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EXHIBIT 10.4
PURCHASE AND SALE AGREEMENT
BETWEEN
XXXXXX PETROLEUM CORPORATION
("SELLER")
AND
THE X. X. XXXXX COMPANY
("BUYER")
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MINERAL AND ROYALTY PROPERTIES IN VARIOUS COUNTIES
AND PARISHES IN ALABAMA, LOUISIANA AND MISSISSIPPI
EFFECTIVE NOVEMBER 1, 1998
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TABLE OF CONTENTS
ARTICLE TITLE PAGE
1.0 DEFINITIONS
1.1 Agreement
1.2 Assets
1.3 Assumed Obligations
1.4 Closing
1.5 Closing Date
1.6 Effective Time
1.7 Environmental Obligations or Liabilities
1.8 Excluded Assets
1.9 Hydrocarbons
1.10 Inventory Hydrocarbons
1.11 Personal Property and Incidental Rights
1.12 Purchase Price
2.0 PURCHASE AND SALE
2.1 Purchase and Sale
2.2 Performance Deposit
3.0 PURCHASE PRICE AND PAYMENT
3.1. Purchase Price
3.2 Final Settlement
3.3 Plugging, Replugging, Abandonment, Removal,
Disposal, and Restoration
4.0 SELLER'S REPRESENTATIONS AND WARRANTIES
4.1 Seller's Representations and Warranties
5.0 BUYER'S REPRESENTATIONS AND WARRANTIES
5.1 Buyer's Representations and Warranties
6.0 ACCESS TO INFORMATION, INSPECTIONS AND
TITLE/ENVIRONMENTAL DEFECTS
6.1 Title Files
6.2 Other Files
6.3 Confidentiality Agreement
6.4 Inspections
6.5 Title and Environmental Defects - Notice,
Adjustments and Termination
7.0 TITLE AND OTHER MATTERS
7.1 No Warranty or Representation
7.2 Buyer's Title Review
8.0 COVENANTS OF SELLER
8.1 Covenants of Seller Pending Closing
8.2 Limitations on Seller's Covenants
Pending Sale
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9.0 CLOSING CONDITIONS
9.1 Seller's Closing Conditions
9.2 Buyer's Closing Conditions
9.3 Notice on Closing Conditions
10.0 CLOSING
10.1 Closing
10.2 Seller's Closing Obligations
10.3 Buyer's Closing Obligations
10.4 Joint Closing Obligations
11.0 EFFECT OF CLOSING
11.1 Assumed Obligations; Pre-Closing Liabilities
11.2 After Final Settlement
11.3 Back-In After Payout
12.0 LIMITATIONS ON WARRANTIES AND REMEDIES
12.1 Limitations
12.2 Survival
13.0 CASUALTY LOSS AND CONDEMNATION
13.1 Casualty Loss
14.0 DEFAULT AND REMEDIES
14.1 Seller's Remedies
14.2 Buyer's Remedies
14.3 Other Remedies
14.4 Effect of Termination
15.0 ASSUMPTION AND INDEMNITY
15.1 Buyer's Indemnity
15.2 Seller's Indemnity
15.3 Broker or Finder's Fee
15.4 Securities Laws
15.5 Miscellaneous
16.0 MISCELLANEOUS
16.1 Public Announcements
16.2 Filing and Recording of Assignments, etc.
16.3 Further Assurances and Records
16.4 Notices
16.5 Incidental Expenses
16.6 Antitrust Laws
16.7 Waiver
16.8 Binding Effect; Assignment
16.9 Taxes
16.10 Audits
16.11 Governing Law
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16.12 Entire Agreement
16.13 Exhibits
16.14 Delivery of Files After Closing
16.15 Survival
16.16 Counterparts
16.17 Agreement as Offer
EXHIBITS
A. Description of Fee Land
B. Assignment
C. Minerals Sold
D. Non-Producing Acreage
E. Substantial Producing Acreage
F. Actual Revenues
G. Leasing Revenues
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PURCHASE AND SALE AGREEMENT
THIS AGREEMENT dated as of the 28th day of October, 1998, is made by
and between XXXXXX PETROLEUM CORPORATION, a Delaware corporation, its successors
or assigns (herein referred to as "Seller"), and THE X. X. XXXXX COMPANY, a
Texas corporation, its successors or assigns (herein referred to as "Buyer").
Seller and Buyer are sometimes together referred to herein as "Parties".
W I T N E S S E T H:
WHEREAS, Seller owns certain oil and gas, mineral and royalty interests
situated in Alabama, Louisiana and Mississippi; and
WHEREAS, Seller desires to sell and Buyer desires to acquire these
interests and related assets on the terms and conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, Seller and Buyer hereby agree as follows:
ARTICLE 1 - DEFINITIONS
The following terms, as used herein, shall have the following meanings:
1.1 "AGREEMENT" shall mean this Purchase and Sale Agreement between
Seller and Buyer.
1.2 "ASSETS" shall mean the following described assets and properties
associated with the properties more particularly described on Exhibit "A"
attached hereto (except to the extent constituting Excluded Assets):
(a) all oil, gas, mineral and royalty interests owned by Seller which
are severed from the surface rights;
(b) all coal, lignite, bauxite and any other mineral rights of any kind
and character owned by Seller and which are severed from the surface
rights;
(c) the Personal Property and Incidental Rights;
(d) the Inventory Hydrocarbons;
(e) except to the extent constituting Excluded Assets, any and all
interests owned by Seller which relate to the Assets, or which Seller
is entitled to receive by reason of any participation, joint venture,
farm-in, farm-out, joint operating agreement or other agreement, oil,
gas and other
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mineral leases, permits, licenses, concessions, leasehold estates, net
revenue interests, executory interests, net profit interests, working
interests, reversionary interests, fee and term mineral interests,
royalty and overriding royalty interests, and any other interests of
Seller in Hydrocarbons;
(f) all claims and causes of action of Seller arising from acts,
omissions, or events or damage to or destruction of the Assets, except
as specifically reserved by Seller in this Agreement, occurring prior
to the Effective Time; and
(g) fee lands described on Exhibit B attached hereto.
1.3 "ASSUMED OBLIGATIONS" shall mean except as otherwise provided in
Section 15 below:
(a) all Environmental Obligations or Liabilities, and (b) all
liabilities, duties, and obligations that arise on or after the
Effective Time from ownership or operation of the Assets including, but
not limited to:
(i) all liabilities and obligations of Seller from and after
the Effective Time until Closing and of Buyer on or after Closing, with
respect to compliance with all applicable rules, regulations, statutes,
permits and orders, including, but not limited to, plugging and
abandoning any xxxxx, the restoration of any well sites, tank battery
sites and gas plant sites, the proper removal, disposal and abandonment
of any wastes or fixtures, and the proper capping and burying of all
flow lines, which are included in the Assets;
(ii) all duties, liabilities and obligations arising on or
after the Effective Time under any contracts or agreements affecting
the Assets in existence at the Effective Time, and all obligations with
respect to gas production, sales or processing imbalances with third
parties;
(iii) all duties, liabilities, and obligations that arise
under the Assets and burdens on production; and
(iv) all other duties, liabilities, and obligations assumed by
Buyer under this Agreement.
1.4 "CLOSING" shall be as defined in Article 10.1.
1.5 "CLOSING DATE" shall be as defined in Article 10.1.
1.6 "EFFECTIVE TIME" shall mean 7:00 a.m., Central Daylight Time on
November 1, 1998.
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1.7 "ENVIRONMENTAL OBLIGATIONS OR LIABILITIES" shall mean all
liabilities, obligations, expenses (including without limitation, all attorney
fees), fines, penalties, costs, claims, suits or damages (including natural
resource damages) of any nature, including personal injury or wrongful death,
associated with the assets, including: (i) pollution or contamination of soil,
groundwater or air, and any other contamination of or adverse effect upon the
environment, (ii) underground injection activities and waste disposal (iii)
clean-up responses, remedial control or compliance costs including the required
cleanup or remediation of spills, pits, ponds, or lagoons including any
subsurface or surface pollution caused by such spills, pits, ponds, or lagoons,
(iv) noncompliance with applicable land use, permitting, surface disturbance,
licensing or notification requirements and (v) violation of any federal, state
or local environmental or land use law.
1.8 "EXCLUDED ASSETS" shall mean the following:
(a)(i) all trade credits, accounts receivable, notes receivable and
other receivables attributable to Seller's interest in the Assets with
respect to any period of time prior to the Effective Time; (ii) all
deposits, cash, checks or drafts in process of collection, cash
equivalents and funds attributable to Seller's interest in the Assets
with respect to any period of time prior to the Effective Time;
and (iii) all proceeds, benefits, income or revenues accruing (and any
security or other deposits made) with respect to the Assets prior to
the Effective Time;
(b) all corporate, financial, and tax records of Seller; however, Buyer
shall be entitled to receive copies of any records which directly
relate to any Assumed Obligations, or which are necessary for Buyer's
ownership, administration, or operation of the Assets;
(c) except as otherwise provided in Section 13.1, all rights, titles,
claims and interests of Seller (i) under any policy or agreement of
insurance or indemnity; (ii) under any bond; or (iii) to any insurance
or condemnation proceeds or awards;
(d) all Hydrocarbons produced from or attributable to the Assets with
respect to all periods prior to the Effective Time, together with all
proceeds from or of such Hydrocarbons;
(e) claims of Seller for refund of or loss carry forwards with respect
to production, windfall profit, severance, ad valorem or any other
taxes attributable to any period prior to the Effective Time, or income
or franchise taxes;
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(f) all amounts due or payable to Seller as adjustments or refunds
under any contracts or agreements (including take-or-pay claims)
affecting the Assets, respecting periods prior to the Effective Time;
(g) all amounts due or payable to Seller as adjustments to insurance
premiums related to the Assets with respect to any period prior to the
Effective Time; and
(8) any working interest owned by Seller in the Assets.
1.9 "HYDROCARBONS" SHALL MEAN CRUDE OIL, NATURAL GAS, CASINGHEAD GAS,
CONDENSATE, SULPHUR, NATURAL GAS LIQUIDS AND OTHER LIQUID OR GASEOUS
HYDROCARBONS (INCLUDING CO2), and shall also refer to all other minerals of
every kind and character, including, but not limited to any coal, bauxite, and
lignite rights which may be covered by or included in the Assets.
1.10 "INVENTORY HYDROCARBONS" shall mean all merchantable minerals
produced from or attributable to the Assets prior to the Effective Time which
have not been sold by Seller or the operator of the Assets involved therein and
are in storage at the Effective Time.
1.11 "PERSONAL PROPERTY AND INCIDENTAL RIGHTS" shall mean all right,
title and interest of Seller, if any, in and to or derived from the following
insofar as the same do not constitute Excluded Assets and are assignable and
attributable to, appurtenant to, incidental to, or used for the operation of the
Assets:
(a) all easements, rights-of-way, permits, licenses, servitudes or
other interests;
(b) all equipment and other personal property, inventory, spare parts,
tools, fixtures, pipelines, platforms, tank batteries, appurtenances,
and improvements situated upon the Assets and used or held for use in
connection with the development or operation of the Assets or the
production, treatment, storage, compression, processing or
transportation of Hydrocarbons from or in the Assets;
(c) all contracts, agreements, and title instruments to the extent
attributable to and affecting the Assets in existence at Closing,
including all Hydrocarbon sales, purchase, gathering, transportation,
treating, marketing, exchange, processing, fractionating contracts,
oil, gas and other mineral leases, and joint operating agreements; and
(d) copies of all files, land files, well files, gas and oil sales
contract files, gas processing files, division order
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files, abstracts, title opinions, and all other books, files and
records, information and data including computer software programs used
for land records and accounting, and all rights thereto of Seller
insofar as the same are directly related to and necessary to the
realization of value by Buyer of the Assets and to the extent the
transfer thereof is not prohibited by existing contractual obligations.
1.12 "PURCHASE PRICE" shall be as defined in Article 3.1.
1.13 "NET REVENUE" shall mean all income attributable to the Assets and
the Hydrocarbons to be derived therefrom, net of Buyer's expenses directly
associated with the ownership of the Assets and the Hydrocarbons, including
property taxes, transfer taxes, operating expenses (associated with any working
interest) and costs associated with ASSUMED OBLIGATIONS.
ARTICLE 2 - PURCHASE AND SALE
2.1 PURCHASE AND SALE. Subject to the terms and conditions of this
Agreement, and the elections of Seller under Section 2.2 hereof, Seller agrees
to sell and convey to Buyer, and Buyer agrees to purchase and pay for the Assets
and to assume the Assumed Obligations as provided for in Section 3.3.
2.2 PERFORMANCE DEPOSIT. On or before two (2) business days from the
date a fully executed copy of this agreement is actually delivered to Buyer's
office, Buyer will pay by wire transfer to Bank of Montreal Trust Company,
subject to the terms of a mutually acceptable escrow agreement, U.S.
$1,300,000.00 in good and immediately available funds, as a performance deposit
("Performance Deposit") on the Assets to be transferred to Buyer hereunder. This
Performance Deposit is solely to assure the performance of Buyer pursuant to the
terms and conditions of this Agreement. If Buyer, through no fault of Seller,
fails, refuses or is unable for any reason (including failure to obtain
financing) to close the transaction in accordance with the terms hereof, Seller
may, at its sole option, retain the Performance Deposit as agreed liquidated
damages and not as a penalty. In the event, however, either Buyer or Seller
refuses to close pursuant to the provisions of Section 6.5 hereof, the
Performance Deposit shall be returned as provided herein. If Closing occurs,
Seller shall credit Buyer with the amount of the Performance Deposit toward the
total Purchase Price at Closing.
ARTICLE 3 - PURCHASE PRICE AND PAYMENT
3.1 PURCHASE PRICE. Subject to adjustment as set forth in 3.1, the
Purchase Price for the Assets shall be thirteen million dollars
($13,000,000.00), and the back-in after payout described in Section 11.3 below.
The Purchase Price includes consideration for
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Buyer assuming all plugging, replugging, abandonment, removal, disposal, and
restoration obligations, if any, as provided in Section 3.3, and acquiring the
Inventory Hydrocarbons.
At Closing, the Purchase Price shall be reduced by lease bonus income
from leases granted after October 15, 1998, through the Closing, and by the
Performance Deposit. The adjusted purchase price, together with purchase price
adjustments, shall be paid by wire transfer in immediately available funds to
Seller or its Trust Account. Buyer shall be responsible for state sales tax, if
any.
3.2 FINAL SETTLEMENT. Within 120 days after Closing, Seller shall
provide to Buyer, for Buyer's concurrence, an accounting (the "Final Settlement
Statement") of the actual amounts of Seller's and Buyer's credits for the
adjustments set out in this Section 3.2. Buyer shall have the right for 30 days
after receipt of the Final Settlement Statement to audit and take exceptions to
such adjustments. Any disagreements shall be resolved on a best efforts basis by
Seller and Buyer. Those credits agreed upon by Buyer and Seller shall be netted
and the final settlement shall be paid as directed in writing by the receiving
party, on final adjustment by the party owing it (the "Final Settlement").
The Purchase Price shall be adjusted as follows:
(a) The Purchase Price shall be adjusted upward by the following
("Seller's Credits"):
(i) an amount equal to the sum of any upward adjustments
provided elsewhere in this Agreement; and
(ii) any other amount agreed upon by any Seller and Buyer in
writing prior to Closing.
(b) The Purchase Price shall be adjusted downward by the following
("Buyer's Credits"):
(i) the total sales value of all Hydrocarbons sold from the
Assets after the Effective Time and for which Seller is actually paid
by any third party after the Effective Time, all of which are
attributable to the Assets, any other monies collected by the Seller
with respect to the ownership or operation of the Assets after the
Effective Time for activities which occur after the Effective Time;
(ii) the amount of all unpaid ad valorem, property,
production, excise, severance and similar taxes and assessments (but
not including income taxes), which taxes and assessments become due and
payable or accrue to the Assets prior to the Effective Time, which
amount shall, where possible, be computed based upon the tax rate and
values
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applicable to the tax period in question; otherwise, the amount of the
adjustment under this paragraph shall be computed based upon such taxes
assessed against the applicable portion of the Assets for the
immediately preceding tax period just ended;
(iii) an amount equal to the sum of any downward adjustments
provided elsewhere in this Agreement;
(iv) any other amount agreed upon by any Seller and Buyer in
writing prior to Closing.
3.3 PLUGGING, REPLUGGING, ABANDONMENT, REMOVAL, DISPOSAL, AND
RESTORATION. Upon Closing, Buyer shall assume all of Seller's plugging,
replugging, abandonment, removal, disposal and restoration obligations, if any,
associated with the Assets, and the necessary and proper capping and burying of
all associated flow lines. Buyer shall be responsible for the plugging and
abandonment of any xxxxx drilled and the removal of any structures placed on the
Assets, to the extent Seller has any such obligations. All plugging, replugging,
abandonment, removal, disposal, and restoration operations, if any, shall be
conducted in a good and workmanlike manner.
ARTICLE 4 - SELLER'S REPRESENTATIONS AND WARRANTIES
4.1. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and
warrants to Buyer as of the date hereof and the Closing Date that:
(a) Seller is a Delaware corporation, duly organized, validly existing,
and in good standing and is duly authorized to carry on its business in
the states of Alabama, Louisiana and Mississippi;
(b) Seller has all requisite power and authority to carry on its
business as presently conducted, to enter into this Agreement and the
other documents and agreements contemplated hereby, and to perform its
obligations under this Agreement and the other documents and agreements
contemplated hereby. The consummation of the transactions contemplated
by this Agreement will not violate, nor be in conflict with, any
provision of its governing documents or any agreement or instrument to
which it is a party or by which it is bound or any judgment, decree,
order, statute, rule, or regulation applicable to Seller (except any
provision contained in agreements customary in the oil and gas industry
relating to (1) the preferential right to purchase all or any portion
of the Assets; (2) required consents to transfer and related
provisions; (3) maintenance of uniform interest provisions;
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and (4) any other third-party approvals or consents contemplated
herein);
(c) this Agreement, and all documents and instruments required
hereunder to be executed and delivered by Seller at Closing, constitute
legal, valid and binding obligations of Seller in accordance with its
respective terms;
(d) there are no bankruptcy or receivership proceedings pending, being
contemplated by, or, to the actual knowledge of Seller, threatened
against Seller;
(e) there are no Environmental Obligations or Liabilities of which the
Seller is aware;
(f) there are no claims, demands, losses, damages, costs expenses,
causes of action, pending lawsuits or judgments of any kind or
character with respect to any liabilities and obligations or alleged or
threatened liabilities and obligations, including claims for personal
injury, illness, disease, wrongful death, damage to property, liability
based on strict liability or condition of the Assets attributable to or
arising out of the Assumed Obligations of which the Seller is aware;
(g) there are no challenges to the Seller's ownership of the Assets of
which the Seller is aware;
(h) Except as reflected on Exhibit "C", Seller has not sold any of the
Assets since acquiring the Assets from the Federal Intermediate Credit
Bank of Xxxxxxx;
(i) Except as will be released immediately prior to Closing, Seller is
not aware of any liens on the Assets nor has the Seller mortgaged,
pledged or hypothecated any of the Assets since acquiring the Assets
from the Federal Intermediate Credit Bank of Xxxxxxx;
(j) Seller's corporate resolutions have been fully executed and
delivered to Buyer verifying the execution, delivery and performance of
this Agreement and the transactions contemplated hereunder have been
duly and validly authorized by all requisite authorizing action,
corporate, partnership or otherwise on the part of Seller; and,
(k) Seller will execute any transfer orders, division orders, or
letters in lieu thereof, necessary to transfer production proceeds from
Seller to Buyer after Closing and any instruments necessary to correct
any inaccurate descriptions of the Assets.
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ARTICLE 5 - BUYER'S REPRESENTATIONS AND WARRANTIES
5.1 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to Seller as of the date hereof and the Closing Date that:
(a) THE X. X. XXXXX COMPANY is a Texas corporation duly organized,
validly existing, and in good standing and is duly organized to carry
on business in the state of Texas;
(b) it has all requisite power and authority to carry on its business
as presently conducted, to enter into this Agreement and the other
documents and agreements contemplated hereby, to purchase the Assets on
the terms described in this Agreement, and to perform its other
obligations under this Agreement and the other documents and agreements
contemplated hereby. The consummation of the transactions contemplated
by this Agreement will not violate, nor be in conflict with, any
provision of Buyer's articles of incorporation, partnership
agreement(s), by-laws or governing documents, or any material agreement
or instrument to which Buyer is a party or by which it is bound, or any
judgment, decree, order, statute, rule or regulation applicable to
Buyer;
(c) the execution, delivery and performance of this Agreement and the
transactions contemplated hereunder have been duly and validly
authorized by all requisite authorizing action, corporate, partnership
or otherwise on the part of the Buyer;
(d) this Agreement, and all documents and instruments required
hereunder to be executed and delivered by Buyer at Closing, will
constitute legal, valid and binding obligations of Buyer in accordance
with their respective terms;
(e) there are no bankruptcy, reorganization or receivership proceedings
pending, being contemplated by, or to the actual knowledge of Buyer,
threatened against Buyer;
(f) Buyer is an experienced and knowledgeable investor in the oil and
gas business. Prior to entering into this Agreement, Buyer was advised
by and has relied solely on its own expertise and legal, tax and other
professional counsel concerning this Agreement, the Assets and the
value thereof;
(g) Buyer is acquiring the Assets for its own account, not with a view
toward, and for the sale in connection with, any distribution thereof,
nor with any intention of distributing or selling any interests in the
Assets in violation of the Securities Act of 1933 or any other
applicable federal or state securities laws and regulations. In
entering into this transaction, Buyer has complied with securities laws
and
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regulations which may be applicable. The foregoing notwithstanding,
Buyer shall have the right to assign all or part of its rights
hereunder at Closing, to no more than five additional parties;
(h) Buyer has arranged, or will arrange, to have available by the
Closing Date sufficient funds to enable the Buyer to pay in full the
Purchase Price as herein provided in 3.1 and otherwise to perform its
obligations under this Agreement; and
(i) Buyer has arranged to comply with all applicable laws, ordinances,
rules and regulations in connection with the Assets purchased.
ARTICLE 6 - ACCESS TO INFORMATION AND INSPECTIONS, AND
TITLE/ENVIRONMENTAL DEFECTS
6.1 TITLE FILES. Promptly after the execution of this Agreement and
until the Closing Date, Seller shall permit Buyer and its representatives at
reasonable times during normal business hours to examine, in Seller's offices at
their actual location, to inspect all Seller's files including but not limited
to abstracts of title, title opinions, title files, ownership maps, lease files,
assignments, division orders, payout statements and agreements pertaining to the
Assets insofar as the same may now be in existence and in the possession of
Seller. No warranty of any kind is made by Seller as to the information so
supplied, and Buyer agrees that any conclusions drawn therefrom are the result
of its own independent review and judgment.
6.2 OTHER FILES. Prior to the execution of this Agreement, Seller has
made available to Buyer, for its inspection, certain records and data in
possession of Seller, or its agents, which are directly related to or constitute
a portion of the Assets, and certain other files, records, and data pertaining
to the Assets. The Data furnished by Seller is believed by Seller to be accurate
and representative. No warranty of any kind is made by Seller as to the
information so supplied, and Buyer agrees that any conclusions drawn therefrom
are the result of its own independent review and judgment.
6.3 CONFIDENTIALITY AGREEMENT. All such information made available to
Buyer shall be maintained confidential by Buyer until Closing. Any
confidentiality agreement Buyer has previously executed with Seller with respect
to the Assets shall continue in force until Closing, at which time such
agreement shall terminate. Buyer shall further take whatever reasonable steps
which may be necessary to ensure that Buyer's employees, consultants and agents
comply with the provisions of this Section 6.3.
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6.4 INSPECTIONS. By the execution of this Agreement, Seller grants its
permission to Buyer and its representatives, at reasonable times and at their
sole risk, cost and expense, to conduct reasonable inspections of the Assets;
provided, however, Buyer shall repair any damage to the Assets resulting from
such inspections and Buyer does hereby indemnify and hold harmless Seller from
and against any and all losses, costs, damages, obligations, claims,
liabilities, expenses (including court costs and attorney's fees), or causes of
action arising from Buyer's inspection and observation of the Assets, including,
without limitation, claims for personal injuries or death of employees of the
Buyer, its contractors, agents, consultants and representatives, and property
damages.
6.5 TITLE AND ENVIRONMENTAL DEFECTS - NOTICE, ADJUSTMENTS AND
TERMINATION. Upon execution of and pursuant to the terms of this Agreement,
Buyer shall have the right to conduct its investigation into the status of the
title of the Assets and the physical and environmental condition of the Assets.
Such investigation or inspection shall be reasonable and shall be conducted at
such time and in such manner as is mutually agreed to by the Parties. If, in the
course of conducting such investigation, Buyer discovers significant
environmental matters or title defects materially affecting the value of Assets,
in Buyer's sole discretion, Buyer may, no later than ten days prior to the
Closing Date, notify Seller in writing specifying such defects, the Assets
affected thereby and Buyer's estimate of (i) in the case of non-producing net
acreage, as described on the schedule of non-producing net acreage attached
hereto as Exhibit "D", the net reduction in acreage covered by such defects,
and/or (ii) in the case of producing acreage, as described on the schedule of
substantial producing acreage attached hereto as Exhibit "E", the net reduction
in value of the producing acreage covered by such defects. Material defects are
defined as those which collectively exceed (i) 10% of the net non-producing
acreage, or (ii) 5% of the allocated value of the substantial producing acreage.
Buyer acknowledges that Seller produced Exhibit "E" as a matter of convenience
for Buyer, and Buyer shall satisfy itself as to the accuracy of the information
contained therein.
If Buyer fails to notify Seller no later than ten days prior to Closing
of the defects, the defects will be deemed waived, the Parties shall proceed
with Closing, Seller shall be under no obligation to correct the defects and
Buyer shall assume the risks related to the Assets. If Buyer notifies Seller of
the defects no later than ten days before Closing and if such defects are, in
the opinion of Seller, capable of being corrected prior to the Closing Date,
Seller may, but shall be under no obligation to, correct at its own costs and
expense, such defects on or before the Closing Date.
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If Seller, in Buyer's sole discretion, fails to correct the defects
prior to Closing, and Buyer's estimate of such defects collectively exceed ten
percent (10%) of the net non-producing acreage, or 5 percent (5%) of the value
of the substantial producing acreage, which calculation Buyer shall supply to
Seller at the time of notification of any such defects, Buyer shall have the
right to terminate this Agreement by so notifying Seller in writing. Upon such
termination, Seller shall return the Performance Deposit to Buyer within ten
(10) days of receipt of the notice of termination and neither Party shall have
any further obligations hereunder. Otherwise, Closing shall occur and Seller
shall make a reasonable effort to correct the defects within ninety (90) days of
Closing. If Seller, in Buyer's sole discretion, fails to correct the defects
within such ninety (90) day period, Seller shall refund to Buyer a defect value
amount that is mutually agreed to by the Parties and Buyer shall transfer that
part of the Assets affected thereby to Seller. In the event that the Parties
cannot mutually agree upon the defect value amount, the decision shall be
submitted to binding arbitration under the rules of the American Arbitration
Association.
ARTICLE 7 - TITLE AND OTHER MATTERS
7.1 NO WARRANTY OR REPRESENTATION. SELLER SHALL CONVEY SELLER'S
INTERESTS IN AND TO THE ASSETS TO BUYER SUBJECT TO ALL ROYALTIES, OVERRIDING
ROYALTIES, BURDENS, AND ENCUMBRANCES, AND WITHOUT ANY WARRANTY OF TITLE, EXPRESS
OR IMPLIED, AS PROVIDED IN THE FORM OF ASSIGNMENT, XXXX OF SALE AND CONVEYANCE
ATTACHED AS EXHIBIT "B" HERETO. SELLER MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, WITH RESPECT TO THE ACCURACY, COMPLETENESS, OR MATERIALITY
OF THE INFORMATION, RECORDS, AND DATA NOW, HERETOFORE, OR HEREAFTER MADE
AVAILABLE TO BUYER IN CONNECTION WITH THE ASSETS OR THIS AGREEMENT (INCLUDING,
WITHOUT LIMITATION, ANY DESCRIPTION OF THE ASSETS, QUALITY OR QUANTITY OR
HYDROCARBON RESERVES, IF ANY, PRODUCTION RATES, RECOMPLETION OPPORTUNITIES,
DECLINE RATES, GAS BALANCING INFORMATION, POTENTIAL FOR PRODUCTION OF
HYDROCARBONS FROM THE ASSETS, OR ANY OTHER MATTERS CONTAINED IN ANY OTHER
MATERIAL FURNISHED TO BUYER BY SELLER OR BY SELLER'S AGENTS OR REPRESENTATIVES).
ANY AND ALL SUCH DATA, INFORMATION AND MATERIAL FURNISHED BY SELLER IS PROVIDED
AS A CONVENIENCE ONLY AND ANY RELIANCE ON OR USE OF SAME IS AT BUYER'S SOLE
RISK.
7.2 BUYER'S TITLE REVIEW. Buyer specifically assumes the risk of
description and title to the Assets. In addition, Buyer acknowledges that prior
to Closing it will have reviewed the title material in Seller's possession and
made available to Buyer and examined the status of title of the Assets to be
assigned. Buyer acknowledges that it will have conducted all necessary due
diligence with respect to title matters; and will have satisfied itself with the
status of Seller's title and agrees if this
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transaction closes, to accept same AS IS, WHERE IS and without any
title warranties, express or implied.
ARTICLE 8 - COVENANTS OF SELLER
8.1 COVENANTS OF SELLER PENDING CLOSING.
(a) From and after the date of execution of this Agreement and until
the Closing and subject to Article 8.2 below and the constraints of
applicable operating and other agreements, Seller shall operate,
manage, and administer the Assets in a good and workmanlike manner
consistent with its past principles and shall carry on its business
with respect to the Assets in substantially the same manner as before
execution of this Agreement. Seller shall: (1) from and after the date
of execution of this Agreement until Closing, not be entitled to
continue to grant, extend, ratify, or amend, as it deems necessary, oil
and gas leases on the Assets in the normal course of its business
without the express written consent of Buyer; (2) consult with, inform,
and advise Buyer regarding all material matters concerning the
operations, management, and administration of the Assets; (3) obtain
Buyer's written approval prior to voting under any operating unit,
joint venture, partnership, or similar agreement; and (4) not approve
or elect to go non-consent as to any proposed well or plug and abandon
or agree to plug and abandon any well without Buyer's prior written
approval. On any matter requiring Buyer's approval under this Section
8.1(a), Buyer shall respond in writing within five (5) days to Seller's
request for approval and failure of Buyer to respond to Seller's
request for approval within such time shall release Seller from the
obligation to obtain Buyer's approval before proceeding on such matter.
(b) Seller shall promptly notify Buyer of any suit, demand, action, or
other proceeding received by Seller after this Agreement is executed
before any court, arbitrator, or governmental agency and any cause of
action filed after the Effective Time which relates to the Assets or
which might result in impairment or loss of Seller's interest in any
portion of the Assets or which might hinder or impede the operation of
the Assets.
8.2 LIMITATIONS ON SELLER'S COVENANTS PENDING CLOSING. To the extent
Seller is not the operator of any of the Assets, the obligations of Seller in
Section 8.1 above, which have reference to operations or activities which
normally or pursuant to existing contracts are carried out or performed by the
operator, shall be construed to require only that Seller use all reasonable
efforts (without being obligated to incur any expense or institute any cause of
action) to cause the operator of such Assets to take such actions or render such
performance within the constraints of the applicable operating agreements and
other applicable agreements.
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ARTICLE 9 - CLOSING CONDITIONS
9.1 SELLER'S CLOSING CONDITIONS. The obligations of the Seller under
this Agreement are subject, at the option of Seller, to the satisfaction, at or
prior to the Closing, of the following conditions:
(a) all representations and warranties of Buyer contained in this
Agreement shall be true in all material respects at and as of the
Closing as if such representations and warranties were made at and as
of the Closing, and Buyer shall have performed and satisfied all
agreements required by this Agreement to be performed and satisfied by
Buyer at or prior to the Closing;
(b) the execution, delivery, and performance of this Agreement and the
transactions contemplated thereby have been duly and validly authorized
by all necessary action, corporate, partnership or otherwise, on the
part of Buyer;
(c) all necessary consents of and filings with any state or federal
governmental authority or agency relating to the consummation of the
transactions contemplated by this Agreement shall have been obtained,
accomplished or waived, except to the extent that such consents and
filings are normally obtained, accomplished or waived after Closing;
(d) as of the Closing Date, no suit, action or other proceedings
(excluding any such matter initiated by Seller) shall be pending or
threatened before any court or governmental agency seeking to restrain
Seller or prohibit the Closing or seeking damages against Seller as a
result of the consummation of this Agreement.
9.2 BUYER'S CLOSING CONDITIONS. The obligations of Buyer under this
Agreement are subject, at the option of Buyer, to the satisfaction at or prior
to the Closing, of the following conditions:
(a) all representations and warranties of Seller contained in this
Agreement shall be true in all material respects at and as of the
Closing as if such representations and warranties were made at and as
of the Closing, and Seller shall have performed and satisfied all
agreements required by this Agreement to be performed and satisfied by
Seller at or prior to the Closing;
(b) the execution, delivery, and performance of this Agreement and the
transactions contemplated thereby have been duly and validly authorized
by all necessary action, corporate or otherwise, on the part of Seller;
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(c) all necessary consents and filings with any state or federal
governmental authority or agency relating to the consummation of the
transactions contemplated by this Agreement shall have been obtained,
accomplished or waived, except to the extent that such consents and
filings are normally obtained, accomplished or waived after Closing;
(d) as of the Closing Date, no suit, action, or other proceedings
(excluding any such matter initiated by Buyer) shall be pending or
threatened before any court or governmental agency seeking to restrain
Buyer or prohibit the Closing or seeking damages against Buyer as a
result of the consummation of this Agreement;
(e) as of five (5) days preceding the Closing Date, (i) Buyer shall
have confirmed the information relating to actual income, as more
particularly set forth on Exhibit "F", is true and correct for the time
period covered thereby, plus or minus a tolerance of five percent (5%);
and (ii) Buyer, to its sole satisfaction, shall have confirmed gross
cash receipts attributable to leasing activities related to the Assets,
total at least $326,876.76, in accord with the schedule of lease
revenues attached hereto as Exhibit "G", for the time period covered
thereby, plus or minus a tolerance of five percent (5%); and
9.3 NOTICE ON CLOSING CONDITIONS. In the event either party shall
determine that any of the Closing Conditions required of the other party have
not been satisfied, such party shall give written notice to the other party,
with five (5) days' opportunity to cure, setting forth the specific Closing
Condition which has not been satisfied. In the event the other party is then
unable to satisfy such Closing Condition, either party may waive its objections
and proceed to Closing or otherwise, the parties' rights and obligations shall
be governed by the terms and provisions of Article 14.
ARTICLE 10 - CLOSING
10.1 CLOSING. The closing of this transaction (the "Closing") shall be
held at the offices of Seller at 1500 Xxxxxx Building, 0000 Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxx 00000 at 10:00 a.m., Central Standard Time, thirty (30) days from
the date a fully executed copy of this agreement is delivered to Buyer's office,
in accord with Section 16.17 hereof; or at such earlier date or place as the
Parties may agree in writing (herein called "Closing Date"). On or before five
(5) business days prior to Closing, Buyer agrees to provide Seller a copy of all
documents prepared by Buyer which Buyer may request Seller to execute at
Closing.
10.2 SELLER'S CLOSING OBLIGATIONS. At Closing, except to the extent
comprising the Excluded Assets, Seller shall deliver to Buyer the Assignment,
Xxxx of Sale, and Conveyance substantially in
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the form attached hereto as Exhibit "B" and such other documents as may
be reasonably necessary to convey all of Seller's interest in the
Assets to Buyer in accordance with the provisions hereof.
10.3 BUYER'S CLOSING OBLIGATIONS. At Closing, Buyer shall deliver to
Seller:
(a) by wire transfer in immediately available funds to the bank account
designated by Seller the Purchase Price of $13,000,000.00 with all
adjustments as set forth in 3.1 above;
(b) a certified resolution of Buyer's Board of Directors evidencing the
authority of Buyer to enter into this Agreement and close the
transaction contemplated thereby.
10.4 JOINT CLOSING OBLIGATIONS. All events of Closing shall each be
deemed to have occurred simultaneously with the other, regardless of when
actually occurring, and each shall be a condition precedent to the other.
ARTICLE 11 - EFFECT OF CLOSING
11.1 ASSUMED OBLIGATIONS; PRE-CLOSING LIABILITIES. Buyer shall assume
all risk and loss with respect to and any change in the condition of the Assets
from the Effective Time until Closing for production of Hydrocarbons through
normal depletion (including the watering-out of any well) and the depreciation
of personal property through ordinary wear and tear. Upon and after Closing,
Buyer shall own the Assets, together with all the rights, duties, obligations,
and liabilities accruing after the Effective date, including the Assumed
Obligations and Buyer's indemnity obligations hereunder. Buyer agrees to assume
and pay, perform, fulfill and discharge all Assumed Obligations. To the extent
not included in Assumed Obligations or otherwise agreed within this Agreement,
or those matters for which Seller is indemnified, Seller agrees to pay, perform,
fulfill and discharge all costs, expenses and liabilities incurred by Seller
with respect to the ownership or operation of the Assets and accruing prior to
Closing.
11.2 AFTER FINAL SETTLEMENT. After Final Settlement, those proceeds
received by or expenses paid by either Seller or Buyer for or on behalf of the
other party with respect to the Assets which were not already included in the
Final Settlement, shall be settled as follows:
(a) Proceeds received by Buyer with respect to sales of Hydrocarbons
produced and sold prior to the Effective Time shall be remitted to
Seller. Proceeds received by Seller with respect to sales of
Hydrocarbons or Inventory Hydrocarbons produced after the Effective
Time shall be paid by Seller to Buyer.
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(b) Proceeds received which cover periods of time both before and after
the Effective Time, shall be allocated on days before versus days after
the Effective Time, unless some more appropriate way of splitting the
proceeds is available.
(c) In the event Seller is audited by Federal Intermediate Credit Bank
of Xxxxxxx pursuant to the Purchase and Sale Agreement made effective
as of August 1, 1993 between Seller and such entity, Buyer will
cooperate with Seller in remitting any proceeds to Seller which should
be thereafter remitted to Federal Intermediate Credit Bank of Xxxxxxx,
pursuant to the terms of such contract.
11.3 BACK-IN AFTER PAYOUT. On the first day of the first calendar month
following the calendar month in which Buyer has received Net Revenue equal to
$13,000,000.00, Buyer will assign an undivided ten percent (10.0%) interest in
and to the Assets to Seller. Such assignment shall be substantially similar to
the form assignment attached hereto as Exhibit "B". Buyer shall provide an
annual statement to Seller indicating Net Revenue which shall detail actual
receipts and expenses attributable to the Assets from all sources for the
calendar year. Seller shall have the right to audit the annual statement and
Buyer's records relating thereto, at Seller's sole cost and expense.
ARTICLE 12 - LIMITATIONS ON WARRANTIES AND REMEDIES
12.1 LIMITATIONS. THE EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER
CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT
LIMITATIONS ANY REPRESENTATION OR WARRANTY WITH RESPECT TO, TITLE TO THE ASSETS,
THE QUALITY, QUANTITY OR VOLUME OF THE RESERVES, IF ANY, OF OIL, GAS OR OTHER
HYDROCARBONS IN OR UNDER THE ASSETS, OR THE ENVIRONMENTAL CONDITION OF THE
ASSETS. THE APPURTENANCES CONVEYED AS PART OF THE ASSETS ARE SOLD HEREUNDER "AS
IS, WHERE IS, AND WITH ALL FAULTS" AND NO WARRANTIES OR REPRESENTATIONS OF ANY
KIND OR CHARACTER, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONDITION, ARE GIVEN BY OR
ON BEHALF OF THE SELLER. IT IS UNDERSTOOD AND AGREED THAT PRIOR TO CLOSING BUYER
SHALL HAVE INSPECTED THE ASSETS FOR ALL PURPOSES AND HAS SATISFIED ITSELF AS TO
THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE AND SUBSURFACE, AND
THAT BUYER ACCEPTS SAME IN ITS "AS IS, WHERE IS, AND WITH ALL FAULTS" CONDITION.
THE WARRANTIES OF SELLER CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU
OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, AND BUYER HEREBY WAIVES ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONDITION, OR
CONFORMITY TO SAMPLES.
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12.2 SURVIVAL. All representations, warranties, covenants, indemnities,
and agreements made herein shall survive the Closing.
ARTICLE 13 - CASUALTY LOSS AND CONDEMNATION
13.1 CASUALTY LOSS. If, prior to the Closing, all or any portion of the
Assets are destroyed by fire or other casualty or if any portion of the Assets
shall be taken by condemnation or under the right of eminent domain (all of
which are herein called "Casualty Loss" and limited to property damage or taking
only), Buyer and Seller must agree prior to Closing either (ii) to delete that
portion of the Assets that is subject to the Casualty loss from the Assets, and
the Purchase Price shall be reduced according to a value mutually agreed upon,
or (ii) for Buyer to proceed with the purchase of such Assets, notwithstanding
any such destruction or taking (without reduction of the Purchase Price) in
which case Seller shall pay, at the Closing, to Buyer all sums paid to Seller by
third parties by reason of the destruction or taking of such Assets and shall
assign, transfer and set over unto Buyer all of the right, title and interest of
Seller in and to any claims, causes of action, unpaid proceeds or other payments
from third parties arising out of such destruction or taking. Prior to Closing,
Seller shall not voluntarily compromise, settle or adjust any amounts payable by
reason of any Casualty Loss without first obtaining the written consent of
Buyer.
ARTICLE 14 - DEFAULT AND REMEDIES
14.1 SELLERS' REMEDIES. Upon failure of Buyer to comply herewith by the
Closing Date, as it may be extended in accordance herewith, or if Seller's
Closing Conditions set forth in Section 9.1 are not satisfied prior to Closing
Date, Seller, at its sole option, may terminate this Agreement and retain the
Performance Deposit, as Seller's sole and exclusive remedies for such default,
all other remedies (except as expressly retained in Section 14.3) being
expressly waived by Seller.
14.2 BUYER'S REMEDIES. Upon failure of Seller to comply herewith by the
Closing Date, as it may be extended in accordance herewith, or if Buyer's
Closing Conditions set forth in Section 9.2 are not satisfied prior to Closing
Date, Buyer, at its sole option, may (i) enforce specific performance or (ii)
terminate this Agreement and receive back the Performance Deposit from Seller,
as Buyer's sole and exclusive remedies for such default, all other remedies
(except as expressly retained in Section 14.3) being expressly waived by Buyer.
14.3 OTHER REMEDIES. Notwithstanding the foregoing, termination of this
Agreement shall not prejudice or impair Buyer's obligations under Sections 6.3
(and the Confidentiality Agreements referenced therein) and 6.4, and such other
portions of this
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Agreement as are necessary to the enforcement and construction of Sections 6.3
and 6.4. The prevailing party in any legal proceeding brought under or to
enforce this Agreement shall be additionally entitled to recover court costs and
reasonable attorney's fees from the non-prevailing party.
14.4 EFFECT OF TERMINATION. In the event of termination of this
Agreement, it and each and every provision thereof shall become void and have no
further effect whatsoever and neither Buyer nor Seller shall have any further
right or duty to the other hereunder, except as provided in this Section.
ARTICLE 15 - ASSUMPTION AND INDEMNITY
15.1 BUYER'S INDEMNITY. With the exception of those items for which
Seller expressly indemnifies Buyer under this Agreement, Buyer agrees to
indemnify, defend and hold Seller harmless from and against any and all claims,
demands, losses, damages, costs, expenses, causes of action or judgments of any
kind or character with respect to all liabilities and obligations or alleged or
threatened liabilities and obligations, including claims for personal injury,
illness, disease, wrongful death, damage to property, liability based on strict
liability or condition of the Assets attributable to or arising out of the
Assumed Obligations (including Buyer's plugging, replugging, abandonment,
removal, disposal, and restoration obligations described in Sections 1.3 and
3.3), Buyer's acts or omissions, the operation of the Assets by Buyer after the
Effective Time, the ownership of the Assets by Buyer after the Effective Time,
or which arise or are asserted after Closing and are attributable to the
ownership or operation of the Assets by Buyer after the Effective Time,
including, without limitation, any interest, penalty, reasonable attorney's fees
and other costs and expenses incurred in connection therewith or the defense
thereof, even if caused in whole or in part by the negligence or strict
liability of Seller, or the condition of the Assets.
15.2 SELLER'S INDEMNITY. Seller shall be responsible for any and all
liabilities, claims, causes of action, overpayment on production, and damages
arising out of the accounting or payment of proceeds of production or other
payments with respect to the Assets, insofar as such liabilities, claims, causes
of action, overpayment on production and damages (collectively "Claims") relate
to or arise out of events prior to the Effective Time and shall defend,
indemnify, and hold Buyer harmless from and against all such Claims. Likewise,
Seller shall retain any benefits arising from underpayments and additional
payments due on production sold prior to the Effective Time. Buyer shall be
responsible for all of said types of Claims insofar as they relate to periods of
time from and after the Effective Time and shall defend, indemnify, and hold
Seller harmless therefrom.
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15.3 BROKER OR FINDER'S FEE. Each party hereby agrees to indemnify and
hold the other harmless from and against any claim for a brokerage or finder's
fee or commission in connection with this Agreement or the transactions
contemplated by this Agreement to the extent such claim arises from or is
attributable to the actions of such indemnifying party, including, without
limitation, any and all losses, damages, attorney's fees, costs and expenses of
any kind or character arising out of or incurred in connection with any such
claim or defending against the same.
15.4 SECURITIES LAWS. Buyer shall protect, indemnify and hold harmless
Seller from and against any and all claims, costs, damages and liabilities
arising under applicable state or federal securities laws in connection with the
sale of the Assets or any portion thereof by Seller to Buyer or its assignees as
provided herein or the subsequent sale or other disposition of the Assets or any
portion thereof by Buyer, its affiliates or assignees.
15.5 MISCELLANEOUS. The indemnities of Seller herein shall not cover or
include any amounts which Buyer may legally recoup from other third party owners
without judicial process, or which Buyer is reimbursed by any third party. With
respect to any claim for which an indemnifying party may be required to provide
partial or full indemnity, or for which a party may be obligated to defend in
warranty, such party shall have the right, but not the obligation, to
participate fully in the defense of any such claim. Reasonable attorneys' fees,
court costs, interest, penalties, and other expenses incurred in connection with
the defense of such claims shall be included in Seller's and Buyer's indemnities
herein. All indemnities of Buyer and Seller herein shall extend to and cover the
parent, subsidiary and affiliated companies and the officers, directors,
employees, and agents of the indemnified party and its parent, subsidiary and
affiliated companies.
ARTICLE 16 - MISCELLANEOUS
16.1 PUBLIC ANNOUNCEMENTS. The Parties hereto agree that prior to
Closing, prior to making any public announcement or statement with respect to
the transaction contemplated by this Agreement, the party desiring to make such
public announcement or statement shall consult with the other party hereto and
exercise its best efforts to (i) agree upon the text of a joint public
announcement or statement to be made by both of such Parties; or (ii) obtain
written approval of the other party hereto to the text of a public announcement
or statement to be made solely by Seller or Buyer, as the case may be. Nothing
contained in this paragraph shall be construed to require either party to obtain
approval of the other party hereto to disclose information with respect to the
transaction contemplated by this Agreement to any state or federal governmental
authority or agency to the extent (i) required by applicable law or by any
applicable rules, regulations or orders of
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any governmental authority or agency having jurisdiction; or (ii) necessary to
comply with disclosure requirements of the New York Stock Exchange or other
recognized exchange or over the counter, and applicable securities laws.
16.2 FILING AND RECORDING OF ASSIGNMENTS, ETC. Buyer shall be solely
responsible for all filings and recording of assignments and other documents
related to the Assets and for all fees connected therewith, and upon request
Buyer shall advise Seller of the pertinent recording data. Seller shall not be
responsible for any loss to Buyer because of Buyer's failure to file or record
documents correctly or promptly.
16.3 FURTHER ASSURANCES AND RECORDS.
(a) After the Closing each of the Parties will execute, acknowledge and
deliver to the other such further instruments, and take such other
action, as may be reasonably requested in order to more effectively
assure to said party all of the respective properties, rights, titles,
interests, estates, and privileges intended to be assigned, delivered
or inuring to the benefit of such party in consummation of the
transactions contemplated hereby.
(b) Buyer agrees to maintain the files and records of Seller that are
acquired pursuant to this Agreement until August 1, 2000. In addition
to any other audit rights granted hereunder, Buyer shall provide Seller
and its representatives reasonable access to and the right to copy such
files and records, at the Seller's cost, for the purposes of (i)
preparing and delivering any accounting provided for under this
Agreement and adjusting, prorating and settling the charges and credits
provided for in this Agreement; (ii) complying with any law, rule or
regulations affecting Seller's interest in the Assets prior to the
Closing Date; (iii) preparing any audit of the books and records of any
third party relating to Seller's interest in the Assets prior to the
Closing Date, or responding to any audit prepared by such third
parties; (iv) preparing tax returns; (v) responding to or disputing any
tax audit; or (vi) asserting, defending or otherwise dealing with any
claim or dispute under this Agreement.
(c) To the extent not obtained or satisfied as of Closing, Seller
agrees to continue to use all reasonable efforts, but without any
obligation to incur any cost or expense in connection therewith, and to
cooperate with Buyer's efforts to
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obtain for Buyer (i) access to files, records and data relating to the
Assets in the possession of third parties; and (ii) access to xxxxx
constituting a part of the Assets operated by third parties for
purposes of inspecting same.
(d) Buyer shall comply with all current and subsequently amended
applicable laws, ordinances, rules, and regulations applicable to the
Assets.
16.4 NOTICES. Except as otherwise expressly provided herein, all
communications required or permitted under this Agreement shall be in writing
and any communication or delivery hereunder shall be deemed to have been duly
given and received when actually delivered to the address of the party to be
notified as set forth below and addressed as follows:
If to Buyer:
The X. X. XXXXX Company
Attn: Xxxx X. Xxxxxxxx, Xx.
0000 Xxxxxxxxx, #000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copy to:
Xxxxxx Xxxxxxxxx Xxxxxxxx, P.C.
Attn: Xxxx Xxxx Xxxxxx
0000 Xxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to Seller: Xxxxxx Petroleum Corporation
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx
President & COO
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Provided, however, that any notice required or permitted under this
Agreement will be effective if given orally within the time provided, so long as
such oral notice is followed by written notice thereof in the manner provided
herein within twenty-four (24) hours thereafter. Any party may, by written
notice so delivered to the other, change the address to which delivery shall
thereafter be made.
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16.5 INCIDENTAL EXPENSES. Buyer shall bear and pay (i) all State or
local government sales, transfer, gross proceeds, or similar taxes incident to
or caused by the transfer of the Assets to Buyer; (ii) all documentary, transfer
and other State and local government taxes incident to the transfer of the
Assets to Buyer; and (iii) all filing, recording or registration fees for any
assignment or conveyance delivered hereunder. Each party shall bear its own
respective expenses incurred in connection with the Closing of this transaction,
including its own consultants' fees, attorneys' fees, accountants' fees, and
other similar costs and expenses.
16.6 ANTITRUST LAWS. If the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act
of 0000 (xxx "XXX Xxx") is applicable to this transaction, then each party shall
have the responsibility for filing with the Federal Trade Commission and the
Department of Justice their respective notifications and reports and any
supplemental information which may be reasonably requested in connection with
the HSR Act, which reports and notifications and supplemental information will
comply in all material respects with the requirements of the HSR Act.
16.7 WAIVER. Any of the terms, provisions, covenants, representations,
warranties or conditions hereof may be waived only by a written instrument
executed by the party waiving compliance. Except as otherwise expressly provided
in this Agreement, the failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect such party's right
to enforce the same. No waiver by any party of any condition, or of the breach
of any term, provision, covenant, representation or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or of the breach of any
other term, provisions, covenant, representation or warranty.
16.8 BINDING EFFECT; ASSIGNMENT. All the terms, provisions, covenants,
obligations, indemnities, representations, warranties and conditions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the Parties hereto and their respective successors and assigns. The rights of
each party under this Agreement are personal to that party and may not be
assigned or transferred to any other party, firm, corporation or other entity,
without the prior, express and written consent of the other party.
16.9 TAXES.
(a) Seller and Buyer agree that this transaction may be subject to the
reporting requirement of Section 1060 of the
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Internal Revenue Code of 1986, as amended, and that, therefore, IRS
Form 8594, Asset Acquisition Statement, may be required to be filed for
this transaction. In the event the Parties mutually agree that a filing
of Form 8594 is required by Buyer, the Parties will confer and
cooperate in the preparation and filing of necessary forms on behalf of
Buyer.
(b) Subject to Seller's rights as provided in Section 11.3 and any tax
consequences to Seller associated therewith, Seller shall be
responsible for and shall pay all taxes attributable to or arising from
the ownership or operation of the Assets prior to the Effective Time.
Buyer shall be responsible for and shall pay all taxes attributable to
or arising from the ownership or operation of the Assets after the
Effective Time. Each party shall be responsible for its own federal
income taxes, if any, as may result from this transaction.
16.10 AUDITS. It is expressly understood and agreed that Seller retains
its right to receive its proportionate share of the proceeds from any audits
relating to activities prior to the Effective Time. Buyer is under no obligation
to conduct any such audits.
16.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MISSISSIPPI, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS OTHERWISE APPLICABLE TO SUCH DETERMINATIONS.
16.12 ENTIRE AGREEMENT. Except for the Confidentiality Agreements
referenced in Section 6.3, this Agreement embodies the entire agreement between
the Parties (superseding all prior agreements, arrangements and understandings
related to the subject matter hereof), and may be supplemented, altered,
amended, modified or revoked by writing only, signed by the Parties hereto. The
headings herein are for convenience only and shall have no significance in the
interpretation hereof.
16.13 EXHIBITS. All Exhibits and Schedules attached to this Agreement,
and the terms of those Exhibits and Schedules which are referred to in this
Agreement, are made a part hereof and incorporated herein by reference.
16.14 DELIVERY OF FILES AFTER CLOSING. The Assets set out in Section
1.12(iii) and (iv) shall be provided by Seller to Buyer as soon as possible
after the Closing Date at a location to be specified by Seller. Any
transportation, postage, or delivery costs from Seller's offices shall be at
Buyer's sole cost, risk and expense.
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16.15 SURVIVAL. All of the representations, warranties, indemnities,
covenants and agreements of or by the Parties hereto shall survive the execution
and delivery of the Assignment, Xxxx of Sale and Conveyance.
16.16 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each and every counterpart shall be deemed for all purposes
one (1) agreement.
16.17 AGREEMENT AS OFFER. The offer contained in this Agreement shall
expire if not accepted by Seller by 5:00 P.M. on Friday, November 6, 1998. In
the event a fully executed copy of this Agreement has not been actually
delivered to Buyer by Federal Express by such date and time, the offer contained
herein will expire without further notice.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
SELLER:
XXXXXX PETROLEUM CORPORATION
By: /s/ XXXXXXX X. XXXXXX
---------------------------------------
Xxxxxxx X. Xxxxxx, President
BUYER:
THE X.X. XXXXX COMPANY
By: /s/ XXXX X. XXXXXXXX, XX.
---------------------------------------
Xxxx X. Xxxxxxxx, Xx., President
30
X. X. XXXXXX COMPANY
0000 XXXXXXXXX #000
XXXXXX, XXXXX 00000
November 12, 1998
Xxxxxx Petroleum Corporation
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, President and COO
Re: Amendment to Purchase and Sale Agreement between Xxxxxx Petroleum
Corporation ("Seller") and the X.X. Xxxxxx Company ("Buyer"), effective
November 1, 1998 ("Agreement")
Gentlemen:
Buyer and Seller do hereby amend the Agreement in the manner set forth below.
All terms defined in the Agreement shall have the same meaning when used herein:
Section 11.3 of the Agreement is hereby deleted and the following provision
substituted therefor:
11.3 Net Profits Interest. From and after the date at which aggregate
Net Revenue equals $13,000,000 (hereinafter called "Payout"), Buyer
shall pay, within 30 days following the end of each calendar quarter,
to Seller 10% of all Net Profits (defined below) received by Buyer
after Payout. The term "Net Profits" as used in this Agreement shall
mean the Net Revenue received by Buyer after Payout during the subject
calendar quarter. The definition of Net Revenue as defined in Section
1.13 shall not include (i) general and administrative expenses incurred
by Buyer (excluding bona fide third party expenses) directly associated
with the ownership of the Assets, or (ii) costs or revenue associated
with participation in a working interest. Buyer also agrees that leases
to affiliates, if made will be at then current competitive lease rates.
The net profits interest created hereby does not encumber the Assets or
"run with the land," and Buyer shall have the authority and ability to
transfer (via arm's-length transaction with a bona fide third party)
all or any portion of the Assets free of this net profits interest;
however, any proceeds received by Buyer from any such disposition
(including any retained interest) shall be treated as income
attributable to the Assets for the purpose of computing Net Revenue.
Prior to Payout, Buyer shall provide an annual statement to Seller
indicating Net Revenue which shall detail actual receipts and expenses
attributable to Assets from all sources for the calendar year. After
Payout, Buyer shall provide quarterly statements which shall detail
receipts and expenses. Seller shall have
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the rights to audit all such statements and Buyer's records relating
thereto, with advance notice, during regular business hours and at
Seller's sole cost and expense.
The first sentence of Section 3.1 of the Agreement is hereby amended by
inserting the words net profits interest therein, so that this sentence now
reads as follows:
Subject to adjustments as set forth in 3.1, the Purchase Price for the
Assets shall be thirteen million dollars ($13,000,000.00), and the Net
Profits Interest described in Section 11.3 below. [remainder unchanged]
The third sentence of Section 6.5 of this Agreement is hereby amended by
inserting the words gas imbalances therein, so that this sentence now reads as
follows:
If, in the course of conducting such investigation, Buyer discovers
significant environmental matters, title defects, or gas imbalances
materially affecting the value of Assets.... [remainder unchanged]
Buyer shall have until 10:00 a.m. Dallas, Texas time on Monday, November 16,
1998, to initiate the wire transfer of funds required by Section 2.2 of the
Agreement.
Except as amended hereby, the Agreement remains in full force and effect in
accordance with its terms.
THE X.X. XXXXXX COMPANY
By: /s/ Xxxx X. Xxxxxxxx, Xx.
------------------------------------
Xxxx X. Xxxxxxxx, Xx., President
Dated: November 13, 1998 Director and Sole Shareholder
XXXXXX PETROLEUM CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
----------------------------------
Dated: November 13, 1998 Title: President
---------------------------------
