ASSET PURCHASE AGREEMENT
among
RAM ENERGY, INC.,
MAGIC CIRCLE ENERGY CORPORATION
and
▇▇▇▇▇▇ DEVELOPMENT CORPORATION
(the "Sellers")
and
▇▇▇▇▇▇ ACQUISITION CORP.
(the "Buyer")
December 1, 2001
COMMERCIAL LAW GROUP, P.C.
ATTORNEYS & COUNSELORS
2725 Oklahoma Tower o ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Telephone (405)
232-3001 o Telecopier (▇▇▇) ▇▇▇-▇▇▇▇
TABLE OF CONTENTS
Page
1. Property to be Sold and Purchased 1
1.1 Real Property Interests 1
1.2 Tangible Property 2
1.3 Unit and Related Interests 2
1.4 Contracts 2
1.5 Hydrocarbons 2
1.6 Related Rights 2
1.7 Imbalances 3
1.8 Title Documents and Warranties 3
1.9 Records 3
1.10 Derivative Rights 3
20 Purchase Price 4
2.1 Mortgage Liens 4
2.2 Title and Environmental Defects 5
2.3 Gas Imbalances 5
2.4 Adjustments 5
30 Representations and Warranties of the Seller 5
3.1 No Assumption of Obligations 5
3.2 Organization, Good Standing, Etc 5
3.3 Legal Requirements 6
3.4 Consents and Approvals 6
3.5 Litigation 6
3.6 Taxes 6
3.7 No Breach of Statute or Contract; Governmental Authorizations 6
3.8 Permits 7
3.9 Title to the Interests 7
3.10 Oil and Gas Leases in Good Standing 7
3.11 Compliance with Laws 7
3.12 Contracts, Consents and Preferential Rights 8
3.13 Planned Future Commitments 8
3.14 Environmental and Safety Matters 8
3.15 Plugging Status 9
3.16 Payout Balances, Gas Imbalances and Take or Pay 9
3.17 Affiliate Transactions 10
3.18 Authority 10
3.19 Broker's or Finder's Fees 10
3.20 Fairness Opinion 10
3.21 Full Disclosure 10
40 Representations and Warranties of the Buyer 10
4.1 Organization and Standing 10
4.2 Corporate Powers 10
4.3 No Restriction 11
4.4 Authorization 11
4.5 Governmental Consent 11
4.6 Litigation, etc 11
4.7 Broker's or Finder's Fees 11
50 Covenants 11
5.1 Access to Information 11
5.2 Conduct of Business 12
5.3 Consents and Operations 12
5.4 Conditions 12
5.5 Accounting 12
5.6 Independent Contractors 12
5.7 Revenues Held For Benefit of Another Party 12
5.8 Revenues and Expenses 13
5.9 ▇▇▇▇▇▇ System Right of First Refusal 13
5.10 ▇▇▇▇ Well Area 13
5.11 Gas Balancing Reconciliation 14
5.12 Posting of Letter of Credit 14
5.13 ▇▇▇▇▇▇ Well. 14
5.14 Sapient 14
5.15 Dissolution Agreement 14
60 Buyer's Conditions Precedent 15
70 Sellers' Conditions Precedent 16
80 The Closing 16
8.1 Buyer's Deliveries 17
8.1.1 Purchase Price 17
8.1.2 Escrow Agreement 17
8.1.3 Evidence of Authority 17
8.1.4 Additional Documents 17
8.2 Sellers' Deliveries 17
8.2.1 Assignments 17
8.2.2 Change of Operator Forms 17
8.2.3 Escrow Agreement 17
8.2.4 Other Parties 17
8.2.5 Evidence of Authority 17
8.2.6 Records and Data 18
8.2.7 Interest 18
8.2.8 Additional Documents 18
8.3 Post Closing Adjustments and Escrow Disbursements 18
8.4 Costs 18
8.5 Risk of Loss 18
90 Post Closing Adjustments; Escrow Amount and Disbursements 18
9.1 Hold Back Amount 18
9.2 Post-Closing Adjustments 18
9.3 Title and Environmental Defects 19
9.3.1 Environmental Defects 19
9.3.2 Title Defects 19
9.4 Escrow Disbursements 21
9.4.1 First Claim Period 21
9.4.2 Second Claim Period 22
9.4.3 Title and Environmental Defects 22
9.4.4 Reassigned Interests 23
9.4.5 Dispute Resolutions 23
9.4.6 Joint Instructions; Allocations; Interest 24
9.5 Adjustments in Excess of Hold Back ▇▇▇▇▇▇ ▇▇
▇▇. Sellers' Indemnification 24
11. Preservation of Books and Records. 25
12. Termination 25
13. Default 25
14. Arbitration 25
15. Miscellaneous 26
15.1 Time 26
15.2 Notices 26
15.3 Representations and Warranties 27
15.4 Cooperation 27
15.5 No Third Party Beneficiaries 27
15.6 Cumulative Remedies 27
15.7 Choice of Law 28
15.8 Headings 28
15.9 Entire Agreement 28
15.10 Assignment 28
15.11 Amendment 28
15.12 Severability 28
15.13 Attorney Fees 28
15.14 Waiver 28
15.15 Counterparts 28
15.16 JOINT ACKNOWLEDGMENT 29
15.17 WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC 29
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered
into effective the 1st day of December, 2001, among RAM ENERGY, INC., a Delaware
corporation ("RAM"), MAGIC CIRCLE ENERGY CORPORATION, a Delaware corporation
("MCEC") and ▇▇▇▇▇▇ DEVELOPMENT CORPORATION, an Oklahoma corporation, on its own
behalf and as successor in interest to Carmen Field Limited Partnership, an
Oklahoma limited partnership ("CDC", and jointly and severally with RAM and
MCEC, the "Sellers"), and CARMEN ACQUISITION CORP., an Oklahoma corporation (the
"Buyer").
B A C K G R O U N D :
A. Prior to the Closing Date (as hereinafter defined), the Sellers will cause
▇▇▇▇▇▇ Field Limited Partnership ("CFLP") to be dissolved and all of CFLP's oil
and gas leases and related assets will be distributed to CDC just prior to the
Effective Time (as hereinafter defined).
B. The Sellers desire to sell and the Buyer desires to purchase all of the
Sellers' right, title and interest in and to the Interests (as hereinafter
defined) which includes all of the producing and non-producing oil and gas
assets held, owned or controlled by the Sellers, CFLP and any other subsidiaries
of RAM as of November 15, 2001, in the counties listed in Schedule "1" attached
hereto and made a part hereof, excluding the Excluded Assets (as hereinafter
defined).
C. The purchase and sale of the Interests from the Sellers to the Buyer will be
consummated on the terms and conditions set forth in this Agreement and the
Assignment, ▇▇▇▇ of Sale and Conveyance in the forms at Exhibit "1" attached
hereto and made a part hereof (the "Assignment").
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Property to be Sold and Purchased. Subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase and the Sellers agree to sell,
assign, convey and deliver to the Buyer at Closing, but effective as of 7:00
a.m. CST on December 1, 2001 (the "Effective Time") all of the right, title and
interest of the Sellers in all oil, gas and mineral properties and interests
located in the counties and states listed in Schedule "1" attached hereto and
made a part hereof (the "Interests"). The Interests will include, without
limitation, all of the Sellers' right, title and interest in and to:
1.1 Real Property Interests. All oil, gas and mineral leases, operating
rights, working interests, net revenue interests, mineral interests,
royalty interests, overriding royalty interests, payments out of
production and other similar agreements and rights, whether producing
or non-producing and any other oil, gas or other leasehold or mineral
rights of any type located in the counties listed in Schedule "1",
including, without limitation, the working and net revenue interests
in ▇▇▇▇▇ as described in Schedule "1.1" attached hereto and made a
part hereof, any working interests and net revenue interests in the
mineral interests, leasehold interests, oil and gas interests and any
rights to acquire any of the foregoing interests, by contract, pooling
order or otherwise (the "Real Property Interests").
1.2 Tangible Property. All tangible personal property, equipment,
inventory, spare parts, fixtures and improvements, including, but not
by way of limitation, all oil and gas ▇▇▇▇▇, injection ▇▇▇▇▇, salt
water disposal facilities, well heads, casing, tubing, pumps, motors,
gauges, valves, heaters, treaters, gathering lines, flow lines, gas
lines, gas processing and compression facilities, water lines,
vessels, tanks, boilers, separators, fixtures, platforms, machinery,
tools, treating equipment, compressors and other equipment, pipelines,
power lines, telephone and communication lines, transportation and
communication facilities, and other appurtenances situated upon the
lands covered by the Real Property Interests or any land or lands
pooled or unitized therewith or used or obtained in connection with
the production, treating, storing, transportation or marketing of oil,
gas and other hydrocarbons or minerals therefrom (the "▇▇▇▇▇").
1.3 Unit and Related Interests. All presently existing unitization,
pooling and/or communitization agreements, declarations or
designations and statutorily, judicially or administratively created
drilling, spacing and/or production units, whether recorded or
unrecorded, which relate to the Real Property Interests, and all of
the Sellers' interest in and to the properties covered or units
created thereby which are attributable to the Real Property Interests.
1.4 Contracts. All presently existing and valid oil, casinghead gas and
gas sales agreements, operating agreements, farmout and farmin
agreements, pooling agreements, purchase agreements, exploration
agreements, area of mutual interest agreements, exchange and
processing contracts and agreements, partnership and joint venture
agreements and any other contracts, agreements and instruments which
pertain to the Real Property Interests, ▇▇▇▇▇ or any interests pooled
or unitized therewith, except to the extent (and only to the extent)
any such contract covers lands outside the counties listed in Schedule
"1."
1.5 Hydrocarbons. All oil and gas and other hydrocarbons in, on, under or
produced from the Real Property Interests or any interests pooled or
unitized therewith from and after the Effective Time.
1.6 Related Rights. All easements, permits, licenses, servitudes, rights
of way and all other rights and appurtenances situated on or used in
connection with the Real Property Interests, ▇▇▇▇▇ or any interests
pooled or unitized therewith and the right to receive all income,
disbursements and distributions attributable to the Sellers'
partnership interests, whether general, limited or special, in the
partnerships listed on Schedule "1.6" attached hereto and made a part
hereof, save and except the income, disbursements and distributions
attributable to a one percent (1%) general partnership interest in
each such partnership, which shall be retained by MCEC (the
"Partnership Rights");
1.7 Imbalances. All rights and benefits arising from or in connection with
any gas production, pipeline, storage, processing or other imbalance
attributable to hydrocarbons produced from the Real Property Interests
as of the Effective Time.
1.8 Title Documents and Warranties. To the extent the same are assignable
or transferable, and further to the extent the same are related to the
Real Property Interests and ▇▇▇▇▇, all of the Sellers' interests in
and to all: (i) orders, contracts, title opinions and documents,
abstracts of title, leases, deeds, division of interest statements,
participation agreements, and all other agreements and instruments,
easements, rights-of-way, licenses, authorizations, permits and
similar rights and interests, subject to the rights of third parties;
and, (ii) all claims, rights and causes of action including, without
limitation, causes of action for breach of warranty, against third
parties, asserted and unasserted, known and unknown, but only to the
extent such claims, rights and causes of action affect the value of
the Real Property Interests or the ▇▇▇▇▇ after the Effective Time, and
where necessary to give effect to the assignment of such rights,
claims and causes of action, Assignor grants to Assignee the right to
be subrogated to such rights, claims and causes of action.
1.9 Records. All files, records and data (including electronic data)
including but not limited to geophysical and seismic data, lease
files, land files, ▇▇▇▇▇ files, division order files, abstracts, title
files, engineering and/or production files, maps, accounting records,
and other information in the possession of the Sellers or copies
thereof specifically related to the ▇▇▇▇▇ and Real Property Interests,
and all rights relating thereto.
1.10 Derivative Rights. All other rights and interests in, to or under or
derived from the ▇▇▇▇▇ or the Real Property Interests, the lands
covered thereby or pooled, unitized or directly used or held for use
in connection therewith.
There is hereby expressly reserved to Sellers, and the Interests will not cover
or include the following (the "Excluded Assets"): (a) Any interest or ownership
of the Sellers in the ▇▇▇▇▇▇ Gathering System located in ▇▇▇▇▇, Alfalfa and
Major Counties, Oklahoma (for purposes of this Agreement, the parties
acknowledge that the ▇▇▇▇▇▇ Gathering System includes all real and personal
property comprising, connected to or used in connection with the system
downstream of (i) the inlet of the gas purchase meter on each well connected to
the system, and (ii) the outlet of the tank battery on each such well), nor
shall the Assignment convey any easements, rights of way, real estate,
buildings, fixtures, equipment, central point salt water disposal facilities,
contracts or any other rights, benefits, obligations or liabilities pertaining
to the ▇▇▇▇▇▇ Gathering System, (b) any right, title, interest or ownership of
the Sellers in Sections 31 and 32 of Township 17 North, Range 25 West, Sections
5, 6, 7 and 8 of Township 16 North, Range 25 West and Sections 1, 2, 11 and 12
of Township 16 North, Range 26 West, all in ▇▇▇▇▇ ▇▇▇▇▇ County, Oklahoma, (c)
any right, title, interest or ownership of the Sellers in the Sellers' yard
located in Fairview, Oklahoma, the Carmen Gathering System office located in
Carmen, Oklahoma, the Carmen plant site or the real property offsetting the
▇▇▇▇▇▇ plant site or in any personal property or equipment located thereon, (d)
any hydrocarbons produced from the Real Property Interests prior to the
Effective Time, including hydrocarbons in storage at the Effective Time, and any
proceeds from the sale thereof, (e) any claims relating to sales of production
from the Real Property Interests prior to the Effective Time, (f) any claims for
a refund relating to or entitlement to an adjustment with respect to prior
payments for sales of production from the Real Property Interests prior to the
Effective Time, (g) any claims relating to, or any entitlement to an adjustment
for, expenses paid by the Sellers prior to the Effective Time, (h) any claims
relating to the ownership or operation of the Real Property Interests or the
▇▇▇▇▇ prior to the effective time (except for gas imbalances and title claims,
all of which are intended to be conveyed to the Buyer), (i) any trucks,
tractors, backhoes or other vehicles or similar equipment on or relating to the
Real Property Interests, (j) all accounts receivable relating to the Real
Property Interests and the ▇▇▇▇▇ attributable to operations prior to the
Effective Time, (k) all geological and geophysical information, files, maps and
similar information relating to concepts, lead areas and prospects upon which
leasehold interests have not been acquired by the Sellers as of the Effective
Time, and (l) rights or obligations relating to gas imbalances on ▇▇▇▇▇ located
in the counties listed on Schedule "1" that have been plugged and abandoned
prior to the Effective Time, but only to the extent the Sellers had such rights
or obligations at the Effective Time. The Sellers hereby acknowledge and agree
that, except as otherwise specifically agreed in writing, the Sellers will
retain all liabilities and obligations relating to the Excluded Assets (other
than those under clause [b]) and will indemnify and hold the Buyer harmless with
respect thereto. The foregoing retention of liabilities and obligations by the
Sellers together with the foregoing agreement to indemnify will not apply to
liabilities or obligations otherwise assumed or agreed to be performed in
writing by the Buyer, its subsidiaries or affiliates (which for purposes of this
Agreement and the Assignment will not include any of the Sellers or CFLP).
20 Purchase Price. On the Closing Date, in consideration for the sale of the
Interests, the Buyer will: (a) pay to the Sellers as provided in this
Agreement the aggregate amount of Seventy-Six Million Dollars
($76,000,000.00), as adjusted as provided hereinafter, for one hundred
percent (100%) of the Interests ( the "Purchase Price"). The Purchase Price
will be payable eighty-five percent (85%) in cash (the "Cash Purchase
Price") and fifteen percent (15%) in 11 1/2% Senior Notes due 2008 issued
by RAM (the "Senior Notes") at par value transferred to RAM on behalf of
the Sellers (the "Notes Purchase Price"). For all purposes under this
Agreement and in connection with the Closing of the transaction
contemplated hereby, in determining all allocations between the Cash
Purchase Price and the Notes Purchase Price, the Senior Notes included
therein will be rounded downward to the nearest One Thousand Dollars
($1,000.00) and any excess will be included in the Cash Purchase Price. The
Sellers hereby acknowledge that Seven Million Five Hundred Thousand Dollars
($7,500,000.00) of the Purchase Price (the "Escrow Amount") will be
delivered to BancFirst, Oklahoma City, as escrow agent (the "Escrow Agent")
on the Closing Date to be held for making adjustments as further provided
in this Agreement pursuant to an escrow agreement executed by the Sellers,
the Buyer and the Escrow Agent (the "Escrow Agreement"). In addition, at
Closing the Sellers will pay in cash to the Buyer the accrued interest
through the Closing Date on the Senior Notes used to satisfy the Note
Purchase Price. The Purchase Price will be adjusted as follows:
2.1 Mortgage Liens. At the Closing, the Buyer will pay for the Sellers'
account the Sellers' indebtedness (the "Bank Financing") to Foothill
Capital Corporation ("Foothill"), as agent for certain lenders, to the
extent necessary to cause Foothill to release and terminate any and
all liens and security interests on all of the Interests. The Cash
Purchase Price will be reduced by all principal, interest, costs, fees
and expenses paid to Foothill in connection with the pay off of the
Bank Financing. At the time such payment is made, the Sellers will
cause lien releases and termination statements to be delivered to the
Buyer with respect to all liens, security interests, claims and
encumbrances. However, nothing contained herein will prevent the Buyer
from asserting as a Title Defect (as hereinafter defined) any lien,
security interest, claim or encumbrance for which a release or
termination statement in not properly recorded or tendered at Closing.
2.2 Title and Environmental Defects. The Purchase Price will be decreased
for any Title Defects and Environmental Defects (as hereinafter
defined) pursuant to paragraph 9 of this Agreement.
2.3 Gas Imbalances. The Purchase Price will be decreased by the net mcf
amount of the aggregate gas imbalances (overproduc- tion) attributable
to the Interests as of the Effective Time multiplied by $1.50 per mcf.
2.4 Adjustments. The adjustments provided for herein will be based on
estimations as of the Closing Date, to the extent available, prepared
as mutually agreed by the parties with the final adjustments therefor
made in accordance with the provisions of paragraph 9 and other
applicable provisions of this Agreement.
30 Representations and Warranties of the Seller. As an inducement to the Buyer
to enter into this Agreement, as of the date of this Agreement and the
Effective Time, the Sellers jointly and severally represent and warrant to
the Buyer (except as to the matters in paragraphs 3.9, 3.14.1, 3.14.3 and
the first sentence of 3.10, which matters the Sellers warrant but do not
represent):
3.1 No Assumption of Obligations. Except as specifically provided in this
Agreement or in the Assignment, the execution and consummation of this
Agreement by the Buyer will not obligate the Buyer with respect to (or
result in the assumption by the Buyer of) any obligation of the
Sellers under or with respect to any liability, agree- ment or
commitment relating to the Interests to the extent arising prior to
the Effective Time, including, without limitation, any agreement or
obligation relating to the Interests arising prior to the Effective
Time or any other business, affairs, properties or finances of the
Sellers.
3.2 Organization, Good Standing, Etc. RAM and MCEC are each corporations
duly formed, validly existing and in good standing under the laws of
the State of Delaware and CDC is a corporation duly formed, validly
existing and in good standing under the laws of Oklahoma. Each of the
Sellers has the corporate power and authority to own the Interests and
to carry on their respective businesses in each state where the
Interests are located. The Sellers are duly qualified and/or licensed,
as may be required, and in good standing in each of the jurisdictions
in which the nature of the business conducted by the Sellers or the
character of the Interests owned, leased or used by the Sellers makes
such qualification and/or licensing necessary, except where the
failure to be so qualified and/or licensed, and in good standing would
not singly or in the aggregate have a material adverse effect on any
of the Interests. CFLP has been dissolved and CDC is the successor in
interest to all of the Interests previously owned by CFLP and no other
person or entity has any rights or claims with respect thereto.
3.3 Legal Requirements. Each of the Sellers: (a) has all requisite power
to own, lease and operate all the Interests as now being operated; and
(b) holds all required licenses and permits for carrying on all
operations with respect to the Interests.
3.4 Consents and Approvals. Except (i) with respect to Permitted
Encumbrances (as hereinafter defined), or (ii) as disclosed in
Schedule "3.4" attached hereto and made a part hereof, the execution,
delivery, performance and consummation of this Agreement does not and
will not: (a) violate, conflict with or constitute a default or an
event that, with notice or lapse of time or both, would be a default,
breach or violation under any term or provision of any instrument,
agreement, contract, commitment, license, promissory note, conditional
sales contract, indenture, mortgage, deed of trust, lease or other
agreement, instrument or arrangement to which either of the Sellers or
CFLP is a party or by which either of the Sellers, CFLP or any of the
Interests is bound (other than the credit and security documents
related to the Bank Financing, which is being paid in full at the
Closing, thereby terminating all obligations of the Sellers
thereunder); (b) violate, conflict or constitute a breach of any
statute, regulation or judicial or administrative order, award,
judgment or decree to which either of the Sellers or CFLP is a party
or by which either of the Sellers, CFLP or any of the Interests is
bound; or (c) result in the creation, imposition or continuation of
any adverse claim or interest, or any lien, encumbrance, charge,
equity or restriction of any nature whatsoever, on or affecting the
Sellers, CFLP or the Interests.
3.5 Litigation. Except as listed in Schedule "3.5" attached hereto and
made a part hereof, there is no action, suit or proceeding pending or
threatened in writing against the Sellers or the Interests and no
proceeding, investigation, charge, audit or inquiry pending, or to the
Sellers' knowledge threatened, before or by any federal, state,
municipal or other governmental court, department, commission, board,
bureau, agency or instrumentality which might result in a material
adverse effect on the Buyer or any of the Interests.
3.6 Taxes. All ad valorem, property, production, severance and similar
taxes and assessments based on or measured by the ownership of
property comprising the Interests or the production or removal of
hydrocarbons or the receipt of proceeds therefrom (including
applicable escheatment requirements) have been timely paid when due
and are not in arrears, except such things as are being contested in
good faith by appropriate proceedings and as to which adequate
reserves have been established in accordance with generally accepted
accounting principles.
3.7 No Breach of Statute or Contract; Governmental Authorizations. Neither
the execution and delivery of this Agreement nor compliance with the
terms and provisions of this Agreement by the Sellers will violate any
law, statute, rule or regulation of any governmental authority, or
will on the Closing Date conflict with or result in a breach of any of
the terms, conditions or provisions of any judgment, order,
injunction, decree or ruling of any court or governmental agency or
authority to which the Sellers, CFLP or any of the Interests is
subject or of any material agreement or instrument to which either of
the Sellers or CFLP is a party or by which either of the Sellers, CFLP
or any of the Interests is bound, or constitute a material default
thereunder, or result in the creation of any material lien, charge or
encumbrance upon any of or the Interests or cause any acceleration of
maturity of any material obligation or loan, or give to others any
material interest or rights, including rights of termination,
cancellation or first refusal, in or with respect to any of the
Interests, other than preferential rights to purchase described in
Schedule "3.12".
3.8 Permits. On the Closing Date, the Sellers will have all approvals,
authorizations, consents, licenses, orders, franchises, rights,
registrations and permits of all governmental agencies, whether
federal, state or local, United States or foreign, required to permit
the operation of the Interests as presently operated (the "Permits")
and each will be in full force and effect and will have been duly and
validly issued, except where the absence of which, singly or in the
aggregate, would not have a material adverse effect on the Interests
or the Buyer. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result
in any revocation, cancellation, suspension or modification of any
such Permit except (a) those Permits issued in the name of the Sellers
that are not transferable under applicable law, or (b) where such
revocation, cancellation, suspension or modification would not have a
material adverse effect on the Buyer or any of the Interests. On the
Closing Date, there will be no outstanding violation of any of the
Permits singly or in the aggregate that would have a material adverse
effect on the Buyer or the Interests.
3.9 Title to the Interests. The Sellers will have, as of the Effective
Time, Defensible Title (as hereinafter defined) of record to working
and net revenue interests set forth in Schedule "1.1" in all of the
respective properties comprising the Interests, free and clear of all
liens, pledges, claims, charges, security interests, production
payments or other encumbrances other than the Permitted Encumbrances.
3.10 Oil and Gas Leases in Good Standing. Except as set forth in Schedule
"3.10" attached hereto and made a part hereof, all oil and gas leases,
farmout agreements and exploration agreements relating to the
Interests are in full force and effect, and the Sellers and CFLP are
not in default thereunder. Except for revenues which are properly
being suspended in accordance with applicable law, all oil and gas
proceeds owing to others for production prior to the Effective Time
have been or will be disbursed in accordance with all of the terms and
conditions of the applicable leases, other contracts and applicable
law and all deductions from such oil and gas proceeds have been or
will be deducted in compliance with all of the terms and conditions of
the applicable leases, other contracts and applicable law.
3.11 Compliance with Laws. The Sellers have and are operating and, to the
best of the Sellers' knowledge, other operators of the Interests have
operated the Interests in compliance with the provisions and
requirements of all applicable law, ordinance, regulation, writ,
judgment, decree or order of any court or government or governmental
unit in connection with the Interests.
3.12 Contracts, Consents and Preferential Rights. The Sellers have
described in Schedule "3.12"attached hereto and made a part hereof:
(a) all partnership, joint venture, area of mutual interest, purchase
and/or acquisition agreements of which any terms remain executory
which materially affect any of the Interests (excluding joint
operating agreements and oil, gas and mineral leases); (b) all seismic
contracts, any terms of which are still executory, covering any of the
Real Property Interests to which the either of the Sellers or CFLP is
a party or the Interests are subject; (c) all gas purchase contracts,
oil purchase contracts, gathering contracts, transportation contracts,
marketing contracts, disposal or injection contracts and all other
contracts which are not, by the terms thereof, subject to termination
upon thirty (30) days or less notice, (d) all governmental or court
approvals and third party contractual consents required in order to
consummate the transactions contemplated by this Agreement, other than
routine consents required in connection with transfers of U.S.
federal, state and Indian leases; (e) all agreements pursuant to which
third parties have preferential rights or similar rights to acquire
any portion of the Interests upon the transfer of the Interests by
CFLP or by the Sellers to the Buyer as contemplated by this Agreement;
and (f) all production payments or net profits interests burdening any
of the Interests. All such agreements are in full force and effect and
no default or breach of any such agreements, consents, approvals or
other matters has occurred or is continuing as of the date of this
Agreement and the Closing Date.
3.13 Planned Future Commitments. Except for the continuing operations and
other matters set forth in Schedule "3.13" attached hereto and made a
part hereof, the Sellers and CFLP have not and will not become legally
obligated for any future expenditure commitments requiring an
expenditure by the Sellers in excess of Ten Thousand Dollars
($10,000.00) relating to any of the Real Property Interests (drilling
of ▇▇▇▇▇, workovers, contract settlements, pipeline projects,
production facilities, etc.), or the ▇▇▇▇▇ after the date of this
Agreement.
3.14 Environmental and Safety Matters. Insofar as it pertains to the
Interests:
3.14.1 Except as set forth in Schedule "3.14" attached hereto and
made a part hereof, the Interests and the ownership and
operation thereof are in material compliance with all
applicable Environmental Laws (as hereinafter defined) and
with all terms and conditions of all environmental permits,
and all prior instances of non-compliance have been fully
and finally resolved to the satisfaction of all governmental
authorities with jurisdiction over such matters, to the
extent governmental authorities were involved with any prior
instance of non-compliance.
3.14.2 Except as set forth in Schedule "3.14", there are no civil,
criminal or administrative actions, lawsuits, demands,
litigation, claims or hearings relating to an alleged breach
of Environmental Laws on or with respect to the Interests,
and neither the Sellers nor CFLP has received any notice of
any third party environmental or health or safety claim,
demand, filing, investigation, administrative proceeding,
action, suit or other legal proceeding relating to the
Interests (an "Environmental Claim") or notice of any
alleged violation or non-compliance with any Environmental
Law or of non-compliance with the terms or conditions of any
environmental permits, arising from, based upon, associated
with or related to the Interests or the ownership or
operation of any thereof.
3.14.3 No pollutant, waste, contaminant or hazardous, extremely
hazardous or toxic material, substance, chemical or waste
identified, defined or regulated as such under any
Environmental Law is present or has been handled, managed,
stored, transported, processed, treated, disposed of,
released, migrated or escaped on, in, from, under or in
connection with the Interests or the ownership or operation
of any thereof, such as to cause a condition or circumstance
that would reasonably be expected to result in an
Environmental Claim or a violation of any Environmental Law.
3.15 Plugging Status. All ▇▇▇▇▇ on the Interests that have been plugged and
abandoned by the Sellers and, to the best knowledge of the Sellers all
other ▇▇▇▇▇ on the Interests that have been plugged and abandoned,
have been plugged and abandoned in accordance in all material respects
with all applicable requirements of each governmental authority having
jurisdiction over the Sellers, CFLP or the Interests.
3.16 Payout Balances, Gas Imbalances and Take or Pay. The Payout Balance
for each well located on the Real Property Interests is properly
reflected in Schedule "3.16A" as of the respective date(s) shown
thereon. "Payout Balance(s)" means the status, as of the dates of the
Sellers' calculations, of the recovery by the Sellers, CFLP or a third
party of a cost amount specified in the contract relating to a well
out of the revenue from such well where the net revenue interest of
the Sellers or CFLP therein will be reduced or the working interest
therein will be increased when such amount has been recovered. Except
as is reflected on Schedule "3.16B" as of the respective dates shown
thereon: (a) there are no production, transportation or processing
imbalances existing with respect to the Sellers, CFLP or the
Interests, and (b) neither the Sellers nor CFLP have received any
deficiency payments under gas contracts for which any party has a
right to take deficiency gas from the Interests, nor have the Sellers
or CFLP received any payments for production which are subject to
refund or recoupment out of future production.
3.17 Affiliate Transactions. Except with respect to purchases by MCEC, as
successor to CFLP as the owner and operator of the ▇▇▇▇▇▇ Gathering
System (the "▇▇▇▇▇▇ System"), of oil and gas from Real Property
Interests upon which ▇▇▇▇▇ are located that are connected to the
▇▇▇▇▇▇ System, and the disposal of salt water produced from Real
Property Interests upon which ▇▇▇▇▇ are located that are connected to
the ▇▇▇▇▇▇ System, there are no transactions affecting any of the
Interests between the Sellers and any affiliates of the Sellers that
are material to the continued operation of the Interests and that will
continue beyond the Closing, except as set forth in Schedule "3.17"
attached hereto and made a part hereof. As used in this Agreement,
"affiliate" means, with respect to any person or entity, each other
person or entity directly or indirectly controlling, controlled by or
under common control with such person.
3.18 Authority. Each of the Sellers has taken all necessary action to
authorize the execution, delivery and performance of this Agreement
and has adequate power, authority and legal right to enter into,
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement is legal, valid and
binding with respect to the Sellers and is enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally.
3.19 Broker's or Finder's Fees. The Sellers have not incurred any
liability, contingent or otherwise, for brokers' or finders' fees in
respect of the transactions contemplated by this Agreement for which
the Buyer will have any responsibility whatsoever.
3.20 Fairness Opinion. RAM has received an opinion of CIBC World Markets
Corp. that the transactions contemplated by this Agreement are fair to
RAM from a financial point of view.
3.21 Full Disclosure. All of the representations and warranties in
paragraph 3 of this Agreement are true and correct as of the date made
and will be true and correct as of the Closing Date.
40 Representations and Warranties of the Buyer. As an inducement to the
Sellers to enter into this Agreement, the Buyer represents and warrants to
the Seller that as of the date of this Agreement and the Closing Date:
4.1 Organization and Standing. The Buyer is a corporation duly formed and
in good standing under the laws of the State of Oklahoma.
4.2 Corporate Powers. The Buyer is duly authorized and empowered to
execute, deliver and perform this Agreement. Neither the certificate
of incorporation nor the bylaws of the Buyer, nor any other instrument
to which the Buyer is a party or is bound, nor any court order or
governmental law, rule or regulation, will be violated by the Buyer's
execution and consummation of this Agreement.
4.3 No Restriction. The Buyer is not subject to any order, judgment or
decree, or the subject of any litigation, claim or proceeding, pending
or threatened, or any other restriction of any kind or character known
to the Buyer, which would affect its ability to carry out the
transactions contemplated by this Agreement.
4.4 Authorization. All corporate action on the part of the Buyer necessary
for the transaction contemplated by this Agreement shall have been
taken on or before the Closing Date. This Agreement is legal, valid
and binding with respect to the Buyer and is enforceable in accordance
with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally.
4.5 Governmental Consent. No consent, approval, or authorization of, or
designation, or filing with, any governmental unit is required on the
part of the Buyer in connection with the valid execution and delivery
of this Agreement or the consummation of transactions contemplated
hereby.
4.6 Litigation, etc. There are no actions, proceedings, or investigations
pending, or to the Buyer's knowledge, any basis or threat thereof,
which question the validity of this Agreement or any other action
taken or to be taken in connection herewith or which would have a
material adverse effect on the Buyer.
4.7 Broker's or Finder's Fees. The Buyer has not incurred any liability,
contingent or otherwise, for brokers' or finders' fees in respect of
this Agreement for which the Sellers will have any responsibility
whatsoever.
50 Covenants. The parties hereby covenant and agree to perform the following:
5.1 Access to Information. During the Hold Back Period (as hereinafter
defined), insofar as related to the Interests, the Sellers will give
the Buyer and the Buyer's agents and representatives, reasonable
access to all of the books and records of the Sellers and agree to
cause their respective officers to furnish the Buyer and the Buyer's
agents and representatives with such financial and operating data and
other information with respect to the Interests as the Buyer, its
agents and representatives shall from time to time reasonably request;
provided, however, that any such investigation shall not affect any of
the representations and warranties of the Sellers hereunder and shall
be conducted in such manner as not to interfere unreasonably with the
operation of the business of the Sellers.
5.2 Conduct of Business. From and after the date of this Agreement:
5.2.1 The Sellers will, to the extent required for continued
operation of the Interests without impairment, use the
Sellers reasonable best efforts to assist the Buyer (without
incurring any third party expenses) in preserving the
present relationships related to the Interests with persons
having significant business relations therewith such as
suppliers, customers, brokers, agents or otherwise.
5.2.2 The Sellers will pay, when due, all expenses, taxes,
revenues, royalties, overriding royalties and other
obligations incurred prior to or due, attributable or owing
for periods prior to the Effective Time and will not,
without the prior written consent of the Buyer waive any
rights accruing after the Effective Time of substantial
value with respect to any of the Interests.
5.2.3 The Sellers will take any and all actions necessary to
ensure that the Interests are free and clear of all liens,
security interests, claims and encumbrances in connection
with the Bank Financing and any other indebtedness or
obligation created by the Sellers and encumbering any of the
Interests, except the Permitted Encumbrances or otherwise
provided in the Assignment.
5.3 Consents and Operations. From and after the date of this Agreement,
the Sellers will each use their reasonable efforts to obtain the
consent or approval of each person whose consent or approval is
required in order to consummate the transactions contemplated by this
Agreement and the Sellers will use their reasonable best efforts,
without incurring any third party expense, to assist the Buyer in
becoming the duly elected, appointed or successor operator of all of
the Interests presently operated by the Sellers or CFLP.
5.4 Conditions. The Buyer and the Sellers will use their respective
reasonable best efforts to cause the conditions and agreements in
paragraphs 6, 7 and 8 of this Agreement to be satisfied and performed,
whether prior to or after the Closing.
5.5 Accounting. The Sellers will cooperate with and assist the Buyer in
the transition of the joint interest billing and revenue disbursement
accounting for the Interests and will take such actions as may be
reasonably required with respect thereto with the accounting firm
which provides such services to the Sellers.
5.6 Independent Contractors. The Sellers will cooperate with and assist
the Buyer in interviewing and evaluating all pumpers and other
independent contractors used by the Sellers in the operation of the
Interests and, upon request by the Buyer, in the retention of such
individuals' services by the Buyer.
5.7 Revenues Held For Benefit of Another Party. In the event either the
Buyer receives production or other revenues attributable to any of the
Interests for any periods prior to the Effective Time or the Sellers
receive production or other revenues attributable to any of the
Interests for any periods after the Effective Time, the receiving
party will hold such revenues for the exclusive benefit of, and
immediately remit such revenues to, the party entitled thereto.
5.8 Revenues and Expenses. The Sellers and the Buyer will properly
allocate revenues and expenses before and after the Effective Time and
will make payments to each other to the extent necessary for such
proper allocation. All expenses incurred in the operation of the
Interests before the Effective Time will be borne by the Sellers and
all proceeds from the sale of oil, gas or other hydrocarbons produced
from or attributable to the Interests prior to the Effective Time will
be the property of the Sellers and all expenses incurred in the
operation of the Interests after the Effective Time will be borne by
the Buyer and all proceeds from the sale of oil, gas or other
hydrocarbons produced from or attributable to the Interests after the
Effective Time will be the property of the Buyer. Ad valorem taxes,
property taxes and other similar obligations will be prorated between
the Sellers and the Buyer as of the Effective Time.
5.9 ▇▇▇▇▇▇ System Right of First Refusal. Effective as of the Closing, the
Sellers hereby grant to the Buyer a right of first refusal ("ROFR") to
purchase the ▇▇▇▇▇▇ System. The ROFR shall operate as follows: In the
event Sellers receive a bona fide third party offer to purchase the
▇▇▇▇▇▇ System in any form of transaction including, without
limitation, sale, merger or other disposition (an "Offer") at a price
the Sellers desire to accept (the "Offer Price"), the Sellers will
give written notice to the Buyer of the Offer and all terms and
conditions thereof including, without limitation, the parties thereto.
The Buyer shall have a period of ten (10) days after receipt of the
notice of the Offer to notify the Sellers in writing of the Buyer's
agreement to purchase the ▇▇▇▇▇▇ System for the Offer Price on the
terms outlined in the Offer, subject to terms and adjustments
customary in similar transactions. In the event the Buyer so notifies
the Sellers of the Buyer's intent to purchase the ▇▇▇▇▇▇ System for
the Offer Price and on such terms, then the sale will be documented
and closed on or before the later of: (a) the closing time set forth
in the Offer; or (b) the date thirty (30) days after the date the
Buyer notifies the Sellers of the Buyer's agreement to purchase the
▇▇▇▇▇▇ System. In the event Buyer fails to affirmatively notify the
Sellers, within the ten (10) day period described above, of Buyer's
intent to purchase the ▇▇▇▇▇▇ System on the terms stated in the Offer,
then the Sellers shall be free to sell the ▇▇▇▇▇▇ System to a third
party at any time within ninety (90) days after the date of the
initial notice to the Buyer, on terms no less favorable to the Sellers
than the terms set out in the Offer. In the event Sellers fail to
close such a sale within such ninety (90) day period, then the ROFR
will become effective once again upon the expiration of such ninety
(90) day period. The ROFR will not continue to burden the ▇▇▇▇▇▇
System after a sale to a third party conducted as hereinabove
described. The ROFR will not apply in the event of a merger by RAM
with or into another corporation or a sale by RAM and its subsidiaries
(including MCEC and CDC) of all or substantially all of the properties
and assets of RAM and its subsidiaries.
5.10 ▇▇▇▇ Well Area. Contemporaneously with the Closing, RAM agrees to
transfer to the Buyer or the Buyer's designee operations on the ▇▇▇▇
Well, located in Section 5-11N-15W, Washita County, Oklahoma, and to
support Buyer as operator of all joint interest ▇▇▇▇▇ hereafter
drilled in Sections 5, 7 and 8-11N-15W, Washita County, Oklahoma.
Buyer agrees to commence the drilling of a Red Fork test well in
Section 8-11N-15W, Washita County, Oklahoma, within sixty (60) days
after the later of: (a) receipt of written proposal from RAM to drill
such well; or (b) if Oklahoma Corporation Commission proceedings are
necessary in order to drill such well, the date a final order is
entered in such proceedings.
5.11 Gas Balancing Reconciliation. The Buyer agrees, prior to the
expiration of the Second Hold Back Period (as hereinafter defined), to
use its best reasonable efforts to determine the gas balancing status
of the Interests as of the Effective Time. The Sellers agree to use
their best efforts to cooperate with and assist the Buyer in making
such determination. The Buyer will provide for review by the Sellers
all information gathered and relied upon by Buyer in making such
determination. Within twenty (20) days after receipt from the Buyer of
the Buyer's determination of the gas balancing status of the Interests
as of the Effective Time, the parties will account and make payment
from one to the other as necessary to reflect the gas balancing
adjustment to the Purchase Price, at $1.50 per net mcf, that would
have been made at Closing had the information determined by Buyer been
determined at and as of the Effective Time.
5.12 Posting of Letter of Credit. The Sellers agree to post or to cause the
operator of the ▇▇▇▇▇▇ System to post on or before February 1, 2002,
and maintain in force and effect for the period of three (3) years
from the date of issuance, a standby letter of credit in the minimum
amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) to
secure the timely payment to the Chesapeake Parties of proceeds from
the sale of production into the ▇▇▇▇▇▇ System under all hydrocarbon
purchase and sale contracts.
5.13 ▇▇▇▇▇▇ Well. With respect to the ▇▇▇▇▇▇ #2-7 Well described in
Schedule "3.13," which currently is drilling, the Buyer shall
reimburse the Sellers the full amount of all unaffiliated third party
costs and expenses incurred by the Sellers to date in connection with
joint operations on such well, including those costs and expenses
incurred prior to the Effective Time but excluding any costs of
acquiring or maintaining leasehold interests.
5.14 Sapient. The parties agree that within five (5) business days after
the closing of the merger between an affiliate of the Buyer and
Sapient Energy Corp. the parties will cause all of their respective
affiliates to pay current: (a) any and all amounts due and owing by
Sapient Energy Corp. to the Sellers or the Sellers' affiliates; and
(b) any and all amounts due and owing by the Sellers or the Sellers'
affiliates to Sapient Energy Corp.
5.15 Dissolution Agreement. This Agreement will not affect, modify or
assign the allocation of liability provisions or the indemnification
provisions set forth in Article IV and V of that certain Agreement for
the Dissolution of Joint Venture (the "Dissolution Agreement") dated
February 7, 1996, among DLB Acquisition, L.L.C., DLB Oil & Gas, Inc.,
Magic Circle Acquisition Corporation and ▇▇▇▇▇▇ Field Limited
Partnership. Such liabilities will remain with the party allocated
such obligations under the Dissolution Agreement.
60 Buyer's Conditions Precedent. The obligation of the Buyer to consummate the
transactions contemplated by this Agreement is subject to the satisfaction
or waiver (subject to applicable law) at or prior to the Closing Date of
each of the following conditions:
6.1 No preliminary or permanent injunction or other order will have been
issued by any court of competent jurisdiction or any regulatory body
preventing consummation of the transactions contemplated by this
Agreement;
6.2 No action will have been commenced or threatened against the Sellers,
the Buyer or any of their respective affiliates, associates, officers
or directors seeking to prevent or challenge the transactions
contemplated by this Agreement or seeking damages arising from the
transactions contemplated by this Agreement;
6.3 All representations and warranties of the Sellers contained herein
will be true and correct in all material respects on and as of the
Closing Date;
6.4 The Sellers will have performed or satisfied in all material respects
on and as of the Closing Date, all obligations, covenants, agreements
and conditions contained in this Agreement to be performed or complied
with by the Sellers including, without implied limitation, the payment
of the accrued interest on the Senior Notes used to satisfy the Note
Purchase Price;
6.5 All actions, proceedings, instruments and documents required to carry
out the transactions contemplated hereby will be reasonably
satisfactory to the Buyer and the Buyer's counsel, and the Sellers
will have delivered such additional certificates, opinions and other
documents as the Buyer reasonably requests including, without
limitation, certificates of the Sellers dated the Closing Date
evidencing compliance with the conditions set forth in this paragraph
6;
6.6 All of the Interests will be conveyed by the Sellers to the Buyer
pursuant to the terms of the Assignment;
6.7 There will have been no material adverse change in the condition of
any of the Interests;
6.8 There shall not have occurred any loss or damage to any of the
Interests (whether or not covered by insurance), which, in any case,
would have a material adverse effect on the Buyer;
6.9 The Sellers and CFLP shall not have sold, assigned, transferred,
encumbered, conveyed or otherwise disposed of any of the Interests;
6.10 The Sellers shall have prepared the necessary forms for the transfer
to the Buyer or the Buyer's designee operations of all of the
Interests operated by the Sellers in accordance with all applicable
agreements relating to such operations;
6.11 The Sellers shall have executed and delivered to the Buyer the
Goodwill Protection Agreement in the form of Exhibit "6.11" attached
hereto and made a part hereof;
6.12 The Sellers and the Buyer or another subsidiary of Chesapeake Energy
Corporation ("Chesapeake") shall have entered into the Exploration
Agreement on terms and conditions satisfactory to Chesapeake;
6.13 All existing gas contracts covering the Interests and any other
properties owned by the Buyer, Chesapeake and any of its other
subsidiaries (the "Chesapeake Parties") pursuant to which gas is
delivered into the ▇▇▇▇▇▇ System shall have been amended on terms and
conditions acceptable to the Buyer and the Sellers; and
6.14 All outstanding accounts receivable and/or unpaid proceeds due to the
Chesapeake Parties by the Sellers or any of their subsidiaries or
affiliates will be paid in full in immediately available funds net of
amounts that are due and owing by Chesapeake to the Sellers.
70 Sellers' Conditions Precedent. The obligation of the Sellers to consummate
the transactions contemplated by this Agreement is subject to the
satisfaction or waiver (subject to applicable law) at or prior to the
Closing Date of each of the following conditions:
7.1 No preliminary or permanent injunction or other order will have been
issued by any court of competent jurisdiction or any governmental or
regulatory body preventing consummation of the transactions
contemplated by this Agreement;
7.2 No action will have been commenced or threatened against the Sellers,
the Buyer or any of their respective affiliates, associates, officers
or directors seeking to prevent or to challenge the transactions
contemplated by this Agreement or seeking damages arising therefrom;
7.3 All representations and warranties of the Buyer contained herein will
be true and correct in all material respects on and as of the Closing
Date;
7.4 The Buyer will have performed in all material respects all
obligations, covenants and agreements contained in this Agreement to
be performed or complied with by the Buyer; and
7.5 All existing gas contracts covering the Interests and any other
properties owned by the Chesapeake Parties pursuant to which gas is
delivered into the ▇▇▇▇▇▇ System shall have been amended on terms and
conditions acceptable to the Buyer and the Sellers.
80 The Closing. Unless extended as provided herein, this Agreement will be
consummated (the "Closing") at 10:00 a.m. local time in the offices of
Commercial Law Group, P.C. or before the close of business on December 5,
2001 (the "Closing Date"). The parties may, by mutual written consent,
change the Closing Date to any other date that they may agree upon.
8.1 Buyer's Deliveries. On the Closing Date, the Buyer will deliver or
cause to be delivered:
8.1.1 Purchase Price. To RAM on behalf of all of the Sellers the
Cash Purchase Price and to RAM on behalf of all of the
Sellers, the Notes Purchase Price (each, as adjusted and
less the Escrow Amount and the amounts payable to Foothill);
8.1.2 Escrow Agreement. To the Sellers and the Escrow Agent, an
executed copy of the Escrow Agreement;
8.1.3 Evidence of Authority. Such corporate resolutions,
certificates of good standing and other evidence of
authority with respect to the Buyer as might be reasonably
requested by the Sellers; and
8.1.4 Additional Documents. Such additional documents customary in
similar transactions as might be reasonably requested by the
Sellers to consummate this Agreement.
8.2 Sellers' Deliveries. On the Closing Date, the Sellers will deliver or
cause to be delivered to the Buyer the following items (all documents
will be duly executed and acknowledged where required):
8.2.1 Assignments. Assignments of each of the Sellers and CFLP for
each of the Interests including appropriate documents to
evidence the transfer to the Buyer of the Partnership
Rights;
8.2.2 Change of Operator Forms. Change of operator forms in form
and substance satisfactory to the Buyer for each of the
Interests for which either of the Sellers or CFLP acts as
operator evidencing a transfer to the Buyer or the Buyer's
designee of operations on all such Interests;
8.2.3 Escrow Agreement. To the Buyer and the Escrow Agent, an
executed copy or the Escrow Agreement;
8.2.4 Other Parties. Such releases, termination statements,
ratifications and waivers from any party who owns or claims
any right, title or interest in and to any of the Interests
as might be reasonably requested by the Buyer and releases
and termination statements for all liens, security interests
and encumbrances covering any of the Interests and securing
the Bank Financing;
8.2.5 Evidence of Authority. Such corporate resolutions,
certificates of good standing and other evidence of
authority with respect to the Sellers and CFLP as might be
reasonably requested by the Buyer;
8.2.6 Records and Data. All records, files, documents, data and
other information concerning any of the Interests including,
without limitation, all electronic records and data;
8.2.7 Interest. Pay to the Buyer the accrued interest on the
Senior Notes used to satisfy the Note Purchase Price; and
8.2.8 Additional Documents. Such additional documents customary in
similar transactions as might be reasonably requested by the
Buyer to consummate this Agreement.
8.3 Post Closing Adjustments and Escrow Disbursements. The Buyer and the
Sellers agree that the Purchase Price will be adjusted after the
Closing Date in accordance with the provisions of paragraph 9 of this
Agreement.
8.4 Costs. The Sellers will pay the Sellers' attorney fees and the
recording costs for the Foothill releases and termination statements,
the Buyer will pay the Buyer's attorney fees and the recording costs
for the Assignments and the Sellers and the Buyer will each pay fifty
percent (50%) of the fees and expenses of the Escrow Agent.
8.5 Risk of Loss. As of the Effective Time, beneficial ownership and the
risk of loss of the Interests will pass from the Sellers to the Buyer.
90 Post Closing Adjustments; Escrow Amount and Disbursements. The Buyer and
the Sellers agree that the Purchase Price will be adjusted post Closing, as
follows:
9.1 Hold Back Amount. On the Closing Date, the Escrow Amount will be
funded eighty-five percent (85%) out of the Cash Purchase Price and
fifteen percent (15%) out of the Notes Purchase Price and will be
separated into: (a) a separate fund in the amount of Three Million
Seven Hundred Fifty Thousand Dollars ($3,750,000.00) (the "First Hold
Back Amount") to be held by the Escrow Agent for a period of sixty
(60) days after the Closing Date (the "Initial Hold Back Period"); and
(b) a separate fund in the amount of Three Million Seven Hundred Fifty
Thousand Dollars ($3,750,000.00) (the "Second Hold Back Amount") to be
held by the Escrow Agent for a period of one hundred twenty (120) days
after the Closing Date (the "Secondary Hold Back Period" and, together
with the Initial Hold Back Period, the "Hold Back Period).
9.2 Post-Closing Adjustments. The Purchase Price will be adjusted for: (a)
any net mcf amount difference between the actual aggregate gas
imbalances as of the Effective Time and the gas imbalances estimated
at Closing multiplied by $1.50 per net mcf; (b) for Title Defects and
Environmental Defects (as hereinafter defined) as further provided in
this paragraph 9; and (c) other claims made or adjustments pursuant to
this Agreement including, without limitation the failure of the
Sellers to post the letter of credit as provided in paragraph 5.12 of
this Agreement.
9.3 Title and Environmental Defects. The Buyer may conduct, at its sole
cost and expense, such title examination or investigation, and other
examinations and investigations, as it may in its sole discretion
choose to conduct with respect to the Interests in order to determine
whether any Title Defects or Environmental Defects exist. All
adjustments to the Purchase Price based on Title Defects will be based
on the Allocated Values attributable to the affected Interests. All
adjustments to the Purchase Price based on an Environmental Defect
related to an Interest will be in the amount necessary to remediate or
otherwise cure such Environmental Defect. No adjustments to the
Purchase Price will be made for Title Defects and Environmental
Defects unless the aggregate amount of all Title Defects and
Environmental Defects exceeds Five Hundred Thousand Dollars
($500,000.00) (the "Aggregate Defect Threshold") and no single Title
Defect or Environmental Defect with respect to an Interest shall be
asserted or taken into account in determining the Aggregate Defect
Threshold unless the value of all Title Defects and Environmental
Defects with respect to such Interest is determined to be more than
Five Thousand Dollars ($5,000.00).
9.3.1 Environmental Defects. As used in this Agreement: (a)
"Environmental Defect" means a violation of applicable
Environmental Laws that is presently existing on an
Interest; and (b) "Environmental Law" means any law, common
law, ordinance, regulation or policy of any Governmental
Authority, as well as any order, decree, permit, judgment or
injunction issued, promulgated, approved or entered
thereunder, relating to the environment, health and safety,
hazardous materials (including the use, handling,
transportation, production, disposal, discharge or storage
thereof), industrial hygiene, the environmental conditions
on, under, or about any real property owned, leased or
operated at any time by the Sellers or CFLP, including soil,
groundwater, and indoor and ambient air conditions or the
reporting or remediation of environmental contamination
including, without limitation, the Clean Air Act, as
amended, the Federal Water Pollution Control Act, as
amended, the Rivers and Harbors Act of 1899, as amended, the
Safe Drinking Water Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as
amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, the Resource Conservation and Recovery Act
of 1976, as amended, the Hazardous and Solid Waste
Amendments Act of 1984, as amended, the Toxic Substances
Control Act, as amended, the Occupational Safety and Health
Act, as amended, the Hazardous Materials Transportation Act,
as amended, and any other federal, state and local law whose
purpose is to conserve or protect human health, the
environment, wildlife or natural resources;
9.3.2 Title Defects. As used in this Agreement, (a) "Title Defect"
means any condition that causes the Sellers' title to one or
more of the Interests to be less than Defensible Title; (b)
"Defensible Title" means clear, unencumbered, uncontested,
record title to an Interest in the Sellers that is (i)
evidenced by instruments filed of record in accordance with
the conveyance and recording laws of the applicable
jurisdiction which (A) entitle the Sellers to receive,
throughout the productive life of such Interest, subject to
the Before Payout ("BPO") and After Payout ("APO") interests
set out in Schedule "1.1," not less than the net revenue
interest set forth in Schedule "1.1" in and to all
hydrocarbons produced from or allocated to such Interest
after deduction of all lessors' royalties, overriding
royalties, and other burdens and payments out of production,
and (B) obligate the Sellers to bear, throughout the
productive life of such Interest (and the plugging,
abandonment and salvage thereof), not greater than the
working interest set forth in Schedule "1.1" of the costs
and expenses associated with the maintenance, exploration,
development, operation and abandonment of such Interest,
except increases in such working interest that result in at
least a proportionate increase in the Sellers' net revenue
interest for such Interest; (ii) with respect to any
Ownership Interest in an item of the Interests not yet
earned under a farmout agreement, described in and subject
to a farmout agreement containing terms and provisions
reasonably consistent with terms and provisions used in the
domestic oil and gas business and under which there exists
no default by the Sellers; and (iii) subject to Permitted
Encumbrances and the BPO and APO interests set out in
Schedule "1.1", free and clear of all reversionary
interests, contractual burdens, claims and other liens; (c)
"Ownership Interests" means the net revenue interests and
working interests of the Sellers in each of the Interests,
as set forth on Schedule "1.1"; (d) "Permitted Encumbrances"
means (i) royalties, overriding royalties, net profits
interests and production payments which do not reduce the
Sellers' net revenue interest or increase the Sellers'
working interest in any Interest from that described in
Schedule "1.1", (ii) liens for taxes, assessments, labor and
materials for which payment is not due, (iii) operating
agreements, unit agreements, unitization and pooling
designations and declarations, gathering and transportation
agreements, processing agreements, gas, oil and liquids
purchase, sale and exchange agreements which are not
required by the terms of this Agreement to be disclosed on
any Schedule hereto, provided (A) they contain terms and
conditions customary in the oil and gas industry, (B) they
do not adversely affect or burden the ownership or operation
of the Interests affected thereby, (C) all amounts due and
payable by the Sellers and CFLP thereunder have been paid
and (D) neither the Sellers nor CFLP is in default
thereunder, (iv) regulatory authority of governmental
agencies not presently or previously violated, easements,
surface leases and rights, plat restrictions and similar
encumbrances, provided that they do not materially detract
from the value or materially increase the cost of operation
of any of the Interests or otherwise adversely affect the
operation thereof, (v) consents to assignment required from
state and federal governments, Indian tribes and similar
authorities that customarily are obtained following the
delivery of an assignment, but limited to such consents as
relate to the Assignment provided for herein as opposed to
prior assignments, (vi) conventional rights of reassignment
obligating the Sellers to reassign or offer to reassign
their interests in any lease prior to a release or
abandonment of such lease, (vii) preferential rights to
purchase that are waived or for which, after proper notice,
the time for exercise has lapsed prior to the date a Title
Defect claim is asserted with respect to such outstanding
rights, (viii) the production payment described in and
created by that certain Conveyance of Production Payment
dated September 28, 1999, from RAM to Duke Energy Merchant
Finance, L.L.C. covering Interests located in ▇▇▇▇▇▇, ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇ Counties, Oklahoma, together with the
agreements, liens and other obligations related thereto,
(ix) the preferential rights to purchase listed on Schedule
"3.12E" the commitments listed on Schedule "3.13" and items
described in Schedule "9.3.2" attached as a part hereof, and
(x) the contracts and agreements liens, charges,
encumbrances and irregularities in the chain of title which,
because of remoteness in or passage of time, statutory cure
periods, marketable title acts or other similar reasons,
have not affected or interrupted, and are not reasonably
expected to affect or interrupt, the ownership of Seller or
its predecessors in or the receipt of production revenues
from the Properties affected thereby; and (e) "Allocated
Values" means the allocation of values for the Interests
shown on Schedule "1.1" attached hereto and made a part
hereof.
9.4 Escrow Disbursements. Disbursements will be made by the Escrow Agent
from the Escrow Amount as follows:
9.4.1 First Claim Period. At any time prior to the date that is
fifty-one (51) days after the Closing Date (the "First Claim
Period"), the Buyer will have the right to notify the
Sellers in writing that the Buyer is making a claim with
respect to the Escrow Amount. Such notice will specify the
nature of the claims and the amount the Buyer proposes to be
paid out of the First Hold Back Amount with respect to such
claims. With respect to all claims other than for Title
Defects and Environmental Defects: (a) in the event the
Sellers dispute the Buyer's claims, the Sellers will notify
the Buyer in writing thereof within three (3) days after
receipt of such notice; (b) in the event the Sellers and the
Buyer are unable to resolve such dispute within five (5)
days after receipt by the Buyer of the notice of dispute,
such dispute will be submitted to arbitration as provided in
paragraph 14 of this Agreement and the amount in dispute
will be transferred from the First Hold Back Amount to the
Second Hold Back Amount; (c) in the event the Sellers do not
dispute such claims or upon resolution of any such disputes,
the Escrow Agent will disburse to the Buyer such amount pro
rata from the Cash Purchase Price and the Notes Purchase
Price constituting the Escrow Amount as a reduction to the
Purchase Price; and (d) the balance of the First Hold Back
Amount at the end of the Initial Hold Back Period, if any,
after disbursement to the Buyer of any undisputed or
resolved claims made during the First Claim Period and
transfer to the Second Hold Back Amount of any disputed
claims, will be disbursed by the Escrow Agent to the Sellers
in the manner provided for payments in paragraph 8.1.1 of
this Agreement and the Buyer will pay the Sellers (i) with
respect to all Senior Notes distributed to the Sellers, the
amount of interest paid by the Sellers to the Buyer on such
Senior Notes at the Closing, plus interest on such amount
calculated at five percent (5%) per annum from the Closing
Date to the date of payment, plus (ii) with respect to the
cash distributed to the Sellers, interest on such amount
calculated at five percent (5%) per annum from the Closing
Date to the date of payment.
9.4.2 Second Claim Period. At any time prior to the date that is
one hundred ten (110) days after the Closing Date (the
"Second Claim Period"), the Buyer will have the right to
notify the Sellers in writing that Buyer is making a claim
with respect to the Second Hold Back Amount. Such notice
will specify the nature of the claims and the amount the
Buyer proposes to be paid out of the Second Hold Back Amount
with respect to such claims. With respect to all claims
other than for Title Defects and Environmental Defects: (a)
in the event the Sellers dispute the Buyer's claims, the
Sellers will notify the Buyer in writing thereof within
three (3) days after receipt of such notice; (b) in the
event the Sellers and the Buyer are unable to resolve such
dispute within five (5) days after receipt by the Buyer of
the notice of dispute, such dispute will be submitted to
arbitration as provided in paragraph 14 of this Agreement
and the amount in dispute will continue to be held in escrow
by the Escrow Agent until such dispute is finally resolved;
(c) in the event the Sellers do not dispute such claims or
upon resolution of any such disputes, the Escrow Agent will
disburse to the Buyer such amount pro rata from the Cash
Purchase Price and the Notes Purchase Price constituting the
Escrow Amount as a reduction to the Purchase Price; and (d)
the balance of the Second Hold Back Amount at the end of the
Secondary Hold Back Period, after disbursement to the Buyer
of any undisputed or resolved claims made during the Second
Claim Period less the amount of any unresolved disputed
claims, will be disbursed to the Sellers in the manner
provided for payments in paragraph 8.1.1 of this Agreement
and the Buyer will pay the Sellers (i) with respect to all
Senior Notes distributed to the Sellers, the amount of
interest paid by the Sellers to the Buyer on such Senior
Notes at the Closing, plus interest on such amount
calculated at five percent (5%) per annum from the Closing
Date to the date of payment, plus (ii) with respect to the
cash distributed to the Sellers, interest on such amount
calculated at five percent (5%) per annum from the Closing
Date to the date of payment.
9.4.3 Title and Environmental Defects. During the First Claim
Period and the Second Claim Period, the Buyer will have the
right to notify the Sellers in writing that the Buyer is
asserting a Title Defect or Environment Defect with respect
to the Interests. Such notice will specify the nature of the
claims, the amount the Buyer proposes to be paid out of the
First Hold Back Amount and/or the Second Hold Back Amount
with respect to such claims and the basis of any claims. In
the event the Sellers either (a) dispute the Buyer's claims,
or (b) intend to attempt to cure the asserted defect, the
Sellers will notify the Buyer in writing thereof within
three (3) days after receipt of such notice. In the event
(i) the Sellers are unable to cure any asserted defect that
they have attempted to cure, and/or (ii) the Sellers and the
Buyer, both acting in good faith, are unable to reach
agreement as to the value of any disputed or uncured defect
within five (5) days after receipt by the Buyer of the
notice of dispute or intent to attempt to cure, then the
Sellers shall notify the Buyer not later than the close of
business on such fifth day (or if it is a Saturday, Sunday
or legal holiday, the close of business on the next business
day) whether the Sellers intend to either (y) accept the
Buyer's calculation of the value of the subject defect, or
(z) delete the affected item of the Interests from the sale
and concede to the Buyer an allowed claim against the Escrow
Amount (or against Sellers, in the event the amount
remaining in the Escrow Account is insufficient) equal to
the Allocated Value of the deleted item of the Interests. In
the event the Sellers fail to give such notice, then they
shall be deemed to have accepted the Buyer's calculation of
the value of the defect. In the event the Sellers timely
notify the Buyer of their intent to delete the affected item
of the Interests from the sale, the Buyer shall have the
last opportunity, by notice to the Sellers not later than
the close of business on the next business day after receipt
of the Sellers' notice, to accept the Sellers' calculation
of the value of the defect and thereby retain the affected
item of the Interests. In the event the affected item of the
Interests is deleted from the sale, the Buyer shall, upon
receipt of payment in full of the Allocated Value of the
affected item of the Interests (whether out of the Escrow
Account or directly from the Sellers) promptly reconvey such
item of the Interests to the Sellers, effective as of the
Effective Time and free and clear of all liens, claims or
encumbrances created or arising by, through or under the
Buyer. The Buyer agrees to deliver to the Sellers all
written information concerning the Environmental Defect or
condition that caused the Buyer to reconvey such property to
the Sellers and to maintain the confidentiality of such
information to the same extent the Buyer maintains the
confidentiality of similar information concerning the
Buyer's properties.
9.4.4 Reassigned Interests. In the event that as a result of Title
Defects and/or Environmental Defects, an item of the
Interests is reconveyed by the Buyer to the Sellers, the
Sellers hereby indemnify and hold harmless the Buyer from
any claims with respect to such reassigned item of the
Interests, except to the extent such claims first arose
during the period the Buyer was the owner of such item of
the Interests.
9.4.5 Dispute Resolutions. As each such unresolved dispute or
pending claim is resolved, any amount retained in escrow
with respect thereto will be disbursed as provided by such
resolution and the Buyer will pay to the Sellers (i) with
respect to all Senior Notes distributed to the Sellers, the
amount of interest paid by the Sellers to the Buyer on such
Senior Notes at the Closing, plus interest on such amount
calculated at five percent (5%) per annum from the Closing
Date to the date of payment, plus (ii) with respect to the
cash distributed to the Sellers, interest on such amount
calculated at five percent (5%) per annum from the Closing
Date to the date of payment.
9.4.6 Joint Instructions; Allocations; Interest. The Sellers and
the Buyer agree to cooperate in good faith to jointly direct
the Escrow Agent to make such distributions from the Escrow
Amount as are appropriate to reflect the agreement of the
parties as provided herein. All distributions out of the
Escrow Amount will be made pro rata from the Cash Purchase
Price and the Notes Purchase Price constituting the Escrow
Amount as a reduction to the Purchase Price so that the
ratio of the Cash Purchase Price and the Notes Purchase
Price will at all times remain 85/15. Any interest paid on
the Senior Notes while in the Escrow and any interest earned
thereon after payment will be paid to the parties in the
same proportions as the Senior Notes upon which such
interest was paid are distributed to the parties by the
Escrow Agent; provided, however, that promptly after receipt
by the Buyer, on the next payment date with respect thereto,
of payment in full of all interest owing on the Senior Notes
distributed by the Escrow Agent to the Buyer, the Buyer will
immediately pay to the Sellers an amount equal to the amount
of interest on such Senior Notes that was paid to by the
Sellers to the Buyer at the Closing, together with interest
thereon at the rate of five percent (5%) per annum from the
Closing Date to the date of payment. All interest earned on
the cash portion of the Escrow Amount (excluding interests
earned on interest amounts paid on the Senior Notes) will be
the sole property of the Buyer and the Escrow Agent will
disburse such interest to the Buyer periodically as
requested by the Buyer or upon termination of the Escrow
Agreement.
9.5 Adjustments in Excess of Hold Back Amount. In the event the
total Purchase Price adjustments pursuant to this paragraph 9
exceed the Escrow Amount, within ten (10) days after such
determination, the Sellers will pay the Buyer the total amount
of adjustments in excess of the Escrow Amount together with
interest calculated at five percent (5%) per annum on such
amount from the Closing Date to the date of payment.
10. Sellers' Indemnification. The Sellers agree to pay, defend, indemnify,
reimburse and hold harmless the Buyer and the Buyer's directors, officers,
agents and employees (the "Indemnified Parties") for, from and against any loss,
damage, diminution in value, claim, liability, debt, obligation or expense
(including interest, reasonable legal fees, and expenses of litigation)
incurred, suffered, paid by or resulting to any of the Indemnified Parties and
which results from, arises out of or is incurred by reason of: (a) litigation
commenced by any third party alleging that the execution, delivery or
performance of this Agreement constituted or constitutes a breach or violation
of any agreement of the Sellers or CFLP; (b) any inaccuracy of any
representation or breach of any warranty set forth in this Agreement or any
failure in the performance by the Sellers of any covenant or obligation set
forth in this Agreement which is not cured as provided in paragraph 12 of this
Agreement; (c) except as otherwise expressly provided in the Assignment, any
liabilities or claims arising or attributable to periods prior to the Effective
Time with respect to the Interests including, without limitation, all litigation
affecting the Interests and all claims and liabilities relating to joint
interest ▇▇▇▇▇▇▇▇, revenue disbursements, taxes and personal injuries. In
addition to the foregoing, the Sellers will pay to the Indemnified Parties
interest on the amount of any loss, damage, claim, liability, debt, obligation
or expense the payment of which is or becomes due to the Indemnified Parties by
the Sellers, such interest to be calculated from the date of loss or payment of
an indemnified claim and until paid at a floating rate of interest equal to the
prime rate published from time to time in The Wall Street Journal. Claims for
indemnification involving the payment of money by the Sellers to an Indemnified
Party will be due and payable by the Sellers within ten (10) days after
notification thereof. Claims for indemnification involving amounts due to third
parties will be promptly paid by the Sellers when due, subject to the Sellers'
right to contest the same in good faith. The Buyer may not settle a third-party
claim for which indemnification is sought against the Sellers without the
Sellers consent.
11. Preservation of Books and Records. For a period of four (4) years after the
Closing Date, the Buyer and the Sellers will, using procedures consistent with
their current record retention procedures, preserve and retain all books and
records held by any of them that relate to the Interests including, but not
limited to, any documents relating to any governmental or nongovernmental
actions, suits, proceedings or investigations arising out of the operation of
the Interests prior to the Effective Time. Subject to mutually acceptable
confidentiality requirements, each of the parties agrees to make the such books
and records available to the other parties and their respective agents upon
reasonable notice and at reasonable times.
12. Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned by: (a) mutual consent of the Sellers and
the Buyer; (b) the Buyer, if the Buyer is not in default and the conditions set
forth in paragraph 6 of this Agreement have not been satisfied by the Sellers or
waived by the Buyer; or (c) the Sellers, if the Sellers are not in default, and
the conditions precedent set forth in paragraph 7 of this Agreement have not
been satisfied by the Buyer or waived by the Sellers. In the event of
termination, written notice thereof will be given to the other party or parties
specifying the provision pursuant to which such termination is made.
13. Default. If any party fails to perform any obligation contained in this
Agreement, the party claiming default will serve written notice to the other
party specifying the nature of such default and demanding performance. If such
default has not been cured within ten (10) days after receipt of such default
notice, the nondefaulting party will be entitled to exercise all remedies
arising at law or in equity by reason of such default, including, without
limitation, specific performance of this Agreement.
14. Arbitration. Any dispute under this Agreement (other than disputes regarding
Title Defects and Environmental Defects) will be submitted to binding
arbitration before a single arbitrator selected by the American Arbitration
Association (the "AAA"), with such arbitration proceeding to be conducted in
Oklahoma City, Oklahoma, in accordance with the Commercial Arbitration Rules of
the AAA. The arbitrator will be instructed and empowered to take reasonable
steps to expedite the arbitration and the arbitrators' judgment will be final
and binding upon the parties subject solely to challenge on the grounds of fraud
or gross misconduct. Judgment upon any verdict in arbitration may be entered in
any court of competent jurisdiction. Notwithstanding the foregoing, a party may
seek a preliminary injunction or other provisional judicial relief if in such
party's judgment such action is necessary to avoid irreparable damage or to
preserve the status quo. Unless otherwise expressly set forth in this Agreement,
the procedures specified in this paragraph 14 will be the sole and exclusive
procedures for the resolution of disputes and controversies between the parties
arising out of or relating to this Agreement.
15. Miscellaneous. It is further agreed as follows:
15.1 Time. Time is of the essence of this Agreement.
15.2 Notices. Any notice, demand or communication required or permitted to
be given by any provision of this Agreement will be in writing and
will be deemed to have been given and received when delivered
personally, or on the date of delivery when delivered prior to 5:00
p.m. local time on a business day by telefacsimile to the party
designated to receive such notice, otherwise on the next succeeding
business day, or on the date following the day sent by overnight
courier, or on the third (3rd) business day after the same is sent by
certified mail, postage and charges prepaid, directed to the following
addresses or to such other or additional addresses as any party might
designate by written notice to the other parties:
To the Buyer: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Acquisition Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copies to: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Acquisition Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇ ▇▇▇▇
Commercial Law Group, P.C.
2725 Oklahoma Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To the Sellers: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇
RAM Energy, Inc.
Magic Circle Energy Corporation
Meridian Tower, Suite 650
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇. ▇▇▇▇▇ Smiley
RAM Energy Inc.
Meridian Tower, Suite 650
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
C. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esquire
McAfee & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
15.3 Representations and Warranties. The respective representations and
warranties of the Sellers and the Buyer contained in this Agreement
will not be deemed waived or otherwise affected by any investigation
made by any party hereto. Such representations and warranties will
survive the Closing Date but will terminate on the day that is two (2)
years from and after the Closing Date, except for the warranties in
paragraphs 3.9, 3.14.1 and 3.14.3 and the first sentence of paragraph
3.10 which warranties, except as otherwise provided in the Assignment,
will terminate at the end of the Second Hold Back Period. The intended
effect of termination of representations and/or warranties is to bar,
from and after the date of termination, any claim or cause of action
by one party against the other(s) based on the alleged inaccuracy of
such representation or breach of such warranty. This paragraph 15.3
will have no effect on any other obligation of the parties hereto,
whether to be performed before or after the Closing Date.
15.4 Cooperation. Prior to termination of this Agreement and at all times
following the consummation of this Agreement, the parties agree to
execute and deliver, or cause to be executed and delivered, such
documents and do, or cause to be done, such other acts and things as
might reasonably be requested by any party to this Agreement to assure
that the benefits of this Agreement are realized by the parties.
15.5 No Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to confer upon any person, other than the parties
hereto and their respective heirs, successors and assigns, any rights
or remedies under or by reason of this Agreement or to constitute such
person a third party beneficiary of this Agreement.
15.6 Cumulative Remedies. No failure on the part of any party to this
Agreement to exercise and no delay in exercising any right hereunder
will operate as a waiver thereof, nor will any single or partial
exercise by any party hereto of any right hereunder preclude any other
or further right of exercise thereof or the exercise of any other
right.
15.7 Choice of Law. This Agreement will be interpreted, construed and
enforced in accordance with the laws of the State of Oklahoma.
15.8 Headings. The paragraph headings contained in this Agreement are for
reference purposes only and are not intended to affect in any way the
meaning or interpretation of this Agreement.
15.9 Entire Agreement. This Agreement and the Assignment constitute the
entire agreement between the parties with respect to the subject
matter hereof and there are no agreements, understandings, warranties
or representations except as set forth herein or therein. In the event
of any conflict between the terms of this Agreement and the terms of
the Assignment, the terms of the Assignment will control.
15.10 Assignment. It is agreed that the parties may not assign such party's
rights nor delegate such party's duties under this Agreement without
the express written consent of the other parties to this Agreement.
15.11 Amendment. Neither this Agreement, nor any of the provisions hereof
can be changed, waived, discharged or terminated, except by an
instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought.
15.12 Severability. If any clause or provision of this Agreement is
illegal, invalid or unenforceable under any present or future law, the
remainder of this Agreement will not be affected thereby. It is the
intention of the parties that if any such provision is held to be
illegal, invalid or unenforceable, there will be added in lieu thereof
a provision as similar in terms to such provisions as is possible to
make such provision legal, valid and enforceable.
15.13 Attorney Fees. If any party institutes an action or proceeding
against any other party relating to the provisions of this Agreement,
including arbitration, the party to such action or proceeding which
does not prevail will reimburse the prevailing party therein for the
reasonable expenses of attorneys' fees and disbursements incurred by
the prevailing party.
15.14 Waiver. Waiver of performance of any obligation or term contained in
this Agreement by any party, or waiver by one party of the other's
default hereunder will not operate as a waiver of performance of any
other obligation or term of this Agreement or a future waiver of the
same obligation or a waiver of any future default.
15.15 Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be an original instrument, but all of
which will constitute one agreement.
15.16 JOINT ACKNOWLEDGMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
15.17 WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. EACH OF THE BUYER AND
THE SELLERS HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
IRREVOCABLY (A) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY A JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH, (B) WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH LITIGATION OR ARBITRATION ANY "SPECIAL DAMAGES,"
AS DEFINED BELOW, (C) CERTIFIES THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (D)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS PARAGRAPH. AS USED
IN THIS PARAGRAPH, "SPECIAL DAMAGES" INCLUDES ALL SPECIAL,
CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (REGARDLESS OF HOW
NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR FUNDS WHICH ANY PARTY
HERETO HAS EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY
HERETO.
IN WITNESS WHEREOF, the Sellers and the Buyer have executed this
Agreement effective as of the date first above written.
▇▇▇▇▇▇ ACQUISITION CORP., an Oklahoma corporation
By ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
(the "Buyer")
RAM ENERGY, INC., a Delaware corporation
By ▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇ ▇. ▇▇▇, Chief Executive Officer
MAGIC CIRCLE ENERGY CORPORATION, a Delaware corporation
By ▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇ ▇. ▇▇▇, Chief Executive Officer
▇▇▇▇▇▇ DEVELOPMENT CORPORATION, an Oklahoma corporation,
on its own behalf and as successor in interest to CFLP
By ▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇ ▇. ▇▇▇, Chief Executive Officer
(jointly and severally, the "Sellers")