UNION OIL COMPANY OF CALIFORNIA
AND
Magnum Hunter Production, Inc.
PURCHASE AND SALE AGREEMENT
Dated as of November 25, 1998
DEFINITIONS..............................................................8
1.1 Defined Terms..........................................8
1.2 Undefined Financial Accounting Terms..................13
1.3 References............................................13
1.4 Construction..........................................13
PURCHASE AND SALE.......................................................14
2.1 Assets................................................14
2.2 Excluded Assets.......................................15
2.3 Purchase Price........................................16
2.4 Payment Procedures....................................16
2.5 Adjusted Purchase Price...............................16
2.6 Cash Settlement.......................................17
TITLE EXAMINATION.......................................................17
3.1 Access to Title Information...........................17
3.2 Title Defects.........................................18
3.3 Notice of Title Defect................................18
3.4 Claim Value...........................................18
3.5 Defect Value..........................................18
3.6 Remedies for Title Defects............................18
3.7 Purchase Price Adjustments Threshold..................19
3.8 Preferential Purchase Rights..........................19
3.9 Preferential Purchase Right Disputes..................20
ENVIRONMENTAL MATTERS...................................................20
4.1 No Admission Against Interest.........................20
4.2 Physical Condition of the Assets......................20
4.3 Endangered Species, Critical Habitat, Wetlands,
Geologic Hazards and Flooding.........................21
4.4 Environmental Assessments and Completion of
Environmental Due Diligence...........................21
4.5 Buyer's Access to Assets; Indemnification; Insurance..22
4.6 Assumption of Environmental Liabilities...............23
4.7 Qualified Claim Cost Sharing..........................24
4.8 Limitation............................................25
4.9 Termination Due to Material Environmental
Deficiencies..........................................26
4.10 Determination of Value................................26
OPERATIONS AND CASUALTY LOSS............................................27
5.1 Operations............................................27
5.2 Casualty Loss.........................................27
5.3 Successor Operator....................................27
5.4 Restrictions on Operations............................27
REPRESENTATIONS AND WARRANTIES OF UNOCAL................................28
6.1 Organization..........................................28
6.2 Authority to do Business..............................28
6.3 Binding Obligation....................................28
6.4 Litigation, Suits or Claims...........................28
6.5 Relation to Assumed Liabilities.......................29
6.6 Disclaimer of Warranties..............................29
6.7 Gas Entitlements......................................29
6.8 Disclosure............................................29
6.9 No Breach.............................................30
6.10 Environmental Condition of Assets.....................30
6.11 Compliance with Laws and Agreements...................30
6.12 Taxes.................................................30
6.13 Brokers...............................................30
6.14 Tax Partnership.......................................30
REPRESENTATIONS AND WARRANTIES OF BUYER.................................30
7.1 Organization..........................................30
7.2 Authority; Enforceability.............................31
7.3 Consents..............................................31
7.4 Litigation, Suits or Claims...........................31
7.5 Disclosure............................................31
7.6 No Breach.............................................32
7.7 Investigations of Assets..............................32
7.8 No Distribution.......................................32
7.9 Resale Registration...................................32
7.10 Oil and Gas Experience................................32
7.11 Federal Leases........................................32
7.12 Brokers...............................................32
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF UNOCAL.......................32
8.1 Purchase Price........................................32
8.2 Buyer's Representations and Warranties True...........33
8.3 Officer's Certificate.................................33
8.4 Opinion of Counsel....................................33
8.5 Pre-Closing Performance...............................34
8.6 Authorization.........................................34
8.7 Absence of Litigation.................................34
8.8 Bonds.................................................34
8.9 Preferential Purchase Rights..........................34
8.10 Xxxx-Xxxxx-Xxxxxx Act.................................34
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER........................35
9.1 Delivery of Instruments of Transfer...................35
9.2 Unocal's Representations and Warranties...............35
9.3 Officer's Certificate.................................35
9.4 Pre-Closing Performances..............................35
9.5 Authorization.........................................35
9.6 Absence of Litigation.................................35
9.7 Xxxx-Xxxxx Xxxxxx Act.................................36
COVENANTS...............................................................36
10.1 Investigation and Decision............................36
10.2 Access to Information.................................37
10.3 General Liabilities and Assumed Liabilities...........37
10.4 Assumption of Plugging and Abandonment Obligations....37
10.5 Gas Imbalance.........................................37
10.6 Xxxx-Xxxxx-Xxxxxx Act.................................38
10.7 Third-Party Consents..................................38
10.8 Completion of Due.....................................38
10.9 Additional Agreements.................................38
10.10 Payment of Certain Expenses Due and Payable After
the Effective Date....................................39
10.11 Notification of Certain Matters.......................39
10.12 Announcements.........................................39
10.13 Termination of Guarantees and Other Commitments.......39
10.14 Like Kind Exchange....................................40
10.15 Access to Geologic and Geophysical Information........40
EMPLOYEE MATTERS........................................................40
11.1 Employee List.........................................40
11.2 Job Classification....................................40
TAXES...................................................................41
12.1 Apportionment of Ad Valorem and Property Taxes........41
12.2 Sales Taxes, Filing Fees, Etc.........................41
12.3 Other Taxes...........................................41
TERMINATION.............................................................41
13.1 Termination...........................................42
13.2 Effect of Termination.................................42
13.3 Specific Performance..................................43
SURVIVAL AND INDEMNIFICATION............................................43
14.1 Survival..............................................43
14.2 Indemnification.......................................43
14.3 Third Party Claims....................................44
14.4 Method of Asserting Claims............................44
14.5 Right to Cure.........................................47
CLOSING.................................................................47
15.1 Time of Essence.......................................47
15.2 Place and Date........................................47
15.3 Unocal's Actions at Closing...........................47
15.4 Buyer's Actions at Closing............................48
15.5 Closing Statement.....................................49
15.6 Notices...............................................49
ACTIONS AFTER CLOSING...................................................50
16.1 Final Accounting......................................50
16.2 Receipts and Credits..................................50
16.3 Suspended Funds.......................................50
16.4 Further Assurances....................................51
16.5 Post-Closing Accounting...............................51
16.6 Recording.............................................51
16.7 Books and Records.....................................51
16.8 Access to Properties and Records by...................51
16.9 Access to Properties and Records by...................52
MISCELLANEOUS...........................................................52
17.1 Governing Law.........................................52
17.2 Assignment............................................52
17.3 Written Notices.......................................53
17.4 Expenses..............................................54
17.5 Waiver of Compliance with Bulk Transfer Laws..........54
17.6 WAIVER OF CONSUMER RIGHTS.............................54
17.7 Waiver of Jury Trial..................................54
17.8 Limitation of Liability...............................55
17.9 No Admissions.........................................55
17.10 Use of Unocal's Name..................................55
17.11 Entire Agreement, Etc.................................55
17.12 Parties in Interest...................................55
17.13 Severability..........................................56
17.14 Consents..............................................56
SCHEDULE OF EXHIBITS
Exhibit "A" - Leasehold Interests
Exhibit "B" - Personal Property, Warehouse Stock and Idle Equipment
Exhibit "C" - Claim Value Formula and Allocated Values Schedule
Exhibit "D" - Arbitration Procedures
Exhibit "E" - Environmental Assessment Fields
Exhibit "F" - Gas Balancing Schedule
Exhibit "G" - Environmental Disclosure Schedule
Exhibit "H" - Disclosure Schedule
Exhibit "I" - Geophysical Data Licensing Agreement
Exhibit "I-1"- Geophysical Data
Exhibit "J" - Satisfactory Completion of Due Diligence
Exhibit "K" - Conveyance and Xxxx of Sale
Exhibit "L" - Assumption Agreement
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is entered into effective as of November
25, 1998, by and between Union Oil Company of California, a California
corporation, with an office at 00000 Xxxxxxxxx Xxxxxxx, Xxxxx Xxxx, Xxxxx 00000
(hereinafter referred to as "Unocal"), and Magnum Hunter Production, Inc., a
____ corporation, whose address is 000 Xxxx Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000 (hereinafter referred to as "Buyer").
RECITALS
WHEREAS, Unocal is the holder of certain assets which include oil and gas
interests and properties in the state of Oklahoma; and
WHEREAS, Unocal desires to sell such oil and gas interests, properties and
related rights, as hereinafter described, to Buyer and Buyer desires to purchase
such interests, properties and rights from Unocal, upon the terms and subject to
the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, Unocal and Buyer agree as follows:
SECTION 1
DEFINITIONS
1.1 Defined Terms: The following terms, when capitalized in this Agreement,
shall have the meanings defined either in this Section or elsewhere in this
Agreement.
"Adjusted Purchase Price" shall have the meaning specified in Section 2.5.
"Accruing" or "Accrued" means, with respect to any obligation, duty, loss,
liability, claim, fine, expense, damage, cost or penalty, the occurring or
happening of any event which causes such obligation, duty, loss, liability,
claim, fine, expense, damage, cost or penalty to become demandable, requirable,
assertible, enforceable, due and owing, or being incurred or occurring, as the
case may be.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person. For purposes of this definition, "control" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.
"Agreement" means this Purchase and Sale Agreement, including all Exhibits.
"Allocated Value(s)" means the value of the Assets based on the discounted
future net pre-tax proved reserves as determined by Buyer, and as set forth in
Exhibit "C".
"Assets" shall have the meaning specified in Section 2.1.
"Assumed Liabilities" means all Environmental Liabilities, General
Liabilities, Plugging and Abandonment Obligations and other liabilities assumed
by Buyer under the terms of this Agreement.
"Cash Settlement" shall have the meaning specified in Section 2.6.
"Casualty Loss" means a loss of or damage to personality, excluding oil,
gas and other minerals in place, that is caused by a sudden, unexpected,
catastrophic and unusual event or other acts of God.
"Claim Notice" means notification by an Indemnified Party to an
Indemnifying Party of any claim or demand for which the Indemnifying Party would
be liable hereunder, and providing information which specifies the nature and
basis of the claim or demand and the amount or the estimated amount of the claim
or demand.
"Claim Value" shall have the meaning specified in Section 3.4.
"Claim Value Formula" shall have the meaning specified in Exhibit "C" or,
if none is provided therein, the claim value formula mutually agreed to by the
parties in writing.
"Closing" means the consummation of the transactions contemplated in this
Agreement other than any transactions specifically scheduled for a time after
Closing by the terms hereof.
"Closing Date" means the date specified in Section 15.2, or such other date
as the parties may mutually agree upon in writing.
"Confidentiality Agreement" means any Confidentiality Agreement between the
Parties, and any amendments thereto, executed prior to and in conjunction with
and for the purposes of this Agreement.
"Contract Rights" means the Assets described in Section 2.1 (v).
"Defect Value" shall have the meaning specified in Section 3.5.
"Defensible Title" means title which is determinable of record, and is free
of liens, claims, defects, encumbrances or deficiencies other than Permitted
Encumbrances.
"Deleterious Substance" means (i) any substance, product, waste or other
material of any nature whatsoever which is or becomes listed as a hazardous
substance, hazardous waste, hazardous material or pollutant under any
Environmental Laws; (ii) any substance, product, waste or other material of any
nature whatsoever which may give rise to liability under any Environmental Laws;
(iii) petroleum and its fractions, crude oil and other petroleum products; and
(iv) radioactive materials including but not limite to naturally occurring
radioactive materials.
"Disclosure Schedule" means Exhibit "H" to this Agreement.
"Due Diligence Period" means the sooner of (i) thirty (30) calendar days
following the date of this Agreement, or (ii) the Closing Date.
"Xxxxxxx Money Deposit" shall have the meaning specified in Section 2.4
(i).
"Effective Date" means 11:59 p.m. local time in Houston, Texas, on December
31, 1998.
"Environmental Assessments" shall have the meaning specified in Section
4.4.
"Environmental Disclosure Schedule" means Exhibit "G" to this Agreement.
"Environmental Laws" means any applicable laws, orders, rules, regulations,
judgments or decrees of any federal, state, tribal, county or municipal
governing authority having jurisdiction over any Asset or Party which relate to
pollution, the protection or cleanup of the environment, or the release or
disposal of deleterious substances into the environment, including but not
limited to ambient air, surface water, groundwater, land surface or subsurface
strata; including all such laws, orders, rules, regulations, judgments or
decrees as they may be amended, varied or modified in the future.
"Environmental Liabilities" means all obligations, duties, losses,
liabilities, claims, fines, expenses, damages, costs (including attorney's fees
and expenses) or penalties created by, related to, or arising out of any
Environmental Law, whether Accruing before or after the Effective Date;
excluding all Plugging and Abandonment Obligations.
"Excluded Assets" shall have the meaning specified in Section 2.2.
"Execution Date" means the date on which this Agreement has been fully
executed by Unocal and Buyer.
"Facilities" means the Assets described in Section 2.1 (ii).
"Final Accounting" shall have the meaning specified in Section 16.1.
"Gas Imbalance" means the difference between the volume of produced gas
that Unocal took from an Asset(s) and the volume of Unocal's gas entitlement for
such Asset(s).
"General Liabilities" means all obligations, duties, losses, liabilities,
claims, fines, expenses, damages, costs (including attorneys fees and expenses)
or penalties created by, related to, or arising out of ownership or operation of
the Assets, any contractual relationship, or any applicable law, order, rule,
regulation, judgment or decree of any federal, state, tribal, county or
municipal governing authority having jurisdiction over the Assets or the
Parties, whether Accruing before or after the Effective Date; excluding Plugging
and Abandonment Obligations (which are addressed elsewhere herein),
Environmental Liabilities (which are addressed elsewhere herein), and all
obligations, duties or liabilities for the payment of royalties and taxes which
Accrued prior to the Effective Date, as well as liabilities sums and amounts
that are liquidated and certain which have been invoiced or charged to Unocal
under contracts for services rendered or goods provided prior to the Effective
Date, and which ar attributable to periods prior to the Effective Date, and
which sums and amounts remain outstanding as of the Closing Date.
"Geophysical Data Licensing Agreement" means the agreement attached hereto
and designated as Exhibit "I".
"Geophysical Seismic Licensing Price" means the initial fee of $1.00,
together with all other fees and charges described in the Geophysical Data
License Agreement, which the Buyer will pay to Unocal to license the Geophysical
Data described in the Geophysical Data Licensing Agreement.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" and "Indemnifying Party" shall have the meaning
specified in Section 14.4.
"Interest Rate" means an interest rate of 6.5% per annum.
"Knowledge" means the actual knowledge of the applicable Party's officers
and salaried employees directly, immediately and materially involved in the
transactions which are the subject matter of this Agreement and, as to Unocal,
that are equal to or above the level of asset manager in Unocal's management
structure.
"Leasehold Interests" means the Assets described in Section 2.1 (i).
"Liens" means any and all liens, mortgages, charges, pledges, security
interests, or other similar type encumbrances, including, but not limited to,
such as may arise under any contracts or judgments.
"Material Environmental Deficiency" means a deficiency or deficiencies in
the Assets arising out of the Environmental Liabilities for which the cumulative
estimated Remediation Cost will create a liability for which Buyer will be
responsible in an amount in excess of 8.5% of the Purchase Price (being
$3,111,694.20); provided, however, that any Remediation Costs assumed by Unocal
under Section 4.7(v) below shall not be included in any calculation of the
Material Environmental Deficiency.
"Minimal Environmental Liabilities" shall have the meaning specified in
Section 4.7 (i).
"NORM" means naturally occurring radioactive material.
"P&A Conversion Price" shall mean U.S.$3,030,000.
"Party" or "Parties" means Unocal or Buyer, or Unocal and Buyer
respectively.
"Party Adverse Effect" shall mean an event, taking into account all facts
and circumstances, on the business, properties, condition (financial or
otherwise) or operations of a Party, which has had or could reasonably be
expected to have a material adverse effect on the ability of such Party to
perform its obligations under this Agreement.
"Permits" means any and all permits, including temporary permits to
construct or operate, authorizations, approvals, registrations, rights of way,
orders, waivers, variances or other licenses issued or granted by any federal,
state, tribal or local administrative or governmental authority, bureau or
agency.
"Permitted Encumbrances" means (i) liens for taxes, assessments or other
governmental charges or levies not yet delinquent; (ii) liens in connection with
workers' compensation, unemployment insurance or other social security, old-age
pension or public liability obligations which are not yet due or delinquent;
(iii) liens in favor of vendors, carriers, warehousemen, repairmen, mechanics,
workmen, materialmen, construction or similar liens arising by operation of law
in the ordinary course of business as to obligations which are not yet
delinquent or which have not been filed pursuant to law; (iv) rights to consent
by, required notices to, filing with, or other actions by governmental entities
in connection with the sale or conveyance of the applicable property if the same
are customarily obtained subsequent to such sale or conveyance; (v) easements,
rights of way, restrictions, encroachments and other similar encumbrances, and
minor defects in the chain of title which do not interfere with the continued
current use of the applicable property or materially detract from the value of
such property; (vi) rights of utility companies to lay, maintain and repair
pipelines, conduits, cable boxes and other installations on, under, and across
the applicable property; (vii) rights reserved to or vested in any municipality
or governmental, statutory or public authority to control or regulate any
interest in any manner, and all applicable laws, rules and orders of such
authority; (viii) any lien or encumbrance in the form of a judgment secured by a
supersedeas bond or other security approved by a court of competent
jurisdiction; and (ix) all matters disclosed in the Disclosure Schedule or
Environmental Disclosure Schedule which affect the quality or quantity of title.
"Person" means any individual, partnership, joint venture, firm,
corporation, association, trust, limited liability company, joint stock company,
estate, unincorporated organization or other entity, and their successors and
assigns; or any governmental or political subdivision, including any agency,
department or instrumentality thereof.
"Plugging and Abandonment Obligations" means all usual and normal prudent
operations for the plugging, abandonment, surface restoration, site clearance,
and disposal of related waste materials, including NORM and asbestos, of all
oil, gas, injection, water or other xxxxx, sumps, pits, ponds, tanks,
impoundments, foundations, pipelines, structures and equipment of any kind or
description on the Assets, in compliance with all applicable contractual
obligations and applicable rules and regulations of governmental bodies having
jurisdiction over the Assets. Plugging and Abandonment Obligations do not
include cleanup of polluted lands, air or water other than routine cleanup
normally associated with plugging and abandonment, such cleanup obligations
which are other than routine being included within the definition of
Environmental Liabilities.
"Purchase Price" shall have the meaning specified in Section 2.3.
"Qualified Claim" means an unknown Environmental Liability which Accrued
prior to the Effective Date, and which is the subject of a specific written
claim asserting Unocal's or Buyer's responsibility made and asserted during the
period within six (6) months following the Closing Date (or, with respect to any
claims of Environmental Liability made or asserted within one (1) year following
the Closing Date by the Oklahoma Corporation Commission in connection with
Complaint # 185990GD041094 received by the Oklahoma Corporation Commission on
October 14, 1998) either by a governmental entity or by a third party that is
not an Affiliate or a successor in interest of Buyer, with a Claim Notice
provided by Buyer to Unocal at once but in no case later than thirty (30) days
after Buyer's receipt of such claim. Provided, however, Environmental Law for
purposes of determining Environmental Liabilities that can be Qualified Claims
shall not include Environmental Laws as they may be amended, varied or modified
in the future, but shall be limited to Environmental Laws in effect and
applicable to the Assets as of the Effective Date.
"Qualified Claim Cost Sharing Allocation" shall have the meaning specified
in Section 4.7.
"Remediation Cost" means the cost to remedy any Environmental Liability
using the most cost effective methods and manner that satisfy applicable
Environmental Laws, and which are consistent with the continued use of the
affected Assets in the same capacity and for the same purposes as they were
being used on the Effective Date.
"Surface Access Agreements" means the Assets described in Section 2.1 (vi).
"Title Defect" shall have the meaning specified in Section 3.2.
1.2 Undefined Financial Accounting Terms: Undefined financial accounting
terms used in this Agreement shall be defined according to generally accepted
accounting principles.
1.3 References: References in this Agreement to Sections or Exhibits shall
be to the entirety of the Sections or Exhibits of this Agreement which are
referred to unless expressly limited to a sub-Section in the reference.
References, if any, in this Agreement to "hereby", "herein", "hereinabove",
"hereinafter", "hereinbelow", "hereof", "hereunder", and words of similar import
shall be to this Agreement in its entirety and not only to the particular
Section or Exhibit in which such reference appear unless expressly stated to the
contrary.
1.4 Construction: Unless the context otherwise requires: (i) "or" is not
exclusive; (ii) words used in the singular include the plural and words used in
the plural include the singular; (iii) words used in the masculine include the
feminine and words used in the feminine include the masculine; (iv) any date
specified for any action that is not a business day as such term is generally
defined in the United States of America shall be deemed to mean the first
business day after such date; (v) neither the captions to Sections or paragraphs
hereof nor the Table of Contents shall be deemed to be a part of the Agreement;
(vi) the Exhibits form a part of the Agreement and shall have the same force and
effect as if set out in the body of the Agreement; and (vii) references herein
to any other agreement or instrument shall, unless the context otherwise
requires or specifies, be deemed references to that agreement or instrument as
it may from time to time be changed, amended or extended, but shall not be an
incorporation by reference unless specifically so provided.
SECTION 2
PURCHASE AND SALE
2.1 Assets: Subject to the terms and conditions of this Agreement, Unocal
shall sell and Buyer shall purchase on the Closing Date, effective as of the
Effective Date, without warranty of title, either express or implied, all of
Unocal's right, title and interest in the following assets ("Assets"):
(i) Unocal's leasehold interest in the oil, gas and other mineral leases
described in Exhibit "A", insofar as same cover and affect the lands described
in Exhibit "A" ("Leasehold Interests");
(ii) the xxxxx, equipment and facilities permanently located on the lands
described in Exhibit "A, including, but not limited to, pumps, surface and
subsurface well equipment, gas plants, saltwater disposal xxxxx, lines and
facilities, sulfur recovery facilities, compressors, compressor stations,
dehydration facilities, treating facilities, gathering lines, flow lines,
valves, meters, separators, tanks, tank batteries, and other fixtures
("Facilities");
(iii) the oil, condensate and natural gas liquids produced after the
Effective Date, including line fill below the pipeline connections as of the
Effective Date attributable to the leasehold interests described in Exhibit "A";
(iv) all personal property, warehouse stock and idle equipment described in
Exhibit "B";
(v) all contracts and agreements concerning the properties described in
Exhibits "A" and "B", including, but not limited to, unit agreements, pooling
agreements, areas of mutual interest agreements, farmout agreements, farmin
agreements, saltwater disposal agreements, water injection agreements, line well
injection agreements, road use agreements, drilling contracts, operating
agreements, well service contracts, production sales contracts, gas contracts,
gas balancing agreements, storag or warehouse agreements, supplier contracts,
service contracts, construction agreements, division orders and transfer orders,
insofar as and only insofar as they relate to the interests and properties
described in Exhibits "A" and "B" ("Contract Rights"); and
(vi) all surface use agreements, easements, rights of way, licenses,
authorizations, Permits, and similar rights and interests applicable to, or used
in connection with, any or all of the interests and properties described in
Exhibits "A" and "B" ("Surface Access Agreements"); and
2.2 Excluded Assets: It is specifically agreed that Unocal is not selling
and Buyer is not purchasing the following assets ("Excluded Assets"):
(i) all rights and interests of any kind in the leases and lands described
in Exhibit "A" other than the leasehold interests specifically described in
Section 2.1 (i);
(ii) in conjunction with any interests retained by Unocal in the leases,
lands and xxxxx described in Exhibit "A", a like interest in all applicable
Facilities, Contract Rights and Surface Access Agreements;
(iii) any and all interests in the Assets Unocal is legally or
contractually restricted from selling;
(iv) all materials and equipment leased or temporarily located on the
Leasehold Interests, and any materials, equipment, pipelines, facilities or
interests in the land owned by a purchaser and/or transporter of oil and/or gas
therefrom, a lessor, or a third Person;
(v) all interests in pipelines, Facilities, Contract Rights and Surface
Access Agreements owned by Unocal that are not used in connection with the
Assets or which cover lands described in the Leasehold Interests, but which are
used in connection with properties that are not being sold under the terms of
this Agreement;
(vi) items sold, transferred, disposed of or consumed and contracts
terminated prior to the Closing Date in the ordinary course of business;
(vii) any right to use the "Unocal" name, marks, trade dress or insignia,
or to use the name of any other subsidiary of Unocal Corporation; and all of
Unocal's intellectual property, including, but not limited to patents, trade
secrets, and copyrights;
(viii) all amounts due or payable to Unocal as adjustments or refunds under
any contracts affecting the Assets for all periods of time prior to the
Effective Date, specifically including, without limitation, amounts recoverable
from audits under operating agreements;
(ix) all rights, titles, claims and interests of Unocal or its Affiliates
to or under any policy or agreement of insurance or indemnity, any bond, or to
any insurance proceeds or awards; and any employment, consulting, office lease
or accounting service contracts;
(x) all claims and chooses in action of Unocal arising from acts, omissions
or events, or damages to or destruction of property, occurring prior to the
Effective Date;
(xi) all proceeds, benefits, income or revenue accruing to the Assets prior
to the Effective Date, and any claims of Unocal for refunds of or losses carried
forwards with respect to taxes attributable to the Assets for any period prior
to the Effective Date; and
all geophysical, geological and seismic data, surveys, analysis and similar
data or information, which is not specifically licensed under the Geophysical
Data Licensing Agreement.
2.3 Purchase Price: The Purchase Price for the Assets shall be THIRTY SIX
MILLION SIX HUNDRED EIGHT THOUSAND ONE HUNDRED SIXTY SEVEN DOLLARS AND NO/100
($36,608,167.00) ("Purchase Price") in United States currency.
2.4 Payment Procedures: Payment shall be made as follows:
(i) contemporaneous with the execution of this Agreement, Buyer shall pay
and deliver to Unocal by wire transfer of immediately available funds, as
specified by Unocal, an Xxxxxxx Money Deposit of $1,830,408.35 ("Xxxxxxx Money
Deposit");
(ii) at Closing, Buyer shall pay to Unocal the remainder of the Adjusted
Purchase Price, plus or minus any Cash Settlement by wire transfer of
immediately available funds as specified by Unocal.
2.5 Adjusted Purchase Price: The net price which Buyer shall pay for the
Assets ("Adjusted Purchase Price") shall be:
(i) the Purchase Price; plus or minus
(ii) any adjustments for Title Defects; minus
(iii) the Allocated Value or Claim Value of any part of the Assets sold to
a third Person pursuant to the exercise of a preferential purchase right; plus
the Geophysical Seismic License Price; plus
the upward adjustment for the P&A Conversion Price, if applicable under
Section 15.4 below.
2.6 Cash Settlement: The sum ("Cash Settlement") due to settle accounts
until the Final Accounting shall be determined, in good faith, by Unocal for
Closing purposes by adding or subtracting from the Adjusted Purchase Price as
follows:
(i) subtract the Xxxxxxx Money Deposit;
(ii) add the amount of estimated expenditures made by Unocal that are
attributable to the Assets for the period between the Effective Date and Closing
Date including, without limitation, royalties, taxes, rentals and similar
charges and expenses, including those billed under applicable operating
agreements, and all prepaid expenses;
(iii) subtract the amount of estimated revenues received by Unocal in
connection with sales of hydrocarbons and associated products from the Assets,
together with any other income from the Assets, Accruing after the Effective
Date, excluding estimated revenues from the sale of liquid hydrocarbons in
storage tanks above the pipeline connection on the Effective Date valued at
market or contract prices in effect as of the Effective Date after deducting
royalty and tax obligations;
(iv) add any positive adjustments for any underbalanced position of Unocal
with respect to any Gas Imbalances.
SECTION 3
TITLE EXAMINATION
3.1 Access to Title Information: After the date of this Agreement and until
the end of the Due Diligence Period, Unocal shall make all of its land records
that are not privileged or confidential available to Buyer at Unocal's offices
located at 00000 Xxxxxxxxx Xxxxxxx, Xxxxx Xxxx, Xxxxx 00000, or such other place
as deemed appropriate by Unocal, during normal business hours, for examination
by Buyer. Unocal shall not be obligated to perform any title work, and no
abstracts or title opinions will b made current by Unocal. NO WARRANTY OF ANY
KIND IS MADE BY UNOCAL AS TO THE INFORMATION SO SUPPLIED, AND BUYER AGREES THAT
ANY CONCLUSIONS DRAWN THEREFROM SHALL BE THE RESULT OF ITS OWN INDEPENDENT
REVIEW AND JUDGMENT. SUBJECT TO THE OTHER PROVISIONS OF THIS AGREEMENT, BUYER
ASSUMES THE RISK OF ANY TITLE DEFECTS AND/OR CONFLICTING ADVERSE RIGHT(S),
TITLE(S) AND/OR INTEREST(S) WHICH A RECORD TITLE CHECK AND/OR PHYSICAL
INSPECTION REVEALS OR WOULD HAVE REVEALED.
3.2 Title Defects: For purposes of this Agreement, a defect in title
("Title Defect") shall mean a defect in one or more of the following respects
only:
(i) Unocal's interest in any one or more of the properties comprising the
Assets described in Exhibit "A" is more or less than the interest for such
property(ies) reflected in Exhibit "A";
(ii) Unocal's rights and interests in one or more of the properties
comprising the Assets described in Exhibit "A" are subject to being reduced by
virtue of the exercise by a third party of a reversionary, back-in or similar
right not reflected in Exhibit "A" nor disclosed to Buyer in the Disclosure
Schedule; or
(iii) Unocal's title to one or more of the properties comprising the Assets
described in Exhibit "A" is subject to any lien, claim, defect, encumbrance or
deficiency which causes Unocal to not have Defensible Title to such
property(ies).
3.3 Notice of Title Defect: Upon discovery of a Title Defect, the Party
discovering same shall as soon as reasonably possible thereafter notify the
other Party of the Title Defect. The notice shall include with reasonable
specificity the property or properties described in Exhibit "A" which are
affected, the particular Title Defect claimed, and the notifying Party's good
faith estimate of the Claim Value or Defect Value. Any Title Defect which is not
asserted by Unocal or Buyer prior to the end of the Due Diligence Period shall
conclusively be deemed waived by both parties for all purposes.
3.4 Claim Value: If a claim of Title Defect is made pursuant to Section 3.2
(i) or (ii), the value of the claim ("Claim Value") shall be calculated using
the Claim Value Formula and Allocated Values set out in Exhibit "C".
3.5 Defect Value: If a claim of Title Defect is made pursuant to Section
3.2 (iii) for a matter not covered by Sections 3.2 (i) or (ii), the value of the
defect ("Defect Value") for a defect that is a liquidated or certain amount
shall be such liquidated or certain amount, and as to unliquidated or uncertain
amounts it shall be an amount necessary to compensate Buyer for the adverse
economic effect of such Title Defect on the value of the property(ies) affected,
taking into consideration all relevant factors, including the practical and
legal effect of the Title Defect. In no instance shall a Defect Value be an
amount in excess of the Allocated Value of an affected property.
3.6 Remedies for Title Defects:
(i) Unocal may elect to cure any or all Title Defects; provided, however,
if Unocal elects to cure a Title Defect, but has not been able to do so by the
Closing Date, the Parties shall proceed with the Closing, with the Claim Value
or Defect Value, as applicable, being an adjustment to the Purchase Price.
Unocal shall retain the right to cure any such Title Defect for a period of time
not to exceed one year after the Closing Date. Within thirty (30) days of
Buyer's receipt of curative documents which eliminate the Title Defect, Buyer
shall tender to Unocal the applicable Claim Value or Defect Value withheld at
Closing. Unocal's option to cure Sections 3.2 (i) or (ii) Title Defects shall
include the option to partially cure any such Title Defect or Title Defects so
as to reduce the Claim Value of the Title Defect or Title Defects to an amount
Unocal shall in its sole discretion determine.
(ii) If the Claim Value or Defect Value of a Title Defect is equal to
twenty-five percent (25%) or more of the Allocated Value of a property described
in Exhibit "A", Unocal may in its sole discretion elect to retain the affected
property and delete it from the Assets. In such instance, the Purchase Price
shall be adjusted in an amount equal to the Claim Value of the deleted
property(ies).
(iii) If a Title Defect is a Section 3.2 (i), (ii), or (iii) Title Defect
which increases or decreases Unocal's interest in the Assets, and Unocal does
not elect to cure the Title Defect, the Purchase Price shall be adjusted up or
down by the Claim Value of the Title Defect.
(iv) If Unocal contests the existence of a Title Defect or Buyer's good
faith estimate of the Claim Value or Defect Value of the Title Defect, the
Parties shall meet and use their best efforts to agree on the validity and/or
value of the Title Defect. If the Parties cannot agree on the validity and/or
value of a Title Defect, and neither Party elects to waive its claim, the
dispute shall be submitted to arbitration in accordance with the arbitration
procedures set forth in Exhibit "D".
3.7 Purchase Price Adjustments Threshold: No other provision herein
withstanding, the Purchase Price shall not be adjusted due to or for a Title
Defect, and neither Party shall notify the other Party of a Title Defect unless
or until the Claim Value or Defect Value of the Title Defect exceeds $10,000.00.
This $10,000.00 Title Defect threshold shall be applied separately to each
property described in Exhibit "A" that has been assigned a separate Allocated
Value, but shall be calculated on a cumulative basis if a separate property is
subject to more than one Title Defect.
3.8 Preferential Purchase Rights: Preferential purchase rights shall not be
considered Title Defects hereunder regardless of whether or not they are
reflected in the Disclosure Schedule. As to any and all preferential purchase
rights affecting Unocal's interest in all or part of the Assets, in accordance
with the provisions of the agreement which created the rights, Unocal shall send
to the owner or owners of such rights a notice offering to sell to such owner or
owners, those Assets covered by such rights for the Allocated Value assigned to
the affected Assets. If the owner or owners of the rights exercise same, the
affected portion of the Assets shall be deleted from the transaction, and the
Purchase Price shall be reduced in an amount equal to the Allocated Value of the
deleted Assets. If the specific Assets affected do not have a separate Allocated
Value, the value shall be the Claim Value of the deleted Assets.
3.9 Preferential Purchase Right Disputes:
(i) If an owner of a preferential purchase right obtains judicial relief
which permanently enjoins the consummation of the transactions contemplated
under this Agreement, such enjoinder shall be deemed a termination of this
Agreement by mutual consent of the Parties.
(ii) If an owner of a preferential purchase right seeks judicial relief,
other than injunctive relief, Buyer shall indemnify, defend and hold Unocal
harmless from any and all claims, causes of action, costs and expenses arising
out of or relating to such dispute.
SECTION 4
ENVIRONMENTAL MATTERS
4.1 No Admission Against Interest: Nothing contained in this Section 4, or
elsewhere in this Agreement, shall be construed to be an admission against
interest as to Unocal or Buyer. Unocal and Buyer have not included Environmental
Liability related provisions herein due to any perceived liability and
specifically disclaim the existence of any such liability to third parties
(including governmental entities) based on contract, tort, statute or otherwise.
4.2 Physical Condition of the Assets: Buyer acknowledges that the Assets
have been used for oil and gas drilling and production operations, related oil
field operations and possibly for the storage and disposal of Deleterious
Substances, and the Assets may be contaminated with such materials. Physical
changes in or under the Leasehold Interests or adjacent lands may have occurred
as a result of such uses. The Assets may contain xxxxx, sumps, landfills, pits,
ponds, tanks, impoundments, foundations, pipelines and other equipment, whether
or not of a similar nature, any of which may be buried and contain Deleterious
Substances, and the locations of which may not be known to Unocal or be readily
apparent by a physical inspection of the property. Further, spills, leaks,
blowouts and routine operations may have led to contamination of the Assets with
Deleterious Substances, the locations of which may not be known to Unocal or be
readily apparent by a physical inspection of the property. Buyer understands
that Unocal does not have the requisite information with which to determine the
exact nature or condition of the Assets nor the effect any use has had on the
physical condition of the Assets. In addition Buyer acknowledges that some oil
field production equipment may contain asbestos and/or NORM. In this regard,
Buyer expressly understands that NORM may affix or attach itself to the inside
of xxxxx, pipelines, materials and equipment as scale or in other forms, and
that xxxxx, materials and equipment located on the Assets described herein may
contain asbestos and NORM, and that NORM in the form of scale or in other forms
may have become dislodged from the inside of xxxxx, materials and equipment and
be located on the Property and that asbestos and NORM containing materials may
be buried or have been otherwise disposed of on the Property. Buyer also
expressly understands that special procedures may be required for the removal
and disposal of asbestos, NORM and other Deleterious Substances from the
Property where they may be found.
4.3 Endangered Species, Critical Habitat, Wetlands, Geologic Hazards and
Flooding: "Endangered Species" as used herein shall have the same meaning as
"endangered species" is defined pursuant to 16 U.S.C. 1532(6) or the laws of the
state in which the Leasehold Interest is located; as "threatened species" is
defined pursuant to 16 U.S.C. 1533(30) or the laws of the state in which the
Leasehold Interest is located; and/or, as a candidate species for such listing
under federal or state law. "Critical Habitat" as used herein shall have the
meaning as defined pursuant to 16 U.S.C. 1532(5). "Wetland" as used herein shall
have the meaning as defined in 40 Code of Federal Regulations ss.230.3(a), or
under the laws of the state in which the Leasehold Interest is located.
"Geologic Hazards" as used herein shall include seismic hazard and any earth
slides or other earth movement. "Flooding" as used herein shall include the
risks associated with a flood plain, flood way or restriction zone and/or any
diminution in the value of the Property or restriction of its use by reason of
the risk of water entering or remaining thereon. WITHOUT IN ANY WAY LIMITING ANY
OTHER DISCLAIMERS OF WARRANTY HEREIN AND NOTWITHSTANDING ANY DISCLOSURES MADE BY
UNOCAL TO BUYER, UNOCAL DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY OR
REPRESENTATION AS OF THE DATE OF THIS AGREEMENT AND/OR AS OF THE CLOSING OF THE
COMPLETENESS OF ANY SUCH DISCLOSURE OR THAT THE PROPERTY IS FREE FROM ANY
ENDANGERED SPECIES OR THAT ALL OR ANY PART OF THE PROPERTY IS NOT A CRITICAL
HABITAT OR A WETLAND, OR THAT ANY PART OF THE ASSETS DOES NOT INCLUDE A GEOLOGIC
HAZARD, OR THAT ANY PART OF THE PROPERTY IS NOT SUBJECT TO FLOODING.
Notwithstanding any knowledge that could be imputed to Unocal, Buyer has the
obligation to ascertain the presence of and extent of any Endangered Species,
Critical Habitat, Wetland, Geologic Hazards and the risk of Flooding on the
Property.
4.4 Environmental Assessments and Completion of Environmental Due
Diligence: From the date of this Agreement, Unocal will provide Buyer (or its
contractor) with reasonable access to the Assets operated by Unocal for the Due
Diligence Period, during which Buyer will, as part of Buyer's due diligence,
conduct, at its sole risk and expense, Phase I environmental site assessments as
provided below and such additional environmental site assessments as Buyer
determines is appropriate (collectively, the "Environmental Assessments"). Buyer
agrees to conduct a Phase I environmental site assessment (pursuant to American
Society for Testing and Materials standards) on each of the fields operated by
Unocal set forth in Exhibit "E", to be conducted by an unrelated third party
qualified to conduct such Phase I environmental site assessments. Buyer agrees
to immediately provide to Unocal a copy of the Environmental Assessments,
including all reports, data and conclusions, and, in any event, Buyer shall
provide Unocal a copy of all of the foregoing no later than 10 days prior to
Closing. Buyer shall keep any data or information acquired by all such
examinations and the results of all analyses of such data and information
strictly confidential and, unless required by law, will not disclose same to any
person or agency without the prior written approval of Unocal except to the
extent such disclosure is to financial institutions, environmental consultants,
legal counsel or other parties to whom disclosure is appropriate and desirable
to consummate this transaction, but subject to the prior agreement of any such
party to maintain the confidentiality of the information. Buyer shall complete
its environmental due diligence within the Due Diligence Period.
4.5 Buyer's Access to Assets; Indemnification; Insurance:
(i) Buyer shall have reasonable access to the Assets to conduct its
environmental due diligence including but not limited to the Environmental
Assessments. Buyer shall not perform any act or permit the performance of any
act that would injure the Assets or disrupt Unocal's activities thereon or the
surface owner's or the surface tenant's activities thereon. If the consent of
the surface owner or the surface tenant or any other third party is required in
connection with Buyer's access to the Assets, Buyer agrees to obtain such
consent before entering onto the Assets affected thereby (and Unocal will
reasonably cooperate (at no cost to Unocal) with Buyer's attempt to obtain such
third-party consents).
(ii) Buyer RELEASES AND AGREES TO INDEMNIFY, DEFEND AND HOLD HARMLESS
Unocal , its directors, officers, employees, agents and Affiliates against all
claims for injury to, or death of, persons or damage to property arising in any
way from the exercise of access rights granted to Buyer for environmental due
diligence or due diligence for any other purpose, or from the activities of
Buyer or its employees, agents or contractors on the Assets. Buyer shall
indemnify Unocal, its directors, officers, employees, agents and Affiliates
against and hold each and all of said indemnitees harmless from any and all
loss, cost, damage, expense or liability, including reasonable attorney's fees,
arising out of (i) any and all third party statutory or common-law Liens or
other encumbrances for labor or materials furnished in connection with such
tests, samplings, studies or surveys as Buyer may conduct with respect to the
Assets; and (ii) any injury to or death of any of Buyer's employees, agents or
representatives or damage to property occurring in, on or about the Assets as
the result of Buyer's due diligence activities, REGARDLESS OF THE SOLE, JOINT OR
CONCURRENT NEGLIGENCE, STRICT LIABILITY, PREMISES LIABILITY, BREACH OF CONTRACT
OR OTHER FAULT OR RESPONSIBILITY OF ANY PARTY OR PERSON (except for any such
injuries or damages caused solely by the gross negligence or willful misconduct
of any said indemnitees). The foregoing obligation of indemnity shall survive
Closing or termination of this Agreement without Closing.
(iii) Buyer shall obtain and maintain insurance acceptable to Unocal which
is primary as to any insurance or self-insurance available to Unocal and which
names Unocal as an additional insured with respect to liability arising out of
Buyer's or its agents' activities on the Assets, including a severability of
interest clause (cross liability), which additional insured endorsement shall
not exclude coverage based upon the alleged or actual negligence of the
additional insured. Such insurance shall include:
(a) commercial general liability insurance occurrence form or the
equivalent with the amendment-aggregate limits of insurance covering contractual
liability, subcontractor's liability, blanket contractual liability, and, unless
waived in writing by Unocal, liability arising from explosion, collapse, or
underground property damage, all with a minimum combined single limit of
$1,000,000.00 each occurrence, $2,000,000.00 aggregate, for bodily injury,
death, property damage, business interruption and personal injury;
(b) comprehensive automobile liability insurance or business auto policy on
an occurrence basis covering all owned, hired or otherwise operated non-owned
vehicles with a minimum combined single limit of $1,000,000.00 each occurrence
for bodily injury, death and property damage;
(c) workers' compensation insurance as required by law; and
(d) employers' liability insurance with a minimum limit of $1,000,000.00
each occurrence.
Such insurance shall be written by a carrier with a Best's rating of A IX
or above. Before the entry by Buyer upon the Assets, Buyer shall provide Unocal
with policies or certificates of the aforesaid insurance acceptable in form and
substance to Unocal which shall provide that coverage shall not be canceled or
materially changed prior to thirty (30) days' written notice to Unocal.
Subrogation against Unocal shall be waived with respect to all of the insurance
policies set forth above (including without limitation, policies of any
consultant). An alternate employer endorsement may be substituted for the
additional insured endorsement with respect to worker's compensation insurance
and employer's liability insurance only. The insurance required by this
provision in no way limits Buyer's obligations under any other Section of this
Agreement. Further, the insurance to be carried shall in no way be limited by
any limitation expressed elsewhere in this Agreement, or any limitation placed
on the indemnity herein given or as a matter of law.
4.6 Assumption of Environmental Liabilities: Buyer shall assume and
discharge any and all Environmental Liabilities relating to or arising from the
Assets, whether relating to or arising from ownership or operations before or
after the Effective Date, except as follows:
(i) Buyer assumes no Environmental Liabilities unless and until Closing
occurs; and
Based on the Qualified Claim Cost Sharing Allocation, Unocal shall be
responsible for a portion of the Remediation Costs for Qualified Claims.
4.7 Qualified Claim Cost Sharing: Any Remediation Costs incurred by Buyer
or Unocal in satisfying a Qualified Claim shall be allocated and satisfied by
the Parties as follows ("Qualified Claim Cost Sharing Allocation"):
(i) each separate and distinct Qualified Claim for which the Remediation
Cost is $10,000 or less ("Minimal Environmental Liabilities") shall be allocated
to and satisfied by Buyer;
Subject to Section 4.7 (i) above, cumulative Remediation Costs for all
Qualified Claims, except Minimal Environmental Liabilities, up to an aggregate
amount equal to $50,000 are allocated to and shall be satisfied by Unocal and
buyer as follows: Buyer shall satisfying the first $10,000 of each separate and
distinct Qualified Claim for which the Remediation Cost is greater than $10,000
and Unocal satisfying the balance of the claim up to an aggregate amount for all
Qualified Claims of $50,000;
(iii) Subject to Sections 4.7 (i) and (ii), cumulative Remediation Costs
for all Qualified Claims, except Minimal Environmental Liabilities, which exceed
an aggregate amount equal to $50,000 (with such aggregate $50,000 for all
Qualified claims being allocated and satisfied in the manner described in
Section 4.7 (ii) above) and up to an aggregate amount equal to one hundred
percent (100%) of the Adjusted Purchase Price are allocated to and shall be
satisfied one-half by Buyer and one-half by Unocal.
(iv) Subject to Sections 4.7 (i) - (iii), cumulative Remediation Costs for
all Qualified Claims, except Minimal Environmental Liabilities, which exceed an
aggregate amount equal to one hundred percent (100%) of the Purchase Price are
allocated to and shall be satisfied by Buyer.
(v) Notwithstanding Subparagraphs (i)- (iv) above, with respect to those
Remediation Costs associated with a proposed mercury remediation described on
Exhibit "G" regarding the Caddo Field and Plant, shall be allocated and
satisfied by Unocal, insofar and only insofar as (a) such Remediation Costs are
liquidated and certain as of the Execution Date or are incurred subsequently
pursuant to a written statement or scope of work approved and signed by Unocal
(and Buyer shall provide Unocal access to the Assets after Closing to supervise
and complete said statements or scopes of work), and (b) the Remediation Costs
only relate to clean-up or environmentally required remediation to the standards
expressly required of Unocal by the Oklahoma Department of Environmental Quality
pursuant to a written "Mercury Cleanup Workplan for Unocal Caddo Gas Field,
Springer, Oklahoma" for EMCON Project No.: 61900-037.002 under those
Environmental Laws existing as of the Execution Date, and (c) the Remediation
Costs are actually incurred by Unocal prior to December 31, 1999; and any other
Environmental Liabilities or Remediation Costs associated with or relating to
such mercury (or other) contamination, associated with or relating to the
remediation or clean-up thereof shall be handled in accordance with the terms
and provisions of this Agreement and assumed by Buyer as part of the Assumed
Liabilities.
4.8 Limitation:
No obligations allocated to or assumed by Unocal under this Agreement shall
include any obligation to remediate any Environmental Liability in or upon land
or any water course or body of water including ground water beyond the lawful
requirements of the government agency or agencies with jurisdiction over the
Assets or a court of competent jurisdiction, nor shall such obligations include
any action, cost or expense other than actions, costs, or expenses required by
law. Between the Parties, Unocal shall have the right but not the obligation to
direct and control any work required to remedy Environmental Liabilities if it
may be responsible for more than fifty percent (50%) of the costs and expenses
of such work attributable to the interest of the Parties; provided, however, if
the Parties have control, regardless of which Party directs and controls any
required work to remedy Environmental Liabilities, all such actions shall be the
most cost efficient possible to comply with applicable Environmental Laws and
which are consistent with continued use of the Assets for the same purposes they
were being used on the Effective Date, and shall be based on mutually acceptable
actions after consultation with the other Party.
THE LIMITATIONS ON UNOCAL'S LIABILITY, AND THE ASSUMPTION OF ALL
LIABILLITIES ABOVE SUCH LIMITATIONS BY BUYER, UNDER THIS SECTION 4 AND ELSEWHERE
IN THIS AGREEMENT SHALL APPLY REGARDLESS OF WHETHER SUCH LIABILITIES ARE KNOWN
OR UNKNOWN, RELATE TO ACTIONS, EVENTS OR CONDITIONS EXISTING OR OCCURING PRIOR
TO THE EFFECTIVE DATE, WHETHER ATTRIBUTABLE (IN WHOLE OR IN PART) TO THE
ACTIONS, SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, BREACH OF
CONTRACT, PRODUCTS LIABILITY, ENVIRONMENTAL LIABILITY, PREMISES LIABILITY, OR
OTHER FAULT, LIABILITY OR RESPONSIBILITY OF UNOCAL OR ANY OTHER PERSON OR PARTY,
AND REGARDLESS OF WHETHER ASSERTED UNDER ANY THEORY OF LIABILITY.
4.9 Termination Due to Material Environmental Deficiencies: If it is
determined during the Due Diligence Period that a Material Environmental
Deficiency exists, either Buyer or Unocal may elect to terminate this Agreement,
unless Buyer and Unocal mutually agree in writing to delete all or part of the
affected Assets from this Agreement such that the total Environmental
Liabilities remaining do not constitute a Material Environmental Deficiency.
4.10 Determination of Value:
(i) Upon delivery of notice by Buyer to Unocal of a Material Environmental
Deficiency, Buyer and Unocal shall meet and use their best efforts to agree on
whether such a Material Environmental Deficiency exists. The value of
Environmental Liabilities shall be based on the estimated Remediation Cost.
(ii) If, during the Due Diligence Period, Buyer determines there is a
Material Environmental Deficiency and desires to terminate this Agreement, it
shall immediately so notify Unocal. Unocal shall respond on the earlier of the
Date of Closing or seven (7) days from the date of notice whether it concurs in
Buyer's determination that the estimated Remediation Cost of the applicable
Environmental Liabilities is sufficient to constitute a Material Environmental
Deficiency. In the event Unocal concurs in Buyer's determination, the
termination of this Agreement shall be treated as a termination by mutual
consent of the Parties.
(iii) If Unocal timely notifies Buyer that it does not concur with the
Buyer's determination of the estimated Remediation Costs, Buyer may still elect
to terminate this Agreement and request a determination of the value of the
Environmental Liabilities by the following procedure: the Parties will submit
the issue of the existence of a Material Environmental Deficiency to arbitration
in accordance with the arbitration procedures set forth in Exhibit "D". If the
arbitrators determine that a Material Environmental Deficiency does not exist,
Buyer will pay the arbitration costs and shall not be entitled to the return of
the Xxxxxxx Money Deposit. If the arbitrators find that a Material Environmental
Deficiency does exist, Unocal will pay the arbitration costs and shall return
Buyer's Xxxxxxx Money Deposit with interest at the Interest Rate within fifteen
(15) business days. If Buyer does not elect to terminate this Agreement in a
written notice to Unocal prior to the commencement of arbitration in connection
with this Section, then Buyer shall be deemed to have waived its right to
terminate this Agreement under this Section 4.10(iii) unless and until the
arbitors determine that a Material Environmental Deficiency exists, and if such
arbitors determine that no Material Environmental Deficiency exists, then Buyer
shall pay all arbitration costs an proceed toward Closing, subject to the other
terms and conditions of this Agreement.
(iv) Any and all disagreements between Buyer and Unocal regarding the value
of Environmental Liabilities shall be submitted to arbitration in accordance
with the arbitration procedures set forth in Exhibit "D".
SECTION 5
OPERATIONS AND CASUALTY LOSS
5.1 Operations: Between the Execution Date and Closing, as to the portion
of the Assets to be conveyed which Unocal now operates, it shall operate the
same in a good and workmanlike manner. At Closing such operations shall be
turned over to and become the responsibility of Buyer, unless an applicable
unit, pooling, communitization or operating agreement requires otherwise, in
which case (unless Buyer and Unocal otherwise agree) Unocal shall continue the
physical operation of such portion of the Assets, pursuant to and under the
terms of such applicable agreement, until such time after Closing as such
applicable agreement may require. However, Unocal shall have no liability as
operator to Buyer, for any operations by Unocal, for loss or damages sustained,
or liabilities incurred, REGARDLESS OF THE SOLE, JOINT, CONCURRENT NEGLIGENCE,
STRICT LIABILITY, BREACH OF CONTRACT OR OTHER FAULT OR RESPONSIBILITY OF UNOCAL
OR ANY OTHER PERSON OR PARTY, except as may result directly from Unocal's gross
negligence or willful misconduct. Such operations from and after the Closing
shall be conducted by Unocal for and on behalf of Buyer, and Unocal shall make
appropriate charges to Buyer pursuant to any applicable operating agreement. In
the absence of any applicable operating agreement, for any such services
performed by Unocal as operator of the Assets (or portions thereof) from and
after the Effective Date, Buyer shall pay to Unocal the applicable Asset's
working interest percentage of an overhead operating charge of $400 per month
per active well operated by Unocal; plus Buyer shall reimburse all reasonable
and necessary expenses incurred by Unocal in such operation, protection or
maintenance of the Assets as are not normally included within the operating
charge in standard form accounting procedures but are paid as direct charges
thereunder. Any such charges and expenses shall be recovered by Unocal as part
of the Closing or Final Accounting adjustments as appropriate.
5.2 Casualty Loss: Upon the Closing, the risk of Casualty Loss relating to
the Assets shall pass from Unocal to Buyer.
5.3 Successor Operator: Buyer acknowledges and agrees that Unocal cannot
and does not covenant or warrant that Buyer shall become successor operator of
all or any portion of the Assets, since the Assets or portions thereof may be
subject to unit, pooling, communitization, operating or other agreements which
control the appointment of a successor operator.
5.4 Restrictions on Operations: Between the Execution Date and Closing,
except as necessary in Unocal's opinion in emergency situations, Unocal shall
not, without Buyer's consent, voluntarily incur any liability or enter into any
commitment with respect to the Assets which will cost in excess of $25,000 net
to Unocal with respect to an individual project; cancel any contract associated
with the Assets except in the ordinary course of business; or enter into any
hedging, forward sales or similar agreements with respect to production from the
Assets.
SECTION 6
REPRESENTATIONS AND WARRANTIES OF UNOCAL
Unocal hereby represents and warrants to Buyer as follows:
6.1 Organization: Unocal is a corporation duly organized, validly existing
and in good standing under the laws of the state of California, and is qualified
to do business and is in good standing as a foreign corporation in every other
jurisdiction where the failure to so qualify would have a Party Adverse Effect
on Unocal.
6.2 Authority to do Business: Unocal has all requisite power and authority
to own, lease or operate the Assets and to carry on the business as now
conducted.
6.3 Binding Obligation:
(i) Unocal has all requisite corporate power and authority to enter into
and perform its obligations under this Agreement and to carry out the
transactions contemplated hereby.
(ii) All corporate acts and other proceedings required to be taken by
Unocal to authorize the execution, delivery and performance by Unocal of this
Agreement, have been duly and properly taken.
(iii) This Agreement has been duly executed and delivered by Unocal and
constitutes the valid and binding obligation of Unocal, enforceable against
Unocal in accordance with its terms.
(iv) The execution, delivery and performance by Unocal of this Agreement
does not and will not conflict with, or result in any violation of or default
under any provision of the Articles of Incorporation or By-laws of Unocal or any
law, ordinance, rule, regulation, order, decree, agreement, instrument or
license applicable to Unocal or to the Assets.
6.4 Litigation, Suits or Claims: To Unocal's Knowledge, except as disclosed
in the Disclosure Schedule, there are no actions, suits or proceedings pending
or threatened in writing against Unocal which if decided unfavorably to Unocal
could have a Party Adverse Effect on Unocal, or a material adverse effect on the
value of any one of the Assets (other than actions, suits, proceedings, asserted
or threatened, relating to Title Defects or Environmental Liabilities or
disclosed in the Environmental Disclosure Schedule or other Disclosure
Schedules).
6.5 Relation to Assumed Liabilities: No representation or warranty
contained herein shall be deemed a representation or warranty by Unocal which
abrogates the obligations of Buyer to investigate the Assets, and make an
independent decision to purchase the Assets; and Buyer's obligations herein with
respect to the investigation of, and independent decision to purchase the
Assets, are not diminished by any representations or warranties herein.
6.6 Disclaimer of Warranties: THE ASSETS ARE SOLD "AS IS," "WHERE IS" AND
"WITH ALL FAULTS AS TO ALL MATTERS," AND EXPRESSLY DISCLAIMS AND NEGATES ANY
REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE, OR
OTHERWISE RELATING TO (a) THE CONDITIONS OF THE ASSETS (INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, OF FITNESS FOR A
PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS), (b) ANY
INFRINGEMENT BY UNOCAL OF ANY PATENT OR PROPRIETARY RIGHT OF ANY THIRD PARTY,
(c) ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO
BUYER BY OR ON BEHALF OF UNOCAL (INCLUDING WITHOUT LIMITATION, IN RESPECT OF
GEOLOGICAL AND ENGINEERING DATA, THE EXISTENCE OR EXTENT OF OIL, GAS OR OTHER
MINERAL RESERVES, THE RECOVERABILITY OF OR THE COST OF RECOVERING ANY SUCH
RESERVES, THE VALUE OF SUCH RESERVES, ANY PRODUCT PRICING ASSUMPTIONS, AND THE
ABILITY TO SELL OIL OR GAS PRODUCTION AFTER CLOSING), (d) THE ENVIRONMENTAL
CONDITION AND OTHER CONDITION OF THE ASSETS AND ANY POTENTIAL LIABILITY ARISING
FROM OR RELATED TO THE ASSETS, AND (e) THE FAILURE OF ANY COMPUTER, ELECTRONICS,
SOFTWARE, OR COMPONENTS TO BE FREE OF ANY BUGS OR ERRORS, INCLUDING, BUT NOT
LIMITED TO, ANY DEFICIENCIES RELATING TO THE INABILITY TO PROPERLY FUNCTION
BEYOND DECEMBER 31, 1999 (BEING SOMETIMES REFERRED TO AS THE "YEAR 2000 BUG" OR
"Y2K PROBLEM").
6.7 Gas Entitlements: To Unocal's Knowledge, except as described in Exhibit
"F", Unocal is not obligated by virtue of any prepayment made under any
production sales contract or any other contract containing a take-or-pay clause,
or under any similar arrangement, to deliver oil, gas or other minerals produced
from or allocated to any of the Assets at any time after the Effective Date
without receiving full payment therefor at the time of delivery.
6.8 Disclosure: To Unocal's Knowledge, neither this Agreement nor any
certificate to be furnished by Unocal contains or, upon delivery thereof, will
contain any untrue statement of a material fact or omission, or upon delivery
thereof, will omit to state a material fact necessary to make the statements
herein or therein, in light of the circumstances under which they were or are
made, not misleading.
6.9 No Breach: To Unocal's Knowledge, Unocal is not party to, or subject
to, or bound by any provision of any judgment, order, writ, injunction or decree
of any court, or governmental body, or any statute, rule or regulation
applicable to Unocal which prohibits or would be violated by, or which allows
for the termination or modification of this Agreement due to Unocal entering
into, executing, delivering or consummating same.
6.10 Environmental Condition of Assets: To Unocal's Knowledge, all
environmental problems affecting the Assets are referred to in documents which
have been or, prior to Closing, will be provided or made available to Buyer, or
referred to in the Disclosure Schedule, the Environmental Disclosure Schedule or
elsewhere in this Agreement.
6.11 Compliance with Laws and Agreements: To Unocal's Knowledge, Unocal is
in substantial compliance with all permits, contracts and agreements relating to
the Assets, and in substantial compliance with all laws, rules and regulations
of federal, state or local entities which have jurisdiction over Unocal or the
Assets such that any failure of compliance will not have a material adverse
effect on the value of the Assets.
6.12 Taxes: All ad valorem, property, production, severance and similar
taxes and assessments based on or measured by the ownership of property or the
production or removal of hydrocarbons or the receipt of proceeds therefrom and
relating to the Assets and attributable to the periods prior to the Effective
Date, to the extent such taxes and assessments have become due and payable, have
been timely paid; provided, however, that Unocal makes no representation or
warranty regarding the manner, method, calculation, valuation or other criteria
or procedure used to determine or pay such taxes or assessments.
6.13 Brokers: Unocal has not incurred any obligation or liability,
contingent or otherwise, for any fee payable to a broker or finder with respect
to the matters provided for in this Agreement which could be attributable to
Buyer.
6.14 Tax Partnership: No part of the Assets is treated for Federal income
tax purposes as being owned by a partnership except as disclosed in the
Disclosure Schedule.
SECTION 7
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Unocal as follows:
7.1 Organization:
(i) Buyer is a corporation duly organized, validly existing and in good
standing under the Laws of the state wherein it was incorporated or organized,
and is qualified to do business and is in good standing as a foreign corporation
in every other jurisdiction where the failure to so qualify would have a Party
Adverse Effect on Buyer.
(ii) Buyer is authorized to do business in the State of Oklahoma.
(iii) Prior to the Closing, Buyer will have delivered to Unocal true,
correct and complete copies of Buyer's Certificates or Articles of Incorporation
and Bylaws and Certificates of Good-Standing, as currently in effect.
(iv) Buyer's headquarters and principal offices are located in the State of
Texas.
7.2 Authority; Enforceability:
(i) Buyer has all requisite corporate power and authority to enter into and
perform its obligations under this Agreement and to carry out the transactions
contemplated hereby.
(ii) All corporate acts and other proceedings required to be taken by Buyer
to authorize the execution, delivery and performance by Buyer of this Agreement,
have been duly and properly taken.
(iii) This Agreement has been duly executed and delivered by Buyer and
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms.
(iv) The execution, delivery and performance of this Agreement by Buyer and
the consummation by Buyer of the transactions contemplated by this Agreement
does not and will not conflict with, or result in any violation of or default
under any provision of the Articles of Incorporation or By- laws of Buyer, or
any law, ordinance, rule, regulation, judgment, order, decree, agreement,
instrument or license applicable to Buyer or to its properties or assets.
7.3 Consents: Except for the consents of governmental agencies regarding
the transfer of leases, licenses and Permits which apply to the Assets, no
consent, approval, authorization, notice, filing, registration or qualification
is required to be obtained or effected by Buyer for the execution, delivery or
performance by Buyer of this Agreement.
7.4 Litigation, Suits or Claims: To Buyer's Knowledge, there are no
actions, suits or proceedings pending or threatened in writing against Buyer
which if decided unfavorably to Buyer could have a Party Adverse Effect on
Buyer, or a material adverse effect on the value of the Assets.
7.5 Disclosure: To Buyer's Knowledge, neither this Agreement nor any
certificate to be furnished to Unocal contains or, upon delivery thereof, will
contain any untrue statement of a material fact or omission, or upon delivery
thereof, will omit to state a material fact necessary to make the statements
herein or therein, in light of the circumstances under which they were or are
made, not misleading.
7.6 No Breach: To Buyer's Knowledge, Buyer is not party to, or subject to,
or bound by any provision of any judgment, order, writ, injunction or decree of
any court, or governmental body, or any statute, rule or regulation applicable
to Buyer which prohibits or would be violated by, or which allows for the
termination or modification of this Agreement due to Buyer entering into,
executing, delivering or consummating same.
7.7 Investigations of Assets: In accordance with the provisions of this
Agreement, Buyer has made, or will make or arrange for others to make, such
inspection of the Assets as it deems appropriate, and, except as otherwise
provided herein, Buyer will accept the Assets "AS IS," "WHERE IS" AND "WITH ALL
FAULTS AS TO ALL MATTERS."
7.8 No Distribution: Buyer is acquiring the Assets for its own account for
investment purposes and not with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act of 1933, as
amended, and the rules and regulations thereunder and any applicable state
securities laws.
7.9 Resale Registration: Buyer will not sell, transfer, lease or otherwise
convey in any manner, in whole or in part, the Assets without the necessary
registrations, or exemptions therefrom, under applicable federal and state
securities laws.
7.10 Oil and Gas Experience: Buyer (or its predecessor, if any) is and has
been during the preceding two years primarily engaged in the business of
exploring for, drilling for, producing or refining oil or gas and derives at
least 80%, or $5,000,000 of its annual gross income, from exploring for,
drilling for, producing or refining oil or gas.
7.11 Federal Leases: If the Assets include any federal leases, Buyer is
qualified to own such federal leases or will be so qualified at Closing.
7.12 Brokers: Buyer has not incurred any obligation or liability,
contingent or otherwise, for any fee payable to a broker or finder with respect
to the matters provided for in this Agreement which could be attributable to
Unocal.
SECTION 8
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF UNOCAL
The obligation of Unocal to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment at Closing of each of the
following conditions, each of which may be waived by Unocal except as otherwise
required by law:
8.1 Purchase Price: At Closing, Buyer shall deliver:
(i) the Adjusted Purchase Price less the Xxxxxxx Money Deposit; and
(ii) plus or minus as applicable the Cash Settlement.
8.2 Buyer's Representations and Warranties True: The representations and
warranties of Buyer contained herein on the date hereof shall have been correct
in all material respects, and shall be correct in all material respects on and
as of the Closing with the same force and effect as though made at and as of
such time, except for the representations and warranties specifically relating
to a time or times other than the Closing, or as may be affected by transactions
contemplated hereby.
8.3 Officer's Certificate: Buyer shall have furnished Unocal a certificate
of an officer of Buyer certifying that:
(i) the representations and warranties of Buyer contained in this Agreement
are true and correct in all material respects on and as of the Closing Date with
the same force and effect as though made at and as of such time, except for
representations and warranties specifically relating to a time or times other
than the Closing Date, or except as may be affected by the transactions
contemplated hereby; and
(ii) Buyer has performed all of its obligations contained in this Agreement
required to be performed by it prior to Closing.
8.4 Opinions of Counsel: Buyer shall have furnished Unocal an opinion
rendered by legal counsel of Buyer, dated as of the Closing, to the effect that:
(i) Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the state wherein it was incorporated or organized
and is authorized to do business in the State of Oklahoma; and
(ii) Buyer has full power to carry out the transactions provided for in
this Agreement; this Agreement has been duly executed and delivered by Buyer;
and this Agreement is the legal and binding obligation of Buyer, enforceable in
accordance with its terms except as enforceability may be limited or denied by
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect that affect the rights of creditors generally and except as
enforcement or remedies may be limited or denied by general equitable
principles; and
(iii) the execution, delivery and performance of this Agreement by Buyer
and the consummation by Buyer of the transactions contemplated by this Agreement
will not constitute a breach, violation, or default under the Certificate or
Articles of Incorporation or By-laws of Buyer.
8.5 Pre-Closing Performance: Buyer shall have performed, observed or
complied in all material respects with all its obligations and conditions
required by this Agreement to be performed, observed or complied with by it at
or prior to Closing.
8.6 Authorization: All corporate actions necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby shall have been duly and validly taken by
Buyer.
8.7 Absence of Litigation: No litigation or administrative proceeding shall
be pending (or threatened), and no investigation shall have been commenced (and
be pending), by Buyer or any third party seeking to restrain or prohibit (or
questioning the validity or legality of) the consummation of the transactions
contemplated by this Agreement or seeking damages in connection therewith which
makes it unreasonable to proceed with the consummation of the transactions
contemplated hereby.
8.8 Bonds: Buyer shall have delivered to Unocal either copies of such
bonds, in form and substance and issued by corporate sureties (which corporate
sureties are satisfactory to Unocal), covering the Assets as may be required
under any laws, rules or regulations of any federal, Indian tribe, state or
local government agencies having jurisdiction over the Assets, or a commitment
by a surety company, satisfactory to Unocal, to issue such bonds upon Closing.
8.9 Preferential Purchase Rights: All preferential purchase rights
affecting the Assets shall have been exercised, waived or assumed, or the
election time shall have expired.
8.10 Xxxx-Xxxxx-Xxxxxx Act: All obligations under the Xxxx-Xxxxx-Xxxxxx Act
shall have been satisfied.
8.11 Parent Guaranty: Buyer shall have delivered to Unocal a Guaranty, in
form and substance satisfactory to Unocal, executed and delivered by Magnum
Hunter Resources, Inc., pursuant to which Magnum Hunter Resources, Inc.
unconditionally guarantees to Unocal all of the obligations, liabilities,
indemnities and covenants of Buyer under this Agreement and any agreement,
instrument or document executed or delivered by Buyer in connection herewith.
8.12 Delayed Closing: If Closing shall not have occurred on or before 3:00
p.m.,CST, December 31, 1998, for any reason whatsoever, including, but not
limited to, because a Party has sought dispute resolution under the arbitration,
or other dispute resolution provisions, hereunder prior to Closing, then Unocal
may, in its sole discretion, elect to terminate this Agreement. If Unocal elects
to terminate this Agreement for failure of this condition in this Section 8.12,
it shall be treated as a termination by mutual consent of both Parties
hereunder.
SECTION 9
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment, at or prior to Closing, of
each of the following conditions, each of which may be waived by Buyer except as
otherwise required by law:
9.1 Delivery of Instruments of Transfer: At Closing, Unocal shall deliver
to Buyer executed, and where appropriate recordable, bills of sale, lease
assignments, and other instruments of conveyance as required herein, and such
other documents as may be mutually agreed and customary and usual for
transactions of this type.
9.2 Unocal's Representations and Warranties: The representations and
warranties of Unocal contained herein on the date hereof shall have been correct
in all material respects, and shall be correct in all material respects on and
as of the Closing with the same force and effect as though made at and as of
such time, except for the representations and warranties specifically relating
to a time or times other than the Closing, or as may be affected by transactions
contemplated hereby.
9.3 Officer's Certificate: Unocal shall have furnished Buyer a certificate
of an officer of Unocal certifying that:
(i) the representations and warranties of Unocal contained in this
Agreement are true and correct in all material respects on and as of the Closing
Date with the same force and effect as though made at and as of such time,
except for representations and warranties specifically relating to a time or
times other than the Closing Date, or except as may be affected by the
transactions contemplated hereby; and
(ii) Unocal has performed all of its obligations contained in this
Agreement required to be performed by it prior to Closing.
9.4 Pre-Closing Performances: Unocal shall have performed, observed or
complied in all material respects with all its obligations and conditions
required by this Agreement to be performed, observed or complied with by it at
or prior to Closing.
9.5 Authorization: All corporate actions necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby shall have been duly and validly taken by
Unocal.
9.6 Absence of Litigation: No litigation or administrative proceeding shall
be pending (or threatened), and no investigation shall have been commenced (and
be pending), by Unocal or by a third party against Unocal seeking to restrain or
prohibit (or questioning the validity or legality of) the consummation of the
transactions contemplated by this Agreement or seeking damages in connection
therewith which makes it unreasonable to proceed with the consummation of the
transactions contemplated hereby.
9.7 Xxxx-Xxxxx Xxxxxx Act: all obligations under the Xxxx-Xxxxx-Xxxxxx Act
shall have been satisfied.
9.8 Change of Operator Forms: Unocal shall have provided to Buyer, where
applicable, executed change of operator forms to be filed, by Buyer, with the
relevant regulatory agency naming Buyer, or its designee, the operator of those
Assets (active or inactive) which Unocal operated as of the Closing Date and
that are subject to this Agreement, provided, however, that Buyer shall be
responsible for completing and complying with any balloting or voting procedures
required under any applicable operating agreements regarding appointment of a
successor operator and Unocal in no way represents or guarantees that Buyer will
be elected or appointed as the successor operator under the applicable operating
agreements covering those Assets (and Unocal assumes that Buyer is otherwise
qualified to operate such Assets).
SECTION 10
COVENANTS
10.1 Investigation and Decision: The Parties further covenant as follows:
Investigation of Assets: During the Due Diligence Period Buyer shall: (i)
make, or arrange for others to make, such inspection and investigation of the
Assets and Assumed Liabilities as it deems appropriate; (ii) investigate and
have knowledge of operative or proposed laws to which the Assets are or may be
subject; (iii) accept the Assets and Assumed Liabilities upon the basis of its
review and determination of the applicability and effect of such laws; (iv) have
reviewed and evaluated any data room materials or other materials to which
access has been provided to Buyer by Unocal under this Agreement; and (v) have
made such investigations of the title, condition, status under Environmental
Laws, oil and gas laws and any other aspects of the Assets and Assumed
Liabilities as may be necessary or appropriate. Buyer agrees that such
inspections shall not unreasonably interfere with the business and operations of
Unocal, and that such inspections and all such documents shall be subject to the
Confidentiality Agreement.
Independent Decision: Buyer has made its own independent judgment of the
commercial potential, condition and usefulness of the Assets, taking into
consideration all current Environmental Laws and other laws and the likelihood
that such Environmental Laws and other laws will change in the future. Buyer has
such knowledge and experience in business and financial affairs in general,
securities and investments, and of the oil and gas business as conducted and
regulated in the State of Oklahoma in particular as to be capable of evaluating
the merits and risks of purchasing the Assets.
10.2 Access to Information:
Unocal has afforded to Buyer and to Buyer's representatives, reasonable
access during the period prior to the execution of this Agreement and will
continue to afford to Buyer reasonable access until Closing, and, to the extent
that the Parties mutually agree the same is necessary, for a reasonable time
after the Closing, to all of Unocal's properties, books, contracts, documents
and non-interpretative records relating to the Assets, and, during such period,
Unocal has used and will continue to use reasonable efforts to furnish promptly
to Buyer all material information concerning the business and properties
relating to the ownership and operations of the Assets (subject to existing
confidentiality agreements with third parties and subject also to the
attorney-client privilege), including, to the extent prepared in the ordinary
course, such data and operating reports as may reasonably be necessary or
appropriate for any relevant purposes of investigation and analysis related to
this Agreement. Upon Buyer's reasonable request, Unocal shall attempt to secure
waivers of any such confidentiality agreements. Unocal shall, to the best of its
ability, arrange for Buyer and its representatives to discuss with appropriate
officers, employees, consultants, contractors and representatives of Unocal such
matters related to the transactions provided for herein as Buyer may reasonably
request. Buyer will hold such information in confidence in accordance with the
Confidentiality Agreement.
10.3 General Liabilities and Assumed Liabilities: If Closing occurs, then
Buyer assumes hereby any and all General Liabilities and Assumed Liabilities,
subject to the other provisions of this Agreement.
10.4 Assumption of Plugging and Abandonment Obligations: If Closing occurs,
Buyer assumes hereby any and all Plugging and Abandonment Obligations.
10.5 Gas Imbalance: As to any Gas Imbalances which exist, the Parties agree
that:
Unocal will furnish Buyer with a statement, in the form of Exhibit "F",
showing the most current estimate of the over or under production between the
owners as of the most recent available date.
From and after the Effective Date, any and all benefits, obligations and
liabilities associated with Gas Imbalances shall accrue to and be the
responsibility of Buyer. Buyer shall assume Unocal's overproduced or
underproduced position in the xxxxx located on the Leasehold Properties as of
the Effective Date, including but not limited to the responsibility for the
payment of royalties on the volume of such gas which Unocal took in excess of
its entitlement and any obligation to balance whether in cash or in kind. The
Final Accounting shall include an adjustment for any Gas Imbalance differences
between the volume shown on Exhibit "F" and the actual Gas Imbalances as of the
Effective Date. Notwithstanding the actual amounts or proceeds that Buyer may
receive from the Gas Imbalances due to underproduced positions, or the actual
amounts that Buyer must pay with respect to Gas Imbalances due to overbalanced
positions, the parties shall settle such Gas Imbalances as between themselves,
and the adjustments to the Purchase Price and/or at the Final Accounting will be
calculated using a settlement price of $1.25 per Mcf (thousand cubic feet).
10.6 Xxxx-Xxxxx-Xxxxxx Act: Each Party shall prepare and submit, within
fifteen (15) days of the execution of this Agreement, any necessary filings in
connection with the transactions contemplated by this Agreement under the Xxxx-
Xxxxx-Xxxxxx Act, but each Party shall be responsible for its respective filing
costs and expenses. The Parties shall request expedited treatment of such filing
by the Federal Trade Commission, shall promptly make any appropriate or
necessary subsequent or supplemental filings, and shall furnish to each other
copies of all filings made under the Xxxx-Xxxxx-Xxxxxx Act at the same time they
are filed with the government.
10.7 Third-Party Consents: Certain of the transfers contemplated by this
Agreement are subject to various forms of third-party consents, including
compliance with the provisions of the Xxxx-Xxxxx-Xxxxxx Act. Unocal and Buyer
shall cooperate and shall promptly take such action as may be required to obtain
all necessary consents prior to Closing. Unocal and Buyer agree that to the
extent any contract or Permit that would otherwise be assigned under this
Agreement is not capable of being assigned, transferred, subleased or
sublicensed without the consent of, or waiver by any other party thereto, or any
other Person, or if such assignment, transfer, sublease or sublicense or
attempted assignment, transfer, sublease or sublicense would constitute a breach
thereof, or a violation of any law, this Agreement shall not constitute an
assignment, transfer, sublease or sublicense, or an attempted assignment,
transfer, sublease or sublicense of any such contract or Permit. With respect to
each contract that, but for the reasons set forth in the first sentence of this
Section, would be assigned, Unocal agrees to provide Buyer with the benefits
(including the right to terminate any such contract or Permit in accordance with
the terms thereof) of such contract or Permit, to the extent related to
transactions or periods that occur at or after Closing, and to the extent it is
possible to do so; and, if and to the extent such benefits are provided to
Buyer, Buyer agrees to observe and perform such contract or Permit. Unocal shall
continue to use its reasonable efforts to obtain an assignment to Buyer of each
contract or Permit that, but for the reasons set forth in the first sentence of
this Section, would be assigned; provided, however, that Unocal shall not be
required to pay any consideration or suffer any financial disadvantage to obtain
such assignment.
10.8 Completion of Due: Within three (3) days of the end of the Due
Diligence Period Buyer shall give Unocal a letter of satisfactory completion of
due diligence and proof of financing substantially in the form attached hereto
as Exhibit "J".
10.9 Additional Agreements: Unocal and Buyer shall execute such further
documents and instruments, requested by either Party, as may be necessary or
reasonably desirable to consummate the transactions contemplated by this
Agreement or any part thereof. Subject to the other terms and conditions of this
Agreement, each of the Parties, hereto agrees to use its best efforts at its own
expense to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws to
consummate and make effective the transactions contemplated by this Agreement.
10.10 Payment of Certain Expenses Due and Payable After the Effective Date:
Buyer shall pay, as and when due, all fees and bills due and payable after the
Closing Date, and Unocal shall reimburse Buyer within thirty (30) days after
invoice for any amounts under such bills attributable to any period prior to the
Effective Date for which it is responsible hereunder; provided, however that if
after Closing Unocal is obligated to continue as operator under an existing
agreement Unocal shall make payments for Buyer's account and at Buyer's expense.
10.11 Notification of Certain Matters: Between the Effective Date and
Closing, Unocal and Buyer will each give prompt notice to the other of (i) any
information that indicates that any representation or warranty contained herein
was not true and correct as of the date hereof or will not be true and correct
as of the Closing Date; (ii) the occurrence of any event which will result, or
has a reasonable prospect of resulting, in the failure to consummate the
transactions contemplated hereunder on or before the Closing Date or to satisfy
a condition to Closing herein as the case may be; (iii) any notice or other
communication from any third party alleging that the consent or waiver of such
third party is required in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated by this
Agreement; and (iv) any notice of, or other communication relating to any
default or event which, with notice or lapse of time or both, would become a
default under any contract to be assigned at Closing.
10.12 Announcements: At all times prior to Closing, Unocal and Buyer,
including their respective Affiliates, shall use their best efforts to cooperate
in the development and distribution of all news releases and other public
disclosures relating to the proposed transactions described in this Agreement,
and agree that no such releases or disclosures will be made without prior notice
to the other Party; provided, however, that from the date of this Agreement and
continuing for twelve (12) months after the Closing if reserve volumes are
estimated in a news release in conjunction with a Purchase Price disclosure the
release must state that the reserve estimates are the disclosing Party's reserve
estimates, and no news release or public disclosure whatsoever by Buyer may
disclose the identity of Unocal or a specific description of the Assets unless
both Parties agree to the form and content of such disclosure, each being under
no obligation to agree and having the right to withhold agreement for any
reason; provided, also that either Party may make all disclosures which are
required or prudent under applicable laws, including, but not limited to, rules,
regulations and guidelines of the Securities and Exchange Commission and
applicable stock exchanges.
10.13 Termination of Guarantees and Other Commitments:
Subject to applicable laws, as of the Closing Date, all of the following
shall be canceled or terminated as to Buyer: (i) undertakings, comfort letters
or guarantees by Unocal or any of its Affiliates to third parties in connection
with the Assets; (ii) letters of credit, surety bonds, and related indemnity
agreements arranged and maintained by Unocal or any of its Affiliates with
respect to the Assets; and (iii) any credit card accounts issued by Unocal or
any of its Affiliates to any employees in connection with the Assets.
Buyer understands and agrees that all insurance policies, provided to or
for the Assets through Unocal, any Affiliate of Unocal, or a self-insurance
program of Unocal will be terminated as to the Assets as of the Closing Date.
Unocal and Unocal's Affiliates shall have no responsibility or liability
under this Agreement to provide for insurance coverage or any such security for
the Assets in any manner whatsoever after the Effective Date.
10.14 Like Kind Exchange: Without affecting its obligations hereunder, with
appropriate prior notice to the other Party, either Party shall have the option,
at or before Closing, to structure the Closing of this transaction in such a
manner so as to qualify as a like kind exchange pursuant to Section 1031 of the
Internal Revenue Code of 1986, as amended, provided that such a structure shall
not delay the Closing in any way. The other Party will cooperate with the
electing Party to facilitate a like kind exchange but will in no event be
required to take title to any replacement properties. In the event either Party
desires such exchange, it shall timely notify the other Party, in writing, of
its intent and the electing Party shall be responsible for arranging the
structure of the exchange, compliance with time limits for like kind exchanges,
the preparation of appropriate documents to complete the transaction, and all
additional costs directly related thereto. The electing Party shall indemnify
the other Party against all losses, costs, expenses, taxes, fines, penalties or
assessments arising out of any like kind exchange structure.
10.15 Access to Geologic and Geophysical Information: As long as the same
remains in Buyer's possession or control, Unocal retains the right to copy any
and all geologic and geophysical information transferred or licensed to Buyer
hereunder, and Buyer agrees to co-operate with Unocal in granting access to such
information.
SECTION 11
EMPLOYEE MATTERS
11.1 Employee List: To the extent requested by Buyer in writing, within ten
days after execution of this Agreement, Unocal shall provide Buyer a list of
field employees at each work location for the Assets, indicating name, job
classification and years of service with Unocal.
11.2 Hired Employee List: Within thirty days after Closing (or, after
Closing, within thirty (30) days of hiring such employee at any time within 18
months following the Closing), Buyer shall provide Unocal with a list of all
Unocal field employees hired by Buyer (whether as regular or contract employees)
and their base pay rate.
SECTION 12
TAXES
12.1 Apportionment of Ad Valorem and Property Taxes: All ad valorem taxes,
real property taxes, personal property taxes and similar obligations shall be
apportioned as of the Effective Date between Buyer and Unocal. All such taxes
allocable to the periods before the Effective Date shall be paid by Unocal, and
all such taxes allocable to the Effective Date and after shall be paid by Buyer.
Any refunds of taxes allocable to periods prior to the Effective Date shall be
the property of Unocal. Buyer shall file or cause to be filed all required
reports and returns incident to such taxes which are due on or after the Closing
Date, and shall pay or cause to be paid to the taxing authorities all such taxes
reflected on such reports and returns.
12.2 Sales Taxes, Filing Fees, Etc: The Purchase Price provided for
hereunder is net of any sales taxes or other transfer taxes. Buyer shall be
liable for any sales tax or other transfer tax as well as any applicable
conveyance, transfer and recording fees, and real estate transfer stamp or taxes
imposed upon the sale pursuant to this Agreement, and Buyer shall defend any
action by a governmental agency to collect such taxes or fees, and will hold
Unocal harmless from any cost or liability for taxes, fees, penalty, interest or
costs, including reasonable attorney's fees, assessed as a result of this
transaction.
12.3 Other Taxes: All production, severance or excise taxes, conservation
fees and other similar such taxes or fees (other than income taxes) relating to
oil and gas produced and sold from the Assets prior to the Effective Date shall
be paid by Unocal, and all such taxes and fees relating to such oil and gas
produced and sold on the Effective Date and after shall be paid or reimbursed by
Buyer. (or if attributable to periods after the Effective Date and Unocal pays
such taxes, then Buyer shall reimburse Unocal therefore). Any rebates, refunds
or similar credits attributable to such taxes and fees for periods prior to the
Effective Date shall be, and remain, the property of Unocal (and Buyer is hereby
notified that Unocal may be seeking certain rebates, refunds or similar credits
from the applicable taxing authorities). In the event such taxes attributable to
the Assets are not assessed on a current year basis, it is agreed that when such
taxes are assessed, insofar as they Accrued t the Assets on or before the
Effective Date, they shall be paid by Unocal upon receipt of a statement and
supporting documentation.
13.1 Termination: This Agreement and the transactions contemplated herein
may be terminated at any time prior to Closing:
(i) by mutual consent of the Parties; or
(ii) by either Party, without impairing any other rights hereunder, if
there has been a material breach of covenant or agreement contained in this
Agreement on the part of the other Party, or a failure of a condition and such
breach of a covenant or agreement or failure of a condition has not been
promptly cured, or a failure of Buyer to obtain financing satisfactory to Unocal
to close and consummate the transactions contemplated herein; or
by either Party, upon written notice to the other Party, pursuant to
Section 4.9.
13.2 Effect of Termination:
(i) In the event of termination of this Agreement by mutual consent of the
Parties, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of either Party or their respective officers
or directors or shareholders except as otherwise set forth herein. Unocal shall
in such event return the xxxxxxx money deposit within fifteen (15) business days
of such termination plus interest calculated at the Interest Rate.
(ii) In the event this Agreement is terminated under Section 13.1 (ii) by
Buyer:
(a) If Unocal concurs with Buyer that a material breach of covenant or
agreement or failure of a condition has occurred and was not promptly cured,
Unocal shall return the Xxxxxxx Money Deposit within fifteen (15) business days
of such termination, plus interest calculated at the Interest Rate;
(b) If Unocal does not concur with Buyer that a material breach of covenant
or agreement or failure of a condition has occurred and was not promptly cured,
Unocal shall interplead the Xxxxxxx Money Deposit, plus interest calculated at
the Interest Rate, into a court or arbitration of competent jurisdiction; and
the prevailing party shall receive the interplead monies and the losing party
shall pay the prevailing Party's costs and reasonable attorney's fees incurred
in conjunction with the proceeding.
(iii) If this Agreement is terminated by Buyer or Unocal because Buyer
failed to get satisfactory financing to close and consummate the transactions
contemplated herein, then Unocal shall be entitled to keep and retain the
Xxxxxxx Money Deposit as liquidated damages.
(iv) If Unocal prevails in the arbitration proceeding regarding the value
of Material Environmental Deficiencies pursuant to Section 4.10 (iii), or if
Unocal terminates under Section 13.1 (ii) for good cause, then Unocal shall, in
consideration of holding the Assets off the market and refraining from dealing
with others concerning the Assets and as liquidated damages in lieu of all other
damages, retain the Xxxxxxx Money Deposit made by Buyer. The Parties hereby
acknowledge that the extent of damages to Unocal occasioned by such breach or
default or failure to proceed by Buyer would be impossible or extremely
impractical to ascertain and that the Xxxxxxx Money Deposit is a fair and
reasonable estimate of such damages under the circumstances. Provided, also, if
Buyer does not contest Unocal's termination under Section 13.1 (ii) by written
notification within ten (10) days, or if Buyer terminates under Section 4.9 and
the existence of a Material Environmental Deficiency is being arbitrated
hereunder, Unocal shall be free to enjoy all rights of ownership of the Assets
and to sell, transfer, encumber or otherwise dispose of the Assets to any party
without any restriction under this Agreement.
13.3 Specific Performance: If Closing does not occur as contemplated herein
by reason of Unocal's determination that Buyer has breached this Agreement or
failed to satisfy a condition, Buyer may contest Unocal's termination of this
Agreement and seek specific performance of the Agreement, provided it notifies
Unocal in writing of its election to seek specific performance within ten (10)
days of Unocal's notice of termination under Section 13.1 (ii). The losing Party
shall pay the prevailing Party's costs and reasonable attorney's fees together
with (i) in the case of the Buyer being the losing Party, and Buyer shall
release any claims to(and Unocal shall retain) the Xxxxxxx Money Deposit, and
(ii) in the case of Unocal being the losing Party, Buyer shall be entitled to
specific performance, subject to the other terms and provisions hereof, of this
Agreement. This Section represents Buyer's sole and exclusive remedy with
respect to the matters covered hereby.
14.1 Survival: Notwithstanding any investigation conducted by any Party
hereto and any information which any Party may receive, a claim for a breach of
any of the representations, warranties or covenants contained in this Agreement,
or in any Exhibit, certificate, document or statement delivered pursuant hereto,
or pursuant to any indemnification, or of any third party claims under Section
14.3 (i) must be made within one (1) year following Closing; provided, however,
that nothing in this Section shall be construed to limit the time for making a
claim by Unocal against, or seeking indemnification from, Buyer with regard to
Assumed Liabilities.
14.2 Indemnification:
(i) Except as otherwise set forth herein and except for Assumed Liabilities
of Buyer, Unocal shall indemnify and hold harmless Buyer, and its successors and
assigns, against, and in respect of, any and all damages, claims, losses,
liabilities and expenses, including, without limitation, reasonable legal,
accounting and other expenses, which may arise out of: (i) any breach or
violation of this Agreement by Unocal; (ii) any breach of any of the
representations, warranties or covenants made in this Agreement by Unocal; or
(iii) liabilities expressly retained by Unocal in this Agreement.
(ii) Buyer shall indemnify and hold harmless Unocal, and its or their
successors and assigns, against, and in respect of, any and all damages, claims,
losses, liabilities and expenses, including, without limitation, reasonable
legal, accounting and other expenses, which may arise out of: (i) any breach or
violation of this Agreement by Buyer; (ii) any breach of any of the
representations, warranties or covenants made in this Agreement by Buyer; or
(iii) Assumed Liabilities of Buyer.
14.3 Third Party Claims:
(i) Except as otherwise set forth herein and except for Assumed Liabilities
of Buyer, Unocal shall indemnify and hold Buyer and its successors and assigns
harmless against any and all damages, claims, losses, liabilities and expenses,
including, without limitation, reasonable legal, accounting and other expenses,
arising out of any third party claim, legal suit or proceeding against Buyer,
which claim, legal suit or proceeding arises from the conduct of the business of
Unocal or the ownership of the properties owned or leased by Unocal prior to the
Closing Date; provided, however, that Unocal's indemnity obligation hereunder
shall be limited to the Adjusted Purchase Price.
(ii) Buyer shall indemnify and hold Unocal and its successors and assigns
harmless against any and all damages, claims, losses, liabilities and expenses,
including, without limitation, reasonable legal, accounting and other expenses,
arising out of any third party legal suit or proceeding against Unocal, which
legal suit or proceeding arises out of Assumed Liabilities, or from the conduct
of the business of Buyer or the ownership of the properties owned or leased by
Buyer after the Closing Date.
14.4 Method of Asserting Claims: The Party making a claim under this
Section, or any other indemnity provision herein, is hereinafter referred to as
the "Indemnified Party" and the Party against whom such claims are asserted is
hereinafter referred to as the "Indemnifying Party". All claims by an
Indemnified Party shall be asserted and resolved as follows:
(i) If any claim or demand for which an Indemnifying Party would be liable
to an Indemnified Party hereunder is asserted against or sought to be collected
from such Indemnified Party by a third party, such Indemnified Party shall as
promptly as is practicable after its receipt of such claim or demand, deliver a
Claim Notice to the Indemnifying Party; provided, however, that any failure to
give such notice will not waive any rights of the Indemnified Party except to
the extent that eithe the rights of the Indemnifying Party are actually
prejudiced or such notice is not given within the applicable time periods set
forth in this Agreement.
The Indemnifying Party may, and upon request of the Indemnified Party
shall, retain counsel of its choice to represent the Indemnified Party and any
others the Indemnifying Party may reasonably designate in connection with such
claim or demand and shall pay the fees and disbursements of such counsel with
regard thereto; provided, however, that any Indemnified Party is hereby
authorized prior to the date on which it receives written notice from the
Indemnifying Party designating such counsel to retain counsel whose reasonable
fees and expenses shall be at the expense of the Indemnifying Party to file any
action, answer or other pleading and take such other action which it shall
reasonably deem necessary to protect its interests or those of the Indemnifying
Party until the date on which the Indemnified Party receives such notice from
the Indemnifying Party.
In the event that the Indemnifying Party shall retain such counsel, the
Indemnified Party shall have the right to retain its own counsel but the fees
and expenses of such counsel shall be at the expense of the Indemnified Party
unless:
(a) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel; or
(b) the named parties to any such proceeding (including, but not limited
to, any impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both Parties by the same counsel would
involve such counsel in an actual or potential conflict of interest in violation
of applicable principles of professional ethics.
(ii) If requested by the Indemnifying Party, the Indemnified Party agrees
to cooperate with the Indemnifying Party and its counsel in contesting any claim
or demand that the Indemnifying Party defends, or, if appropriate and related to
the claim in question, in making any counterclaim against the Person asserting
the third party claim or demand, or any cross- complaint against any Person. If
the Indemnifying Party has accepted responsibility in writing, no claim or
demand that would result in an Indemnifying Party being liable hereunder may be
settled without the consent of the Indemnifying Party which consent shall not be
unreasonably withheld. Unless the Indemnifying Party shall have agreed in
writing that any and all damages to the Indemnified Party related to a claim or
demand are fully covered by the indemnities provided herein, no such claim or
demand may be settled without the consent of the Indemnified Party, which
consent will not be unreasonably withheld. Except with respect to settlements
entered into without the Indemnified Party's consent pursuant to the immediately
preceding sentence, to the extent it shall be determined that the Indemnified
Party shall have no right pursuant to this Section to be indemnified by the
Indemnifying Party, the Indemnified Party shall promptly pay to the Indemnifying
Party:
(a) any amounts previously paid or advanced by the Indemnifying Party to
the Indemnified Party with respect to such matters pursuant to this Section;
plus
(b) interest thereon until paid by the Indemnified Party at the Interest
Rate for the period commencing on the date on which it was finally determined
that the Indemnified Party had no such right to be indemnified.
(iii) In the event the Indemnified Party should have a claim against the
Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall as promptly as is practical send a Claim Notice with
respect to such claim to the Indemnifying Party; provided, however, that any
failure to give such notice will not waive any rights of the Indemnified Party
except to the extent that either the rights of the Indemnifying Party are
actually prejudiced or such notice is not given within the applicable time
periods set forth in this Agreement. If the Indemnifying Party notifies in
writing the Indemnified Party that it does not dispute such claim, the amount of
such claim shall be conclusively deemed a liability of the Indemnifying Party
hereunder and shall be paid to the Indemnified Party immediately. If the
Indemnifying Party disputes such claim, such dispute shall be resolved by good
faith negotiations between the Parties.
(iv) From and after the delivery of a Claim Notice hereunder, at the
reasonable request of the Indemnifying Party, the Indemnified Party shall grant
the Indemnifying Party and its representatives full and complete access to the
books, records and properties of the Indemnified Party to the extent reasonably
related to the matters with which the Claim Notice is concerned. The
Indemnifying Party will not, and shall require that its representatives do not,
use (except in connection with suc Claim Notice) or disclose to any third Person
other than the Indemnifying Party's representatives (except as may be required
by law) any information obtained that is designated as confidential by the
Indemnified Party, unless such information is:
(a) generally available to the public other than as the result of a
wrongful act or omission by the Indemnifying Party;
(b) already within the knowledge of the Indemnifying Party;
(c) available to the Indemnifying Party through other Sections herein, or
(d) provided to the Indemnifying Party in writing by a third party who is
under no obligation to the Indemnified Party to protect the confidentiality
thereof.
All such access shall be granted during normal business hours, shall be
subject to the normal safety regulations of the Indemnified Party, and shall be
granted under conditions that will not interfere with the business and
operations of the Indemnified Party. Nothing contained in this Section shall be
construed to expand or reduce the rights or obligations of the Indemnifying
Party with respect to any information previously provided to the Indemnifying
Party pursuant to any other confidentialit agreement.
14.5 Right to Cure: Any Party that is obligated to indemnify, defend and/or
hold harmless any other Party pursuant to any provision of this Agreement shall
have the right to cure, within a reasonable time and in a manner reasonably
satisfactory to such Indemnified Party, any matter giving rise to such
obligation; provided, however, that any such cure shall not relieve or reduce
any such obligation to the extent that such cure is inadequate. The Indemnified
Party may, if there is no attempt to cure or if the cure is inadequate, expend
reasonable sums to cure, which sums shall be reimbursed together with interest
at the Interest Rate.
15.1 Time of Essence: Time is expressly declared to be of the essence under
this Agreement.
15.2 Place and Date: Closing shall occur at Unocal's offices at 00000
Xxxxxxxxx Xxxxxxx, Xxxxx Xxxx, Xxxxx 00000 on or before 3:00 p.m., CST, December
31, 1998 ("Closing Date"), unless extended by agreement of the parties.
15.3 Unocal's Actions at Closing: At Closing, Unocal shall perform the
following actions:
(i) Unocal shall deliver to Buyer herein-required opinions of counsel and
certificates;
(ii) Unocal shall execute and deliver to Buyer all required instruments of
conveyance and sale, including a Conveyance and Xxxx of Sale in the form
attached hereto as Exhibit "K";
(iii) Unocal shall (subject to the terms of applicable operating agreements
and other provisions hereof) deliver to Buyer exclusive possession of the
Assets;
(iv) Unocal shall, at or as promptly as reasonably possible after Closing,
provide and make available to the Buyer, at Buyer's cost and expense, subject to
the attorney-client privilege, photocopies of the following records relating to
the Assets to the extent they are in Unocal's possession: lease files; unit
files; lease contract files; well files, land files, oil and gas purchase and
sales contract files; and all non-interpretative geologic information, but
specifically excluding any information or data that Unocal is restricted from
disclosing, information which is trade secret or proprietary to Unocal and is
not part of the Assets and all other records, including, but not limited to,
corporate records, computer programs and general tax records. Unocal shall also
provide copies of all seismic data covering the Assets described in Exhibit
"I-1", subject to Buyer's execution of a Geophysical Data Licensing Agreement in
the form of Exhibit "I" covering such seismic data, that Unocal is not
contractually or otherwise legally restricted from disclosing. As to any seismic
data Unocal is contractually or otherwise legally restricted from disclosing,
Buyer may prepare and provide Unocal with documents requesting waivers of the
applicable restrictions, and Unocal shall forward such requests as well as
provide Buyer such other assistance in obtaining waivers of the applicable
restrictions as is reasonable under the circumstances. If Buyer obtains, via
license, any or all seismic data described in Exhibit "I-1", the Purchase Price
shall be increased by the value amount corresponding the obtained data in
Exhibit "I-1" ("Geophysical Seismic License Price"). Any data documents or other
information provided or made available hereunder or in connection with the
transactions contemplated herein is provided WITHOUT ANY REPRESENTATION OR
WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, AS TO
THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED THEREIN, and shall be
at Buyer's sole risk and expense. Any other provision of this Agreement to the
contrary notwithstanding, Unocal shall not provide Buyer with copies of any
records or data or access to any records or data which Unocal cannot legally
provide to Buyer because of third party restrictions on Unocal; and
(v) Unocal shall deliver to Buyer a certificate of a corporate officer to
the effect that, as of the Closing Date, it is not a foreign person as defined
in the Internal Revenue Code of 1986, as amended, and Income Tax Regulations,
such certificate to be substantially in the form described in Treasury
Regulation Section 1.1445-2(b)(2)(iii)(B) or otherwise within the requirements
of Section 1.1445-2(b)(2) of that regulation.
15.4 Buyer's Actions at Closing: At Closing, Buyer shall perform the
following actions:
Buyer shall execute and deliver to Unocal an Assumption Agreement in the
form attached hereto as Exhibit "L";
Buyer shall execute and deliver to Unocal all herein required opinions of
counsel and certificates;
Buyer shall pay Unocal the balance remaining due of the Adjusted Purchase
Price, plus or minus the Cash Settlement,
Unocal and Buyer acknowledge that if, for any reason, Unocal is prevented
or prohibited by the Oklahoma Corporation Commission (or other local, state or
federal governmental agency or body having jurisdiction) from transferring any
of the xxxxx located in the Cumberland Field (up to an aggregate of 80 xxxxx)
which are down, shut-in, temporarily abandoned or other similar xxxxx in this
Field unless and until such xxxxx are plugged and abandoned, then (a) title to
such xxxxx shall remain with Unocal and shall not be deemed transferred and
assigned to Buyer (or, to the extent necessary, such xxxxx shall be re-assigned
and re-transferred to Unocal by Buyer after receipt of the notice of such
prohibition or restriction); (b) Buyer shall pay and deliver to Unocal the P&A
Conversion Price (if the notice of such prohibition or restriction on transfer
is received prior to Closing, then this amount shall be added as a positive
adjustment to the Purchase Price to be delivered at Closing, if the notice is
received after closing, then Buyer shall pay and deliver such P&A Conversion
Price within 10 days after Unocal provides written notice to Buyer of such
prohibition or restriction), provided, however, that if less than all 80 xxxxx
are prohibited or restricted from transfer, then Buyer shall pay a pro rata
portion of the P&A Conversion Price to Unocal (with such pro rata portion being
calculated as follows: [P&A Conversion Price] x [(number of xxxxx prohibited or
restricted from transfer) divided by (80)]; (c) Unocal shall be responsible for
the Plugging and Abandonment Obligations only for such xxxxx as are prohibited
or restricted from being transferred and assigned, but Buyer shall be liable for
any and all other Assumed Liabilities relating to these xxxxx; (d) Buyer shall
provide Unocal Access to the Assets to supervise conduct the plugging and
abandonment of these xxxxx; (e) as soon as reasonably practicable after these
xxxxx have been plugged and abandoned, Unocal shall transfer and assign such
xxxxx to Buyer, subject to and in accordance with the other terms and provisions
hereof.
15.5 Closing Statement: Unocal and Buyer shall execute a joint closing
statement acknowledging the payment of the Adjusted Purchase Price, the Cash
Settlement, the transfer of the Assets, and the assumption of liabilities.
15.6 Notices: Immediately after Closing, Buyer shall notify all operators,
non-operators, oil or gas purchasers, government agencies and royalty owners
that it has purchased the Assets.
16.1 Final Accounting: Within 120 days after Closing Unocal shall provide
Buyer with a statement of accounting ("Final Accounting"). Buyer shall have the
right to cause its accountant, in consultation with Unocal's accountant, to
review the Final Accounting within an additional thirty (30) days following
Unocal's delivery of such notice. If Buyer's accountant and Unocal's accountant
are unable to agree upon the Final Accounting within an additional thirty (30)
days following completion of Buyer's review of the Final Accounting described
above, then the two accountants jointly shall select, within such thirty (30)
day period, an independent accounting firm of national reputation which shall
determine the final accounting as soon as reasonably possible but in no event
later than 180 days after Closing. The determination by such independent
accounting firm shall be conclusive. The expense of such independent accounting
firm shall be borne one-half by Unocal and one-half by Buyer.
16.2 Receipts and Credits: The Final Accounting notwithstanding, all
monies, proceeds, receipts, credits and income attributable to the Assets for
all periods of time subsequent to the Effective Date except as otherwise
provided herein, shall be the sole property and entitlement of Buyer, and to the
extent received by Unocal, Unocal shall account for and reflect the same to
Buyer in the Final Accounting after Closing. All monies, proceeds, receipts and
income attributable to the Assets except as otherwise provided in this Agreement
for all periods of time prior to the Effective Date shall be the sole property
and entitlement of Unocal and, to the extent received by Buyer, Buyer shall
fully disclose, account for and transmit same to Unocal promptly. All costs,
expenses and disbursements attributable to the Assets for periods of time prior
to the Effective Date except as otherwise provided herein, regardless of when
due or payable, shall be the sole obligation of Unocal and Unocal shall promptly
pay, or if paid by Buyer, promptly reimburse Buyer for and hold Buyer harmless
from and against same. All costs, expenses and disbursements attributable to the
Assets for periods of time subsequent to the Effective Date regardless of when
due or payable, shall be the sole obligation of Buyer and Buyer shall promptly
pay, or if paid by Unocal, promptly reimburse Unocal for and hold Unocal
harmless from and against same. Unocal shall be entitled to a credit for and
reimbursement in an amount equal to any amount received by Buyer after Closing
for any delivery or performance by Unocal prior to the Effective Date, and Buyer
shall be entitled to a credit for and reimbursement in an amount equal to any
amount received by Unocal after Closing for any delivery or performance by Buyer
after the Effective Date.
16.3 Suspended Funds: After the Closing, Unocal will provide to Buyer a
listing showing all proceeds from production attributable to the Leasehold
Interests which are currently held in suspense and shall transfer to Buyer all
of those suspended proceeds. Buyer shall be responsible for proper distribution
of all the suspended proceeds, to the extent turned over to it by Unocal, to the
parties lawfully entitled to them, and hereby agrees to indemnify, defend and
hold harmless Unocal from and against any and all claims, liabilities, losses,
costs and expenses, arising out of or relating to those suspended proceeds to
the extent turned over to it by Unocal.
16.4 Further Assurances: After Closing, Unocal and Buyer agree to take such
further actions and to execute, acknowledge and deliver all such further
documents that are necessary or useful in carrying out the purposes of this
Agreement or of any document delivered pursuant hereto.
16.5 Post-Closing Accounting: Subsequent to Closing, at Buyer's request,
Unocal shall have the option to continue performing accounting obligations for
the Assets for a period of time not to exceed six (6) months. Unocal shall be
compensated their mutually agreed sum per month for each month or portion
thereof during which Buyer requests such assistance. Unocal shall have no
obligation to provide accounting assistance post-Closing for any portion of the
Assets, except as is reasonable in good fait in a transaction of this type to
transfer files and necessary information to Buyer.
16.6 Recording: Buyer shall, at its own cost, immediately record all
instruments of conveyance and sale in the appropriate office of the state and
county in which the lands covered thereby are located. Buyer shall immediately
file for and obtain the necessary approval of all federal, Indian tribal or
state government agencies to the assignment of the Assets. The assignment of any
state, federal or Indian tribal oil and gas leases shall be filed in the
appropriate governmental offices on a form required and in compliance with the
applicable rules of the applicable government agencies. Buyer shall supply
Unocal, at Unocal's cost, with a true and accurate photocopy of all the recorded
and filed assignments within a reasonable period of time after their recording
and filing.
16.7 Books and Records: Notwithstanding any other provision herein
contained, Buyer shall retain all original documents, if any, delivered by Buyer
hereunder which pertain to the Assets (documents delivered by Buyer hereunder
may be maintained on compact discs) for as long as it so desires and make the
same available after the Closing for inspection and copying by Unocal during
normal business hours, upon reasonable request and upon reasonable notice;
provided, however, that during the first ten (10 years after Closing, such
books, records or documents shall not be disposed of or destroyed by Buyer
without first advising Unocal in writing and giving Unocal reasonable
opportunity to obtain possession thereof.
16.8 Access to Properties and Records by: From and after the Closing Date,
Unocal will afford to Buyer and its authorized representatives reasonable access
during normal business hours to the then current officers and employees of
Unocal retained by Unocal who were employed in connection with the Assets and
will cooperate with Buyer in making available to Buyer at Buyer's expense,
unless the action is an action by Buyer against Unocal, as a witness or deponent
such employees of Unocal in each case only so long as such persons are then
employees of Unocal or an Affiliate of Unocal, as Buyer may request for
financial reporting, tax or similar purposes, purposes of investigating claims,
or conducting litigation or administrative proceedings with third parties or
government agencies. Unocal will also afford to Buyer and its authorized
representatives, for appropriate purposes, such reasonable access during normal
business hours to the properties and relevant books and records of Unocal
associated with the Assets prior to the Closing Date but not transferred to
Buyer.
16.9 Access to Properties and Records by: From and after the Closing Date,
Buyer will afford to Unocal and its authorized representatives reasonable
access, during normal business hours, to the transferred employees, as shall at
such time be employees of Buyer and who were prior to the Closing Date
associated with the Assets, and to such properties, books and records relating
to the Assets transferred to Buyer hereunder without charge, and will furnish to
Unocal such additional information, and will cooperate with Unocal in such other
respects, including the making available to Unocal at Unocal's expense, unless
the action is an action by Unocal against Buyer, as a witness or deponent such
former employees of Unocal as shall be at the time employees of Buyer, as Unocal
may request for financial reporting, tax or similar purposes, purposes of
investigating claims, or conducting litigation or administrative proceedings
with third parties or government agencies. Buyer will also provide to Unocal's
authorized representatives such reasonable access without charge during normal
business hours to the officers, employees, properties, books and records
transferred to Buyer in connection with this Agreement. In addition Buyer will
provide access to the Assets, and Buyer will cooperate with other reasonable
requests of Unocal, in connection with any investigation of or procurement of
insurance by Unocal relating to the Assets. including, without limitation,
requests by Unocal (or its insurer) of financial, operational, environmental
compliance and other information of or relating to Buyer.
SECTION 17
MISCELLANEOUS
17.1 Governing Law: THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OKLAHOMA, WITHOUT REGARD TO CONFLICT OF
LAWS PROVISIONS. All assignments and instruments executed in accordance with
this Agreement shall be governed by and interpreted in accordance with the laws
of the state where the Assets conveyed thereby are located.
17.2 Assignment:
(i) This Agreement and the rights and obligations hereunder shall not be
assignable by either Party hereto without the prior written consent of the
other; provided, however, that Unocal and Buyer shall have the right without the
other Party's consent (but upon written notice to the other Party) to assign
this Agreement, but not the right to assign any duties or obligations hereunder,
to an Affiliate(s) or a subsidiary company. In addition, prior to Closing, Buyer
may (upon written notice to Unocal) assign this Agreement to an Affiliate of
Buyer, insofar as any assignment by Buyer shall in no way affect or diminish the
obligations or liabilities of Buyer or, its ultimate parent, Magnum Hunter
Resources, Inc. under the Guarantee described in Section 8.11 above.
(ii) Any Party hereto may assign or delegate any of its rights, benefits,
duties or obligations hereunder: (i) to any Person, if it has received the prior
written consent of the other Party; (ii) to its legal successor, if it merges
(whether or not it is the surviving corporation); or (iii) to any Person to whom
it has made any sale, lease, transfer or other disposition of all or
substantially all of its assets; provided, however, that no Party may make an
assignment or delegation described in clauses (ii) and (iii), above, unless such
Party delivers to the other Party hereto such written assumptions, affirmations
and/or legal opinions as such other Party may reasonably request to preserve
their rights and remedies hereunder.
(iii) In the event of an approved assignment, the rights, benefits, duties
and obligations of each Party hereto shall inure to the benefit of, and be
binding upon, each Party's successors, assigns or delegates.
17.3 Written Notices: Any notices required to be given hereunder shall be
in writing and transmitted by telex or telecopier, delivered by air courier, or
deposited in the mail, postage prepaid and certified, and addressed as follows
or as otherwise specified by Unocal and Buyer by notice hereunder:
To Unocal:
Union Oil Company of California
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Fax No. (000) 000-0000
Attention: Director, Business Development
with a copy to:
Union Oil Company of California
dba Spirit Energy 76
00000 Xxxxxxxxx Xxxxxxx
Xxxxx Xxxx, Xxxxx 00000
Fax No. (000)000-0000
Attention: Vice President and General Counsel
To Buyer:
Magnum Hunter Production, Inc.
000 Xxxx Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: ___________
Fax No. (000) 000-0000
Notices shall be effective upon receipt.
17.4 Expenses: Except as otherwise provided herein, each Party shall be
solely responsible for all expenses incurred by it in connection with this
transaction (including without limitation, fees and expenses of its own counsel
and accountants).
17.5 Waiver of Compliance with Bulk Transfer Laws: Buyer waives compliance
with any applicable bulk transfer law relating to the transactions contemplated
by this Agreement, and agrees to assume all risk and liability in connection
with the failure to so comply.
17.6 WAIVER OF CONSUMER RIGHTS: BUYER HEREBY WAIVES ITS RIGHTS UNDER THE
DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ.,
BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN SELECTION, BUYER
VOLUNTARILY CONSENTS TO THIS WAIVER. IN ADDITION, TO THE EXTENT APPLICABLE TO
THE ASSETS OR ANY PORTION THEREOF, BUYER HEREBY WAIVES THE PROVISIONS OF THE
TEXAS CONSUMER PROTECTION LAWS REGARDING FALSE, MISLEADING AND DECEPTIVE
BUSINESS PRACTICES, UNCONSCIONABLE ACTIONS AND BREACHES OF WARRANTY; PROVIDED,
HOWEVER, THAT NOTHING HEREIN CONTAINED SHALL BE DEEMED A WAIVER BY BUYER WHERE
SUCH WAIVER IS PROHIBITED BY LAW. IN ORDER TO EVIDENCE ITS ABILITY TO GRANT SUCH
WAIVER, BUYER HEREBY REPRESENTS AND WARRANTS TO UNOCAL THAT BUYER (i) IS IN THE
BUSINESS OF SEEKING OR ACQUIRING, BY PURCHASE OR LEASE, GOODS, OR SERVICES FOR
COMMERCIAL OR BUSINESS USE, (ii) HAS ASSETS OF FIVE MILLION DOLLARS OR MORE
ACCORDING TO IT MOST RECENT FINANCIAL STATEMENT PREPARED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, (iii) HAS KNOWLEDGE AND EXPERIENCE IN
FINANCIAL MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS OF THE
TRANSACTION CONTEMPLATED HEREBY, AND (iv) IS NOT IN A SIGNIFICANTLY DISPARATE
BARGAINING POSITION. Nothing in this Section shall be interpreted as a waiver of
the express representations and warranties in this Agreement.
17.7 Waiver of Jury Trial: UNOCAL AND BUYER DO HEREBY IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, SUIT OR OTHER LEGAL PROCEEDING BASED UPON, ARISING OUT OF, OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
17.8 Limitation of Liability: Notwithstanding anything herein provided to
the contrary, Unocal and Buyer do hereby covenant and agree that, after Closing,
the recovery by 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 covenants, agreements,
representations, guaranties, warranties, disclaimers, waivers or continuing
obligations under this agreement shall be limited to the actual damages suffered
or incurred by the non- breachin Party as a result of the breach by the
breaching Party of its covenants, agreements, representations, guaranties,
warranties, disclaimers, waivers, or continuing obligations hereunder plus costs
and reasonable attorney's fees and in no event shall the breaching Party be
liable to the non-breaching Party for consequential damages as a result of the
breach by the breaching Party of any of its covenants, agreements,
representations, guaranties, warranties, disclaimers, waivers or continuing
obligations hereunder; provided, however that nothing herein contained shall be
deemed a limitation on either Party's indemnity obligations contained in this
Agreement.
17.9 No Admissions: Buyer and Unocal agree that neither this Agreement, nor
any part hereof, nor any performance under this Agreement, nor any payment of
any amount pursuant to any provision of this Agreement shall constitute or be
construed as a finding, evidence of, or an admission or acknowledgment of any
liability, fault, or past or present wrongdoing, or violation of any law, rule,
regulation, or policy, by either Unocal or Buyer or by their respective
officers, directors, employees, or agents.
17.10 Use of Unocal's Name: As soon as practicable after Closing, and in
any event no later than 180 calendar days after Closing, Buyer shall remove or
cause to be removed the names and marks used by Unocal and all variations and
derivations thereof and logos relating thereto from the Assets and shall not
make any use whatsoever of those names, marks and logos.
17.11 Entire Agreement, Etc: This Agreement, including the Exhibits
referred to herein or delivered pursuant to this Agreement and the
Confidentiality Agreement, which is incorporated herein by this reference as
though fully set forth hereby, constitutes the entire agreement between Unocal
and Buyer with respect to the subject matter hereof, and supersedes all prior
oral or written agreements, commitments or understandings with respect thereto.
No amendment of this Agreement shall be binding on the Parties unless in writing
and signed by the authorized representatives of both Parties hereto. Any waiver
of any breach of any term or condition of this Agreement shall not operate as a
waiver of any other breach of such term or condition or of any other term or
condition of this Agreement.
17.12 Parties in Interest: Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any Persons other than the Parties to it and their permitted
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third Persons to any
Party to this Agreement, nor shall any provision give any third Persons any
right of subrogation or action over and against any Party to this Agreement.
17.13 Severability: If any provision of this Agreement shall be held to be
invalid or unenforceable under present or future law in whole or in part by any
court of any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provisions in any other jurisdiction.
17.14 Consents: When a consent is required of either Party hereto, such
consent shall not be unreasonably withheld.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
Union Oil Company of California
By:
Attorney-in-Fact
Magnum Hunter Production, Inc.
By:
Name:
Title:
AMENDMENT TO PURCHASE AND SALE AGREEMENT
This AMENDMENT TO PURCHASE AND SALE AGREEMENT (hereinafter "Amendment") is
executed this 28th day of December, 1998, but effective for all purposes as of
November 25, 1998, by and between Union Oil Company of California, at 00000
Xxxxxxxxx Xxxxxxx, Xxxxx Xxxx, Xxxxx 00000 (hereinafter referred to as
"Unocal"), and MAGNUM HUNTER PRODUCTION, INC., a Texas corporation, whose
address is 000 Xxxx Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000
(herein referred to as "Buyer").
WHEREAS, reference is herein made to that certain PURCHASE AND SALE
AGREEMENT (hereinafter "Purchase Agreement") dated as of November 25, 1998, by
and between Unocal and Buyer. All capitalized terms used herein but not
otherwise defined shall have the meanings attributed to them in the Purchase
Agreement;
WHEREAS, Unocal and Buyer desire to make certain changes and amendments to
the Purchase Agreement, as set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby amend the Purchase Agreement
and agree as follows:
1. Certain Elections; INDEMNITY:
a. Xxxx Love #3. Pursuant to that certain proposal letter dated November
18, 1998 from Oryx Energy Company ("Oryx"), Oryx proposed to drill the Xxxx Love
#3 Well ("EL3 Operations") in Xxxxxx County, Oklahoma pursuant to the terms of
that certain Operating Agreement dated October 1, 1956, between Sun Oil Company
and Union Oil Company of California, et al, as amended, ("EL3 Operating
Agreement"). But for Buyer's desire to have Unocal participate in this well and
Buyer's agreement herein, Unocal would not elect to consent to and participate
in the EL3 Operations. Therefore, to the extent that Unocal consents to the EL3
Operations, Buyer shall indemnify, defend and hold Unocal harmless from and
against any and all costs, charges, fees, expenses (including, but not limited
to, attorney fees and court costs), damages and any other liabilities of any
kind whatsoever relating to or arising from the EL3 Operations (including, but
not limited to, any charges assessed or allocated to Unocal under the EL3
Operating Agreement); provided however, that in the event that the transactions
contemplated under the Purchase Agreement are not consummated, then, insofar and
only insofar as the EL3 Operations are successful and Unocal actually receives
any proceeds from its share of the
production from this well, Unocal shall reimburse to Buyer, only from the
proceeds from Unocal's current working interest share of proceeds of production
actually received by Unocal from this well, up to an aggregate maximum amount of
200% of the amounts indemnified and paid by Buyer under this Section (and after
such payout, Buyer shall have no further right or interest in any proceeds or
production from said well).
King #32B. Pursuant to that certain proposal letter dated November 18, 1998
from Sanguine Ltd. ("Sanguine"), Sanguine proposed to drill the King #32B Well
("K32B Operations") in Caddo County, Oklahoma pursuant to the terms of that
certain Operating Agreement dated June 6, 1980, between Sanguine Ltd.and Rocket
Oil Company, et al, as amended, ("K32B Operating Agreement"). But for Buyer's
desire to have Unocal participate in this well and Buyer's agreement herein,
Unocal would not elect to consent to and participate in the K32B Operations.
Therefore, to the extent that Unocal consents to the K32B Operations, Buyer
shall indemnify, defend and hold Unocal harmless from and against any and all
costs, charges, fees, expenses (including, but not limited to, attorney fees and
court costs), damages and any other liabilities of any kind whatsoever relating
to or arising from the K32B Operations (including, but not limited to, any
charges assessed or allocated to Unocal under the K32B Operating Agreement);
provided however, that in the event that the transactions contemplated under the
Purchase Agreement are not consummated, then, insofar and only insofar as the
K32B Operations are successful and Unocal actually receives any proceeds from
its share of the production from this well, Unocal shall reimburse to Buyer,
only from the proceeds from Unocal's current working interest share of proceeds
of production actually received by Unocal fro this well, up to an aggregate
maximum amount of 400% of the amounts indemnified and paid by Buyer under this
Section (and after such payout, Buyer shall have no further right or interest in
any proceeds or production from said well).
2. Designated Operator: Buyer hereby designates its affiliated company,
Gruy Petroleum Management Co. (a wholly owned subsidiary of Buyer's parent
company, Magnum Hunter Resources, Inc.) to operate those Assets which would
otherwise have been operated by Buyer, provided, however, that such designation
shall in no way relieve or release Buyer from any obligations or liabilities to
Unocal under the Purchase Agreement.
3. Additional Disclosures: Exhibit H to the Purchase Agreement is hereby
amended and supplemented to add reference to the following disclosures: (i) In
connection with the Xxxxxx described in Section A(5) of Exhibit H, there was a
second complaint filed with the OCC (in addition to and similar to the complaint
described in the this Section of Exhibit H ) by Xx. Xxx Xxxxxx on October 14,
1998 (Incident No. 99-41095), and (ii) Xxxxxx X. Xxxxxx, Trustee, et al. v.
Unocal, et al., Case Xx.0 000, xx xxx Xxxxxxxx Xxxxx xx Xxxxx Xxxxxx, Xxxxxxxx,
filed on December 3, 1998 (this is a suit relating to gas balancing and Unocal
is currently in settlement negotiations with the plaintiff)..
4. Ratification: Except as expressly amended hereby, all of the terms and
provisions of the Purchase Agreement are hereby ratified and affirmed in all
respects and are incorporated herein by reference.
5. Entire Agreement: This Amendment constitutes the entire agreement of the
parties with regard to the subject matter hereof and supersedes any prior oral
or written agreements or understandings. This amendment may not be amended
except through a written agreement executed by the parties hereto.
Counterparts: This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written, but effective for all purposes as of November 25, 1998.
Union Oil Company of California
By:
Name:
Title: Attorney-in-Fact
MAGNUM HUNTER PRODUCTION, INC.
By:
Name:
Title:
SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT
This SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT (hereinafter
"Amendment") is executed this 31st day of December, 1998, but effective for all
purposes as of November 25, 1998, by and between Union Oil Company of
California, at 00000 Xxxxxxxxx Xxxxxxx, Xxxxx Xxxx, Xxxxx 00000 (hereinafter
referred to as "Unocal"), and MAGNUM HUNTER PRODUCTION, INC., a Texas
corporation, whose address is 000 Xxxx Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000 (herein referred to as "Buyer").
WHEREAS, reference is herein made to that certain PURCHASE AND SALE
AGREEMENT dated as of November 25, 1998, by and between Unocal and Buyer, as
amended by that certain Amendment to Purchase and Sale Agreement dated December
28, 1998(hereinafter "Purchase Agreement"). All capitalized terms used herein
but not otherwise defined shall have the meanings attributed to them in the
Purchase Agreement;
WHEREAS, Unocal and Buyer desire to make certain changes and amendments to
the Purchase Agreement, as set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby amend the Purchase Agreement
and agree as follows:
1. Office Lease: From and after February 1, 1999, Buyer agrees to assume
all liabilities and obligations in and under that certain office lease dated
commencing on August 1, 1996, between Unocal and Great Western Management
Corporation, agent for MacArthur Executive Center, covering the office space
located at Suite 300, MacArthur Executive Center, 0000 X.X. Xxxxxxxxxx, Xxxxxxxx
Xxxx, Xxxxxxxx 00000-0000. In connection with this assumption, all of the
following, to the extent owned by Unocal and located at this office, will be
transferred to Buyer on the same terms and conditions as if they had been added
to Exhibit "B" attached to the Purchase Agreement: (i) office furniture and
fixtures (other than computers, printers and other ancillary equipment), (ii)
file cabinets, (iii) copier, and (iv) fax machine.
2. Scout Card Library: To the extent that Unocal is not restricted or
prohibited from transferring the same to Buyer, all of the following, to the
extent owned by Unocal and located at either (i) the concourse of Unocal's
offices located at 00000 Xxxxxxxxx Xxxxxxx, Xxxxx Xxxx, Xxxxx 00000, or (ii)
Xxxxx storage management in Houston, Texas, will be transferred to Buyer on the
same terms and conditions as if they had been added to Exhibit
"B" attached to the Purchase Agreement: Unocal's historical collection of
well scout tickets over many Oklahoma counties, which have been collected by
Pure Oil Company and Unocal either by direct purchase from data companies or
through Unocal representatives.
3. DISCLAIMER: All of the items described in Section 1 and Section 2 above
will be transferred and sold on an "AS IS," "WHERE IS" AND "WITH ALL FAULTS AS
TO ALL MATTERS," AND UNOCAL EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION
OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE,
OR OTHERWISE RELATING TO (a) THE CONDITION OF THESE ITEMS (INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, OF FITNESS FOR A
PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR
ACCURACY OR COMPLETENESS OF ANY INFORMATION OR DATA), (b) ANY INFRINGEMENT BY
UNOCAL OF ANY PATENT OR PROPRIETARY RIGHT OF ANY THIRD PARTY, (c) ANY
INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO BUYER BY OR
ON BEHALF OF UNOCAL (INCLUDING WITHOUT LIMITATION, IN RESPECT OF GEOLOGICAL AND
ENGINEERING DATA, THE EXISTENCE OR EXTENT OF OIL, GAS OR OTHER MINERAL RESERVES,
THE RECOVERABILITY OF OR THE COST OF RECOVERING ANY SUCH RESERVES, THE VALUE OF
SUCH RESERVES, ANY PRODUCT PRICING ASSUMPTIONS, AND THE ABILITY TO SELL OIL OR
GAS PRODUCTION AFTER CLOSING), (d) THE ENVIRONMENTAL CONDITION AND OTHER
CONDITION OF THE ITEMS AND ANY POTENTIAL LIABILITY ARISING FROM OR RELATED TO
THE ITEMS OR THE OFFICE LEASE, AND (e) THE FAILURE OF ANY COMPUTER, ELECTRONICS,
SOFTWARE, OR COMPONENTS TO BE FREE OF ANY BUGS OR ERRORS, INCLUDING, BUT NOT
LIMITED TO, ANY DEFICIENCIES RELATING TO THE INABILITY TO PROPERLY FUNCTION
BEYOND DECEMBER 31, 1999.
4. Title Defects; WAIVER AND RELEASE: In consideration for Unocal's
agreement to accept a one-time downward adjustment to the Purchase Price at
Closing of (and the Purchase Price is hereby reduced by) an amount equal to
FIFTY SIX THOUSAND TWO HUNDRED AND SIXTY NINE DOLLARS AND NO/100 ($56,269.00),
BUYER HEREBY WAIVES AND RELEASES UNOCAL FROM ANY AND ALL CLAIMS (INCLUDING, BUT
NOT LIMITED TO, CONTRACT, COMMON-LAW, TORT, OR CLAIMS ASSERTED UNDER ANY OTHER
THEORY OF LIABILITY) ARISING FROM OR RELATING TO ANY AND ALL TITLE DEFECTS
RELATING TO THE ASSETS, WHETHER KNOWN OR UNKNOWN, WHETHER ASSERTED OR UNASSERTED
AS OF THE DATE HEREOF, REGARDLESS OF WHETHER CREATED OR ESTABLISHED BY, THROUGH
OR UNDER UNOCAL OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, ANY AND ALL ALLEGED
TITLE DEFECTS DESCRIBED IN CORRESPONDENCE FROM BUYER'S LEGAL COUNSEL, XXXXX &
XXXXX, P.C. Notwithstanding that Buyer has waived and released any claims
regarding any Title Defects, Unocal, for a period of 120 days after the Closing
shall attempt to use commercially reasonable efforts to cooperate with any
attempts of Buyer to cure those items described as possible Title Defects in the
letter from Xxxxx Xxxxxxx, with the lawfirm of Xxxxx & Xxxxx, P.C., to Xxxx
Xxxxxx (with Magnum Hunter Production, Inc.) dated December 30, 1998 (a copy of
which was provided to Unocal); provided, however, that such cooperation by
Unocal shall not require Unocal to expend or incur any amounts whatsoever
(unless agreed to be paid or reimbursed by Buyer) or devote any unreasonable
amount of time, determined in Unocal's sole discretion, and Unocal shall not be
in any way liable or responsible if any attempts to cure any such items or Title
Defects fails for any reason whatsoever.
5. Cumberland Seismic Data License: Pursuant to the terms of that certain
Cumberland AMI/Exploration Agreement ("XXXXX Agreement") between Unocal and The
Xxxxxxx Xxxxxx Company, Inc. ("QLC"), Unocal has a joint interest in certain 3-D
seismic data covering certain acreage in the Cumberland Field in Oklahoma (such
data referred to in the XXXXX Agreement as the 3-D Seismic Data). To the extent
that within five (5) year(s) after Closing, QLC provides any required consent or
approval for Unocal to license such 3-D Seismic Data, on a non-exclusive basis
and on terms comparable (in Unocal's sole determination) to those set forth in
the form of Geophysical Data License Agreement attached as Exhibit "I" to the
Purchase Agreement, then to the extent that Unocal continues to own an interest
therein, Unocal would agree to license the same to Buyer on such terms and waive
any license fee that Unocal would otherwise be entitled to in connection with
such non-exclusive license; provided, however, that notwithstanding anything
stated herein to the contrary, nothing herein shall be deemed a representation
or warranty that QLC will provide any such required consent or approval and
nothing herein shall be deemed a waiver, release, reduction, or diminution of
any rights of QLC, including, but not limited to, the right of QLC to any fee
that QLC may be entitled to in connection with any such license.
6. Certain Cumberland Xxxxx: It is currently known that six xxxxx in or
near the Cumberland Field have recently failed certain mechanical integrity
tests. Of these six xxxxx, five xxxxx were previously inactive xxxxx and one was
an active salt-water injection well ("Injection Well"). With regard to the five
previously inactive xxxxx and any other xxxxx that may fail similar tests in
connection with this proposed sale to Buyer, if, after the Closing, the
applicable Oklahoma governmental authority prohibits or restricts transfer of
these xxxxx unless or until they are plugged and abandoned, then there will be
an adjustment and payment by Buyer in the manner and amount contemplated under
Section 15.4(iv) within thirty (30) days after receipt of notice from such
Oklahoma governmental authority stating that such transfer is restricted or
prohibited. With regard to the Injection Well, if, after the Closing, the
applicable Oklahoma governmental authority prohibits or restricts transfer of
this well until such well is either plugged and abandoned or repaired, then (i)
to the extent that Buyer would prefer this well to be plugged and abandoned,
then Buyer shall provide Unocal written notice of this and tender the payment to
Unocal for such well in the same manner and amount contemplated under Section
15.4(iv) within thirty (30) days after receipt of notice from such Oklahoma
governmental authority stating that such transfer is restricted or prohibited,
or (ii) to the extent that Buyer would prefer this well to be repaired, then
Buyer shall provide Unocal written notice of this within thirty (30) days after
receipt of notice from such Oklahoma governmental authority stating that such
transfer is restricted or prohibited, and Buyer shall thereafter assume and pay
(or reimburse Unocal) for all costs and expenses relating to the repair thereof.
7. Ratification: Except as expressly amended hereby, all of the terms and
provisions of the Purchase Agreement are hereby ratified and affirmed in all
respects and are incorporated herein by reference.
8. Entire Agreement: This Amendment constitutes the entire agreement of the
parties with regard to the subject matter hereof and supersedes any prior oral
or written agreements or understandings. This amendment may not be amended
except through a written agreement executed by the parties hereto.
9. Counterparts: This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written, but effective for all purposes as of November 25, 1998.
Union Oil Company of California
By:
Name:
Title: Attorney-in-Fact
MAGNUM HUNTER PRODUCTION, INC.
By:
Name:
Title:
THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT
This THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT (hereinafter
"Amendment") is executed this ____ day of February, 1999, but effective for all
purposes as of February __, 1999, by and between Union Oil Company of
California, at 00000 Xxxxxxxxx Xxxxxxx, Xxxxx Xxxx, Xxxxx 00000 (hereinafter
referred to as "Unocal"), and MAGNUM HUNTER PRODUCTION, INC., a Texas
corporation, whose address is 000 Xxxx Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000 (herein referred to as "Buyer").
WHEREAS, reference is herein made to that certain PURCHASE AND SALE
AGREEMENT dated as of November 25, 1998, by and between Unocal and Buyer, as
amended by that certain Amendment to Purchase and Sale Agreement dated December
28, 1998, and as further amended by that certain Second Amendment to Purchase
And Sale Agreement dated December 31, 1998 (hereinafter "Purchase Agreement").
All capitalized terms used herein but not otherwise defined shall have the
meanings attributed to them in the Purchase Agreement;
WHEREAS, Unocal and Buyer desire to make certain changes and amendments to
the Purchase Agreement, as set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby amend the Purchase Agreement
and agree as follows:
1. Certain Little 100-7 groundwater testing. Notwithstanding that the
following would not constitute a Qualified Claim under the Purchase Agreement
(as they are not actual Remediation Costs incurred to satisfy unaffiliated
third-party or governmental claims of an unknown Environmental Liability which
Accrued prior to the Effective Date and which have been asserted within the
6-month period after the Closing Date): Unocal and Buyer hereby agree that (i)
Unocal will conduct testing to evaluate the condition of groundwater at the
Little 100-7 wellsite through a consultant or contractor of its selection; (ii)
Unocal will control, direct the scope of, and supervise, the testing activities
with regard to the Little 100- 7 wellsite; (iii) Unocal will communicate with
Buyer regarding procedures and costs relating to, and access to the Assets for
purposes of controlling and supervising, the testing of groundwater at the
Little 100-7 wellsite. (iv) all of the costs, expenses, charges, fees, and other
amounts attributable to the testing shall be allocated and satisfied by Unocal
and the Buyer on a 50:50 basis--one-half by Buyer and one-half by Unocal (and
Buyer will pay or reimburse Unocal for 50% of each dollar spent or liability
incurred by Unocal for such costs, expenses, charges, fees, and other amounts in
connection with the testing of groundwater at the Little 100-7 wellsite);
provided, however, that notwithstanding anything stated herein to the contrary,
Unocal's aggregate liability under this Section (together with Unocal's
aggregate liability for any and all Qualified Claims) shall not exceed the
aggregate limitations set forth in Section 4.7(iii) of the Purchase
Agreement.
3. Ratification. Except as expressly amended herein, the Purchase
Agreement, as amended by this Agreement, is hereby ratified and affirmed in all
respects.
4. Governing Law: THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OKLAHOMA, WITHOUT REGARD TO CONFLICTS
OF LAW PROVISIONS.
5. Entire Agreement; Amendments: This Agreement, constitutes the entire
agreement between Unocal and Buyer with respect to the subject matter hereof,
and supersedes all prior oral or written agreements, commitments or
understandings with respect thereto. No amendment of this Agreement shall be
binding on the Parties unless in writing and signed by the authorized
representatives of both Parties hereto. Any waiver of any breach of any term or
condition of this Agreement shall not operate as a waiver of any other breach of
such term or condition or of any other term or condition of this Agreement.
6. Counterparts: This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
Union Oil Company of California
By: ____________________________ Date: ________________
Name: __________________________
Title: Attorney-in-Fact
Magnum Hunter Production, Inc.
By: ____________________________ Date: _________________
Name: __________________________
Title: _________________________
