SALE AND PURCHASE AGREEMENT
THIS SALE AND PURCHASE AGREEMENT (this "Agreement") is made and entered
as of the 13th day of February, 1997, by and among RAMCO-NYL 1987 LIMITED
PARTNERSHIP, a Texas limited partnership ("R-NYL"), and RB OPERATING COMPANY,
an Oklahoma corporation ("RBOC"), (R-NYL and RBOC being hereinafter referred
to collectively as "Seller"), and ▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇, LTD., a Texas limited
partnership ("W-C Ltd."), WILDCARD OIL & GAS COMPANY, a Texas corporation
("Wildcard"), ▇▇▇▇-▇▇▇▇▇▇ (TEXAS), LLC, a Texas limited liability company
("WCT"), and PROVIDENCE ENERGY CORP., a Texas corporation ("Providence"),
(W-C Ltd., Wildcard, WCT and Providence being hereinafter referred to
collectively as "Buyer").
WITNESSETH THAT:
WHEREAS, Seller is the owner of the Interests, as hereinafter defined);
and
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller the Interests on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereinafter expressed, it is hereby agreed as
follows:
ARTICLE 1
PROVISIONS CONCERNING BUYER
1.1 PARTIES COMPRISING BUYER. Except as otherwise indicated to
the contrary in the various provisions of this Agreement the term "Buyer" as
used herein is intended to be inclusive of all parties comprising Buyer, as
hereinabove defined. Prior to the Closing (hereinafter defined), all parties
comprising Buyer shall act in concert in exercising the rights and performing
the obligations of Buyer under this Agreement. In order to effectuate such
agreement, each party comprising Buyer hereby irrevocably appoints W-C Ltd.
as such party's agent and representative with respect to all rights to be
exercised and obligations to be performed by Buyer hereunder prior to the
Closing. All notices and other communications given or made by W-C Ltd.
prior to the Closing shall be binding upon all parties comprising Buyer, and
Seller shall never be obligated to deal with, or to accept, act upon or be
bound by notices from, the individual parties comprising Buyer other than W-C
Ltd.
1.2 OBLIGATIONS AT CLOSING; POST-CLOSING. At the Closing, each
party comprising Buyer will purchase and receive from Seller an assignment of
an undivided percentage interest in each group of properties (i.e., Rocky
Mountain, Gulf Coast, East Texas Operated and Texas(Other), individually a
"Property Group" and collectively the "Property Groups") comprising the
Interests (hereinafter defined), and will pay therefor a percentage of the
Purchase Price (hereinafter defined) attributable to each Property Group,
equal to the percentage set opposite the name of such party in Appendix I
under the heading for each Property Group (as to each such party and each
Property Group, the "Applicable Percentage"). Failure to close of any party
comprising Buyer shall be deemed a failure to close of all parties comprising
Buyer; however, any party comprising Buyer may assume the responsibilities of
any other party failing to perform hereunder and thereby succeed to the
rights and obligations of the non-performing party. Following the Closing,
the obligations of Seller to Buyer and of Buyer to Seller as provided herein
will be several as between Seller and each party comprising Buyer and will
relate only to the Applicable Percentage interest in the Interests acquired
by each party comprising Buyer.
ARTICLE 2
SALE AND PURCHASE OF THE INTERESTS
2.1 INTERESTS. Seller is the owner of undivided interests in
and under oil and gas leases covering lands upon which the ▇▇▇▇▇ or units
described in Exhibit A are located, or to which production from the ▇▇▇▇▇ or
units described in Exhibit A is attributed by reason of inclusion in a
statutory or voluntary unit, together with undivided interests attributable
to said leases in the ▇▇▇▇▇, personal property, fixtures and equipment
located on the lands covered by said leases or units, or used or obtained in
connection with the production and development thereof, and together with all
contracts, agreements, licenses, permits, easements, orders of regulatory
agencies and other rights and interests relating thereto (collectively, the
"Interests").
2.2 AGREEMENT FOR SALE AND PURCHASE; EFFECTIVE TIME. Seller
hereby agrees to sell to each party comprising Buyer, and each party
comprising Buyer hereby agrees to purchase from Seller on the Closing Date
(as hereinafter defined), such party's Applicable Percentage share of each
Property Group, as set out in Appendix I opposite the name of such party.
The effective time of the sale and purchase of the Interests (the "Effective
Time") shall be (i) as to all of the Interests other than West Cameron Block
504, 7:00 a.m. local time (in each locality where such items of the Interests
are located) on January 1, 1997, and (ii) as to West Cameron Block 504, 7:00
a.m. Central Time on November 1, 1996.
2.3 PURCHASE PRICE. The purchase price for the Interests (the
"Purchase Price") shall be the sum of (i) $10,762,000 (the "Base Price"),
allocated among the Property Groups as set out in Exhibit A, less (ii) the
Net Adjustment (as hereinafter defined) applicable to each Property Group.
The Purchase Price, less the Deposit (as hereinafter defined), shall be paid
by Buyer in immediately available funds at the Closing (as hereinafter
defined).
2.4 NET ADJUSTMENT. The Net Adjustment shall be the sum of the
adjustment amounts described in Sections 3.4 (Title
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Defects), Section 7.4 (Gas Imbalances), Section 7.5 (Disapproved Operations),
Section 7.6 (Preferential Rights), Section 7.7 (Operations Subsequent to the
Effective Time), Section 7.8 (Revenues in Suspense) and Section 8.5
(Environmental Defects). A Net Adjustment shall be calculated as to each
Property Group.
2.5 DEPOSIT. Contemporaneously with the execution of this
Agreement, Buyer is delivering to Seller, in immediately available funds in
accordance with wire instructions furnished by Seller, the sum of $1,076,200
as a deposit toward the Purchase Price (the "Deposit"). The Deposit shall be
paid by Buyer in the amounts set out in Appendix I and so credited toward the
Purchase Price payable by each such party at the Closing. In the event that
Buyer shall fail to close the transaction contemplated hereby in accordance
with the terms of this Agreement, and provided that the conditions precedent
to the obligations of Buyer as set forth in Article 9 hereof have been
fulfilled or Seller is ready, willing and able to comply with all such
conditions precedent, Seller shall be entitled to retain the Deposit as
liquidated damages pursuant to Section 11.2.
2.6 AGREED VALUES. The Base Price has been allocated by the
parties among the Interests as set out in Exhibit A. The amounts so
allocated and are referred to herein as the "Agreed Values" of such items of
the Interests.
2.7 WILDCARD LIKE-KIND EXCHANGE. Wildcard has elected to
structure the Closing as to its Applicable Percentage share of the Interests
in such a manner so as to qualify as a tax deferred exchange under Section
1031 of the Internal Revenue Code of 1986, as amended. In connection
therewith, Wildcard has conveyed oil and gas properties to an exchange
partner and has designated its Applicable Percentage share of the Interests
as the properties to be exchanged therefor. The funds to be utilized to pay
the Purchase Price attributable to Wildcard's Applicable Percentage share of
the Interests are being held by a third party (the "Intermediary") who will
pay the Purchase Price for such share of the Interests at the Closing.
Notwithstanding such exchange transaction and Seller's consent thereto,
Wildcard shall remain responsible for all of its obligations under this
Agreement, whether accruing before or after the Closing (including, without
limitation, the obligation to pay the Purchase Price if the Intermediary
fails to do so at the Closing), and Seller shall never be required or
obligated to look to the Intermediary for payment or performance of any of
such obligations. In no event shall Seller be required to, by reason of the
exchange agreement or otherwise in connection with the exchange, (i) defer
the Closing or retain title to the Interests beyond the Closing, (ii) take
title to any property of Wildcard, the Intermediary or any other person or
entity, or (iii) incur any cost, expense (including attorney's fees) or other
obligation or liability of any nature whatsoever in connection with
facilitating the transaction contemplated by the exchange agreement or
otherwise in
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connection with the exchange. Wildcard agrees to indemnify and hold harmless
Seller from and against any and all cost, expense or other obligation or
liability described in clause (iii) next above.
ARTICLE 3
TITLE EXAMINATION; ADJUSTMENTS
3.1 TITLE MATERIALS. From the date hereof to the Closing Date,
Seller shall provide Buyer full opportunity to examine the books, records and
files of Seller insofar as they pertain to the Interests. Seller makes no
warranty or representation, express or implied, with respect to the accuracy
or completeness of any title information, records or other data made
available to Buyer in connection with this Agreement.
3.2 TITLE DEFECTS; DEFENSIBLE TITLE.
(a) As used herein, the term "Title Defect" shall mean any
lien, claim, defect, encumbrance, security interest, burden or deficiency
such that Seller does not have Defensible Title (hereinafter defined), as
distinguished from technically marketable title, to any of the Interests;
provided, no Permitted Encumbrance (hereinafter defined) shall constitute a
Title Defect.
(b) As used herein, the term "Defensible Title" means
clear, unencumbered and uncontested title in Seller to the Interests such
that (i) after giving effect to existing spacing orders, operating
agreements, unit agreements, unitization orders and pooling designations, and
subject to the limitations, if any, described in Exhibit A, and after taking
into account all royalty interests, overriding royalty interests, net profit
interests, production payments and other burdens on production, Seller is
entitled to a share (expressed as a decimal) of all oil, gas and other
minerals produced from each well or unit described in Exhibit A which is not
less than the Net Revenue Interest set out in Exhibit A in connection with
the description of such well or unit, (ii) Seller owns an undivided interest
(expressed as a decimal) equal to the Working Interest set out in Exhibit A
in connection with the description of each such well or unit in and to all
property and rights incident thereto, including all rights in, to and under
all agreements, leases, permits, easements, licenses and orders in any way
relating thereto, and in and to all ▇▇▇▇▇, personal property, fixtures and
improvements thereon, appurtenant thereto or used or obtained in connection
therewith or with the production or treatment or sale or disposal of
hydrocarbons or water produced therefrom or attributable thereto, (iii)
Seller is obligated for a fraction of the costs relating to the exploration,
development and operation of such well or unit no greater than the Working
Interest set out in Exhibit A in connection with the description of such
well, and (iv) except as shown in Exhibit A, Seller's interests in such ▇▇▇▇▇
and the production therefrom are not subject to being reduced by virtue of
reversionary interests owned by third parties.
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(c) As used herein, the term "Permitted Encumbrances" means
(i) matters described without material omission in any of the Exhibits or
Schedules attached hereto, (ii) royalties, overriding royalties, net profits
interests, production payments and other burdens on production which do not
reduce Seller's Net Revenue Interest in any of the Interests to less than
that described in Exhibit A, (iii) liens for taxes, assessments, labor and
materials where payment is not due, (iv) 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, and other similar 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 of the Interests, (C) all amounts due and payable by Seller
thereunder have been paid, and (D) Seller is not in material default
thereunder, (v) 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, materially increase the cost of operation of any of
the Interests or otherwise adversely affect the operation thereof, and (vi)
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
claimed ownership of Seller or its predecessors in or the receipt of
production revenues from the Interests affected thereby.
3.3 TITLE EXAMINATION; NOTICE OF DEFECTS.
(a) Promptly after execution of this Agreement, Buyer
shall, at Buyer's sole cost and expense, commence and pursue such examination
of title to the Interests as Buyer deems necessary or proper. Buyer will
conclude its title review and give notice to Sellers of any asserted Title
Defects affecting the Interests not later than February 23, 1997 (the "Title
Notice Date"). Each such notice shall include a brief description of each
Title Defect of which notice is being given, the action required to cure such
Title Defect and the proposed adjustment to the Base Price by reason of the
existence of such Title Defect. Buyer shall be deemed to have waived any
Title Defects existing with respect to the Interests except to the extent
such Title Defects (i) constitute a breach of the special warranty contained
in the Assignment, Conveyance and ▇▇▇▇ of Sale to be delivered at Closing, or
(ii) are set out in a notice given to Seller on or prior to the Title Notice
Date.
(b) Seller shall have a period of five (5) days after the
Title Notice Date to cure all or any portion of the Title Defects described
in any notice(s) of Title Defects affecting Interests properly given by Buyer
prior to such date. In the event
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Seller is unable or unwilling to cure any of the asserted Title Defects prior
to the expiration of each cure period, the parties shall proceed in
accordance with Section 3.4.
3.4 ADJUSTMENTS.
(a) If any uncured Title Defect is based on Buyer's
substantiated notice in reasonable detail that Seller owns a Net Revenue
Interest less than that shown on Exhibit A with respect to a particular item
of the Interests, then the Agreed Value of such item shall be reduced in the
same proportion that the actual Net Revenue Interest bears to the Net Revenue
Interest shown therefor on Exhibit A and the amount of such reduction shall
constitute the approved adjustment amount with respect to such Title Defect.
(b) If any uncured Title Defect involves a substantiated
claim against or uncertainty with respect to Seller's title to a particular
item of the Interests, the parties shall attempt to negotiate a mutually
acceptable reduction in the Agreed Value of the affected item of the
Interests by reason of such defect. In the event the parties agree on an
appropriate reduction in the Agreed Value, such amount shall constitute the
principal amount of Buyer's approved claim with respect to such Title Defect.
If the parties are unable to agree on an appropriate reduction and Buyer
elects not to waive the Title Defect, then Seller shall have the option of
(i) proceeding to Closing but reducing the Base Price by the Agreed Value of
such item, or (ii) excluding the affected item from the Interests being sold
and reducing the Base Price by the Agreed Value of such item, or (iii) if the
sum of the Agreed Values of the Interests for which Buyer has given a Notice
of Title Defects exceeds $645,000, and if Buyer or Seller elects to terminate
this Agreement pursuant to the provisions of Section 3.4(d) by reason
thereof, then either Buyer or Seller may elect to postpone the Closing and
arbitrate the disputed issues to determine if Title Defects in fact exist
which would result in reducing the Purchase Price by more than the sum of
$645,000. Such arbitration shall be conducted in accordance with the
procedures set out in Section 11.4 hereof. In the event the arbitrator shall
determine that the Title Defects asserted by Buyer in fact constitute Title
Defects which would result in reducing the Purchase Price by more than
$645,000, then this Agreement shall terminate effective as of the date such
award is issued. If, however, the arbitrator shall determine that such
asserted Title Defects do not in fact constitute Title Defects under this
Agreement aggregating more than $645,000, then the Closing shall occur on the
day that is five (5) business days after the issuance by the arbitrator of
such award. The award of the arbitrator shall be final and not subject to
appeal or judicial review of any nature whatsoever.
(c) Notwithstanding the provisions of subsections (a) and
(b) above, Buyer shall not be entitled to any adjustment of
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the Purchase Price at the Closing by reason of asserted Title Defects unless
the sum of all such claims approved pursuant to Section 3.4(a) or agreed to
by Seller pursuant to Section 3.4(b) exceeds the sum of $20,000.
(d) In the event the aggregate adjustment for Title Defects
exceeds the sum of $645,000, either Seller or Buyer may elect by written
notice to the other to terminate this Agreement, subject to the arbitration
provisions of Section 3.4(b) hereof. In the event this Agreement is so
terminated, Seller shall promptly return the Deposit to Buyer.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as of the date
hereof as follows:
4.1 ORGANIZATION. R-NYL is a limited partnership, duly
organized and validly existing under the Texas Revised Uniform Limited
Partnership Act. RBOC is a corporation, duly organized and validly existing
under the laws of the State of Oklahoma. Each Seller has the power and
authority under its governing corporate and partnership documents and
applicable law to own and use its properties and to transact the business in
which it is engaged, and holds all franchises, licenses and permits necessary
and required therefor.
4.2 AGREEMENT AUTHORIZED. This Agreement has been duly
authorized, executed and delivered by each Seller and all requisite corporate
and partnership action has been taken to authorize the execution hereof, the
transactions contemplated hereby and all things necessary or desirable in
order to accomplish the sale of the Interests.
4.3 VALID AGREEMENT. This Agreement constitutes the valid and
binding agreement of each Seller enforceable against each Seller in
accordance with its terms, and all instruments required hereunder to be
executed and delivered by each Seller at the Closing will constitute valid
and binding agreements of such Seller enforceable against such Seller in
accordance with their terms.
4.4 BROKERS AND FINDERS. Seller has incurred no liability,
contingent or otherwise, for brokers' or finders' fees in respect of this
transaction for which Buyer shall have any responsibility whatsoever.
4.5 COMPLIANCE WITH AGREEMENTS AND LAWS. No material default
exists under any of the terms and provisions, express or implied, of the
leases or any material agreement, contract or commitment to which Seller is a
party or to which any part of the Interests is subject, and Seller has not
received any notice of any
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claim of such default. To Seller's knowledge, all ▇▇▇▇▇ included in the
Interests have been drilled, completed and operated, and all production
therefrom has been accounted for and paid to the persons entitled thereto in
substantial compliance with all applicable Federal, state and local laws and
applicable rules and regulations of the Federal, state and local regulatory
authorities having jurisdiction thereof.
4.6 SALE OF PRODUCTION. Seller is not obligated by virtue of
any prepayment made under any production sales contract or any other contract
containing a take-or-pay clause, or under any similar arrangement, to deliver
oil, gas or other minerals produced from or allocated to any of the Interests
at any time after the Effective Time without receiving full payment therefor
at the time of delivery. Except for routine suspense on new ▇▇▇▇▇, proceeds
from the sale of oil and gas from the Interests are being received by Seller
in a timely manner and are not being held in suspense for any reason.
4.7 PRODUCTION AND AD VALOREM TAXES. All ad valorem, property,
production, severance and similar taxes based on or measured by the ownership
of property or the production or removal of hydrocarbons or the receipt of
proceeds therefrom have been timely paid and all required returns and reports
related thereto filed.
4.8 MATERIAL EXECUTORY CONTRACTS RELATING TO THE ASSETS. Except
for operating agreements, gas purchase and sale contracts and similar
operating and disposition of production contracts containing terms and
provisions reasonably customary in the industry, there are no material
contracts or agreements affecting the Interests for which Buyer will have any
responsibility or liability after the Closing.
4.9 CLAIMS OR LITIGATION. There is neither any suit, action or
other proceeding pending before any court or governmental agency nor, to the
knowledge of Seller, any claim, dispute, suit, action or other proceeding
threatened against Seller or any of the Interests or any third party which
might result in the impairment or loss of Seller's title to any of the
Interests or the value thereof, or increase the cost of operation thereof.
4.10 ASSIGNMENTS PRIOR TO CLOSING. Seller has not since the
Effective Time made any assignment, conveyance or encumbrance of the
Interests.
4.11 OPERATIONS. Except as described in Schedule 6.2, no
operations of the types prohibited by Section 6.2 hereof have been conducted
since the Effective Time or are now being conducted.
4.12 CONSUMMATION OF TRANSACTIONS. The consummation of the
transactions contemplated hereby will not constitute a violation
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or breach of, or an event of default under, any contract or agreement
affecting the Interests or constitute the happening of a condition upon which
any other party to such a contract may exercise any right or option which
will adversely affect any of the Interests.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Each party comprising Buyer represents and warrants to Seller as to
such party as follows:
5.1 ORGANIZATION. (i) W-C Ltd. is a limited partnership, (ii)
WCT is a limited liability company, and (iii) each of Wildcard and Providence
is a corporation, all duly organized and validly existing under the laws of
the State of Texas.
5.2 AGREEMENT AUTHORIZED. This Agreement has been duly
authorized, executed and delivered by Buyer and all requisite partnership or
corporate action has been taken to authorize the execution hereof, the
transactions contemplated hereby and all things necessary or desirable in
order to accomplish the purchase of the Interests, and Buyer has all
necessary authority under its partnership agreement or charter, bylaws and
other governing documents, and otherwise has good right and lawful authority,
to consummate the same.
5.3 VALID AGREEMENT. This Agreement constitutes the valid and
binding agreement of Buyer enforceable against Buyer in accordance with its
terms, and all instruments required hereunder to be executed and delivered by
Buyer at the Closing will constitute valid and binding agreements of Buyer
enforceable against Buyer in accordance with their terms.
5.4 BROKERS AND FINDERS. Buyer has incurred no liability,
contingent or otherwise, for brokers' or finders' fees in respect of this
transaction for which Seller shall have any responsibility whatsoever.
ARTICLE 6
COVENANTS OF SELLER PENDING CLOSING
Seller covenants and agrees with Buyer that from and after the date
of this Agreement and until the Closing, Seller will conduct its business
subject to the following provisions and limitations:
6.1 ORDINARY COURSE. The Interests will be maintained and
operated in a good and workmanlike manner consistent with historical
practices, and Seller will timely pay or cause to be paid all costs and
expenses incurred in connection therewith.
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6.2 RESTRICTIONS ON OPERATIONS. Subject to the provisions of
Section 7.5 hereof, except with Buyer's prior written consent no operations
will be conducted for the drilling of any new well, the reworking or
redrilling of any existing well or the making of any other capital
expenditure on the Interests requiring an expenditure by Seller in excess of
$25,000 for any single project or $150,000 in the aggregate. Insofar as any
of the following described actions would affect the Interests, Seller will
not waive any rights or enter into any new agreements or commitments other
than in the ordinary course of business, abandon any well capable of
commercial production (based upon prevailing economic conditions), release or
abandon any Interests, or encumber, sell or otherwise dispose of any of the
Interests other than personal property thereon which is replaced by
equivalent property or consumed in the operation of such Interests in the
ordinary course of business. Buyer expressly consents to the post-Effective
Time operations described in Schedule 6.2.
6.3 MAINTENANCE OF FILES. Seller will exercise reasonable
diligence in safeguarding and maintaining secure all files, books and records
currently maintained.
6.4 ACCESS OF BUYER. Buyer shall have access to the employees,
offices, properties, records, files, geological and geophysical data,
engineering reports and evaluations, books of account, and all other
information of the Seller pertaining to the Interests; provided, however,
that such investigation shall be conducted during normal business hours and
in a manner that does not unreasonably interfere with Seller's normal
operations. Seller shall reasonably assist Buyer in making such
investigation and shall cause the counsel, accountants, employees and other
representatives of Seller to be reasonably available to Buyer for such
purposes. During such investigation, Buyer shall have the right, at Buyer's
sole cost and expense, to make copies of such records, files and other
materials as Buyer may deem advisable.
ARTICLE 7
ADDITIONAL AGREEMENTS OF THE PARTIES
7.1 RETURN OF INFORMATIONAL MATERIAL. If this Agreement is not
consummated, Buyer shall return to Seller all of the items of information
which Seller has delivered to Buyer hereunder, including all copies of same
made by Buyer.
7.2 CONFIDENTIALITY OF INFORMATION. If the purchase and sale of
the Interests as contemplated by this Agreement is not completed, Buyer (i)
will keep the information furnished to Buyer hereunder or in contemplation
hereof strictly confidential, except to the extent such information (A)
becomes public other than as a result of dissemination by Buyer, (B) was
already known to Buyer other than as a result of a breach of a
confidentiality restriction, or (C) is furnished to Buyer by a third party
independently of
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Buyer's investigation pursuant to this Agreement, and (ii) will not use any
of such information to Buyer's financial advantage or in competition with
Seller. Notwithstanding the provisions of Section 14.6 hereof, this
provision shall not be construed as superseding or limiting the provisions of
any confidentiality agreement heretofore executed by and between Buyer and
Seller.
7.3 COMPLIANCE WITH CONDITIONS. Buyer and Seller, respectively,
will proceed diligently using all reasonable efforts to cause all of the
conditions to the obligations of Seller and Buyer, respectively, to be timely
satisfied.
7.4 GAS IMBALANCES. Seller and Buyer acknowledge, but Seller
does not represent or warrant, that certain gas imbalances existed at the
Effective Time with respect to production from or attributable to certain of
the Interests. The best information concerning such imbalances available to
Seller as of the date of this Agreement is set forth on Schedule 7.4 . At
the Closing, the Base Price shall be adjusted downward by the amount of
$135,231 to take into account the imbalances reflected in Schedule 7.4. For
all purposes hereunder, the Agreed Value of each item of the Interests on
which a gas imbalance exists shall be adjusted to take into account the
imbalance existing on such item of the Interests. If, prior to the Title
Notice Date, either Seller or Buyer determines that the net gas imbalance
(that is, the difference between aggregate overproduction attributable to
Seller's interest in the Interests and the aggregate underproduction
attributable to such interest) at the Effective Date was less or greater than
that set forth on Schedule 7.4, the party making such determination shall so
notify the other party. If such decrease or increase is confirmed, the Base
Price shall be adjusted at the Closing by an amount equal to $1.50 per Mcf
for the decrease or increase in net overproduction from that shown in
Schedule 7.4; provided, however, that no adjustment shall be made unless the
decrease or increase in net overproduction exceeds 10,000 Mcf. If, after the
Title Notice Date but not later than June 1, 1997, either party notifies the
other that the net gas imbalance at the Effective Time was less or greater
than that set forth on Schedule 7.4, and that such decrease or increase in
net overproduction (LESS any volume for which a Purchase Price adjustment was
made at Closing) exceeded 10,000 Mcf, then if such decrease or increase is
confirmed (i) Seller shall pay to Buyer an amount equal to $1.50 per Mcf for
any increase in net overproduction, or (ii) Buyer shall pay to Seller an
amount equal to $1.50 per Mcf for any decrease in net overproduction.
7.5 CAPITAL EXPENDITURES. During the period from the execution
of this Agreement to the Closing Date, Seller will consult with Buyer from
time to time with respect to any operation proposed to be conducted on the
Interests and reasonably expected to require an expenditure by Seller in
excess of $25,000 for any single project or $150,000 in the aggregate, and
will provide Buyer with all information reasonably available to Seller with
respect thereto.
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Buyer shall, within ten (10) days after receipt of Seller's recommendation
for conducting or participating in any such project, or within such lesser
period as may be required by the terms of any applicable agreement, approve
or disapprove such project. Failure of Buyer to respond within the time
required will be deemed to constitute disapproval by Buyer of the project.
In the event Buyer approves such project, Seller shall conduct, propose or
elect to participate in such project and shall incur and pay as they become
due the expenditures associated therewith. In the event the project or
operation is a well proposed by an unrelated third party and Seller must, by
operation of an applicable agreement or order of a regulatory agency, elect
either to participate in such well or lose the right to participate in such
well and/or other rights in the unit in which such well is proposed (for
example, but not by way of limitation, a non-consent penalty under a joint
operating agreement, requirement to accept consideration in lieu of
participation under a pooling order or forfeiture of the right to participate
in future development under an area of mutual interest agreement), and Buyer
disapproves or is deemed to have disapproved participation by Seller in such
well, then, upon five (5) days written notice to Buyer (during which time
Buyer may reverse its decision and approve participation by Seller), Seller
may elect to exclude from the Interests and the sale hereunder the property
on which such operation is to be conducted and reduce the Base Price by the
Agreed Value of such item of the Interests.
7.6 CONSENTS; PREFERENTIAL RIGHTS TO PURCHASE. Promptly after
execution hereof, Seller will proceed diligently to solicit any consents to
the transfers contemplated hereby which are required to be obtained from
third parties and will give all notices required by existing contracts with
respect to preferential rights to purchase on the part of third parties and
to obtain waivers of such preferential rights. Any item of the Interests
which requires the consent of a third party for transfer where such consent
cannot be obtained prior to the Closing Date (other than routine consents
required in connection with federal, state and Indian leases), or which is
subject to a preferential right to purchase which has not expired and has not
been waived prior to the Closing Date, may, at Buyer's option, be excluded
from the Interests and the sale hereunder and the Base Price reduced by the
Agreed Value of such item of the Interests.
7.7 ADJUSTMENTS FOR OPERATIONS SUBSEQUENT TO THE EFFECTIVE TIME.
The following adjustments shall be made to the Base Price for operations
conducted subsequent to the Effective Time to the extent the following
described items of revenue and expense relate to the Interests:
(a) The Base Price shall be adjusted upward by all amounts
actually paid by Seller in respect of (i) actual direct operating expenses
and capital expenditures (other than those prohibited by the terms hereof),
(ii) overhead or indirect expenses
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required to be paid by the terms of existing operating agreements, and (iii)
ad valorem, property, production, severance and similar taxes and assessments
based upon or measured by the ownership of property, the production or
removal of hydrocarbons or the receipt of proceeds therefrom; to the extent
such expenditures relate to the period between the Effective Time and the
Closing Date on the accrual method of accounting. Ad valorem taxes shall be
prorated on the basis of time, and if the taxes cannot be determined for the
current taxable year, then the amount thereof for the taxable year most
recently ended shall be used in determining ad valorem taxes attributable to
a particular period of time. Ad valorem taxes assessed on production prior
to the Effective Time shall be the responsibility of Seller regardless of
when such taxes are assessed.
(b) The Base Price shall be adjusted downward by all
proceeds actually received by Seller (including proceeds from sale or salvage
of any personal property forming a part of the Interests as well as the
hydrocarbons produced therefrom and attributable thereto) to the extent such
proceeds relate to the period from the Effective Time to the Closing Date on
the accrual method of accounting. Proceeds received by Seller after the
Effective Time for the sale of production in storage at the Effective Time
shall remain the property of Seller and shall not give rise to an adjustment.
7.8 REVENUES IN SUSPENSE. The Purchase Price shall be adjusted
downward at the Closing by the amount of all revenues held in suspense by
Seller with respect to the Interests. Seller shall furnish Buyer at the
Closing a schedule of such suspense revenues. Buyer agrees to pay when due
to the owners thereof or otherwise in accordance with applicable law all such
revenues for which an adjustment is made and to indemnify and hold harmless
Seller with respect to the payment thereof, including, without limitation,
any penalties, interest and other charges relating thereto to the extent
included in the amount for which an adjustment is made or accruing after the
Effective Time.
ARTICLE 8
ENVIRONMENTAL MATTERS
8.1 PHYSICAL CONDITION OF THE PROPERTIES. The Properties
(solely for purposes of this Article, the term "Properties" shall mean the
lands covered by the leases included in the Interests or included in a
statutory or voluntary unit with such lands, and shall included both the
surface and the subsurface) have been used for oil and gas drilling,
production, gathering and processing operations, related oil field operations
and possibly for other operations, whether of a similar or dissimilar nature.
Physical changes in or under the Properties or adjacent lands may have
occurred as a result of such uses. The Properties also may contain buried
pipelines and other equipment, whether or not of a similar nature, the
locations of which may not be known to Seller or be
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readily apparent by a physical inspection of the Properties. Third parties
may have used the Properties or the surface rights thereon for other purposes
as well. Buyer understands that Seller does not have the requisite
information with which to determine the exact nature or condition of the
Properties nor the effect any such use has had on the physical condition of
the Properties. Buyer is hereby notified that detectable amounts of
regulated and unregulated chemicals and other substances which may pose a
threat to health or to plants or wildlife, or which are known to cause
illnesses, diseases, cancer, birth defects and other reproductive harm, may
be found in, on or around the Properties. Adverse physical conditions,
including the presence of such chemicals and other substances, may not be
revealed by Buyer's investigation. In addition, Buyer acknowledges that some
oil field production equipment may contain various contaminants or hazardous
substances, including without limitation, asbestos and/or naturally-occurring
radioactive material ("NORM"). In this regard, Buyer expressly understand
that NORM may affix or attach itself to the inside of ▇▇▇▇▇, materials, pipes
and equipment as scale or in other forms, and that ▇▇▇▇▇, materials, pipes
and equipment located on the Properties may contain NORM and that
NORM-containing materials may be buried or have been otherwise disposed of on
the Properties. Buyer also expressly understands that special procedures may
be required for the removal and disposal of various contaminants or hazardous
substances, including without limitation asbestos and NORM, from the
Properties where it may be found. The statements in this Section 8.1 are
intended as disclosures and acknowledgments of possible conditions existing
on the Properties.
8.2 ENVIRONMENTAL ASSESSMENT.
(a) Buyer shall have the right, at Buyer's sole cost, risk,
and expense, to undertake an environmental assessment of the Properties
during the period ending on the Title Notice Date (the "Inspection Period").
Buyer and its agents shall have the same right as Seller to enter upon the
Properties, inspect the same, conduct soil and water sampling, analysis and
monitoring, including soil borings (and, after notice and consultation with
Seller, drilling groundwater monitoring ▇▇▇▇▇), an generally conduct such
tests, examinations, investigations and studies as Buyer deems necessary or
appropriate for preparing appropriate engineering and other reports and
making judgments relating to the Properties, their condition, and the
presence of chemicals and other substances. Seller shall cooperate with any
efforts of Buyer and its agents to obtain third party consents for access to
those parcels of land within the Properties to which Seller may not presently
have access. Buyer and its agents shall have reasonable access to Seller's
agents and employees in the course of conducting Buyer's environmental
assessment. Buyer agrees to provide to Seller a copy of all facts discovered
in the course of conducting Buyer's environmental assessment, including all
direct observations (if in writing or other tangible or transferable medium),
data and summaries thereof. Buyer
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shall keep any data or information acquired in the course of such
examinations and the results of all analyses of such data and information
strictly confidential and not disclose same to any person or agency without
the prior written approval of Seller, except that Buyer may disclose to
authorities having jurisdiction such information as is required by law or by
court order at the same time that Buyer provides such information to Seller.
If Buyer determines that conditions on a Property do not satisfy the
environmental standards set forth in Section 8.4 below in a material respect,
then Buyer may notify Seller of such condition by providing Seller, on or
prior to the Title Notice Date, a written "Notice of Environmental Defect"
setting forth in detail the facts giving rise to the claimed defect, the
environmental standard which Buyer claims is not satisfied, any Applicable
Environmental Law (hereinafter defined) which Buyer contends has been
breached or violated and, if the claimed defect arises from information
contained in a document, a copy of such document or the relevant parts
thereof. Buyer shall be deemed to have accepted without objection (i) the
environmental conditions described in Schedule 8.4, and (ii) any Property
which does not meet the environmental standards or which is subject to an
environmental defect unless a Notice of Environmental Defect is given with
respect to such Property on or prior to the First Title Notice Date.
(b) Buyer shall be deemed to have given, effective as of
the date of this Agreement, a Notice of Environmental Defect with respect to
the Properties and conditions described in Schedule 8.2.
8.3 ACCESS; INDEMNIFICATION. Access to the Properties to
conduct Buyer's environmental assessment shall be subject to the following
conditions: Buyer waives and releases all claims against Seller and its
partners, employees and agents, for injury to or death of persons or damage
to property arising in any way from the exercise of rights granted to Buyer
hereby or the activities of Buyer or its employees, agents or contractors on
the Properties, provided that Buyer does not hereby assume the risk of
damage, injury or death attributable to the willful misconduct or gross
negligence of Seller. Buyer shall indemnify Seller, its partners employees,
and agents, and shall hold each and all of said indemnities harmless from and
against any and all loss whatsoever arising out of (i) any and all statutory
or common-law liens or other encumbrances for labor or materials furnished in
connection with such tests, samplings, studies or surveys as Buyer may
conduct with respect to the Properties, and (ii) any injury to or death of
persons or damage to property occurring in, on or about the Properties as a
result of such exercise or activities (except for any such injuries or
damages caused by the gross negligence or willful misconduct of any said
indemnities). Notwithstanding any provision of this Agreement to the
contrary, the foregoing obligation of indemnity shall survive the Closing or
the termination of this Agreement without Closing.
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8.4. ENVIRONMENTAL STANDARDS. This section sets out the
environmental standards applicable to the Properties for purposes of this
Agreement and do not constitute covenants, representations or warranties of
Seller. Seller disclaims all warranties and representations regarding and
makes no covenants with respect to environmental conditions on the
Properties.
(a) The Properties shall not have been used for the
generation, treatment, storage or disposal of a Hazardous Substance (as
defined below) in a manner or to an extent that would subject Seller to a
material liability for violation of any Applicable Environmental Laws (as
defined below). Except as disclosed in Schedule 8.4, there shall not have
been any release or discharge of a Hazardous Substance from the Properties in
a manner or to an extent that would subject Seller to a material liability
for violation of any Applicable Environmental Laws. "Hazardous Substance"
shall mean any hazardous substance, pollutant, contaminant, solid or
hazardous waste, hazardous waste constituents, hazardous material or toxic
substance subject to regulation or liability under Applicable Environmental
Laws in force as of the date hereof, including asbestos, radioactive
substances, and any other substance or material that would constitute or
cause a health, safety or environmental hazard on or at the Properties under
Applicable Environmental Laws. "Applicable Environmental Laws" shall mean
(i) all federal statutes regulating or prescribing restrictions regarding the
use of the Properties or other activities affecting the environment (air,
water, land, animal and plant life), including but not limited to the
following: the Clean Air Act, Clean Water Act, Comprehensive Environmental
Response, Compensation and Liability Act, Emergency Planning and Community
Right-to-Know Act, Endangered Species Act, Hazardous Materials Transportation
Act, Migratory Bird Treaty Act, National Environmental Policy Act,
Occupational Safety and Health Act, Oil Pollution Act of 1990, Resource
Conservation and Recovery Act, Safe Drinking Water Act, and Toxic Substances
Control Act; (ii) any regulations promulgated under such federal statutes,
(iii) any state law counterparts of such federal statutes and the regulations
promulgated thereunder; (iv) any other state or local statutes, rules,
regulations or ordinances regulating the use of or affecting the environment,
and (v) all common law rights, duties and obligations regarding the use of or
matters affecting the environment.
(b) Except as disclosed in Schedule 8.4, there are no
agreements, consent or administrative orders, injunctions, decrees,
judgments, license or permit conditions, or other directives of governmental
authorities based on any Applicable Environmental Laws that require any
material change in the present condition of the Properties, and Seller has
not received any notice from any governmental authority or private or public
entity advising Seller that it is or is potentially responsible for response
costs under an Applicable Environmental Law as a result of Seller's ownership
or activities in connection with the Properties.
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(c) Except as disclosed in Schedule 8.4, no conditions or
circumstances exist on the Properties that would subject Seller to any
material damages, penalties, injunctive relief or cleanup or closure costs
under any Applicable Environmental Laws or that would require cleanup,
removal, remedial or corrective action or other response involving a material
expenditure by Seller pursuant to Applicable Environmental Laws.
8.5 PROPERTIES SUBJECT TO ENVIRONMENTAL DEFECT. Seller shall
have a period of five (5) days after the Title Notice Date to cure or
remediate the environmental defect(s) set out in any Notice of Environmental
Defect timely and properly given by Buyer. In the event Seller is unable or
unwilling to cure or remediate any such defect prior to Closing, one of the
following shall occur:
(a) The parties shall agree upon an adjustment to the
Purchase Price to compensate Buyer (i) for the defect and all future
liability associated therewith or resulting therefrom, and (ii) for agreeing
to indemnify, defend and hold harmless Seller from and against any and all
loss, cost, liability or expense associated therewith or resulting therefrom.
(b) If the parties are unable to reach agreement pursuant
to (a) above, Seller, at its sole discretion, may elect to proceed to
Closing but exclude the affected Property from the Interests and the sale
hereunder and reduce the Base Price by the Agreed Value thereof.
(c) Notwithstanding the provisions of (a) and (b) above,
Purchaser shall not be entitled to an adjustment of the Base Price pursuant
to the provisions of this Section 8.5 unless the cumulative amount of all
such adjustments exceeds $50,000.
(d) With respect to the environmental defects described on
Schedule 8.2 as "excessive pressure on surface casing," each such defect
shall be deemed cured if, as a result of Seller filling the annulus with
heavy drilling mud or taking other appropriate action, the surface casing
pressure as measured at the surface is reduced to zero. With respect to the
environmental defect described on Schedule 8.2 as "open pit that needs to be
remediated and closed," such defect shall be deemed cured if the contents of
such pit are disposed of in an environmentally safe manner and the pit is
closed, filled and leveled prior to the Closing. In the event any of the
environmental defects described in Schedule 8.2 are not cured by Seller prior
to the Closing in the manner hereinabove provided, then Buyer may elect to
exclude the affected item of the Interests from the sale hereunder and reduce
the Base Price by the Agreed Value thereof.
8.6 INDEMNIFICATION OF SELLER. All liabilities attributable to
conditions existing and operations conducted on the Properties assigned to
Buyer, under Applicable Environmental Laws
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and under all future environmental laws, shall be liabilities of Buyer, and
Buyer shall indemnify, defend, and hold harmless Sellers from and against all
loss, cost, liability or expense attributable thereto or resulting therefrom.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to consummate the transactions provided for
in this Agreement shall be subject to the satisfaction of each of the
following conditions on or before the Closing Date, subject to the right of
Buyer to waive any of such conditions:
9.1 REPRESENTATIONS AND WARRANTIES OF SELLER. At and as of the
Closing Date, the representations and warranties of Seller contained in
Article 4 hereof shall be true and correct in all material respects as though
made on such date.
9.2 PERFORMANCE OF THIS AGREEMENT. Seller shall have duly
performed or complied in all material respects with all of the obligations to
be performed or complied with by Seller under the terms of this Agreement on
or prior to the Closing Date.
ARTICLE 10
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions provided
for in this Agreement shall be subject to the satisfaction of each of the
following conditions on or before the Closing Date, subject to the right of
Seller to waive any of such conditions:
10.1 REPRESENTATIONS AND WARRANTIES OF BUYER. The
representations and warranties of Buyer contained in Article 5 hereof shall
be true and correct in all material respects at and as of the Closing Date.
10.2 PERFORMANCE OF THIS AGREEMENT. Buyer shall have duly
performed or complied in all material respects with all of the obligations to
be performed or complied with by Buyer under the terms of this Agreement on
or prior to the Closing Date.
ARTICLE 11
TERMINATION
11.1. NONCOMPLIANCE BY SELLER. Buyer may terminate this Agreement
by written notice to Seller if the conditions to Buyer's obligations under
this Agreement, as set forth in Article 9 hereof, shall not have been
complied with or performed in all material respects (and Seller shall not be
prepared to comply with or perform the same) by the date on which the Closing
is to occur (as set forth in Section 12.1), and such non-compliance or
non-performance shall
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not have been waived in writing by Buyer. Under such circumstances, Buyer
shall be entitled to a return of the Deposit, which shall be Buyer's sole
remedy hereunder unless such termination is a result of Seller's failure or
refusal to close the transaction contemplated hereby under circumstances in
which all conditions precedent to Seller's obligations as set forth in
Article 10 have been performed or satisfied in all material respects, in
which event Buyer shall be entitled to pursue any remedies existing at law or
in equity.
11.2. NONCOMPLIANCE BY BUYER. Seller may terminate this Agreement
by written notice to Buyer if the conditions to Seller's obligations under
this Agreement, as set forth in Article 10 hereof, shall not have been
complied with or performed in all material respects (and Buyer shall not be
prepared to comply with or perform the same) by the date on which the Closing
is to occur (as set forth in Section 12.1), and such non-compliance or
non-performance shall not have been waived in writing by Seller. In such
event, Seller shall retain the Deposit as liquidated damages for Buyer's
failure to purchase the Interests at the time specified herein. The parties
hereto agree that time is of the essence for the consummation of the
transactions contemplated hereby, that the amount of damages caused by
Buyer's breach would be very difficult to calculate exactly, and that the
provision for liquidated damages contained in this Section 11.2 shall not be
construed as a penalty provision. Such right to liquidated damages shall be
Seller's sole remedy hereunder, unless such termination is as a result of
Buyer's failure or refusal to close the transaction contemplated hereby under
circumstances in which all conditions precedent to Buyer's obligations as set
forth in Article 9 have been performed or satisfied in all material respects,
in which event Seller shall be entitled to pursue any remedies existing at
law or in equity.
11.3. COOPERATION BY BUYER. In the event of termination of this
Agreement, Seller shall be free to sell the Interests to any third party
without any limitation under or by reason of this Agreement. Buyer shall
cooperate with Seller in effectuating any such sale by promptly executing any
instrument reasonably requested by Seller evidencing the termination of this
Agreement or Buyer's right to acquire the Interests.
11.4. ARBITRATION. In the event this Agreement is terminated by
Buyer pursuant to Section 11.1 hereof or by Seller pursuant to Section 11.2
hereof and a dispute exists between the parties with respect to entitlement
to the Deposit, such dispute shall be resolved by binding arbitration
conducted in accordance with the Commercial Arbitration Rules of the AAA.
The arbitration proceedings shall be conducted in Oklahoma City, Oklahoma, by
a single arbitrator agreed to by the parties, or if they are unable to agree,
selected by the AAA. The arbitrator shall be a licensed attorney experienced
in transactions involving the sale and purchase of oil and gas properties
(and, if the arbitration proceeding is commenced pursuant to the provisions
of Section 3.4(b) hereof,
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experienced in oil and gas title examination). The arbitrator shall be
instructed to make a determination that either Buyer is entitled to return of
the entire Deposit or Seller is entitled to retain the entire Deposit (or, in
the event of a proceeding commenced pursuant to Section 3.4(b) hereof, the
existence and value of Title Defects timely asserted by Buyer). The decision
of the arbitrator shall be conclusive and binding on the parties. The
general expenses of arbitration, including the fees of the AAA if
necessitated by reason of the failure of the parties to agree upon an
arbitrator, shall be borne equally by Seller and Buyer; however, each party
shall bear and pay the fees and expenses of its own witnesses, legal counsel
and of the collection and presentation of its evidence.
ARTICLE 12
CLOSING
12.1 DATE AND PLACE. The Closing shall be held at 9:00 o'clock
a.m. on February 28, 1997 (the date on which the Closing actually occurs is
referred to herein as the "Closing Date"). The Closing shall take place in
the offices of Seller, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
12.2 SATISFACTION OF CONDITIONS. Not later than two (2) business
days prior to the Closing Date, each party shall provide the other party such
evidence of satisfaction of conditions under Sections 9.2 and 10.2 hereof as
the other party shall have reasonably and timely requested.
12.3 ASSIGNMENTS. At the Closing, Seller shall deliver to Buyer
a fully executed and acknowledged Assignment, Conveyance and ▇▇▇▇ of Sale, in
the form attached hereto as Exhibit B, together with any necessary forms of
assignment for Federal, State and Indian leases as required by applicable law
and regulations.
12.4 DETERMINATION AND PAYMENT OF PURCHASE PRICE. On the day
that is two (2) business days prior to the Closing Date, Seller shall furnish
to Buyer (i) a summary of the Base Price adjustments to be effected at the
Closing pursuant to Sections 3.4, 7.4, 7.5, 7.6, 7.7, 7.8 and 8.5 hereof, and
(ii) based upon the information at (i), a calculation of the Purchase Price.
Buyer and Seller shall work together diligently and in good faith prior to
the Closing in an effort to agree upon the amount of the adjustments
necessary to determine the Purchase Price, and if they do so agree, the
agreed amount, less the Deposit, shall be paid by Buyer to Seller by wire
transfer of immediately available funds at the Closing. If the parties
cannot agree on the adjustment amounts necessary to determine the Purchase
Price, the Closing shall occur as scheduled based on Seller's reasonable,
good faith estimate of the Purchase Price ("Seller's Estimate") and the
difference between Seller's Estimate and Buyer's calculation of the Purchase
Price shall be deposited in escrow with a mutually acceptable institutional
escrow holder pending a determination of the final
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Purchase Price. In such event the final Purchase Price shall be determined
either (i) by subsequent agreement of the parties, or (ii) by binding
arbitration pursuant to an arbitration proceeding initiated and conducted
substantially in accordance with the procedures set out in Section 11.4
hereof. In the event arbitration is necessary to determine the Purchase
Price, prior to initiating the arbitration, each party shall furnish to the
other a statement of such party's calculation of the Purchase Price. All
fees and expenses of the arbitration, including attorneys' fees, expert
witness fees and all other out-of-pocket expenses of BOTH parties, shall be
paid by the party whose calculation of the Purchase Price bears the greatest
difference from the Purchase Price determined by the arbitrator. The award
of the arbitrator shall not be subject to appeal or judicial review of any
nature and shall be promptly furnished to the escrow holder who shall make
distribution of the escrowed funds in a manner consistent with such award.
12.5 LETTERS IN LIEU. Seller shall execute and deliver to Buyer
at the Closing, on forms prepared by Buyer, transfer orders or letters in
lieu thereof directing all purchasers of production to make payment to Buyer
of proceeds attributable to production from the Interests.
12.6 CHANGE OF OPERATOR FORMS. At the Closing, Seller will
execute and deliver to Buyer all forms reasonably known to Seller as being
required by State or Federal agencies to reflect the resignation of Seller
(or its affiliates) as operator of the Interests currently operated by Seller
(or its affiliates) and the assumption of operations by ▇▇▇▇-▇▇▇▇▇▇ Energy,
Inc. Buyer agrees to cooperate with Seller in the identification and
preparation of the required forms.
ARTICLE 13
POST-CLOSING MATTERS
13.1 SALES TAXES. It is understood that the Purchase Price does
not include sales taxes imposed on account of the transactions contemplated
hereby. Buyer will be responsible for all such taxes, will remit same to the
proper governmental authorities within the time allowed by law for payment
thereof and will hold Seller harmless with respect thereto, including any
penalties or interest assessed for late payment.
13.2 RECEIPTS AND DISBURSEMENTS. If, after the Closing, Buyer
receives any funds relating to operations on or production from the Interests
prior to the Effective Time, including, without limitation, any joint
interest account credits relating to operations prior to the Effective Time,
or Seller receives any funds relating to operations on or production from the
Interests after the Effective Time, then the party receiving such funds shall
account therefor and pay the same to the other party promptly after receipt
thereof. Likewise, if Buyer shall be required to pay any amount
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relating to items of the Interests which accrued to the owner of the
Interests before the Effective Time, or if Seller shall be required to pay
any amount (not otherwise prohibited by the terms of this Agreement) relating
to items of the Interests which accrued to the owner of the Interests after
the Effective Time, then the party making such payment shall invoice the
other party for the amount of such payment and the party receiving such
invoice promptly shall pay the same. Notwithstanding the foregoing, there
shall be no accounting for amounts received or paid which have already been
taken into account in calculating the Purchase Price. In determining the
amount paid by a party accruing during a period of time in respect of ad
valorem taxes, the taxes shall be prorated as provided in Section 7.7.
13.3 ALLOCATION OF LIABILITY. Seller shall, except as otherwise
provided in clause (ii) of Section 13.4 hereof, remain liable and responsible
for all costs and expenses attributable to the ownership or operation of the
Interests prior to the Effective Time. Buyer shall be liable and responsible
for all costs and expenses attributable to the ownership or operation of the
Interests after the Effective Time, together with those additional
liabilities and obligations assumed by Buyer pursuant to clause (ii) of
Section 13.4 hereof.
13.4 ASSUMPTION. By acceptance of the Assignment, Conveyance and
▇▇▇▇ of Sale at the Closing, Buyer shall be deemed to have accepted and
assumed responsibility for all obligations and liabilities of Seller (i)
accruing from and after the Effective Time under the terms of the leases
included in the Interests, under all prior assignments in the chain of title
to said leases, and under all joint operating agreements and other similar
agreements to which said leases are subject or pursuant to which operations
are conducted on the Land, (ii) relating to the environmental condition of
and other conditions on and under the Land, whether existing as of the
Effective Time or thereafter arising, and whether created by statute,
regulation, rule, order, common law or contract, including, without
limitation, any obligation to plug, replug or repair any well, or to restore,
clean up or remediate the surface of the Land, and (iii) all obligations
attributable to the Interests relating to gas overproduction, including
balancing rights of third parties and any cash balancing obligations
determined by contract, common law, settlement or court order or judgment.
13.5 BOOKS AND RECORDS. Seller shall deliver to Buyer, as soon
as practicable after the Closing Date (but in no event more than thirty (30)
days after the Closing Date), all original books, files, records and other
information of Seller (including, without limitation, land, geological,
geophysical and accounting files, records and other material) relating to the
Interests. For a period of five (5) years after the delivery of such files
and records, Buyer shall permit Seller reasonable access to such files and
records, but such right of access shall not constitute an obligation
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of Buyer to maintain such files in the same form as maintained by Seller
prior to delivery thereof.
ARTICLE 14
MISCELLANEOUS
14.1 NOTICES. All communications required or permitted to be
given under this Agreement shall be in writing and delivered, mailed or
transmitted to the parties at the addresses set out below. Notices shall be
deemed given when received except that notices given by facsimile
transmission on weekends, holidays or after 5:00 p.m. Central Time, shall be
deemed received on the next business day. If delivered by commercial
delivery service or mailed by registered or certified mail, the delivery
receipt shall be evidence of the date of receipt. Either party may, by
written notice so delivered to the other, change the address to which
delivery shall thereafter be made.
(a) Notices to Buyer:
▇▇▇▇-▇▇▇▇▇▇ Energy, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No. (▇▇▇)▇▇▇-▇▇▇▇
and to:
Providence Energy Corp.
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇ ▇▇▇▇▇
Fax No. (▇▇▇)▇▇▇-▇▇▇▇
(b) Notices to Seller:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇
RAMCO Operating Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No. (▇▇▇)▇▇▇-▇▇▇▇
With copy to:
C. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
McAfee & ▇▇▇▇ A Professional Corporation
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
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14.2 BINDING EFFECT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that Buyer may not assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of Seller, which consent may be withheld in Seller's sole
discretion.
14.3 COUNTERPARTS. This Agreement may be executed in any number
of counterparts which taken together shall constitute one and the same
instrument and each of which shall be considered an original for all purposes.
14.4 EXPENSES. Each party hereto will bear and pay its own
expenses of negotiating and consummating the transactions contemplated hereby.
14.5 SECTION HEADINGS. The section headings contained in this
Agreement are for convenient reference only and shall not in any way affect
the meaning or interpretation of this Agreement.
14.6 SUPERSEDING EFFECT. This Agreement supersedes any prior
agreement or understanding between the parties with respect to the subject
matter hereof.
14.7 GOVERNING LAW; ENFORCEMENT. This Agreement shall be
governed by, construed and enforced in accordance with the laws of the State
of Oklahoma applicable to contracts made and to be performed entirely
therein. The prevailing party in any litigation initiated to enforce rights
under or collect damages for breach of this Agreement shall be entitled to
reimbursement from the non-prevailing party of all costs and expenses,
including attorneys' fees, incurred by the prevailing party in connection
with such litigation.
14.8 EXHIBITS AND SCHEDULES. The Exhibits and Schedules referred
to herein are attached hereto and by this reference made a part hereof.
14.9 ANNOUNCEMENTS. Seller and Buyer shall consult with each
other with regard to all press releases and other announcements issued by
either party concerning this Agreement or the transaction contemplated hereby
and, except as may be required by applicable laws or the applicable rules and
regulations of any governmental agency or stock exchange, neither Buyer nor
Seller shall issue any such press release or other publicity without the
prior written consent of the other party.
14.10 SURVIVAL. The representations and warranties of Seller set
out in Article 4 hereof shall expire at, and be of no further force or effect
after, the Closing, and Buyer shall have no claim against Seller for
inaccuracy of any such representation or breach of any such warranty from and
after the Closing. Buyer's
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only recourse for discovery of the inaccuracy of any representation or the
breach of any warranty set out in Section 4 hereof shall be excused
performance of Buyer's obligation to close pursuant to Section 9.1 hereof.
The representations and warranties of Buyer as set out in Article 5 hereof
shall survive the Closing. The covenants of the parties under this Agreement
shall survive the Closing (for this purpose, nothing contained in Article 4
hereof shall be deemed to be a covenant).
14.11 INDEMNITY. Seller agrees to indemnify, defend and hold
Buyer harmless against any damage, loss, cost, liability and expense,
including court costs and attorneys' fees, resulting from any breach of
covenant on the part of Sellers hereunder. Buyer agrees to indemnify, defend
and hold Sellers harmless against any damage, loss, cost, liability and
expense, including court costs and attorneys' fees, resulting from any
inaccuracy of representation or breach of warranty or covenant on the part of
Buyer hereunder.
14.12 FURTHER ASSURANCES. After the Closing the parties shall, at
the sole cost and expense of the requesting party if more than an immaterial
expense is involved, (i) furnish such additional information, (ii) execute
and deliver such additional documents, and (iii) perform such additional
acts, as may be necessary and reasonably requested by the other party or
parties to effect the transaction contemplated by this Agreement.
14.13 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any
delay by any party in exercising any right, power or privilege under this
Agreement or the documents referred to herein will operate as a waiver of
such right, power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by applicable law, (i) no waiver
of any claim or right under this Agreement will be valid unless evidenced by
a writing signed by the waiving party, (ii) no waiver given by a party will
be applicable except in the specific instance for which it is given, and (ii)
no notice to or demand on a party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to herein.
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Executed as of the date first above written.
SELLER:
RAMCO-NYL 1987 LIMITED PARTNERSHIP, a Texas
limited partnership
By: RAMCO Operating Company,
Managing General Partner
By /s/ ▇▇▇▇▇ ▇. ▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇, President
RB OPERATING COMPANY, an Oklahoma corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇, President
BUYER:
▇▇▇▇-▇▇▇▇▇▇ 1996, LTD., a Texas limited
partnership
By: ▇▇▇▇ ▇▇▇▇ Limited, a Texas
limited partnership, as
General Partner
By: ▇▇▇▇-▇▇▇▇▇▇ Energy, Inc., as
General Partner of ▇▇▇▇ ▇▇▇▇
Limited
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
WILDCARD OIL & GAS COMPANY
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
President
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▇▇▇▇-▇▇▇▇▇▇ (TEXAS), LLC,
By: ▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇, Ltd., a
Texas limited partnership, as
Manager
By: ▇▇▇▇ ▇▇▇▇ Limited, a Texas
limited partnership, as
General Partner of ▇▇▇▇-▇▇▇▇▇▇
1996, Ltd.
By: ▇▇▇▇-▇▇▇▇▇▇ Energy, Inc., as
General Partner of ▇▇▇▇ ▇▇▇▇
Limited
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
PROVIDENCE ENERGY CORP.
By /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------------------
President
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LIST OF APPENDICES, EXHIBITS AND SCHEDULES
APPENDICES
I Applicable Percentages and Allocation of Deposit
EXHIBIT
A Listing of Interests; WI and NRI; Agreed Values
B Assignment, Conveyance and ▇▇▇▇ of Sale
SCHEDULES
6.2 Post-Effective Time operations
7.4 Gas balancing status
8.2 Environmental Defects
8.4 Environmental conditions on the Properties
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