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EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
XXXXXXX OIL OF MICHIGAN, INC.
AS "SELLER"
AND
KCS ENERGY MARKETING, INC.
AS "BUYER"
AS OF NOVEMBER 30, 1995
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TABLE OF CONTENTS
PAGE
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ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II. TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.01 Purchase and Sale of Production Payment . . . . . . . . . . . . . . 8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . 9
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . 13
ARTICLE V. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . 14
5.01 General Conditions to Obligations of Seller . . . . . . . . . . . . 14
5.02 General Conditions to Obligations of Buyer . . . . . . . . . . . . . 15
ARTICLE VI. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.01 The Closing in General . . . . . . . . . . . . . . . . . . . . . . . 17
6.02 Deliveries at the Closing . . . . . . . . . . . . . . . . . . . . . 17
6.03 Recordings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.04 Failure to Close . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.05 Payment of the Purchase Price . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.01 Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.02 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.03 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.04 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.07 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.08 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 21
7.09 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . 21
7.10 Entire Agreement; Amendments; Waivers . . . . . . . . . . . . . . . 21
7.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULE 1 LIST OF DEVELOPMENT ACTIVITIES
SCHEDULE 2 LIST OF CLAIMS, LAWSUITS AND PROCEEDINGS
SCHEDULE 3 LIST OF EXISTING OIL AND GAS SALES AGREEMENTS
EXHIBIT A SUBJECT INTERESTS AND PERMITTED ENCUMBRANCES
EXHIBIT B FORM OF CONVEYANCE OF PRODUCTION PAYMENT
EXHIBIT C FORM OF PRODUCTION AND DELIVERY AGREEMENT
EXHIBIT D LIST OF MATERIAL PROPERTIES
EXHIBIT E FORM OF SELLER'S COUNSEL'S OPINION
EXHIBIT F FORM OF NATURAL GAS PURCHASE AGREEMENT
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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (as amended, modified, supplemented
or restated from time to time in accordance with applicable provisions hereof,
this "Agreement") is made and entered into as of the 30th day of November,
1995, by and between XXXXXXX OIL OF MICHIGAN, INC., a Delaware corporation
("Seller"), and KCS ENERGY MARKETING, INC., a New Jersey corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller is the owner of undivided interests in the oil and gas
properties located in the State of Michigan and described in Exhibit A attached
hereto (as defined and more particularly described in this Agreement, the
"Subject Interests"); and
WHEREAS, Seller desires to sell and Buyer desires to purchase, subject
to the terms and conditions set forth herein, certain production payment
interests in the Subject Interests;
NOW, THEREFORE, in consideration of the mutual benefits and
obligations of the parties contained herein, Buyer and Seller agree as follows:
ARTICLE I.
DEFINITIONS
1.01 Certain Definitions. As used herein, each of the following
terms shall have the meaning set forth below for such term, except as otherwise
expressly provided in this Agreement:
"Affiliate" means any entity which either directly or
indirectly controls or manages, is controlled or managed by or is
under common control or management with the relevant party. For
purposes hereof, "control" means the possession, directly or
indirectly, of the right or power to direct the policies of another
through contract, stock ownership, voting rights or otherwise.
"Casualty Defect" means, with respect to all or any material
portion of the Subject Properties, any destruction by fire, blowout,
leak, explosion or other casualty (above or below ground) or any
taking, or pending or threatened taking, in condemnation or under the
right of eminent domain, of any portion of a Subject Property.
"Central Time" means either Central Standard Time or Central
Daylight Savings Time, whichever is in effect in Houston, Texas, on
the day in question.
"Claims" shall have the meaning given such term in Section
7.06.
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"Closing" means the consummation of the purchase and sale
transaction contemplated hereby, as provided in Article VI.
"Closing Date" means the Effective Date of the Merger, as that
term is defined in the Merger Agreement.
"Closing Documents" means this Agreement, the Conveyance, the
Production Agreement, the Gas Purchase Contract and any other document
or instrument executed or delivered by or on behalf of Seller at or in
connection with the Closing, as provided in Article VI.
"Confidentiality Agreements" means, collectively, the
Confidentiality Agreement by and between Seller and Buyer, dated April
25, 1995 and each additional or supplemental confidentiality agreement
by and between Seller and Buyer relating to the Subject Properties.
"Contracts" means all contracts for the sale, purchase,
exchange and processing of Hydrocarbons attributable to the Subject
Interests, transportation agreements, farm-in and farm-out agreements,
joint operating agreements, equipment leases, and all other contracts
or agreements, other than the Leases, relating to the acquisition,
exploration, development, production operations, or maintenance of the
Xxxxx or the Leases, including the Other Agreements listed in Exhibit
A.
"Conveyance" means the Conveyance of Production Payment to be
executed by Seller and Buyer in the form attached hereto as Exhibit B,
and covering the Subject Interests, as such conveyance may be amended,
modified, supplemented or restated from time to time.
"Development Activities" means the activities listed on
Schedule 1 attached hereto as to one or more of the Subject Properties
and shall include the drilling, completion and equipping of Xxxxx and
the construction and installation of Facilities.
"Encumbrances" means pledges, liens, mortgages, security
interests, contract obligations, options, claims and encumbrances.
"Facilities" means oil, gas and water pipelines and gathering
systems and water disposal systems, compressors, wellhead equipment
and facilities, central production facilities, saltwater disposal
xxxxx and facilities, together with all equipment, material, supplies,
buildings, structures, improvements and fixtures used in connection
with the exploration, development, production, operation or
maintenance of the Xxxxx or the Leases, together with all
rights-of-way, easements, surface leases, deeds and grants
appertaining thereto.
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"Gas" means natural gas and all other gaseous hydrocarbons,
including casinghead gas and hydrocarbon liquids or products recovered
as a result of gas processing operations.
"Gas Purchase Contract" means the Natural Gas Purchase
Agreement to be entered into between Seller and Buyer in the form of
Exhibit F attached hereto, covering certain quantities of natural gas
(other than quantities attributable to the Production Payment Gas)
which are produced from the Subject Interests, as the same may be
amended, modified, supplemented or restated from time to time.
"Good and Defensible Title" means, for each Lease, Well or
Unit, as the case may be, such record title (any element of a Net
Revenue Interest which is attributable to a non-consent or sole risk
election shall be deemed to be record title) that (i) entitles Seller
to receive throughout the life of such Lease, Well or Unit, a Net
Revenue Interest in, to and from Hydrocarbons attributable to such
Lease, Well or Unit, as the case may be, not less than the Net Revenue
Interest specified for such Lease, Well or Unit on Exhibit A attached
hereto, (ii) obligates Seller to pay and bear throughout the life of
such Lease, Well or Unit a share of the costs and risks of exploring,
drilling, developing, operating and abandoning that Lease, Well or
Unit, as the case may be, not greater than the Working Interest
specified for such Lease, Well or Unit on Exhibit A attached hereto
(prior to giving effect to rights of non-consent hereafter exercised),
and (iii) is free and clear of all Encumbrances except Permitted
Encumbrances.
"Governmental Authority" means all applicable federal, state,
local and municipal agencies, boards, tribunals, ministries and
departments.
"Hydrocarbons" means Oil and Gas.
"Indemnified Parties" shall have the meaning given such term
in Section 7.06.
"Independent Engineer" means Netherland, Xxxxxx & Associates.
"Lands" means the lands covered by a Lease, lands included in
a Unit and lands within an area covered by an unitization,
communitization or pooling agreement or order.
"Lease" means an oil, gas and/or mineral lease described or
identified with particularity in Exhibit A attached hereto as to all
Lands and depths described in such lease (or the applicable part or
portion thereof if specifically limited in depth and/or areal extent
in Exhibit A), together with any renewal or extension of such lease
(as to all or any part or portion thereof), and any replacement lease
taken upon or in anticipation of expiration or termination of such
lease (if executed and delivered during the term of or within one year
after expiration of the predecessor lease) as to all lands and depths
described in the predecessor lease (unless the predecessor lease is
specifically limited in depth or areal extent in Exhibit A, in which
event only such portion of such lease shall
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be considered a renewal or extension or a replacement lease and
subject to the terms of this Agreement), and all renewals and
extensions of such replacement leases.
"Legal Requirement" means any requirement imposed pursuant to
any statute, rule, regulation, order, permit or license of any
applicable governmental authority or by an applicable court order.
"Material Adverse Effect" means any event (individually or in
the aggregate), which has or would have an adverse effect on the
business, properties, results of operations or financial condition of
Seller, that (after taking into consideration insurance recoveries in
respect thereof) is material to Seller.
"Material Properties" means the Subject Interests listed by
Well name in Exhibit D attached hereto.
"Merger" means consummation of the merger transaction
described in Section 2.1 of the Merger Agreement.
"Merger Agreement" means Agreement and Plan of Merger dated as
of November 30, 1995, by and between Savoy Oil & Gas, Inc., Savoy
Exploration, Inc., Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx Oil
& Gas, Inc., and Xxxxxxx Transition Co.
"Net Revenue Interest" means the interest (expressed as a
percentage) of Seller in and to all Hydrocarbons produced from or
allocated or attributable to a Lease, Well or Unit, as the case may
be, and of the proceeds of such production, after giving effect to and
deducting all applicable Production Burdens (other than the Production
Payment) and after giving effect to all Permitted Encumbrances.
"Oil" means crude oil, condensate, and other liquid
hydrocarbons recovered at or near the wellhead, including liquid
hydrocarbons recovered by use of conventional separators, but
excluding hydrocarbons recovered in connection with gas processing
operations.
"Other Agreements" means Seller's interests in the agreements
and instruments (including easements and permits) listed in Exhibit A
attached hereto to the extent they relate to the operation of the
Subject Interests or the production of Hydrocarbons therefrom.
"Permitted Encumbrances" means and includes the following:
(a) Those instruments and matters set forth on
Exhibit A attached hereto, according to the
definition of "Permitted Encumbrances"
appearing on page 1 of Exhibit A;
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(b) Production Burdens which do not reduce
Seller's Net Revenue Interest in a Lease,
Well or Unit below the Net Revenue Interest
set forth on Exhibit A for such Lease, Well
or Unit;
(c) Encumbrances under contracts and pooling and
unitization orders of a scope and nature
customary in the oil and gas industry,
insofar as they do not cause Seller's Net
Revenue Interest in a Lease, Well or Unit to
be less than the Net Revenue Interest set
forth on Exhibit A and will not cause Seller
to bear more than the share of the costs and
risks of exploring, drilling, developing,
operating and abandoning such Leases, Xxxxx
or Units equal to Working Interest set forth
on Exhibit A (prior to giving effect to
rights of non-consent hereafter exercised);
(d) Liens for taxes or assessments or
governmental charges not yet delinquent and
taxes, assessments and charges that are being
contested in good faith;
(e) Materialman's, mechanic's, repairman's,
employee's, contractor's, operator's and
other similar liens or charges arising in the
ordinary course of business securing amounts
not yet due and payable or which are being
contested in good faith;
(f) Easements, rights-of-way, servitudes,
permits, surface leases and other rights in
respect of surface or seafloor operations
incidental to the ownership of the Subject
Leases;
(g) All rights of consent required by any
Governmental Authority (if any) in connection
with the change of ownership or control of an
interest in any federal, state or other Lease
if the same are customarily obtained after
such change of ownership or control by timely
filings or other actions; and
(h) All other liens, charges, encumbrances,
contracts, agreements, instruments,
obligations, defects and irregularities
affecting the Leases, Xxxxx or Units which
taken individually or together: (i) do not
interfere materially with the operation,
value or use of any of the Leases, Xxxxx or
Units; (ii) do not prevent Seller from
receiving the proceeds of production from any
of the Leases, Xxxxx or Units or Buyer from
receiving Production Payment Hydrocarbons, or
the proceeds thereof; (iii) do not reduce the
Seller's Net Revenue Interest in a Lease,
Well or Unit below the Net Revenue Interest
set forth in Exhibit A for such Lease, Well
or Unit (prior to giving effect to rights of
non-consent hereafter exercised), or (iv) do
not cause Seller to bear more than that share
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of the costs and risks of exploring,
developing, operating and abandoning such
Lease, Well or Unit equal to the Working
Interest set forth on Exhibit A (prior to
giving effect to rights of non-consent
exercised); provided that liens securing
indebtedness for borrowed money shall not be
considered as coming within the scope of this
clause (h).
"Person" means any individual, natural person, corporation,
limited liability company, joint venture, partnership, limited
partnership, trust, estate, business trust, association, governmental
entity or other entity.
"Personal Property and Equipment" means equipment, pipe and
other personal property, fixtures and improvements situated upon the
Land pertaining to a Lease, Well or Unit or used or held in use in
connection with the exploration, development or operation of a Lease,
Well or Unit or the production, treatment, storage, compression, sale,
marketing or transportation of the Hydrocarbons therefrom.
"Production Agreement" means the Production and Delivery
Agreement to be entered into by and between Buyer and Seller in the
form of Exhibit C attached hereto, as the same may be amended,
modified, supplemented or restated from time to time.
"Production Burdens" means all royalty interests, overriding
royalty interests, production payments, net profits interests or other
similar non-operating interests that constitute a burden on and are
measured by or are payable out of, the production of Hydrocarbons or
the proceeds realized from the sale or other disposition of
Hydrocarbons, other than Taxes, Severance Taxes and assessments of
Governmental Authorities.
"Production Payment" shall have the meaning given such term in
Section 1.01 of the Conveyance.
"Production Payment Hydrocarbons" means the Hydrocarbons which
are attributable to the Production Payment.
"Purchase Price" shall have the meaning given such term in
Section 2.01.
"Reserve Report" means the reserve report and evaluation
covering the Subject Interests dated as of August 1, 1995, prepared by
the Independent Engineer, and including the supplemental report and
evaluation dated as of October 1, 1995.
"Subject Interests" means the respective undivided interests
of Seller set forth in Exhibit A in and to the Leases, Units or Xxxxx
described on Exhibit A and the interests of Seller arising therefrom
in all Hydrocarbons produced from or allocated or attributable to such
interests and in all Lands now or hereafter pooled, communitized or
unitized therewith, all as the same shall be enlarged by the discharge
of any burdens or by the
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removal of any charges or encumbrances to which any of the same may be
subject as of the date hereof or decreased as a result of any burden,
charge or encumbrance set forth in Exhibit A as to any Lease or
Leases, Well or Xxxxx, or Unit or Units, and any and all renewals and
extensions of any of the same.
"Subject Lands" means with respect to each Well, Unit or
Lease, as the case may be, the Lands and depths described in Exhibit A
(where no depth limit is specified, the Subject Lands shall include
all depths).
"Subject Properties" or "Subject Property" means, collectively
or singularly, all of Seller's rights, titles and interests in and to
(i) the Subject Interests, (ii) the Lands, (iii) the Personal Property
and Equipment, (iv) the Contracts, (v) the Facilities and (vi) the
Well Data.
"Taxes" means all ad valorem, property, occupation, gathering,
pipeline, windfall profit, severance, gross production, excise, energy
and other taxes, governmental charges and assessments levied or
imposed on any of the Subject Interests, the Production Payment or the
Production Payment Hydrocarbons, other than federal income taxes,
state income taxes, franchise taxes levied against Seller and any
other taxes levied against the overall net income or gross receipts of
Seller.
"Title Defect" means any Encumbrance (or any claim of an
Encumbrance) other than a Permitted Encumbrance which would cause
title to any Lease, Land, Well or Unit included in the Material
Properties not to be Good and Defensible Title.
"Unit" means with respect to each Well, the Drilling Unit
specified in Exhibit A, whether such Drilling Unit consists of (a) the
drilling or spacing unit for such Well as approved by the Michigan
Department of Natural Resources or (b) a pooled unit or unitized tract
existing pursuant to a pooling declaration or agreement, a unitization
agreement or order, or any other written instrument.
"Well" means a well described by name in Exhibit A, a well now
located on the Subject Lands (whether or not described in Exhibit A)
or hereafter drilled on the Subject Lands, and any other xxxxx now or
hereafter located on lands or leases pooled, unitized or communitized
with the Subject Interests for the purpose of producing Hydrocarbons.
"Well Data" means information pertaining to the reserves or
deposits of Hydrocarbons attributable to the Subject Properties,
including production records, engineering data, consultants' studies
or reports regarding any of the foregoing, insurance policies and
bonds, all original books, records, files, documents (including
accounts payable and receivable, accounting records, Leases, deeds,
and Contracts) that pertain to the Subject Properties but excluding
all geological or seismic data; all title information (including but
not limited to title opinions, abstracts, evidence that rentals,
royalties and other payments due under the Leases and Contracts have
been paid, evidence that Taxes have been paid, maps and surveys, lease
records and data sheets), computer sensible
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copies of all computer records pertaining to the Subject Interests but
excluding all geological or seismic data; and all written plans for
exploration and development, applications, inspection reports,
environmental impact statements, assessments and studies, permits,
licenses, orders, consents, notices, correspondence and other
statements and instruments pertaining to environmental matters and
requirements with respect to the Subject Interests that have been
filed with or supplied to or by any Governmental Authority.
"Working Interest" means the interest (expressed as a
percentage) of Seller in any Lease, Well or Unit before giving effect
to any applicable Production Burdens and the percentage of all costs
and expenses associated with the exploration, drilling, development,
operation, maintenance and abandonment of such Lease, Well or Unit
required to be borne by Seller (prior to giving effect to rights of
non-consent hereafter exercised).
1.02 Interpretation. In this Agreement, unless the context
indicates or provides otherwise, (a) the singular includes the plural and the
plural the singular; (b) words importing any gender include the other gender;
(c) references to statutes, sections or regulations are to be construed as
including all statutory or regulatory provisions consolidating, amending,
replacing, succeeding or supplementing the statute, section or regulation
referred to; (d) references to "writing" include printing, typing, lithography,
facsimile reproduction and other means of reproducing words in a tangible
visible form; (e) the words "including," "includes" and "include" shall be
deemed to be followed by the words "without limitation" or "but not limited to"
or words of similar import; (f) references to articles, sections (or
subdivisions of sections), exhibits, annexes or schedules are to those of this
Agreement; (g) references to agreements and other contractual instruments shall
be deemed to include all exhibits and appendices attached thereto and all
subsequent amendments and other modifications to such instruments, but only to
the extent such amendments and other modifications are not prohibited by the
terms of this Agreement; and (h) references to Persons include their respective
successors and permitted assigns.
ARTICLE II.
TRANSACTIONS
2.01 Purchase and Sale of Production Payment. Subject to and in
accordance with the terms and conditions of this Agreement and the other
Closing Documents to be executed by Seller on or about November 30, 1995,
Seller agrees to sell and convey to Buyer, and Buyer agrees to purchase from
Seller, the Production Payment for a purchase price of Twenty-Eight Million
Nine Hundred Eighty Thousand U.S. Dollars (U.S. $28,980,000) and the parties
agree to execute and deliver such Closing Documents. The Purchase Price shall
be paid and delivered by Buyer to Seller as provided in Section 6.05. Seller
shall use $1,260,000 of the Purchase Price to pay Seller's costs of performing
certain of the Development Activities, in accordance with the terms of the
Production Agreement and Section 6.05 of this Agreement.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
To induce Buyer to enter into this Agreement and to pay the Purchase
Price, Seller hereby represents and warrants to Buyer that:
(a) To the knowledge of Seller, the factual data,
information, exhibits, memoranda and reports furnished by Seller to
Buyer in connection with the negotiation of the Production Payment
Documents (taken as a whole, and taking into account all corrections
and supplements to such information heretofore delivered) do not
contain any untrue statement of material fact or omit to state a
material fact known to Seller when made and which is necessary in
order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There is no
fact known to Seller that has not been disclosed to Buyer which could
materially and adversely affect the value of the Production Payment
(other than commodity prices). (In accepting these representations
and warranties Buyer acknowledges that Seller has not warranted or
made any representation that any reserve or production estimates
relating to the Subject Interests revealed to or obtained by Buyer
will ultimately prove to have been accurate.)
(b) Seller has Good and Defensible Title to the Working
Interests and the Net Revenue Interests attributable to the Material
Properties listed on Exhibit D, and more particularly described in
Exhibit A, and in and to the corresponding Leases, Lands, Xxxxx or
Units described therein, free and clear of all Encumbrances except for
the Permitted Encumbrances. With respect to the Subject Interests
which are not attributable to the Material Properties (the
"Non-Material Properties"), Seller has Good and Defensible Title to
the Working Interests and the Net Revenue Interests to such Subject
Interests, and in and to the corresponding Leases described on Exhibit
A and in the corresponding Units set forth on Exhibit A, but subject
to the Permitted Encumbrances applicable thereto; provided, however,
Seller shall not be deemed to have breached any representation with
respect to the Non-Material Properties unless the aggregate amount in
controversy with respect to all Non-Material Properties exceeds
$450,000.00. Except as set forth in this Agreement, Seller makes no
other representation or warranty, express or implied, with respect to
the Net Revenue Interests or Working Interests constituting the
Subject Interests.
(c) All Taxes imposed or assessed with respect to or
measured by or charged against or attributable to the Subject
Interests and the Subject Properties have been paid prior to
delinquency, except (i) those which are being contested in good faith
by proceedings being pursued diligently by Seller or (ii) those unpaid
Taxes attributable to Subject Interests other than the Material
Properties, to the extent the aggregate unpaid amount is less than
$10,000.00.
(d) Except as may be set forth in Schedule 2, there are
no suits or proceedings pending or, to the knowledge of Seller,
probable of assertion against Seller or the Subject
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Interests, or the ownership or operation thereof, before any court, or
by or before any Governmental Authority, that if decided adversely to
the interest of Seller would have a material and adverse effect on the
value of the Production Payment, the ability of Seller to convey the
Production Payment pursuant to the Production Payment Documents or the
ability of Seller to perform its obligations under the Production
Payment Documents.
(e) The Leases are in full force and effect, and Seller
has complied with the terms of all governmental orders or directives
either naming Seller or directly applicable to the Subject Interests
where such noncompliance could materially and adversely affect the
ownership or operation of any of the Material Properties.
(f) All rents and royalties with respect to the Leases
have been paid in a timely manner, and all material liabilities or
obligations of any kind or nature under or incurred with respect to
the Leases have been paid or performed in accordance with the terms of
the Leases and Seller's customary practices, except such which are
being contested in good faith by proceedings being pursued diligently
by Seller or such as could not materially and adversely affect the
ownership or operation of any of the Material Properties; Seller has
not received any notice of default or claimed default with respect to
the Subject Interests or any Lease attributable to the Material
Properties or any part thereof; and all facilities and equipment
necessary for the operation of the Xxxxx attributable to the Material
Properties are in good repair and working condition subject to
ordinary maintenance and repair requirements and to Seller's knowledge
have been designed, installed and maintained in accordance with good
industry standards and all applicable Legal Requirements.
(g) Except for those set forth in Schedule 3 (true copies
of all of which have been furnished to Buyer) and the Gas Purchase
Contract, neither the Subject Interests nor the Hydrocarbons
attributable thereto are subject, committed or dedicated to any
contract, agreement or arrangement regarding the sale, transportation
or processing (or otherwise, related to marketing such Hydrocarbons)
which (i) is not terminable upon 90 days or less notice without
penalty, (ii) would bind Buyer as owner of the Production Payment
Hydrocarbons or (iii) would otherwise restrict the rights of Buyer
under the Conveyance to take possession of and market the Production
Payment Hydrocarbons.
(h) Except as set forth under a Permitted Encumbrance
listed in Exhibit A and except for any easements, surface easements or
rights-of-way listed in Exhibit A, no Material Property is subject to
a preferential purchase right to purchase or subject to a requirement
that a consent to assignment be obtained from a third party which
would be triggered by the conveyance of the Production Payment.
(i) Except for those set forth in Schedule 3 (true copies
of all of which have been furnished to Buyer), Seller is not a party
to or bound by, and neither the Subject Interests nor the Hydrocarbons
attributable thereto are encumbered or affected by, any gas balancing,
deferred production, gas banking or similar agreement or arrangement;
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and except as shown on Schedule 3, Seller is not in an
"under-produced," "over-produced," or similar status under any such
agreement or arrangement.
(j) Except for those set forth in Schedule 3 (true copies
of all of which have been furnished to Buyer), neither the Subject
Interests nor the Hydrocarbons attributable thereto are subject to any
contract, agreement or arrangement (including advance payment
agreements, prepayments, take-or-pay makeup obligations or otherwise)
whereby the owner of such Hydrocarbons or any part thereof is not
entitled to convey such Hydrocarbons or to market such Hydrocarbons
and to obtain the full contract or market price or value of the same.
(k) The Subject Interests (to the extent the same could
materially and adversely affect the ownership or operation of the
Subject Interests after the date hereof) have been operated in
accordance with, and are currently in compliance with, all rules and
regulations of all Governmental Authorities having jurisdiction
relating to the ownership and operation of the Subject Interests,
including the production of Hydrocarbons attributable thereto, and to
the best of Seller's knowledge, no action, claim or proceeding is now
pending or probable of assertion that would cause the Subject
Interests hereafter to be subject to reduced allowances or other
penalties on account of overproduction or otherwise.
(l) Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
is duly qualified as a foreign corporation and is in good standing
under the laws of the State of Michigan, and has all requisite
corporate power and authority to own, lease, operate and transfer its
properties located in the State of Michigan (including the Subject
Interests) and to carry on its business as now being conducted; and
Seller has all requisite corporate power and authority (i) to execute
and deliver the Conveyance and to convey to Buyer the Production
Payment, as the same may hereafter be supplemented, and all of the
rights and privileges appurtenant thereto and (ii) to execute and
deliver this Agreement and the other Closing Documents and to perform
all of its obligations under the same.
(m) The execution, delivery and performance by Seller of
the Closing Documents to which Seller is a party and the consummation
of the transactions contemplated herein and therein have been duly
authorized by all necessary corporate action and do not and will not
(i) violate any material provision of any law, rule, regulation,
order, writ, judgment, decree, determination or award presently in
effect having applicability to Seller or of the Certificate of
Incorporation or By-laws of Seller, or (ii) result in a breach of, or
constitute a default under, any material contract, indenture,
instrument, or agreement to which Seller is a party or by which it or
its property may be presently bound or affected (including the Leases
comprising the Material Properties, the Permitted Encumbrances
attributable thereto, and the contracts listed on Schedule 3 attached
to this Agreement), or result in or require the creation or imposition
of any Encumbrance under any such contract, indenture, instrument, or
agreement. Seller has obtained, and shall continue to obtain, all
consents, authorizations
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and waivers necessary under any such contract, indenture, instrument
or agreement or under any such material provision of law, rule
regulation, order, writ, judgment, decree, determination or award in
order to permit the valid execution, delivery and performance by
Seller of the Closing Documents.
(n) The Closing Documents have been duly executed and
delivered by Seller (to the extent it is a party thereto) and
constitute the legal, valid and binding acts and obligations of
Seller, enforceable against Seller in accordance with their respective
terms except as such enforcement may be limited by bankruptcy,
fraudulent transfer, insolvency, moratorium and other similar laws
applicable to creditors' rights generally or by general principles of
equity. No bankruptcy or insolvency proceeding is presently pending
(or, to Seller's knowledge, threatened) by or against Seller under any
applicable bankruptcy, insolvency or other similar law of any
jurisdiction.
(o) All advance notifications to other Persons, if any,
of the transactions contemplated herein and in the other Closing
Documents necessary to permit the valid conveyance to Buyer of the
Production Payment and the execution and delivery of this Agreement
and the other Closing Documents have been timely and properly given.
(p) Except as disclosed in that certain letter dated as
of November 30, 1995, from the Seller to the Buyer, no authorization,
consent, approval, license, or exemption of, or any filing or
registration with, any court or Governmental Authority is necessary to
the valid execution and delivery by Seller of, or the performance by
Seller of its obligations under, this Agreement or the other Closing
Documents, that has not been obtained or performed or the period for
objection thereto expired, other than routine filings of the
Conveyance and any supplements thereto with filing officers in
relevant counties in the State of Michigan.
(q) Since August 1, 1995, no fire, explosion, accident,
earthquake, act of public enemy, or other casualty (regardless of
whether covered by insurance) materially and adversely affecting any
portion of the Material Properties or the operation thereof, or
materially and adversely affecting the ability of Seller to perform
its obligations under this Agreement or the other Closing Documents,
has occurred. For purposes of this subsection, an adverse effect of
$250,000 or more shall be deemed a material adverse effect.
(r) Seller has furnished or made available to Buyer true
copies of all of the agreements and other instruments described in
Exhibit A as Permitted Encumbrances which relate to or affect the
Material Properties and which are in effect as of the Closing
contemplated in Article VI.
(s) The principal office where Seller keeps its records
relating to the Subject Interests is located at the following address:
000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxxx 00000.
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(t) Seller has obtained or will timely obtain all
permits, licenses, bonds and other authorizations under federal, state
and local laws which are necessary to own, operate and develop the
Subject Interests and which are required with respect to pollution or
protection of the environment relating to the Subject Interests,
including laws relating to actual or threatened emissions, discharges
or releases of pollutants, raw materials, products, contaminants or
hazardous or toxic materials or wastes into ambient air, surface
water, groundwater or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of pollutants, contaminants or hazardous or toxic
materials or wastes, the failure to obtain which would materially and
adversely affect the value, use or operation of any of the Subject
Interests; and to the best of Seller's knowledge and belief, Seller is
in compliance in all material respects with all terms and conditions
of such laws, permits, licenses and authorizations, and also is in
compliance in all material respects with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligation, schedules and timetables contained in such laws or
contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved
thereunder relating to the Subject Interests, the failure to comply
with which would materially and adversely affect the value, use or
operation of the Subject Interests; and Seller has not (and to
Seller's knowledge and belief, no other Person acting as operator has)
received notice of a violation of or investigation relating to any
federal, state or local laws with respect to pollution or protection
of the environment relating to the Subject Interests.
(u) Seller is not a "transmitting utility" as defined in
MCLA 440.9105(1)(o).
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Seller to enter into this Agreement and to convey the
Production Payment, Buyer represents and warrants to Seller that:
(a) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New
Jersey and is duly qualified as a foreign corporation and is in good
standing under the laws of the States of Texas and Michigan. Buyer
has all requisite corporate power and authority to execute and deliver
this Agreement and the other Closing Documents and to perform its
obligations under the same. The execution, delivery and performance
by Buyer of this Agreement and the other Closing Documents and the
consummation of transactions contemplated herein and therein have been
duly authorized by all necessary corporate action and do not and will
not violate any material provision of any law, rule, regulation,
order, writ, judgment, decree, determination or award presently in
effect having applicability to Buyer or Buyer's certificate of
incorporation, bylaws, or other governing documents, result in a
breach of, or constitute a default under, any material contract,
indenture, instrument or agreement to which Buyer is a party or by
which it or any of its material properties may be presently bound or
affected, or result in or require the creation or imposition of any
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Encumbrance upon or of any of the material properties of Buyer under
any such contract, indenture, instrument or agreement; and Buyer has
obtained, and shall continue to obtain, all consents, authorizations
and waivers necessary under any such contract, indenture, instrument
or agreement or under any such material provision or law, rule,
regulation, order, writ, judgment, decree, determination or award in
order to permit the valid execution, delivery, and performance by
Buyer of the Closing Documents.
(b) The Closing Documents have been duly executed and
delivered by Buyer (to the extent it is a party thereto) and
constitute the legal, valid and binding acts and obligations of Buyer,
enforceable against Buyer in accordance with their respective terms
except as such enforcement may be limited by bankruptcy, fraudulent
transfer, insolvency, moratorium and other similar laws applicable to
creditors' rights generally or by general principles of equity. No
bankruptcy or insolvency proceeding is presently pending (or, to
Buyer's knowledge, threatened) by or against Buyer under any
applicable bankruptcy, insolvency or other similar law of any
jurisdiction.
(c) Buyer has funds available, either in its possession
or under fully enforceable commitments from other Persons, to enable
it to deliver to Seller the Purchase Price, and will maintain such
availability of funds until the earlier of delivery of the Purchase
Price or termination of this Agreement. Buyer's payment of the
Purchase Price will be made pursuant to all requisite power and
authority, including any authority required from the Persons providing
funds for such purpose to Buyer.
ARTICLE V.
CONDITIONS TO CLOSING
5.01 General Conditions to Obligations of Seller. The obligation
of Seller to proceed with the Closing is subject to the satisfaction, on or
prior to the Closing Date, of all of the following conditions, any one or more
of which may be waived in whole or in part in writing by Seller:
(a) The Merger shall be effective in the State of
Michigan and the Secretary of State of the State of Delaware shall
have acknowledged the effectiveness of the Merger.
(b) Buyer shall have performed all covenants and
agreements required to be performed by it hereunder at or prior to the
Closing, and each of the representations and warranties contained in
Article IV hereof shall be true and correct on and as of such Closing
Date in all material respects, except such as are made as of another
date, which, nonetheless shall remain true and correct as of the date
made.
(c) Seller shall have received a certificate, dated the
Closing Date, of an executive officer of Buyer certifying as to the
matters specified in clause (b) of this Section 5.01.
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(d) The consummation of the Closing shall not be
prohibited by any order or decree of any federal or state court or
agency having competent jurisdiction, and no suit, action or other
proceeding shall be pending in which there is sought any remedy to
restrain, enjoin or otherwise prevent the consummation of this
Agreement or the transactions contemplated in connection herewith.
(e) Seller shall have received from the corporate
secretary of Buyer certified copies of resolutions of the directors of
Buyer authorizing the transactions contemplated hereby and Buyer's
execution of the Closing Documents to be executed by the officer or
representative signing on its behalf.
(f) Seller shall have received certificates dated as of a
date no earlier than thirty (30) days prior to the Closing Date from
the applicable public officials of the State of New Jersey showing
that Buyer is a corporation duly organized, validly existing and in
good standing in such state and from the applicable public officials
of the State of Michigan showing that Buyer is duly qualified and in
good standing as a foreign corporation in such state.
5.02 General Conditions to Obligations of Buyer. The obligation of
Buyer to proceed with the Closing is subject to the satisfaction, on or prior
to the Closing Date, of all of the following conditions precedent, any one or
more of which may be waived in whole or part in writing by Buyer:
(a) The Merger shall be effective in the State of
Delaware and the Secretary of State of the State of Delaware shall
have acknowledged the effectiveness of the Merger.
(b) Seller shall have performed all covenants and
agreements required to be performed by it hereunder at or prior to the
Closing, and each of the representations and warranties contained in
Article III hereof shall be true and correct on and as of such Closing
Date in all material respects, except such as are made as of another
date, which, nonetheless shall remain true and correct as of the date
made.
(c) Buyer shall have received (i) a certificate, dated
the Closing Date, of an executive officer of Seller certifying as to
the matters specified in clauses (a) and (b) of this Section 5.02 and
(ii) a certificate, dated the Closing Date, of an executive officer of
Seller certifying as to the form of Exhibit A.
(d) The consummation of the Closing shall not be
prohibited by any order or decree of any federal or state court or
agency having competent jurisdiction, and no suit, action or other
proceeding shall be pending in which there is sought any remedy to
restrain, enjoin or otherwise prevent the consummation of this
Agreement or the transactions contemplated in connection herewith.
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(e) Buyer shall have received (i) supplemental opinions
of special title counsel to Seller, acceptable in form and substance
to Buyer, covering Seller's title to the Subject Interests listed in
Attachment D to letter dated November 30, 1995 from the law firm of
Loomis, Ewert, Parsley, Xxxxx & Gotting, and (ii) an opinion, dated as
of the Closing Date, of Xxxxxxxxxx, Fist & Xxxxxxx, counsel to Seller,
in substantially the form of Exhibit E, all of such opinions expressly
permitting Buyer and Buyer's Affiliates and lenders, if any, to rely
thereon.
(f) Buyer shall be reasonably satisfied with Seller's
title to the Material Properties and with any review of the Material
Properties undertaken by Buyer prior to the Closing.
(g) There shall not exist or have occurred any Casualty
Defects that, in the aggregate, materially and adversely affect the
value of the Subject Interests or the Production Payment or the use,
possession or operation by Seller of the Subject Interests or any
material part thereof.
(h) Buyer shall have received from the corporate
secretary of Seller certified copies of resolutions of the directors
of Seller authorizing the transactions contemplated hereby and the
execution of the Closing Documents by the officers or representatives
signing on behalf of Seller.
(i) Buyer shall have received certificates (1) with
respect to Savoy Oil & Gas, Inc. ("Savoy"), dated no earlier than
thirty (30) days prior to the Closing Date and (2) with respect to
Seller, dated within ten (10) days following the Closing Date, from
the applicable public officials of the State of Delaware showing that
Savoy and Seller, respectively, are corporations duly organized,
validly existing and in good standing in such state and from the
applicable public officials of the State of Michigan showing that
Savoy and Seller, respectively, are duly qualified and in good
standing as a foreign corporation in such state.
(j) Since August 1, 1995 there shall not have occurred
any material and adverse change in the business or financial condition
of the Seller or the Subject Interests, other than as the result of
drilling operations conducted subsequent to such date.
(k) Buyer shall have received and approved the plans of
development for each of the Subject Interests described on Schedule 1
attached hereto, showing the estimated date of commencement of
operations.
(l) Buyer and Seller shall have executed and delivered
the Production Agreement and the Gas Purchase Contract, and all
necessary consents under existing operating agreements or
authorizations from co-owners in the Subject Interests, if any, with
respect to the transactions contemplated herein, shall have been
obtained.
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ARTICLE VI.
CLOSING
6.01 The Closing in General. The consummation of the purchase and
sale transaction relating to the Production Payment (referred to herein as the
"Closing) shall occur at a location to be mutually agreed upon, on November 30,
1995, or such later date upon which the conditions set forth in Sections 5.01
and 5.02 shall have been satisfied. At the Closing, each of Buyer and Seller
shall execute, acknowledge and deliver the instruments described in Section
6.02 which are to be executed, acknowledged or delivered by it and shall take
all additional steps necessary to consummate such Closing and to effectuate the
conveyance of the Production Payment to Buyer.
6.02 Deliveries at the Closing. The following shall occur on the
Closing Date:
(a) Buyer and Seller shall execute and deliver the
following:
(i) Counterparts of the Conveyance;
(ii) Counterparts of the Production Agreement;
(iii) Mortgages, financing statements and other
security instruments, all in form and
substance reasonably satisfactory to Buyer,
as may be reasonably necessary or appropriate
to create and perfect, upon completion of
necessary filings of counterparts thereof,
the liens and security interests contemplated
to be granted to Buyer pursuant to the
Production Agreement; and
(iv) Counterparts of the Gas Purchase Contract.
(b) Buyer and Seller shall execute and deliver each of
the certificates and other Closing Documents which are required to
satisfy the Conditions to the Closing set forth in Article V.
(c) Buyer shall deliver the Purchase Price to Seller (or
its designee), in accordance with Section 6.05.
(d) The parties shall take such other actions and make
such other deliveries of documents as are necessary or appropriate to
effectuate the conveyance to Buyer of the Production Payment and to
satisfy the Conditions to the Closing.
The Closing shall be deemed to have occurred upon delivery to Seller (or its
designee) of the Purchase Price less the Deferred Amount or any Agreed
Adjustment, as provided in Section 6.05 below.
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6.03 Recordings. Immediately following the Closing, Buyer shall
cause counterparts of the Conveyance, the Mortgages, financing statements and
other instruments (including amendments to the foregoing) actually delivered at
the Closing to be filed for record in the appropriate public records of the
counties and in such other locations or offices as deemed necessary or
appropriate by Buyer. Seller and Buyer shall share equally the costs of
recording and shall be equally responsible for the payment or reimbursement of
all documentary, filing and recording fees required in connection with the
filing and recording of the Closing Documents.
6.04 Failure to Close. If all of the conditions precedent to the
Closing contemplated by Article V have not been satisfied or waived on or
before the third business day following the Closing Date (or such later date as
hereafter may be mutually agreed upon by the parties in writing), this
Agreement shall automatically terminate as of the end of such third following
day, and no party hereto shall have any further obligation or liability to the
other party pursuant to this Agreement, except as provided in Section 7.03 and
except that nothing herein shall relieve any party from liability for actions
taken by it prior to such termination date or for its willful failure to
satisfy any conditions to the Closing.
6.05 Payment of the Purchase Price. At the Closing, the sum of
$630,000.00 out of the Purchase Price (the "Deferred Amount") shall be held by
Buyer in trust for the benefit of Seller in one or more of Buyer's parent's
corporate accounts. All funds so held in trust by Buyer shall accrue, for the
account of Seller, interest at an annual rate equal to five percent (5%).
Disbursements of the Deferred Amount shall be requested by Seller pursuant to
written requests which (a) specify the amount of the requested disbursement,
(b) include copies of approved work orders, authorities for expenditures,
completion reports, or other requests for payment by contractors performing or
to perform work relating to a Development Activity, and (c) include a
certification by an executive officer of Seller that the requested disbursement
has or will be utilized to satisfy Grantor's share of the costs of such
Development Activity. Requests shall be addressed to Buyer. Buyer shall
review, promptly and in good faith, each such request for disbursement
presented to it within 72 hours of receipt, and if complete, shall approve the
request. Upon Buyer's request, Seller shall provide written confirmation of
the application of the disbursements actually made and the payment of invoices
of applicable contractors. In the event there remains at June 30, 1996 any
undisbursed portion of the Deferred Amount or earned interest thereon, Buyer
shall disburse the entire remaining balance of the account to Seller for the
purpose of completing the Development Activities to be performed by Seller in
calendar year 1996. In addition to the foregoing, to the extent that Seller
holds at the Closing Date any proceeds attributable to the Production Payment
Hydrocarbons and Seller and Buyer have reached agreement as to amounts of
proceeds (whether estimated or final) owed to Buyer (such amount, the "Agreed
Adjustment"), then the amount of the Purchase Price to be delivered at the
Closing by Buyer shall be reduced by the Adjustment Amount.
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ARTICLE VII.
MISCELLANEOUS
7.01 Announcements. Each party covenants and agrees with the other
that, subject to applicable law, each party shall promptly advise and consult
with the other and obtain the other's written consent before issuing any press
release with respect to this Agreement or the transactions described herein.
7.02 Further Assurances. Seller and Buyer agree to take all such
further action and to execute, acknowledge and deliver all such further
documents that are necessary or useful to effectuate the conveyance, amendment
or restatement of the Production Payment and to carry out the purposes of this
Agreement or any of the Closing Documents.
7.03 Survival. The representations, warranties, covenants,
agreements and indemnities in this Agreement and in the other Closing Documents
and the provisions of the Confidentiality Agreement shall survive the relevant
Closing and the consummation of the transactions described herein and therein.
Furthermore, the provisions of Section 7.06 and the provisions of the
Confidentiality Agreement and Section 7.11 shall survive termination of this
Agreement upon a failure to close, as contemplated in Section 6.04.
7.04 Expenses. Except as otherwise provided in this Agreement or
in the other Closing Documents, each party hereto shall bear and be responsible
for all fees, costs and expenses (including, without limitation, legal,
accounting and engineering expenses) incurred by such party with respect to the
negotiation, documentation and consummation of the transactions described
herein; provided, however, Buyer and Seller shall share equally in the expenses
associated with the preparation of the title opinions referenced in Section
5.02(e)(i) by (i) the Loomis, Ewert, Parsley, Xxxxx & Gotting law firm and (ii)
Meridian Abstracting Company. Seller shall indemnify and hold harmless Buyer
from and against any and all liabilities for any brokers' or finders' fees
arising with respect to brokers or finders retained or engaged by Seller in
respect of the transactions described herein (including but not limited to The
Windrock Group), and Buyer shall indemnify and hold harmless Seller from and
against any and all liability for any brokers' or finders' fees arising with
respect to brokers or finders retained or engaged by Buyer respect of the
transactions described herein.
7.05 Notices. All notices, requests, demands, instructions and
other communications required or permitted to be given hereunder shall be in
writing and shall be delivered personally, mailed by certified mail, postage
prepaid and return receipt requested or sent by telecopier, as follows:
If to Seller, addressed to:
Xxxxxxx Oil of Michigan, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: C.E. "Xxxxx" Xxxxx
Phone: 000-000-0000
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Fax: 000-000-0000
If to Buyer, addressed to:
KCS Energy Marketing, Inc.
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxx Xxxxx, President
Phone: 000-000-0000
Fax: 000-000-0000
or to such other place within the United States of America as either party may
designate in writing. All notices given by personal delivery or by mail shall
be effective on the date of actual receipt at the appropriate address. Notice
given by telecopier shall be effective upon actual receipt if received during
the recipient's normal business hours or if received after the recipient's
normal business hours, at the beginning of the next business day after receipt.
7.06 Indemnification.
(a) Seller shall fully defend, protect, indemnify and
hold harmless Buyer and Buyer's successors, assigns and Affiliates
("Indemnified Parties") from and against any and all losses which may
be suffered by Indemnified Parties and from and against any and all
claims, demands, suits and causes of action (collectively "Claims") of
every kind and character (together with reasonable attorneys' fees and
costs of defense) which may be asserted by any Person (including
Seller, Seller' officers and Affiliates of Seller), to the extent
relating to, arising out of, or in any way incidental to the breach of
any warranty or representation contained in Article III of this
Agreement, regardless of whether Buyer may have known of such breach
or of the condition giving rise to such breach, but excluding breaches
or conditions arising as a result of the gross negligence, willful
misconduct, bad faith, or violation of law by Buyer or its Indemnified
Parties. Without limiting the foregoing, if the Conveyance is
rejected as an unexpired lease or executory contract pursuant to any
of the provisions of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code,
the damages recoverable as a result of such rejection shall equal the
value (as of the date of rejection) of the future Hydrocarbon delivery
obligations remaining under the Conveyance at the time of the
rejection, determined in a commercially reasonably manner. Seller
acknowledges that the mortgage lien and security interest contemplated
in the Production Agreement secure, among other things, any amount
owed pursuant to this Section 7.06.
(b) In the event any Claim is asserted against any
Indemnified Party by a third party, the Indemnified Party shall with
reasonable promptness notify the Seller of such Claim. Pursuant to
its defense obligation provided in the first sentence of Section
7.06(a), Seller shall employ counsel reasonably satisfactory to Buyer
and shall take such other steps as are reasonably necessary or
appropriate to defend the Indemnified Parties against such Claim.
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7.07 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF TEXAS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. INSOFAR AS THIS AGREEMENT RELATES TO THE
CONVEYANCE OR THE CREATION, PERFECTION OR FORECLOSURE OF ENCUMBRANCES AND THE
ENFORCEMENT OF RIGHTS AND REMEDIES AGAINST THE SUBJECT PROPERTIES, IT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF MICHIGAN.
7.08 Successors and Assigns. This Agreement shall be binding upon
and, subject to the following restriction, shall inure to the benefit of the
parties hereto and their respective permitted successors and assigns. Nothing
contained herein shall in any way limit or restrict the right of Buyer, or
Buyer's successors and assigns, to transfer, assign or pledge their respective
rights or obligations hereunder in whole or in part. Notwithstanding the
foregoing, Seller shall not transfer, assign or pledge its rights or
obligations hereunder without the prior written consent of Buyer, such consent
shall not be unreasonably withheld.
7.09 Schedules and Exhibits. The Schedules and Exhibits attached
hereto and referred to herein constitute a part of this Agreement.
7.10 Entire Agreement; Amendments; Waivers. This Agreement, the
Closing Documents and the Confidentiality Agreement constitute the entire
agreement between the parties hereto with respect to the transactions described
herein, superseding all prior negotiations, discussions, agreements and
understandings, whether oral or written, relating to such subject matter,
including, without limitation, those certain letters of intent dated June 30
and November 1, 1995, respectively, by and between Buyer and Seller, which
letters of intent are hereby terminated. This Agreement may not be amended and
no rights hereunder may be waived except by a written document signed by the
party to be charged with such amendment or waiver. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided. Each party
acknowledges that it has read and understands the terms of this Agreement and
the Closing Documents and has had the opportunity to consult with legal, tax
and accounting counsel and advisers of its choice concerning the meaning and
effect thereof. Neither party has relied upon the other party or its counsel
or advisers with respect to the meaning or effect of any such agreement or
instrument.
7.11 Confidentiality. Buyer agrees at all times to abide by the
provisions of the Confidentiality Agreements. In addition, except to the
extent required to do so by applicable laws or the requirements of any stock
exchange, Seller agrees to hold confidential this Agreement and the
transactions covered hereby. Specifically, except as may be required in
connection with any permitted transfer by Seller of its rights hereunder,
Seller agrees not to furnish this Agreement or any of the other Closing
Documents (other than instruments recorded in public records) to any Person
other than (a) Seller's counsel, officers, employees, agents, lenders,
shareholders and other representatives with a need to know such information or
(b) a
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party authorized pursuant to any Confidentiality Agreement, without Buyer's
prior written consent.
7.12 Headings. The headings of the articles and sections of this
Agreement are for guidance and convenience of reference only and shall not
limit or otherwise affect any of the terms or provisions of this Agreement.
7.13 Counterparts. This Agreement may be executed by Buyer and
Seller in any number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute but one and the same
instrument.
EXECUTED on the date first set forth above.
SELLER:
XXXXXXX OIL OF MICHIGAN, INC.
By:
---------------------------------
C.E. "Xxxxx" Xxxxx, President
BUYER:
KCS ENERGY MARKETING, INC.
By:
---------------------------------
Xxxxx Xxx Xxxxx, President
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