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EXHIBIT 10.14
SECOND AMENDMENT TO
PURCHASE AND SALE AGREEMENT
This Second Amendment to Purchase and Sale Agreement ("Amendment") is
made and entered into this 28th day of May, 1999, by and between Shell Western
E&P Inc. ("SWEPI") and Shell Onshore Ventures Inc. ("SOVI") (collectively
"SELLER") and Encore Operating, L.P. ("PURCHASER"). SELLER and PURCHASER may be
referred to herein collectively as the "Parties" and individually as a "Party."
WITNESSETH
WHEREAS, SELLER and PURCHASER are parties to that certain Purchase and
Sale Agreement dated March 12, 1999, as amended by agreement dated May 26, 1999,
providing for the sale to PURCHASER of SELLER's interests in the Williston Basin
(Cedar Creek Anticline) in Montana and North Dakota (the "PSA"); and
WHEREAS, the Parties desire to amend the PSA to provide for additional
transitional services from SWEPI to PURCHASER;
NOW THEREFORE, in consideration of the mutual promises set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereto agree as follows:
A. Definitions
Capitalized terms used in this Amendment, which are not defined herein,
shall have the meaning ascribed thereto in the PSA.
B. Amendments
1. Subsection 19(d) of the PSA is amended by deleting the last two
sentences and inserting the following:
"At PURCHASER's request, after Closing, SELLER or its affiliates shall
provide transitional services (including without limitation accounting,
payment and collection, purchasing, communications and information
system services) for PURCHASER pursuant to the terms of the Transition
Services Agreement attached as EXHIBIT "I" hereto."
2. EXHIBIT "I" to the PSA shall be replaced in its entirety with the
EXHIBIT "I" attached to this Amendment and incorporated by reference herein.
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C. PSA
Except as expressly set forth herein, the terms and conditions of the
PSA are unaffected and shall remain in full force and effect as written.
IN WITNESS WHEREOF, this Amendment is executed as of the date first
above written.
SHELL WESTERN E&P INC.
By: /s/
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Attorney-in-Fact
SHELL ONSHORE VENTURES INC.
By: /s/
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Attorney-in-Fact
ENCORE OPERATING, L. P.
By: EAP Operating Inc.
General Partner
By: /s/ I. XXX XXXXXXX
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I. Xxx Xxxxxxx,
Chief Executive Officer
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EXHIBIT I
ATTACHED TO THAT CERTAIN
SECOND AMENDMENT TO
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN SHELL WESTERN E&P INC.
AND SHELL ONSHORE VENTURES INC., AS SELLER,
AND ENCORE OPERATING, L.P., AS PURCHASER
TRANSITION SERVICES AGREEMENT
This Transition Services Agreement ("Agreement") is made and entered
into as of this 1st day of June, 1999, by and between Shell Western E&P Inc.
("SWEPI") and Encore Operating, L.P. ("Encore"). "SWEPI" and "Encore" are
referred to collectively herein as "Parties".
WITNESSETH:
WHEREAS, SWEPI and Shell Onshore Ventures Inc. (collectively "Seller")
and Encore have entered into that certain Purchase & Sale Agreement dated March
12, 1999, as amended, pursuant to which Encore will acquire certain oil and gas
properties in the States of Montana and North Dakota (the "Property") from
Seller, effective June 1, 1999; and
WHEREAS, in order to provide for an efficient transfer of operations
from Seller to Encore following Closing, Encore desires to retain SWEPI's
services to assist Encore in the operation of the Property during the term of
this Agreement; and
WHEREAS, SWEPI is agreeable to providing such services pursuant to the
terms hereof;
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements herein contained, the Parties hereto agree as follows:
1. SERVICES
During the term of this Agreement, SWEPI will provide or otherwise
make available employees or employees of its affiliates to perform (i) such
land, operations, purchasing, communications, information system, and other
general services relating to the Property as Encore may from time to time
request and SWEPI may from time to time agree to perform; and (ii) such of the
accounting and payment services described on Schedule 1 hereof as Encore may
from time to time request, provided that any request for accounting and payment
services for June 1999, must be made on or before 9:00 a.m. Central Time on
June 14, 1999. This Agreement shall not extend to services that would require
the service provider (a) to be authorized to do business in any jurisdiction
other than Montana, Texas or North Dakota or (b) to make any decisions
concerning the business activities or rights or obligations or regulatory
responsibilities of Encore.
2. PERFORMANCE OBLIGATIONS
During such time as SWEPI's or its affiliates' employees are rendering
services hereunder on behalf of Encore, those employees who are engaged in the
performance of such services shall remain employees of SWEPI or its affiliates
and continue to be paid by and to enjoy the benefits to which they are entitled
as employees of SWEPI or its affiliates.
The obligations of SWEPI and its affiliates and their employees to
perform any services hereunder shall be subject to the business requirements of
SWEPI and its affiliates.
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The obligations of SWEPI and its affiliates and their employees to
perform the accounting and payment services set forth on Schedule 1 hereof are
conditioned upon and subject to Encore and SWEPI, at Encore's cost and expense,
maintaining the existing communications link between Encore's office at Baker,
Montana, and SWEPI's offices in Houston, Texas. It is acknowledged and agreed
that SWEPI and its affiliates shall be relieved of their obligations to provide
the services set forth on Schedule 1 at any time and from time to time that such
communications link is unavailable or inoperable.
3. COMPENSATION
To the extent the services described in clause (i) of Section 1 shall
be furnished, payment therefor shall be made by Encore to SWEPI at a rate equal
to all direct costs (including, without limitation, salaries of the employees
providing the services, labor burden, out-of-pocket expenses, expenses for
computers, materials and supplies, and for travel and living, etc.) plus all
applicable indirect costs, all of which costs, whether direct or indirect, shall
be determined in accordance with generally accepted accounting methods and
practices, consistently applied.
The services described on Schedule 1 (if requested by Encore) shall be
provided for production occurring in the month of June 1999 for a flat fee of
$107,000.00. If Encore desires to receive any such services for any production
month other than June, 1999, the requested services shall be provided at a
mutually agreeable fee.
SWEPI shall maintain adequate accounting records, which in reasonable
detail fairly reflect the services contemplated hereunder, and shall maintain a
system of internal controls, sufficient to provide reasonable assurances that
the services are provided in accordance with this Agreement.
All related books and accounts of SWEPI applicable to the performance
of its obligations hereunder shall at all reasonable times be open to inspection
by auditors for Encore for a period of one year after the date of termination of
this Agreement.
4. INDEPENDENT CONTRACTOR STATUS
Nothing contained in this Agreement shall constitute either party
hereto the agent of the other party for any purpose. SWEPI and all affiliates
and employees providing services hereunder shall be engaged in a capacity as an
independent contractor with full control over the manner and method of
performance subject to the work authorizations of Encore.
5. STANDARD OF CARE
While performing the services hereunder, SWEPI and its affiliates and
their employees shall perform their duties in a manner they reasonably believe
to be in the best interests of Encore, BUT SHALL HAVE NO LIABILITY WHATSOEVER TO
ENCORE FOR ANY DAMAGES, LIABILITIES OR CLAIMS ARISING OUT OF OR RELATED TO THE
PERFORMANCE OF SERVICES HEREUNDER, EXCEPT SUCH AS ARE CAUSED BY THEIR GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT IN THE PERFORMANCE OF THE SERVICES HEREUNDER.
6. INDEMNITY
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, ENCORE SHALL
INDEMNIFY, DEFEND AND HOLD HARMLESS SWEPI, ITS AFFILIATES, AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, CONTRACTORS AND SUBCONTRACTORS ("SWEPI
INDEMNIFIED PARTIES") FROM AND AGAINST ANY AND ALL CLAIMS COSTS OR LIABILITIES
OF ANY KIND OR NATURE WHATSOEVER ("CLAIMS"), ARISING OUT OF ANY ACTS OR
OMISSIONS OF THE SWEPI INDEMNIFIED
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PARTIES IN THE PERFORMANCE OF THE SERVICES HEREUNDER, EXCEPT FOR THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE SWEPI INDEMNIFIED PARTIES. THE FOREGOING
OBLIGATIONS OF INDEMNITY SHALL APPLY EVEN THOUGH SUCH CLAIMS MAY HAVE BEEN
CONTRIBUTED TO OR CAUSED BY THE NEGLIGENCE OR FAULT, OR THE STRICT OR STATUTORY
LIABILITY OF THE SWEPI INDEMNIFIED PARTIES UNDER ANY LAW (INCLUDING STATUTORY,
REGULATORY AND CASE LAW), EXCEPT FOR THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF THE SWEPI INDEMNIFIED PARTIES.
Nothing contained in this Agreement shall be deemed to relieve either
the partners or management of Encore from the performance of their respective
duties or limit the exercise of their powers and authority under the law.
This Agreement, upon execution hereof, shall be effective as of the
date hereof and shall continue in effect for a period of six months thereafter,
subject, however, to termination at any time by either party giving thirty (30)
days written notice to the other.
IN WITNESS WHEREOF, the Parties have executed this Agreement effective
as of the date first written above.
SHELL WESTERN E&P INC.
By:
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Attorney-in-Fact
ENCORE OPERATING, L.P.
BY: EAP OPERATING INC.,
GENERAL PARTNER
By:
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Title:
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SCHEDULE 1
Accounting Services
Revenue calculation
Severance tax calculation
Payment to working interest owners
Payment to royalty interest owners
Net proceeds calculation/payment
State/Federal reports
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