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EXHIBIT 10.k
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into as of the 6th day of November, 1996, by
and between Enexco, Inc., a Texas corporation ("Enexco"), N & R Resources, Inc.
("N & R"), X. Xxxxx Rather, Xxxxx X. Rather, Xxxxxxx Rather, Xxxx X. Rather, and
C. Xxxxx Rather (hereinafter collectively referred to as the "Sellers"), and
Queen Sand Resources, Inc., a Nevada corporation (the "Purchaser"), (Sellers and
Purchaser hereinafter individually referred to as "Party" and collectively as
"Parties").
RECITALS
WHEREAS, Sellers desire to sell and convey, and Purchaser desires to
purchase and receive certain rights and interests in and to various oil and gas
properties.
WHEREAS, the parties hereto have entered that certain letter of intent
dated August 12, 1996, from Purchaser to Sellers, covering the oil and gas
properties, which letter of intent is superseded and replaced by this Agreement.
NOW, THEREFORE, for and in consideration of the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Sellers and
Purchaser hereby agree as follows:
1. Definitions. For the purpose of this Agreement, the following
terms shall have the following meanings:
"LEASES" shall mean the oil, gas, and mineral leases and
properties and interests described in Exhibits "A-1" through "A-7"
attached hereto and made a part hereof, including, but not limited to,
leasehold, fee, mineral, royalty, and overriding royalty interests and
payments out of or measured by production (hereinafter defined), and
including the units, pooled acreage, spacing or proration units, or
other allocation of acreage, and all rights associated therewith, which
are applicable to such leases, properties, and interests and have been
established by or in accordance with (a) applicable contractual
provisions regarding unitization, communitization, pooling, spacing or
proration, or (b) applicable state or federal law.
"PRODUCTION" shall mean all oil, gas, casinghead gas,
condensate, distillate, and other liquid or gaseous hydrocarbons, and
other minerals which are in, under, upon, and produced from or
allocable (or to be produced from and allocable) to the Leases, after
the Effective Date (defined herein), including "line fill" and
inventory, or the proceeds from the sale of such production.
"XXXXX" shall mean and refer to all xxxxx located on the
Leases, whether productive or non-productive, active or inactive, used
for production or injection, and xxxxx used for water production.
"EQUIPMENT" shall mean and refer to all personal property of
every kind or character located on the Leases or used in the operation
thereof, including, without limitation, xxxxx, compressors, well
equipment, casing, tanks, machinery, gathering lines and systems,
treatment facilities, pipelines and other appurtenances, and any other
personal property situated thereon.
"RIGHTS OF WAY AND PERMITS" shall mean and refer to all
rights, privileges, benefits, permissions, and authorizations
(including, without limitation, permits, licenses, servitudes,
easements, and rights of way) in respect of the use and occupation of
the surface of the Leases, and the subsurface depths under the land and
premises covered by and benefiting such Leases.
"CONTRACTS" shall mean and refer to all of the orders, gas
purchase and sale contracts (wherein Sellers are a selling party),
crude purchase and sale agreements (wherein Sellers are
PURCHASE AND SALE AGREEMENT - PAGE 1
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a selling party), surface leases, farm-in agreements, farmout
agreements, bottom hole agreements, acreage contribution agreements,
operating agreements, unit agreements, area of mutual interest
agreements, processing agreements, options, leases of equipment or
facilities, and other contracts, agreements, and rights, which are
owned by Sellers, in whole or in part and are (i) appurtenant to the
Leases or (ii) used or held for use in connection with the ownership or
operation of the Leases or with the Production, treatment on the
Leases, sale or disposal of water, hydrocarbons, or associated
substances.
"RECORDS" shall mean and refer to all files, records, and data
in the possession of Sellers relating to the Leases, Production, Xxxxx,
and Equipment, including, without limitation, lease files, title
records (including abstracts of title, title opinions, and title
curative documents), contracts, correspondence, originals, or copies of
geological, geophysical, and seismic records, data, and information,
and originals and copies of production records, electric logs, core
data, pressure data, and decline curves and graphical production
curves, and all related matters.
2. Sale and Purchase. Sellers agree to sell and convey to
Purchaser, and Purchaser agrees to purchase and pay for:
(a) All of Sellers' right, title, and interest in and to the
Leases described in Exhibit "A-1" attached hereto, commonly referred to
as the "Enexco, Inc. - Xxxxxxx Unit," and in and to the Leases
described in Exhibit "A-2" attached hereto, commonly referred to as the
"Xxxxxxx Well," together with all of Sellers' right, title, and
interest in and to Production, Xxxxx, Equipment, Contracts, and Records
relating to, and attributable to, such Leases.
(b) An undivided seventy-five percent (75%) of all of Sellers'
right, title, and interest in and to the Leases described in Exhibit
"A-3" attached hereto, commonly referred to as the "Xxxxxxx #2 Well,"
and in and to the Leases described in Exhibit "A-4" attached hereto,
commonly referred to as the "Blocker Field Prospect," and in and to the
Leases described in Exhibit "A-5" attached hereto, commonly referred to
as the "Xxxxx #1 Well," together with an undivided seventy-five percent
(75%) of all of Sellers' right, title, and interest in and to
Production, Xxxxx, Equipment, Contracts, and Records relating to, and
attributable to, such Leases.
(c) An undivided fifty percent (50%) of all of Sellers' right,
title, and interest in and to the Leases described in Exhibit "A-6"
attached hereto, commonly referred to as the "Juboncillo Prospect," and
in and to the Leases described in Exhibit "A-7" attached hereto,
commonly referred to as the "X. X. Xxxx Prospect," together with an
undivided fifty percent (50%) of all of Sellers' right, title, and
interest in and to Production, Xxxxx, Equipment, Contracts, and Records
relating to, and attributable to, such Leases.
Exhibit "B-1" attached hereto and made a part hereof sets forth the
undivided interests of Sellers being acquired by Purchaser under this Agreement
in the Leases, and the revenue attributable thereto. This Agreement covers and
pertains to the rights, titles, and interests of Sellers in the Leases,
Production, Xxxxx, Equipment, and Rights of Way, as set forth in subparagraphs
(a), (b), and (c) above, even if the undivided interests being conveyed by
Sellers in any such property or property rights should be incorrectly described
in Exhibit "B-1."
The Leases, Production, Xxxxx, Equipment, Rights of Way and Permits,
Contracts, and Records to the extent being purchased by Purchaser, are
hereinafter sometimes referred to individually and collectively as "Property."
3. Purchase Price. The "Purchase Price" for the Property payable
by Purchaser shall be subparagraphs (a) through (g) as follows:
(a) Five Hundred Thousand Dollars ($500,000) payable at
Closing to Xxxx X. Xxxxxx, as escrow agent, as further described below;
and
PURCHASE AND SALE AGREEMENT - PAGE 2
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(b) A promissory note in the sum of One Hundred Thousand
Dollars ($100,000) payable by Purchaser, bearing interest at the rate
of nine percent (9%) per annum, payable on or before the ninetieth
(90th) day following the date of Closing; and
(c) A promissory note in the sum of One Hundred Thousand
Dollars ($100,000) payable by Purchaser, bearing interest at the rate
of nine percent (9%) per annum, payable on or before the one hundred
and eightieth (180th) day following the date of Closing; and
(d) A promissory note in the sum of Two Hundred Twenty-Seven
Thousand Five Hundred Dollars ($227,500) payable by Purchaser, bearing
interest at the rate of ten percent (10%) per annum, which shall begin
to accrue on the date of Closing, payable in twenty-four (24) equal
monthly installments of principal and interest, with the first
installment due on December 1, 1996; and
(e) One hundred thousand (100,000) shares of the common stock
of Queen Sand Resources, Inc., a Delaware corporation ("QSR"), who is
the parent corporation of Purchaser (the "QSR Shares"), which shares
are to be issued to Xxxx X. Rather. For purposes of this transaction
said shares are deemed to have a value of Two Hundred Fifty Thousand
Dollars ($250,000). The Sellers acknowledge that the QSR Shares being
acquired pursuant to this Agreement have not been, and except as
provided for in paragraph 18 herein, will not be, registered under the
Securities Act of 1933 as amended (the "Securities Act") or qualified
under applicable state securities law and that the transferability
thereof is restricted by the registration provisions of the Securities
Act as well as such state laws. Based upon the representation and
agreements being made by it herein, the QSR Shares will be issued
hereunder pursuant to an exemption from such registration provided by
Section 4(2) of the Securities Act and applicable state securities law
qualification exemptions. The Sellers represent that they are acquiring
the QSR Shares for their own account, for investment purposes only, and
not with a view to resale or other distribution thereof, nor with the
intention of selling, transferring, or otherwise disposing of all or
any part of such securities for any particular event or circumstance,
except selling, transferring, or disposing of them upon full compliance
with all applicable provisions of the Securities Act, the Securities
and Exchange Act of 1934 amended, the Rules and Regulations promulgated
by the United States Securities and Exchange Commission thereunder, and
any applicable state securities laws. The Sellers further understand
and agree that (i) the securities may be sold only if they are
subsequently registered under the Securities Act and qualified under
any applicable state securities laws or, in the opinion of counsel
acceptable to the Purchaser, an exemption from such registration and
qualification is available; (ii) except as otherwise provided for
herein, the Purchaser will be under no obligation to register or
qualify the QSR Shares or effect compliance with any exemption from
such registration or qualification; and (iii) any routine sales of
securities made in reliance upon Rule 144 promulgated by the Commission
can be made only in the amounts set forth in and pursuant to the other
terms and conditions of that Rule. Purchaser shall deliver at Closing a
letter of instruction from QSR to its transfer agent authorizing the
delivery to Xxxx X. Rather of the QSR Shares.
The Sellers agree that each certificate representing the QSR
Shares will bear on its face a legend in substantially the following
form:
These securities have not been registered under the
Securities Act of 1933 or qualified under any state securities
laws. They may not be sold or transferred in the absence of an
effective registration statement under that Act or
qualification under applicable state securities laws without
an opinion of counsel satisfactory to the Company that such
registration and qualification are not required.
(f) Purchaser shall pay at Closing the entire indebtedness
outstanding as of October 20, 1996, plus interest thereafter accrued
under that certain Promissory Note dated July 25, 1995, from X. Xxxxx
Rather and Xxxxx X. Rather, as makers, to Texas Central Bank, as payee,
in the original principal sum of $125,000.00, as renewed and extended
by Renewal Promissory Note dated May 20, 1996, in the original
principal sum of $157,785.00; provided, however, Purchaser shall not
pay any such indebtedness to the extent same exceeds
PURCHASE AND SALE AGREEMENT - PAGE 3
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at the date of Closing the sum of $130,000.00. Subject to the foregoing
limitation, if any of such indebtedness is paid by Sellers to Texas
Central Bank prior to date of Closing, the Purchaser shall reimburse
Sellers at Closing for any such payments made.
It is expressly understood that Purchaser does not agree to
pay a second promissory note dated August 24, 1991, payable by X. Xxxxx
Rather and Xxxxx X. Rather to Texas Central Bank, in the principal sum
of $50,000.00, which indebtedness is also secured by the oil, gas, and
mineral properties described in Exhibits "A-1" and "A-2," and which
security interest is to be released on or prior to closing.
(g) Purchaser shall pay at Closing to Sellers, or directly to
Sellers' counsel, one-half of the attorney's fees incurred by Sellers
in connection with this transaction.
The Purchase Price shall be allocated among the various properties
being acquired under this Agreement as set forth in Exhibit "B-2" attached
hereto and made a part hereof.
The ownership interest of each particular Seller in the various oil and
gas properties is also set forth and described in Exhibit "B-2" attached hereto.
The share of the Purchase Price to be delivered to a particular Seller shall be
based upon such Seller's ownership share, as reflected in Exhibit "B-2," of each
particular property being purchased, and shall be based upon the purchase value
of each particular property, as reflected in Exhibit "B-2."
The cash payment to be tendered under subparagraph (a) above, as such
sum may be adjusted pursuant to the terms herein, shall be delivered at closing
to Xxxx X. Xxxxxx, as Escrow Agent, under an agreement executed simultaneously
with this Agreement by Purchaser, Sellers, and Janex Oil Co., Inc. The
distribution of such funds by the Escrow Agent, pursuant to the terms of such
Escrow Agreement, is for the purposes expressed in such Escrow Agreement, which
purposes have been agreed by the parties to such Escrow Agreement, which
purposes include matters unrelated to the sale and conveyance covered by this
Agreement. Therefore, the delivery of the cash sums to Xxxx X. Xxxxxx, as Escrow
Agent, at Closing hereunder, shall constitute a complete tender and delivery of
such sums to Sellers for purposes of this Agreement.
Prior to Closing, the Sellers shall deliver to Purchaser a joint
directive advising Purchaser of the manner in which Sellers have apportioned
between themselves, based upon their respective share of the Purchase Price.
Purchaser shall deliver said promissory notes according to such joint directive.
The promissory notes described in subparagraphs (b), (c), and (d) above
shall be tendered and delivered at Closing to the particular Sellers who shall
be payees of the particular note, per the joint directive received by Purchaser
from Sellers, utilizing the form of promissory notes attached hereto as Exhibits
"C-1," "C-2," and "C-3." At the request of Sellers, each note referenced in
subparagraphs (b), (c), and (d) above may be separated into multiple separate
notes, with such separate note being payable to the particular Seller sharing in
the payments, and with each such separate note covering that portion of the
principal sum due to be paid to a particular sharing Seller. If any of the notes
described in subparagraphs (b), (c), and (d) are divided into multiple separate
notes, each such separate note created by such division shall be based upon the
forms of notes attached as Exhibits "C-1," "C-2," and "C-3, " with each such
separate note created by such division differing from the form as to payee and
the principal sum.
At Closing a Subscription Agreement shall be executed in counterpart
copy by Xxxx X. Rather, being the Seller receiving the QSR Shares. At Closing
Purchaser shall cause to be delivered to such Seller an instruction letter from
QSR to its transfer agent which authorizes the issuance of the QSR Shares to
such Seller.
All cash payments to be tendered by Purchaser, either before or after
Closing, shall be made by wire transfer or shall be made by certified funds.
The Purchase Price shall be subject to adjustment as hereinafter
provided.
PURCHASE AND SALE AGREEMENT - PAGE 4
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4. Closing and Effective Date.
(a) The closing of the sale and purchase of the Property shall
take place on or before November 5, 1996, (the "Closing") at the
offices of Enexco, or at such other time, place, or manner as may be
mutually agreeable to the Parties. The sale of the Property shall be
effective as of 7:00 a.m. Central Standard Time on October 1, 1996 (the
"Effective Date").
(b) At the Closing, the Property shall be conveyed and
transferred by Sellers to Purchaser by the execution and delivery of
the following:
(1) An Assignment and Xxxx of Sale in the form
attached hereto as Exhibit "D-1" conveying the properties
described in Exhibits "A-1" and "A-2"; and
(2) An Assignment and Xxxx of Sale in the form
attached hereto as Exhibit "D-2" to be used for the properties
described in Exhibits "A-3" and "A-4"; and
(3) A Xxxx of Sale in the form attached hereto as
Exhibit "D-3" to be used for the properties described in
Exhibit "A-5"; and
(4) An Assignment and Xxxx of Sale in the form
attached hereto as Exhibit "D-4" to be used for the properties
described in Exhibits "A-6" and "A-7"; and
(5) Such other instruments of conveyance as may be
reasonably requested by Purchaser.
Such documents to be delivered at Closing shall hereinafter be
referred to as the "Assignments."
(c) Purchaser shall be subject to the duties and obligations
attendant with ownership of the Property for the period from and after
the Effective Date. For the period prior to the Effective Date, Sellers
shall be entitled to all of the rights (including, without limitation,
the rights to all of Sellers' share of Production and proceeds of
Production) appurtenant and attributable to the Property and shall be
subject to the duties and obligations attendant with ownership of the
Property.
5. Adjustments to Purchase Price. The Purchase Price shall be
adjusted (the "Adjusted Purchase Price") at the Closing, by the "Interim
Settlement Statement" (hereinafter defined in this paragraph and in paragraph 10
below), and, subsequent to Closing, by the "Final Settlement Statement"
(hereinafter defined in paragraph 14 below), as follows:
(a) The Purchase Price shall be increased by the following:
(1) the value of all merchantable allowable oil or
other liquid hydrocarbons in storage owned by Sellers in the
tanks or above the pipeline connection at the Effective Date,
and not previously sold by Sellers, that is credited to the
share of the Property being acquired hereunder, valued at the
contract price thereto, or if none, the actual price received
by Purchaser, less taxes or gravity adjustments deducted by
the purchaser of such oil or other liquid hydrocarbons;
(2) the amount of all reasonable expenditures made in
connection with the ownership, operation, and maintenance of
the share of the Property being acquired hereunder, (including
royalties and rentals) and in accordance with generally
accepted accounting principles and prudent operations,
attributable solely to the period from and after the Effective
Date and which are paid by or on behalf of Sellers after the
Effective Date;
(3) an amount equal to all prepaid expenses,
attributable to the ownership, operation, and maintenance of
the share of the Property being acquired hereunder that are
paid by or on behalf of Sellers after the Effective Date and
prior to the Closing
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Date and that are, in accordance with generally accepted
accounting principles, attributable solely to the period from
and after the Effective Date;
(4) any other amount agreed upon by Purchaser and
Sellers.
(b) The Purchase Price shall be decreased by the following:
(1) the amount of any proceeds from the sale of
Production attributable to the share of the Property being
acquired hereunder attributable to the period on or after the
Effective Date (net of production, severance, and similar
taxes and assessments measured by or payable out of
production) actually received or accrued by or on behalf of
Sellers;
(2) an amount equal to all unpaid ad valorem,
property, production, profit, severance, and similar taxes and
assessments based upon or measured by the ownership of the
share of the Property being acquired hereunder or the
production of oil, gas, or other minerals therefrom or the
receipt of proceeds attributable thereto, which accrue to or
are chargeable against such share of the Property (in
accordance with generally accepted accounting principles) and
which are attributable to the period prior to the Effective
Date, which amount shall, to the extent not actually assessed,
be computed based upon such taxes and assessments for the
immediately-preceding calendar year, or if such taxes or
assessments are assessed on other than a calendar-year basis,
for the tax period last ended;
(3) any amounts received by Sellers (whether prior to
or subsequent to the Effective Date) pursuant to
"take-or-pay," advance payment, or similar provisions of any
production sales contract, any gas balancing agreement, or any
other agreement, to the extent any purchaser has the right to
apply any such amounts to Purchaser's share of Production
delivered after the Effective Date;
(4) any reduction in the value of the share of the
Property being acquired hereunder resulting from the existence
of a Defect (herein defined in Section 5(d)) which is not
cured or waived prior to Closing;
(5) any other amount agreed upon by Purchaser and
Sellers.
(c) The "Interim Settlement Statement" shall be prepared by
Sellers prior to Closing, which statement shall set forth the
adjustments to the Purchase Price, per the adjustments set forth in
this paragraph 5, which are or may be determined at or prior to
Closing. Such statement shall be prepared according to generally
accepted accounting principles and shall show the calculation of all
such adjustments. Upon the approval of such Interim Settlement
Statement by Purchaser, the Purchase Price shall be adjusted according
to such statement. Upon Purchaser's request, Sellers shall make
available to Purchaser all information relied upon by Sellers for the
adjustments requested in order to aid and facilitate Purchaser's
approval of such statement. In the event the net effect of such
statement is to reduce the Purchase Price payable to Sellers, such
reduction shall be made from the sum of money to be tendered to Sellers
at Closing, which sum is referenced in paragraph 3(a) above. In the
event the net effect of such statement is to increase the Purchase
Price payable to Sellers, such increase shall be made to the sum of
money to be tendered to Sellers at Closing, which sum is referenced in
paragraph 3(a) above. After Closing the Purchase Price may further be
adjusted, pursuant to the adjustments set forth in this paragraph, with
the "Final Settlement Statement" in the manner further described in
paragraph 14 below.
(d) All monies received by either Party hereto which, under
the terms of this Agreement or otherwise, belong to the other Party,
shall be received in trust by the Party receiving such funds, and shall
monthly, upon receipt, be paid over to the other Party. The Parties
agree, in this regard, to cooperate fully and to execute, endorse, and
deliver as expeditiously as practicable such papers, checks, and
documents as are needed promptly to complete the transfer of such
payments;
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(e) After the Closing, if an invoice or other evidence of an
obligation relating to the share of the Property acquired by Purchaser
is received which is applicable to periods both prior to and after the
Effective Date, and is partly the obligation of Sellers and partly the
obligation of Purchaser, then each Party shall pay its respective
portion of such obligation to the obligee, prorated between the Parties
as of the Effective Date;
(f) At and after the Closing, Purchaser and Sellers will
cooperate fully in notifying all applicable third parties (including
the execution by Sellers of such transfer orders, letters in lieu,
change of operator, etc., as may be requested by Purchaser) so that
notices, proceeds, and invoices from such third parties may take into
account the fact that Purchaser has acquired the Property as of the
Effective Date;
(g) The parties hereto agree to exercise diligence and good
faith in attempting to resolve any disagreements or disputes which may
arise from the adjustments to the Purchase Price to be made in
accordance with this paragraph.
(h) The provisions of this Section 5 shall survive the Closing
hereof.
6. Property Conditions, Title Review, Property Information, and
Casualty Losses.
(a) Property Conditions. THIS SALE OF THE EQUIPMENT AND ALL
OTHER PERSONAL PROPERTY THAT IS A PART OF THE PROPERTY IS MADE ON AN
"AS IS," "WHERE IS" BASIS WITH ALL FAULTS AS TO ITS CONDITION, AND
SELLERS EXPRESSLY DISCLAIM ALL WARRANTIES AS TO THE CONDITION OF THE
EQUIPMENT (NOTE, HOWEVER, THERE ARE CERTAIN WARRANTIES AS TO TITLE AS
HEREIN SET FORTH) INCLUDING, WITHOUT LIMITATIONS, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE.
Sellers agree that for a period of time commencing with the date of the
letter of intent dated August 13, 1996, and continuing until five (5)
business days before Closing (the "Review Period"), Purchaser,
personally or through its authorized agents or representatives, shall
have the right to make any and all physical inspections of the Property
which Purchaser may desire to make or to have made and to make all such
other inspections, surveys, tests, or other studies (including, but not
limited to, environmental assessments and evaluations) as Purchaser
deems necessary or desirable. Upon reasonable notice to Sellers,
Purchaser, and its authorized agents and representatives, at
Purchaser's sole risk, may enter upon the Property for the purpose of
conducting those inspections, surveys, tests, and studies. If Purchaser
shall determine that the condition of the Property is not in
substantial compliance with any governmental regulations (including
environmental regulations), then upon discovery Purchaser must promptly
give written notice to Sellers of such condition ("Condition"). Upon
receipt of such notice, Sellers shall have the option, but not the
obligation, to (a) cure or remedy such Condition to the reasonable
satisfaction of Purchaser (if current remediation of such Condition is
required by a governmental agency, Sellers agree that the Condition
shall be remedied in accordance with and to the satisfaction of the
appropriate agency's requirements); or (b) agree with Purchaser on a
reduction to the Purchase Price which reduction shall reflect
Purchaser's anticipated reasonable cost to remedy such Condition. If
the Condition cannot be cured or remedied to Purchaser's reasonable
satisfaction, and if agreement cannot be reached on reduction to the
Purchase Price, then the affected Property may be excluded by Purchaser
from the Property to be acquired by Purchaser hereunder, and the
Parties hereto shall in good faith attempt to agree upon a reduction of
the Purchase Price on account of the excluded Property. In the event
the Parties fail to agree upon the implementation of either Subclause
(a) or (b) prior to Closing, and if a reduction of more than
twenty-five percent (25%) in the Purchase Price results from the
exclusion by Purchaser of the affected Property, either Party may
terminate this Agreement by delivery of written notice so indicating to
the other Party, in which event this Agreement shall terminate, and the
"Escrow Deposit" (as defined herein) (plus accrued interest) shall be
returned to Purchaser, and the Parties hereto shall have no further
rights or obligations under this Agreement;
(b) Review of the Records. During the Review Period, and upon
reasonable notice from Purchaser, Sellers shall provide Purchaser,
personally or through their authorized
PURCHASE AND SALE AGREEMENT - PAGE 7
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agents or representatives, full access during normal business hours to
Sellers' offices and premises to review and inspect all Records,
including, but not limited to, all abstracts of title, lease files,
unit files, production and marketing files, title opinions, title
files, title records, geologic, engineering, and other files or
information in Sellers' possession or to which they have access which
relate to the Property and the status of Sellers' title thereto, and
Purchaser at its expense, shall have the right to make and retain
copies of any of such Records; provided, however, if the transactions
contemplated hereby do not close for any reason, Purchaser shall return
any Records and copies thereof to Sellers forthwith. Without limiting
the generality of the foregoing, Purchaser shall also be given access
to reserve reports, geological and geophysical reports (including, but
not limited to well records, log films, proprietary or joint venture
seismic data or other seismic data which Sellers are not contractually
restricted from disclosing), contracts (including, but not limited to,
gas contracts), operating agreements, operating statements and reports;
(c) Notice of Defect. If during the Review Period, Purchaser
determines that the Property is subject to a "Defect" (as defined
herein in Section 6(d)), the Purchaser must give written notice to
Sellers of such Defect, the nature of the Defect, and furnish Sellers
with Purchaser's basis for the assertion of such Defect. As soon as
practical after such written notice, Sellers shall use reasonable
diligence to cure any such Defects. If Sellers cannot cure any such
Defects to the reasonable satisfaction of Purchaser, then Sellers shall
so notify Purchase in writing. Thereafter, Sellers and Purchaser shall
use a good faith effort to agree on the Purchase Price adjustment for
any such Defect which cannot be cured. If the Sellers and Purchaser
cannot agree in good faith on the amount of such a Purchase Price
adjustment, such amount shall be determined in accordance with the
following guidelines:
(1) If the Defect is that Sellers' Net Revenue
Interest ("NRI") for any Property is less than the NRI for
such Property as set forth in Exhibit "B-1," then the portion
of the Purchase Price which Sellers and Purchaser may agree to
be allocated to such Property, shall be adjusted in the same
proportion that the actual NRI for such property bears to the
NRI shown in Exhibit "B-1."
(2) If the Defect is a lien, encumbrance, or other
charge upon the Property which is liquidated in amount, then
the adjustment shall be the sum necessary to be paid to the
obligee to remove the Defect from the Property;
(3) If the Defect is curable, but not cured by
Closing, and Sellers desire to continue to attempt to cure
such Defect, the Parties shall attempt to agree upon an amount
to instruct the Escrow Agent (defined herein) to withhold at
Closing, pursuant to the Escrow Agreement (defined herein);
(4) If the Purchase Price adjustment for any such
Defect cannot be determined, and the Sellers and Purchaser
cannot agree in good faith on the amount of the adjustment to
the Purchase Price, the Purchaser may (a) waive the Defect and
proceed with Closing or (b) exclude the affected Property and
reduce the Purchase Price based upon the value of the affected
Property, as such value may be agreed upon by Sellers and
Purchaser in good faith. In the further event the Parties are
unable to agree in good faith upon the value of the affected
Property, then either party hereto, upon written notice to the
other, may elect to terminate this Agreement. In the event
exclusion of any affected Property or adjustment due to Defect
results in a reduction of more than twenty-five percent (25%)
of the Purchase Price, either Party may terminate this
Agreement by delivery of written notice so indicating to the
other Party. In the event this Agreement shall be so
terminated, the Escrow Deposit (plus accrued interest) shall
be returned to Purchaser, and the Parties hereto shall have no
further rights or obligations under this Agreement.
(d) Definition of Defect. For the purpose of this Agreement, a
"Defect" shall be defined as:
(1) Any material encumbrance, lien, mortgage, breach
of representation or warranty, production payment, pledge,
claim, charge, call on production, default,
PURCHASE AND SALE AGREEMENT - PAGE 8
9
defect, Condition, unleased mineral interest, preferential
right, or requirement for consent to assignment affecting the
Property;
(2) Sellers' NRI in any Property is less than the NRI
for such Property which is set forth in Exhibit "B-1," or
Sellers' gross working interest ("GWI") in any Property is
less than the working interest shown in Exhibit "B-1," or
Sellers' GWI in any Property is greater than the working
interest shown in Exhibit "B-1" without a corresponding
increase in the NRI in such Property.
(e) Other Property Information. If, based upon Purchaser's
examination of the Records according to paragraph 6(b) hereof,
Purchaser shall determine that any information, statement, or data
contained in any information, reports, statement, or data furnished to
Purchaser or used in its economic analysis of the Property is not true
or correct in any material respect, upon discovery of any incorrect
information, Purchaser may give written notice to Sellers of such
inaccuracy or misstatement. Any such notice must be provided in writing
during the Review Period, or it will be deemed to be waived. Such
notice shall provide a summary of such inaccuracy or misstatement. Upon
receipt of such notice, Sellers shall have the option, but not the
obligation, to (a) cure or remedy such inaccuracy or misstatement to
the reasonable satisfaction of Purchaser; or (b) agree with Purchaser
on a reduction to the Purchase Price which reduction shall reflect
Purchaser's reasonably anticipated cost to remedy such inaccuracy or
misstatement. If the inaccuracy or misstatement cannot be cured or
remedied to Purchaser's reasonable satisfaction, and if agreement
cannot be reached on reduction to the Purchase Price, then the affected
Property shall be excluded from the Property to be acquired by
Purchaser hereunder, and the Purchase Price shall be reduced by the
value of the affected Property (or that portion of such Property so
affected) as may be agreed upon by Sellers and Purchaser in good faith.
In the event the Parties fail to agree upon the implementation of
either Subclause (a) or (b) prior to Closing, and if a reduction of
more than twenty-five percent (25%) in the Purchase Price results from
the exclusion by Purchaser of the affected Property, Purchaser may
terminate this Agreement by delivery of written notice so indicating to
the Sellers, in which event this Agreement shall terminate, and the
Escrow Deposit (plus accrued interest) shall be returned to Purchaser,
and the Parties hereto shall have no further rights or obligations
under this Agreement;
(f) Casualty Loss. If, prior to Closing, any Property is
substantially damaged or destroyed by fire or other casualty ("Casualty
Defect"), Sellers shall notify Purchaser promptly after Sellers learn
of such event. Sellers shall have the right, but not the obligation, to
cure any such Casualty Defect by repairing such damage or, in the case
of personal property, fixtures, replacing the Property affected thereby
with equivalent items, no later than the date of Closing. If any
Casualty Defects exist at Closing, Purchaser may proceed to purchase
the Property affected thereby, and the Purchase Price shall be reduced
by the aggregate reduction in the value of such Property on account of
such Casualty Defects, as determined by the mutual agreement of the
Parties, or if the Parties are unable to agree on such amount prior to
Closing, then such determination shall be made by an appraiser chosen
by the Parties (acting in good faith) and knowledgeable in the field to
determine such value. Notwithstanding anything to the contrary
contained herein, Sellers shall be entitled to retain all insurance
proceeds and claims against other Parties in respect of any such
Casualty Defect which occurs prior to closing unless no reduction is
made in the Purchase Price as a result of such Casualty Defect, in
which event Purchaser shall be entitled to the insurance proceeds and
claims against other Parties arising from such Casualty Defect.
Provided, however, if any Casualty Defect materially and adversely
affects the value of the Property as a whole by more than twenty-five
percent (25%) of the Adjusted Purchase Price, then Purchaser may
terminate this Agreement, in which event the Escrow Deposit (plus
accrued interest) shall be returned to Purchaser.
(g) Reduction of Purchaser's Notes. In the event of any
downward adjustment of the Purchase Price under this paragraph 6, then,
unless the parties agree otherwise in writing, the amount of the
promissory note described in paragraph 3(d) hereof shall be reduced by
such downward adjustment, provided, if such note is not sufficient to
absorb such downward adjustment, then the promissory note described in
paragraph 3(c) shall be reduced by the amount of the downward
adjustment which exceeds the amount of the promissory
PURCHASE AND SALE AGREEMENT - PAGE 9
10
note described in paragraph 3(d). If the promissory note in paragraph
3(c) is not sufficient to handle such downward adjustment, then the
promissory note described in paragraph 3(b) shall be reduced by the
amount of the downward adjustment which exceeds the total amount of the
promissory notes described in paragraphs 3(d) and 3(c). If such note is
not sufficient to handle such downward adjustment, then the cash
portion of the Purchase Price described in paragraph 2(a) shall be
reduced by the amount of the downward adjustment which exceeds the
total amounts of the promissory notes described in paragraphs 3(d),
3(c), and 3(b).
7. Sellers' Covenants, Representations, and Warranties. Sellers
represent and warrant to Purchaser that:
(a) Enexco is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Texas; (ii) Enexco
is duly qualified to transact business in each jurisdiction where the
nature and extent of its business and properties require the same in
order for it to perform its obligations under this Agreement; (iii)
Enexco possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply
with the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, including the Assignment,
all of which have been duly authorized and approved by all necessary
corporate action and for which no further approval or consent is
required;
(b) N & R Resources is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Texas;
(ii) N & R Resources is duly qualified to transact business in each
jurisdiction where the nature and extent of its business and properties
require the same in order for it to perform its obligations under this
Agreement; (iii) N & R Resources possesses all requisite authority,
power, licenses, permits, and franchises to conduct its business and
execute, deliver, and comply with the terms and provisions of this
Agreement and any other document, instrument, or agreement provided for
herein, including the Assignment, all of which have been duly
authorized and approved by all necessary corporate action and for which
no further approval or consent is required;
(c) This Agreement has been duly executed and delivered on
behalf of Sellers and is binding and enforceable against Sellers in
accordance with its terms and at the Closing. All documents and
instruments required hereunder to be executed and delivered by Sellers
shall have been duly executed and delivered at Closing, and the
execution, delivery, and performance of this Agreement by Sellers and
the consummation of transactions contemplated hereby will not
constitute a breach of, an event of default under, a violation of, or a
conflict with any agreement or other instrument to which Sellers is a
party (except to the extent such instrument may be released at the
Closing), nor will the same cause Sellers to be in violation of their
Articles of Incorporation or Bylaws, as the case may be, or any
applicable laws or regulations or any order of any court or
governmental agency having jurisdiction;
(d) All ad valorem, property, production, severance, excise,
and similar taxes and assessments based on or measured by the ownership
of the Property or the Production or the receipt of proceeds therefrom,
which have become due and payable prior to the date hereof with respect
to the Property have been properly paid, and Sellers' allocable share
of such taxes and assessments which become due and payable prior to the
Closing shall be properly paid by Sellers, and all royalties,
overriding royalties and payments to any third parties which have
become due and payable prior to the date hereof with respect to
production from the Property, have been properly paid, and will be
hereafter properly paid for the period prior to Closing.
(e) Sellers have incurred no liability, contingent or
otherwise, for brokers' or finders' fees in respect of this transaction
for which Purchaser shall have any responsibility whatsoever;
(f) Prior to the Closing, Sellers will pay or cause to be paid
all costs and expenses incurred in connection with the Property and
will comply with all contracts or other agreements relating to the
Property incurred while owned by Sellers;
PURCHASE AND SALE AGREEMENT - PAGE 10
11
(g) To the best of Sellers' information and belief, all laws,
regulations, and orders of all governmental agencies having
jurisdiction over the Property have been and shall continue to be
complied with until the Closing;
(h) There are no first rights of refusal, consents,
authorizations, preferential rights, options, or claims of a similar
nature affecting the Property, other than those listed in Exhibit "E,"
said listed consents defined herein as "Consents";
(i) Sellers shall, upon request, subrogate Purchaser to any
claim which Sellers may have against any third party, prior owner,
vendor, or assignor with respect to the share of the Property acquired
by Purchaser, or the title thereto;
(j) There are no "imbalances" which allow any other party to
make up production at any time after the Effective Date, under any
operating agreement, gas balancing agreement and storage agreement, gas
transportation agreement, gas processing or dehydration agreement, or
other similar agreement relating to the Property;
(k) Sellers have not directly or indirectly reserved or
retained any recorded or unrecorded interest or rights in any of the
Property, and Sellers shall not reserve any recorded or unrecorded
executory interest or rights relating to the Property;
(1) The Assignment to Purchaser shall contain a special
warranty as to its right, title, and interest as described in the
exhibits attached hereto, by, through, and under Sellers, but not
otherwise; and the Assignment shall contain a warranty by Sellers that
the Property is free and clear of all encumbrances, liens, and
mortgages created by, through, or under Sellers, save and except such
encumbrances expressly set forth in the exhibits attached hereto, and
further save and except liens for taxes not yet due and payable;
(m) Except as set forth in Exhibit "F" attached hereto, the
Property is not subject to any restriction, reservation, reversionary
interest, drilling or development obligation, or other material
obligation or burden on the operation or the disposition of Production
attributable to the Property;
(n) No part of any of the Property is affected by any
prepayment arrangement under any contract for the sale of oil or gas,
or by any production payment or any other arrangement for delivery of
oil or gas produced from any of the Property at some future time
without Purchaser then or thereafter receiving full payment therefor,
and no third party now has or at Closing will have any right to take
makeup gas for which it has already paid. As of the Effective Date,
there are no volumes of makeup gas owing, or accumulated transportation
credits due, to gas purchasers on account of any "take-or-pay" or other
provisions of any contract, and Sellers have not produced or sold more
than their pro-rata share of the gas from any Xxxxx included in the
Property;
(o) Except as may be set forth in Exhibit "G" attached hereto,
there are no gas purchase or sale agreements, and no gas gathering or
transportation agreements, affecting the Property that cannot be
terminated upon ninety (90) days' written notice;
(p) Without the prior written consent of Purchaser, Sellers
(i) shall not enter into any new agreements or commitments affecting
the Property which extend beyond the Closing, and (ii) will not modify
or terminate any agreements affecting any of the Property, including,
without limitation, any oil and gas leases, unitization or pooling
agreements, operating agreements, pipeline agreements, processing
agreements, and hydrocarbon sales contracts, and (iii) will not further
encumber, sell, mortgage, release, abandon, or otherwise dispose of any
of the Property or any interests therein;
(q) There is not any suit, action, or other proceeding pending
or threatened which affects or relates to the Property, or seeks to
restrain or prohibit Sellers from selling or conveying to Purchaser the
share of the Property to be purchased herein. Sellers shall promptly
notify Purchaser of any such proceedings which may arise or be
threatened prior to Closing;
PURCHASE AND SALE AGREEMENT - PAGE 11
12
(r) There are no operating agreements with third parties
affecting the Property except those set forth in Exhibit "H" attached
hereto;
(s) Sellers have no knowledge and have not received any notice
of any claimed default (or any event which, with the giving of notice
or the passage of time, or both, would constitute a default) under (i)
the Leases, (ii) any order, writ, injunction, or decree of any court,
commission, or administrative agency affecting the Property or (iii)
any other agreement affecting the Property. Sellers shall promptly
notify Purchaser of any such notice hereafter received by Sellers and
the occurrence of any such event of which Sellers become aware prior to
Closing;
(t) There are no tax partnerships affecting any of the
Property;
(u) To the best of Sellers' information and belief, no
Production from any Well on the Property has occurred in excess of that
permitted by law, orders, or regulations;
(v) To the best of Sellers' information and belief, there has
been no material injury or damage to any of the Property which has not
been fully repaired, replaced, or rebuilt;
(w) Except for depletion due to continued production, there
has been no substantial and material change in condition of the
Property between the date hereof and Closing;
(x) To the best of Sellers' information and belief, all
easements, rights of way, permits, crossing agreements, and surface
rights included in the Property are in full force and effect and are
valid and subsisting, and freely assignable, and all rentals and other
payments due thereunder have been properly and timely paid and all
conditions necessary to keep them in force have been duly performed;
(y) From and after the effective date of its acquisition of
its ownership in the Leases, the Sellers have performed all obligations
required to be performed under such Leases, or any other instruments
and agreements relating to the Properties, and is not in default
thereunder, and to the best of Sellers' information and belief, each of
the Leases to be conveyed is valid and in full force and effect;
(z) To the best of Sellers' knowledge, Sellers own each Lease
and Property in the undivided share reflected by the "Working Interest"
described and set forth in Exhibit "B-1" for each particular Lease and
Property, and Sellers own for each Lease and Property the share of
Production reflected as "Net Revenue Interest" in Exhibit "B-1"
attached hereto. Sellers are being paid not less than the fractional
"Net Revenue Interest" for each Property as reflected in Exhibit "B-1"
hereto, and, for expenses and costs for each Property Sellers are not
paying more than the fractional interest specified under "Working
Interest" for each Property in Exhibit "B-1" hereto;
(aa) To the best of Sellers' information and belief, all
rentals and bonuses have been timely and fully paid and discharged, and
all conditions necessary to keep the Leases in full force have been
performed and that no proceeds from the sale of Production attributable
to the Property are currently being held in suspense by any purchaser
thereof;
(bb) The Sellers have not collected any proceeds from the sale
of Production attributable to the Property which are subject to refund,
or if so, that any such refund, if not otherwise accounted for under
this Agreement, shall be the sole responsibility of the Sellers;
(cc) Except as listed in Exhibit "I" attached hereto, to the
best of Sellers' information and belief, there are no Xxxxx located on
the Property that Sellers are obligated by law or contract to plug and
abandon, that Sellers will be obligated by law or contract to plug and
abandon at the present time, and with the lapse of time or notice, or
both, because the well is not currently capable of producing production
in commercial quantities, or
PURCHASE AND SALE AGREEMENT - PAGE 12
13
because the Well is subject to exceptions to a requirement to plug and
abandon issued by a regulatory authority having jurisdiction over the
Property;
(dd) To the best of Sellers' information and belief, there are
no presently existing Conditions (as defined herein and by existing
federal or state regulations) affecting the Property, which might give
rise to a cause of action on behalf of any governmental agency or third
party, against either Purchaser or Sellers;
(ee) All information and data provided to Purchaser concerning
the Property is true and correct to the best of Sellers' information,
knowledge, and belief;
(ff) The Sellers represent and agree that (i) Sellers'
acquisition of QSR Shares will not be made with a view toward the
"distribution" of such shares, as defined in the securities Act of
1933, as amended (the "1933 Act"); (ii) such shares may not be
transferred or hypothecated unless, in the opinion of counsel to the
corporation, such transfer or hypothecation would be in compliance with
the registration provisions of the 1933 Act or pursuant to an exemption
therefrom; and (iii) the Seller who shall acquire such shares agrees to
sign an agreement to such effect at the time of Closing and agrees that
the certificate for the shares so acquired may be inscribed with a
legend to ensure compliance with the 1933 Act. Sellers understands that
the shares will not, subject to paragraph 18 below, be registered under
the 1933 Act, or under the laws of any jurisdiction. The Sellers,
themselves, or through their advisers, are sophisticated and
experienced in financial business and investment matters, and as a
result, the Sellers are in a position to evaluate the merits and risks
of an investment in Queen Sand Resources, Inc., a Delaware corporation;
(gg) Environmental Current Status. To the best of Sellers'
knowledge, the Property and Sellers are not in violation of or subject
to any existing, pending, or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any
applicable laws pertaining to health or the environment (such laws as
they now exist or are hereafter enacted and/or amended hereinafter
sometimes collectively called "Applicable Environmental Laws"),
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 (as amended, hereinafter
called "CERCLA"), the Resource Conservation and Recovery Act of 1976,
as amended by the Used Oil Recycling Act of 1980, the Solid Waste
Disposal Act Amendments of 1980, and the Hazardous and Solid Waste
Amendments of 1984 (as amended, hereinafter called "RCRA"), the Texas
Water Code and the Texas Solid Waste Disposal Act, and this
representation will continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant
facts, conditions, and circumstances, if any, pertaining to the
Property and Sellers. The terms "hazardous substance" and "release" as
used in this Agreement shall have the meanings specified in CERCLA, and
the terms "solid waste" and "disposal" (or "disposed") shall have the
meanings specified in RCRA; provided, in the event either CERCLA or
RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective
date of such amendment and provided further, to the extent that the
laws of the State of Texas establish a meaning for "hazardous
substance," "release," "solid waste," or "disposal" which is broader
than that specified in either CERCLA or RCRA, such broader meaning
shall apply.
(hh) Xxxx X. Rather warrants and represents that she is
a) a natural person whose individual net worth, or
joint net worth with her spouse, at the time of this purchase
exceeds $1 million; or
b) a natural person who had an individual income in
excess of $200,000.00 in each of the two most recent years or
joint income with her spouse in excess of $300,000.00 in each
of those years and has a reasonable expectation of reaching
the same income level in the current year.
(ii) The sum of $158,019.30 was the unpaid principal
indebtedness as of October 4, 1996, under that certain Promissory Note
dated January 27, 1994, from Enexco,
PURCHASE AND SALE AGREEMENT - PAGE 13
14
Inc., as maker, to Oak Lawn Investments, Inc., as payee, and the
interest has been paid current under the note.
(jj) On or after Closing, Sellers shall cause to be delivered
to Purchaser a stipulation, or other document, in a form acceptable to
Purchaser, (i) which shall be executed by all parties, or their
respective successors and assigns, to the following contract:
Agreement for Assignment between Oak Lawn
Investments, Inc., and Enexco, Inc., dated July 28, 1994.
(ii) by which document the parties stipulate and agree that the funds
remaining to be recovered, to effect payout, and reversion, under such
contract, shall not be more than $158,019.30, and (iii) which document
shall be in recordable form to provide notice of the rights to
Purchaser upon payout.
(kk) The provisions of this paragraph 7 shall survive Closing
for a period of four (4) years from the date of Closing.
8. Purchaser's Representations and Warranties. Purchaser
represents and warrants to Sellers that:
(a) Purchaser: (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada;
(ii) is duly qualified to transact business in each jurisdiction where
the nature and extent of its business and properties require the same
in order for it to perform its obligations under this Agreement; and
(iii) possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business and execute, deliver, and comply
with the terms and provisions of this Agreement and any other document,
instrument, or agreement provided for herein, all of which have been
duly authorized and approved by all necessary corporate action and for
which no further approval or consent is required;
(b) The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with (i) any agreement or
instrument to which Purchaser is a party; or (ii) any judgment or
decree applicable to Purchaser as a party in interest with respect
thereto;
(c) This Agreement has been duly executed and delivered on
behalf of Purchaser, and at the Closing, all documents and instruments
required hereunder to be executed and delivered by Purchaser (or its
assignees) shall have been duly executed and delivered;
(d) Subject to the conditions herein, Purchaser has or will
have at Closing (i) the financial capability or (ii) commitments from
responsible financial institutions to provide the funds required by
Purchaser, to pay the Purchase Price and consummate the transaction
contemplated hereby within the time period contemplated herein;
(e) Purchaser either has performed, or prior to closing will
perform, whatever inspection of the Property and Sellers' title thereto
that Purchaser deems appropriate and knows the condition thereof and is
purchasing the Property as a result of such inspections and not because
of, or in reliance on, any representation or warranty made by Sellers
other than those expressly set forth in this Agreement;
(f) In the event the Purchase Price is adjusted down at
Closing, based upon any unpaid taxes as set forth in paragraph 5(b)(2)
hereof (the "Tax Adjustment"), Purchaser agrees to timely make payment
(equivalent to the Tax Adjustment) to such taxing authorities as may be
appropriate;
(g) The provisions of this Paragraph 8 shall survive Closing
for a period of four (4) years from the date of Closing.
PURCHASE AND SALE AGREEMENT - PAGE 14
15
9. Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the transaction provided for herein are subject, at the
option of Purchaser, to the fulfillment on or prior to Closing, of each of the
following conditions:
(a) Representations. The representations and warranties of
Sellers herein contained shall be true and correct in all material
respects at Closing as though made on and as of such date (unless
appropriate adjustments or remediation has been made in accordance with
paragraph 6 hereof);
(b) Performance. Sellers shall have performed all obligations,
covenants, and agreements hereunder and shall have complied with all
covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing;
(c) Pending Matters. No suit, action, or other proceedings
shall be pending or threatened (a) against Sellers before any court or
governmental agency which might result in impairment or loss of value
as to Sellers' title to any part of the Property; or (b) which seeks to
restrain, enjoin or otherwise prohibit the consummation of the
transactions contemplated by this Agreement;
(d) Liability. No liability which affects, in a materially
adverse manner, the Property or Purchaser's ability to receive the
economic benefits therefrom has been or is threatened to be asserted
with respect to the Property;
(e) Defects. No Defects shall be present, which are not cured
by Sellers or waived by Purchaser as provided herein;
(f) Records and Access. Sellers shall have afforded Purchaser
and its officers, employees, and representatives timely and reasonable
access to the Records as required herein;
(g) Title Records. If (i) after the review of Sellers' Records
relating to the Property, Purchaser and/or Purchaser's lender fail or
refuse in their respective discretion, to approve title to the
Property, or to any particular property of the Property, on account of
the Sellers' lack of sufficient or comprehensive title information
which assure Purchaser or Purchaser's lender that the title is good and
indefeasible and (ii) to approve such title, Purchaser or Purchaser's
lender, or either or them, determine in their discretion that the costs
to them, or either of them, of title examination are more than they, or
either of them, desire to absorb and pay in order to approve the title,
then Purchaser shall promptly notify Sellers, and in such event, this
Agreement shall be terminated and shall be without further force and
effect, in which event Purchaser shall be entitled to the return of the
Escrow Deposit (plus accrued interest).
10. Sellers' Obligations at Closing. At the Closing, Sellers shall
deliver to Purchaser the following items; however, item (e) will be delivered as
soon prior to Closing as reasonably practical:
(a) The Assignments, duly executed and acknowledged by
Sellers;
(b) Duly executed and acknowledged releases of all liens and
burdens on the Property or on Production therefrom or attributable
thereto;
(c) Executed transfer orders (or letters in lieu thereof)
addressed to all purchasers of production from the Property;
(d) Any other executed documents or instruments which may be
reasonably required to consummate the transactions contemplated herein
and to fully vest Purchaser with operations and title to the Property
as contemplated hereby;
(e) The "Interim Settlement Statement," which shall set forth
the Purchase Price and adjustments thereto provided for in this
Agreement which are or may be determined at
PURCHASE AND SALE AGREEMENT - PAGE 15
16
or prior to the Closing, which statement shall be delivered to
Purchaser as soon as reasonably practical prior to Closing for
Purchaser's review and approval;
(f) A copy of the Form P-4 for each Property, save and except
the Kruger Well, duly executed by the current operator, transferring
operations to Purchaser, or the designee of Purchaser;
(g) All consents required of third parties, who are identified
in Exhibit "E" attached, properly executed and in form approved by
Purchaser; and
(h) All releases of current liens of lenders and any other
lien holders, including holders of any judgment liens, encumbering all
or any part of the Property, properly executed in form acceptable by
Purchaser.
11. Purchaser's Obligations at Closing. At the Closing, Purchaser
shall:
(a) Deliver the Adjusted Purchase Price in the manner
described in paragraph 5, in cash or other immediately available funds
(which shall be subject to a subsequent accounting between Sellers and
Purchaser pursuant to this Agreement); and
(b) Execute and deliver to Sellers the promissory notes
described in paragraph 3(b), (c), and (d) hereof; and
(c) Deliver to Sellers a counterpart copy of the Subscription
Agreement, executed by Sellers and QSR, covering the QSR Shares, along
with the instruction letter to the transfer agent, Continental Stock
Transfer & Trust Co., authorizing and directing the delivery of the QSR
Shares to Xxxx X. Rather; and
(d) Deliver payment to Texas Central Bank of the sums agreed
to be paid by Purchaser pursuant to Paragraph 3(f); and
(e) Deliver payment to Sellers' counsel of one-half of
Sellers' attorney's fees; and
(f) Execute and deliver any other documents or instruments
which may be required to consummate the transactions contemplated
herein.
12. Notices. All notices, demands, and requests which may be given or
which are required to be given by either Party to the other shall be in writing.
Any notice, demand, or communication required or permitted hereunder shall be
deemed to be delivered on actual receipt or three (3) days after being sent by
overnight courier or Certified U.S. Mail to Sellers or Purchaser, whichever
occurs first, respectively, as follows:
Sellers: PURCHASER:
Enexco, Inc., N & R Resources, Inc., Queen Sand Resources, Inc.
X. Xxxxx Rather, Xxxxx X. Rather, Xxxxx 000, Xxxx Xxx 00
Xxxxxxx Rather, Xxxx X. Rather, 0000 Xxx Xxxx Xxxxxx
C. Xxxxx Rather Xxxxxx, Xxxxx 00000-0000
Xxxxx 000, Xxxx Xxx 00 Attn.: Xxxxxx Xxxxxx
0000 Xxx Xxxx Xxxxxx Xxxxxxxxx
Xxxxxx, Xxxxx 00000-0000 Telephone: 000-000-0000
Telephone: 000-000-0000 Facsimile: 000-000-0000
Facsimile: 000-000-0000
or such other address as Purchaser or Sellers may, from time to time, designate
pursuant to the terms hereof. A facsimile transmission shall be considered an
original document for purposes of providing notice under this section.
PURCHASE AND SALE AGREEMENT - PAGE 16
17
13. Furnishing Data and Information. The Sellers also agree to
promptly cooperate in all reasonable requests by Purchaser in furnishing copies,
at Purchaser's expense, of all Records necessary for Purchaser to conduct its
due diligence under the terms of this Agreement.
14. Post-Closing Adjustments.
(a) As soon as practicable after the closing, and in any event
within sixty (60) days after Closing, Sellers shall prepare and deliver
to Purchaser, in accordance with this Agreement and generally accepted
accounting principles, a statement (the "Final Settlement Statement")
setting forth each adjustment or payment pursuant to paragraph 5 hereof
that was not finally determined as of the Closing ("Post-Closing
Adjustments") and showing the calculation of such Post-Closing
Adjustments and the aggregate amount thereof. Within ten (10) business
days after receipt of the Final Settlement Statement, Purchaser shall
deliver to Sellers a written report containing any changes that
Purchaser proposes be made to the Final Settlement Statement. The
Parties undertake to agree with respect to the amounts of such
Post-Closing Adjustments no later than ninety (90) days after the
Closing Date. The date upon which such agreement is reached or upon
which the aggregate amount of the adjustments are finally established
shall be herein called the "Final Settlement Date." Sellers shall pay
to Purchaser, or vice versa, as the case may be, within ten (10)
business days after the Final Settlement Date the amount of such
adjustments (as finally established), by means of wire transfer in
immediately available funds or by means of a certified bank check;
(b) The provisions of this paragraph 14 shall survive the
Closing.
15. Failure to Perform/Termination of Agreement. If the Sellers
should fail to fully and timely perform any of its obligations hereunder, or
should fail to consummate the sale of the Property, except due to the
Purchaser's default, the Purchaser may, at its option, enforce specific
performance of this Agreement, or terminate this Agreement. If Purchaser should
fail to fully and timely perform any of its obligations hereunder, and fail to
consummate the purchase of the Property, except due to the Sellers' default or
other provisions in this Agreement that permit Purchaser to terminate this
Agreement, the Sellers shall have all remedies to which it is entitled as a
matter of law.
16. Indemnification by Sellers.
(a) Each Seller agrees to indemnify and save and hold harmless
Purchaser against and from any loss, damage, or expense sustained by
Purchaser arising out of or resulting from any breach by such Seller of
any of the representations and warranties made hereunder and not waived
by Purchaser;
(b) Each Seller agrees to indemnify and save and hold harmless
Purchaser against all claims, liabilities, costs, expenses, taxes, and
liability arising out of the ownership or operation of the interest in
the Property owned by such Seller and acquired by Purchaser hereunder,
and based upon the occurrence of events, the accrual of obligations or
liabilities, or the existence of conditions prior to the Effective
Date;
(c) If any claims for brokerage fees are asserted against
Purchaser in connection with this transaction based upon alleged
commitments made by Sellers, Sellers shall indemnify Purchaser against
all such claims and reimburse Purchaser for all reasonable expenses
incurred in responding to such claims, including reasonable attorney's
fees;
(d) Notwithstanding anything to the contrary contained herein,
each Seller agrees to indemnify and save and hold harmless Purchaser
for such Seller's gross negligence or willful misconduct for that
period of time between the Effective Date and Closing;
(e) The provisions of this paragraph 16 shall survive Closing
for a period of four (4) years from the date of Closing, and Purchaser
shall not be entitled to assert any right of indemnification hereunder
after such date.
PURCHASE AND SALE AGREEMENT - PAGE 17
18
17. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify and save and hold harmless
Sellers against and from any loss, damage, or expense sustained by
Sellers arising out of or resulting from any breach of any of the
representations and warranties made hereunder and not waived by
Sellers;
(b) Purchaser shall assume and hereby agrees to pay, honor,
discharge, and perform fully and timely, the obligations and
liabilities directly associated with the Sellers' interest in the share
of the Property acquired by Purchaser hereunder, which are attributable
to the period of time from and after the Effective Date;
(c) Purchaser agrees to indemnify and save and hold harmless
Sellers against all claims, costs, expenses, and liabilities arising
out of the ownership or operation of the share of the Property acquired
by Purchaser hereunder and based upon the occurrence of events, the
accrual of obligations or liabilities, or the existence of conditions
on and subsequent to the Effective Date (but not including the costs
and expenses incurred with respect to this Agreement and the purchase
of Sellers' interest in the Property or the negotiations leading to
such purchase);
(d) If any claims for brokerage fees are asserted against
Sellers in connection with this transaction based upon alleged
commitments made by Purchaser, Purchaser shall indemnify Sellers
against all such claims and reimburse Sellers for all reasonable
expenses incurred in responding to such claims, including reasonable
attorney's fees;
(e) The provisions of this paragraph 17 shall survive Closing
for a period of four (4) years from the date of Closing, and Sellers
shall not be entitled to assert any right of indemnification hereunder
after such date.
18. Registration Rights. If Queen Sand Resources, Inc., a Delaware
corporation, shall at any time after Closing determine in its discretion to
proceed with the actual preparation and filing of a registration statement under
the Securities and Exchange Act of 1933 as amended in connection with the
proposed offer and sale for cash of any of its securities by it or any of its
security holders (other than a future Form S-8 or similar registration
statement), the Purchaser will give written notice of its determination to the
particular Seller or Sellers receiving the QSR Shares under this Agreement (the
"Share Owners"). Upon the written request of the Sellers given within thirty
(30) days after receipt of any such notice from the Purchaser, the Purchaser
will, except as herein provided, cause all of the QSR Shares issued to the Share
Owners pursuant hereto, or to the extent requested by Sellers, to be included in
such registration statement, and to be so registered, all to the extent
requisite to permit the sale or other disposition by the Share Owners; provided
however, that nothing herein shall prevent Queen Sand Resources, Inc., a
Delaware corporation, from, at any time, in its discretion, abandoning or
delaying any registration. If any registration pursuant to this paragraph shall
be underwritten in whole or in part, the Purchaser may require that the QSR
Shares requested for inclusion pursuant to this paragraph 18 be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. In the event that, in the good faith judgment of
the managing underwriter of such public offering, the inclusion of all of the
QSR Shares originally covered by a request for registration would materially
adversely interfere with the distribution of the shares of stock offered by the
Purchaser, the number of shares issued pursuant hereto and otherwise to be
included in the underwritten public offering may be reduced. In connection with,
and as a condition to, any such registration, the Share Owners shall enter into
an indemnification agreement, in form and substance satisfactory to the
Purchaser relating to such registration. All federal and state registration fees
and fees of the National Association of Securities Dealers, Inc., relating to
any such registration of such shares shall be borne by the Sellers. All other
expenses relating to such registration will be borne by the Purchaser.
19. Operations. All of the properties covered by this Agreement
are operated by Sellers, save and except the Xxxxxxx Well (the "Operated
Properties"). Regarding operations, the Parties agree as follows:
PURCHASE AND SALE AGREEMENT - PAGE 18
19
(a) At Closing there shall be delivered to Purchaser a Texas
Railroad Commission Form P-4 for each of the Operated Properties, duly
executed by the current operator for the transfer of operations. As to
the Operated Properties in which Sellers, or any of them, retain an
interest, by their signatures hereto, Sellers hereby irrevocably
appoint Purchaser their agent and attorney in-fact to cast the ballot
of Sellers in the selection of a successor operator hereafter, in the
event of any election hereafter of a successor operator of a particular
Operated Property occurs by reason of the sale and conveyance under
this Agreement under and pursuant to the terms of any operating
agreements which may cover the particular Operated Property.
(b) Sellers shall notify any third party non-operating joint
owners of the resignation of Seller as operator and with reasonable
diligence and in good faith, shall assist Purchaser in acquiring the
consents of any such owners to the selection of Purchaser's designated
operator as the successor operator of the Operated Properties.
(c) It is understood and agreed that the ability of Purchaser
to select an operator of its choice is a very material consideration to
Purchaser in this Agreement, and, as to the Operated Properties in
which any of the Sellers retain an interest, the Sellers shall take no
action to thwart or hinder Purchaser in its attempt to designate an
operator of its choice as the operator of any of the properties.
Sellers agree to cast their ballot for the operator of Purchaser's
choice in the event of any elections hereafter of the operator on any
of the properties, including both the Operated and Non-Operated
Properties, and shall otherwise assist Purchaser in its efforts to have
the properties operated by an operator of Purchaser's choice. Sellers
shall not seek the operations of any property without the express
written consent of Purchaser.
20. Confidentiality. Prior to Closing, the Sellers shall be
furnishing to Purchaser various information relating to Sellers and the
Property, and Sellers' business activities, assets, finances, costs, revenues,
rights, obligations, liabilities, and strategies. In consideration of the
Sellers furnishing this information to Purchaser, Purchaser agrees that prior to
Closing (a) that such information is confidential and/or proprietary to Sellers,
and such information shall be entitled to and shall receive treatment as such by
Purchaser; (b) Purchaser shall use its best efforts, and will advise all of its
employees, representatives, agents, and advisors who have access to such
information, to use their best efforts to hold in confidence, not to disclose to
others, and not to use (except in respect of the transaction contemplated by
this Agreement) any such information; and (c) if Closing does not occur, all
such information, unless otherwise specified in writing, shall remain the
property of Sellers, and shall be returned to Sellers together with any copies
made thereof. Prior to Closing, Purchaser shall provide such information only to
its employees, representatives, agents, and advisors who have need to know such
information in connection with this Agreement.
21. Subordination of Debt. Purchaser contemplates a loan from
Comerica Bank - Texas to acquire certain financing which shall be necessary for
closing hereunder. The following terms of subordination are required by Comerica
Bank - Texas as a condition to its loan to Purchaser:
(a) The payment of all indebtedness now or at any time
hereafter owing by Purchaser to Sellers, of whatever nature and however
arising, shall be subject, subordinate, and inferior to the prior
payment of all indebtedness now or hereafter owing by Purchaser to
Comerica Bank - Texas, whether now existing or hereafter arising
("Senior Indebtedness"). Provided, however, that so long as there has
not occurred, or will not occur as a result of such a payment, an Event
of Default, or there does not constitute a condition which, with lapse
of time or notice, will constitute an Event of Default under the Credit
Agreement dated December 1, 1995, as amended, between Purchaser and
Comerica Bank - Texas, or under any security instrument executed and
delivered to secure indebtedness owing by Purchaser to Comerica Bank -
Texas, Purchaser may pay to Sellers from the income realized by it from
its business and operations such amount or amounts as may be required
to discharge the indebtedness of Purchaser to said Sellers.
(b) Until the payment in full of the Senior Indebtedness,
Sellers will not receive, accept, or collect any sum or asset for
application on the indebtedness owing by Purchaser to Sellers, except
as provided in subparagraph (a) above.
PURCHASE AND SALE AGREEMENT - PAGE 19
20
(c) If Sellers receive any sum or asset for application on
indebtedness owing to them by Purchaser other than in compliance with
subparagraph (a), the same shall be received by them in trust for the
benefit and account of the holder of the Senior Indebtedness and shall
promptly be remitted and paid by it to such holder, in the form
received.
(d) In the event of any proceedings pursuant to any debtor
relief laws involving Purchaser, said Sellers will at the request of
the holder of the Senior Indebtedness file any claims, proof of claims,
or other instruments of similar character and do and perform such other
acts and things as are necessary and proper to enforce the obligations
of Purchaser to said Sellers and will receive, hold, and remit pursuant
to subparagraph (c) above any and all sums, assets, or dividends
received in such proceedings on account of indebtedness of Purchaser to
Sellers.
(e) Comerica Bank - Texas may at any time and from time to
time, without the consent of or notice to Sellers, without incurring
responsibility to Sellers, and without impairing or releasing any of
said Bank's rights or any of the obligations of Sellers hereunder;
(i) change the amount, manner, place, or terms of
payment or change or extend the time of payment of or renew or
alter all or any part of the Senior Indebtedness;
(ii) release or otherwise deal with all or any part
of any property at any time pledged, mortgaged, or otherwise
encumbered to secure all or any part of the Senior
Indebtedness;
(iii) release any party liable or becoming liable in
any manner for the payment or collection of all or any part of
the Senior Indebtedness;
(iv) exercise or refrain from exercising any rights
against Purchaser and others, including but not limited to
Sellers; and
(v) apply any sums, by whomsoever paid or however
realized, to the Senior Indebtedness.
22. The lands contained within one statute mile from the boundary
line of each of the properties contained within the Property shall constitute an
area of mutual interest between the parties hereto. For a period extending for
three (3) years from the date hereof and for so long thereafter as any of the
leases described in the Exhibits attached to this contract shall remain in
effect, should any party who is a Seller under this agreement acquire an
interest in any oil and gas lease or leases, or rights to acquire any interest
in any such lease or leases, which cover any of the land covering any of any
such area of mutual interest, such acquiring Seller shall offer any such
interests to the Purchaser, insofar as such interests cover the area of mutual
interest, and shall cover an undivided share of the interests which is
equivalent to the undivided share of the abutting properties acquired by
Purchaser under this agreement. In this regard, (i) if the newly acquired
interests cover the area of mutual interest applicable to the properties
described in Exhibits "A-1" and "A-2," then the particular Seller shall offer
Purchaser the entire (100%) interests acquired by the particular Seller, and
(ii) if the newly acquired interests cover the area of mutual interest
applicable to the properties described in Exhibits "X-0," "X-0," and "A-5," then
the particular Seller shall offer Purchaser an undivided seventy-five percent
(75%) of the interests acquired by the particular Seller, and (iii) if the newly
acquired interests cover the area of mutual interest applicable to the
properties described in Exhibits "A-6" and "A-7," then the particular Seller
shall offer Purchaser an undivided fifty percent (50%) of the interest acquired
by the particular Seller. In like manner, if Purchaser should acquire any such
interest covering an area of mutual interest applicable to the properties
described in Exhibits "X-0," "X-0," and "A-5," then Purchaser shall offer to the
particular Seller or Sellers owning an interest in the abutting property an
undivided twenty-five percent (25%) of the interest acquired. Further, if
Purchaser should acquire any such interest covering an area of mutual interest
applicable to the properties described in Exhibits "A-6" and "A-7," then
Purchaser shall offer to the particular Seller or Sellers owning an interest in
the abutting property an undivided fifty percent (50%) of the interest acquired.
All interests offered under this agreement shall be at actual
PURCHASE AND SALE AGREEMENT - PAGE 20
21
direct cost, and allocated to the undivided share purchased, and subject to no
additional burdens. Any party acquiring any such interest within the area of
mutual interest shall furnish the other party or parties to whom an offer is
extended per the terms of this paragraph actual copies of (i) the lease, leases,
or rights to acquire an interest in a lease or leases, (ii) the documents
whereby the acquiring party acquired its interest, (iii) the instruments
sufficient to verify the actual consideration paid, (iv) a plat or exact
description of the location of the interest, and (v) any other documents which
may be pertinent to the other party's evaluating the acquiring party's interest.
The party or parties to whom the offer is tendered per this paragraph shall
thereafter have thirty (30) days from receipt of such notice to notify the
acquiring party of its election to acquire the interest offered per this
paragraph.
23. Miscellaneous.
(a) If any term or provision of this Agreement is held to be
illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining terms and provisions of this Agreement
shall not be affected thereby, and in lieu of each such illegal,
invalid, or unenforceable term or provision, there shall be added
automatically to this Agreement a legal, valid, and enforceable term or
provision as similar as possible to the term or provision declared
illegal, invalid, or unenforceable;
(b) Either Sellers or Purchaser shall have the right to waive
any requirement contained in this Agreement, which is intended for the
waiving Party's benefit, but except as otherwise specifically provided
herein, such waiver shall be effective only if in writing and executed
by the Party for whose benefit such requirement is intended; provided
however, that any such waiver shall not be construed as a waiver of any
other benefit accruing to the waiving Party hereunder;
(c) The captions used in connection with this Agreement are
for convenience only and shall not be deemed to expend or limit the
meaning of the language of this Agreement;
(d) Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular
shall be held to included the plural, unless the context otherwise
requires;
(e) Sellers agree that, on or before the Closing, it will not
carry on any negotiations with any third party, for the sale or
transfer of any interest in any of the Property, without the prior
written consent of Purchaser. Thereafter, Sellers may negotiate with
third parties if this Agreement has been terminated;
(f) THIS AGREEMENT AND ALL OF THE TRANSACTIONS CONTEMPLATED
HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS;
(g) This Agreement embodies the entire agreement between
Sellers and Purchaser with respect to the subject matter hereof and
supersedes all prior agreements, whether written or oral;
(h) Except as otherwise specifically provided herein, this
Agreement may not be amended except by an agreement in writing executed
by both Sellers and Purchaser;
(i) This Agreement shall be binding upon and inure to the
benefit of Sellers and Purchaser and their respective legal
representatives, successors, and assigns. It is expressly understood
and agreed that Purchaser's rights under this Agreement may not be
assigned prior to Closing. Provided however, any interest acquired
hereunder shall be freely assignable by Purchaser after Closing;
(j) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all
of which shall be deemed to be one and the same instrument;
PURCHASE AND SALE AGREEMENT - PAGE 21
22
(k) In addition to the acts and deeds recited herein and
contemplated to be performed, both Sellers and Purchaser hereby agree
to perform, execute, and/or deliver at and after Closing any and all
such further reasonable acts, deeds, and assurances as may be
reasonably required to consummate the transactions contemplated by this
Agreement;
(l) This Agreement supersedes any and all other agreements,
either oral or in writing, between the Parties hereto with respect to
the subject matter hereof and contains all of the covenants and
agreements between the Parties with respect to said matter. Each Party
to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any
Party, or anyone acting on behalf of any Party, which are not embodied
herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding;
(m) In the event of any dispute occurring under this
Agreement, the prevailing Party shall be entitled to be reimbursed by
the other Party for its reasonable and necessary attorney's fees;
(n) Any failure by either Party to insist, or any election by
either Party not to insist, upon strict performance by the other Party
of any of the terms, provisions, or conditions of this Agreement shall
not be deemed to be a waiver of the same or of any other term,
provision, or condition hereof, and either Party may at any time or
times thereafter insist upon strict performance by the other Party of
any and all of such terms, provisions, and conditions. No waiver by
either Party of any right, remedy, power, or privilege hereunder shall
be construed as a waiver of, or operate to impair, any subsequent
right, remedy, power, or privilege nor shall any single or partial
exercise of any such right, remedy, power, or privilege exhaust the
same or preclude other or further exercise thereof.
EXECUTED as of the day and year shown below.
PURCHASER:
QUEEN SAND RESOURCES, INC.,
a Nevada corporation
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
SELLERS:
ENEXCO, INC.,
a Texas corporation
By: /s/ X. Xxxxx Rather
-------------------------------------
X. Xxxxx Rather, President
N & R RESOURCES, INC.
By: /s/ X. Xxxxx Rather
-------------------------------------
X. Xxxxx Rather, President
/s/ X. Xxxxx Rather
-------------------------------------
X. Xxxxx Rather
PURCHASE AND SALE AGREEMENT - PAGE 22
23
/s/ Xxxxx X. Rather
-------------------------------------
Xxxxx X. Rather
/s/ Xxxxxxx Rather
-------------------------------------
Xxxxxxx Rather
/s/ Xxxx X. Rather
-------------------------------------
Xxxx X. Rather
/s/ C. Xxxxx Rather
-------------------------------------
C. Xxxxx Rather
ACKNOWLEDGMENTS
STATE OF TEXAS
COUNTY OF DALLAS
The foregoing instrument was acknowledged before me this 6th day of
November, 1996, by Xxxxxx X. Xxxxxxx, Vice President of QUEEN SAND RESOURCES,
INC., a Nevada corporation, for said corporation.
[NOTARY SEAL] XXXXXX X. XXXXX
Notary Public /s/ Xxxxxx X. Xxxxx
STATE OF TEXAS -------------------------------------
Commission Expires 11/10/98 Notary Public
STATE OF TEXAS
COUNTY OF DALLAS
The foregoing instrument was acknowledged before me this 6th day of
November, 1996, by X. Xxxxx Rather, President of ENEXCO, INC., a Texas
corporation, for said corporation.
[NOTARY SEAL] XXXXXX X. XXXXX
Notary Public /s/ Xxxxxx X. Xxxxx
STATE OF TEXAS -------------------------------------
Commission Expires 11/10/98 Notary Public
STATE OF TEXAS
COUNTY OF DALLAS
The foregoing instrument was acknowledged before me this 6th day of
November, 1996, by X. Xxxxx Rather, President of N & R RESOURCES, INC., a Texas
corporation, for said corporation.
[NOTARY SEAL] XXXXXX X. XXXXX
Notary Public /s/ Xxxxxx X. Xxxxx
STATE OF TEXAS -------------------------------------
Commission Expires 11/10/98 Notary Public
PURCHASE AND SALE AGREEMENT - PAGE 23
24
STATE OF TEXAS
COUNTY OF DALLAS
The foregoing instrument was acknowledged before me this 6th day of
November, 1996, by X. Xxxxx Rather.
[NOTARY SEAL] XXXXXX X. XXXXX
Notary Public /s/ Xxxxxx X. Xxxxx
STATE OF TEXAS -------------------------------------
Commission Expires 11/10/98 Notary Public
STATE OF TEXAS
COUNTY OF DALLAS
The foregoing instrument was acknowledged before me this 6th day of
November, 1996, by Xxxxx X. Rather.
[NOTARY SEAL] XXXXXX X. XXXXX
Notary Public /s/ Xxxxxx X. Xxxxx
STATE OF TEXAS -------------------------------------
Commission Expires 11/10/98 Notary Public
STATE OF TEXAS
COUNTY OF DALLAS
The foregoing instrument was acknowledged before me this 6th day of
November, 1996, by Xxxxxxx Rather.
[NOTARY SEAL] XXXXXX X. XXXXX
Notary Public /s/ Xxxxxx X. Xxxxx
STATE OF TEXAS -------------------------------------
Commission Expires 11/10/98 Notary Public
STATE OF TEXAS
COUNTY OF DALLAS
The foregoing instrument was acknowledged before me this 6th day of
November, 1996, by Xxxx X. Rather.
[NOTARY SEAL] XXXXXX X. XXXXX
Notary Public /s/ Xxxxxx X. Xxxxx
STATE OF TEXAS -------------------------------------
Commission Expires 11/10/98 Notary Public
STATE OF TEXAS
COUNTY OF DALLAS
The foregoing instrument was acknowledged before me this 6th day of
November, 1996, by C. Xxxxx Rather.
[NOTARY SEAL] XXXXXX X. XXXXX
Notary Public /s/ Xxxxxx X. Xxxxx
STATE OF TEXAS -------------------------------------
Commission Expires 11/10/98 Notary Public
PURCHASE AND SALE AGREEMENT - PAGE 24
25
SCHEDULE OF EXHIBITS
Exhibit A-1 Enexco, Inc. - Xxxxxxx Unit
Exhibit A-2 Xxxxxxx Well
Exhibit A-3 Xxxxxxx #2 Well
Exhibit A-4 Blocker Field Prospect
Exhibit A-5 Xxxxx No. 1 Well
Exhibit A-6 Juboncillo Prospect
Exhibit A-7 X. X. Xxxx Prospect
Exhibit B-1 Paragraph 2 Paragraph Working Interest and Net Revenue
Interest in each property being acquired
by Queen Sand
Exhibit B-2 Paragraph 3 Allocation of Purchase Price to the various
properties
Exhibit C-1 Paragraph 3 Form of Promissory Note
Exhibit C-2 Paragraph 3 Form of Promissory Note
Exhibit C-3 Paragraph 3 Form of Promissory Note
Exhibit D-1 Paragraph 4 Form of Assignment and Xxxx of Sale
Exhibit D-2 Paragraph 4 Form of Assignment and Xxxx of Sale
Exhibit D-3 Paragraph 4 Form of Assignment and Xxxx of Sale
Exhibit D-4 Paragraph 4 Form of Assignment and Xxxx of Sale
Exhibit E Paragraph 7(h) Schedule of preferential rights, rights
of first refusal, options, or claims
of a similar nature
Exhibit F Paragraph 7(m) Schedule of material obligations
covering any of the properties
Exhibit G Paragraph 7(o) Schedule of gas purchase and sales
contracts
Exhibit H Paragraph 7(r) Schedule of operating agreements
Exhibit I Paragraph 7(cc) Schedule of non-producing xxxxx
