EXHIBIT 2.1
AGREEMENT FOR PURCHASE AND SALE
GREAT RIVER OIL & GAS CORPORATION
AS SELLER
AND
PETROCORP INCORPORATED
AS BUYER
TABLE OF CONTENTS
ARTICLE I ASSETS
1.01 AGREEMENT TO SELL AND PURCHASE 1
1.02 ASSETS 1
1.03 EXCLUDED AND RESERVED ASSETS 2
ARTICLE II CONSIDERATION
2.01 PURCHASE PRICE 2
2.02 DEPOSIT 2
2.03 ALLOCATED VALUES 2
ARTICLE III EFFECTIVE TIME
3.01 OWNERSHIP OF ASSETS 3
ARTICLE IV TITLE MATTERS
4.01 TITLE EXAMINATION PERIOD 3
4.02 TITLE DEFECTS 3
4.03 NOTICE OF TITLE DEFECTS 4
4.04 REMEDIES FOR TITLE DEFECTS 4
4.05 ASSIGNMENT. 5
4.06 PREFERENTIAL RIGHTS TO PURCHASE. 6
4.07 CONSENTS TO ASSIGNMENT 7
4.08 GOVERNMENTAL CONSENTS 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER
5.01 EXISTENCE 7
5.02 CORPORATE POWER 8
5.03 EXECUTION 8
5.04 BROKERS 8
5.05 BANKRUPTCY 8
5.06 SUITS 8
5.08 HYDROCARBON SALES 8
5.09 REVENUES AND EXPENSES 9
5.10 ENVIRONMENTAL, HEALTH AND SAFETY 9
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER
6.01 EXISTENCE 9
6.02 CORPORATE POWER 9
6.03 EXECUTION 10
6.04 BROKERS 10
6.05 BANKRUPTCY 10
6.06 SUITS 10
6.07 QUALIFICATIONS 10
6.08 INVESTMENT 10
ARTICLE VII OPERATION OF AND ACCESS TO THE ASSETS
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7.01 OPERATION OF THE ASSETS PRIOR TO CLOSING 10
7.02 OPERATION OF THE ASSETS AFTER CLOSING 10
7.03 ACCESS 11
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER
8.01 REPRESENTATIONS 11
8.02 PERFORMANCE 11
8.03 PENDING MATTERS 11
8.04 EXECUTION AND DELIVERY OF CLOSING DOCUMENTS 11
ARTICLE IX CONDITIONS TO OBLIGATIONS OF BUYER
9.01 REPRESENTATIONS 11
9.02 PERFORMANCE 12
9.03 PENDING MATTERS 12
9.04 EXECUTION AND DELIVERY OF CLOSING DOCUMENTS 12
9.05 ADVERSE CHANGE 12
ARTICLE X CLOSING
10.01 TIME AND PLACE OF CLOSING 12
10.02 ADJUSTMENTS TO PURCHASE PRICE AT CLOSING 12
10.03 POST-CLOSING ADJUSTMENTS TO PURCHASE PRICE 13
10.04 TRANSFER TAXES 13
10.05 ACTIONS OF SELLER AT CLOSING 14
10.06 ACTIONS OF BUYER AT CLOSING 14
10.07 FURTHER COOPERATION 14
ARTICLE XI TERMINATION
11.01 RIGHT OF TERMINATION 15
11.02 DISTRIBUTION OF DEPOSIT UPON TERMINATION 15
11.03 EFFECT OF TERMINATION 15
ARTICLE XII ASSUMPTION AND INDEMNIFICATION
12.01 ASSUMPTION. 16
12.02 INDEMNIFICATION BY BUYER 16
12.03 INDEMNIFICATION BY SELLER 16
12.04 NEGLIGENCE AND FAULT 17
12.05 EXCLUSIVE REMEDY 17
12.06 EXPENSES 17
ARTICLE XIII LIMITATIONS ON REPRESENTATIONS AND WARRANTIES
13.01 DISCLAIMERS OF REPRESENTATIONS AND
WARRANTIES 17
13.02 WAIVER OF TEXAS DTPA 18
13.03 SURVIVAL 18
13.04 CASUALTY LOSS 18
ARTICLE XIV MISCELLANEOUS
14.01 DOCUMENT RETENTION 19
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14.02 ENTIRE AGREEMENT 20
14.03 WAIVER 20
14.04 PUBLICITY 21
14.05 CAPTIONS 21
14.06 AFFILIATE 21
14.07 NO THIRD PARTY BENEFICIARIES 21
14.08 ASSIGNMENT 21
14.09 GOVERNING LAW 21
14.10 NOTICES 21
14.11 SEVERABILITY 22
14.12 GUARANTOR 22
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Exhibit A - Description of Properties
Exhibit B - Allocated Values
Exhibit C - Form of Assignment and Xxxx of Sale
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AGREEMENT FOR PURCHASE AND SALE
This Agreement for Purchase and Sale (this "Agreement") is made and entered
into this 5th day of June, 1997, by and between Great River Oil & Gas
Corporation, a Delaware corporation ("Seller"), and PetroCorp Incorporated, a
Texas corporation ("Buyer"). Buyer and Seller are collectively referred to
herein as the "Parties" and sometimes individually referred to as a "Party."
W I T N E S S E T H:
WHEREAS, Seller is the owner of the Assets (as hereinafter defined); and
WHEREAS, Seller is willing to sell to Buyer, and Buyer is willing to
purchase from Seller, the Assets, all upon the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the mutual benefits derived and to be
derived from this Agreement by each Party, Seller and Buyer hereby agree as
follows:
ARTICLE I
ASSETS
1.01 AGREEMENT TO SELL AND PURCHASE. Subject to the terms and conditions
of this Agreement, Buyer agrees to purchase from Seller and Seller agrees to
sell, transfer, assign and convey to Buyer the Assets.
1.02 ASSETS. Subject to Section 1.03, the term "Assets" shall mean:
(a) An undivided 50% of Seller's right, title and interest in and to
all of the oil, gas and mineral leases, and the leasehold estates created
thereby, and any other real property interests described in Exhibit A-1
(such interest in such leases, estates and property being collectively
referred to as the "Riceville Properties");
(b) All of Seller's right, title and interest in and to all of the
oil, gas and mineral leases, and the leasehold estates created thereby, and
any other real property interests described in Exhibit A-2 (collectively,
the "Non-Riceville Properties") (the Riceville Properties and Non-Riceville
Properties are hereafter referred to collectively as the "Properties" or
individually as a "Property");
(c) All of Seller's right, title and interest in and to the following:
(i) all rights with respect to the use and occupation of the surface of and
the subsurface depths related to the Properties; (ii) all rights with
respect to any pooled, communitized or unitized acreage by virtue of any
Property being a part thereof, including all production from such pool or
unit allocated to any such Property, and all interests in any xxxxx within
any unit or pool allocated to any such Property; (iii) all personal and
movable property, equipment, fixtures and improvements to the extent now or
as of the Closing Date (as hereinafter defined) allocable to or used in
connection with the exploration, development or operation of the
Properties; (iv) all contracts, agreements,
leases and other arrangements to the extent related to the Properties; (v)
all non-confidential and non-proprietary, books, records, files, muniments
of title, reports and similar documents and materials to the extent related
to the Non-Riceville Properties; (vi) copies of all non-confidential and
non-proprietary, books, records, files, muniments of title, reports and
similar documents and materials to the extent related to the Riceville
Properties; and (vii) all geologic and non-proprietary seismic or other
geophysical data to the extent that Seller has the right to transfer same
to Buyer and that Buyer has the right to use same, without the consent of
any other person and without the payment of any fee, penalty or other
consideration to the extent related to the Properties.
1.03 EXCLUDED AND RESERVED ASSETS. Notwithstanding the foregoing, the
Assets shall not include, and there is excepted, reserved and excluded from the
sale contemplated hereby, (i) any accounts receivable or accounts payable
accruing before the Effective Time, (ii) all corporate, financial, tax,
geological and geophysical (except as provided in Section 1.02(c)(vii) above),
and legal records of Seller subject to the attorney client privilege (other than
to the extent related directly to the Non-Riceville Properties), (iii) all
books, records, files, muniments of title, reports and similar documents and
materials to the extent related to the Riceville Properties; (iv) all oil, gas
or other hydrocarbon (collectively, "Hydrocarbons") produced from or
attributable to the Assets with respect to all periods prior to the Effective
Time and all proceeds attributable thereto, (v) any refund of costs, taxes or
expenses borne by Seller or Seller's predecessor in title attributable to the
period prior to the Effective Time and received within one year following
Closing, (vi) any and all proceeds from the settlements of contract disputes
with purchasers of Hydrocarbons from the Properties, including without
limitation settlement of take-or-pay disputes, insofar as said disputes are
attributable to periods of time prior to the Effective Time and asserted no
later than one year following Closing, and (vii) any and all proceeds from
settlements with regard to reclassification of gas produced from the Assets
insofar as said proceeds are attributable to periods of time prior to the
Effective Time and insofar as said reclassifications are initiated within one
year following Closing.
ARTICLE II
CONSIDERATION
2.01 PURCHASE PRICE. The total consideration for the purchase, sale and
conveyance of the Assets to Buyer is Buyer's payment to Seller of the sum of
$11,050,000, as adjusted in accordance with the provisions of Article X (the
"Purchase Price"). The Purchase Price shall be paid by Buyer to Seller at
Closing (as hereinafter defined) by means of a completed wire transfer to the
account of Seller, Account No. 000-0-000000, Reference: in favor of Georgia
Gulf, at The Chase Manhattan Bank, N.A., New York, New York, ABA Routing Number
0000-0000-0 (or to such other bank and account designated by Seller to Buyer in
writing at least two days prior to the Closing).
2.02 DEPOSIT. Concurrently with the execution of this Agreement, Buyer
has paid to an escrow agent an xxxxxxx money deposit in the amount of $1,105,000
(the "Deposit"), which amount is equal to 10% of the unadjusted Purchase Price.
The Deposit (i) shall be applied against the Purchase Price if the Closing
occurs, as provided in Section 10.02(b)(v), or (ii) shall be otherwise
distributed in accordance with the terms of this Agreement.
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2.03 ALLOCATED VALUES. The Purchase Price is allocated to each of the
Properties in Exhibit B (the "Allocated Values"). Seller and Buyer acknowledge
that the Allocated Values are a proper allocation of the Purchase Price.
ARTICLE III
EFFECTIVE TIME
3.01 OWNERSHIP OF ASSETS. If the transactions contemplated hereby are
consummated in accordance with the terms and provisions hereof, the ownership of
the Assets shall be transferred from Seller to Buyer on the Closing Date (as
hereafter defined) but effective as of 7:00 a.m. local time on January 1, 1997
(the "Effective Time"). Subject to the other provisions of this Agreement,
Seller shall be entitled to all of the rights of ownership (including, without
limitation, the right to all production, proceeds of production and other
proceeds), and shall be subject to the duties and obligations of such ownership,
attributable to the Assets for the period of time prior to the Effective Time.
Subject to the other provisions of this Agreement, Buyer shall be entitled to
all of the rights of ownership (including, without limitation, the right to all
production, proceeds of production and other proceeds), and shall be subject to
the duties and obligations of such ownership, attributable to the Assets for the
period of time from and after the Effective Time.
ARTICLE IV
TITLE MATTERS
4.01 TITLE EXAMINATION PERIOD. Commencing the day of the execution date
of this Agreement and ending on June 25, 1997 (the "Title Examination Period"),
Seller shall (i) permit Buyer and/or its representatives to examine, at all
reasonable times in Seller's offices, all non-proprietary abstracts of title,
title opinions, title files, ownership maps, lease files, assignments, division
orders, operating records and agreements pertaining to the Assets insofar as
same may now be in existence and in the possession of Seller and that Seller is
permitted to reveal to Buyer without restriction, and (ii) subject to third-
party operator approval and the provisions of Section 7.03 hereof, permit Buyer
and/or its representatives, at reasonable times and at Buyer's sole risk, cost
and expense, to conduct reasonable inspections of the Assets. Buyer has engaged
counsel to render a title opinion with respect to the Riceville Properties.
Notwithstanding anything herein to the contrary, if Buyer does not receive such
title opinion before June 25, 1997, then the Title Examination Period shall be
extended until June 30, 1997, and the Closing Date shall be extended to July 3,
1997.
4.02 TITLE DEFECTS. An Asset shall be deemed to have a "Title Defect" if
Seller has less than Defensible Title (as hereinafter defined) in any material
respect. For purposes of this Agreement, the term "Defensible Title" means
that, subject to and except for the Permitted Encumbrances (as hereinafter
defined):
(a) Seller is (i) entitled to receive not less than the percentage set
forth in Exhibit A hereto as the "Net Revenue Interest" of all Hydrocarbons
produced, saved and marketed from any Property, any well, or any unit of
which the Property is a part and that are allocated to such Property, all
without reduction, suspension or termination of such interest throughout
the duration of the life of such Property, except as specifically set forth
in Exhibit A, and
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(ii) obligated to bear the percentage of the costs and expenses relating to
the maintenance, development and operation of such Property, well or unit
not greater than the "Working Interest" shown in Exhibit A, without
increase throughout the duration of the life of such Property, except as
specifically set forth in Exhibit A; and
(b) The title of Seller is free and clear of all liens, encumbrances
and material defects.
Notwithstanding the foregoing, the loss of or reduction of interest in any
Property or portion thereof following the Effective Time due to (x) any election
or decision made by Seller in accordance with Article VII, or (y) expiration of
the primary or secondary term of any lease, shall not constitute a Title Defect.
4.03 NOTICE OF TITLE DEFECTS. If Buyer discovers any material Title
Defect affecting the Assets, Buyer shall notify Seller thereof in writing prior
to the expiration of the Title Examination Period. Any matters that may
otherwise constitute Title Defects but that are not specifically raised in
writing by Buyer to Seller prior to the expiration of the Title Examination
Period shall be deemed to have been waived by Buyer; provided however that
matters arising by, through or under Seller shall not be deemed to have been so
waived. Upon the receipt of notice of any Title Defect from Buyer, Seller shall
have the option, but not the obligation, to attempt to cure such Title Defect.
If any unwaived Title Defect is not cured by Closing, and the aggregate
Allocated Value of the Assets affected thereby exceeds 25% of the Purchase
Price, then the Parties shall delay the Closing up to 30 days and use reasonable
efforts to cure such Title Defect. If the aggregate Allocated Value of such
Assets does not exceed 25% of the Purchase Price or if following the expiration
of such extension period any Title Defect remains un-cured, the provisions of
Section 4.04 shall apply.
4.04 REMEDIES FOR TITLE DEFECTS. In the event that any Title Defect is
not cured on or before Closing, Seller may, at its sole election:
(a) forever indemnify Buyer against all liability, loss, cost and
expense resulting from such Title Defect (in an amount not to exceed the
Allocated Value of the Property that is subject to such Title Defect), in
which event the Parties shall proceed to Closing and the Property that is
subject to such Title Defect shall be conveyed by Seller to Buyer subject
to such Title Defect, with no payment or settlement at Closing as a result
of such Title Defect and no reduction or adjustment to the Purchase Price,
provided however that Seller may not make the election in this Section
4.04(a) for Title Defects resulting from a discovery by Buyer that Seller
owned, as of the Effective Time, a Net Revenue Interest in a Property that
is less than the Net Revenue Interest for such Property set forth on
Exhibit A and with respect to which the Parties have agreed upon the amount
by which such Net Revenue Interest is less;
(b) credit Buyer pursuant to Section 10.02(b)(iii) with an amount
agreed upon by Seller and Buyer as being the amount of the proportionate
reduction in the Allocated Value of the Property resulting from such Title
Defect (and in the event that such Title Defect is the result of a
discovery by Buyer that Seller owned, as of the Effective Time, a Net
Revenue Interest in a Property that is less than the Net Revenue Interest
for such Property set forth on Exhibit A, then Buyer and Seller agree that
the proportion of reduction to the Purchase Price shall be equal to the
product of the Allocated Value for such Property and the percentage
reduction in such Net
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Revenue Interest as a result of such Title Defect), in which event the
Parties shall proceed to Closing and the Property that is subject to such
Title Defect shall be conveyed by Seller to Buyer subject to such Title
Defect and Buyer shall pay to Seller the Purchase Price as so adjusted; or
(c) retain the Property subject to such Title Defect and reduce the
Purchase Price by an amount equal to the Allocated Value of such Property,
in which event the Parties shall proceed to Closing and the Property that
is subject to such Title Defect shall be retained by Seller and Buyer shall
pay to Seller the Purchase Price as so adjusted;
provided, however, that in the event Seller has elected to proceed under clause
(b) preceding and Buyer and Seller have failed to agree, by the then scheduled
Closing Date, on the proportionate reduction in the Allocated Value of the
affected Property resulting from such Title Defect (which agreement Buyer and
Seller shall use good faith efforts to reach), Seller shall then elect to
proceed with respect to such Title Defect under clause (a) or (c) preceding.
Notwithstanding anything to the contrary, in no event shall there be any
adjustments to the Purchase Price or other remedies provided by Seller pursuant
to this Section 4.04 for Title Defects until the aggregate exceeds 2% of the
Purchase Price. In the event that the aggregate value of all Title Defects
exceeds 2% of the Purchase Price, then any adjustments to the Purchase Price or
other remedies provided by Seller pursuant to this Section 4.04 shall be
applicable to all such Title Defects. In the event that the aggregate value of
all Title Defects and Purchase Price adjustments pursuant to Sections 4.06 and
4.07 exceeds 25% of the Purchase Price, then either Party may, at its option,
terminate this Agreement.
4.05 ASSIGNMENT. The documents to be executed and delivered by Seller to
Buyer, transferring title to the Assets as required hereby, including the
Assignment and Xxxx of Sale attached hereto as Exhibit C (the "Assignment"),
shall be subject to the Permitted Encumbrances and, except with respect to the
special warranty of title set forth in the Assignment, shall be without warranty
of any kind whatsoever, express, implied or statutory, but shall provide full
substitution and subrogation of Buyer to all representations and warranties of
any predecessors of Seller in title. The term "Permitted Encumbrances" shall
mean any of the following matters:
(a) the terms, conditions, restrictions, exceptions, reservations,
limitations and other matters contained in the agreements, instruments and
documents that create or reserve to Seller its interests in any of the
Assets;
(b) any (i) undetermined or inchoate liens or charges constituting or
securing the payment of expenses that were incurred incidental to
maintenance, development, production or operation of the Assets or for the
purpose of developing, producing or processing Hydrocarbons therefrom or
therein, and (ii) materialman's, mechanics', repairman's, employees',
contractors', operators' or other similar liens or charges for liquidated
amounts arising in the ordinary course of business (x) that Seller has
agreed to assume or pay pursuant to the terms hereof, (y) for which Seller
is responsible for paying or releasing at Closing, or (z) for which Buyer
has agreed to assume or pay pursuant to the terms hereof;
(c) any liens for taxes and assessments not yet delinquent or, if
delinquent, that are being contested in good faith in the ordinary course
of business;
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(d) any liens or security interests created by law or reserved in oil
and gas leases for royalty, bonus or rental, or created to secure
compliance with the terms of the agreements, instruments and documents that
create or reserve to Seller its interests in the Assets;
(e) any obligations or duties affecting the Assets to any municipality
or public authority with respect to any franchise, grant, license or
permit, and all applicable laws, rules, regulations and orders of any
Governmental Authority (as hereinafter defined);
(f) any (i) easements, rights-of-way, servitudes, permits, surface
leases and other rights in respect of surface operations, pipelines or the
like, and (ii) easements for pipelines, telephone lines, power lines and
other similar rights-of-way, on, over or in respect of property owned or
leased by Seller or over which Seller owns rights-of-way, easements,
permits or licenses;
(g) all lessors' royalties, overriding royalties, net profits
interests, carried interests, production payments, reversionary interests
and other burdens on or deductions from the proceeds of production created
or in existence as of the Effective Time that do not operate to reduce the
Net Revenue Interests of Seller as set forth in Exhibit A;
(h) preferential rights to purchase or similar agreements;
(i) third party consents to assignments or similar agreements;
(j) all rights to consent by, required notices to, filings with, or
other actions by any Governmental Authority in connection with the sale or
conveyance of oil and gas leases or interests therein;
(k) production sales contracts; division orders; contracts for sale,
purchase, exchange, refining or processing of Hydrocarbons; unitization and
pooling designations, declarations, orders and agreements; operating
agreements; agreements of development and area of mutual interest
agreements (to the extent such agreements do not operate to reduce the Net
Revenue Interests of Seller as set forth in Exhibit A); gas balancing or
deferred production agreements; processing agreements; plant agreements;
pipeline, gathering and transportation agreements; injection, repressuring
and recycling agreements; carbon dioxide purchase or sale agreements; salt
water or other disposal agreements; seismic or geophysical permits or
agreements; and any and all other agreements that are ordinary and
customary in the oil, gas, sulphur and other mineral exploration,
development or extraction business, or in the business of processing of gas
and gas condensate production for the extraction of products therefrom; and
(l) all defects and irregularities affecting the Assets that
individually or in the aggregate do not operate to reduce the Net Revenue
Interests of Seller, increase the proportionate share of costs and expenses
of leasehold operations attributable to or to be borne by the Working
Interests of Seller, or otherwise interfere materially with the operation,
value or use of the Assets, taken as a whole.
4.06 PREFERENTIAL RIGHTS TO PURCHASE. Seller shall use its reasonable
efforts, but without any obligation to incur any cost or expense in connection
therewith, to comply with all preferential right to
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purchase provisions relative to any of the Assets prior to Closing. Seller shall
promptly notify Buyer if any preferential purchase rights are exercised or if
the requisite period has elapsed without said rights having been exercised. If a
third party who has been offered an interest in any Asset pursuant to a
preferential right to purchase elects prior to Closing to purchase all or part
of such Asset pursuant to the aforesaid offer, the interest or part thereof so
affected will be eliminated from the Assets, the Purchase Price will be reduced
by the Allocated Value attributable thereto and, subject to Section 4.04, the
Parties shall proceed to Closing. If any waiver of such preferential purchase
rights is not obtained by Closing, and the aggregate Allocated Value of the
Assets affected thereby exceeds 25% of the Purchase Price, then the Parties
shall delay the Closing up to 30 days and use reasonable efforts to obtain such
waivers. If following such extension, waivers of preferential purchase rights
affecting Assets exceeding 25% of the Purchase Price remain un-obtained (by the
passage of time or otherwise) either party may elect to terminate this
Agreement. If the aggregate Allocated Value of such Assets does not exceed 25%
of the Purchase Price, the Assets subject to such preferential purchase right
shall be conveyed to Buyer at Closing subject to such preferential right. If a
third party elects to purchase all or a part of an interest in any Property
subject to a preferential right to purchase after the Closing Date, Buyer shall
be obligated to convey said interest to such third party and shall be entitled
to the consideration for the sale of such interest or part thereof.
4.07 CONSENTS TO ASSIGNMENT. Seller shall use its reasonable efforts,
but without any obligation to incur any cost or expense in connection therewith,
to obtain all consents to assignment (except for the governmental consents to
assignment described in Section 4.08) prior to Closing. If any such consents to
assignment are not obtained by Closing, and the aggregate Allocated Value of the
Assets affected thereby exceeds 25% of the Purchase Price, then the Parties
shall delay the Closing up to 30 days and use reasonable efforts to obtain such
consents. If the aggregate Allocated Value of such Assets does not exceed 25%
of the Purchase Price or if following the expiration of such extension period
any consent remains un-obtained and un-waived (by the passage of time or
otherwise), the Assets subject to such consent shall be removed from the Assets,
the Purchase Price reduced by the Allocated Value attributable thereto, and
subject to Section 4.04, the Parties shall proceed to Closing.
4.08 GOVERNMENTAL CONSENTS. At Closing, Seller shall execute and deliver
to Buyer such assignments of federal and state leases as require consent to
assignment, on the forms required by the Governmental Authority having
jurisdiction thereof. Seller and Buyer will use their best efforts after
Closing to obtain approval of such assignments, but Seller shall have no
obligation to incur any costs or expenses in connection therewith. Until such
approvals are obtained, Seller shall continue to hold title to the affected
Assets as nominee for Buyer. If any such consent is finally denied, then
Seller, at its sole option, may elect:
(a) to continue to hold title to the affected Assets as Buyer's
nominee pursuant to a nominee agreement containing the terms described in
this Section 4.08, or
(b) to retain the affected Assets subject to such denied consent.
In the event Seller elects the option set forth in Section 4.08(b), within
30 days of such election (i) Seller shall refund to Buyer the Allocated Value of
such retained Assets, (ii) Buyer shall deliver to Seller all proceeds of
production (net of all expenses, expenditures, capital expenses, royalties and
other costs of operation incurred or paid by Buyer, but excluding mortgage
interest and any burdens or encumbrances created by Buyer (all of which shall be
released prior to any payment to or from Seller
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pursuant to this Section) attributable to the affected Assets from the Effective
Time to the date of reassignment of such Assets from Buyer to Seller, and (iii)
Buyer shall execute any and all conveyances or other instruments necessary or
desirable to fully vest title to such Assets in Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
5.01 EXISTENCE. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Seller has full
corporate power, right and authority to carry on its business as such is now
being conducted and as contemplated to be conducted.
5.02 CORPORATE POWER. Seller has the corporate power and right to enter
into and perform this Agreement and the transactions contemplated hereby. The
consummation of the transactions contem plated by this Agreement will not
violate, nor be in conflict with:
(a) any provision of Seller's articles or certificate of incorporation
or by-laws;
(b) except for any preferential purchase rights and consents to
assignment, any material agreement or instrument to which Seller is a party
or by which Seller is bound; or
(c) any judgment, order, ruling or decree applicable to Seller as a
party in interest or any law, rule or regulation applicable to Seller.
5.03 EXECUTION. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby are duly and validly
authorized by all requisite corporate action on the part of Seller. This
Agreement constitutes the legal, valid and binding obligation of Seller
enforceable in accordance with its terms.
5.04 BROKERS. No broker or finder is entitled to any brokerage or
finder's fee, or to any commission, based in any way on agreements, arrangements
or understandings made by or on behalf of Seller or any affiliate of Seller for
which Buyer has or will have any liabilities or obligations (contingent or
otherwise).
5.05 BANKRUPTCY. There are no bankruptcy, reorganization or arrangement
proceedings pending, being contemplated by or to the knowledge of Seller
threatened against Seller or any affiliate of Seller.
5.06 SUITS. There is no suit, action, claim, investigation or inquiry by
any person or entity or by any Governmental Authority and no legal,
administrative or arbitration proceeding pending or, to Seller's knowledge,
threatened against Seller or any affiliate of Seller that will have a Material
Adverse Effect. For purposes of this Agreement, "Material Adverse Effect" shall
mean a material adverse effect on the use, ownership or operation of the Assets,
taken as a whole, or an occurrence or condition that materially hinders or
impedes the consummation of the transactions contemplated by this Agreement.
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5.07 AFE'S. To the best of Seller's knowledge, Schedule 5.07 contains a
true and complete list as of the date of this Agreement of all material
authorities for expenditures (collectively, "AFE's") to drill or rework xxxxx on
the Properties or for capital expenditures that have been proposed by any person
on or after the Effective Time. For the purposes of this subsection an AFE
shall be material if, net to Seller's interest, such AFE exceeds $25,000. For
purposes of this Agreement, the phrase "to the best of Seller's knowledge" shall
mean to best knowledge of Seller's management or other of Seller's
representatives having decision-making authority.
5.08 HYDROCARBON SALES. To the best of Seller's knowledge, (x) Seller is
not obligated by virtue of: (i) a prepayment arrangement under any contract for
the sale of Hydrocarbons and containing a "take or pay" provision, (ii) a
production payment, or (iii) any other arrangement, other than gas balancing
arrangements, to deliver Hydrocarbons produced from the Assets at some future
time without then or thereafter receiving payment for the production
commensurate with Seller's ownership in and to the Assets, and (y) Seller is not
subject to any penalties or other payments under any gas transportation or other
agreement as a result of the delivery of quantities of gas from the Assets in
excess of the contract requirements.
5.09 REVENUES AND EXPENSES. To the best of Seller's knowledge, (i) all
ad valorem, property, production, severance, excise and similar taxes and
assessments based on or measured by the ownership of property included in the
Assets or the production of Hydrocarbons from or attributable to the Assets, or
the receipt of proceeds therefrom, that have become due and payable before the
Effective Time have been properly paid, (ii) all rentals, royalties, excess
royalty, overriding royalty interests and other payments due under or with
respect to the Assets have been properly and timely paid, (iii) all material
expenses payable under the terms of contracts comprising the Assets have been
properly and timely paid except for such expenses as are being currently paid
prior to delinquency in the ordinary course of business and (iv) materially all
of the proceeds from the sale of Hydrocarbons produced from or attributable to
the Assets are being properly and timely paid to Seller by the purchasers of
production without suspension or indemnity other than standard division order
indemnities.
5.10 ENVIRONMENTAL, HEALTH AND SAFETY. To the best of Seller's
knowledge, (i) the operators of the Properties have obtained and maintained in
effect all environmental, health and safety permits, licenses and other
governmental authorizations necessary for the ownership and operation of the
Properties; (ii) Seller, the Properties and the operation thereof are in
material compliance with all such permits, licenses and other governmental
authorizations, and all prior instances of non-compliance have been fully and
finally resolved to the satisfaction of governmental authorities with
jurisdiction; and (iii) no environmental, health or safety claim, demand,
filing, investigation, proceeding, action or suit, is pending or, to the best of
Seller's knowledge, threatened which relates to the Properties or the operation
thereof.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
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6.01 EXISTENCE. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Texas. Buyer has full
corporate power, right and authority to carry on its business as such is now
being conducted and as contemplated to be conducted.
6.02 CORPORATE POWER. Buyer has the corporate power and right to enter
into and perform this Agreement and the transactions contemplated hereby. The
consummation of the transactions contemplated by this Agreement will not
violate, nor be in conflict with:
(a) any provision of Buyer's articles or certificate of incorporation
or by-laws;
(b) any material agreement or instrument to which Buyer is a party or
by which Buyer is bound; or
(c) any judgment, order, ruling or decree applicable to Buyer as a
party in interest or any law, rule or regulation applicable to Buyer.
6.03 EXECUTION. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby are duly and validly
authorized by all requisite corporate action on the part of Buyer. This
Agreement constitutes the legal, valid and binding obligation of Buyer enforce
able in accordance with its terms.
6.04 BROKERS. No broker or finder is entitled to any brokerage or
finder's fee, or to any commission, based in any way on agreements, arrangements
or understandings made by or on behalf of Buyer or any affiliate of Buyer for
which Seller has or will have any liabilities or obligations (contingent or
otherwise).
6.05 BANKRUPTCY. There are no bankruptcy, reorganization or arrangement
proceedings pending, being contemplated by or to the knowledge of Buyer
threatened against Buyer or any affiliate of Buyer.
6.06 SUITS. There is no suit, action, claim, investigation or inquiry by
any person or entity or by any Governmental Authority and no legal,
administrative or arbitration proceeding pending or, to Buyer's knowledge,
threatened against Buyer or any affiliate of Buyer which has or will materially
affect Buyer's ability to consummate the transactions contemplated herein.
6.07 QUALIFICATIONS. Buyer is now, and after Closing shall continue to
be, qualified with all applicable Governmental Authorities to own and operate
the Assets.
6.08 INVESTMENT. 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 legal, tax and other professional
counsel concerning this Agreement, the Assets and the value thereof. In making
the decision to enter into this Agreement and consummate the transactions
contemplated hereby, Buyer has relied solely on the basis of its own independent
due diligence investigation of the Assets and upon the representations made by
Seller in Article V. Buyer is acquiring the Assets for its own account and not
for distribution or resale in any manner that would violate any state or federal
securities law, rule, regulation or order. Buyer understands and acknowledges
that if any of the Assets were held to be securities, they would be restricted
securities.
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ARTICLE VII
OPERATION OF AND ACCESS TO THE ASSETS
7.01 OPERATION OF THE ASSETS PRIOR TO CLOSING. During the period
commencing on the date hereof and terminating upon the Closing or the
termination of this Agreement, Seller shall not, without Buyer's prior consent
(i) propose or conduct any operation with respect to the Assets reasonably
expected to cost Seller in excess of $50,000, (ii) consent to any operation
with respect to the Assets reasonably expected to cost Seller in excess of
$50,000 that is proposed by any third party and for which consent may be given
after the Closing Date, (iii) enter into any contract with a term in excess of 6
months, or (iv) reduce or terminate (or cause to be reduced or terminated) any
insurance coverage now held in connection with the Assets.
7.02 OPERATION OF THE ASSETS AFTER CLOSING. It is expressly understood
and agreed that Seller shall not be obligated to continue operating any of the
Assets following the Closing (except to the extent Seller is so obligated under
applicable joint operating agreements) and Buyer hereby assumes full
responsibility for operating (or causing the operation of) all Assets following
the Closing. Seller does not warrant or guarantee that Buyer will become the
operator under any applicable joint operating agreement(s). Without implying
any obligation on Seller's part to continue operating any Assets after the
Closing, if Seller continues to operate any Assets (other than the Riceville
Properties, for which Seller currently intends to continue as operator)
following the Closing at the request of Buyer or any third party working
interest owner, due to constraints of applicable joint operating agreement(s),
failure of a successor operator to take over operations or other reasonable
cause, such continued operation by Seller shall be for the account of Buyer and
at the sole risk, cost and expense of Buyer.
7.03 ACCESS. Prior to Closing, Seller shall permit Buyer and Buyer's
affiliates, officers, employees, agents and advisors to have reasonable access
to the Assets. Buyer hereby agrees to defend, indemnify, release, protect, save
and hold harmless the Seller Indemnitees (as hereinafter defined) from and
against any and all Claims (as hereinafter defined) arising out of or relating
to the access to the Assets by Buyer, its affiliates, officers, employees,
agents and advisors pursuant to this Section 7.03 and any other due diligence
activity conducted by Buyer or any of Buyer's affiliates, officers, employees,
agents or advisors.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transaction provided for herein
are subject, at the option of Seller, to the fulfillment on or prior to the
Closing Date of each of the following conditions:
8.01 REPRESENTATIONS. The representations and warranties of Buyer herein
contained shall be true and correct in all material respects on the Closing Date
as though made on and as of such date.
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8.02 PERFORMANCE. Buyer shall have performed all material obligations,
covenants and agreements contained in this Agreement to be performed or complied
with by it at or prior to the Closing Date.
8.03 PENDING MATTERS. No suit, action or other proceeding brought by a
party other than Buyer or Seller shall be pending or threatened that seeks to
restrain, enjoin or otherwise prohibit the consummation of the transactions
contemplated by this Agreement.
8.04 EXECUTION AND DELIVERY OF CLOSING DOCUMENTS. Buyer shall have
executed, acknowledged and delivered, as appropriate, to Seller all closing
documents described in Section 10.06.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transaction provided for herein
are subject, at the option of Buyer, to the fulfillment on or prior to the
Closing Date of each of the following conditions:
9.01 REPRESENTATIONS. The representations and warranties of Seller
herein contained shall be true and correct in all material respects on the
Closing Date as though made on and as of such date.
9.02 PERFORMANCE. Seller shall have performed all material obligations,
covenants and agreements contained in this Agreement to be performed or complied
with by it at or prior to the Closing Date.
9.03 PENDING MATTERS. No suit, action or other proceeding brought by a
party other than Buyer or Seller shall be pending or threatened that seeks to
restrain, enjoin, or otherwise prohibit the consummation of the transactions
contemplated by this Agreement.
9.04 EXECUTION AND DELIVERY OF CLOSING DOCUMENTS. Seller shall have
executed, acknowledged and delivered, as appropriate, to Buyer all closing
documents described in Section 10.05.
9.05 ADVERSE CHANGE. The Assets shall not, taken as a whole, have been
materially damaged, lost or destroyed during the period from the date of
execution of this Agreement and the Closing Date where the cost to repair or
replace such exceeds 25% of the Purchase Price.
ARTICLE X
CLOSING
10.01 TIME AND PLACE OF CLOSING. If the conditions referred to in
Articles VIII and IX of this Agreement have been satisfied or waived in writing,
the transactions contemplated by this Agreement (the "Closing") shall take place
at the offices of Seller, Suite 1520 CNG Tower, 0000 Xxxxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxx 00000-0000. The day on which the Closing occurs (the
"Closing Date") shall be June 30, 1997, or as extended (i) pursuant to Section
4.01, 4.03, 4.06 or 4.07 or (ii) by the mutual consent of the Parties.
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10.02 ADJUSTMENTS TO PURCHASE PRICE AT CLOSING. Seller shall prepare
and deliver to Buyer, at least three business days prior to Closing, a closing
statement reflecting the following adjustments to the Purchase Price:
(a) At Closing, the Purchase Price shall be increased by the following
amounts:
(i) all costs and expenses (including royalties, production taxes,
capital expenditures, lease operating expenses and overhead) paid by Seller
that are (x) attributable to the Assets, and (y) attributable to the period
of time from and after the Effective Time;
(ii) the amount of all proceeds actually received by Buyer with
respect to the Assets that are attributable to the period of time prior to
the Effective Time;
(iii) the product of (x) the volume (in thousand cubic feet) of
under-produced gas attributable to the Assets for the period prior to the
Effective Time multiplied by (y) $2.60/Mcf; and
(iv) any other amount provided for in this Agreement or agreed upon by
Seller and Buyer.
(b) At Closing, the Purchase Price shall be decreased by the following
amounts:
(i) the amount of all proceeds actually received by Seller with
respect to the Assets that (x) are attributable to the period of time from
and after the Effective Time, and (y) have not already been remitted to
Buyer in accordance with the provisions below;
(ii) all costs and expenses (including royalties, production taxes,
capital expenditures, lease operating expenses and overhead) paid by Buyer
that are (x) attributable to the Assets, and (y) attributable to the period
of time prior to the Effective Time;
(iii) any amount agreed upon by Buyer and Seller as the value of any
Title Defects as provided in Section 4.04(b);
(iv) the Allocated Value of any Property eliminated from this
Agreement pursuant to Section 4.04(c), Section 4.06 or Section 4.07;
(v) the amount of the Deposit;
(vi) the product of (x) the volume (in thousand cubic feet) of over-
produced gas attributable to the Assets for the period prior to the
Effective Time multiplied by (y) $2.60/Mcf; and
(vii) any other amount provided for in this Agreement or agreed upon
by Seller and Buyer.
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10.03 POST-CLOSING ADJUSTMENTS TO PURCHASE PRICE. Promptly after the
Closing Date (but not later than 90 days thereafter), Seller shall prepare, and
shall furnish to Buyer, a final accounting state ment setting forth the pro-
rating of any amounts provided in Article X or elsewhere in this Agreement. Such
statements shall allocate to the Assets each item of income and each item of
expense and shall show the calculation of all adjustments. As soon as
reasonably practicable thereafter (but not later than 30 days thereafter), Buyer
shall deliver to Seller a written report containing any changes that Buyer
proposes be made to such statement. The Parties shall undertake to agree on the
final adjustment amount, and such final adjustment amount shall be paid by Buyer
or Seller, as appropriate, not later than 60 days after Seller's receipt of
Buyer's written report. In the event that Buyer and Seller fail to agree upon
such final adjustment amount within such time period, either Party may submit
such disputed amount to final and binding arbitration in accordance with the
rules then in effect for the American Arbitration Association for commercial
financial disputes. In the event that any such dispute is submitted to
arbitration prior to the expiration of such 60 day time period, then the
Parties' remedies for such dispute shall not be subject to the exclusive
remedies provisions of Section 12.05 of this Agreement. During the foregoing
periods, either Party may at its own expense audit the other Party's books,
accounts and records relating to production proceeds, operating expenses and
taxes paid that may have been adjusted on account of this transaction. Such
audit shall be conducted so as to cause a minimum of inconvenience to the
audited Party. The occurrence of the Closing shall not relieve either Party of
its obligation to account to the other Party after the Closing with respect to
amounts that are received or become due after the Closing and that are properly
payable or chargeable to either Party pursuant to any provision of this
Agreement.
10.04 TRANSFER TAXES. The Parties have allocated the Purchase Price
between real and personal property comprising the Assets, as set forth in
Exhibit B. All sales, use or other taxes (other than taxes on gross income, net
income or gross receipts) and duties, levies or other governmental charges
incurred by or imposed with respect to the property transfers undertaken
pursuant to this Agreement shall be the responsibility of, and shall be paid by,
Buyer.
10.05 ACTIONS OF SELLER AT CLOSING. At the Closing, Seller shall:
(a) execute, acknowledge and deliver to Buyer the Assignment, letters
in lieu and such other conveyances, assignments, transfers, bills of sale
and other instruments (in form and substance mutually agreed upon by Buyer
and Seller) as may be necessary or desirable to convey the Assets to Buyer;
(b) deliver to Buyer possession of the Assets; and
(c) execute and deliver a notice directing the escrow agent to
release the Deposit and interest earned thereon to Seller;
(d) execute, acknowledge and deliver any other agreements provided for
herein or necessary or desirable to effectuate the transactions
contemplated hereby.
10.06 ACTIONS OF BUYER AT CLOSING. At the Closing, Buyer shall:
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(a) execute and acknowledge the Assignment and such other conveyances,
assign ments, transfers, bills of sale and other instruments (in form and
substance mutually agreed upon by Buyer and Seller) as may be necessary or
desirable to convey the Assets to Buyer;
(b) deliver to Seller the Purchase Price, as adjusted pursuant to the
provisions hereof, by wire transfer as set forth in Section 2.01;
(c) take possession of the Assets; and
(d) execute and deliver a notice directing the escrow agent to
release the Deposit and interest earned thereon to Seller;
(e) execute, acknowledge and deliver any other agreements provided for
herein or necessary or desirable to effectuate the transactions
contemplated hereby.
10.07 FURTHER COOPERATION. (a) Seller shall, at Seller's cost,
deliver to Buyer, within 10 days after the Closing, the books, records, files,
muniments of title, reports and similar documents described in Sections
1.02(b)(v) and 1.02(b)(vi).
(b) After the Closing, each Party at the request of the other and without
additional consideration, shall execute and deliver, or shall cause to be
executed and delivered from time to time such further instruments of conveyance
and transfer and shall take such other action as the other Party may reasonably
request to convey and deliver the Assets to Buyer and to accomplish the orderly
transfer of the Assets to Buyer in the manner contemplated by this Agreement.
After the Closing, the Parties will cooperate to have all proceeds received
attributable to the Assets to be paid to the proper Party here under and to
have all expenditures to be made with respect to the Assets to be made by the
proper Party hereunder.
(c) Notwithstanding Section 12.05, in the event of that any dispute
regarding this Section 10.07 is asserted in writing by the Buyer prior to the
first anniversary of the Closing Date, any remedies with respect to such dispute
shall not be subject to the 2% threshold provided for in Section 12.03.
ARTICLE XI
TERMINATION
11.01 RIGHT OF TERMINATION. This Agreement and the transactions
contemplated hereby may be completely terminated at any time at or prior to the
Closing:
(a) by mutual consent of the Parties;
(b) by either Party if the Closing shall not have occurred on or
before July 31, 1997; provided, however, that no Party can so terminate
this Agreement if such Party is at such time in breach of this Agreement;
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(c) by Seller, at Seller's option, (i) in the event the conditions set
forth in Article VIII are not satisfied to the satisfaction of Seller at or
prior to June 30, 1997 (as extended pursuant to Section 4.01, 4.03, 4.06 or
4.07), or (ii) pursuant to Section 4.04;
(d) by Buyer, at Buyer's option, (i) if the conditions set forth in
Article IX are not satisfied to the satisfaction of Buyer at or prior to
June 30, 1997 (as extended pursuant to Section 4.01, 4.03, 4.06 or 4.07) or
(ii) pursuant to Section 4.04; or
(e) by either Party if any court or Governmental Authority shall have
issued an order, judgment or decree or taken any other action challenging,
delaying, restraining, enjoining, prohibiting or invalidating the
consummation of any of the transactions contemplated herein.
11.02 DISTRIBUTION OF DEPOSIT UPON TERMINATION. If Seller terminates
this Agreement pursuant to Section 11.01(c)(i) or as the result of any default
or breach by Buyer of Buyer's obligations hereunder, then, as its sole remedy,
Seller shall retain the Deposit and any interest earned thereon as liquidated
damages free of any claims by Buyer or any other person with respect thereto
(the Parties hereby acknowledging that the extent of damages to Seller
occasioned by such breach or default by Buyer would be impossible or extremely
difficult to ascertain and that the amount of the Deposit and any interest
earned thereon is a fair and reasonable estimate of such damages under the
circumstances). If this Agreement is terminated for any reason other than as set
forth in the preceding sentence, then Seller shall deliver the Deposit and any
interest earned thereon to Buyer, free of any claims by Seller or any other
person with respect thereto.
11.03 EFFECT OF TERMINATION. In the event that the Closing does not
occur as a result of either Party exercising its right not to close pursuant to
Section 11.01, then this Agreement shall be null and void and neither Party
shall have any rights or obligations under this Agreement, except that nothing
herein shall relieve any party from liability for any breach hereof occurring
prior to such termination. If either Party to this Agreement resorts to legal
proceedings to enforce this Agreement, the prevailing Party in such proceedings
shall be entitled to recover all costs incurred by such Party including
reasonable attorney's fees, in addition to any other relief to which such Party
may be entitled; provided, however, and notwithstanding anything to the contrary
in this Agreement, in no event shall either Party be entitled to receive any
punitive, indirect or consequential damages.
ARTICLE XII
ASSUMPTION AND INDEMNIFICATION
12.01 ASSUMPTION. As of the Closing, but subject to Seller's
indemnity obligation in Section 12.03, Buyer assumes all obligations that are
attributable to the ownership or operation of the Assets (or incurred by Seller
in its role as Buyer's nominee under Section 4.08 or in its role as operator
under Section 7.01), including without limitation (i) all obligations (whether
arising by statute, regulation, court order or by contract) to properly plug and
abandon all xxxxx and remove all related equipment now located on the Assets or
hereafter placed on the Assets, and all such obligations to cleanup and restore
the lands constituting or related to such Assets, (ii) all taxes, including ad
valorem taxes, attributable to the Assets or Hydrocarbons produced therefrom,
and (iii) all liabilities attributable to the Assets arising from, attributable
to, or alleged to be arising from or attributable to, a violation of, or the
failure to perform any obligation imposed by, any Environmental Laws (such
assumed obligations
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and liabilities being hereinafter collectively referred to as the "Assumed
Obligations"). For purposes of this Agreement, the term "Environmental Laws"
shall mean any and all laws, statutes, ordinances, rules, regulations, orders or
determinations of any Governmental Authority pertaining to health or the
environment in effect in any and all jurisdictions in which the property is
located, including without limitation, the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of 1980,
as amended ("CERCLA"), the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Hazardous & Solid Waste Amendments Act of 1984, as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, and all other environmental, conservation or
protection laws as may be in effect or applicable to the Assets now or
hereafter. For purposes of this Agreement, the term "Governmental Authority"
includes the United States, the state, county, city and political subdivisions
in which the Assets are located or that exercises jurisdiction over any of the
Assets, and any agency, department, commission, board, bureau or instrumentality
or any of them that exercises jurisdiction over any of the Assets.
12.02 INDEMNIFICATION BY BUYER. Subject to Seller's indemnity
obligation in Section 12.03, Buyer shall, upon Closing, indemnify, release,
defend and hold harmless Seller, its officers, directors, employees, agents,
representatives, affiliates, subsidiaries, successors and assigns (collectively,
the "Seller Indemnitees") from and against any and all Claims (as hereinafter
defined) caused by, arising from, attributable to, or alleged to be caused by,
arising from or attributable to (i) the Assumed Obligations or (ii) the breach
by Buyer of any of its representations, warranties, covenants or agreements
contained in this Agreement. Notwithstanding anything herein to the contrary,
Buyer shall incur no obligation or liability to the Seller Indemnitees under
this Section 12.02 where Seller fails to provide Buyer written notice of the
Claim giving rise to such obligation or liability within 90 days following that
point in time when Seller's management or other representatives of Seller having
decision-making authority had actual knowledge of the existence of such Claim.
The term "Claims" as used in this Agreement shall mean all claims, liabilities,
losses, damages, costs and expenses (including, without limitation, court costs
and reasonable attorneys' fees).
12.03 INDEMNIFICATION BY SELLER. Seller shall, upon Closing,
indemnify, release, defend and hold harmless Buyer, its officers, directors,
employees, agents, representatives, parents, affiliates, subsidiaries and
successors (collectively, the "Buyer Indemnitees") from and against any and all
Claims caused by, arising from or attributable to (i) Seller's ownership or
operation of the Assets prior to the Effective Time, but excluding Claims with
respect to the obligations to properly plug and abandon all xxxxx and remove all
related equipment now located on the Assets or hereafter placed on the Assets
and all obligations to cleanup and restore the lands constituting or related to
the Assets, or (ii) the breach by Seller of any of its representations,
warranties, covenants or agreements contained in this Agreement. Notwithstanding
anything herein to the contrary, Seller shall incur no obligation or liability
to the Buyer Indemnitees under this Section 12.03 (i) where Buyer fails to
provide Seller written notice of the Claim giving rise to such obligation or
liability within 90 days following that point in time when Buyer's management or
other representatives of Buyer having decision-making authority had actual
knowledge of the existence of such Claim, (ii) where the aggregate total of all
such Claims is less than 2% of the Purchase Price or to the extent that such
aggregate total exceeds the Purchase Price, or (iii) with respect to Claims,
notice of which is provided by Buyer to Seller later than one year from the
Closing Date.
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12.04 NEGLIGENCE AND FAULT. THE RELEASE, DEFENSE AND INDEMNIFICATION
OBLIGATIONS SET FORTH IN THIS AGREEMENT (INCLUDING SECTIONS 7.02, 12.02 AND
12.03), SHALL ENTITLE THE INDEMNIFIED PARTY TO SUCH RELEASE DEFENSE AND
INDEMNIFICATION HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF
WHETHER THE LOSS OR CLAIM GIVING RISE TO SUCH RELEASE, DEFENSE AND
INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE, CONCURRENT OR COMPARATIVE
NEGLIGENCE, STRICT LIABILITY OR VIOLATION OF ANY LAW OF OR BY SUCH INDEMNIFIED
PARTY OR BY A PRE-EXISTING CONDITION.
12.05 EXCLUSIVE REMEDY. Except as provided in Section 10.03 and
10.07(c), each of the Parties hereto acknowledges and agrees that its sole and
exclusive remedy with respect to (i) any and all Claims described in Sections
12.02 and 12.03, or (ii) any other claims pursuant to or in connection with an
alleged breach of representations, warranties, covenants or agreements contained
in this Agreement, shall be limited to the indemnification provisions set forth
in this Agreement, and in furtherance of the forgoing, each of the Parties
hereby waives, to the fullest extent permitted under any applicable law, any and
all right, claims and causes of action it may have against the other with
respect thereto except as provided herein. Nothing in this Section 12.05 shall
be construed as limiting the Parties' remedies with respect to the special
warranty of title in the Assignment.
12.06 EXPENSES. Notwithstanding anything herein to the contrary, the
foregoing release, defense and indemnity obligations shall not apply to, and
each Party shall be solely responsible for, all expenses, including due
diligence expenses, incurred by it in connection with the consummation of this
transaction.
ARTICLE XIII
LIMITATIONS ON REPRESENTATIONS AND WARRANTIES
13.01 DISCLAIMERS OF REPRESENTATIONS AND WARRANTIES. 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. BUYER ACKNOWLEDGES THAT SELLER HAS NOT MADE, AND SELLER
HEREBY EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER HEREBY EXPRESSLY WAIVES, ANY
REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE OR
OTHERWISE RELATING TO (A) PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE
RATES, OR THE QUALITY, QUANTITY OR VOLUME OF THE RESERVES OF HYDROCARBONS, IF
ANY, ATTRIBUTABLE TO THE ASSETS, (B) THE ACCURACY, COMPLETENESS OR MATERIALITY
OF ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL) NOW, HERETOFORE OR
HEREAFTER FURNISHED TO BUYER BY OR ON BEHALF OF SELLER, AND (C) THE
ENVIRONMENTAL CONDITION OF THE ASSETS. NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS AGREEMENT, SELLER EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER HEREBY
WAIVES (I) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (II) ANY IMPLIED
OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (III) ANY IMPLIED OR
EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (IV) ANY
RIGHTS OF PURCHASERS UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF
CONSIDERATION, (V) ANY CLAIMS BY BUYER FOR DAMAGES
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BECAUSE OF REDHIBITORY VICES OR DEFECTS, WHETHER KNOWN OR UNKNOWN AS OF THE
EFFECTIVE TIME OR THE CLOSING DATE, AND (VI) ANY AND ALL IMPLIED WARRANTIES
EXISTING UNDER APPLICABLE LAW; IT BEING THE EXPRESS INTENTION OF BOTH BUYER AND
SELLER THAT THE ASSETS ARE HEREBY CONVEYED TO BUYER IN THEIR PRESENT CONDITION
AND STATE OF REPAIR, "AS IS" AND "WHERE IS" WITH ALL FAULTS, AND THAT BUYER HAS
MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE. SELLER
AND BUYER AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE,
THE DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED IN THIS SECTION ARE
"CONSPICUOUS" DISCLAIMERS FOR THE PURPOSES OF ANY APPLICABLE LAW, RULE OR ORDER.
13.02 WAIVER OF TEXAS DTPA. It is the intent of the parties that
Buyer's rights and remedies with respect to this transaction and with respect to
all acts or practices of Seller, past, present or future, in connection with
this transaction shall be governed by legal principles other than the Texas
Deceptive Trade Practices - Consumer Protection Act, Tex. Bus. & Com. Code Xxx.
(S) 17.41 et seq. (Xxxxxx 1987 and Supp. 1996) (the "DTPA"). As such, Buyer
hereby waives the applicability of the DTPA to this transaction and any and all
duties, rights or remedies that might be imposed by the DTPA, whether such
duties, rights or remedies are applied directly by the DTPA itself or indirectly
in connection with other statutes; provided, however, Buyer does not waive
Section 17.555 of the DTPA. Buyer acknowledges, represents and warrants that it
is purchasing the assets covered by this Agreement for commercial or business
use; that Buyer has assets of Five Million Dollars ($5,000,000) or more
according to its most recent financial statement prepared in accordance with
generally accepted accounting principles; that Buyer has knowledge and
experience in financial and business matters that enable it to evaluate the
merits and risks of a transaction such as this; and that it is not in a
significantly disparate bargaining position with Seller. Buyer expressly
recognizes that the price for which Seller has agreed to sell the assets and
perform its obligations under this Agreement has been predicated upon the
inapplicability of the DTPA and this waiver of the DTPA. Buyer further
recognizes that Seller, in determining to proceed with the entering into of this
Agreement, has expressly relied on this waiver and the inapplicability of the
DTPA.
13.03 SURVIVAL. The obligations of the Parties under Sections 10 and
12 hereof shall survive the Closing.
13.04 CASUALTY LOSS. (a) Buyer shall assume all risk of 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, collapsed casing or sand infiltration
of any well) and the depreciation of personal property due to ordinary wear and
tear, but no further.
(b) If after the Effective Time and prior to the Closing any part of the
Assets shall be damaged or destroyed by fire or other casualty or if any part of
the Assets shall be taken in condemnation or under the right of eminent domain
or if proceedings for such purposes shall be pending or threatened, this
Agreement shall, subject to Section 9.05, remain in full force and effect
notwithstanding any such destruction, taking or proceeding, or the threat
thereof.
(c) In the event of any loss described in Section 13.04(b) and the Parties
proceed to Closing, Seller shall pay to Buyer at the Closing all sums paid to
Seller by third parties by reason of the
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destruction or taking of such Assets and shall assign, transfer and set over
unto Buyer all of the rights, 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.
ARTICLE XIV
MISCELLANEOUS
14.01 DOCUMENT RETENTION. (a) As used in this Section 14.01, the term
"Documents" shall mean all files, documents, books, records and other data
delivered to Buyer by Seller pursuant to the provisions of this Agreement (other
than those that Seller has retained either the original or a copy of),
including, but not limited to: financial and tax accounting records; land, title
and division of interest files; contracts; engineering and well files; and books
and records related to the operation of the Assets prior to the Closing Date.
Subject to the provisions of Section 14.01(b), Buyer agrees, and will cause its
assigns to agree, that the Documents shall be open for inspection by
representatives of Seller at reasonable times and upon reasonable notice during
regular business hours for a period of six years following the Closing Date (or
for such longer period as may be required by law or Governmental Authorities),
and that Seller may during such period at its expense make such copies thereof
as it may reasonably request. Seller agrees, and shall cause its assigns to
agree, that such documents and material as shall be retained by Seller and its
assigns and that are related to the Assets (other than privileged, proprietary
or confidential data or tax returns or other confidential tax information) shall
be open for inspection by representatives of Buyer at reasonable times and upon
reasonable notice during regular business hours for a period of six years
following the Closing Date and that Buyer may during such period at its expense
make such copies thereof as it may reasonably request.
(b) Destruction. Without limiting the generality of the foregoing, for a
period of six years after the Closing Date (or for such longer period as may be
required by law or by Governmental Authorities), Buyer shall not, and shall
cause its assigns to agree that they shall not, destroy or give up possession of
any original or final copy of the Documents without first offering Seller the
opportunity, at Seller's expense (without any payment to Buyer), to obtain such
original or final copy or a copy thereof. After the conclusion of such period,
Buyer shall, and shall cause its assigns to agree that they shall, offer to
deliver to Seller, at Seller's expense (without any payment to Buyer), the
Documents prior to destroying the same.
14.02 ENTIRE AGREEMENT. This Agreement, the documents to be executed
hereunder, and the exhibits attached hereto constitute the entire agreement
between the Parties hereto pertaining to the subject matter hereof and supersede
all prior agreements, understandings, negotiations and discussions, whether oral
or written, of the Parties pertaining to the subject matter hereof; provided,
however, that this Agreement does not supersede that certain Agreement to
Evaluate between the Parties dated February 9, 1997, which shall remain in force
and effect in accordance with its terms until the Closing Date. No supplement,
amendment, alteration, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the Parties hereto.
14.03 WAIVER. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
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14.04 PUBLICITY. Seller and Buyer shall consult with each other with
regard to all publicity and other releases concerning this Agreement and the
transactions contemplated hereby and, except as required by applicable law by
any Governmental Authority or stock exchange, neither Party shall issue any such
publicity or other release without the prior written consent of the other Party
hereto, which consent shall not be unreasonably withheld.
14.05 CAPTIONS. The captions in this Agreement are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
14.06 AFFILIATE. For purposes of this Agreement, the term "affiliate"
(whether capitalized or not) shall mean when used with respect to a person or
entity, any other person or entities:
(a) that directly or indirectly (through one or more intermediaries)
controls, or is controlled by, or is under common control with, such first
mentioned person or entity; or
(b) that beneficially owns, holds or controls 25% or more of the
interest of such first mentioned person or entity.
14.07 NO THIRD PARTY BENEFICIARIES. Except with respect to the
parties included within the definition of Seller Indemnitees or Buyer
Indemnitees (and in such cases, only to the extent expressly provided herein),
nothing in this Agreement shall provide any benefit to any third party or
entitle any third party to any claim, cause of action, remedy or right of any
kind, it being the intent of the parties that this Agreement shall not be
construed as a third party beneficiary contract.
14.08 ASSIGNMENT. Buyer may not assign or delegate any of its rights
or duties hereunder, without the prior written consent of Seller and any
assignment made without such consent shall be void. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective permitted successors, assigns and legal
representatives.
14.09 GOVERNING LAW. This Agreement, other documents delivered
pursuant hereto and the legal relations between the Parties shall be governed
and construed in accordance with the laws of the State of Texas, without giving
effect to principles of conflicts of laws.
14.10 NOTICES. Any notice, communication, request, instruction or
other document required or permitted hereunder shall be given in writing and
delivered in person or sent by U.S. Mail postage prepaid, return receipt
requested, or by telex, facsimile or telecopy to the addresses of Seller and
Buyer set forth below. Any such notice shall be effective only upon receipt.
Seller: Great River Oil & Gas Corporation
Suite 1520 CNG Tower
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to: Georgia Gulf Corporation
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Post Office Box 105197
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
Buyer: PetroCorp Incorporated
00000 Xxxxxxxxxxx Xxxx Xxxxx
Xxxxx 000, Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxxx Xxxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
Either Party may, by written notice so delivered, change its address for notice
purposes hereunder.
14.11 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any adverse manner to
either Party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
14.12 GUARANTOR. Georgia Gulf Corporation, as the parent corporation
of Seller, joins in the execution hereof solely for the purpose of guaranteeing
the performance by Seller of its special warranty of title and indemnity
obligations under Sections 4.04 and 12.03 of this Agreement.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of the
date hereof.
SELLER:
GREAT RIVER OIL & GAS CORPORATION
By:
Name:
Title:
BUYER:
PETROCORP INCORPORATED
By:
Name:
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Title:
Georgia Gulf Corporation executes this Agreement solely for the purposes
set forth in Section 14.12 hereof.
GUARANTOR:
GEORGIA GULF CORPORATION
By:
Name:
Title:
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