of good-faith
negotiations pursuant to subparagraph (e) above, at either party's
option, upon notice to the other party, such matter shall be
determined by a title attorney with at least 10 years' experience in
oil and gas titles in the state in which the Units or Xxxxx (or
majority of Units or Xxxxx) in question are located as selected by
mutual agreement of Buyer and BRG or absent such agreement during the
10-day period, by the Houston office of the American Arbitration
Association (the "Title Arbitrator"). The arbitration proceeding shall
be held in Houston, Texas and shall be conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association, to the extent such rules do not conflict with the terms
of this Section. The Title Arbitrator's determination shall be made
within 10 days after submission of the matters in dispute and shall be
final and binding upon both parties, without right of appeal. The
Title Arbitrator shall act as an expert for the limited purpose of
determining the specific disputed Title Defect or Defect Value
submitted by either party and may not award damages, interest or
penalties to either party with respect to any matter. Sellers and
Buyer shall bear their own respective legal fees and other costs of
presenting its case. Each party shall bear one-half of the costs and
expenses of the Title Arbitrator.
(g) To the extent that Buyer has knowledge of any Title Defect
prior to the execution of this Agreement, the Sellers acknowledge that
Buyer shall not be deemed to have waived any of its rights hereunder
to an adjustment in the Purchase Price on account of any such Title
Defect.
6.9 Audited Financials. On or before April 15, 1998, Sellers shall deliver
to Buyer the audited consolidated financial statement for the year ended
December 31, 1997. The defined term "Financial Statements" shall be deemed to
include (in addition to the other financial statements included in such defined
term) such audited financial statements for all purposes after the delivery
thereof. Such audited financials shall not be materially different from the
draft audited financials previously submitted to Buyer by Sellers.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Access to Records after Closing.
(a) For a period of six years after the Closing Date, Sellers and
their representatives shall have reasonable access to all of the
files, data, books and records of BRG, the BRG Partnerships and the
BRG 1997-I Oil and Gas Program relating to the period of time prior to
and including the Closing Date and shall have an opportunity to make
copies of such materials. Such access shall be afforded by Buyer upon
receipt of reasonable advance notice and during normal business hours.
Sellers shall be solely responsible for any costs or expenses incurred
by it pursuant to this Section 7.1. If Buyer shall desire to dispose
or permit the disposal of any of such files, data, books and records
prior to the expiration of such six-year period, Buyer shall, prior to
such disposition, give Sellers a reasonable opportunity, at Sellers'
expense, to segregate and remove such files, data, books and records
as Sellers may select. Sellers shall keep, and shall cause their
respective agents, employees, representatives and affiliates to keep,
confidential, and not use for any competitive purposes, any
confidential information to which they have access pursuant hereto for
a period of two years from the date after the Closing Date that they
access such confidential information.
(b) For a period of six years after the Closing Date, Buyer and
its representatives shall have reasonable access to all of the files,
data, books and records relating to BRG, the BRG Partnerships and the
BRG 1997-I Oil and Gas Program, if any, which Sellers may retain after
the Closing Date and shall have an opportunity to make copies of such
materials. Such access shall be afforded by Sellers upon receipt of
reasonable advance notice and during normal business hours. Buyer
shall be solely responsible for any costs and expenses incurred by it
pursuant to this Section 7.1. If Sellers shall desire to dispose or
permit the disposal of any of such files, data, books and records
prior to the expiration of such six-year period, Sellers shall, prior
to such disposition, give Buyer a reasonable opportunity, at Buyer's
expense, to segregate and remove such files, data, books and records
as Buyer may select.
7.2 Confidentiality Agreement. The Confidentiality Agreement shall remain
in full force and effect following the execution of this Agreement until Closing
or as provided in Section 9.3 and is hereby incorporated herein by reference and
shall constitute a part of this Agreement for all purposes. Any and all
information received by Buyer pursuant to the terms and provisions of this
Agreement shall be governed by the applicable terms and provisions of the
Confidentiality Agreement.
7.3 No Public Announcement. Except as Buyer and Sellers may otherwise
consent to in writing (which consent shall not be unreasonably withheld),
neither Buyer nor Sellers shall, without the approval of the other, make any
press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that any such party
shall be so obligated by law or the rules of any stock exchange or quotation
system, in which case, to the extent practicable, the other party shall be
advised and the parties shall use their best efforts to cause a mutually
agreeable release or announcement to be issued; provided that the foregoing
shall not preclude communications or disclosures necessary to implement the
provisions of this Agreement or to comply with the accounting and, if
applicable, Securities and Exchange Commission disclosure obligations.
7.4 Expenses and Sales Taxes. All legal, accounting and other fees, costs
and expenses incurred in connection with, or arising out of the obligations
contained in this Agreement and the transactions contemplated hereby
("Transaction Expenses") which are attributable to the BRG Shareholders shall be
payable by BRG, all Transaction Expenses attributable to each BRG Partnership
shall be paid by that BRG Partnership and all Transaction Expenses attributable
to each 1997-I Program Participant shall be payable by such 1997-I Program
Participant. All such Transaction Expenses shall be paid by the Purchase Price
adjustment provided for in the first sentence of Section 2.5 hereof, except for
Transactional Expenses incurred pursuant to Section 2.7(c) hereof. All
Transaction Expenses attributable to Buyer shall be paid by Buyer. All sales
taxes, if any, payable by reason of the transfers of the BRG Partnership
Properties and the 1997-I Properties will be paid by Buyer and Buyer shall, or
shall cause BRG to, file all returns, reports or statements, if any, that may be
required or appropriate in connection with the transactions contemplated by this
Agreement.
7.5 Further Assurances. From time to time following the Closing, each of
the parties hereto shall execute, acknowledge and deliver or cause to be
executed, acknowledged and delivered such instruments and take such other action
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.
7.6 Change of Corporate Name. Buyer will cause BRG to change its corporate
name to a name not confusingly similar to "BRG Petroleum" within 120 days
following the Closing Date. Prior to such change of name, Buyer shall, if
requested by Sellers' Representative, give Sellers' Representative or its
designee consent to use of the name "BRG" or "BRG Petroleum." Following such
change of name, Buyer shall (a) remove or cause to be removed the name, marks
and logos of BRG from the BRG Property, the BRG Partnership Properties and the
1997-I Properties, and (b) file an appropriate notice of such change of name in
the real estate records of each county of each state where the BRG Oil and Gas
Properties, the BRG Partnership Properties and the 1997-I Properties are
located.
7.7 Indemnification of Sellers for Environmental Liabilities. All
Environmental Liabilities attributable to conditions existing and operations
conducted on the BRG Property (except for the Excluded Assets), the BRG
Partnership Properties and the 1997-I Properties, whenever discovered, shall be
liabilities of BRG, and from and after the Closing Buyer shall indemnify,
defend, and hold harmless Sellers from and against all loss, cost, liability or
expense attributable thereto or resulting therefrom.
7.8 Tax Returns; Payments and Refunds. Following the Closing Date, Sellers'
Representative shall prepare, with the assistance of Xxxxx Xxxxxx & Xxxxxxx,
LLP, Tulsa, Oklahoma, and timely file with the appropriate federal, state and
local agencies all Tax Returns relating to BRG, the BRG Partnerships and the tax
partnership comprised of 1997-I Program Participants for periods ending on or
prior to the Closing Date, including the consolidated federal income Tax Return
of the affiliated group of which BRG is the common parent for the short period
ending on the Closing Date. Not later than 30 days prior to the due date
(including extensions) for filing any Tax Return described in the preceding
sentence, Sellers' Representative shall deliver to Buyer a copy of such Tax
Return and shall allow Buyer to review, comment upon and approve such Tax Return
without unreasonable delay. The parties good faith estimate of the costs
associated with the preparation of such Tax Returns and the Taxes due by BRG for
the period ending on the Closing Date shall be a liability of each of BRG and
the BRG Partnerships for purposes of calculating its Adjusted Working Capital.
The parties good faith estimate of any refund of Taxes due to BRG for the period
ending on the Closing Date shall be an asset of BRG for purposes of calculating
its Adjusted Working Capital. Buyer shall pay to Sellers' Representative the
amount of any refund of federal income Taxes related to the carryback of any
losses incurred during the taxable year of BRG that includes the Closing Date,
but only to the extent the amount of such Tax refund (i) is actually received by
the Buyer, (ii) is specifically attributable to the carryback of such losses,
and (iii) is not reflected or otherwise provided for in the Closing Date Balance
Sheet. Buyer shall have no obligation to pursue any such claim for refund.
7.9 Employee Relations and Benefits. Sellers' Representative shall take
such action as is necessary to transfer the employment of the employees of BRG
and Charter Servicing Company to BRG Petroleum Corporation prior to the Closing
Date. Sellers' Representative shall take such action as is necessary and
possible under the terms of the Benefit Plans to cause (i) the Benefit Plans and
all liabilities thereunder (whether occurring prior to or after the Closing
Date) to be assumed by BRG Petroleum Corporation, (ii) BRG to cease as of the
Closing Date to be participating employers in any of the Benefit Plans and (iii)
BRG to have no liability as of and after the Closing Date in respect of any
Benefit Plan. It is understood that Buyer has no commitment or plans to employ
any of the employees of BRG or any of its subsidiaries after the Closing.
Nevertheless, in the event that any such employee is offered employment with and
is employed by Buyer or BRG or any Affiliate thereof within three months after
Closing, service by such employees with BRG shall be recognized under the
employee benefit plans maintained by the Buyer, BRG or any Affiliate thereof for
the benefit of such employees, for all purposes, including without limitation
participation, coverage, vesting and level of benefits, as applicable, but not
in excess of the maximum credit available to Buyer's employees under such plans.
Schedule 7.9 describes the severance benefits to be provided by BRG for its
employees. Any amounts payable to such employees by BRG shall be taken into
account in connection with the calculation of the Closing Adjusted Working
Capital of BRG for purposes of Section 2.5.
7.10 Release and Indemnification of Resigning Officers and Directors. Upon
receipt of the resignation of each of the officers and directors of BRG at the
Closing, Buyer and BRG shall agree to release such individual from any and all
claims, costs, liabilities and actions that they may have against such
individual (except in connection with the transactions contemplated hereby).
Buyer further agrees to not allow BRG to amend its Organizational Documents to
eliminate or alter (except to provide more generous indemnification or
limitation of liability provisions for former officers and directors) any
indemnification or limitation of liability provisions intended to benefit the
officers and directors of BRG.
7.11 Insurance Coverage. Subject to approval by the BRG insurance carrier
or carriers, prior to the Closing Date, BRG and Sellers shall take such action
as may be necessary and as is reasonably acceptable to Buyer to split the
current insurance coverage of BRG, the BRG Partnerships and the 1997-I
Properties so that the Excluded Assets and operations to be conducted in
connection therewith will continue to be covered as will the BRG Properties, BRG
Partnership Properties, 1997-I Properties and the ongoing operations and
activities of BRG.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES
8.1 Conditions to Buyer's Obligations. The obligations of Buyer to purchase
the Shares, the BRG Partnership Properties and the 1997-I Properties pursuant to
this Agreement shall, at the option of Buyer, be subject to the satisfaction, on
or prior to the Closing Date, of the following conditions:
(a) There shall have been no material breach or breaches by Sellers in
the performance of any of their covenants and agreements herein; each of
the representations and warranties of Sellers contained or referred to
herein shall be true and correct on the Closing Date as though made on the
Closing Date, except for changes therein specifically permitted by this
Agreement or resulting from any transaction expressly consented to in
writing by Buyer; and there shall have been delivered to Buyer a
certificate to such effect, dated the Closing Date and signed on behalf of
BRG and the BRG Partnerships by the chief executive officer of Sellers'
Representative in addition to the other deliveries specified in Section
3.2.
(b) There shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement; and Sellers shall have
delivered to Buyer a certificate to such effect, dated the Closing Date and
signed on behalf of BRG and the BRG Partnerships by Seller's
Representative.
(c) The parties shall have received all approvals and actions of or by
all Governmental Bodies and other Persons which are necessary to consummate
the transactions contemplated hereby and which are required to be obtained
prior to the Closing by applicable Requirements of Laws or contractual or
other obligations.
(d) BRG and the BRG Partnerships shall have received consents or
waivers of preferential purchase rights from the other parties to all
contracts, leases, agreements and permits to which either BRG or the BRG
Partnerships is a party or by which BRG or the BRG Partnerships or any of
its assets or properties is affected and which are required to consummate
the transactions contemplated hereby.
(e) All actions to be taken by Sellers in connection with consummation
of the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance
to Buyer.
(f) All of the BRG Partnerships shall have received the necessary
consents required from the limited partners thereof as may be required for
the sale of the BRG Partnership Properties.
(g) BRG Holding Company, Inc. shall have become the general partner of
the BRG Partnerships (and the liabilities associated therewith assumed by
BRG Holding Company, Inc.) pursuant to an assignment and assumption form or
other appropriate instrument acceptable to Buyer.
(h) The transactions contemplated by the stock purchase agreement
entered into by BRG pursuant to Section 6.4 hereof shall have been
consummated on terms acceptable to Buyer and any demand note or other
payment obligations given by the purchaser in connection therewith shall
have been fully satisfied.
(i) A majority in interest of the limited partners of the BRG
Partnerships shall have provided a release of liability associated with BRG
acting in the capacity as general partner of the BRG Partnerships in a form
acceptable to Buyer.
(j) Buyer shall have received an opinion of Xxxxxx & Xxxxxxx, A
Professional Corporation, dated as of the Closing Date, that addresses the
matters set forth in Sections 4.1(a), 4.1(b), 4.1(c), 4.2, 4.3(a), 4.3(b)
and 10.4 hereof, including such exceptions and assumptions as are customary
in such opinions, in form and substance acceptable to Buyer.
(k) The consents of all of the holders of the outstanding options to
purchase shares of BRG stock and/or the amendments to the stock option
agreements contemplated by Section 6.5 hereof shall have been obtained or
agreed to by each of the holders of such stock options and Buyer shall have
received evidence of such consents or amendments.
(l) All credit cards and turnpike passes held in the name of BRG shall
have either been canceled or a release of liability shall have been
obtained and delivered to Buyer evidencing the release of any and all
liability or obligation of BRG as to such credit cards and turnpike passes
and such accounts shall have been transferred out of the name of BRG.
(m) All of the participation program agreements entered into between
BRG and Xxxxx X. Xxxxxxxx, X.X. Xxxx, Xxxxxx X. Xxx, Xxxxxxx X. Xxxxxxxx
and J. Xxxxx Xxxxxxxx, shall have been terminated; provided, however, all
obligations and benefits arising under such participation program
agreements for prospects identified prior to the execution of this
Agreement shall remain in full force and effect.
(n) All amounts owing under the Special Loan Agreement dated August
30, 1996, between BRG and NationsBank, N.A. as ultimate successor to Bank
IV Oklahoma, National Association and the Supplemental Loan Agreement dated
December 31, 1996, between BRG and NationsBank, N.A., as successor to
Xxxxxxx'x National Bank of Oklahoma, shall have been fully satisfied and
releases of all liens on BRG Properties shall have been obtained from the
respective bank.
(o) All intercompany indebtedness among BRG and its subsidiaries shall
have been paid in full or otherwise eliminated and evidence thereof shall
be provided to Buyer.
8.2 Conditions to Sellers' Obligations. The obligations of Sellers to sell
the Shares, the BRG Partnership Properties and the 1997-I Properties pursuant to
this Agreement shall, at the option of Sellers, be subject to the satisfaction,
on or prior to the Closing Date, of the following conditions:
(a) There shall have been no material breach by Buyer in the
performance of any of its covenants and agreements herein; each of the
representations and warranties of Buyer contained or referred to in this
Agreement shall be true and correct on the Closing Date as though made on
the Closing Date; and there shall have been delivered to Sellers a
certificate to such effect, dated the Closing Date and signed on behalf of
Buyer by the chief executive officer of Buyer.
(b) There shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement; and Buyer shall have delivered
to Sellers a certificate to such effect, dated the Closing Date and signed
on behalf of Buyer by the chief executive officer of Buyer.
(c) The parties shall have received all approvals and actions of or by
all Governmental Bodies necessary to consummate the transactions
contemplated hereby and which are required to be obtained prior to the
Closing by applicable Requirements of Laws.
(d) BRG shall have received the requisite approvals from the
participants of the 1997-I Program for the sale of the 1997-I Properties
and the BRG Partnerships shall have
received the necessary consents required from the limited partners of the BRG
Partnerships for the sale of the BRG Partnership Properties.
(e) BRG shall have consummated a stock purchase agreement with
BRG Petroleum Corporation, providing for, among other things, the sale
of all of the capital stock of BRG Holding Company, Inc. and BRG
Production Company to BRG Petroleum Corporation, and the consummation
of the transactions contemplated thereunder shall have occurred prior
to the Closing.
(f) All actions to be taken by Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Sellers.
ARTICLE IX
TERMINATION TERMINATION
9.1 Termination. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated at any time prior to the
Closing Date:
(a) by the mutual consent of Buyer and Sellers;
(b) by Buyer or Sellers if the Closing shall not have occurred on or
before June 15, 1998 (or such later date as may be mutually agreed to by
Buyer and Sellers), for any reason other than the breach or default by the
party desiring to terminate;
(c) by Buyer in the event of any material breach or breaches by
Sellers of any of Sellers' agreements, representations or warranties
contained herein;
(d) by Sellers in the event of any material breach by Buyer of any of
Buyer's agreements, representations or warranties contained herein.
9.2 Notice of Termination. Any party desiring to terminate this Agreement
pursuant to Section 9.1 shall give notice of such termination to the other party
to this Agreement.
9.3 Effect of Termination. In the event that this Agreement shall be
terminated pursuant to this Article IX, all further obligations of the parties
under this Agreement shall be terminated without further liability of any party
to the other, provided that nothing herein shall relieve any party from
liability for its breach of this Agreement. Notwithstanding the preceding
sentence, the provisions of Sections 2.3, 7.3 and 7.4 , and the Confidentiality
Agreement (which shall continue pursuant to its terms) shall survive any
termination hereof pursuant to Section 9.1.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival of Representations, Warranties, Covenants and
Agreements/Indemnities
(a) Except as provided in this Section 10.1(a), none of the
representations, warranties, covenants or agreements contained in this
Agreement or in any instrument delivered pursuant to this Agreement, and no
agreements or obligations arising under the Confidentiality Agreement,
shall survive the consummation of the transactions contemplated hereunder.
The representations and warranties contained in Sections 4.2, 4.3, 4.8, and
4.28 and the agreements contained in Sections 6.7, 7.1, 7.3, 7.5, 7.6, and
7.8, and the certificates delivered at Closing, to the extent pertaining to
such representations, warranties and agreements, shall survive the Closing
until the first anniversary of the Closing Date at which time they shall
expire. The representations and warranties contained in Sections 4.1, 4.16,
4.32, 6.4, 6.6., 7.7., 7.9 and 7.10 and Article 10 and the certificates
delivered at Closing, to the extent pertaining to such representations,
warranties and agreements, shall survive the Closing until the expiration
of the applicable limitations period. Notwithstanding the foregoing, any
representation, warranty or agreement that is the subject of a Claim Notice
timely delivered shall survive with respect to the specific matter
described in the such Claim Notice until the earlier to occur of (i) the
date on which a final nonappealable resolution of the matter described in
such Claim Notice has been reached or (ii) the date on which the matter
described in such Claim Notice has otherwise reached final resolution.
(b) Sellers severally and not jointly hereby agree to protect, defend,
indemnify and hold harmless Buyer and BRG and their respective affiliates,
officers, directors, agents and representatives (the "Indemnitees") from
and against,
(i) all Taxes imposed and all costs and expenses (including,
without limitation, litigation costs and reasonable attorneys' and
accountants' fees and disbursements) incurred as a result of a claim,
notice of deficiency, or assessment by, or any obligation owing to,
any taxing authority for:
(A) Any Taxes of BRG or any BRG Partnership attributable to
any Pre-Closing Taxable Period to the extent such Taxes exceed
the aggregate amount accrued or reserved for Taxes on the Closing
Date Balance Sheet (the "Tax Accrual"); provided, however, that
amounts accrued or reserved for deferred Taxes established to
reflect timing differences between book and Tax income shall not
be included in the Tax Accrual.
(B) Any Taxes of any entity (other than BRG and the BRG
Partnerships) that is or was a member of any group of entities
filing a consolidated, combined or unitary Tax Return of which
BRG or any BRG Partnership was a member at any time on or prior
to the Closing Date;
(C) Any Taxes attributable to the transactions contemplated
by this Agreement other than any Taxes that may be incurred as a
result of an election made or other action taken by Buyer or BRG
after the Closing, including any election under Section 338 of
the Code; and
(ii) all Damages arising out of, resulting from or relating to
any breach of the representations and warranties or obligations of
Sellers that survive the Closing under this Agreement.
Notwithstanding anything in this Agreement to the contrary, no
indemnification payment for Damages suffered or incurred by an
Indemnitee shall be made to such Indemnitee, until the amount which all
Indemnitees under this Agreement would otherwise be entitled to receive
as indemnification under this Agreement aggregates in excess of the sum
of $1,000,000 (such sum, hereinafter, the "Threshold"), at which time
each Indemnitee shall be entitled to recover any and all amounts for
which a claim for indemnity has theretofore been made, in excess of the
amount of the Threshold. Each Seller other than those Sellers listed in
Schedule 10.1 (the "Principal Sellers"); shall be obligated to
indemnify the Indemnitees only for such Seller's pro rata portion
(based on such Sellers' relative ownership interests) of any Damages
which are attributable to the entity or assets in which such Seller had
an ownership interest. The Sellers listed in Schedule 10.1 shall be
jointly and severally liable to any Indemnitee for indemnification
claims hereunder; provided, however, that the limitation provided in
the last sentence of this subparagraph (b) shall still be applicable
and that such Sellers shall have rights of contribution from all other
Sellers who may be liable for any such claim. No claim for
indemnification may be submitted under subparagraph (i) hereof after
the limitations period for asserting or claiming an assessment by a
Governmental Body or other taxing authority has expired or would have
expired but for extensions of filing any returns or tolling or
extensions of the applicable limitations period that may have been
obtained, requested or agreed to subsequent to Closing. No claim for
indemnification may be submitted under subparagraph (ii) after the
expiration of the survival period provided for in subparagraph (a). No
Seller shall be liable for indemnification hereunder for an amount in
excess of the portion of the Purchase Price finally received by him,
her or it after all adjustments.
(c) All claims for indemnification under this Agreement shall be
asserted and resolved as follows:
(i) To make claim for indemnification under this Agreement,
an indemnified party shall notify the indemnifying party of its
claim under the applicable indemnity, including the specific
details of and specific basis under this Agreement for its claim
(the "Claim Notice"). In the event that the claim for
indemnification is based upon a claim by a third party against
the indemnified party (a "Claim"), the indemnified party shall
provide its Claim Notice promptly after the indemnified party has
actual knowledge of the Claim and shall enclose a copy of all
papers (if any) served with respect to the Claim; provided that
the failure of any indemnified party to give notice of a Claim as
provided in this Section 10.1(c) shall not relieve the
indemnifying party of its obligations under the indemnities set
forth in this Agreement except to the extent such failure results
in insufficient time being available to permit the indemnifying
party to effectively defend against the Claim or otherwise
prejudices the indemnifying party's ability to defend against the
claim. In the event that the claim for indemnification is based
upon an inaccuracy or breach of a representation, warranty,
covenant or agreement that survives the Closing, then the Claim
Notice shall specify the representation, warranty, covenant or
agreement which was inaccurate or breached.
(ii) In the case of a claim for indemnification based upon a
Claim, the indemnifying party shall have 30 days from its receipt
of the Claim Notice to notify the indemnified party whether it
admits or denies its liability to defend the indemnified party
against such Claim at the sole cost and expense of the
indemnifying party. The indemnified party is authorized, prior to
and during such 30-day period, to file any motion, answer or
other pleading that it shall deem necessary or appropriate to
protect its interests or those of the indemnifying party and that
is not prejudicial to the indemnifying party.
(iii) If the indemnifying party admits its liability, it
shall have the right and obligation to diligently defend, at its
sole cost and expense, the Claim. The indemnifying party shall
have full control of such defense and proceedings, including any
compromise or settlement thereof. If requested by the
Indemnifying Party, the indemnified party agrees to cooperate in
contesting any Claim which the indemnifying party elects to
contest. The indemnified party may participate in, but not
control, any defense or settlement of any Claim controlled by the
indemnifying party pursuant to this Section. An indemnifying
party shall not, without the written consent of the indemnified
party, (i) settle any Claim or consent to the entry of any
judgment with respect thereto which does not include an
unconditional written release of the indemnified party from all
liability in respect of such Claim or (ii) settle any Claim or
consent to the entry of any judgment with respect thereto in any
manner that may materially and adversely affect the indemnified
party (other than as a result of money damages covered by the
indemnity).
(iv) If the indemnifying party does not admit its liability
or admits its liability but fails to diligently prosecute or
settle the Claim, then the indemnified party shall have the right
to defend against the Claim at the sole cost and expense of the
indemnifying party, with counsel of the indemnified party's
choosing, subject to the right of the indemnifying party to admit
its liability and assume the defense of the Claim at any time
prior to settlement or final determination thereof. If the
indemnifying party has not yet admitted its liability for a
Claim, the indemnified party shall send written notice to the
indemnifying party of any proposed settlement and the
indemnifying party shall have the option for 10 days following
receipt of such notice to (i) admit in writing its liability for
the Claim and (ii) if liability is so admitted, reject, in its
reasonable judgment, the proposed settlement.
(v) In the case of a claim for indemnification not based
upon a Claim, the indemnifying party shall have 30 days from its
receipt of the Claim Notice to (i) cure the losses or damages
complained of, (ii) admit its liability for such losses or
damages or (iii) dispute the claim for such losses or damages. If
the indemnifying party does not notify the indemnified party
within such 30 day period that it has cured the losses or damages
or that it disputes the claim for such losses or damages, the
amount of such losses or damages shall conclusively be deemed a
liability of the indemnifying party hereunder.
(d) Any outstanding breach on or as of the Closing Date of the
representations, warranties, covenants or agreements contained in this
Agreement or in any instrument delivered pursuant to this Agreement is
deemed to be waived by the party entitled to the benefit thereof, upon the
Closing of the transactions contemplated hereunder to the extent such
breach is known to such party as acknowledged in writing. Following the
Closing Date, no suit or action may be commenced for claims based on a
breach of the representations, warranties, covenants or agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement that do not survive the Closing which is alleged to have occurred
on or prior to the Closing Date. To the extent that Buyer has knowledge of
any breach by Sellers of their representations or warranties herein prior
to the execution of this Agreement, Sellers acknowledge that Buyer shall
not be deemed to have waived any of its rights or remedies hereunder with
respect to any such breach.
10.2 No Reliance. Except as to the representations and warranties of
Sellers expressly set forth in Article IV hereof any of the closing certificates
and schedules delivered pursuant to this Agreement, Buyer has not relied upon
any oral or written statements, representations, or warranties which may have
been made by or on behalf of Sellers or upon any written reports, financial
data, business plans, projections, forecasts or any environmental reports,
audits, studies or assessments, copies of which may have been furnished to Buyer
or as to which Buyer may have been provided access in connection with the
transactions contemplated by this Agreement. TO THE EXTENT THAT BUYER HAS BEEN
FURNISHED COPIES OF OR BEEN PROVIDED ACCESS TO ANY OF THE FOREGOING, BUYER
ACKNOWLEDGES THAT NEITHER SELLERS NOR ANY OF THEIR RESPECTIVE SUBSIDIARIES, OR
ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES AND
AGENTS, HAS MADE, AND HEREBY EXPRESSLY DISCLAIM, ANY REPRESENTATIONS OR
WARRANTIES AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION, DATA OR
MATERIALS (WHETHER WRITTEN OR ORAL) WHICH MAY HAVE BEEN FURNISHED TO BUYER OR
ITS REPRESENTATIVES OR AGENTS BY OR ON BEHALF OF SELLERS IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY.
Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
(i) when delivered personally, (ii) if transmitted by fax, when confirmation of
transmission is received, or (iii) if sent by registered mail, return receipt
requested, or by private courier, when received; and shall be addressed as
follows:
If to Buyer, to:
Seagull Energy E&P Inc.
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: X. X. Xxxxxxx, Vice President-Exploitation,
Engineering & Acquisitions
With a copy to:
Xxxxxx & Xxxxxx L.L.P.
2300 First City Tower
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: J. Xxxx Xxxxx
If to Sellers or Sellers' Representative, to:
BRG Petroleum Corporation
0000 Xxxxx Xxxx
Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: President
with a copy to:
Xxxxxx & Xxxxxxx,
A Professional Corporation
0000 Xxxxx Xxxxx Tower
00 Xxxx Xxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Lynnwood X. Xxxxx, Xx.
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
10.4 Representation of Sellers by Sellers' Representative. Each of the
Sellers hereby irrevocably appoints BRG Petroleum Corporation (the "Sellers'
Representative") the agent and attorney-in-fact of each of the Sellers for the
purposes of acting in the name and stead of such Seller in: (i) receiving,
holding and distributing the Purchase Price and paying any associated costs and
expenses of the transactions hereunder required to be paid by such Seller; (ii)
giving and receiving all notices permitted or required by this Agreement and
acting on Sellers' behalf under Section 6.8 hereof for all purposes; (iii)
delivering the certificates for the Shares endorsed by Sellers or accompanied by
stock powers executed by Sellers to Buyer at Closing and any and all assignments
relating thereto; (iv) agreeing with Buyer as to any amendments to this
Agreement which the Sellers' Representative may deem necessary or advisable,
including but not limited to the extension of time in which to consummate the
transactions contemplated by this Agreement, and the waiver of any closing
conditions; (v) employing legal counsel; (vi) paying any legal and any other
fees and expenses incurred by the Sellers' Representative in consummating the
transactions contemplated by this Agreement; and (vii) making, executing,
acknowledging, and delivering all such contracts, orders, receipts, notices,
requests, instructions, certificates, letters, and other writings, and in
general doing all things and taking all actions which the Sellers'
Representative, in its sole discretion, may consider necessary or proper in
connection with or to carry out the terms of this Agreement, as fully as if such
Sellers were personally present and acting. This power of attorney and all
authority conferred hereby is granted and conferred subject to the interests of
the other parties to this Agreement, and in consideration of those interests and
for the purpose of completing the transactions contemplated hereby, this power
of attorney and all authority conferred hereby shall be irrevocable and shall
not be terminated by Sellers or by operation of law, whether by the death,
incompetency or incapacity of the BRG Shareholders or 1997-I Program
Participants, or any of them, or by the occurrence of any other event. If any
BRG Shareholder should die or become incompetent or incapacitated, or any other
event should occur before the delivery of certificates representing the Shares
pursuant to this Agreement, such certificates shall be delivered by or on behalf
of such BRG Shareholder in accordance with the terms and conditions of this
Agreement, and all actions taken by the Sellers' Representative pursuant to this
Agreement shall be as valid as if such death, incompetence, or incapacity or
other event had not occurred, regardless of whether Buyer or the Sellers'
Representative, or any of them, shall have received notice of such death,
incompetence, incapacity, or other event.
10.5 Successors and Assigns. Assigns
(a) The rights of the parties under this Agreement shall not be
assignable by any such parties hereto prior to the closing without the
written consent of the other. Following the Closing, either party may
assign any of its rights hereunder, but no such assignment shall relieve it
of its obligations hereunder.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. The
successors and permitted assigns hereunder shall include, without
limitation, any permitted assignee as well as the successors in interest to
such permitted assignee (whether by merger, liquidation (including
successive mergers or liquidations) or otherwise). Nothing in this
Agreement, expressed or implied, is intended or shall be construed to
confer upon any Person other than the parties and successors and assigns
permitted by this Section 10.5(b) or any indemnified Person any right,
remedy or claim under or by reason of this Agreement.
10.6 Entire Agreement; Amendments. This Agreement and the Exhibits and
Schedules referred to herein and the documents delivered pursuant hereto and the
Confidentiality Agreement contain the entire understanding of the parties hereto
with regard to the subject matter contained herein or therein, and supersede all
prior agreements, understandings or letters of intent between or among any of
the parties hereto. This Agreement shall not be amended, modified or
supplemented except by a written instrument signed by an authorized
representative of Buyer and the Sellers' Representative.
10.7 Waivers. Any term or provision of this Agreement may be waived, or the
time for its performance may be extended, by the party or parties entitled to
the benefit thereof. Any such waiver shall be validly and sufficiently given for
the purposes of this Agreement if, as to any party, it is in writing signed by
an authorized representative of such party. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
10.8 Partial Invalidity. Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such provision or provisions or any other provisions hereof, unless such a
construction would be unreasonable.
10.9 Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be considered an original instrument, but
all of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the parties
hereto and delivered to each of Sellers and Buyer.
10.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (as opposed to the conflicts of law
provisions) of the State of Oklahoma.
10.11 Certain Individuals. Each of Xxxxx X. Xxxxxxxx and Xxxxxx X. Xxx are
executing this Agreement in his individual capacity and as a trustee of a trust.
All references in this Agreement to "Sellers" and to the "BRG Shareholders"
shall be deemed to also include each such individual in his individual capacity
to the extent that such references would be applicable to the trust on whose
behalf such individual executed this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
BUYER:
SEAGULL ENERGY E&P INC.
By:
Xxxxx X. Xxxx, Chairman of the Board
SELLERS:
Xxxxx X. Xxxxxxxx,Individually, and as
Trustee of the Xxxxx X. Xxxxxxxx Living Trust
dated September 17, 1997
X. X. Xxxx
Xxxxxx X. Xxx, Individually, and as Trustee
of the Gee Family Trust u/t/d 12/23/92
BKM Family Limited Partnership
By:
Xxxxxx X. Xxx, General Partner
Xxxx Xxxx Xxxxxxxx, Individually, and as
Trustee of the Xxxx Xxxx Xxxxxxxx Living
Trust dtd /17/97
Xxxxxxx X. Xxxxxxxx
J. Xxxxx Xxxxxxxx
Xxxxx Xxxx Xxxxxxxx Xxxx, by Xxxxx X.
Xxxxxxxx, Attorney-in-Fact
Xxxxx Xxxxx Xxxxxxxx, by Xxxxx X. Xxxxxxxx,
Attorney-in-Fact
Xxxxxxx Xxxxxxx Xxxxxxxx, by Xxxxx X.
Xxxxxxxx, Attorney-in-Fact
Xxxxxx Xxxxx Xxxx, by Xxxxx X. Xxxxxxxx,
Attorney-in-Fact
Xxxx Xxxxxxx Xxxx, by Xxxxx X. Xxxxxxxx,
Attorney-in-Fact
M. Xxxx Xxxxx, by Xxxxx X. Xxxxxxxx,
Attorney-in-Fact
Xxxxx X. Xxxxx, by Xxxxx X. Xxxxxxxx,
Attorney-in-Fact
Xxxxxxx X. Xxxxx, by Xxxxx X. Xxxxxxxx,
Attorney-in-Fact
Xxxxxx X. Xxxxx XxxXxxxxxx, by Xxxxx X.
Xxxxxxxx, Attorney-in-Fact
Xxxxx X. Xxxxxx, by Xxxxxx X. Xxx,
Attorney-in-Fact
Xxxxx X. Xxxxxxx, by Xxxxxx X. Xxx,
Attorney-in-Fact
Xxx Xxxxxx Xxxxxxx, by Xxxxxx X. Xxx,
Attorney-in-Fact
Xxxxxxx X. Xxx, by Xxxxxx X. Xxx,
Attorney-in-Fact
BRG 1998 Consolidated Limited Partnership
By: BRG Petroleum, Inc., General Partner
By:
Xxxxx X. Xxxxxxxx, President
BRG 1997 Consolidated Limited Partnership
By: BRG Petroleum, Inc., General Partner
By:
Xxxxx X. Xxxxxxxx, President
BRG 1996-I Oil & Gas Limited Partnership
By: BRG Petroleum, Inc., General Partner
By:
Xxxxx X. Xxxxxxxx, President
BRG 1996-II Oil & Gas Income Fund Limited
Partnership
By: BRG Petroleum, Inc., General Partner
By:
Xxxxx X. Xxxxxxxx, President
BRG 1993-I Oil and Gas Limited Partnership
By: BRG Petroleum, Inc., General Partner
By:
Xxxxx X. Xxxxxxxx, President
BRG 1992-I Oil & Gas Income Fund
Limited Partnership
By: BRG Petroleum, Inc., General Partner
By:
Xxxxx X. Xxxxxxxx, President
BRG 1990-II Oil and Gas Limited Partnership
By: BRG Petroleum, Inc., General Partner
By:
Xxxxx X. Xxxxxxxx, President
BRG 1989-II Oil & Gas Income Fund Limited
Partnership
By: BRG Petroleum, Inc., General Partner
By:
Xxxxx X. Xxxxxxxx, President
Each of those Participants in the BRG 1997-I
Oil and Gas Program Listed on Attachment A
hereto
By: BRG Petroleum, Inc., as Program
Administrator
By:
Xxxxx X. Xxxxxxxx, President
SELLERS' REPRESENTATIVE:
BRG PETROLEUM CORPORATION
By:
Xxxxx X. Xxxxxxxx,
Chairman of the Board
EXHIBIT A
Form of Conveyance, Assignment and Xxxx of Sale
