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EXHIBIT 10.6
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT (this "Agreement"), dated February 5, 1998, is by and
between ENRON OIL & GAS COMPANY, a Delaware corporation ("EOG"), and XXXXXXX
PETROLEUM CORPORATION, a Texas corporation ("Xxxxxxx"), and is in consideration
of EOG's agreement to sell, and Michael's agreement to buy, certain property
described in this Agreement, all pursuant to the terms and conditions of this
Agreement. EOG and Xxxxxxx xxx also be referred to herein individually as a
"Party" or, collectively, as the "Parties."
1. PROPERTY. Subject to the terms and conditions set forth hereinafter, EOG
agrees to grant or convey to Xxxxxxx (whichever is applicable as provided for
below) the EOG Property (as defined hereinafter) and Xxxxxxx agrees to accept
the EOG Property, and tender consideration therefor, in the manner and of the
type and amount as hereinafter required. For purposes of this Agreement, "EOG
Property" shall mean, collectively:
(a) all of EOG's right, title and interest in, to and under or derived
from the oil and gas leases, oil, gas and mineral leases, surface estate, and
other interests therein referred to in Exhibit "A," attached hereto and made a
part hereof for all purposes (the "Leases"), insofar and only insofar as the
Leases apply to the lands, depths, formations, wellbore rights and/or other
rights specified on Exhibit "A," together with identical interests in and to all
property and rights incident thereto, including, without limitation, all xxxxx,
gathering systems, materials, equipment, personal property, fixtures and
facilities located thereon or used in connection therewith and all of EOG's
rights in, to and under all agreements, unitization agreements, operating
agreements, leases, permits, rights-of-way, easements, licenses, options and
orders in any way relating thereto;
(b) a leasehold interest in all of EOG's right, title and interest in,
to and under or derived from the lands depicted on the plat attached hereto as
Exhibit "B" (the "South Xxxxxxxxx Ranch Lands"), insofar and only insofar as
the South Xxxxxxxxx Ranch Lands cover the interval from the surface of the
ground down to 100 feet below the stratigraphic equivalent of the
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base of the Lobo 6 sand, together with all of EOG's right, title and interest in
and to all xxxxx, gathering systems, materials, equipment, personal property,
fixtures and facilities located on the South Xxxxxxxxx Ranch Lands and used in
connection with such lands and above-described depths and all agreements,
unitization agreements, operating agreements, leases, permits, rights-of-way,
easements, licenses, options and orders in any way relating to such lands and
above-described depths, all pursuant to an Oil and Gas Lease from EOG to Xxxxxxx
in substantially the form of Lease attached hereto as Exhibit "C" (the "South
Xxxxxxxxx Ranch Lease");
(c) a term assignment of all of EOG's interests in and to a 2.67%
nonparticipating royalty interest in and to the South Xxxxxxxxx Ranch Lands,
insofar and only insofar as such lands cover the interval covered by the South
Xxxxxxxxx Ranch Lease and terminating simultaneously with and as to that portion
of the South Xxxxxxxxx Ranch Lease which has terminated; and
(d) All three-dimensional and two-dimensional seismic data owned by EOG
insofar, but only insofar, as such data covers the lands referred to or
described in Exhibit "A" or the lands depicted in Exhibit "B," plus that portion
of the surrounding lands necessary to obtain full fold coverage of the lands
referred to or described in Exhibit "A" or the lands depicted in Exhibit "B," if
available, to the extent any of the above is assignable or transferable,
including all supporting survey information necessary to post and locate all
surveys on Michael's map(s), including a tape copy in a SEG-P1 format of all
surveys and well information in X-Y coordinates necessary to load the 3-D
seismic surveys on a geophysical workstation and a printed survey map showing
all source and receiver locations of any 3-D seismic survey pertaining to the
lands referred to, or described or depicted in Exhibits "A" and "B," and subject
to any consents to assignment or transfer to which any of the above may be
subject (the "Seismic Data").
2. CONSIDERATION. As consideration for the EOG Property, Xxxxxxx shall pay
to EOG at Closing (as defined hereinafter), the cash sum of FORTY-EIGHT MILLION
FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($48,500,000.00) (the "Purchase
Price"). As additional consideration for the EOG Property, Xxxxxxx shall convey
to EOG all of Michael's
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right, title and interest in and to the Rottersmann 250 #1 Well, including,
without limitation, all rights and interests of Xxxxxxx therein arising out of
or derived from the contracts and agreements described in Exhibit "D," attached
hereto and made a part hereof for all purposes, together with identical
interests in and to all property and rights incident thereto, including, without
limitation, all gathering systems, materials, equipment, personal property and
fixtures located thereon or used in connection therewith and all of Michael's
rights in, to and under all agreements, operating agreements, permits,
rights-of-way, easements, licenses, options and orders in any way relating
thereto. The foregoing properties, rights and interests being hereinafter called
the "XXXXXXX Property." In addition, Xxxxxxx shall grant to EOG a non-exclusive
license to use the Seismic Data pursuant to a Seismic License Agreement
substantially in the form of Exhibit "E" attached hereto (the "License"), to the
extent the Seismic Data may be licensed to ENRON by Xxxxxxx under the terms of
applicable agreements covering such Seismic Data and subject to the obtaining of
any necessary consents.
3. XXXXXXX PRE-ACQUISITION REVIEW. EOG shall make a good-faith effort, to
give Xxxxxxx and Michael's authorized representatives, at any reasonable time(s)
before Closing, (a) physical access to the xxxxx and other equipment included in
the EOG Property, at Michael's sole risk, cost and expense, for the purpose of
inspecting the same, and conducting witnessed tests of production from the xxxxx
thereon, (b) access to all production, engineering and other technical data and
records, and to all contract, land and lease records, to the extent such data
and records are in EOG's possession and relate to the EOG Property, and (c)
access to all accounting records pertaining to the EOG Property for the past
three (3) years such that Xxxxxxx can perform an audit of such records for such
three (3) year period prior to the Closing Date; provided, however, EOG shall
have no obligation to provide Xxxxxxx xxxx access to any data or information
which EOG considers proprietary or confidential or which access EOG cannot
legally provide Xxxxxxx because of third-party restrictions.
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4. EOG PRE-ACQUISITION REVIEW. Xxxxxxx shall make a good-faith effort to
give EOG and EOG's authorized representatives, at any reasonable time(s) before
Closing, (a) physical access to the XXXXXXX Property, at EOG's sole risk, cost
and expense for the purpose of inspecting the same, and (b) access to all
contract, land and lease records, to the extent such data and records are in
Michael's possession and relate to the XXXXXXX Property; provided, however,
Xxxxxxx shall have no obligation to provide EOG such access to any data or
information which Xxxxxxx considers proprietary or confidential or which access
Xxxxxxx cannot legally provide EOG because of third-party restrictions.
5. TITLE DEFECTS ON EOG PROPERTY. As used in this Agreement, the term "EOG
Title Defect" shall mean a material deficiency in one (or more) of the following
respects:
(a) EOG's title, as of the Effective Time (as defined hereinafter), as
to all or any portion of the EOG Property, is subject to an outstanding
mortgage, deed of trust, lien or encumbrance or other adverse claim which would
interfere materially with the ownership, operation, use or value of the EOG
Property;
(b) EOG owns less than the net revenue interest described on Exhibit
"A-1" or more than the working interest described on Exhibit "A-1" without a
corresponding increase in net revenue interest;
(c) EOG's rights and interests are subject to being reduced by virtue
of the exercise by a third party of any preferential right, reversionary,
back-in or other similar right not reflected on Exhibit "A-1;" and
(d) EOG is in default under some material provision of a lease, farmout
agreement, operating agreement, or other agreement affecting the EOG Property.
Xxxxxxx shall give EOG written notice of each EOG Title Defect on or
before five (5) days prior to the Closing Date, together with full particulars
relating thereto. XXXXXXX SHALL BE DEEMED TO HAVE WAIVED ALL EOG TITLE DEFECTS
OF WHICH EOG HAS NOT BEEN GIVEN TIMELY WRITTEN NOTICE, SAVE AND EXCEPT CLAIMS
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BASED UPON A BREACH OF THE LIMITED WARRANTY OF TITLE PROVIDED IN THE ASSIGNMENT
AND XXXX OF SALE ATTACHED HERETO AS EXHIBIT "F."
6. PURCHASE PRICE ADJUSTMENTS ON EOG PROPERTY.
Xxxxxxx xxx, by delivery of written notice to EOG of the existence of an
EOG Title Defect, request a reduction of the Purchase Price. Conversely, EOG
may, by delivery of written notice to Xxxxxxx, request an increase in the
Purchase Price because the net revenue interest owned by EOG in the EOG Property
is greater than that shown on Exhibit "A-1."
Any such notice by Xxxxxxx or EOG shall include appropriate evidence to
substantiate its position and shall be delivered to the other Party on or before
five (5) days prior to the Closing. In the event any such notice is not timely
delivered, Xxxxxxx shall thereafter have no right to assert an EOG Title Defect
and EOG shall thereafter have no right to assert a larger net revenue interest.
Upon timely delivery of a notice either by Xxxxxxx of an EOG Title
Defect or by EOG of a larger net revenue interest, Xxxxxxx and EOG shall meet,
within the period between the date of receipt of such notice and the Closing
Date, and may mutually agree as follows with respect to any EOG Title Defect:
(i) EOG shall cure or agree to cure such EOG Title Defect, to a degree agreed
upon prior to Closing (provided, however, EOG shall have no obligation to
perform such cure), (ii) Xxxxxxx shall agree to accept the interest "AS IS," and
release EOG from all claims related thereto, (iii) EOG shall agree to indemnify
Xxxxxxx against all losses, costs, expenses and liabilities with respect to such
EOG Title Defect, or (iv) EOG and Xxxxxxx shall agree as to the amount of a
Purchase Price adjustment in connection with such EOG Title Defect. If no
agreement can otherwise be reached as to the disposition of an interest burdened
by an EOG Title Defect or with respect to EOG's larger net revenue interest
prior to the Closing Date, either Party may give written notice to the other
Party on or before the Closing Date to terminate this Agreement and upon the
giving of such notice, this Agreement shall be of no further force and effect.
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In the event the net amount of the Purchase Price adjustments hereunder
exceeds ten percent (10%) of the Purchase Price, then either Xxxxxxx or EOG
may, upon written notice to the other Party, cancel this Agreement and the same
shall be of no further force and effect.
If Xxxxxxx receives a Purchase Price adjustment at Closing on account of
an EOG Title Defect, EOG shall have until June 30, 1998 to cure such EOG Title
Defect at its cost. If by such date it can demonstrate to Michael's reasonable
satisfaction that such EOG Title Defect has been cured, then EOG shall be
entitled to reimbursement from Xxxxxxx for the amount of such Purchase Price
adjustment. Xxxxxxx shall pay such amount to EOG within fifteen (15) business
days of the date EOG demonstrates to Michael's reasonable satisfaction that such
EOG Title Defect has been cured.
7. TITLE DEFECTS ON XXXXXXX PROPERTY. As used in this Agreement, the term
"XXXXXXX Title Defect" shall mean a material deficiency in one (or more) of the
following respects:
(a) Michael's title, as of the Effective Time, as to all or any portion
of the XXXXXXX Property, is subject to an outstanding mortgage, deed or trust,
lien or encumbrance or other adverse claim which would interfere materially with
the ownership, operation, use or value of the XXXXXXX Property;
(b) Xxxxxxx owns less than the net revenue interest described on Exhibit
"D" or more than the working interest described on Exhibit "D" without a
corresponding increase in net revenue interest;
(c) Michael's rights and interests are subject to being reduced by
virtue of the exercise by a third party of any preferential right, reversionary,
back-in or other similar right not reflected on Exhibit "D;" and
(d) Xxxxxxx is in default under some material provision of a lease,
farmout agreement or agreement affecting the XXXXXXX Property.
EOG shall give Xxxxxxx written notice of each XXXXXXX Title Defect on or
before five (5) days prior to the Closing Date, together with full particulars
relating thereto. EOG
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SHALL BE DEEMED TO HAVE WAIVED ALL XXXXXXX TITLE DEFECTS OF WHICH XXXXXXX HAS
NOT BEEN GIVEN TIMELY WRITTEN NOTICE, SAVE AND EXCEPT CLAIM BASED UPON A BREACH
OF THE LIMITED WARRANTY OF TITLE PROVIDED IN THE ASSIGNMENT ATTACHED HERETO AS
EXHIBIT "I." EOG and Xxxxxxx hereby agree that the allocated value of the
XXXXXXX Property, for purposes of notice to preferential rights holders only, is
$1,500,000.00.
8. PURCHASE PRICE ADJUSTMENTS ON XXXXXXX PROPERTY. EOG may, by delivery of
written notice to Xxxxxxx of the existence of a XXXXXXX Title Defect, request an
increase in the Purchase Price.
Any such notice by EOG shall include appropriate evidence to
substantiate its position and shall be delivered to Xxxxxxx on or before five
(5) days prior to the Closing. In the event any such notice is not timely
delivered, EOG shall thereafter have no right to assert a XXXXXXX Title Defect.
Upon timely delivery of a notice by EOG of a XXXXXXX Title Defect, EOG
and Xxxxxxx shall meet, within the period between the date of receipt of such
notice and the Closing Date, and may mutually agree as follows: (i) Xxxxxxx
shall cure or agree to cure such XXXXXXX Title Defect, to a degree agreed upon
prior to Closing (provided, however, Xxxxxxx shall have no obligation to perform
such cure), (ii) EOG shall agree to accept the interest "AS IS," and release
Xxxxxxx from all claims related thereto, (iii) Xxxxxxx shall agree to indemnify
EOG against all losses, costs, expenses and liabilities with respect to such
XXXXXXX Title Defect, or (iv) Xxxxxxx and EOG shall agree as to the amount of a
Purchase Price adjustment in connection with such XXXXXXX Title Defect. If no
agreement can otherwise be reached as to the disposition of an interest burdened
by a XXXXXXX Title Defect prior to the Closing Date, either Party may give
written notice to the other Party on or before the Closing Date to terminate
this Agreement and, upon the giving of such notice, this Agreement shall be of
no further force and effect.
If EOG receives a Purchase Price adjustment at Closing on account of a
XXXXXXX Title Defect, Xxxxxxx shall have until June 30, 1998 to cure such
XXXXXXX Title Defect at its
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cost. If by such date it can demonstrate to EOG's reasonable satisfaction that
such XXXXXXX Title Defect has been cured, then Xxxxxxx shall be entitled to
reimbursement from EOG for the amount of such Purchase Price adjustment. EOG
shall pay such amount to Xxxxxxx within fifteen (15) business days of the date
Xxxxxxx demonstrates to EOG's reasonable satisfaction that such XXXXXXX Title
Defect has been cured.
9. GAS IMBALANCES FOR EOG PROPERTY. In the event it is determined that a
net gas imbalance exists with respect to operations relating to the EOG
Property, the Purchase Price shall be adjusted upward or downward, as the case
may be, to reflect the effect of such net gas imbalance for the EOG Property as
of the Effective Time. Such adjustment shall be calculated by multiplying the
per Mcf amount of the gas imbalance, as of the Effective Time, by $2.25 per Mcf.
10. GAS IMBALANCES FOR XXXXXXX PROPERTY. In the event it is determined that
a net gas imbalance exists with respect to operations relating to the XXXXXXX
Property, the Purchase Price shall be adjusted upward or downward, as the case
may be, to reflect the effect of such net gas imbalance for the XXXXXXX Property
as of the Effective Time. Such adjustment shall be calculated by multiplying the
per Mcf amount of the gas imbalance, as of the Effective Time, by $2.25 per Mcf.
11. REPRESENTATIONS BY EOG. EOG represents to Xxxxxxx, each of which
representations shall survive Closing, that as of the date of this Agreement and
as of Closing:
(a) Due Organization. EOG is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Delaware and is
duly qualified to do business in the State of Texas and has satisfied all state
bonding requirements, if any.
(b) Corporate Power. EOG has all requisite corporate power and authority
to carry on its business as presently conducted, to enter into this Agreement,
and to perform its obligations under this Agreement. The consummation of the
transactions contemplated by this
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Agreement will not violate, nor be in conflict with, (i) any provision of its
charter or bylaws or (ii) any agreement or instrument to which it is a party or
is bound (except for preferential rights to purchase, maintenance of uniform
interests, and required third party consents to assignment, if any).
(c) Duly Executed. This Agreement has been duly executed and delivered
on behalf of EOG, and at Closing all documents and instruments required
hereunder to be executed and delivered by it shall have been duly executed and
delivered and the transactions contemplated hereby shall have been duly and
validly authorized by all requisite corporate action.
(d) No Litigation. There are no pending or, to the best of EOG's
knowledge without further investigation, threatened claims, lawsuits,
administrative proceedings, or governmental investigations or inquiries
involving EOG's right to consummate the sale contemplated hereunder.
12. REPRESENTATIONS BY XXXXXXX. Xxxxxxx represents to EOG, each of which
representations shall survive Closing, that as of the date of this Agreement and
as of Closing:
(a) Due Organization. Xxxxxxx is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Texas and is duly
qualified to do business in the State of Texas and has satisfied all state
bonding requirements, if any.
(b) Corporate Power. Xxxxxxx has all requisite corporate power and
authority to carry on its business as presently conducted, to enter into this
Agreement, and to perform its obligations under this Agreement. The consummation
of the transactions contemplated by this Agreement will not violate, nor be in
conflict with, (i) any provision of its charter or bylaws or (ii) any agreement
or instrument to which it is a party or is bound (except for preferential rights
of purchase, if any).
(c) Duly Executed. This Agreement has been duly executed and delivered
on behalf of Xxxxxxx, and at Closing, all documents and instruments required
hereunder to be executed and delivered by it shall have been duly executed and
delivered and the transactions contemplated hereby shall have been duly and
validly authorized by all requisite corporate action.
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(d) No Litigation. There are no pending or, to the best of Michael's
knowledge without further investigation, threatened claims, lawsuits,
administrative proceedings, or governmental investigations or inquiries
involving Michael's right to consummate the sale contemplated hereunder.
13. CLOSING. Closing shall occur on or before March 31, 1998, or at such
date as may be agreed by the Parties or as provided by this Agreement (the
"Closing Date"), at the offices of Enron Oil & Gas Company in Houston, Texas, or
at such other place as Xxxxxxx and EOG may agree. "Closing" shall mean (a) the
granting or conveyance of the EOG Property to Xxxxxxx and the conveyance of the
XXXXXXX Property to EOG; (b) the complete satisfaction by the Parties of the
obligations of consideration under Section 2 above, and (c) the transfer of the
operation and possession of the EOG Property to Xxxxxxx. At Closing, the
following will occur:
(a) Consideration. Xxxxxxx shall make payment of the Purchase Price, as
adjusted, by wire transfer to an account or accounts to be designated by EOG.
Prior to Closing, EOG will notify Xxxxxxx of the amounts to be deposited in each
designated account.
(b) Grant or Conveyance. EOG will grant or convey, as the case may be,
the EOG Property to Xxxxxxx by executing and delivering (i) an Assignment and a
Xxxx of Sale, in substantially the form attached hereto as Exhibit "F," (ii) a
Deed, in substantially the form attached hereto as Exhibit "G," (iii) the South
Xxxxxxxxx Ranch Lease, and (iv) a Term Assignment, in substantially the form
attached hereto as Exhibit "H." Xxxxxxx will convey the XXXXXXX Property to EOG
by executing and delivering an Assignment, in substantially the form attached
hereto as Exhibit "I" and will execute and deliver the License.
(c) Non-Foreign Affidavits. EOG shall execute and deliver to Xxxxxxx a
Non-Foreign Affidavit, in substantially the form attached hereto as Exhibit "J,"
and Xxxxxxx shall execute and deliver to EOG a Non-Foreign Affidavit, in
substantially the form attached hereto as Exhibit "K."
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(d) Operatorship. EOG and Xxxxxxx shall execute any necessary forms
required by governmental agencies for the transfer of operatorship of the EOG
Property (in those instances where EOG is the Operator) to a person or entity
designated by Xxxxxxx and Xxxxxxx shall file same immediately following Closing.
(e) Possession. EOG shall (subject to the terms of any applicable
agreements and to the other provisions hereof) deliver to Xxxxxxx exclusive
possession of the EOG Property and grant the Lease to Xxxxxxx, effective as of
the Effective Time and Xxxxxxx shall (subject to the terms of any applicable
agreements and to the other provisions hereof) deliver to EOG exclusive
possession of the XXXXXXX Property and grant the License, effective as of the
Effective Time.
(f) Records of EOG Property. Originals (or copies with respect to the
South Xxxxxxxxx Ranch Lands) of all books, records and files in the possession
of EOG pertaining to the EOG Property, including, without limitation, all well
files, correspondence, geological and engineering information, shall be made
available for delivery to Xxxxxxx at EOG's offices where currently maintained,
within five (5) days after the Closing. EOG shall have the right to retain
copies (or originals with respect to the South Xxxxxxxxx Ranch Lands) of any or
all of such books, records and files and to retain canceled checks and general
ledger, purchasing and other general accounting records of EOG. EOG reserves the
right to later examine the records and information delivered to Xxxxxxx pursuant
to this subsection (f) to the extent such examination is necessary for any
relevant business purpose. All information and data shall be furnished as a
matter of convenience only to Xxxxxxx and Michael's reliance on same shall be
at Michael's sole risk.
(g) Records of XXXXXXX Property. Originals of all books, records and
files in the possession of Xxxxxxx pertaining to the XXXXXXX Property,
including, without limitation, all well files, correspondence, geological and
engineering information, shall be made available for delivery to EOG at
Michael's offices where currently maintained, within five (5) days after the
Closing. Xxxxxxx shall have the right to retain copies of any or all of such
books, records and files and to retain canceled checks and general ledger,
purchasing and other general accounting records of Xxxxxxx. Xxxxxxx reserves the
right to later examine the records and information delivered to
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EOG pursuant to this subsection (g) to the extent such examination is necessary
for any relevant business purpose. All information and data shall be furnished
as a matter of convenience only to EOG and EOG's reliance on same shall be at
EOG sole risk.
(h) Other Documents and Actions. EOG and XXXXXXX shall execute and
deliver to each other the letter agreements attached hereto as Exhibits "L" and
"M." In addition, EOG and Xxxxxxx shall execute and deliver such other
instruments and take such other actions as may be required pursuant to the terms
of this Agreement.
14. FURTHER ASSURANCES.
After the Closing, each of the Parties shall execute, acknowledge and
deliver to the other such further instruments, and take such other actions as
may be reasonably necessary to carry out the provisions of this Agreement,
including, without limitation, all division orders, transfer orders and all
other documents necessary to fully vest in the Parties the rights, obligations
and benefits acquired pursuant to this Agreement. With regard to the EOG
Property, however, Xxxxxxx shall assume all responsibility for notifying the
purchasers of oil and gas production, and such other designated persons who may
be responsible for disbursing payments for the purchase of such production, of
the transfer of ownership of the EOG Property. In connection therewith, EOG
shall provide Xxxxxxx with a complete list of all purchasers of oil, gas and
condensate production from the EOG Property no later than five (5) days prior to
the Closing. Xxxxxxx shall take all actions necessary to effectuate the transfer
of such payments to Xxxxxxx as of the Effective Time. With regard to the XXXXXXX
Property, however, EOG shall assume all responsibility for notifying the
purchasers of oil and gas production, and such other designated persons who may
be responsible for disbursing payments for the purchase of such production, of
the transfer of ownership of the XXXXXXX Property. EOG shall take all actions
necessary to effectuate the transfer of such payments to EOG as of the Effective
Time.
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15. EFFECTIVE TIME. The grant and conveyance of the EOG Property from EOG
to Xxxxxxx and the conveyance of the XXXXXXX Property from Xxxxxxx to EOG shall
be effective as of January 1, 1998, at 7:00 a.m. Central Standard Time (the
"Effective Time").
16. RESERVATIONS AND EXCEPTIONS. EOG and Xxxxxxx each agree that the
transfer of the EOG Property and the XXXXXXX Property are both made subject to
all reservations, exceptions, limitations, contracts and other burdens or
instruments which are of record or of which the Parties had actual or
constructive notice affecting such properties, including any matter included or
referenced in the materials made available by each Party to the other.
17. ASSUMPTION OF LIABILITIES AND INDEMNITIES FOR EOG PROPERTY. As used in
this Section 17 and the subparagraphs hereunder, "claims" shall include claims,
demands, causes of action, liabilities, damages, penalties and judgments of any
kind or character and all costs and fees in connection therewith.
(A) XXXXXXX SHALL, (I) AT THE EFFECTIVE TIME, ASSUME, AND BE RESPONSIBLE
FOR AND COMPLY WITH, ALL DUTIES AND OBLIGATIONS OF EOG, EXPRESS OR IMPLIED, WITH
RESPECT TO THE EOG PROPERTY, INCLUDING, WITHOUT LIMITATION, THOSE ARISING UNDER
OR BY VIRTUE OF ANY LEASE, CONTRACT, AGREEMENT, DOCUMENT, PERMIT, APPLICABLE
STATUTE OR RULE, REGULATION OR ORDER OF ANY GOVERNMENTAL AUTHORITY (SPECIFICALLY
INCLUDING, WITHOUT LIMITATION, ANY GOVERNMENTAL REQUEST OR REQUIREMENT TO PLUG,
RE-PLUG AND/OR ABANDON ANY WELL OF WHATSOEVER TYPE, STATUS OR CLASSIFICATION,
WHETHER NOW EXISTING OR HEREAFTER ARISING OR ACCRUING AND WHETHER SUCH XXXXX ARE
ACTIVE, INACTIVE, IDLE, OR HAVE BEEN PREVIOUSLY ABANDONED AS OF THE EFFECTIVE
TIME, AND/OR TAKE ANY CLEAN-UP OR OTHER ACTION WITH RESPECT TO THE EOG
PROPERTY). AND (II) DEFEND, INDEMNIFY AND HOLD EOG AND ITS PREDECESSORS IN
INTEREST HARMLESS FROM ANY AND ALL CLAIMS IN CONNECTION THEREWITH, EXCEPT ANY
SUCH CLAIMS ARISING DIRECTLY OR INDIRECTLY FROM, OR INCIDENT TO, EOG'S OWNERSHIP
OR OPERATION OF THE EOG PROPERTY PRIOR TO THE EFFECTIVE TIME, OTHER
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THAN CLEAN-UP AND PLUGGING AND ABANDONMENT LIABILITIES ASSUMED BY XXXXXXX
PURSUANT TO SUBSECTION (I).
(B) OTHER THAN AS SET FORTH IN SUBSECTION (A)(II) ABOVE AND SECTIONS 30
AND 33 BELOW, EOG SHALL INDEMNIFY AND HOLD HARMLESS XXXXXXX FROM ANY AND ALL
CLAIMS TO OR BY THIRD PARTIES RELATING TO OR ARISING OUT OF EOG's OWNERSHIP OR
OPERATION OF THE EOG PROPERTY PRIOR TO THE EFFECTIVE TIME. XXXXXXX SHALL
INDEMNIFY AND HOLD HARMLESS EOG FROM ANY AND ALL CLAIMS TO OR BY THIRD PARTIES
RELATING TO OR ARISING OUT OF MICHAEL'S OWNERSHIP OR OPERATION OF THE EOG
PROPERTY AFTER THE EFFECTIVE TIME. EACH INDEMNIFIED PARTY HEREUNDER AGREES THAT
UPON ITS DISCOVERY OF FACTS GIVING RISE TO A CLAIM FOR INDEMNITY UNDER THE
PROVISIONS OF THIS AGREEMENT, INCLUDING RECEIPT BY IT OF ANY CLAIM, JUDICIAL OR
OTHERWISE, BY ANY THIRD PARTY WITH RESPECT TO ANY MATTER AS TO WHICH IT IS
ENTITLED TO INDEMNITY UNDER THE PROVISIONS OF THIS AGREEMENT, IT WILL GIVE
PROMPT NOTICE THEREOF IN WRITING TO THE INDEMNIFYING PARTY, TOGETHER WITH A
STATEMENT OF SUCH INFORMATION RESPECTING ANY OF THE FOREGOING AS IT SHALL THEN
HAVE. SUCH NOTICE SHALL INCLUDE A FORMAL DEMAND FOR INDEMNIFICATION UNDER THIS
AGREEMENT. THE INDEMNIFIED PARTY SHALL AFFORD THE INDEMNIFYING PARTY A
REASONABLE OPPORTUNITY TO PAY, SETTLE OR CONTEST THE CLAIM AT ITS EXPENSE.
(C) EXCEPT AS SET FORTH IN SUBSECTION (A)(II) ABOVE AND SECTIONS 30 AND
33 BELOW, EOG SHALL (I) BE RESPONSIBLE FOR ANY AND ALL CLAIMS ARISING OUT OF THE
PRODUCTION OR SALE OF HYDROCARBONS FROM THE EOG PROPERTY - OR THE PROPER
ACCOUNTING OR PAYMENT TO PARTIES FOR THEIR INTERESTS THEREIN - INSOFAR AS SUCH
CLAIMS RELATE TO PERIODS OF TIME PRIOR TO THE EFFECTIVE TIME, AND (II) DEFEND,
INDEMNIFY AND HOLD XXXXXXX HARMLESS FROM ANY AND ALL SUCH CLAIMS. XXXXXXX 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
EOG AND ITS PREDECESSORS IN INTEREST HARMLESS THEREFROM.
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(D) UNLESS THIS AGREEMENT EXPRESSLY PROVIDES TO THE CONTRARY, THE
INDEMNITIES SET FORTH IN THIS AGREEMENT APPLY REGARDLESS OF WHETHER: (I) THE
INDEMNIFIED PARTY (OR ANY EMPLOYEE, AGENT, CONTRACTOR, SUCCESSOR OR ASSIGN OF
THE INDEMNIFIED PARTY) CAUSES, IN WHOLE OR PART, AN INDEMNIFIED CLAIM; (II) AN
INDEMNIFIED CLAIM ARISES OUT OF OR RESULTS FROM THE INDEMNIFIED PARTY'S (OR AN
EMPLOYEE'S, AGENT'S, CONTRACTOR'S, SUCCESSOR'S OR ASSIGN'S) SOLE OR CONCURRENT
NEGLIGENCE; (III) THE INDEMNIFIED PARTY (OR ANY EMPLOYEE, AGENT, CONTRACTOR,
SUCCESSOR OR ASSIGN OF THE INDEMNIFIED PARTY) IS DEEMED TO BE STRICTLY LIABLE,
IN WHOLE OR PART, FOR AN INDEMNIFIED CLAIM; OR (IV) ANY PART OF AN INDEMNIFIED
CLAIM IS THE RESULT OF THE IMPOSITION OF PUNITIVE DAMAGES. ALL INDEMNITIES SET
FORTH IN THIS AGREEMENT EXTEND TO THE OFFICERS, DIRECTORS, EMPLOYEES AND
AFFILIATES OF THE PARTY INDEMNIFIED, AND COVER THE ACTS AND OMISSIONS OF THE
OFFICERS, DIRECTORS, EMPLOYEES, CONTRACTORS, SUCCESSORS AND ASSIGNS OF THE
INDEMNIFYING PARTY.
18. ASSUMPTION OF LIABILITIES AND INDEMNITIES FOR XXXXXXX PROPERTY. As used
in this Section 18 and the subparagraphs hereunder, "claims" shall include
claims, demands, causes of action, liabilities, damages, penalties and judgments
of any kind or character and all costs and fees in connection therewith.
(A) EOG SHALL, (I) AT THE EFFECTIVE TIME, ASSUME, AND BE RESPONSIBLE FOR
AND COMPLY WITH, ALL DUTIES AND OBLIGATIONS OF XXXXXXX, EXPRESS OR IMPLIED, WITH
RESPECT TO THE XXXXXXX PROPERTY, INCLUDING, WITHOUT LIMITATION, THOSE ARISING
UNDER OR BY VIRTUE OF ANY LEASE, CONTRACT, AGREEMENT, DOCUMENT, PERMIT,
APPLICABLE STATUTE OR RULE, REGULATION OR ORDER OF ANY GOVERNMENTAL AUTHORITY
(SPECIFICALLY INCLUDING, WITHOUT LIMITATION, ANY GOVERNMENTAL REQUEST OR
REQUIREMENT TO PLUG, RE-PLUG AND/OR ABANDON ANY WELL OF WHATSOEVER TYPE, STATUS
OR CLASSIFICATION, WHETHER NOW EXISTING OR HEREAFTER ARISING OR ACCRUING AND
WHETHER SUCH XXXXX ARE ACTIVE, INACTIVE, IDLE OR
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HAVE BEEN PREVIOUSLY ABANDONED AS OF THE EFFECTIVE TIME, AND/OR TAKE ANY
CLEAN-UP OR OTHER ACTION WITH RESPECT TO THE XXXXXXX PROPERTY), AND (II) DEFEND,
INDEMNIFY AND HOLD XXXXXXX HARMLESS FROM ANY AND ALL CLAIMS IN CONNECTION
THEREWITH, EXCEPT ANY SUCH CLAIMS ARISING DIRECTLY OR INDIRECTLY FROM, OR
INCIDENT TO, MICHAEL'S OWNERSHIP OR OPERATION OF THE XXXXXXX PROPERTY PRIOR TO
THE EFFECTIVE TIME, OTHER THAN CLEAN-UP AND PLUGGING AND ABANDONMENT LIABILITIES
ASSUMED BY EOG PURSUANT TO SUBSECTION (I).
(B) OTHER THAN AS SET FORTH IN SUBSECTION (A)(II) ABOVE AND SECTIONS 31
AND 34 BELOW, XXXXXXX SHALL INDEMNIFY AND HOLD HARMLESS EOG FROM ANY AND ALL
CLAIMS TO OR BY THIRD PARTIES RELATING TO OR ARISING OUT OF MICHAEL'S OWNERSHIP
OR OPERATION OF THE XXXXXXX PROPERTY PRIOR TO THE EFFECTIVE TIME. EOG SHALL
INDEMNIFY AND HOLD HARMLESS XXXXXXX FROM ANY AND ALL CLAIMS TO OR BY THIRD
PARTIES RELATING TO OR ARISING OUT OF EOG'S OWNERSHIP OR OPERATION OF THE
XXXXXXX PROPERTY AFTER THE EFFECTIVE TIME. EACH INDEMNIFIED PARTY HEREUNDER
AGREES THAT UPON ITS DISCOVERY OF FACTS GIVING RISE TO A CLAIM FOR INDEMNITY
UNDER THE PROVISIONS OF THIS AGREEMENT, INCLUDING RECEIPT BY IT OF ANY CLAIM,
JUDICIAL OR OTHERWISE, BY ANY THIRD PARTY WITH RESPECT TO ANY MATTER AS TO WHICH
IT IS ENTITLED TO INDEMNITY UNDER THE PROVISIONS OF THIS AGREEMENT, IT WILL GIVE
PROMPT NOTICE THEREOF IN WRITING To THE INDEMNIFYING PARTY, TOGETHER WITH A
STATEMENT OF SUCH INFORMATION RESPECTING ANY OF THE FOREGOING AS IT SHALL THEN
HAVE. SUCH NOTICE SHALL INCLUDE A FORMAL DEMAND FOR INDEMNIFICATION UNDER THIS
AGREEMENT. THE INDEMNIFIED PARTY SHALL AFFORD THE INDEMNIFYING PARTY A
REASONABLE OPPORTUNITY TO PAY, SETTLE OR CONTEST THE CLAIM AT ITS EXPENSE.
(C) EXCEPT AS SET FORTH IN SUBSECTION (A)(II) ABOVE AND SECTIONS 31 AND
34 BELOW, XXXXXXX SHALL (I) BE RESPONSIBLE FOR ANY AND ALL CLAIMS ARISING OUT OF
THE PRODUCTION OR SALE OF HYDROCARBONS FROM THE XXXXXXX PROPERTY -- OR THE
PROPER ACCOUNTING OR PAYMENT TO PARTIES FOR THEIR INTERESTS THEREIN -- INSOFAR
AS SUCH CLAIMS
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RELATE TO PERIODS OF TIME PRIOR TO THE EFFECTIVE TIME, AND (II) DEFEND,
INDEMNIFY AND HOLD EOG HARMLESS FROM ANY AND ALL SUCH CLAIMS. EOG 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
XXXXXXX HARMLESS THEREFROM.
(D) UNLESS THIS AGREEMENT EXPRESSLY PROVIDES TO THE CONTRARY, THE
INDEMNITIES SET FORTH IN THIS AGREEMENT APPLY REGARDLESS OF WHETHER: (I) THE
INDEMNIFIED PARTY (OR ANY EMPLOYEE, AGENT, CONTRACTOR, SUCCESSOR OR ASSIGN OF
THE INDEMNIFIED PARTY) CAUSES, IN WHOLE OR PART, AN INDEMNIFIED CLAIM; (II) AN
INDEMNIFIED CLAIM ARISES OUT OF OR RESULTS FROM THE INDEMNIFIED PARTY'S (OR AN
EMPLOYEE'S AGENT'S, CONTRACTOR'S, SUCCESSOR'S OR ASSIGN'S) SOLE OR CONCURRENT
NEGLIGENCE; (III) THE INDEMNIFIED PARTY (OR ANY EMPLOYEE, AGENT, CONTRACTOR,
SUCCESSOR OR ASSIGN OF THE INDEMNIFIED PARTY) IS DEEMED TO BE STRICTLY LIABLE,
IN WHOLE OR PART, FOR AN INDEMNIFIED CLAIM; OR (IV) ANY PART OF AN INDEMNIFIED
CLAIM IS THE RESULT OF THE IMPOSITION OF PUNITIVE DAMAGES. ALL INDEMNITIES SET
FORTH IN THIS AGREEMENT EXTEND TO THE OFFICERS, DIRECTORS, EMPLOYEES AND
AFFILIATES OF THE PARTY INDEMNIFIED, AND COVER THE ACTS AND OMISSIONS OF THE
OFFICERS, DIRECTORS, EMPLOYEES, CONTRACTORS, SUCCESSORS AND ASSIGNS OF THE
INDEMNIFYING PARTY.
19. CLOSING ADJUSTMENTS ON EOG PROPERTY. All ad valorem taxes, real
property taxes and similar obligations ("Property Taxes") attributable to the
EOG Property for the year 1998 shall be paid by Xxxxxxx. All proceeds (including
proceeds held in suspense or escrow) from the sale of production actually sold
and delivered by EOG prior to the Effective Time and attributable to the EOG
Property shall belong to EOG and all proceeds from the sale of production
actually sold and delivered after the Effective Time attributable to the EOG
Property shall belong to Xxxxxxx. In addition, all oil, condensate or liquid
hydrocarbons (collectively, "Oil") in storage above the pipeline connection have
been gauged and all gas meter charts were replaced at the
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Effective Time. Xxxxxxx shall pay EOG for such Oil at the actual price being
paid to EOG as of the Effective Time for sales of Oil from such EOG Property.
Except as otherwise specifically provided in this Agreement, all costs, expenses
and obligations relating to the EOG Property which accrue prior to the Effective
Time shall be paid and discharged by EOG; and all costs, expenses and
obligations relating to the EOG Property which accrue after the Effective Time
shall be paid and discharged by Xxxxxxx.
20. CLOSING ADJUSTMENTS ON XXXXXXX PROPERTY. All Property Taxes
attributable to the XXXXXXX Property for the year 1998 shall be paid by EOG. All
proceeds (including proceeds held in suspense or escrow) from the sale of
production actually sold and delivered by Xxxxxxx xxxxx to the Effective Time
and attributable to the XXXXXXX Property shall belong to Xxxxxxx and all
proceeds from the sale of production actually sold and delivered after the
Effective Time attributable to the XXXXXXX Property shall belong to EOG. In
addition, all Oil in storage above the pipeline connection have been gauged and
all gas meter charts were replaced at the Effective Time. EOG shall pay Xxxxxxx
for such Oil at the actual price paid to EOG, as operator, at the Effective Time
for sales of Oil from the XXXXXXX Property.
Except as otherwise specifically provided in this Agreement, all costs, expenses
and obligations relating to the XXXXXXX Property which accrue prior to the
Effective Time shall be paid and discharged by XXXXXXX; and all costs,
expenses and obligations relating to the XXXXXXX Property which accrue after the
Effective Time shall be paid and discharged by EOG.
21. POST-CLOSING ACCOUNTING ON EOG PROPERTY. As soon as practicable after
the Closing, EOG shall prepare and deliver to Xxxxxxx, in accordance with this
Agreement and generally accepted accounting principles, a statement (the
"Intermediate Settlement Statement") setting forth for the EOG Property each
adjustment or payment that was not finally determined as of the Closing in
connection with the EOG Property and showing the calculation
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of such adjustments to the Purchase Price. As soon as practicable after receipt
of the Intermediate Settlement Statement, Xxxxxxx shall deliver to EOG a written
report containing any changes that Xxxxxxx proposes be made to such Intermediate
Settlement Statement. The Parties undertake to agree with respect to such
Intermediate Settlement Statement no later than 60 days after the Closing Date;
such agreement constituting and to be embodied in a "Final Settlement Statement"
and to establish the "Final Purchase Price," and the date upon which the Final
Purchase Price is established to be the "Final Settlement Date." In the event
Xxxxxxx and EOG are unable to mutually agree upon the amount of the Final
Settlement Statement in connection with the EOG Property, an audit shall be
conducted by a mutually agreed upon accounting firm. Xxxxxxx and EOG agree to be
bound by the findings of such audit, insofar as the Final Settlement Statement
amount is concerned, and each shall bear one half of all expenses associated
with such audit. In the event that (a) the Final Purchase Price is more than the
amount paid at Closing, Xxxxxxx shall pay to EOG the amount of such difference,
or (b) the Final Purchase Price is less than the amount paid at Closing, EOG
shall pay to Xxxxxxx the amount of such difference, in either event by wire
transfer in immediately available funds, or, if the amount of such difference is
less than $25,000, by corporate check.
In connection with the EOG Property, EOG shall be responsible for the settlement
of all joint billing audits which relate to accounting periods prior to the
Effective Time and Xxxxxxx shall be responsible for the settlement of all joint
billing audits which relate to accounting periods after the Effective Time. Any
credits received by Xxxxxxx after the Effective Time attributable to expenses
paid prior to the Effective Time on behalf of the EOG Property shall be promptly
reimbursed to EOG by Xxxxxxx.
22. POST-CLOSING ACCOUNTING ON XXXXXXX PROPERTY. As soon as practicable
after the Closing, EOG, as operator of the XXXXXXX Property, shall prepare and
deliver to Xxxxxxx, in accordance with this Agreement and generally accepted
accounting principles, the Intermediate Settlement Statement setting forth for
the XXXXXXX Property each
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adjustment or payment that was not finally determined as of the Closing in
connection with the XXXXXXX Property and showing the calculation of such
adjustments to the Purchase Price. As soon as practicable after receipt of the
Intermediate Settlement Statement, Xxxxxxx shall deliver to EOG a written report
containing any changes that Xxxxxxx proposes be made to such Intermediate
Settlement Statement. The Parties undertake to agree with respect to such
Intermediate Settlement Statement no later thin 60 days after the Closing Date;
such agreement constituting and to be embodied in a "Final Settlement Statement"
and to establish the "Final Purchase Price," and the date upon which the Final
Purchase Price is established to be the "Final Settlement Date." In the event
EOG and Xxxxxxx are unable to mutually agree upon the amount of the Final
Settlement Statement in connection with the XXXXXXX Property, an audit shall be
conducted by a mutually agreed upon accounting firm. EOG and XXXXXXX agree to be
bound by the findings of such audit, insofar as the Final Settlement Statement
amount is concerned, and each shall bear one half of all expenses associated
with such audit. In the event that (a) the Final Purchase Price is more than the
amount paid at Closing, EOG shall pay to Xxxxxxx the amount of such difference,
or (b) the Final Purchase Price is less than the amount paid at Closing, Xxxxxxx
shall pay to EOG the amount of such difference, in either event by wire
transfer in immediately available funds, or, if the amount of such difference is
less than $25,000, by corporate check.
In connection with the XXXXXXX Property, Xxxxxxx shall be responsible for the
settlement of all joint billing audits which relate to accounting periods prior
to the Effective Time and EOG shall be responsible for the settlement of all
joint billing audits which relate to accounting periods after the Effective
Time. Any credits received by EOG after the Effective Time attributable to
expenses paid prior to the Effective Time on behalf of the XXXXXXX Property
shall be promptly reimbursed to Xxxxxxx by EOG.
23. TAXES ON EOG PROPERTY. The Purchase Price excludes any sales taxes or
other taxes in connection with the sale of the EOG Property because the parties
believe that this sale is exempt from sales tax. If a determination is ever made
that a sales tax or other transfer tax
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applies, Xxxxxxx shall be liable for such tax as well as any applicable
conveyance, transfer and recording fees, and real estate transfer stamps or
taxes imposed on any transfer of the EOG property pursuant to this Agreement.
Xxxxxxx shall defend and hold EOG harmless with respect to the payment of all
such taxes, if any, including any interest or penalties assessed thereon.
All taxes (other than ad valorem and income taxes) which are imposed on or with
respect to the production of oil, natural gas or other hydrocarbons or minerals
from the EOG Property or the receipt of proceeds therefrom (including but not
limited to severance, production, excise and windfall profit taxes) shall be
apportioned between the Parties based upon the respective shares of production
taken by the Parties. Payment or withholding of all such taxes which have
accrued prior to the Effective Time and filing of all statements, returns and
documents pertinent thereto shall be the responsibility of EOG. Payment or
withholding of all such taxes which have accrued from and after the Effective
Time and the filing of all statements, returns and documents incident thereto
shall be the responsibility of Xxxxxxx.
24. TAXES ON XXXXXXX PROPERTY. The Purchase Price excludes any sales taxes
or other taxes in connection with the sale of the XXXXXXX Property because the
parties believe that this sale is exempt from sales tax. If a determination is
ever made that a sales tax or other transfer tax applies, EOG shall be liable
for such tax as well as any applicable conveyance, transfer and recording fees,
and real estate transfer stamps or taxes imposed on any transfer of the XXXXXXX
Property pursuant to this Agreement. EOG shall defend and hold Xxxxxxx harmless,
with respect to the payment of all such taxes, if any, including any interest or
penalties assessed thereon.
All taxes (other than ad valorem and income taxes) which are imposed on or with
respect to the production of oil, natural gas or other hydrocarbons or minerals
from the XXXXXXX Property or the receipt of proceeds therefrom (including but
not limited to severance, production, excise and windfall profit taxes) shall be
apportioned between the Parties based upon the respective shares
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of production taken by the Parties. Payment or withholding of all such taxes
which have accrued prior to the Effective Time and filing of all statements,
returns and documents pertinent thereto shall be the responsibility of Xxxxxxx.
Payment or withholding of all such taxes which have accrued from and after the
Effective Time and the filing of all statements, returns and documents incident
thereto shall be the responsibility of EOG.
25. FURTHER OPERATION OF EOG PROPERTY. EOG shall, as to the EOG Property it
now operates, continue to operate the same until the Closing, when such
operation shall be turned over to Xxxxxxx: such operation from and after the
Effective Time shall be conducted by EOG for and on behalf of Xxxxxxx; and for
any such services performed by EOG from and after the Effective Time, Xxxxxxx
shall pay EOG for all reasonable and necessary expenses incurred by EOG in such
operation, protection or maintenance of the EOG Property, excluding overhead
charges as to the EOG Property operated by EOG. Such expenses may be recovered
by EOG as part of the closing, or post-closing adjustments, as appropriate.
In its operation of the EOG Property after full execution of this Agreement, EOG
shall continue to exercise the standard of care of an ordinary prudent operator
in the operation of the EOG Property and shall notify Xxxxxxx of any material
adverse change in the productive capability of any well included in the EOG
Property.
26. CASUALTY LOSS ON EOG PROPERTY. If prior to the Closing all or any
portion of the EOG Property is substantially damaged or destroyed by fire or
other casualty ("EOG Casualty Defect"), EOG shall notify Xxxxxxx promptly after
EOG learns of such event. EOG shall have the right, but not the obligation, to
cure the EOG Casualty Defect by repairing such damage or, in the case of
personal property or fixtures, replacing them with equivalent items, no later
than Closing, all to Michael's reasonable satisfaction. If any uncured EOG
Casualty Defect exists at the Closing, the Purchase Price shall be reduced by
the aggregate reduction in the value of the EOG Property on account of such EOG
Casualty Defect as determined by the mutual
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agreement of the Parties. If the Parties fail for any reason to agree prior to
the Closing as to the amount of any Purchase Price adjustment on account of EOG
Casualty Defects, either Party shall have the right to terminate this Agreement
and the same shall be of no further force and effect. In the event the amount of
such downward adjustment of the Purchase Price exceeds twenty percent (20%) of
the Purchase Price, then EOG or Xxxxxxx xxx, upon written notice to the other
Party, cancel this Agreement and the same shall be of no further force and
effect.
27. CASUALTY LOSS ON XXXXXXX PROPERTY. If prior to the Closing all or any
portion of the XXXXXXX Property is substantially damaged or destroyed by fire or
other casualty ("XXXXXXX Casualty Defect"), Xxxxxxx shall notify EOG promptly
after Xxxxxxx learns of such event. XXXXXXX shall have the right, but not the
obligation, to cure the XXXXXXX Casualty Defect by repairing such damage or, in
the case of personal property or fixtures, replacing them with equivalent items,
no later than Closing, all, to EOG's reasonable satisfaction. If any uncured
XXXXXXX Casualty Defect exists at the Closing, the Purchase Price shall be
increased by the aggregate reduction in the value of the XXXXXXX Property on
account of such XXXXXXX Casualty Defect as determined by the mutual agreement of
the Parties. If the Parties fail for any reason to agree prior to the Closing as
to the amount of any Purchase Price adjustment on account of XXXXXXX Casualty
Defects, either Party shall have the right to terminate this Agreement and the
same shall be of no further force and effect.
28. BROKER'S FEE. EOG represents and warrants to Xxxxxxx that EOG has
incurred no liability, contingent or otherwise, for broker's or finder's fees in
respect of this Agreement or the transactions contemplated hereby for which
Xxxxxxx shall have any responsibility whatsoever; and Xxxxxxx represents and
warrants to EOG that Xxxxxxx has incurred no liability, contingent or otherwise,
for broker's or finder's fees in respect of this Agreement or the transactions
contemplated hereby for which EOG shall have any responsibility whatsoever.
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29. NOTICES. All communications required or permitted under this Agreement
shall be in writing and any communication or delivery hereunder shall be deemed
to have been fully made if actually delivered, or if mailed by registered or
certified mail, postage prepaid, or if sent by telecopy to the address as set
forth below:
EOG XXXXXXX
--- -------
Enron Oil & Gas Company Xxxxxxx Petroleum Corporation
539 North Carancahua 00000 Xxxxxxxxx Xxxxxxx
Xxxxx 0000 Xxxxx 000
Xxxxxx Xxxxxxx, Xxxxx 00000 Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxx Attn. Xxxxx X. Xxxx
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
30. DISCLAIMERS/ACKNOWLEDGMENTS REGARDING EOG PROPERTY.
(a) NO WARRANTY, EXPRESS OR IMPLIED. CONVEYANCE OF THE EOG PROPERTY
SHALL BE WITHOUT WARRANTY OF TITLE OF ANY KIND, EXPRESS OR IMPLIED, EXCEPT BY,
THROUGH OR UNDER EOG, BUT NOT OTHERWISE. CONVEYANCE OF THE EOG PROPERTY SHALL BE
WITHOUT WARRANTY WHATSOEVER, EXPRESS, STATUTORY, OR IMPLIED, AS TO DESCRIPTION,
PHYSICAL CONDITION OF THE EOG PROPERTY (INCLUDING, WITHOUT LIMITATION, THE
ENVIRONMENTAL CONDITION OF THE EOG PROPERTY), QUALITY, VALUE, FITNESS FOR
PURPOSE, MERCHANTABILITY OR OTHERWISE. Xxxxxxx shall satisfy itself, prior to
the Closing, as to the type, condition, quality and extent of the property and
property interests which comprise the EOG Property they are receiving pursuant
to this Agreement and under this sale and exchange. Xxxxxxx shall have the right
of full substitution and subrogation to any and all rights and actions of which
EOG has or may have against any and all preceding owners or vendors of the EOG
Property other than Affiliates of EOG.
(b) Acknowledgments of Xxxxxxx at Closing. By closing on the
transaction provided for in this Agreement, Xxxxxxx shall be deemed to have
acknowledged and does hereby
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acknowledge and admit that: (i) Xxxxxxx his been given the opportunity to
adequately inspect the EOG Property for all purposes prior to Closing; (ii)
Xxxxxxx is aware that the EOG Property has been used for the exploration,
development, production, treating and transporting of oil, gas and other
hydrocarbon products and that physical changes may have occurred as a result of
such use and that EOG has disclosed, and Xxxxxxx is further aware, that there
exists the possibility that there could exist on the EOG Property as a result of
such use or uses one or more detrimental environmental conditions, or that there
could have occurred from such use or uses one or more releases of hazardous
substances (as defined in CERCLA or RCRA) or releases of chemical substances
into, or other pollution or contamination of or into, the ambient air, surface
water, ground water, or land surface and subsurface strata of any real property
included in the EOG Property and of contiguous, or a series of contiguous, real
properties not associated with the EOG Property; (iii) Xxxxxxx has entered into
this Agreement on the basis of its own investigation of the physical condition
of the EOG Property and the land related thereto (including the environmental
condition of the EOG Property); and (iv) XXXXXXX, WITH FULL KNOWLEDGE OF THE
FOREGOING AND AFTER CONDUCTING THE ABOVE DESCRIBED INVESTIGATION AND EVALUATION,
IS ACQUIRING THE EOG PROPERTY ON A "WHERE IS" AND "AS IS" BASIS; AND XXXXXXX, BY
ACQUIRING THE EOG PROPERTY ON A "WHERE IS" AND "AS IS" BASIS WAIVES ANY CLAMS OR
OTHER RIGHTS OF INDEMNIFICATION, CONTRIBUTION OR RECOURSE IT MAY HAVE AGAINST OR
FROM EOG WITH RESPECT TO THE CONDITION OF THE EOG PROPERTY, INCLUDING, WITHOUT
LIMITATION, THE ENVIRONMENTAL CONDITION OF THE EOG PROPERTY AND DAMAGE TO
NATURAL RESOURCES ASSOCIATED WITH THE EOG PROPERTY (INCLUDING ANY LIABILITY
UNDER CERCLA OR OTHER ENVIRONMENTAL LAWS), WHETHER CONTRACT, TORT OR STATUTORY
IN NATURE, REGARDLESS OF THE NEGLIGENCE, FAULT OR STRICT (STATUTORY) LIABILITY
OF EOG.
31. DISCLAIMERS/ACKNOWLEDGMENTS REGARDING XXXXXXX PROPERTY. (a) NO
WARRANTY, EXPRESS OR IMPLIED. CONVEYANCE OF THE XXXXXXX PROPERTY SHALL BE
WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, EXCEPT BY, THROUGH OR UNDER
XXXXXXX, BUT NOT OTHERWISE. CONVEYANCE OF THE XXXXXXX
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PROPERTY SHALL HE WITHOUT WARRANTY WHATSOEVER, EXPRESS, STATUTORY, OR IMPLIED AS
TO DESCRIPTION, PHYSICAL CONDITION OF THE XXXXXXX PROPERTY (INCLUDING, WITHOUT
LIMITATION, THE ENVIRONMENTAL CONDITION OF THE XXXXXXX PROPERTY), QUALITY,
VALUE, FITNESS FOR PURPOSE, MERCHANTABILITY, OR OTHERWISE. EOG shall satisfy
itself, prior to the Closing, as to the type, condition, quality and extent of
the property and property interests which comprise the XXXXXXX Property it is
receiving pursuant to this Agreement and under this sale and exchange. EOG shall
have the right of full substitution and subrogation to any and all rights and
actions of which Xxxxxxx has or may have against any and all preceding owners or
vendors of the XXXXXXX Property other than Affiliates of Xxxxxxx.
(b) Acknowledgments of EOG at Closing. By closing on the transaction
provided for in this Agreement, EOG shall be deemed to have acknowledged and
does acknowledge and admit that: (i) EOG has been given the opportunity to
adequately inspect the XXXXXXX Property for all purposes prior to Closing; (ii)
EOG is aware that the XXXXXXX Property has been used for the exploration,
development, production, treating and transporting of oil, gas and other
hydrocarbon products and that physical changes may have occurred as a result of
such use and that Xxxxxxx has disclosed, and EOG is further aware, that there
exists the possibility that there could exist on the XXXXXXX Property as a
result of such use or uses one or more detrimental environmental conditions, or
that there could have occurred from such use or uses one or more releases of
hazardous substances (as defined in CERCLA or RCRA) or releases of chemical
substances into, or other pollution or contamination of or into, the ambient
air, surface water, ground water, or land surface and subsurface strata of any
real property included in the XXXXXXX Property and of contiguous, or a series
of contiguous, real properties not associated with the XXXXXXX Property; (iii)
EOG has entered into this Agreement on the basis of its own investigation of
the physical condition of the XXXXXXX Property and the land related thereto
(including the environmental condition of the XXXXXXX Property); and (iv) EOG,
WITH FULL KNOWLEDGE OF THE FOREGOING AND AFTER CONDUCTING THE ABOVE DESCRIBED
INVESTIGATION AND EVALUATION, IS ACQUIRING THE XXXXXXX PROPERTY ON A "WHERE IS"
AND "AS IS" BASIS; AND EOG, BY ACQUIRING THE XXXXXXX PROPERTY ON A "WHERE IS"
AND
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"AS IS" BASIS WAIVES ANY CLAIMS OR OTHER RIGHTS OF INDEMNIFICATION, CONTRIBUTION
OR RECOURSE IT MAY HAVE AGAINST OR FROM XXXXXXX WITH RESPECT TO THE CONDITION OF
THE XXXXXXX PROPERTY, INCLUDING, WITHOUT LIMITATION, THE ENVIRONMENTAL CONDITION
OF THE XXXXXXX PROPERTY AND DAMAGE TO NATURAL RESOURCES ASSOCIATED WITH THE
XXXXXXX PROPERTY (INCLUDING ANY LIABILITY UNDER CERCLA OR OTHER ENVIRONMENTAL
LAWS), WHETHER CONTRACT, TORT OR STATUTORY IN NATURE, REGARDLESS OF THE
NEGLIGENCE, FAULT OR STRICT (STATUTORY) LIABILITY OF XXXXXXX.
32. INDEPENDENT EVALUATION. Xxxxxxx and EOG have made an independent
evaluation of the EOG Property and the XXXXXXX Property, respectively, and
acknowledge that the other Party has made no statements or representations
concerning the present or future value of the anticipated income, costs, or
profits, if any, to be derived from such property, the physical or environmental
condition of such property, the quantity and quality of any oil and gas or other
minerals that may be produced from such property, or any other matter with
respect to such property and THAT, NEITHER EOG NOR XXXXXXX IMPLIEDLY OR
EXPRESSLY WARRANTS DESCRIPTION, TITLE, VALUE, QUALITY, PHYSICAL CONDITION OF
SUCH PROPERTY (INCLUDING, WITHOUT LIMITATION, THE ENVIRONMENTAL CONDITION OF
SUCH PROPERTY), MERCHANTABILITY, OR FITNESS FOR PURPOSE OF ANY OF SUCH
PROPERTIES OR THE XXXXX, EQUIPMENT, PIPELINE FACILITIES, OR OTHER PROPERTY
LOCATED THEREON OR USED IN CONNECTION THEREWITH. Xxxxxxx and EOG further
acknowledge that, in entering into this Agreement, they have relied solely upon
their independent examination of the EOG Property and the XXXXXXX Property,
respectively, and public records relating to such property and its independent
estimates, computations, evaluations, reports and studies based thereon and has
not relied on any representation or statement made by the other Party. All
information and data furnished to the other Party is believed by EOG and Xxxxxxx
to be accurate and correct to the best of its knowledge without investigation,
however, NEITHER PARTY MAKES ANY WARRANTY OR REPRESENTATION AS TO THE ACCURACY,
COMPLETENESS OR CORRECTNESS OF ANY INFORMATION FURNISHED TO THE OTHER PARTY. ANY
RELIANCE THE OTHER PARTY MAKES ON
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SUCH INFORMATION IS AT SUCH PARTY'S SOLE RISK AND THE DISCLOSING PARTY SHALL
HAVE NO LIABILITY WHATSOEVER TO THE OTHER PARTY IN CONNECTION THEREWITH.
33. ENVIRONMENTAL ASSESSMENT AND INDEMNIFICATION - EOG PROPERTY. (a) "EOG
Adverse Environmental Conditions" shall mean any individual contamination or
condition that would require $50,000 or more of out-of-pocket costs and expenses
to remedy and that is not otherwise permanently authorized by permit or law,
resulting from any discharge, release, disposal, production, storage, treatment,
or any other activities on, in or from the EOG Property, or the migration or
transportation from other lands to the EOG Property, prior to the Closing Date,
of any wastes, pollutants, contaminants, hazardous materials or other materials
or substances that are subject to regulation under any laws, rules or
regulations relating to the protection of health or the environment, including,
without limitation, the Clean Air Act, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Federal Water Pollution
Control Act, the Safe Drinking Water Act, the Toxic Substance Control Act, the
Hazardous and Solid Waste Amendments Act of 1984, the Superfund Amendments and
Reauthorization Act of 1986, the Hazardous Materials Transportation Act, the
Clean Water Act, the National Environmental Policy Act, the Endangered Species
Act, the Fish and Wildlife Coordination Act, the National Historic Preservation
Act and the Oil Pollution Act of 1990, as well as any state and local
regulation or law governing the same, similar or related matters, all as may
have been or be amended from time to time (collectively, "Environmental Laws").
The term "EOG Adverse Environmental Conditions" shall include any such
individual contamination or condition of the EOG Property that would require
$50,000 or more of out-of-pocket costs and expenses to remedy that is
temporarily authorized by permit, fee agreement or other arrangement.
(b) Xxxxxxx shall advise EOG promptly of any EOG Adverse Environmental
Condition discovered after the date hereof as a result of its investigation of
the EOG Property and the estimated costs for remediating such conditions which
are located on the EOG Property. Xxxxxxx shall provide such information
regarding such EOG Adverse Environmental Conditions as EOG may reasonably
request. If EOG receives notice from Xxxxxxx xxxxx to Closing of any
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EOG Adverse Environmental Condition, (i) EOG shall have the right (A) to agree
to remedy the EOG Adverse Environmental Condition to Michael's reasonable
satisfaction, all at EOG's sole cost and expense, in which case there shall be
no adjustment to the Purchase Price in respect of such EOG Adverse Environmental
Condition, or (B) if the Parties have agreed upon an adjustment to the Purchase
Price in respect of such EOG Adverse Environmental Condition, to reduce the
Purchase Price by the amount of such adjustment, in which event EOG shall have
no obligation or liability in respect of such EOG Adverse Environmental
Condition, and (ii) if the reasonable cost of remedying the EOG Adverse
Environmental Condition exceeds 3% of the Purchase Price, EOG shall have the
right to terminate this Agreement. If EOG receives notice from Xxxxxxx of any
EOG Adverse Environmental Condition after Closing but on or before one hundred
and eighty (180) days following the Closing Date, EOG shall remedy the EOG
Adverse Environmental Condition to Michael's reasonable satisfaction, all at
EOG's sole cost and expense. EOG shall have no liability or obligation to
Xxxxxxx under this Section 33(b) for any EOG Adverse Environmental Condition
for which EOG did not receive timely written notice of such condition on or
before one hundred and eighty (180) days following the Closing Date. If EOG
elects or is obligated to remedy an EOG Adverse Environmental Condition
hereunder, EOG agrees that it will exercise all reasonable efforts and diligence
to complete any required remediation within six (6) months, but any failure to
complete such effort by such time shall not relieve EOG of its duty to fully and
completely satisfy its obligation hereunder. Xxxxxxx shall grant EOG and its
representatives such access to the EOG Property as may be reasonably necessary
provided such access does not interfere with Michael's operations. EOG shall
indemnify, defend and hold Xxxxxxx harmless from and against any and all claims
for personal injuries, death or property damage arising from EOG's remediation
activities hereunder, including, without limitation, any claims by EOG's
employees, representatives or agents. Notwithstanding the foregoing, if EOG
elects to remedy an EOG Adverse Environmental Condition and the Parties agree in
writing on the cost of such remediation, Xxxxxxx shall have the right to remedy
the EOG Adverse Environmental Condition by giving written notice to EOG within
10 days after the Parties agree on the cost of the remediation, in which event
Xxxxxxx shall have assumed EOG's obligation to
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remedy the EOG Adverse Environmental Condition, and EOG shall reimburse Xxxxxxx
for all costs and expenses incurred by Xxxxxxx in effecting such remediation,
but not to exceed the agreed upon cost of such remediation.
(c) Except for any costs or expenses incurred by EOG in discharging any
remediation obligations under Section 33(b) or for which Xxxxxxx is entitled to
reimbursement under the last sentence of Section 33(b), if the Closing hereunder
occurs, Xxxxxxx shall indemnify, defend and hold EOG harmless from and against
any and all claims, demands, causes of action, liabilities and obligations, and
all costs and expenses (including, without limitation, reasonable attorneys'
fees) associated therewith (collectively, "Claims"), arising out of or relating
to any discharge, release, disposal, production, storage, treatment or any
activities on, in or from the EOG Property, or the migration or transportation
from any other lands to the EOG Property, whether before or after the Effective
Time, of materials or substances that are presently, or become in the future,
subject to regulation under Environmental Laws, whether such Environmental Laws
are presently existing or are hereafter enacted, INCLUDING, WITHOUT LIMITATION,
ANY SUCH CLAIMS ARISING IN WHOLE OR IN PART FROM THE SOLE OR CONCURRENT
NEGLIGENCE OR GROSS NEGLIGENCE OF EOG. The foregoing indemnity shall not be
applicable to Claims arising out of or relating to activities on the South
Xxxxxxxxx Ranch Lands after the date such lands have reverted back to EOG
pursuant to the South Xxxxxxxxx Ranch Lease.
34. ENVIRONMENTAL ASSESSMENT AND INDEMNIFICATION - XXXXXXX PROPERTY. (a)
"XXXXXXX Adverse Environmental Conditions" shall mean any individual
contamination or condition that would require $50,000 or more of out-of-pocket
costs and expenses to remedy and that is not otherwise permanently authorized by
permit or law, resulting from any discharge, release, disposal, production,
storage, treatment, or any other activities on, in or from the XXXXXXX Property,
or the migration or transportation from other lands to the XXXXXXX Property,
prior to the Closing Date, of any wastes, pollutants, contaminants, hazardous
materials or other materials or substances that are subject to regulation under
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Environmental Laws. The term "XXXXXXX Adverse Environmental Conditions" shall
include any such individual contamination or condition of the XXXXXXX Property
that would require $50,000 or more of out-of-pocket costs and expenses to remedy
that is temporarily authorized by permit, fee agreement or other arrangement.
(b) EOG shall advise Xxxxxxx promptly of any XXXXXXX Adverse
Environmental Condition discovered after the date hereof as a result of its
investigation of the XXXXXXX Property and the estimated costs for remediating
such conditions which are located on the XXXXXXX Property. EOG shall provide
such information regarding such XXXXXXX Adverse Environmental Conditions as
Xxxxxxx xxx reasonably request. If Xxxxxxx receives notice from EOG prior to
Closing of any XXXXXXX Adverse Environmental Condition, (i) Xxxxxxx shall have
the right (A) to agree to remedy the XXXXXXX Adverse Environmental Condition to
EOG's reasonable satisfaction, all at Michael's sole cost and expense, in which
case there shall be no adjustment to the Purchase Price in respect of such
XXXXXXX Adverse Environmental Condition, or (B) if the Parties have agreed upon
an adjustment to the Purchase Price in respect of such Xxxxxxx Adverse
Environmental Condition, to reduce the Purchase Price by the amount of such
adjustment, in which event Xxxxxxx shall have no obligation or liability in
respect of such XXXXXXX Adverse Environmental Condition, and (ii) if the
reasonable cost of remedying the XXXXXXX Adverse Environmental Condition exceeds
3% of the Purchase Xxxxx, Xxxxxxx shall have the right to terminate this
Agreement. If Xxxxxxx receives notice from EOG of any XXXXXXX Adverse
Environmental Condition after Closing but on or before one hundred and eighty
(180) days following the Closing Date, Xxxxxxx shall remedy the XXXXXXX Adverse
Environmental Condition to EOG's reasonable satisfaction, all at Michael's sole
cost and expense. Xxxxxxx shall have no liability or obligation to EOG under
this Section 34(b) for any XXXXXXX Adverse Environmental Condition for which
Xxxxxxx did not receive timely written notice of such condition on or before one
hundred and eighty (180) days following the Closing Date. If Xxxxxxx elects or
is obligated to remedy a XXXXXXX Adverse Environmental Condition hereunder,
Xxxxxxx agrees that it will exercise all reasonable efforts and diligence to
complete any required remediation within six (6) months, but any failure to
complete such effort by such time shall not
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relieve Xxxxxxx of their duty to fully and completely satisfy their obligation
hereunder. EOG shall xxxxx Xxxxxxx and its representatives such access to the
XXXXXXX Property as may be reasonably necessary provided such access does not
interfere with EOG's operations. Xxxxxxx shall indemnify, defend and hold EOG
harmless from and against any and all claims for personal injuries, death or
property damage arising from Michael's remediation activities hereunder,
including, without limitation, any claims by Michael's employees,
representatives or agents. Notwithstanding the foregoing, if Xxxxxxx elects to
remedy a XXXXXXX Adverse Environmental Condition and the Parties agree in
writing on the cost of such remediation, EOG shall have the right to remedy the
XXXXXXX Adverse Environmental Condition by giving written notice to Xxxxxxx
within 10 days after the Parties agree on the cost of the remediation, in which
event EOG shall have assumed Michael's obligation to remedy the XXXXXXX Adverse
Environmental Condition, and Xxxxxxx shall reimburse EOG for all costs and
expenses incurred by EOG in effecting such remediation, but not to exceed the
agreed upon cost of such remediation.
(c) Except for any costs or expenses incurred by Xxxxxxx in discharging
any remediation obligations under Section 34(b) or for which EOG is entitled to
reimbursement under the last sentence of Section 34(b), if the Closing hereunder
occurs, EOG shall indemnify, defend and hold Xxxxxxx harmless from and against
any and all claims, demands, causes of action, liabilities and obligations, and
all costs and expenses (including, without limitation, reasonable attorneys'
fees) associated therewith, arising out of or relating to any discharge,
release, disposal, production, storage, treatment or any activities on, in or
from the XXXXXXX Property, or the migration or transportation from any other
lands to the XXXXXXX Property, whether before or after the Effective Time, of
materials or substances that are presently, or become in the future, subject to
regulation under Environmental Laws, whether such Environmental Laws are
presently existing or are hereafter enacted, INCLUDING, WITHOUT LIMITATION, ANY
CLAIMS, DEMANDS, CAUSES OF ACTION, LIABILITIES OR OBLIGATIONS ARISING IN WHOLE
OR IN PART FROM THE SOLE OR CONCURRENT NEGLIGENCE OR GROSS NEGLIGENCE OF
XXXXXXX.
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35. PRESS RELEASE. There shall be no press release or public communication
concerning this purchase and sale by either Party except with the written
consent of the Party not originating said release or communication, with the
exception being those reports reasonably required by applicable state or federal
law or regulations.
36. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject hereof and shall supersede any
Prior agreement between the parties, whether written or oral, relating to the
subject hereof, including, without limitation, the Offer Letter Agreement dated
December 29, 1997, from EOG and accepted and agreed to by Xxxxxxx on January 5,
1998. This Agreement May be supplemented, altered, amended, modified or revoked
by writing only, signed by both parties.
37. SURVIVAL. The representations, warranties and agreements contained in
this Agreement and in any certificate or other instrument delivered by or on
behalf of either Party pursuant to this Agreement shall survive the Closing and
shall be unaffected by any investigation made by the other Party.
38. HEADINGS. The headings are for guidance only and shall have no
significance in the interpretations of this Agreement.
39. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS Of THE STATE OF TEXAS. THE PARTIES AGREE THAT ANY LITIGATION RELATING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT MUST BE BROUGHT BEFORE AND DETERMINED
BY A COURT OF COMPETENT JURISDICTION WITHIN THE STATE OF TEXAS.
40. DISPUTE RESOLUTION. (a) EOG AND XXXXXXX SHALL ATTEMPT IN GOOD FAITH TO
RESOLVE ANY CONTROVERSY OR DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT
PROMPTLY
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BY NEGOTIATIONS BETWEEN THEMSELVES. THE NEGOTIATION PROCESS MAY BE STARTED BY
THE GIVING OF WRITTEN NOTICE BY EITHER PARTY TO THE OTHER PARTY IN ACCORDANCE
WITH THE TERMS OF SECTION 29 HEREOF. IN THE EVENT THAT EITHER PARTY DESIRES THE
INVOLVEMENT OF A MEDIATOR TO FACILITATE THE NEGOTIATIONS, THEN IT SHALL GIVE
WRITTEN NOTICE THEREOF, AND THE PARTIES AGREE, ADDITIONALLY, TO NEGOTIATE IN
GOOD FAITH TO SELECT AN INDEPENDENT MEDIATOR TO FACILITATE THE NEGOTIATIONS AND
TO CONDUCT UP TO EIGHT CONSECUTIVE HOURS OF NON-BINDING MEDIATED NEGOTIATIONS IN
HOUSTON, TEXAS WITHIN 30 DAYS AFTER THE NOTICE REQUESTING INVOLVEMENT OF A
MEDIATOR IS FIRST SENT. IF, WITHIN 10 DAYS AFTER THE NOTICE REQUESTING A
MEDIATOR, THE PARTIES ARE NOT ABLE TO AGREE UPON A MEDIATOR, THEN EITHER PARTY
MAY SEEK THE APPOINTMENT OF A MEDIATOR UNDER SUB-PARAGRAPH 40(d).
(b) NO ARBITRATION MAY BE COMMENCED BY EITHER PARTY UNLESS AND UNTIL A
GOOD FAITH EFFORT HAS BEEN MADE TO CONDUCT NEGOTIATIONS AND, IF REQUESTED BY A
PARTY, A MEDIATION IN COMPLIANCE WITH THE FOREGOING PARAGRAPH. IF A CONTROVERSY
OR DISPUTE IS NOT RESOLVED AFTER GOOD FAITH EFFORTS TO CONDUCT THE NEGOTIATION
AND MEDIATION PROCESS DESCRIBED ABOVE, THEN, UPON NOTICE BY EITHER PARTY TO THE
OTHER PARTY (AN "ARBITRATION NOTICE"), THE CONTROVERSY OR DISPUTE SHALL BE
SUBMITTED TO FINAL, BINDING ARBITRATION UNDER THE FOLLOWING PROVISIONS.
(c) AN ARBITRATION NOTICE SHALL DESCRIBE THE CONTROVERSY OR DISPUTE TO
BE SUBMITTED TO ARBITRATION AND SHALL NAME ONE ARBITRATOR. WITHIN THIRTY (30)
DAYS AFTER THE RECEIPT OF SUCH NOTICE, THE OTHER PARTY SHALL BY WRITTEN RESPONSE
DESCRIBE ANY ADDITIONAL CONTROVERSY OR DISPUTE TO BE SUBMITTED AND SHALL NAME A
SECOND ARBITRATOR. IF SUCH PARTY FAILS TO TIMELY NAME A SECOND ARBITRATOR, THE
PARTY FIRST GIVING THE ARBITRATION NOTICE MAY BY FURTHER WRITTEN NOTICE NAME THE
SECOND. THE TWO ARBITRATORS SO APPOINTED SHALL NAME A THIRD ARBITRATOR, WHO
SHALL BE INDEPENDENT AND IMPARTIAL AND WHO, LIKE THE TWO ARBITRATORS SO
APPOINTED, SHALL BE QUALIFIED, BY KNOWLEDGE AND EXPERIENCE (WITH EACH HAVING A
MINIMUM OF 10 YEARS OIL AND GAS EXPERIENCE), TO DETERMINE THE CONTROVERSY OR
DISPUTE SUBMITTED. IF THE TWO APPOINTED ARBITRATORS FAIL TO TIMELY NAME A THIRD
ARBITRATOR, THEN EITHER PARTY MAY SEEK THE APPOINTMENT OF A THIRD UNDER
SUB-PARAGRAPH 40(d).
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(d) IF THE PARTIES ARE UNABLE TO AGREE UPON A MEDIATOR OR THE PARTIES'
APPOINTED ARBITRATORS ARE UNABLE TO SELECT A THIRD ARBITRATOR, THEN EITHER PARTY
MAY SEEK THE APPOINTMENT OF A MEDIATOR OR A THIRD ARBITRATOR AS FOLLOWS. EITHER
PARTY MAY REQUEST THE JUDGE OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS, HOUSTON DIVISION, HAVING GREATEST TENURE BUT NOT ON SENIOR
STATUS TO APPOINT A MEDIATOR OR THIRD ARBITRATOR, WHO SHALL BE INDEPENDENT AND
IMPARTIAL AND QUALIFIED TO DETERMINE THE MATTERS SUBMITTED IN THAT JUDGE'S SOLE
OPINION. IF THAT JUDGE FAILS, WITHIN THIRTY (30) DAYS OF SUBMISSION OF THE
REQUEST, TO APPOINT A MEDIATOR OR THIRD ARBITRATOR, THEN EITHER PARTY MAY MAKE
THE SAME REQUEST TO THE JUDGE OF THAT COURT WITH THE NEXT GREATEST TENURE, AND
SO ON, UNTIL THE MEDIATOR IS APPOINTED AND THE PANEL OF ARBITRATORS IS
CONSTITUTED. IF, PRIOR TO RENDERING A DECISION, AN ARBITRATOR RESIGNS OR BECOMES
UNABLE TO SERVE, HE SHALL BE REPLACED AS FOLLOWS. IF HE WAS ONE OF THE TWO
ARBITRATORS APPOINTED BY THE PARTIES, THE PARTY THAT NAMED HIM SHALL NAME HIS
REPLACEMENT; PROVIDED, HOWEVER, THAT IF HIS REPLACEMENT IS NOT NAMED WITHIN
FIFTEEN (15) DAYS, THE OTHER PARTY SHALL NAME HIS REPLACEMENT. IF HE WAS THE
THIRD ARBITRATOR SELECTED BY THE TWO ARBITRATORS NAMED BY THE PARTIES, THOSE
TWO ARBITRATORS SHALL NAME HIS REPLACEMENT; PROVIDED, HOWEVER, THAT IF THEY FAIL
TO AGREE ON HIS REPLACEMENT WITHIN FIFTEEN (15) DAYS, EITHER PARTY MAY FOLLOW
THE PROCEDURE SPECIFIED IN THIS SUBPARAGRAPH (D).
(e) THE ARBITRATION SHALL OCCUR IN HOUSTON, TEXAS AND SHALL BE CONDUCTED
IN ACCORDANCE WITH THE AMERICAN ARBITRATION ASSOCIATION'S COMMERCIAL ARBITRATION
RULES IN EFFECT AT THE TIME OF THE ARBITRATION NOTICE (THE "RULES"). THE PARTIES
AGREE THAT THEY WILL FAITHFULLY OBSERVE THIS AGREEMENT AND THE RULES AND THAT
THEY WILL ABIDE BY AND PERFORM ANY FINAL AWARD RENDERED BY THE ARBITRATORS.
ADDITIONALLY, THE ARBITRATION SHALL BE CONDUCTED IN A MANNER CONSISTENT WITH THE
FEDERAL ARBITRATION ACT, 9 U.S.C. SECTION 1 ET SEQ. (THE "FAA") OR CONSISTENT
WITH THE SAME PRINCIPLES ENUNCIATED IN THE FAA IN THE EVENT IT MAY NOT BE
TECHNICALLY APPLICABLE; PROVIDED, HOWEVER, THAT RULES ESTABLISHED UNDER THE FAA
THAT THE PARTIES CANNOT ELECT AS APPLICABLE IF THE FAA IS NOT TECHNICALLY
APPLICABLE, SUCH AS PROCEDURAL RULES CONCERNING ENFORCEMENT OF AWARDS, ACCESS TO
THE COURTS, PROCEDURES FOR REVIEW, AND
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MATTERS CONCERNING SUBJECT MATTER JURISDICTION, SHALL NOT BE BINDING IF THE FAA
IS NOT TECHNICALLY APPLICABLE. THE CONTROVERSY OR DISPUTE SUBMITTED SHALL BE
RESOLVED BY THE DECISION OF A MAJORITY OF THE PANEL OF ARBITRATORS. THE AWARD OR
JUDGMENT OF THE PANEL SHALL BE FINAL AND BINDING ON THE PARTIES AND JUDGMENT
UPON THE AWARD OR JUDGMENT OF THE PANEL MAY BE ENTERED AND ENFORCED IN ANY COURT
HAVING JURISDICTION. NO LITIGATION OR OTHER JUDICIAL PROCEEDING MAY EVER BE
INITIATED AT ANY TIME IN ANY COURT FOR THE PURPOSE OF ADJUDICATING,
INTERPRETING, OR ENFORCING THE RIGHTS OR OBLIGATIONS OF THE PARTIES TO THIS
AGREEMENT, OR TO DETERMINE THE VALIDITY OF OR ADJUDICATE A CLAIM OF BREACH OF
THIS AGREEMENT; PROVIDED, HOWEVER, THAT THIS PROHIBITION SHALL NOT APPLY TO
LITIGATION OR OTHER JUDICIAL PROCEEDINGS UNDERTAKEN TO SEEK ENFORCEMENT OF THE
PARTIES' AGREEMENT TO ARBITRATE OR TO ENFORCE ANY ARBITRATION AWARD OR SEEK
REVIEW OF ANY ARBITRATION AWARD. REVIEW OF SUCH ARBITRATION AWARD SHALL BE
PERMITTED ONLY ON GROUNDS THAT (I) THE AWARD WAS PROCURED BY CORRUPTION, FRAUD,
OR UNDUE MEANS; (II) THERE WAS EVIDENT PARTIALITY OR CORRUPTION IN THE THIRD
APPOINTED ARBITRATOR; (III) THE PANEL WAS GUILTY OF MISCONDUCT IN REFUSING TO
HEAR EVIDENCE PERTINENT AND MATERIAL TO THE CONTROVERSY; (IV) THE PANEL EXCEEDED
THEIR POWERS; OR (V) THERE WAS NO AGREEMENT TO ARBITRATE THE MATTER SUBMITTED
AND RULED UPON AND THE PARTY AFFECTED DID NOT PARTICIPATE IN THE ARBITRATION
HEARING WITHOUT RAISING THE OBJECTION. THE PARTIES' EXPRESSLY AGREE THAT AN
AWARD SHALL IN NO OTHER RESPECT BE APPEALABLE OR SUBJECT TO REVIEW. IF EITHER
PARTY BECOMES THE SUBJECT OF A BANKRUPTCY, RECEIVERSHIP OR OTHER SIMILAR
PROCEEDING UNDER THE LAWS OF THE UNITED STATES OF AMERICA, ANY STATE OR
COMMONWEALTH OR ANY OTHER NATION OR POLITICAL SUBDIVISION THEREOF, THEN, TO THE
EXTENT PERMITTED OR NOT PROHIBITED BY APPLICABLE LAW, ANY FACTUAL OR SUBSTANTIVE
LEGAL ISSUES ARISING IN OR DURING THE PENDENCY OF ANY SUCH PROCEEDING SHALL BE
SUBJECT TO ALL OF THE FOREGOING MEDIATION AND ARBITRATION PROVISIONS AND SHALL
BE RESOLVED, TO THE EXTENT PERMITTED, IN ACCORDANCE THEREWITH. THE AGREEMENTS
CONTAINED HEREIN HAVE BEEN GIVEN FOR VALUABLE CONSIDERATION, ARE COUPLED WITH AN
INTEREST AND ARE NOT INTENDED TO BE EXECUTORY CONTRACTS. THE FEES AND EXPENSES
OF THE MEDIATOR WILL BE SHARED EQUALLY BY THE PARTIES AND THE FEES AND EXPENSES
OF THE THIRD ARBITRATOR WILL BE SHARED BY THE PARTIES ON A BASIS DETERMINED TO
BE FAIR AND EQUITABLE BY THE PANEL, TAKING INTO ACCOUNT THE RELATIVE FAULT
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OF EACH PARTY, THE RELATIVE CREDIBILITY AND MERIT OF ALL CLAIMS AND DEFENSES
MADE BY EACH PARTY AND THE COOPERATION, SPEED AND EFFICIENCY OF EACH PARTY IN
CONDUCTING THE ARBITRATION PROCEEDINGS AND COMPLYING WITH THE RULES AND WITH THE
ORDERS AND REQUESTS OF THE PANEL.
(f) WITHIN 10 DAYS AFTER THE SELECTION OF THE THIRD ARBITRATOR, THE
PARTIES AND THEIR COUNSEL WILL APPEAR BEFORE THE PANEL AT A PLACE AND TIME IN
HOUSTON, TEXAS AS MAY BE DESIGNATED BY THE PANEL FOR THE PURPOSE OF EACH PARTY
MAKING A ONE HOUR OR LESS PRESENTATION AND SUMMARY OF THE CASE. THEREAFTER, THE
PANEL WILL SET DATES AND TIMES FOR ADDITIONAL HEARINGS UNTIL THE PROCEEDING IS
CONCLUDED. THE DESIRE AND GOAL OF THE PARTIES IS, AND THE PANEL WILL BE ADVISED
THAT THEIR GOAL SHOULD BE, TO CONDUCT AND CONCLUDE THE ARBITRATION PROCEEDING AS
EXPEDITIOUSLY AS POSSIBLE. IF ANY PARTY OR HIS COUNSEL FAILS, WITHOUT GOOD
CAUSE, TO APPEAR AT ANY HEARING, THE PANEL SHALL BE ENTITLED TO REACH A
DECISION BASED ON THE EVIDENCE WHICH HAS BEEN PRESENTED TO HIM BY THE OTHER
PARTY WHO DID APPEAR.
(g) ANY ARBITRAL AWARD MAY BE ENFORCED IN THE COURTS OF THE STATE OF
TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PARTIES HEREBY ACCEPT FOR
THEMSELVES AND IN RESPECT OF THEIR PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS FOR SAID PURPOSE AND THE
PARTIES HEREBY IRREVOCABLY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH THEY MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.
(h) THE PANEL WILL HAVE NO AUTHORITY TO AWARD PUNITIVE OR OTHER DAMAGES
NOT MEASURED BY THE PREVAILING PARTY'S ACTUAL DAMAGES.
41. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and assigns.
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ENRON OIL & GAS COMPANY
By: /s/ XXXXX X. XXXXXXXX, XX.
---------------------------------
Name: Xxxxx X. Xxxxxxxx, Xx.
--------------------------------
Title: Senior Vice President - LAW
-------------------------------
XXXXXXX PETROLEUM CORPORATION
By: /s/ XXXXX X. XXXX
----------------------------------
Xxxxx X. Xxxx
Chief Executive Officer
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STATE OF TEXAS )
)
COUNTY OF XXXXXX )
The foregoing instrument was acknowledged before me this 5th day of
February, 1998, by XXXXX X. XXXXXXXX, XX., SR. VICE PRESIDENT - LAW of ENRON OIL
& GAS COMPANY, a Delaware corporation, on behalf of said corporation.
My commission expires: /s/ XXXXX X. XXXXX
------------------------
October 15, 2000 Notary Public
---------------------
[XXXXX X. XXXXX NOTARY SEAL]
STATE OF TEXAS )
)
COUNTY OF XXXXXX )
The foregoing instrument was acknowledged before me this 5th day of
February 1998, by Xxxxx X. Xxxx, Chief Executive Officer of XXXXXXX PETROLEUM
CORPORATION, a Texas corporation, on behalf of said corporation.
My commission expires:
/s/ XXXX X. VAN ROOYAN
July 18, 1998 ----------------------------
---------------------------- Notary Public
[XXXX X. VAN ROOYAN NOTARY SEAL]
39
