LEASE PURCHASE AGREEMENT BY AND BETWEEN PETRO RESOURCES CORPORATION (IN TEXAS D/B/A PRCT, INC.) AND THE MERIDIAN RESOURCE & EXPLORATION LLC DATED JANUARY 10, 2006
EXHIBIT 10.3
BY
AND BETWEEN
PETRO
RESOURCES CORPORATION (IN TEXAS D/B/A PRCT, INC.)
AND
THE
MERIDIAN RESOURCE & EXPLORATION LLC
DATED
JANUARY 10, 2006
TABLE
OF CONTENTS
| Page | |||
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ARTICLE
I
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DEFINED
TERMS
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1
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1.1
|
Definitions
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1
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1.2
|
References,
Gender, Number
|
5
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|
|
ARTICLE
II
|
AGREEMENT
TO CONVEY
|
6
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|
|
ARTICLE
III
|
CONSIDERATION
AND PAYMENT
|
6
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3.1
|
Consideration
|
6
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3.2
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Payment
|
6
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ARTICLE
IV
|
REPRESENTATIONS
AND WARRANTIES
|
6
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|
|
4.1
|
Representations
and Warranties of PRCT
|
6
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|
|
(a)
|
Organization
and Qualification
|
6
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|
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(b)
|
Non-Foreign
Status
|
6
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(c)
|
No
Investment Company
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6
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(d)
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Authority
|
6
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|
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(e)
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Enforceability
|
7
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|
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(f)
|
No
Conflict or Violation
|
7
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|
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(g)
|
Consents
|
7
|
|
|
(h)
|
Actions;
Orders
|
7
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|
|
(i)
|
Brokerage
Fees and Commissions
|
8
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|
|
(j)
|
Compliance
with Leases; Status of Operations
|
8
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|
|
(k)
|
Preference
Rights
|
8
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|
|
(1)
|
Contracts
and Leases
|
8
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|
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(m)
|
Tax
Partnerships
|
9
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(n)
|
Bankruptcy
|
9
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|
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(o)
|
PRCT's
Knowledge
|
9
|
|
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4.2
|
Representations
and Warranties of Meridian
|
10
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|
|
(a)
|
Organization
and Qualification
|
10
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|
|
(b)
|
Authority
|
10
|
|
|
(c)
|
Enforceability
|
10
|
|
|
(d)
|
No
Conflict or Violation
|
11
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|
|
(e)
|
Consents
|
11
|
|
i
TABLE
OF CONTENTS
(continued)
| Page | |||
|
(f)
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Actions;
Orders
|
11
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|
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(g)
|
Brokerage
Fees and Commissions
|
11
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|
|
(h)
|
Independent
Evaluation
|
11
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|
|
(i)
|
Qualification
|
12
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|
|
(j)
|
Securities
Laws
|
12
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|
|
(k)
|
No
Holding Company
|
12
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|
|
(1)
|
Funds
|
12
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|
|
(m)
|
Bankruptcy
|
12
|
|
|
(n)
|
Meridian's
Knowledge
|
12
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|
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ARTICLE
V
|
COVENANTS
OF PRCT AND MERIDIAN
|
13
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|
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5.1
|
Assignments
|
13
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5.2
|
Data
and Information
|
13
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|
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(a)
|
Lease
and Land Information
|
13
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|
(b)
|
Geological
and Geophysical Data
|
13
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|
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5.3
|
Confidentiality
|
14
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5.4
|
Best
Efforts
|
14
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5.5
|
Area
of Mutual Interest
|
14
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|
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5.6
|
Post-Closing
Title Review
|
15
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|
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5.7
|
Determination
of Title Defects
|
17
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|
|
5.8
|
Title
Defect Amount
|
18
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|
|
5.9
|
Title
Defect Deductible
|
18
|
|
|
ARTICLE
VI
|
CLOSING
CONDITIONS
|
18
|
|
|
6.1
|
PRCT's
Closing Conditions
|
18
|
|
|
(a)
|
Representations,
Warranties and Covenants
|
18
|
|
|
(b)
|
Officer's
Certificate
|
18
|
|
|
(c)
|
Assignments
|
18
|
|
|
(d)
|
Consents
and Waivers
|
18
|
|
|
(e)
|
No
Action
|
18
|
|
|
6.2
|
Meridian's
Closing Conditions
|
19
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|
|
(a)
|
Representations,
Warranties and Covenants
|
19
|
|
ii
TABLE
OF CONTENTS
(continued)
| Page | |||
|
(b)
|
Officer's
Certificate
|
19
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|
|
(c)
|
Assignments
|
19
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|
|
(d)
|
No
Action
|
19
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|
|
(e)
|
Consents
and Waivers
|
19
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|
|
(f)
|
Affidavit
of Non-foreign Status
|
19
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|
|
6.3
|
Failure
to Disclose
|
19
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|
|
ARTICLE
VII
|
CLOSING
|
20
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|
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7.1
|
Closing
|
20
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|
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7.2
|
PRCT's
CIosing Obligations
|
20
|
|
|
7.3
|
Meridian's
Closing ObIigations
|
20
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|
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7.4
|
Survival
|
20
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|
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ARTICLE
VIII
|
OPERATIONS
|
21
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8.1
|
Operations
|
21
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ARTICLE
IX
|
DAMAGES
|
21
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ARTICLE
X
|
ASSUMPTION
AND INDEMNIFICATION
|
22
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|
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10.1
|
Indemnification
by PRCT
|
22
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|
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10.2
|
Indemnification
by Meridian
|
22
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10.3
|
Third
Party Claims
|
22
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10.4
|
Exclusive
Remedy
|
23
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ARTICLE
XI
|
MISCELLANEOUS
PROVISIONS
|
23
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11.1
|
Relationship
of the Parties
|
23
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11.2
|
Choice
of Law
|
23
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11.3
|
Jurisdiction;
Process
|
24
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|
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11.4
|
Waiver
of Jury Trial
|
24
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11.5
|
Laws
|
24
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|
|
11.6
|
Entire
Agreement
|
24
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|
|
11.7
|
Time
of the Essence
|
24
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|
|
11.8
|
Successors
|
24
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|
|
11.9
|
Assignment
|
24
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|
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11.10
|
Notice
|
25
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|
iii
TABLE
OF CONTENTS
(continued)
|
11.11
|
Severability
|
25
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|
11.12
|
Publicity
|
25
|
|
11.13
|
No
Third Party Beneficiaries
|
26
|
|
11.14
|
Exhibits
|
26
|
|
11.15
|
Captions
|
26
|
|
11.16
|
Drafting
of Agreement
|
26
|
|
11.17
|
Further
Assurances
|
26
|
|
11.18
|
Costs
and Expenses
|
26
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|
11.19
|
Counterparts
|
26
|
EXHIBITS
Exhibit
A
- Description of Leases
Exhibit
B-1 - Form of Lease Assignment
Exhibit
B-2 - Form of Lease Option Agreement Assignment
SCHEDULES
Schedule
4.1(f) -- Required Consents and Notifications
iv
This
Lease Purchase Agreement (this "Agreement") dated as of January 10, 2006,
by and between
PETRO RESOURCES CORPORATION, a Delaware corporation, doing business in
the
State of
Texas as PRCT, Inc. ("PRCT"), and THE MERIDIAN RESOURCE & EXPLORATION
LLC, a Delaware limited liability company ("Meridian"). PRCT and Meridian
are sometimes hereinafter referred to individually as a "Party" and
collectively as the "Parties".
WHEREAS,
PRCT owns the Leases (as defined below) and the "Lease Option" under
the
Lease
Option Agreement (as defined below); and
WHEREAS,
PRCT desires to convey to Meridian, and Meridian desires to acquire from PRCT,
an undivided seventy-five percent (75%) of PRCT's entire interests in and to
such Leases and Lease Option on the terms and conditions set forth herein;
and
WHEREAS,
Meridian desires to participate with PRCT in the drilling of certain xxxxx
on
the Subject Lands (as defined below) on the terms and conditions set forth
herein;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements made herein,
the Parties, intending to be legally bound, hereby agree as
follows:
ARTICLE
I
DEFINED
TERMS
1.1
Definitions.
The
defined terms used in this Agreement, shall, unless the context otherwise
requires, have the meanings specified in this Article I, with each such
definition being equally applicable both to the singular and the plural forms
of
the terms so defined.
(a) "Actions"
means any action, claim, suit, arbitration, inquiry, proceeding, investigation
or audit by or before any court or any Governmental Authority.
(b) "Affiliate"
means, when used with respect to any party, any other Person (a) which directly
or indirectly through one or more intermediaries controls, or is controlled
by,
or is under common control with, such party, or (b) which beneficially owns
or
holds more than 50% of any class of voting stock (or in the case of a Person
which is not a corporation, more than 50% of any class of equity interest)
of
such party, or
(c)
more than 50% of any class of whose voting stock (or in the case of a Person
which
is not a
corporation, more than 50% of any class of whose equity interest) is
beneficially owned or held by such party and its Affiliates. The term "control"
(including the terms "controlled by" and "under common control with") means
the
possession, directly or indirectly,
of the power to direct of cause the direction of the management or policies
of
a
Person,
whether through the ownership of voting stock or any equity interest, by
contract or otherwise.
(c) "AMI"
shall be as defined in Section 5.5.
1
(d) "AMI
Leases" shall mean any oil and gas leasehold interest covering lands located
within the AMI with respect to which a Party elected to acquire its
proportionate interest pursuant to the provisions of Section 5.5. If a
determination of whether a leasehold interest constitutes an AMI Lease must
be
made at a point in time when the time period under Section 5.5 for a Party
to
elect to acquire its interest is still extant and the Party timely elects to
acquire its interest, then such leasehold interest shall constitute an AMI
Lease
as of the time of such determination.
(e) "Applicable
Operating Agreement" means the Initial Operating Agreement or such other
operating agreement as may, by mutual agreement, be entered into by the Parties
after the Closing that governs and controls operations on all or part of the
AMI, as applicable.
(f) "Assignments"
shall be as defined in Section 5.1.
(g) "Assumed
Liabilities" means any Covered Liabilities arising out of or attributable to
the
ownership, use, maintenance or operation of the Subject Interests subsequent
to
Closing.
(h) "Business
Day" means any day which is not a Saturday, Sunday or legal holiday recognized
by the United States of America.
(i) "Closing"
means the consummation of the transactions contemplated by Article
VII.
(j) "Closing
Date" means January 10, 2006.
(k)
"Covered Liabilities" means any and all debts, losses, liabilities, duties,
claims, damages, obligations, payments (including those arising out of any
demand, assessment, settlement, judgment or compromise relating to any actual
or
threatened Action), taxes, costs and expenses (including any attorneys' fees
and
any and all expenses whatsoever incurred in investigating, preparing or
defending any Action), whether or not the same are, as of the date hereof,
matured or unmatured, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, known or unknown, including any of the foregoing arising under,
out of or in connection with any Action, any order or consent decree of any
Governmental Authority, any award of any arbitrator, or any Law, contract,
commitment or undertaking.
(l) "Defensible
Title" shall be as defined in Section 5.7.
(m) "Excluded
Liabilities" means any Covered Liabilities arising out of or attributable to
the
ownership, use, maintenance or operation of the Subject Interests and relating
specifically to acts or omissions during the period from the date of the
relevant Lease to the date of Closing.
(n) "Exploration
Agreement" means that certain Exploration Agreement by and between PRCT and
Meridian, executed on the date of execution of this Agreement.
2
(o) "Governmental
Authority" means (i) the United States of America, (ii) any state, county,
municipality or other governmental subdivision within the United States of
America, and (iii) any court or any governmental department, commission, board,
bureau, agency or other instrumentality of the United States of America or
of
any state, county, municipality or other governmental subdivision with the
United States of America.
(p) "Hydrocarbons"
means (i) crude oil, natural gas and other liquid or gaseous hydrocarbons and
(ii) all minerals and substances produced with or extracted, separated,
processed or produced from crude oil, natural gas or other liquid or gaseous
hydrocarbons.
(q) "Indemnified
Party" shall be as defined in Section 10.3.
(r) "Initial
Operating Agreement" means a Joint Operating Agreement by and between Meridian,
as operator, and PRCT, as non-operator, executed on the date of execution of
this Agreement.
(s) "Law"
means all applicable statutes, laws, ordinances, regulations, rules, rulings,
orders, decrees or other official acts of any Governmental
Authority.
(t)
"Leases"
means the oil and gas leases described in Exhibit
A.
(u) "Lease
Option Agreement" means that certain Lease Option Agreement dated effective
September 14, 2005, by and between Black Stone Acquisitions Partners I, L.P.,
and Sugarberry Oil & Gas Corporation, as Optionors, and PRCT, as
Optionee.
(v) "Lien"
means any lien, mortgage, charge, penalty, restriction, security, interest,
collateral assignment, pledge, sale or purchase contract, option, call or
dedication, right of first refusal or other preferential purchase right,
reservation, condition, sublease, license, area of mutual interest agreement,
operating agreement, processing contract, farmout or development agreement,
drilling or service contract, easement or right-of-way, pooling or unitization
order or agreement, or other encumbrance or similar agreement.
(w) "Meridian
Indemnified Parties" shall be as defined in Section 10.1.
(x) "Net
Revenue Interest" means, with respect to any Lease, an interest (expressed
as a
percentage or decimal fraction) in and to all Hydrocarbons produced and saved
from or attributable to the Subject Lands covered by such Lease, after giving
effect to all royalties, overriding royalties and other burdens upon, measured
by, or payable out of production therefrom.
(y) "Party"
shall be as defined in the preamble of this Agreement.
(z) "Permits"
means all permits, licenses, consents, approvals and filings which the lessee
under the Leases is required to obtain, have or make pursuant to
any
3
Law
or
with or from any Governmental Authority to permit or allow such lessee to
conduct any exploration, development, production, processing, abandonment or
other operations or activities with respect to the Leases or the Subject
Lands.
(aa) "Permitted
Encumbrances" means (A) the terms, conditions, restrictions, exceptions,
reservations, limitations and other matters contained in the agreements,
instruments and other documents which create PRCT's Interest (including the
Leases and the Lease Option Agreement), provided that the same (i) do not reduce
the Net Revenue Interest below that set forth in Exhibit
A
or (ii)
do not increase the Working Interest above that set forth in Exhibit
A
without
a proportionate increase in the Net Revenue Interest for the applicable Lease;
(B) statutory and conventional liens securing payments to operators, mechanics
and materialmen or others, payments of taxes or other claims or payment
obligations that are, in each case, not yet delinquent or, if delinquent, are
being contested in good faith in the normal course of business; (C) any
obligations or duties to any municipality or public authority with respect
to
any franchise, grant, certificate, license or permit; (D) any easements,
rights-of-way, servitudes, permits and other rights in respect of surface
operations, pipelines or the like, and easements for pipelines, power lines
and
other similar rights-of-way, and encroachments, on, over or in respect of any
of
the Leases that do not, individually or in the aggregate, unreasonably or
materially interfere with the operation of the Leases for exploration and
production of Hydrocarbons or related operations; (E) all royalties, overriding
royalties, net profits interests, production payments, carried interests,
reversionary interests, calls on production and other burdens on or deductions
from the proceeds of production that do not operate to (i) reduce the Net
Revenue Interest below that set forth in Exhibit
A
or (ii)
increase the Working Interest above that set forth in Exhibit
A
without
a proportionate increase in the Net Revenue Interest for the applicable Lease;
and (F) conventional rights of reassignment prior to abandonment. For the
avoidance of doubt, the terms and provisions of the Leases and the Lease Option
Agreement shall constitute Permitted Encumbrances.
(bb) "Person"
means any individual, firm, corporation, partnership, joint venture, trust,
unincorporated organization, Governmental Authority, or other entity or
organization.
(cc) "Post-Closing
Defect Notice Date" shall be as defined in Section 5.6.
(dd) "PRCT
Indemnified Parties" shall be as defined in Section 10.2.
(ee) "PRCT's
Interest" means, when used with respect to any Lease or the Lease Option
Agreement, all of PRCT's right, title and interest therein.
(ff) "PRCT's
Retained Interest" means PRCT's Interest save, less and except the Subject
Interests.
(gg) "Preference
Right" means any right or agreement that enables or may enable any Person to
purchase or acquire any Subject Interest or any interest therein or portion
thereof as a result of or in connection with (i) the sale, assignment,
encumbrance or other transfer of any Subject Interest or any interest therein
or
portion thereof or (ii)
4
the
execution or delivery of this Agreement or any Assignment or the consummation
or
performance of the terms and conditions contemplated by this Agreement or any
Assignment.
(hh) "Purchase
Price" shall be as defined in Section 3.1.
(ii) "Related
Agreements" shall mean the Assignments, the Initial Operating Agreement and
the
Exploration Agreement.
(jj) "Subject
Interests" means an undivided seventy-five percent (75%) interest in and to
PRCT's Interest in the Leases and the Lease Option Agreement.
(kk) "Subject
Lands" means (i) the lands covered by the Leases and (ii) all lands now or
hereafter pooled or unitized with the lands described in clause (i) above or
with portions thereof.
(ll) "Third
Party Liabilities" means any Covered Liabilities to the extent the same arise
out of or result from any claim, demand or cause of action (or threatened cause
of action) which is at any time made, asserted or threatened against a Meridian
Indemnified Party by a Person which is not a Meridian Indemnified Party or
an
Affiliate of a Meridian Indemnified Party.
(mm) "Title
Defect" shall be as defined in Section 5.7.
(nn) "Title
Defect Amount" shall be as defined in Section 5.8.
(oo) "Working
Interest" means, with respect to any Lease, an interest (expressed as a
percentage or decimal fraction) in and to such Lease and all rights and
obligations of every kind and character appurtenant thereto, or arising
therefrom, without regard to any royalties, overriding royalties or other
encumbrances or charges against production
therefrom, insofar as such interest is burdened with the obligations to bear
and pay
costs
and expenses attributable to the maintenance, development and operation of
the
leasehold interest in Hydrocarbons in and under the Subject Lands covered by
such Lease.
1.2 References,
Gender, Number.
All
references in this Agreement to an "Article," "Section," or "subsection" shall
be to an Article, Section or subsection of this Agreement, unless the context
requires otherwise. Unless the context otherwise requires, the words "this
Agreement," "hereof," "hereunder," "herein," "hereby," or words of similar
import shall refer to this Agreement as a whole and not to a particular Article,
Section, subsection, clause or other subdivision hereof. Whenever the context
requires, the words used herein shall include the masculine, feminine and neuter
gender, and the singular and the plural. The word "including" means "including
without limitation".
5
ARTICLE
II
AGREEMENT
TO CONVEY
Subject
to the terms and conditions of this Agreement, PRCT agrees to assign and
convey
to
Meridian, and Meridian agrees to acquire from PRCT, the Subject
Interests.
ARTICLE
III
CONSIDERATION
AND PAYMENT
3.1 Consideration.
The
consideration for the assignment and conveyance of the Subject Interests is
Three Million Nine Hundred Fifty-Three Thousand Seven Hundred Eighty-Five and
No/100 Dollars ($3,953,785.00) (the "Purchase Price").
3.2 Payment.
The
Purchase Price provided for in Section 3.1 shall be paid by Meridian to PRCT
at
Closing by wire transfer of immediately available funds to Whitney National
Bank, River Oaks Branch, Houston, Texas ABA 000000000 FAO: Petro Resources
Corporation Account Number 7502-75588.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
4.1
Representations
and Warranties of PRCT.
PRCT
represents and warrants to Meridian as of the date hereof as
follows:
(a) Organization
and Qualification.
PRCT is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and in the State of Texas, doing business as
PRCT,
Inc., and has the requisite corporate power to carry on its business as it
is
now being conducted. PRCT is duly qualified or licensed to do business, and
is
in good standing, in each jurisdiction in which the character of the property
or
assets owned, leased or operated by it, or the nature of the business conducted
by it, makes such qualification or licensing necessary and the failure so to
qualify or be licensed would have a material adverse effect on the transactions
or performance contemplated under this Agreement.
(b) Non-Foreign
Status.
PRCT is
not a "foreign person" within the meaning of the Internal Revenue Code of 1986,
as amended (the "Code"), Sections 1445 and 7701.
(c) No
Investment Company.
PRCT is
not (a) an investment company or a company controlled by an investment company
within the meaning of the Investment Company Act of 1940, as amended, or (b)
subject in any respect to the provisions of that Act.
(d) Authority.
PRCT has
all requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement. The execution,
delivery and performance of this Agreement and the transactions contemplated
hereby have been duly and validly authorized by all requisite corporate action
on the part of PRCT.
6
(e) Enforceability. This
Agreement constitutes a valid and binding agreement of PRCT enforceable against
it in accordance with its terms, subject to:
(i) applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application with respect to creditors,
(ii) general
principles of equity, and
(iii) the
powers of a court to deny enforcement of remedies generally based upon public
policy.
(f) No
Conflict or Violation.
Neither
the execution and delivery of this Agreement nor the consummation of the
transactions and performance of the terms and conditions contemplated hereby
by
PRCT will:
(i) conflict
with or result in any breach of any provision of the certificate of
incorporation or bylaws (or other similar governing documents) of PRCT;
or
(ii) be
rendered void or ineffective by or under the terms, conditions or provisions
of any agreement, instrument or obligation to which PRCT is a party
or
is
subject or by which any of its properties or assets are bound;
provided
that, the consents and waivers of third Persons expressly described and set
forth in Section 4.1(f) are obtained as provided herein.
(g) Consents.
Except
for the consents and notifications expressly described and set forth in
Schedule
4.1(f),
and subject to obtaining, satisfying or complying with any Permits, no consent,
approval, authorization or permit of, or filing with or notification to, any
Person is required for or in connection with the execution and delivery of
this
Agreement by PRCT or for or in connection with the consummation of the
transactions and performance of the obligations of PRCT hereunder.
(h) Actions;
Orders.
(i) There
are
no Actions pending or, to the knowledge of PRCT, threatened against PRCT or
any
Affiliate of PRCT which relate to the Leases or the Lease Option Agreement
or
the transactions contemplated by this Agreement.
(ii) Except
for orders of general applicability to oil and gas operators in Texas, and
except for Permits, there is no judgment or outstanding order, injunction,
decree or award rendered by any Governmental Authority by which PRCT or any
Affiliate of PRCT is bound and which relates to the Leases or the Lease Option
Agreement or the transactions contemplated by this Agreement.
(i) Brokerage
Fees and Commissions. PRCT has not incurred any obligation or entered
into any agreement for any investment banking, brokerage or
7
finder's
fee or commission in respect of the transactions contemplated by this
Agreement
for
which Meridian shall incur any liability.
(j) Compliance
with Leases; Status of Operations.
Except
for Permitted Encumbrances,
(i) the
Leases and the Lease Option Agreement have not been amended or
modified;
(ii) to
the
actual knowledge of PRCT, there are no violations or breaches
thereof by PRCT or existing facts or circumstances which upon notice
or
the
passage of time or both will constitute a violation or breach thereof by
PRCT;
(iii) no
notice
of any alleged default or non-compliance by PRCT with respect to the Leases
or
the Lease Option Agreement or operations with respect thereto has been received
by PRCT or any Affiliate of PRCT; and
(iv) PRCT
is
not participating in any discussions or negotiations regarding amendment or
modification of the Leases or the Lease Option Agreement.
Neither
PRCT nor any of its Affiliates has conducted or caused to be conducted any
drilling or other operations on the Subject Lands and, to PRCT's knowledge,
no
third Person has conducted any such operations on the Subject Lands under the
terms of any of the Leases.
(k) Preference
Rights.
Neither
PRCT nor any Affiliate of PRCT has entered into any agreement that makes the
Leases or the Lease Option Agreement subject to any Preference Rights and
neither PRCT nor any Affiliate of PRCT is bound by any Preference Right
affecting any of the Leases or the Lease Option Agreement, other than this
Agreement, the Exploration Agreement and the Initial Operating
Agreement.
(l) Contracts
and Leases.
Set
forth in Exhibit A is a true and correct description of each contract,
agreement, or similar arrangement entered into by PRCT or its Affiliates to
which any of the Leases is subject which:
(i) is
a
contract for the sale, purchase, processing or transportation of, or creates
a
purchase option, right of first refusal or call on, any Hydrocarbons produced
from or attributable to the Subject Lands or Leases;
(ii) creates
any area of mutual interest with respect to the acquisition by PRCT or its
assigns of any interest in any Hydrocarbons, lands or assets;
(iii) creates
or evidences any Preference Right affecting any Lease or interest therein,
whether or not applicable to the transactions contemplated by this Agreement;
or
(iv) creates
or evidences a joint operating agreement, unitization agreement, pooling
agreement, farmout agreement, farmin agreement,
8
participation
agreement, joint venture agreement, partnership agreement or similar
agreement.
(m) Tax
Partnerships.
The
Leases are not subject to any tax partnership agreement or provisions requiring
a partnership income tax return to -be filed under Subchapter K of Chapter
1 of
Subtitle A of the Code.
(n) Bankruptcy.
There
are no bankruptcy, reorganization or arrangement proceedings pending against,
being contemplated by, or, to the knowledge of PRCT, threatened against
PRCT.
(o) PRCT's
Knowledge.
PRCT has
no actual knowledge of any fact which results in any representation or warranty
of Meridian in Section 4.2 being breached. If after Closing PRCT obtains
knowledge of any fact which results in any representation or warranty of
Meridian in Section 4.2 being breached, PRCT will promptly furnish Meridian
written notice thereof.
All
representations and warranties of PRCT contained in this Agreement and the
special warranty of title set forth in the Assignments are exclusive, and are
given in lieu of all other representations and warranties, express, implied
or
statutory.
THERE
ARE NO COVENANTS, REPRESENTATIONS OR WARRANTIES THAT EXTEND BEYOND THE FACE
OF
THIS AGREEMENT. THE EXPRESS COVENANTS, REPRESENTATIONS AND WARRANTIES OF PRCT
CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF, AND PRCT EXPRESSLY
DISCLAIMS AND NEGATES, AND MERIDIAN HEREBY WAIVES, ALL OTHER COVENANTS,
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE.
AS
EXAMPLES AND FOR THE AVOIDANCE OF DOUBT, BUT WITHOUT LIMITATION OF THE
FOREGOING, EXCEPT AS EXPRESSLY PROVIDED IN SECTION 4.1 OF THIS AGREEMENT AND
THE
SPECIAL WARRANTY OF TITLE TO THE SUBJECT INTERESTS CONTAINED IN THE ASSIGNMENT,
THE SUBJECT INTERESTS SHALL
BE
CONVEYED AND ACCEPTED PURSUANT HERETO WITHOUT ANY OTHER
COVENANT, REPRESENTATION OR WARRANTY, WHETHER EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, WITH RESPECT TO (A) THE QUANTITY, QUALITY, CONDITION, SIZE, WEIGHT,
SERVICEABILITY, CONFORMITY TO SAMPLES OF MODELS, (B) ANY OTHER ASPECT OR
CONDITION OF THE SUBJECT INTERESTS, ALL OF WHICH SHALL BE CONVEYED BY PRCT
TO
MERIDIAN AS IS, WHERE IS, AND WITH ALL FAULTS AND DEFECTS AND IN THEIR PRESENT
CONDITION AND STATE OF REPAIR AND WITHOUT ANY COVENANTS, REPRESENTATIONS OR
WARRANTIES, WHATSOEVER OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR
PURPOSE, (C) THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS,
PROJECTIONS, INFORMATION OR MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED
OR
MADE AVAILABLE TO MERIDIAN BY, ON BEHALF OF OR AT THE DIRECTION OF PRCT IN
CONNECTION WITH THIS AGREEMENT INCLUDING THAT RELATIVE TO PRICING ASSUMPTIONS,
QUALITY, QUANTITY OR VOLUMES OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE
TO
THE SUBJECT INTERESTS OR THE ABILITY OR POTENTIAL OF THE SUBJECT
9
INTERESTS
OR THE SUBJECT LANDS TO PRODUCE HYDROCARBONS, (D) THE PHYSICAL AND ENVIRONMENTAL
CONDITION OF THE SUBJECT LANDS, BOTH SURFACE AND SUBSURFACE, INCLUDING BUT
NOT
LIMITED TO CONDITIONS SPECIFICALLY RELATED TO THE PRESENCE, RELEASE OR DISPOSAL
OF HAZARDOUS SUBSTANCES, SOLID WASTES, ASBESTOS AND OTHER MAN MADE FIBERS,
OR
NATURALLY OCCURRING RADIOACTIVE MATERIALS, IT BEING AGREED BY MERIDIAN THAT
ANY
AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION AND OTHER
MATERIALS (WRITTEN OR ORAL) FURNISHED OR OTHERWISE MADE AVAILABLE OR DISCLOSED
TO MERIDIAN HAVE BEEN AND WILL BE PROVIDED TO MERIDIAN AS A CONVENIENCE AND
SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST PRCT AND ANY
RELIANCE ON OR USE OF THE SAME SHALL BE AT MERIDIAN'S SOLE RISK. TO THE MAXIMUM
EXTENT PERMITTED BY LAW, (E) TITLE TO OR THE OWNERSHIP OR OPERATION OF THE
SUBJECT INTERESTS OR ANY
PART
THEREOF AND (F) THE ACCURACY OR COMPLETENESS OF ANY REPORT, ASSESSMENT OR OTHER
MATERIAL PURPORTING TO ASSESS OR ALLOCATE PRODUCTION, RESERVES OR VALUE TO
ANY
SUBJECT INTERESTS OR THE SUBJECT LANDS. PRCT AND MERIDIAN ACKNOWLEDGE THAT
THE
WAIVERS AND DISCLAIMERS IN THIS SECTION ARE CONSPICUOUS.
4.2 Representations
and Warranties of Meridian.
Meridian
represents and warrants to PRCT
as
of the
date hereof as follows:
(a) Organization
and Qualification.
Meridian
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Delaware, and has the requisite corporate power to carry
on
its business as it is now being conducted. Meridian is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction in which
the character of the property or assets owned, leased or operated by it, or
the
nature of the business conducted by it, makes such qualification or licensing
necessary and the failure so to qualify or be licensed would have a material
adverse effect on the transactions or performance contemplated under this
Agreement.
(b) Authority.
Meridian
has all requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement. The execution,
delivery and performance of this Agreement and the transactions contemplated
hereby have been duly and validly authorized by all requisite corporate action
on the part of Meridian.
(c) Enforceability.
This
Agreement constitutes a valid and binding agreement of Meridian enforceable
against it in accordance with its terms, subject to:
(i) applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application with respect to creditors,
(ii) general
principles of equity, and
10
(iii) the
power
of a court to deny enforcement of remedies generally based upon public
policy.
(d) No
Conflict or Violation.
Neither
the execution and delivery of this Agreement nor the consummation of the
transactions and performance of the terms and conditions contemplated hereby
by
Meridian will:
(i) conflict
with or result in any breach of any provision of the certificate of
incorporation or bylaws (or other similar governing documents) of Meridian;
or
(ii) by
rendered void or ineffective by or under the terms, conditions or provisions
of
any agreement, instrument or obligation to which Meridian is a party or is
subject or by which any of its properties or assets are bound.
(e) Consents.
Subject
to obtaining, satisfying or complying with any Permits, no consent, approval,
authorization or permit of, or filing with or notification to, any Person is
required for or in connection with the execution and delivery of this Agreement
by Meridian or for or in connection with the consummation of the transactions
and performance of the obligations of Meridian hereunder.
(f) Actions;
Orders.
(i) There
are
no Actions pending or, to the knowledge of Meridian, threatened against Meridian
or any Affiliate of Meridian which relate to the transactions contemplated
by
this Agreement.
(ii) Except
for orders of general applicability to oil and gas operators in the State of
Texas, and except for Permits, there is no judgment or outstanding order,
injunction, decree or award rendered by any Governmental Authority by which
Meridian or any Affiliate of Meridian is bound and which relates to the
transactions contemplated by this Agreement.
(g) Brokerage
Fees and Commissions.
Meridian
has not incurred any obligation or entered into any agreement for any investment
banking, brokerage or finder's fee or commission in respect of the transactions
contemplated by this Agreement for which PRCT shall incur any
liability.
(h) Independent
Evaluation.
Meridian
acknowledges that it is an experienced and knowledgeable investor in the oil
and
gas business, and the business of purchasing, owning, developing and operating
oil and gas properties such as the Subject Interests. Meridian represents and
acknowledges that it has had access to the Subject Interests, the Leases, the
Lease Option Agreement and the lands subject thereto, the officers, and
employees of PRCT, and to the books, records and files of PRCT relating to
the
Subject Interests, the Leases, the Lease Option Agreement and the lands subject
thereto. In making the decision to enter into this Agreement and to consummate
the transactions contemplated hereby, Meridian (i) has relied solely upon its
own independent due diligence investigation of the Subject Interests, the
Leases, the Lease
11
Option
Agreement and the lands subject thereto and upon the representations,
warranties,
covenants and agreements set forth in this Agreement, and (ii) has been (or
has
had the opportunity
to be) advised by and has relied solely on its own expertise and its own
legal,
tax,
operations, reservoir engineering and other professional counsel and advisors
concerning this transaction, the Subject Interests, the Leases, the Lease Option
Agreement and the lands subject thereto, and the value thereof. In addition,
Meridian acknowledges that in connection with any environmental or title review,
Meridian has been advised by and shall rely solely on its own expertise, its
own
legal counsel and any advisors or experts concerning matters relating to title,
environmental compliance and liabilities
and upon the representations, warranties, covenants and agreements set forth
in
this
Agreement.
(i) Qualification.
As of
Closing Meridian is, and thereafter shall continue to be,
qualified with all applicable Governmental Authorities to own and operate the
Leases
and the
lands covered thereby, including any bonding requirements of such Governmental
Authorities.
(j) Securities
Laws.
Meridian
is acquiring the Subject Interests for its own account and not with a view
to,
or for offer of resale in connection with, a distribution thereof, within the
meaning of the Securities Act of 1933, 15 U.S.C.
§
77a
et
seq., and
any
other rules, regulations, and Laws pertaining to the distribution of securities.
Meridian has not sought or solicited, nor is Meridian participating with,
investors, partners or other third parties in order to fund the Purchase Price
and to close this transaction, and all funds used by Meridian in connection
with
this transaction are Meridian's own funds.
(k) No
Holding Company.
Meridian
is not (a) a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility company" within the meaning of
the
Public Utility Holding Company Act of 1935, as amended, or (b) subject in any
respect to the provisions of that Act, other than Section 9(a)(2)
thereof,
(l) Funds.
Meridian
has immediately available funds to enable Meridian to pay in full the Purchase
Price as herein provided and otherwise to perform its obligations under this
Agreement and the Exploration Agreement.
(m) Bankruptcy.
There
are no bankruptcy, reorganization or arrangement proceedings pending against,
being contemplated by, or, to the knowledge of Meridian, threatened against
Meridian.
(n) Meridian's
Knowledge.
Meridian
has no actual knowledge of any fact which results in any representation or
warranty of PRCT in Section 4.1 being breached. If after Closing Meridian
obtains knowledge of any fact which results in any representation or warranty
of
PRCT in Section 4.1 being breached, Meridian will promptly furnish PRCT written
notice thereof.
12
ARTICLE
V
COVENANTS
OF PRCT AND MERIDIAN
5.1 Assignments.
Upon
the
terms and subject to the conditions of this Agreement, at the Closing, PRCT
and
Meridian shall execute and deliver Assignments of the Subject Interests
substantially in the forms attached hereto as Exhibits
B-1 and B-2
(the
"Assignments"). The Assignments delivered to Meridian pursuant to this Agreement
shall include a pro rata share (based on the percentage interest assigned)
of
PRCT's interest in and obligations under all agreements affecting such Subject
Interests which are described in Exhibit
A
insofar
as the same are attributable to the period after the effective date of such
Assignment.
5.2 Data
and Information.
(a) Lease
and Land Information.
Immediately following the execution of this Agreement, Meridian shall have
the
right from time to time, without charge, to examine and copy the Leases and
the
Lease Option Agreement and any and all lease and land information, summaries
and
plats describing the Leases and the Lease Option Agreement and all title
opinions and reports and other title information relating thereto in PRCT's
possession or control that have not been previously delivered to
Meridian.
(b) Geological
and Geophysical Data.
Immediately following the execution of this Agreement, Meridian shall have
the
right from time to time, without charge, to review and analyze all of PRCT's
proprietary geological and geophysical data and information, and evaluations
and
interpretations thereof, and all well logs and information, relating to the
AMI
or to lands adjacent to any of the AMI insofar as any such data or information
relating to such adjacent lands also relates to the AMI, to the full extent
that
PRCT has the right to make such data and information available to Meridian
under
the provisions of any relevant license or agreement through which PRCT acquired
possession of such data or information and may do so without violating any
other
legal constraints or legal obligations. MERIDIAN
UNDERSTANDS AND AGREES THAT PRCT MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS
OR IMPLIED, AS TO THE ACCURACY, COMPLETENESS, MERCHANTABILITY, FITNESS FOR
ANY
PARTICULAR PURPOSE OR CONDITION OF THE INFORMATION MADE AVAILABLE TO MERIDIAN
PURSUANT TO THIS SUBSECTION OR OF ANY GEOLOGICAL, GEOPHYSICAL, ENGINEERING,
ECONOMIC OR OTHER INTERPRETIVE DATA OTHERWISE MADE AVAILABLE BY PRCT TO MERIDIAN
PURSUANT TO THIS AGREEMENT.
Immediately following the execution of this Agreement, PRCT shall have the
right
from time to time, without charge, to review and analyze all of Meridian's
proprietary geological and geophysical data and information, and evaluations
and
interpretations thereof, and all well logs and information, relating to the
AMI
or to lands adjacent to any of the AMI insofar as any such data or information
relating to such adjacent lands also relates to the AMI, to the full extent
that
Meridian has the right to make such data and information available to PRCT
under
the provisions of any relevant license or agreement through which Meridian
acquired possession of such data or information and may do so without violating
any other legal constraints or legal obligations. PRCT
UNDERSTANDS AND AGREES THAT MERIDIAN MAKES NO WARRANTIES
13
OR
REPRESENTATIONS, EXPRESS OR IMPLIED, AS TO THE ACCURACY, COMPLETENESS,
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE OR CONDITION OF THE
INFORMATION MADE AVAILABLE TO PRCT PURSUANT TO THIS SUBSECTION OR OF ANY
GEOLOGICAL, GEOPHYSICAL, ENGINEERING, ECONOMIC OR OTHER INTERPRETIVE DATA
OTHERWISE MADE AVAILABLE BY MERIDIAN TO PRCT PURSUANT TO THIS
AGREEMENT.
5.3 Confidentiality.
All
data, information and reports furnished or acquired by either Party under this
Agreement shall be kept confidential, and each Party agrees to exercise
reasonable care and precautions to prevent the publication, dissemination or
disclosure of any such data, information and reports or copies thereof, to
any
third Person whomsoever; provided, however, that each Party shall have the
right
to make such data, information and reports or copies thereof available to
Governmental Authorities, prospective purchasers of leasehold or other
interests in Subject Lands or institutional lenders providing financing to
such
Party, to such
Party's
consultants for evaluation purposes, to such Party's Affiliates and to such
Party's successor by merger or reorganization, provided that permitted
disclosures shall be made in such a way as to prevent further disclosure to
the
greatest extent reasonably possible. The foregoing obligations of
confidentiality and non-publication, non-dissemination and non-disclosure shall
not apply to (i) information known to the industry or the public at the time
of
disclosure or that subsequently becomes known to the industry or the public
through no fault of the receiving Party, (ii) disclosure that based on the
advice of counsel to the disclosing Party is required to be disclosed to comply
with any Law, any rule of any securities exchange on which the disclosing Party
or any Affiliate of the disclosing Party is listed or the terms of any of the
Leases or AMI Leases.
5.4 Best
Efforts.
Subject
to the other terms and conditions of this Agreement, PRCT and
Meridian each agrees to use its best efforts to take, or cause to be taken,
all
actions and to do,
or cause
to be done, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement and to cooperate with the other in connection with the foregoing,
including using its best efforts (a) to obtain all consents and file all notices
set forth in Schedule
4.1(f).
The
Parties' respective obligations to use best efforts shall not require or
obligate any Party (1) to pay any penalty, premium or consideration to obtain
any waiver, consent, approval or election, (2) to modify its rights or
obligations under any existing agreement, lease or other contract, or (3) to
violate any applicable Law.
5.5
Area
of Mutual Interest.
(a) General.
An area
of mutual interest among the Parties is hereby established consisting of all
the
lands situated in Motley and Xxxxx Counties, Texas (the "AMI"), In the event
any
oil and gas leasehold interests, fee interest, mineral interest (including
royalty, overriding royalty, executive rights and non-participating mineral
interests) or contractual rights to earn or acquire any such interests are
acquired by either Party, by purchase, assignment or otherwise, in lands lying
within the AMI following the date of this Agreement and during the time this
area of mutual interest provision is in force, the Party acquiring such interest
shall give written notice of such acquisition to the
14
other
Party identifying the interest acquired and specifying the cost of such
acquisition. The Party receiving such notice shall have the right, by giving
written notice to the acquiring Party within fifteen (15) days (or forty-eight
(48) hours if there is a well drilling in the area which will affect the value
of the interest acquired) after receipt of notice of such acquisition, to
purchase and acquire an undivided interest in the acquired interest. Each Party
shall be entitled to acquire an interest in the proportion that such Party's
interest in the Leases bears to the total interest of the Parties in the Leases,
being an undivided seventy five percent (75%) for Meridian and an undivided
twenty five percent for PRCT (25%). The election to participate in the
acquisition must be accompanied by payment of such participating Party's
proportionate part of the actual costs of such acquisition, and further the
agreement of such Party to bear its proportionate part of the obligations in
connection with such acquisition (including, subject to the provisions of the
Exploration Agreement, the costs of drilling, if drilling is necessary to earn
the acreage sought to be acquired). In the event a part of the consideration
concerning the cost of acquisition requires the drilling of an oil or gas well
prior to earning an assignment of any oil or gas leasehold or other interests,
for the purpose of this paragraph it shall be considered that such oil and
gas
leasehold or other interests have been acquired and the notice to the
non-acquiring Party shall be made as soon as the agreement to acquire the same
has been executed. If such Party receiving such notice timely elects to purchase
and acquire such undivided interest, the acquiring Party shall transfer such
undivided interest to such other Party by assignment without warranty of title,
either express or implied, except as to claims of all persons claiming or to
claim the same or any part thereof by, through or under the assigning Party.
Failure by any Party to respond within said fifteen (15) day (or 48-hour) period
in the manner specified shall constitute an election by such Party not to
acquire an interest in the acquired interest. In the case of an acquired
interest in which both Parties participate, such acquired interest shall be
added to and included within the Contract Area under the Operating Agreement
and
all terms and provisions of the Operating Agreement shall be applicable to
such
interest and shall govern the exploration, development and operation of such
interest. This area of mutual interest agreement shall continue in force for
a
period of five (5) years after the Closing Date. The provisions of this Section
5.5(a) shall not apply to an acquisition by one Party of the interest of another
Party in the Leases or any AMI Leases.
(b) Occidental.
Mention
is made that Meridian is presently negotiating with Occidental Petroleum
Corporation for the purchase of certain oil and gas leasehold interests in
lands
situated within the AMI. For the avoidance of doubt, it is expressly understood
and agreed that any such interests so acquired by Meridian shall be subject
to
the provisions of this Section 5.5.
(c) Incorporation
of AMI in Operating Agreement.
Each
Operating Agreement shall include or reference the rights and obligations of
the
Parties under Section 5.5 of this Agreement.
5.6 Post-Closing
Title Review.
(a) After
Closing, Meridian shall promptly but not later than sixty (60) days following
the original Closing Date (the "Post-Closing
Defect Notice Date")
give
PRCT
15
written
notice of matters discovered by Meridian after Closing which, in Meridian's
opinion, constitute Title Defects and which Meridian intends to assert as a
Title Defect with respect to any Lease or portion thereof pursuant to this
Section 5.6. In such event, PRCT shall have the right to attempt to cure or
remedy any such Title Defects at PRCT's sole cost and expense, and if Title
Defects are cured or remedied to Meridian's reasonable satisfaction prior to
the
expiration of thirty (30) days after the Post-Closing Defect Notice Date, then
the Purchase Price shall not be reduced in respect of such cured or remedied
Title Defects. If, however, any such Title Defects remain uncured or unremedied
thirty (30) days following the Post-Closing Defect Notice Date, then (subject
to
Section 5.9) the Purchase Price shall be reduced by an amount equal to the
aggregate of all Title Defect Amounts with respect to any such Title Defects
that then remain uncured or unremedied. To effect such reduction, PRCT shall
(subject to Section 5.9), within two (2) Business Days following the expiration
of such thirty (30) day period, reimburse Meridian, by wire transfer of
immediately available funds, to a bank account designated by Meridian in writing
to PRCT prior to the expiration of such thirty (30) day period, in an amount
equal to the aggregate of all Title Defect Amounts with respect to such uncured
or unremedied Title Defects. In the event any portion of the Purchase Price
is
reduced in respect of any Title Defect resulting in a total failure of
Defensible Title to the Subject Interests related to a particular Lease or
portion thereof, then promptly following a request therefor by PRCT, and
provided Meridian shall have received reimbursement from PRCT, as above
provided, in respect of such Title Defect, Meridian shall execute and deliver
to
PRCT a quitclaim, in recordable form, of any and all right, title
and
interest of Meridian in and to such Subject Interest, free and clear of any
burdens
or
encumbrances created by Meridian.
(b) In
the
event that the Title Defects that are asserted by Meridian pursuant to Section
5.6(a) that constitute Title Defects that are not cured or remedied by PRCT
to
Meridian's reasonable satisfaction prior to the expiration of such thirty (30)
day period provided for in Section 5.6(a) affect more than ten percent (10%)
of
the net mineral acres covered by the Leases, then Meridian shall have the right,
at its sole option, exercisable by giving written notice to PRCT prior to the
expiration of fifteen (15) days following such thirty (30) day period, (i)
to
re-assign to PRCT the Subject Interests, without warranty of title, either
express or implied (except for claims of any person or persons lawfully claiming
or to claim the same or any part thereof by, through or under Meridian) and
otherwise upon terms and conditions substantially as set forth in the
Assignments to be delivered by PRCT to Meridian as provided herein, and (ii)
to
receive back from PRCT the entire amount of the Purchase Price (or adjusted
Purchase Price, as the case may be) that was paid by Meridian to PRCT at the
Closing pursuant to this Agreement.
(c) In
the
event that the Title Defects asserted by Meridian pursuant to Section 5.6(a)
that constitute Title Defects that are not cured or remedied by PRCT to
Meridian's reasonable satisfaction prior to the expiration of such thirty (30)
day period provided for in Section 5.6(a) affect more than twenty percent (20%)
of the net mineral acres covered by the Leases, then PRCT shall have the right,
at its sole option, exercisable by giving written notice to Meridian prior
to
the expiration of fifteen (15) days following such thirty (30) day period,
(i)
to require that Meridian re-assign to PRCT the Subject Interests, without
warranty of title, either express or implied (except for claims of
any
16
person
or
persons lawfully claiming or to claim the same or any part thereof by, through
or under Meridian) and otherwise upon terms and conditions substantially as
set
forth in the Assignments to be delivered by PRCT to Meridian as provided herein,
for a purchase price equal to the entire amount of the Purchase Price (or
adjusted Purchase Price, as the case may be) that was paid by Meridian to PRCT
at the Closing pursuant to this Agreement.
(d)
In
the event that either Meridian or PRCT timely exercises the option provided
for
in Section 5.6(a) or (b) above, such repurchase, assignment and reimbursement
shall occur at a closing to be held on the fifth (5th)
Business Day following Meridian's notice to PRCT pursuant to Section 5.6(b)
or
PRCT's notice to Meridian pursuant to Section 5.6(c), as the case may be, at
the
same place as the Closing unless otherwise mutually agreed by the Parties.
Upon
any such closing, this Agreement, the Exploration Agreement and each Applicable
Operating Agreement shall thereupon terminate and the Parties shall be released
from any and all liabilities and obligations hereunder or
thereunder.
5.7
Determination
of Title Defects.
A Lease
or portion thereof shall be deemed to have a "Title Defect" if any one or
more of the following statements is untrue with respect to such Lease or portion
thereof as of the Closing Date:
(a) PRCT
has
Defensible Title thereto.
(b) All
lease
bonus, royalties, rentals, Xxxx clause payments, shut-in gas payments and other
payments due with respect to such Lease or portion thereof have been properly
and timely paid.
(c) PRCT
is
not in default (and there exists no event or circumstance which with notice
or
the passage of time or both could constitute a default by PRCT) under the terms
of such Lease.
(d) All
consents to assignment or notices of assignment, if any, which are applicable
to
or must be complied with in connection with the sale, assignment or transfer
contemplated by this Agreement, or any prior sale, assignment or transfer of
such Lease or portion thereof, have been obtained and complied
with.
The
term
"Defensible
Title"
as used
herein means, respectively as to the Subject Interest or Subject Interests
related to a particular Lease or portion thereof, record title to such Subject
Interest that: (i) entitles PRCT to receive and retain, without suspension,
reduction or termination, not less than the applicable Net Revenue Interest
or
Net Revenue Interests specified for such Subject Interest in Exhibit
A
through
plugging, abandonment and salvage of all xxxxx hereafter producing from or
attributable to such Subject Interest; (ii) obligates PRCT to bear the costs
and
expenses attributable to the maintenance, development, and operation of such
Subject Interest through plugging, abandonment and salvage of all xxxxx
hereafter producing from or attributable to such Subject Interest in an amount
not greater than the applicable Working Interest or Working Interests specified
for such Subject Interest in Exhibit
A
unless
PRCT's Net
17
Revenue
Interest therein is proportionately increased; and (iii) except for Permitted
Encumbrances, is free and clear of all Liens.
5.8
Title
Defect Amount.
The term
"Title Defect Amount" means, with respect to any portion of a Lease
affected by a Title Defect, the sum of Two Hundred Twenty-Five and No/100
Dollars ($225.00) per net mineral acre of Subject Lands affected by such Title
Defect.
5.9 Title
Defect Deductible.
Notwithstanding anything to the contrary contained in this Agreement, (a) the
Purchase Price shall not be reduced pursuant to Section 5.6 unless Title Defects
affect more than two percent (2%) of the aggregate net mineral acres covered
by
the Leases, and (b) if Title Defects affect more than two percent (2%) of the
aggregate net mineral acres covered by the Leases, then any Purchase Price
reduction provided for herein shall limited to the extent to which the net
mineral acres affected by such Title Defects exceed two percent (2%) of the
entire net mineral acres covered by the Leases.
ARTICLE
VI
CLOSING
CONDITIONS
6.1 PRCT's
Closing Conditions.
The
obligation of PRCT to consummate the transactions contemplated hereby is
subject, at the option of PRCT, to the satisfaction on or prior to the Closing
Date of all of the following conditions:
(a) Representations,
Warranties and Covenants.
The (1)
representations and warranties of Meridian contained in this Agreement shall
be
true and correct in all material respects on and as of the Closing Date, and
(2)
covenants and agreements of Meridian to be performed on or before the Closing
Date in accordance with this Agreement shall have been duly performed in all
material respects.
(b) Officer's
Certificate.
PRCT
shall have received a certificate dated as of the Closing Date, executed by
a
duly authorized officer of Meridian, to the effect that to such officer's
knowledge the conditions set forth in paragraph (a) of this Section 6.1 have
been satisfied.
(c) Assignments.
Meridian
shall have executed and delivered the Assignments and the Initial Operating
Agreement prior to or on the Closing Date and complied with its other
obligations at Closing.
(d) Consents
and Waivers.
PRCT
shall have received a written consent (in form and substance reasonably
satisfactory to Meridian) executed by each of the third parties mentioned in
Schedule
4.1(f),
consenting to the assignment by PRCT to Meridian of the Leases and/or Lease
Option Agreement as to which the assignment thereof requires such third party's
consent or approval.
(e) No
Action.
On the
Closing Date, no suit, action or other proceeding (excluding any such matter
initiated by PRCT or any of its Affiliates) shall be pending or threatened
before any court or governmental agency or body of competent jurisdiction
seeking to enjoin or restrain the consummation of this Agreement or recover
damages from PRCT resulting therefrom.
18
6.2 Meridian's
Closing Conditions.
The
obligation of Meridian to consummate the transactions contemplated hereby is
subject, at the option of Meridian, to the satisfaction on or prior to the
Closing Date of all of the following conditions:
(a) Representations,
Warranties and Covenants.
The (1)
representations and warranties of PRCT contained in this Agreement shall be
true
and correct in all material respects on and as of the Closing Date, and (2)
covenants and agreements of PRCT to be performed on or before the Closing Date
in accordance with this Agreement shall have been duly performed in all material
respects.
(b) Officer's
Certificate.
Meridian
shall have received a certificate dated as of the Closing Date, executed by
a
duly authorized officer of PRCT, to the effect that to such officer's knowledge
the conditions set forth in paragraph (a) of this Section 6.2 have been
satisfied.
(c) Assignments.
PRCT
shall have executed and delivered the Assignments and
the
Initial Operating Agreement prior to or on the Closing Date and complied with
its
other
obligations at Closing.
(d) No
Action.
On the
Closing Date, no suit, action or other proceeding (excluding any such matter
initiated by Meridian or any of its Affiliates) shall be pending or threatened
before any court or governmental agency or body of competent jurisdiction
seeking to enjoin or restrain the consummation of this Agreement or recover
damages from Meridian resulting therefrom.
(e) Consents
and Waivers.
PRCT
shall have received and furnished to Meridian a written consent (in form and
substance reasonably satisfactory to Meridian) executed by each of the third
parties mentioned in Schedule
4.1(f),
consenting to the assignment by PRCT to Meridian of the Leases and/or Lease
Option Agreement as to which the assignment thereof requires such third party's
consent or approval.
(f) Affidavit
of Non-foreign Status.
Meridian
shall have received an Affidavit of Non-foreign Status, substantially in form
and substance acceptable to Meridian, which has been properly executed by or
on
behalf of PRCT.
6.3 Failure
to Disclose.
The
breach by Meridian of its obligation to give notice to PRCT under Section 4,2(n)
shall not constitute a failure of the conditions to Closing under Section 6.1.
From and after Closing, PRCT shall not have any obligation or liability under
this Agreement for any breach of a representation or warranty by PRCT at Closing
by reason of any fact or facts of which Meridian had actual knowledge prior
to
Closing if and to the extent Meridian breached its obligation to give notice
of
such fact or facts to PRCT pursuant to Section 4.2(n). Likewise, the breach
by
PRCT of its obligation to give notice to Meridian under Section 4.1(o) shall
not
constitute a failure of the conditions to Closing under Section 6.2. From and
after Closing, Meridian shall not have any obligation or liability under this
Agreement for any breach of a representation or warranty by Meridian at Closing
by reason of any fact or facts of which PRCT had knowledge prior to Closing
if
and to the extent PRCT breached its obligation to give notice of such fact
or
facts to Meridian pursuant to Section 6.2.
19
ARTICLE
VII
CLOSING
7.1 Closing.
The
Closing shall be held on the Closing Date at 10:00 a.m., Houston time, at the
offices of Meridian at 0000 Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx, or
at
such other time or place as PRCT and Meridian may otherwise agree in
writing.
7.2 PRCT's
Closing Obligations.
At
Closing, PRCT shall execute and deliver, or cause to be executed and delivered,
to Meridian the following:
(a) The
Assignments (as provided for in Section 5.1), the Exploration Agreement and
the
Initial Operating Agreement;
(b) The
officer's certificate referred to in Section 6.2(b);
(c) The
Affidavit of Non-foreign Status referred to in Section 6.2(f); and
(d) Such
other documents as may be reasonably necessary to convey all the Subject
Interests to Meridian in accordance with the terms and provisions of this
Agreement.
At
Closing, PRCT shall further deliver to Meridian evidence, reasonably
satisfactory to Meridian, of the timely payment by PRCT of all lease bonuses
and
other payments required to make the Leases effective.
7.3 Meridian's
Closing Obligations.
At
Closing, Meridian shall execute and deliver, or cause to be executed and
delivered, to PRCT the following:
(a) The
Assignments (as provided for in Section 5. 1), the Exploration Agreement and
the
Initial Operating Agreement; and
(b) The
officer's certificate referred to in Section 6.1(b); and shall pay the Purchase
Price as provided in Section 3.2.
7.4 Survival.
Except
as provided in this Section 7.4, no representations, warranties, covenants
and
agreements made herein shall survive the Closing. Each representation, warranty,
covenant and agreement made herein shall terminate and cease to be of further
force and effect as of the Closing or such later date after Closing as is
expressly stipulated in this Section 7.4 for the survival thereof. Following
the
Closing or such later date stipulated in this Section 7.4 for the survival
thereof, such representation, warranty, covenant or agreement shall not form
the
basis for or give rise to any claim, demand, cause of action, counterclaim,
defense, damage, indemnity, obligation or liability which is asserted, claimed,
made or filed following the Closing or such later date stipulated for survival.
It is expressly agreed that the terms and provisions of:
20
(a) Article
IV (other than Sections 4.1(a), 4.1(b), 4.1(c), 4.1(d), 4. I (e), 4,1(i),
4.1(o), the last two paragraphs of Section 4.1, Sections 4.2(a), 4.2(b), 4.2(c),
4.2 (g), 4.2(h), 4.2(i) and 4.2(n)) shall survive the Closing for a period
of
one (1) year from the Closing Date, and
(b) Sections
4.1(a), 4. I (b), 4.1(c), 4.1(d), 4.1(e), 4.1(i), 4.1(o), the last two
paragraphs of Section 4. 1, Sections 4.2(a), 4.2(b), 4.2(c), 4.2(g), 4.2(h),
4.2(i), 4.2(n), and this Section 7.4, and Articles V, VIII, IX, X and XI shall
survive the Closing indefinitely or for such shorter period of time as may
be
stipulated in such provisions.
In
addition, the definitions set forth in Article I of this Agreement or in any
other provision of this Agreement which are used in the representations,
warranties, covenants and agreements which survive the Closing pursuant to
this
Section 7.4 shall survive the Closing to the extent necessary to give operative
effect to such surviving representations, warranties, covenants and
agreements.
ARTICLE
VIII
OPERATIONS
8.1 Operations.
If the
Closing occurs, the terms of the Applicable Operating Agreement shall govern
and
control all operations conducted upon the Subject Lands covered thereby and
such
other matters as are expressly provided for in this Agreement. Except as
provided in Section 11. 10, in the event of any conflict between the terms
of
this Agreement and the Applicable Operating Agreement, the terms of this
Agreement shall prevail.
ARTICLE
IX
DAMAGES
NOTWITHSTANDING
ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT,
PRCT AND MERIDIAN AGREE THAT THE RECOVERY OF EITHER PARTY HERETO OF ANY DAMAGES
SUFFERED OR INCURRED BY IT AS A RESULT OF ANY BREACH BY THE OTHER PARTY OF
ANY
OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR OBLIGATIONS UNDER THIS
AGREEMENT SHALL BE LIMITED TO THE ACTUAL DAMAGES SUFFERED OR INCURRED BY THE
NON-BREACHING PARTY (AND THE INDEMNIFIED PARTIES TO WHICH SUCH OBLIGATIONS
MAY
EXTEND UNDER THE TERMS HEREOF) AS A RESULT OF THE BREACH BY THE BREACHING PARTY
OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR OBLIGATIONS HEREUNDER AND
IN NO
EVENT SHALL THE BREACHING PARTY BE LIABLE TO THE NON-BREACHING PARTY OR ANY
INDEMNIFIED PARTY FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR
PUNITIVE DAMAGES (INCLUDING ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR
OPPORTUNITIES, BUSINESS INTERRUPTION OR LOST OR DELAYED PRODUCTION) SUFFERED
OR
INCURRED BY THE NON-BREACHING PARTY OR ANY INDEMNIFIED PARTY AS A RESULT OF
THE
BREACH BY THE BREACHING PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES,
COVENANTS OR OBLIGATIONS HEREUNDER.
21
ARTICLE
X
ASSUMPTION
AND INDEMNIFICATION
10.1 Indemnification
by PRCT. FROM AND AFTER THE CLOSING DATE, PRCT SHALL INDEMNIFY AND HOLD HARMLESS
MERIDIAN AND ITS AFFILIATES, EACH OF THEIR DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS, AND EACH OF THE HEIRS, EXECUTORS, SUCCESSORS AND ASSIGNS OF THE
FOREGOING (COLLECTIVELY THE "MERIDIAN INDEMNIFIED PARTIES") FROM AND AGAINST
ANY
AND ALL (I) EXCLUDED LIABILITIES INCURRED BY OR ASSERTED AGAINST ANY OF THE
MERIDIAN INDEMNIFIED PARTIES , INCLUDING ANY EXCLUDED LIABILITY BASED ON
NEGLIGENCE, GROSS NEGLIGENCE OR STRICT LIABILITY OF THE MERIDIAN INDEMNIFIED
PARTY OR ANY OTHER THEORY OF LIABILITY, WHETHER IN LAW (WHETHER COMMON OR
STATUTORY) OR EQUITY; PROVIDED, HOWEVER, THAT THIS INDEMNITY SHALL NOT COVER
ANY
OBLIGATIONS OF ANY OF THE MERIDIAN
INDEMNIFIED PARTIES WHICH FROM TIME TO TIME EXIST UNDER
OR PURSUANT TO ANY OF THE RELATED AGREEMENTS AND (II) ANY COVERED LIABILITY
RESULTING FROM ANY MISREPRESENTATION, BREACH OF WARRANTY OR NONFULFILLMENT
OF
ANY COVENANT OR AGREEMENT ON THE PART OF MERIDIAN
HEREUNDER.
10.2 Indemnification
by Meridian. FROM AND AFTER THE CLOSING DATE, MERIDIAN SHALL INDEMNIFY AND
HOLD
HARMLESS PRCT AND ITS AFFILIATES, EACH OF THEIR DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS, AND EACH OF THE HEIRS, EXECUTORS, SUCCESSORS AND ASSIGNS OF THE
FOREGOING (COLLECTIVELY THE "PRCT INDEMNIFIED PARTIES") FROM AND AGAINST ANY
AND
ALL (I) ASSUMED LIABILITIES INCURRED BY OR ASSERTED AGAINST ANY OF THE PRCT
INDEMNIFIED PARTIES, INCLUDING ANY ASSUMED LIABILITY BASED ON NEGLIGENCE, GROSS
NEGLIGENCE OR STRICT LIABILITY OF THE PRCT INDEMNIFIED PARTY OR ANY OTHER THEORY
OF LIABILITY,. WHETHER IN LAW (WHETHER COMMON OR STATUTORY) OR EQUITY; PROVIDED,
HOWEVER, THAT THIS INDEMNITY SHALL NOT COVER ANY OBLIGATIONS OF ANY OF THE
PRCT
INDEMNIFIED PARTIES WHICH FROM TIME TO TIME EXIST UNDER OR PURSUANT TO ANY
OF
THE RELATED AGREEMENTS AND (II) ANY COVERED LIABILITY RESULTING FROM ANY
MISREPRESENTATION, BREACH OF WARRANTY OR NONFULFILLMENT OF ANY COVENANT OR
AGREEMENT ON THE PART OF PRCT HEREUNDER.
10.3 Third
Party Claims. If a claim by a third party is made against Meridian Indemnified
Party or a PRCT Indemnified Party (an "Indemnified
Party"),
and
if such party intends
to seek indemnity with respect thereto under this Article X such Indemnified
Party shall promptly
notify Meridian or PRCT, as the case may be (the "Indemnitor")
of
such claims. The Indemnitor
shall have thirty (30)
days
after receipt of such notice to undertake, conduct
and control,
through counsel of its own choosing and at its own expense, the settlement
or
defense thereof,
and the Indemnified Party shall cooperate with it in connection
therewith;
provided that the
Indemnitor shall permit the Indemnified Party to participate in such settlement
or defense
22
through
counsel chosen by such Indemnified Party, however, the fees and expenses of
such
counsel shall be borne by such Indemnified Party. So long as the Indemnitor,
at
the Indemnitor's cost and expense,
(i) has
undertaken the defense of, and assumed full responsibility for all Covered
Liabilities with respect to, such claim,
(ii) is
reasonably contesting such claim in good faith, by appropriate proceedings,
and
(iii) has
taken
such action (including the posting of a bond, deposit or other security) as
may
be necessary to prevent any action to foreclose a lien against or attachment
of
the property of the Indemnified Party for payment of such claim,
the
Indemnified Party shall not pay or settle any such claim. Notwithstanding
compliance by the Indemnitor with the preceding sentence, the Indemnified Party
shall have the right to pay or settle any such claim, provided that in such
event it shall waive any right to indemnity therefor by the Indemnitor for
such
claim. If, within thirty (30) days after the receipt of the Indemnified Party's
notice of a claim of indemnity hereunder, the Indemnitor does not notify the
Indemnified Party that it elects, at the Indemnitor's cost and expense, to
undertake the defense thereof and assume full responsibility for all Covered
Liabilities with respect thereto, or gives such notice and thereafter fails
to
contest such claim in good faith or to prevent action to foreclose a lien
against or attachment of the Indemnified Party's property as contemplated above,
the Indemnified Party shall have the right to contest, settle or compromise
the
claim and, to the extent the actions taken by the Indemnified Party in
contesting, settling or compromising the claim are reasonable and in good faith,
the Indemnified Party shall not thereby waive any right to indemnity therefor
pursuant to this Agreement.
10.4 Exclusive
Remedy.
After
Closing, the indemnity provisions of this Article X shall be the sole and
exclusive remedy of each 'Party for and on account of any breach by the other
Party of any of such other Party's representations and warranties under this
Agreement.
ARTICLE
XI
MISCELLANEOUS
PROVISIONS
11.1 Relationship
of the Parties.
It is
not the purpose or intention of the Parties to create, and this Agreement shall
never be construed as creating, a joint venture, mining partnership or other
relationship whereby any Party shall be held liable for the acts, either of
omission or commission, of any other Party hereto.
11.2 Choice
of Law. THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW RULES
THAT WOULD DIRECT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
23
11.3 Jurisdiction;
Process. EACH PARTY CONSENTS TO PERSONAL JURISDICTION
IN ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT IN ANY COURT, FEDERAL OR STATE, WITHIN XXXXXX COUNTY, TEXAS,
HAVING SUBJECT MATTER JURISDICTION AND, WITH RESPECT
TO ANY SUCH CLAIM, EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY CLAIM, OR ANY OBJECTION, THAT SUCH PARTY MAY NOW
OR
HEREAFTER HAVE, THAT VENUE OR JURISDICTION
IS NOT PROPER WITH RESPECT TO ANY SUCH LEGAL ACTION, SUIT OR PROCEEDING BROUGHT
IN SUCH COURT IN XXXXXX COUNTY, TEXAS, INCLUDING
ANY CLAIM THAT SUCH LEGAL ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH COURT
HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM AND ANY CLAIM THAT SUCH PARTY IS NOT
SUBJECT TO PERSONAL JURISDICTION OR SERVICE OF PROCESS IN SUCH XXXXXX COUNTY,
TEXAS FORUM.
11.4 Waiver
of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
11.5 Laws.
This
Agreement is made subject to all valid applicable federal, state and local
laws,
rules, orders, and regulations of any duly constituted federal, state or local
regulatory body or authority having jurisdiction thereof, and all operations
hereunder shall be conducted in conformity therewith.
11.6 Entire
Agreement.
This
Agreement, together with the Related Agreements and the other instruments
referenced herein and the exhibits and attachments hereto, embodies the entire
agreement between the Parties with regard to the Subject Lands and the Leases
and the Lease Option Agreement, and supersedes all other agreements,
arrangements, understandings, negotiations and discussions, whether oral or
written, of the Parties relating to the subject matter hereof, and may be
supplemented, altered, amended, modified, waived or terminated by writing only,
signed by the Parties.
11.7 Time
of the Essence.
Time is
of the essence with respect to matters covered by this Agreement in all
respects.
11.8 Successors.
Subject
to the restrictions on assignment herein contained, the terms and provisions
of
this Agreement shall inure to the benefit of and shall be binding upon the
Parties hereto and their respective legal representatives, successors and
assigns.
11.9 Assignment.
Neither
Party shall assign this Agreement, in whole or in part, save to an Affiliate
of
such Party, without the prior written consent of the other Party, and any
purported assignment in violation hereof shall be null and void. In the event
such other Party consents to a proposed assignment or in the case of an
assignment to an Affiliate, such assignee must agree to be expressly bound
hereby and the assigning Party shall remain liable for its obligations
hereunder. Nothing herein shall require the consent of, or restrict the right
of
a Party
24
to
assign
all or part of its interest in the Leases after the Closing except as limited
in
the Exploration Agreement or Applicable Operating Agreement.
11.10 Notice.
The
parties agree that any notices, communications or documents that either of
them
desire or that may be required to be delivered to any other shall be sent via
telecopy, delivered in person, delivered by recognized courier service (such
as
Federal Express) or sent certified mail, postage prepaid, return receipt
requested, received during normal business hours for the receiving Party and
addressed to the Parties at the following respective addresses stated for
each:
|
PRCT:
|
Petro
Resources Corporation
0000
Xxxxxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Attn:
Xx. Xxxxx X. Xxxx
Telephone:
(000) 000-0000
Telecopy:
(000) 000-0000
|
|
|
Meridian:
|
The
Meridian Resource
&
Exploration LLC
0000
Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Attn:
Xx. Xxxxxx X. Xxxxxx, Xx.
Telephone:
(000) 000-0000
Telecopy:
(000) 000-0000
|
|
Notices
or other communications shall be effective upon receipt by the Party to be
notified, except that, for purposes hereof, if telecopy or personal delivery
is
not possible, refusal by any Party to accept correspondence sent by certified
mail or two unsuccessful attempts by the U.S. Postal Service to serve any
communication sent by certified mail shall be deemed receipt of such
correspondence. Any Party may change its address for notices by written notice
to the other. The notice provisions hereof shall not supersede the notice
provisions of any applicable Operating Agreement for the matters covered
thereby.
11.11 Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic and legal substance of the transaction contemplated
hereby is not affected in any adverse manner to any Party.
11.12 Publicity.
PRCT and
Meridian shall not, and shall cause their respective Affiliates
not to, issue or make any publicity statements, news releases or other public
statements
concerning this Agreement or the operations contemplated by this Agreement,
without the prior written consent of the other Party with respect to the form
and substance thereof, except that either Party may make any such news release
or other public statement where the releasing party is advised by its legal
counsel that such news release or other public statement is required by
applicable laws or regulations of any governmental body or the rules of any
stock exchange on
25
which
such Party or any Affiliate of such Party is listed, but in such event the
Parties shall use their reasonable good faith efforts to agree as to the form
and substance of such news release or other public statement.
11.13 No
Third Party Beneficiaries.
Except
as specified in Article X, which is also intended to benefit and to be
enforceable by any of the Indemnified Parties, nothing in this Agreement shall
entitle any party other than the Parties to this Agreement to any claim, cause
of action, remedy or right of any kind.
11.14 Exhibits.
All
exhibits referred to in this Agreement are incorporated into and made a part
of
this Agreement.
11.15
Captions.
All
titles or headings to Articles, Sections, subsections, or other divisions of
this Agreement or the exhibits hereto are only for the convenience of the
Parties and shall not be construed to have any effect or meaning with respect
to
the other content of such Articles, Sections, subsections, or other divisions,
such other content being controlling as to the agreement between the
Parties.
11.16
Drafting
of Agreement.
PRCT and
Meridian each declare that they have contributed to the drafting of this
Agreement or have had it reviewed by their counsel before signing it. It is
expressly agreed that this Agreement shall not be construed against any Party
on
the basis of who drafted this Agreement or who supplied the form of Agreement.
Each Party agrees that it has been purposefully drawn and correctly reflects
their understanding of the transaction that it contemplates.
11.17
Further
Assurances.
From
time to time (whether before, at or after the Closing Date), and without further
consideration, the Parties, as appropriate, shall, and shall cause their
appropriate Affiliates to, execute and deliver or cause to be delivered such
further instruments of conveyance, assignment and transfer, or any other
documents and take such other action as may be necessary, advisable or
appropriate to more effectively or completely accomplish the transactions
contemplated by this Agreement, including such memorandums of rights or
interests
and
other documents in recordable form as any Party may reasonably deem necessary
to
protect or give notice of its rights and interests hereunder or with respect
to
the teases.
11.18
Costs
and Expenses.
Each
Party shall bear its own costs and expenses in connection with the negotiation,
preparation and execution of this Agreement.
11.19
Counterparts.
Upon its
execution by both Parties, this Agreement shall become effective as of the
date
hereof and shall be binding upon the Parties, their respective legal
representatives, successors and assigns. This Agreement may be executed by
signing the original or a counterpart thereof, or, if this Agreement is executed
in counterparts, all counterparts taken together shall have the same effect
as
if both the Parties had signed the same instrument.
IN
WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
as
of the date shown above, in multiple originals, to be effective as of the date
hereof.
26
|
PETRO
RESOURCES CORPORATION D/B/A in
Texas as PRCT, Inc.
|
||
| |
|
|
| By: | /s/ Xxxxx X. Xxxx | |
|
|
||
|
Xxxxx
X. Xxxx, President of Petro Resources
Corporation
|
||
|
THE
MERIDIAN RESOURCE & EXPORATION
LLC
|
||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxx, Xx. | |
|
|
||
|
Xxxxxx
X. Xxxxxx, Xx.
Chief Executive
Officer
|
||
27
Exhibit
A
to
Leases
and Contracts
Item
1:
|
Contract:
|
Oil
and Gas Lease
|
|
Lessor:
|
Xxxxxxx
Ranch with full executive rights and on behalf of Black
Stone
Acquisitions Partners 1, L. P.
|
|
Lessee:
|
Petro
Resources Corporation dba PRCT, Inc.
|
|
Effective
Date:
|
November
28, 2005
|
|
Term:
|
Four
(4) years
|
|
Acreage:
|
Approximately
13,761.6 located in Motley County, Texas
|
|
Working
Interest:
|
100.00%
|
|
Revenue
Interest:
|
80%
or 79%, depending on applicable royalty as provided for in Paragraph
4(e)
of said Lease
|
|
Recording
Info:
|
Not
Recorded
|
Item
2:
|
Contract:
|
Oil
and Gas Lease
|
|
Lessor:
|
Xxxxxxx
& Xxxxxxx Investments
|
|
Lessee:
|
Petro
Resources Corporation dba PRCT, Inc.
|
|
Effective
Date:
|
November
28, 2005
|
|
Term:
|
Three
(3) years
|
|
Acreage:
|
Approximately
750.0 acres located in Motley County, Texas
|
|
Working
Interest:
|
100.00%
|
|
Revenue
Interest:
|
80.00%
|
|
Recording
Info:
|
Not
Recorded
|
Item
3:
|
Contract:
|
Oil,
Gas and Liquid Hydrocarbon Lease
|
|
Lessors:
|
Black
Stone Acquisitions Partners I, L.P. and Sugarberry Oil & Gas
Corporation
|
|
|
|
|
Lessee;
|
Petro
Resources Corporation dba PRCT, Inc.
|
|
Effective
Date:
|
January
3, 2006
|
|
Acreage:
|
Block
I and Block II containing approximately 10,201.40 gross
acres
located in Xxxxx and Xxxxxx Counties, Texas
|
|
Working
Interest:
|
50.00%
|
|
Revenue
Interest:
|
40.00%
|
|
Recording
Info:
|
Not
Recorded
|
Item
4:
|
Contract:
|
Oil,
Gas and Liquid Hydrocarbon Lease
|
|
Lessors:
|
Black
Stone Acquisitions Partners I, L.P. and Sugarberry Oil &
Gas Corporation
|
|
Lessee:
|
Petro
Resources Corporation dba PRCT, Inc.
|
|
Effective
Date:
|
January
3, 2006
|
|
Acreage:
|
Block
III and Block IV containing approximately 8,326.65 gross
acres
located in Xxxxx and Xxxxxx Counties, Texas
|
|
Working
Interest:
|
50.00%
|
|
Revenue
Interest:
|
40.00%
|
|
Recording
Info:
|
Not
Recorded
|
2
Schedule
4.1(f)
to
(Required
Consents and Notifications)
|
1.
|
Prior
written consent of Black Stone Acquisitions Partners I, L.P. and
Sugarberry Oil &
Gas Corporation, as Optionors, under the Lease Option
Agreement.
|
|
2.
|
Notification
as required by Oil and Gas Lease dated effective November 28, 2005,
by
and
between Xxxxxxx Ranch (on behalf of Black Stone Acquisitions Partners
1,
L.P.), as Lessor, and PRCT, as
Lessee.
|
|
3.
|
Notification
as required by Oil and Gas Lease dated effective November 23, 2005,
by
and
between Xxxxxxx & Xxxxxxx Investments, as Lessor, and PRCT, as
Lessee.
|
|
4.
|
Prior
written consent of Black Stone Acquisitions Partners 1, L.P. and
Sugarberry Oil &
Gas Corporation, as Lessors, under Oil, Gas and Liquid Hydrocarbon
Lease
dated effective January 3, 2006 by and between said Lessors and PRCT,
as
Lessee, covering approximately 10,201.40 gross acres located in Xxxxx
and
Xxxxxx Counties, Texas.
|
|
5.
|
Prior
written consent of Black Stone Acquisitions Partners I, L.P. and
Sugarberry Oil &
Gas Corporation, as Lessors, under Oil, Gas and Liquid Hydrocarbon
Lease
dated effective January 3, 2006 by and between said Lessors and PRCT,
as
Lessee, covering approximately 8,326.65 gross acres located in Xxxxx
and
Xxxxxx Counties, Texas.
|
EXHIBIT
"B-1"
Attached
to and made a part of that certain Lease Purchase Agreement by and between
Petro
Resources Corporation (in Texas d/b/a PRCT, Inc.) and The Meridian Resource
& Exploration LLC
ASSIGNMENT
OF INTERESTS IN OIL AND GAS LEASES
THIS
ASSIGNMENT OF INTERESTS IN OIL AND GAS LEASES (this "Assignment") executed
by
PETRO RESOURCES CORPORATION, a Delaware corporation, doing business in the
State
of Texas as PRCT, Inc. (herein called "Assignor"),
to
THE MERIDIAN RESOURCE & EXPLORATION LLC, a Delaware limited liability
company (herein called "Assignee"),
dated
effective at 7:00 a.m., Central Standard Time, on January __, 2006 (said hour
and day being hereinafter called the "Effective
Time").
ARTICLE
I
Assignment
of Interests in Leases
Assignor,
for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and
other
good and valuable consideration in hand paid by Assignee, the receipt and
sufficiency of which
consideration are hereby acknowledged and confessed by Assignor, does hereby
GRANT,
BARGAIN,
SELL, CONVEY, ASSIGN, TRANSFER, SET OVER and DELIVER unto Assignee, effective
as
of the Effective Time, an undivided seventy-five percent (75%) interest in
and
to Assignor's Interest (hereinafter defined) in and to all of the oil and gas
leases described in Exhibit
A
attached
hereto and made a part hereof for all purposes (the "Leases")
(said
undivided
seventy-five percent (75%) interest in and to Assignor's Interest in and to
the
Leases being herein referred to as the "Subject
Interests").
TO
HAVE
AND TO HOLD the Subject Interests unto Assignee, its successors and
assigns,
forever, subject, however, to the matters set forth herein.
ARTICLE
II
Certain
Definitions
The
following terms, when used in this Assignment, shall have the meanings indicated
below
(such meanings to be fully applicable to both the singular and plural forms
of
the terms
defined):
"Assignor's
Interest"
means,
when used with respect to any Lease, all of Assignor's right, title and interest
therein.
1
"Defensible
Title"
means ,
respectively, as to Subject Interests related to a particular Lease or portion
thereof, record title to such Lease or portion thereof and Subject Interests
related to such Lease or portion thereof, that: (i) entitles Assignor to receive
and retain, without suspension, reduction or termination, not less than the
applicable Net Revenue Interest or Net Revenue Interests specified for such
Lease or portion thereof in Exhibit
A
hereto
through plugging, abandonment and salvage of all xxxxx hereafter producing
from
or attributable to such Subject Interests; (ii) obligates Assignor to bear
the
costs and expenses attributable to the maintenance, development and operation
of
such Lease or portion thereof through plugging, abandonment and salvage of
all
xxxxx hereafter producing from or attributable to such Subject Interests in
an
amount not greater than the applicable Working Interest or Working Interests
specified for such Lease or portion thereof in Exhibit
A
hereto
unless Assignor's Net Revenue Interest
therein is proportionately increased; and (iii) except for Permitted
Encumbrances, is free
and
clear of Liens.
"Hydrocarbons"
means
(i) crude oil, natural gas and other liquid or gaseous hydrocarbons and
(ii)
all minerals and substances produced with or extracted, separated, processed
or
produced
from
crude oil, natural gas or other liquid or gaseous hydrocarbons.
"Lease
Option Agreement"
means
that certain Lease Option Agreement dated effective September
14, 2005, by and between Black Stone Acquisitions Partners I, L.P., and
Sugarberry
Oil
& Gas Corporation, as Optionors, and Assignor, as Optionee.
"Lien"
means
any lien, mortgage, charge, penalty, restriction, security, interest, collateral
assignment, pledge, sale or purchase contract, option, call or dedication,
right
of first refusal or other preferential purchase right, reservation, condition,
sublease, license, area of mutual interest agreement, operating agreement,
processing contract, farmout or development agreement, drilling or service
contract, easement or right-of-way, pooling or unitization order or agreement,
or other encumbrance or similar agreement.
"Net
Revenue Interest"
means,
with respect to any Lease, an interest (expressed as a percentage or decimal
fraction) in and to all Hydrocarbons produced and saved from or attributable
to the lands covered by such Lease, after giving effect to all royalties,
overriding
royalties and other burdens upon, measured by, or payable out of production
therefrom.
"Permitted
Encumbrances"
means
(a) the terms, conditions, restrictions, exceptions, reservations, limitations
and other matters contained in the Leases and the Lease Option Agreement; (b)
statutory and conventional liens securing payments to operators, mechanics
and
materialmen
or others, payments of taxes or other claims or payment obligations that are,
in
each
case,
not yet delinquent or, if delinquent, are being contested in good faith in
the
normal course of business; (c) any obligations or duties to any municipality
or
public authority with respect to any franchise, grant, certificate, license
or
permit; (d) any easements, rights-of-way, servitudes, permits and other rights
in respect of surface operations, pipelines or the like, and easements for
pipelines, power lines and other similar rights-of-way, and encroachments,
on,
over or in respect of any of the Leases that do not, individually or in the
aggregate, unreasonably or materially interfere with the operation of the Leases
for exploration and production of Hydrocarbons or related operations; (e) all
royalties, overriding royalties, net profits interests, production
2
payments,
carried interests, reversionary interests, calls on production and other burdens
on or deductions from the proceeds of production that do not operate to (i)
reduce the Net Revenue Interest below that set forth in Exhibit
A
hereto
or (ii) increase the Working Interest above that set
forth
in Exhibit
A
hereto
without a proportionate increase in the Net Revenue Interest for the
applicable Lease; and (f) conventional rights of reassignment prior to
abandonment. For the avoidance of doubt, the terms and provisions of the Leases
and the Lease Option Agreement shall constitute Permitted
Encumbrances.
"Working
Interest"
means,
with respect to any Lease, an interest (expressed as a percentage or decimal
fraction) in and to such Lease and all rights and obligations of every kind
and
character appurtenant thereto, or arising therefrom, without regard to any
royalties, overriding royalties or other encumbrances or charges against
production therefrom, insofar as such interest is burdened with the obligations
to bear and pay costs and expenses attributable to the maintenance, development
and operation of the leasehold interest in Hydrocarbons in and under the lands
covered by such Lease.
ARTICLE
III
Limitation
of Warranties; Permitted Encumbrances
Section
3.1 Limitation
of Warranties.
(a) Assignor
does hereby bind itself, its successors and assigns, to warrant and forever
defend all and singular Defensible Title to the Subject Interests, unto
Assignee, its successors and assigns, against every person whomsoever lawfully
claiming or to claim the same or any part thereof, by, through or under
Assignor, but not otherwise; subject, however, to the Permitted
Encumbrances
(b) EXCEPT
AS
EXPRESSLY PROVIDED IN SECTION 4.1 OF THAT CERTAIN LEASE PURCHASE AGREEMENT
DATED
JANUARY __,
2006, BY
AND BETWEEN ASSIGNOR AND ASSIGNEE, AND THE SPECIAL WARRANTY OF TITLE TO THE
SUBJECT INTERESTS CONTAINED IN THIS ASSIGNMENT, THE SUBJECT INTERESTS ARE
CONVEYED AND ACCEPTED PURSUANT HERETO WITHOUT ANY OTHER COVENANT, REPRESENTATION
OR WARRANTY, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT
TO
(A) THE QUANTITY, QUALITY, CONDITION, SIZE, WEIGHT, SERVICEABILITY, CONFORMITY
TO SAMPLES OF MODELS, (B) ANY OTHER ASPECT OR CONDITION OF THE SUBJECT
INTERESTS, ALL OF WHICH ARE CONVEYED BY ASSIGNOR TO ASSIGNEE AS IS, WHERE IS,
AND WITH ALL FAULTS AND DEFECTS AND IN THEIR PRESENT CONDITION AND STATE OF
REPAIR AND WITHOUT ANY COVENANTS, REPRESENTATIONS OR WARRANTIES, WHATSOEVER
OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE, (C) THE ACCURACY OR
COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR
MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO ASSIGNEE
BY, ON BEHALF OF OR AT THE DIRECTION OF ASSIGNOR IN CONNECTION WITH THIS
ASSIGNMENT INCLUDING, WITHOUT LIMITATION, THAT RELATIVE TO
3
PRICING
ASSUMPTIONS, QUALITY, QUANTITY OR VOLUMES OF HYDROCARBON RESERVES
(IF ANY) ATTRIBUTABLE TO THE SUBJECT INTERESTS OR THE ABILITY
OR
POTENTIAL OF THE SUBJECT INTERESTS OR THE LANDS COVERED BY THE LEASES TO PRODUCE
HYDROCARBONS, (D) THE PHYSICAL AND ENVIRONMENTAL CONDITION OF SAID LANDS, BOTH
SURFACE AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO CONDITIONS SPECIFICALLY
RELATED TO THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS SUBSTANCES, SOLID
WASTES, ASBESTOS AND OTHER MAN MADE FIBERS, OR NATURALLY OCCURRING RADIOACTIVE
MATERIALS, IT BEING AGREED BY ASSIGNEE THAT ANY AND ALL SUCH DATA, RECORDS,
REPORTS, PROJECTIONS, INFORMATION AND OTHER MATERIALS (WRITTEN OR ORAL)
FURNISHED OR OTHERWISE MADE AVAILABLE OR DISCLOSED TO ASSIGNEE HAVE BEEN AND
WILL BE PROVIDED TO ASSIGNEE AS A CONVENIENCE AND SHALL NOT CREATE OR GIVE
RISE
TO ANY LIABILITY OF OR AGAINST ASSIGNOR AND ANY RELIANCE ON OR USE OF THE SAME
SHALL BE AT ASSIGNEE'S SOLE RISK. TO THE MAXIMUM EXTENT PERMITTED BY LAW, (E)
TITLE TO OR THE OWNERSHIP OR OPERATION OF THE SUBJECT INTERESTS OR ANY PART
THEREOF AND (F) THE ACCURACY OR COMPLETENESS OF ANY REPORT, ASSESSMENT OR OTHER
MATERIAL PURPORTING TO ASSESS OR ALLOCATE PRODUCTION, RESERVES OR VALUE TO
ANY
SUBJECT INTERESTS OR THE LANDS SUBJECT TO THE LEASES.
(c) To
the
extent transferable, Assignee shall be and is hereby subrogated to all covenants
and warranties of title by parties heretofore given or made to Assignor or
its
predecessors in title in respect of any of the Subject Interests.
(d) Notwithstanding
anything contained herein to the contrary, it is expressly understood
and agreed that nothing contained herein is intended or shall operate to limit,
impair
or
release any of the respective rights or obligations of Assignee or Assignor
under the Lease Purchase Agreement mentioned in paragraph (b) of this Article
III.
Section
3.2 Permitted
Encumbrances. The
Subject Interests are assigned and conveyed by Assignor and accepted by Assignee
expressly subject to the Permitted Encumbrances
and the terms and provisions of that certain Operating Agreement dated of
even
date
herewith, between Assignor, as operator, and Assignee, as
non-operator,
By
Assignee's acceptance of this Assignment, Assignee assumes and agrees to bear
Assignee's proportionate share (i.e., seventy-five percent (75%)) of all burdens
and obligations under the Leases that are attributable to Assignor's Interest
and that arise or accrue after (but not before) the Effective Time.
ARTICLE
IV
Miscellaneous
Section
4.1 Further
Assurances. Assignor
covenants and agrees to execute and deliver to Assignee all such other and
additional instruments and other documents and will do all
4
such
other acts and things as may be necessary to more fully assure to Assignee
or
its successors
or
assigns all of the respective properties, rights and interests herein and hereby
granted or intended
so to be, including, without limitation, executing separate assignments of
individual oil
and gas
leases which are included in the Subject Interests and which are necessary
to
facilitate the recognition of Assignee's ownership of the Subject Interests
by
all applicable third parties.
Section
4.2 Successors
and Assigns.
All of
the provisions hereof shall inure to the benefit of and be binding upon Assignor
and Assignee and their respective successors and assigns. All references herein
to either Assignor or Assignee shall include their respective successors and
assigns.
Section
4.3 Counterparts.
This
Assignment is being executed in several original
counterparts, each of which shall be deemed to be an original instrument, but
all of which counterparts shall constitute but one and the same
assignment.
IN
WITNESS WHEREOF, Assignor and Assignee have caused this Assignment to
be
executed
on the dates of their respective acknowledgments set forth below, to be
effective, however, as of the Effective Time.
| ASSIGNOR: | ||
|
PETRO RESOURCES CORPORATION
(IN TEXAS D/B/A PRCT, INC.)
|
||
| By | ||
| Name: | ||
| Title: | ||
| ASSIGNEE: | ||
|
THE MERIDIAN RESOURCE &
EXPLORATION LLC
|
||
| By | ||
| Name: | ||
| Title: | ||
5
|
STATE
OF TEXAS
|
§
|
|
§
|
|
|
COUNTY
OF
|
§
|
This
instrument was acknowledged before me on ___________, 2006, by ____________,
______________ of Petro Resources Corporation, a Delaware corporation, doing
business in the State of Texas as PRCT, Inc., on behalf of said
corporation.
|
|
||
|
Notary
Public, State of Texas
|
||
|
Printed
Name:
|
||
|
My
Commission expires:
|
||
|
STATE
OF TEXAS
|
§
|
|
§
|
|
|
COUNTY
OF
|
§
|
This
instrument was acknowledged before me on _____________, 2006, by __________,
________________of The Meridian Resource & Exploration LLC, a
Delaware
limited liability company, on behalf of said company.
|
|
||
|
Notary
Public, State of Texas
|
||
|
Printed
Name:
|
||
|
My
Commission expires:
|
||
6
Exhibit
A
to
Assignment
of Interests in Oil and Gas Leases
EXHIBIT
"B-2"
Attached
to and made a part of that certain Lease Purchase Agreement by and between
Petro
Resources Corporation (in Texas d/b/a PRCT, Inc.) and The Meridian Resource
& Exploration LLC.
ASSIGNMENT
OF INTEREST IN LEASE OPTION AGREEMENT
THIS
ASSIGNMENT OF INTEREST IN LEASE OPTION AGREEMENT (this "Assignment")
executed by PETRO RESOURCES CORPORATION, a Delaware corporation, doing business
in the State of Texas as PRCT, Inc. (herein called "Ass~nor"), to THE MERIDIAN
RESOURCE & EXPLORATION LLC, a Delaware limited liability company (herein
called "Assignee"), dated effective at 7:00 a.m., Central Standard Time,
on __________, 2006 (said hour and day being hereinafter called the
"Effective Time").
ARTICLE
I
Assignment
of Interest in Lease Option Agreement
Assignor,
for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and
other
good and valuable consideration in hand paid by Assignee, the receipt and
sufficiency of which consideration are hereby acknowledged and confessed by
Assignor, does hereby GRANT, BARGAIN, SELL, CONVEY, ASSIGN and TRANSFER unto
Assignee, effective as of the Effective Time, an undivided seventy-five percent
(75%) interest in and to Assignor's Interest (hereinafter defined) in and to
the
Lease Option Agreement (hereinafter defined) (said undivided seventy-five
percent (75%) interest in and to Assignor's Interest in and to the Lease Option
Agreement being herein referred to as the "Subject
Interest").
TO
HAVE
AND TO HOLD the Subject Interest unto Assignee, its successors and
assigns,
forever, subject, however, to the matters set forth herein.
ARTICLE
II
Certain
Definitions
The
following terms, when used in this Assignment, shall have the meanings indicated
below (such meanings to be fully applicable to both the singular and plural
forms of the terms defined):
"Assignor's
Interest"
means
all of the rights, titles and interests of the "Optionee" existing under and
by
virtue of the Lease Option Agreement.
1
"Lease
Option Agreement"
means
that certain Lease Option Agreement dated effective September
14, 2005, by and between Black Stone Acquisitions Partners 1, L.P., and
Sugarberry
Oil
& Gas Corporation, as Optionors, and Assignor, as Optionee.
ARTICLE
III
Limitation
of Warranties; Permitted Encumbrances
Section
3.1 Limitation
of Warranties.
(a) Assignor
does hereby bind itself, its successors and assigns, to warrant and forever
defend all and singular the Subject Interest, unto Assignee, its successors
and
assigns, against
every person whomsoever lawfully claiming or to claim the same or any part
thereof, by,
through
or under Assignor, but not otherwise; subject, however, to the matters set
forth
herein.
(b) EXCEPT
AS
EXPRESSLY PROVIDED IN SECTION 4.1 OF THAT CERTAIN LEASE PURCHASE AGREEMENT
DATED
_____________, 2006, BY AND BETWEEN ASSIGNOR AND ASSIGNEE, AND THE SPECIAL
WARRANTY OF TITLE TO THE SUBJECT INTEREST CONTAINED IN THIS ASSIGNMENT, THE
SUBJECT INTEREST IS CONVEYED AND ACCEPTED PURSUANT HERETO WITHOUT ANY OTHER
COVENANT, REPRESENTATION OR WARRANTY, WHETHER EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, WITH RESPECT TO (A) THE QUANTITY, QUALITY, CONDITION, SIZE, WEIGHT,
SERVICEABILITY, CONFORMITY TO SAMPLES OF MODELS, (B) ANY OTHER ASPECT OR
CONDITION OF THE SUBJECT INTEREST, ALL OF WHICH IS CONVEYED BY ASSIGNOR TO
ASSIGNEE AS IS, WHERE IS, AND WITH ALL FAULTS AND DEFECTS AND IN ITS PRESENT
CONDITION AND STATE OF REPAIR AND WITHOUT ANY COVENANTS, REPRESENTATIONS OR
WARRANTIES, WHATSOEVER OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR
PURPOSE, (C) THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS,
PROJECTIONS, INFORMATION OR MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED
OR
MADE AVAILABLE TO ASSIGNEE BY, ON BEHALF OF OR AT THE DIRECTION OF ASSIGNOR
IN
CONNECTION WITH THIS ASSIGNMENT INCLUDING, WITHOUT LIMITATION, THAT RELATIVE
TO
PRICING ASSUMPTIONS, QUALITY, QUANTITY OR VOLUMES OF HYDROCARBON RESERVES (IF
ANY) ATTRIBUTABLE TO THE SUBJECT INTEREST OR THE ABILITY OR POTENTIAL OF THE
SUBJECT INTEREST OR THE LANDS COVERED BY THE LEASE OPTION AGREEMENT TO PRODUCE
HYDROCARBONS, (D) THE PHYSICAL AND ENVIRONMENTAL CONDITION OF SAID LANDS, BOTH
SURFACE AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO CONDITIONS SPECIFICALLY
RELATED TO THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS SUBSTANCES, SOLID
WASTES, ASBESTOS AND OTHER MAN MADE FIBERS, OR NATURALLY OCCURRING RADIOACTIVE
MATERIALS, IT BEING AGREED BY ASSIGNEE THAT ANY AND ALL SUCH DATA, RECORDS,
REPORTS, PROJECTIONS, INFORMATION AND OTHER MATERIALS (WRITTEN OR ORAL)
FURNISHED OR OTHERWISE MADE AVAILABLE OR DISCLOSED TO ASSIGNEE HAVE BEEN AND
WILL BE PROVIDED TO ASSIGNEE AS A CONVENIENCE AND SHALL NOT CREATE
2
OR
GIVE
RISE TO ANY LIABILITY OF OR AGAINST ASSIGNOR AND ANY RELIANCE ON OR USE OF
THE
SAME SHALL BE AT ASSIGNEE'S SOLE RISK. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
(E) TITLE TO OR THE OWNERSHIP OR OPERATION OF THE SUBJECT INTEREST OR ANY PART
THEREOF AND (F) THE ACCURACY OR COMPLETENESS OF ANY REPORT, ASSESSMENT OR OTHER
MATERIAL PURPORTING TO ASSESS OR ALLOCATE PRODUCTION, RESERVES OR VALUE TO
ANY
SUBJECT INTEREST OR THE LANDS SUBJECT TO THE LEASE OPTION
AGREEMENT.
(c) To
the
extent transferable, Assignee shall be and is hereby subrogated to
all
covenants and warranties of title by parties heretofore given or made to
Assignor or its predecessors in title in respect of the Subject
Interest.
Section
3.2 Permitted
Encumbrances.
The
Subject Interest is assigned and conveyed by Assignor and accepted by Assignee
expressly subject to the terms and provisions of the Lease Option
Agreement.
By
Assignee's acceptance of this Assignment, Assignee assumes and agrees to bear
Assignee's proportionate share (i.e., seventy-five percent (75%)) of all burdens
and obligations under the Lease Option Agreement that are attributable to
Assignor's Interest and that arise or accrue after (but not before) the
Effective Time.
ARTICLE
IV
Miscellaneous
Section
4.1 Further
Assurances.
Assignor
covenants and agrees to execute and deliver to Assignee all such other and
additional instruments and other documents and will do all such other acts
and
things as may be necessary to more fully assure to Assignee or its successors
or
assigns all of the respective properties, rights and interests herein and hereby
granted or intended so to be, including, without limitation, executing separate
assignments of individual oil and gas leases which (upon exercise of the
"Option" described in the Lease Option Agreement) shall be included in the
Subject Interest and which are necessary to facilitate the recognition of
Assignee's ownership of the Subject Interest by all applicable third
parties.
Section
4.2 Successors
and
Assigns.
All of
the provisions hereof shall inure to the
benefit
of and be binding upon Assignor and Assignee and their respective successors
and
assigns. All references herein to either Assignor or Assignee shall include
their respective successors and assigns.
Section
4.3 Counterparts.
This
Assignment is being executed in several original
counterparts, each of which shall be deemed to be an original instrument, but
all of which counterparts shall constitute but one and the same
assignment.
3
IN
WITNESS WHEREOF, Assignor and Assignee have caused this Assignment to be
executed on the dates of their respective acknowledgments set forth below,
to be
effective, however, as of the Effective Time.
ASSIGNOR:
PETRO
RESOURCES CORPORATION
(IN
TEXAS DB/A PRCT, INC)
By
Name:
Title:
ASSIGNEE:
THE
MERIDIAN RESOURCE &
EXPLORATION LLC
By
Name:
Title:
4
|
STATE
OF TEXAS
|
§
|
|
§
|
|
|
COUNTY
OF
|
§
|
This
instrument was acknowledged before me on ___________, 2006, by ____________,
______________ of Petro Resources Corporation, a Delaware corporation, doing
business in the State of Texas as PRCT, Inc., on behalf of said
corporation.
|
|
||
|
Notary
Public, State of Texas
|
||
|
Printed
Name:
|
||
|
My
Commission expires:
|
||
|
STATE
OF TEXAS
|
§
|
|
§
|
|
|
COUNTY
OF
|
§
|
This
instrument was acknowledged before me on _____________, 2006, by __________,
________________of The Meridian Resource & Exploration LLC, a
Delaware
limited liability company, on behalf of said company.
|
|
||
|
Notary
Public, State of Texas
|
||
|
Printed
Name:
|
||
|
My
Commission expires:
|
||
5
