Execution Version HN\1378916.125654385v1 CONFIDENTIAL INFORMATION, MARKED BY BRACKETS AND ASTERISKS ([***]), IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED...
Execution Version
HN\1378916.125654385v1
CONFIDENTIAL INFORMATION, MARKED BY BRACKETS AND ASTERISKS
([***]), IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THIS OMITTED INFORMATION.
PURCHASE AND SALE AGREEMENT
BETWEEN
PETROQUEST ENERGY, L.L.C.
AS SELLER
AND
▇▇ ▇▇▇▇▇▇▇▇ PROPERTIES, LLC
AS BUYER
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[***] Confidential information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to this omitted information.
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS ............................................................................................................1
1.1 Definitions; References and Construction ...............................................................1
ARTICLE 2 SALE OF ASSETS/PURCHASE PRICE .................................................................12
2.1 Purchase and Sale of Assets ...................................................................................12
2.2 Purchase Price .......................................................................................................15
2.3 Purchase Price Adjustments ..................................................................................15
2.4 Preliminary Settlement Statement ..........................................................................16
2.5 Final Settlement Statement ....................................................................................16
2.6 Purchase Price Allocation .....................................................................................17
2.7 Suspense Funds ......................................................................................................17
2.8 Assumed Liabilities ................................................................................................17
2.9 Disputed Well Interests ..........................................................................................18
ARTICLE 3 [INTENTIONALLY OMITTED] ..............................................................................18
ARTICLE 4 ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES ...........................18
4.1 Opportunity for Review ..........................................................................................18
4.2 Seller’s Indemnity Obligation ................................................................................18
4.3 Buyer’s Indemnity Obligation ................................................................................18
4.4 Threshold, Aggregate Threshold, Cap ...................................................................18
4.5 Tax Treatment .........................................................................................................18
4.6 Notice of Claims .....................................................................................................18
4.7 Defense of Non-Party Claims ................................................................................19
4.8 Investigation and Knowledge .................................................................................20
4.9 Waiver of Certain Damages ...................................................................................20
4.10 Extent of Indemnification .......................................................................................20
4.11 Survival ..................................................................................................................20
4.12 Environmental Liabilities .......................................................................................20
ARTICLE 5 DISCLAIMERS ........................................................................................................21
ARTICLE 6 SELLER’S REPRESENTATIONS AND WARRANTIES .......................................22
6.1 Organization and Good Standing ..........................................................................23
6.2 Authority; Authorization of Agreement ..................................................................23
6.3 No Violations ..........................................................................................................23
6.4 Liability for Brokers’ Fees .....................................................................................23
6.5 Legal Proceedings ..................................................................................................23
6.6 Bankruptcy .............................................................................................................23
6.7 Taxes .......................................................................................................................24
6.8 Material Contracts .................................................................................................24
6.9 [***] .......................................................................................................................24
6.10 Preferential Rights .................................................................................................24
6.11 Consents .................................................................................................................24
6.12 [***] .......................................................................................................................24
6.13 Current Commitments ............................................................................................24
6.14 [***] .......................................................................................................................24
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been requested with respect to this omitted information.
6.15 Production Imbalances ..........................................................................................24
6.16 [***] .......................................................................................................................24
6.17 [***] .......................................................................................................................24
6.18 [***] .......................................................................................................................24
6.19 Liens .......................................................................................................................24
6.20 [Intentionally Omitted]...........................................................................................24
6.21 [***] .......................................................................................................................24
6.22 [***] .......................................................................................................................24
6.23 [***] .......................................................................................................................24
6.24 [***] .......................................................................................................................24
ARTICLE 7 BUYER’S REPRESENTATIONS AND WARRANTIES ........................................25
7.1 Organization and Good Standing ..........................................................................25
7.2 Authority; Authorization of Agreement ..................................................................25
7.3 No Violations ..........................................................................................................25
7.4 Liability for Brokers’ Fees .....................................................................................25
7.5 Claims, Disputes and Litigation ............................................................................25
7.6 Bankruptcy .............................................................................................................26
7.7 Financing; Resources and Other Capabilities .......................................................26
7.8 Independent Evaluation .........................................................................................26
7.9 Accredited Investor ................................................................................................26
ARTICLE 8 COVENANTS ...........................................................................................................26
8.1 Release of Liens .....................................................................................................26
8.2 Consents .................................................................................................................26
8.3 Approvals of Governmental Authorities.................................................................27
8.4 Efforts .....................................................................................................................28
8.5 Governmental Bonds ..............................................................................................29
8.6 Records in Seller’s Possession ...............................................................................29
8.7 Operatorship ..........................................................................................................29
ARTICLE 9 [INTENTIONALLY OMITTED] ..............................................................................30
ARTICLE 10 THE CLOSING .......................................................................................................30
10.1 Closing ...................................................................................................................30
10.2 Obligations of Seller at Closing .............................................................................30
10.3 Obligations of Buyer at Closing ............................................................................31
10.4 DDA .......................................................................................................................31
10.5 Employees ..............................................................................................................31
ARTICLE 11 [INTENTIONALLY OMITTED] ............................................................................32
ARTICLE 12 TAXES ....................................................................................................................32
12.1 Tax Partnership ......................................................................................................32
12.2 Cooperation on Tax Matters ..................................................................................32
12.3 Property and Excise Taxes .....................................................................................32
12.4 Severance Taxes .....................................................................................................33
12.5 Transfer Taxes ........................................................................................................33
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ARTICLE 13 MISCELLANEOUS................................................................................................33
13.1 Notices....................................................................................................................33
13.2 Transaction and Filing Costs .................................................................................34
13.3 Amendments and Severability ................................................................................34
13.4 Successors and Assigns ..........................................................................................34
13.5 Headings ................................................................................................................35
13.6 Governing Law; Jurisdiction; Waiver of Trial by Jury ..........................................35
13.7 No Partnership Created .........................................................................................35
13.8 Public Announcements ...........................................................................................35
13.9 No Third Party Beneficiaries .................................................................................36
13.10 Waiver; Rights Cumulative ....................................................................................36
13.11 Construction ...........................................................................................................36
13.12 Conspicuousness of Provisions ..............................................................................36
13.13 Execution in Counterparts .....................................................................................36
13.14 Entire Agreement ....................................................................................................36
EXHIBITS AND SCHEDULES
EXHIBIT A-1 Leases
EXHIBIT A-2 ▇▇▇▇▇
EXHIBIT A-3 Pooling Orders
EXHIBIT A-4 Marketing Agreements
EXHIBIT B Excluded Assets
EXHIBIT C Certificate of Non-Foreign Status
EXHIBIT D Form of Assignment
SCHEDULE 2.4 Preliminary Settlement Statement
SCHEDULE 6.3 Consents or Approvals
SCHEDULE 6.5 Legal Proceedings
SCHEDULE 6.7 Tax Matters
SCHEDULE 6.8 Material Contracts
SCHEDULE 6.9 Violation of Laws
SCHEDULE 6.10 Preferential Purchase Rights
SCHEDULE 6.12 Contested Royalties
SCHEDULE 6.13 Current Commitments
SCHEDULE 6.14 Environmental
SCHEDULE 6.15 Imbalances
SCHEDULE 6.16 Lease Termination Notices
SCHEDULE 6.17 Permit Violations
SCHEDULE 6.18 Well Issues
SCHEDULE 6.22 Operation of Assets
SCHEDULE 6.23 Salt Water Injection Violations
SCHEDULE 6.24 Claims of Personal Injury or Death
SCHEDULE 8.1 Liens
SCHEDULE 8.5 Bonds
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5654385v1
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (together with the Exhibits and Schedules made a part
hereof, this “Agreement”), dated the 20th day of April, 2016 (the “Execution Date”), is made by
and between PetroQuest Energy, L.L.C., a Louisiana limited liability company (“Seller”), and
▇▇ ▇▇▇▇▇▇▇▇ PROPERTIES, LLC, a Delaware limited liability company (“Buyer”). Seller
and Buyer are sometimes hereinafter referred to individually as a “Party” and collectively as the
“Parties”:
WHEREAS, Seller and Buyer are parties to a certain Drilling and Development
Agreement made and entered into on June 18, 2014 originally by and between Seller and Buyer’s
predecessor-in-interest (the “DDA”) pursuant to which Buyer acquired certain undivided
interests in the Assets (hereinafter defined), all as more particularly set forth in the DDA and any
assignment from Seller to Buyer pursuant to the DDA;
WHEREAS, pursuant to the DDA, Seller was designated “Operator” pursuant to certain
Applicable Operating Agreements (as defined in the DDA);
WHEREAS, Seller desires to sell and Buyer desires to purchase the oil and gas leases,
▇▇▇▇▇, royalty interests, operating rights and other properties, interests, assets and rights
comprising the Assets (hereinafter defined);
NOW, THEREFORE, for a good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions; References and Construction. In this Agreement, capitalized terms
have the meanings provided in this Article 1, unless defined elsewhere in this Agreement. All
defined terms include both the singular and the plural of such terms. All references to Sections
refer to Sections in this Agreement, and all references to Exhibits or Schedules refer to Exhibits
or Schedules made a part of this Agreement. When the term “herein” is used in this Agreement,
reference is made to the entire Agreement and not to any particular Section or subparagraph of a
Section. The word “including” shall mean including without limitation. The words “shall” and
“will” are interchangeably used throughout this Agreement and shall accordingly be given the
same meaning, regardless of which word is used.
“Accounting Referee” means PricewaterhouseCoopers, or similar nationally
recognized firm.
“Adjusted Purchase Price” has the meaning set forth in Section 2.2.
“Adjustments” means the adjustments to the Base Purchase Price pursuant to
Section 2.3.
“AFEs” has the meaning set forth in Section 6.13.
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been requested with respect to this omitted information.
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“Affiliate” means any Person that, directly or indirectly, through one or more
entities, controls or is controlled by or is under common control with the Person specified. For
the purpose of the immediately preceding sentence, the term “control” means the power to direct
or cause the direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or agency or otherwise.
“Affiliate COSA” means that certain Contract Operating Services Agreement
dated June 4, 2015, by and between Seller and WSGP Gas Producing, LLC.
“Aggregate Indemnity Deductible” means [***].
“Agreement” has the meaning set forth in the introductory paragraph
“Applicable ▇▇▇▇” means all Contracts that are joint operating agreements,
pooling orders and pre-pooling agreements and under which Seller is the designated operator.
“Assets” has the meaning set forth in Section 2.1.
“Assignment” means a document in the form of Exhibit D.
“Assumed Liabilities” has the meaning set forth in Section 2.8.
“Barrel” or “Bbl” means 42 U.S. gallons.
“Base Purchase Price” has the meaning set forth in Section 2.2.
“BLM” means the Bureau of Land Management, Department of the Interior,
United States of America.
“Business Day” means a Day other than Saturday, Sunday or any other Day when
federally chartered banks in the United States are required to be closed.
“Buyer” has the meaning set forth in the introductory paragraph.
“Buyer Group” means Buyer and its Affiliates together with its and their
members, partners, officers, directors, managers, agents, representatives, consultants and
employees.
“Certificate of Non-Foreign Status” means a certificate in the form of Exhibit C.
“Claims” means any and all written claims, demands, suits, causes of action,
losses, damages, liabilities, fines, penalties, fees, expenses and costs (including reasonable
attorneys’ fees and costs of litigation).
“Close” or “Closing” means the consummation of the sale of the Assets from
Seller to Buyer, including execution and delivery of all documents and other legal consideration
as provided for in this Agreement pursuant to Article 10.
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been requested with respect to this omitted information.
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“Closing Amount” has the meaning set forth in Section 2.2.
“Closing Date” has the meaning set forth in Section 10.1.
“Code” means the Internal Revenue Code of 1986, as amended.
“Contracts” has the meaning set forth in Section 2.1(c).
“Customary Post-Closing Consents” means consents and approvals from
Governmental Authorities that are customarily obtained after Closing in connection with a
transaction similar to the one contemplated by this Agreement.
“Day” means a calendar day consisting of 24 hours from midnight to midnight.
“Disputed Well Interests” has the meaning set forth in Section 2.9.
“Dollars” means United States Dollars.
“E&P Business” means the business and operations conducted by Seller in its
ordinary course of business to the extent pertaining to the Assets.
“Effective Time” means April 1, 2016, at 12:01 a.m. local time where the Assets
are located.
“Environmental Condition” shall mean (a) any condition existing on or prior to
the Closing Date with respect to the air, soil, subsurface, surface waters, ground waters and/or
sediments that causes any Asset to not be in material compliance with any Environmental Laws,
or (b) any environmental release of Hazardous Substance which could reasonably be expected to
result in any material liability to Seller (including with respect to any remedial or corrective
action) arising under existing Environmental Laws.
“Environmental Laws” means any and all Laws relating to the prevention of
pollution, the preservation and restoration of environmental quality, the protection of human
health, wildlife or environmentally sensitive areas, the remediation of contamination, the
generation, handling, treatment, storage, transportation, disposal or release into the environment
of waste materials, or the regulation of or exposure to hazardous, toxic or other substances
alleged to be harmful. Environmental Laws include all applicable judicial and administrative
Orders, consent decrees or directives issued by a Governmental Authority pursuant to the
foregoing. Unless expressly included in and required by applicable requirements of statutes,
regulations, judicial and administrative Orders, consent decrees or directives issued by a
Governmental Authority included in Environmental Laws, Environmental Laws do not include
good or desirable operating practices or standards that may be employed or adopted by other oil
or gas well or pipeline operators or recommended but not required by a Governmental Authority.
Furthermore, Environmental Laws do not include the Occupational Safety and Health Act or any
other Law governing worker safety or workplace conditions.
“Environmental Liabilities” means any and all liabilities, responsibilities, claims,
suits, losses, costs (including remediation, removal, response, abatement, clean-up, investigative,
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been requested with respect to this omitted information.
5654385v1
and/or monitoring costs and any other related costs and expenses), damages, natural resource
damages, settlements, consulting fees, expenses, assessments, liens, penalties, fines, orphan
share, prejudgment and post-judgment interest, court costs, and reasonable attorney fees incurred
or imposed (a) pursuant to any order, notice of responsibility, directive (including requirements
embodied in Environmental Laws), injunction, judgment or similar ruling or act (including
settlements) by any Governmental Authority to the extent arising out of any violation of, or
remedial obligation under, any Environmental Law that is attributable to (or for which any
liability or responsibility is incurred or imposed as a result of) the ownership or operation of the
Assets prior to, at or after the Closing Date, or (b) pursuant to any claim or cause of action by a
Governmental Authority or other Person for personal injury, death, property damage, damage to
natural resources, remediation or response costs, or similar costs or expenses to the extent arising
out of a release of Hazardous Materials or any violation of, or any remediation obligation under,
any Environmental Laws that is attributable to (or for which any liability or responsibility is
incurred or imposed as a result of) the ownership or operation of the Assets prior to, at or after
the Closing Date, or (c) as a result of Environmental Conditions; provided, however, that
Environmental Liabilities shall not include any Claims for which Seller is required to indemnify
Buyer pursuant to Article 4.
“Equipment” has the meaning set forth in Section 2.1(f).
“Excise Taxes” has the meaning set forth in Section 12.3.
“Excluded Assets” means (a) those assets, interests, rights and contracts described
on Exhibit B; (b) any Assets subject to a Hard Consent which are excluded from the Assets
pursuant to Section 8.2; (c) all trade credits, all accounts, receivables and all other proceeds,
income or revenues attributable to the Assets with respect to any period of time prior to the
Effective Time; (d) all claims and causes of action of Seller arising under or with respect to any
Contracts that are attributable to periods of time prior to the Effective Time (including claims for
adjustments or refunds); (e) all rights and interests relating to the Assets, (i) under any existing
policy or agreement of insurance, (ii) under any bond or (iii) to any insurance or condemnation
proceeds or awards arising, in each case, from acts, omissions or events, or damage to or
destruction of property; (f) all Hydrocarbons produced and sold from the Assets with respect to
all periods prior to the Effective Time; (g) any Tax refunds or Tax carry-forwards amounts
attributable to the Assets prior to the Effective Time or to Seller’s business generally; (h) all
personal computers, network equipment and associated peripherals and telephone equipment
(including cellular telephones); (i) vehicles; (j) all of Seller’s proprietary computer software
(including the CC 9000 security software), patents, trade secrets, copyrights, names, trademarks,
logos and other intellectual property; (k) to the extent not materially interfering with Buyer’s
ownership and operation of the Assets, concurrent rights and interests with Buyer in, to and
under the Contracts, Surface Contracts and Permits, to the extent, and only to the extent,
necessary to own, operate and/or develop the Retained Depths and/or any of the other Excluded
Assets.
“Excluded Chesapeake Liabilities” has the meaning set forth in Section 2.9.
“Excluded Records” has the meaning set forth in Section 2.1(h).
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been requested with respect to this omitted information.
5654385v1
“Excluded Working Interest” means [***].
“Execution Date” has the meaning set forth in the introductory paragraph.
“Final Settlement Statement” has the meaning set forth in Section 2.5.
“Governmental Authority” means any federal, state, local, municipal or other
government; any governmental, regulatory or administrative agency, commission, body or other
authority exercising or entitled to exercise any administrative, executive, judicial, legislative,
police, regulatory or taxing authority or power; and any court or governmental tribunal,
including any tribal authority having jurisdiction.
“Hard Consent” has the meaning set forth in Section 8.2(b).
“Hazardous Materials” shall mean any substance or material that is, or if released
or disposed of would be, designated, classified, characterized or regulated as a “hazardous
substance”, “hazardous waste”, “hazardous material”, “toxic substance”, “pollutant” or
“contaminant” under Environmental Laws.
“▇▇▇▇▇▇” means any swap, collar, floor, cap, option or other Contract that is
intended to eliminate or reduce the risk of fluctuations in the price of Hydrocarbons.
“Hydrocarbons” means oil, gas, natural gas liquids, casinghead gas, coal bed
methane, condensate and other gaseous and liquid hydrocarbons or any combination thereof.
“Imbalance” means over-production or under-production or over-deliveries or
under-deliveries on account of (a) any imbalance at the wellhead between the amount of
Hydrocarbons produced from a Well constituting part of the Assets and allocable to the interests
of Seller, and the shares of production from the relevant Well that are actually taken by or
delivered to or for the account of Seller and (b) any marketing imbalance between the quantity of
Hydrocarbons constituting part of the Assets and required to be delivered by or to Seller under
any Contracts relating to the purchase and sale, gathering, transportation, storage, treating,
processing, or marketing of Hydrocarbons and the quantity of Hydrocarbons actually delivered
by or to Seller pursuant to the applicable Contracts.
“Indemnity Claim” has the meaning set forth in Section 4.6.
“Indemnity Claim Notice” has the meaning set forth in Section 4.6.
“Indemnity Obligations” mean the obligations of a Party to RELEASE, DEFEND,
INDEMNIFY and HOLD HARMLESS the other Party from and against specified Claims as
provided in this Agreement.
“Individual Indemnity Threshold” has the meaning set forth in Section 4.4(b).
“Intended Tax Treatment” has the meaning set forth in Section 12.1.
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[***] Confidential information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to this omitted information.
5654385v1
“Knowledge” means (a) with respect to Seller, the actual knowledge of the
following individuals [***] and (b) with respect to Buyer, the actual knowledge of the following
individuals [***].
“Laws” means any and all laws, statutes, ordinances, permits, decrees, writs,
injunctions, Orders, codes, judgments, principles of common law, rules or regulations that are
promulgated, issued or enacted by a Governmental Authority having jurisdiction.
“Leases” has the meaning set forth in Section 2.1(a).
“Legal Proceedings” means any and all proceedings, suits and causes of action by
or before any Governmental Authority and all arbitration proceedings.
“Lowest Cost Remediation Amount” means, with respect to an Environmental
Condition, the lowest cost of response and/or remediation required or permitted under
Environmental Law that completely addresses and resolves (for current use in the same manner
as currently used) the identified Environmental Condition in its entirety.
“Material Adverse Effect” means a change, event, circumstance, development,
state of facts or condition that (a) results, or would reasonably be expected to result, in a material
adverse effect on the Assets (as currently owned and operated) or the results of operations of
Seller with respect to the Assets, individually, or taken as a whole or (b) materially impairs,
prevents, delays or makes impossible the consummation of the transactions contemplated by this
Agreement; provided, however, that a Material Adverse Effect shall not include any material
adverse effects resulting from: (i) entering into this Agreement or the announcement of the
transactions contemplated by this Agreement; (ii) changes in general market, economic, financial
or political conditions (including changes in commodity prices (including Hydrocarbons), fuel
supply or transportation markets, interest or rates) in the area in which the Assets are located, the
United States or worldwide; (iii) conditions (or changes in such conditions) generally affecting
the oil and gas and/or gathering, processing or transportation industry whether as a whole or
specifically in any area or areas where the Assets are located; (iv) acts of God, including storms
or meteorological events; (v) orders, actions or failures to act of Governmental Authorities;
(vi) civil unrest or similar disorder, the outbreak of hostilities, terrorist acts or war; (vii) any
actions taken or omitted to be taken (A) by or at the written request or with the prior written
consent of Buyer or (B) as expressly permitted or prescribed hereunder; (viii) a change in Laws
or in GAAP interpretation from and after the Execution Date; (ix) reclassification or
recalculation of reserves in the ordinary course of business; and (x) natural declines in well
performance.
“Material Contracts” has the meaning set forth in Section 6.8(a).
“MCF” means thousand cubic feet.
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HN\1378916.125654385v1
“Net Revenue Interest” means the interest (expressed as a percentage or decimal
fraction) as set forth on Exhibit A-2, in and to Hydrocarbons produced from or allocated to a
Well.
“Non-Party” means any Person other than the Parties or their respective Affiliates.
“Oil and Gas Properties” has the meaning set forth in Section 2.1(b).
“Operating Expenses” shall mean Seller’s obligation for any and all costs and
expenses (including lease operating expenses, drilling and completion costs, plugging and
abandonment costs, seismic costs, workover costs, capital expenditures, costs of performing title
due diligence (including the preparation of title opinions and mineral ownership reports),
permitting costs, costs related to obtaining rights-of-ways or easements for operations, joint
interest ▇▇▇▇▇▇▇▇, overhead charges, Taxes and all insurance premiums or any other costs of
insurance attributable to Seller’s and/or its Affiliates’ insurance and to coverage periods from and
after the Effective Time but excluding in all cases, all costs and expenses of bonds, letters of
credit or other surety instruments) which relate to the Assets and are incurred by Seller in
connection with the ownership, operation, development or maintenance of the Assets in the
ordinary course of business, and excluding liabilities, losses, costs, and expenses attributable to:
(i) claims, investigations, administrative proceedings, arbitration or
litigation directly or indirectly arising out of or resulting from actual or claimed
personal injury or other torts, illness or death; property damage (other than
damage to structures, fences, irrigation systems and other fixtures, crops,
livestock, and other personal property in the ordinary course of business);
(ii) violation of any Law (or private cause or right of action under any
Law);
(iii) environmental damage or liabilities, including obligations to
remediate any contamination of groundwater, surface water, soil, sediments, or
Equipment under applicable Environmental Law;
(iv) title and environmental claims (including claims that Leases have
terminated);
(v) claims of improper calculation or payment of royalties (including
overriding royalties and other burdens on production) related to deduction of post-
production costs or use of posted or index prices or prices paid by Affiliates;
(vi) gas balancing and other production balancing obligations for which
there is an adjustment to the Base Purchase Price hereunder;
(vii) overhead, except to the extent due and owing pursuant to a joint
operating agreement associated with the Assets;
(viii) any claims for indemnification, contribution, or reimbursement
from any third Person with respect to liabilities, losses, costs, and expenses of the
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type described in preceding clauses (i) through (vii), whether such claims are
made pursuant to contract or otherwise.
“Operative Documents” means those documents referenced in Sections 10.2 and
10.3.
“Order” means any order, judgment, injunction, non-appealable final order, ruling
or decree of any court or other Governmental Authority.
“Party” or “Parties” has the meaning set forth in the introductory paragraph.
“Permits” has the meaning set forth in Section 2.1(e).
“Permitted Encumbrances” means with respect to any Asset any and all of the
following:
(a) consents to assignment and similar contractual provisions affecting such
Asset including Customary Post-Closing Consents to the extent such consents are addressed
pursuant to Section 8.2;
(b) preferential rights to purchase and similar contractual provisions affecting
such Asset insofar as the same have been waived or the counterparties’ preference rights
thereunder have expired in accordance with the terms thereof;
(c) required notices to and filings with any Governmental Authority in
connection with the consummation of the transaction contemplated by this Agreement;
(d) rights reserved to or vested in a Governmental Authority having
jurisdiction to control or regulate such Asset in any manner whatsoever and all Laws of such
Governmental Authorities, provided that the foregoing does not reduce the Net Revenue Interest
or increase the Working Interest of the associated Well(s);
(e) easements, rights-of-way, permits, licenses, servitudes, surface leases,
sub-surface leases, equipment, pipelines, utility lines and structures on, over or through such
Asset that do not (i) materially detract from the value of or materially affect or impair the
ownership, use or operation of such Asset or (ii) reduce the Net Revenue Interest or increase the
Working Interest of the associated Well(s);
(f) liens for Taxes or assessments not yet delinquent or, if delinquent, that are
being contested in good faith in the normal course of business, the responsibility for which is
retained by Seller;
(g) liens of operators relating to obligations not yet delinquent or, if
delinquent, that are being contested in good faith in the normal course of business, the
responsibility for which is retained by Seller;
(h) any (i) undetermined or inchoate liens or charges constituting or securing
the payment of expenses that were incurred incidental to maintenance, development, production
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HN\1378916.125654385v1
or operation of such Asset or for the purpose of developing, producing or processing
Hydrocarbons therefrom or therein, and (ii) materialman’s, mechanics’, repairmen’s,
employees’, contractors’ or other similar liens or charges relating to obligations not yet
delinquent or, if delinquent, that are being contested in good faith in the normal course of
business, the responsibility for which is retained by Seller;
(i) conventional rights of reassignment upon final intention to abandon or
release an Asset;
(j) any liens or security interests created by Law or reserved in oil and gas
leases for royalty, bonus or rental, or created to secure compliance with the terms of the
agreements, instruments and documents or records that create or reserve such Asset;
(k) any obligations or duties affecting such Asset to any Governmental
Authority with respect to any franchise, grant, license or permit of record or contained in the
Records;
(l) the terms and conditions of the Leases;
(m) the Contracts set forth on Schedule 6.8;
(n) zoning and planning ordinances and municipal regulations; and
(o) the terms and conditions of this Agreement.
“Person” means an individual, group, partnership, corporation, limited liability
company, trust or other entity.
“Preferential Right” has the meaning set forth in Section 6.10.
“Preliminary Settlement Statement” has the meaning set forth in Section 2.4.
“Prime Rate” means the rate of interest published and updated from time to time
by the Wall Street Journal as the “prime” rate.
“Property Taxes” has the meaning set forth in Section 12.3.
“Records” has the meaning set forth in Section 2.1(h).
“Retained Depths” means the oil, gas and/or mineral leases, covering those depths
that are excluded as set forth on Exhibit B.
“Retained Liabilities” means the following obligations:
(a) any and all obligations, liabilities and Claims in any way relating to the
ownership and/or operation of the Assets, excluding, in each case, Environmental Liabilities,
arising during, related to or otherwise attributable to the period prior to the Effective Time;
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(b) all obligations and amounts owed to any employees of Seller relating to
the employment of such individuals by Seller or the termination of employment of such
individuals by Seller;
(c) all obligations and liabilities owed to any employees of Seller arising
under any employee benefit or welfare plan maintained by Seller;
(d) all Claims asserted by any employee of Seller for bodily injury or death
prior to the Effective Time;
(e) all Claims asserted by any Non-Parties for bodily injury to or death of
such Non-Parties or damage to property owned by such Non-Parties to the extent resulting or
arising from, or attributable to, the use, ownership or operation of the Assets and attributable to
periods prior to the Effective Time;
(f) all ▇▇▇▇▇▇ of Seller;
(g) the disposal or transportation of any Hazardous Material to any location
not on the Assets or lands pooled or unitized therewith to the extent resulting or arising from, or
attributable to, the use, ownership or operation of the Assets and attributable to periods prior to
the Closing Date;
(h) the responsibility for the disposition of and the liabilities and obligations
with respect to the Legal Proceedings relating to the Assets and filed prior to the Effective Time,
including those described on Schedule 6.5;
(i) subject to the DDA and Applicable ▇▇▇▇, Seller’s liabilities with respect
to any Operating Expenses related to Seller’s Working Interest in the Assets and accrued during
the period prior to the Effective Time;
(j) all Claims relating to any Taxes imposed on or with respect to Seller or
any of its Affiliates other than Taxes allocated to Buyer pursuant to Sections 12.3, 12.4 and 12.5;
and
(k) the Excluded Chesapeake Liabilities;
provided, however, nothing herein related to the definition of Retained Liabilities (or any
obligations of Seller related thereto (including Indemnity Obligations)) shall affect or restrict
Seller’s rights against Buyer under any prior agreement between Seller or its Affiliates, on the
one hand, and Buyer or its Affiliates, on the other hand, (including rights off contribution, offset
or indemnity).
“Seller” has the meaning set forth in the introductory paragraph.
“Seller Bonds” has the meaning set forth in Section 8.5.
“Seller Employees” has the meaning set forth in Section 10.5.
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“Seller Group” means Seller and its Affiliates, together with its and their
members, partners, officers, directors, managers agents, representatives, consultants and
employees.
“Shallow Depth Properties” means the Retained Depths, together with Seller’s
right, title and interest in any royalties, overriding royalties, net profits interests, carried interests,
or mineral fee interests to the extent attributable to the Retained Depths, and any Hydrocarbon
▇▇▇▇▇ producing from the Retained Depths and any other real or personal property associated
with the ownership and/or operation of any of the foregoing.
“Specified Representations and Warranties” means the representations and
warranties of Seller set forth in Sections 6.1, 6.2, 6.3, 6.4, 6.6 and 6.12.
“Surface Contracts” has the meaning set forth in Section 2.1(d).
“Suspense Funds” means those proceeds from the sale of Hydrocarbons
attributable to the Assets and payable to owners of working interests, royalties, overriding
royalties and other similar interests that are held by Seller in suspense as of the Closing Date
including royalty proceeds held in suspense.
“Tax” or “Taxes” means any taxes, assessments, fees and other governmental
charges imposed by any Taxing Authority, including without limitation income, profits, gross
receipts, net proceeds, alternative or add-on minimum, ad valorem, value added, turnover, sales,
use, property, personal property (tangible and intangible), environmental, stamp, leasing, lease,
user, excise, duty, franchise, capital stock, transfer, registration, license, withholding, social
security (or similar), unemployment, disability, payroll, employment, fuel, excess profits,
occupational, premium, windfall profit, severance, estimated, or other charge of any kind
whatsoever, including any interest, penalty, or addition thereto, and including any liability for
any of the foregoing items that arises by reason of transferee or successor liability.
“Tax Partnership” has the meaning set forth in Section 12.1.
“Tax Purposes” has the meaning set forth in Section 12.1.
“Tax Return” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or attachment thereto.
“Taxing Authority” means, with respect to any Tax, the governmental entity or
political subdivision thereof that imposes such Tax, and the agency (if any) charged with the
collection of such Tax for such entity or subdivision, including any governmental or quasi-
governmental entity or agency that imposes, or is charged with collecting, social security or
similar charges or premiums.
“Transfer Taxes” has the meaning set forth in Section 12.5.
“Treasury” means the United States Department of the Treasury.
“Units” has the meaning set forth in Section 2.1(b).
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“▇▇▇▇▇” has the meaning set forth in Section 2.1(a).
“Working Interest” means the percentage of costs and expenses associated with
the exploration, drilling, development, operation and abandonment of any Well required to be
borne with respect thereto as set forth on Exhibit A-2.
ARTICLE 2
SALE OF ASSETS/PURCHASE PRICE
2.1 Purchase and Sale of Assets. Subject to and in accordance with the terms and
conditions of this Agreement (including Section 8.7), Seller agrees to sell and assign to Buyer,
and Buyer agrees to purchase and acquire from Seller, all of Seller’s right, title and interest in
and to the following (such right, title and interest of Seller in and to the following (less and
except the Excluded Assets and the Excluded Working Interest), collectively, the “Assets”):
(a) all oil and gas leases, oil, gas and mineral leases, mineral servitudes,
subleases and other leaseholds, royalties, overriding royalties, net profits interests, carried
interests, mineral fee interests, farmout rights and operating and record title rights (as such terms
are commonly used by the BLM) that are described on Exhibit A-1 (in each case, subject to the
depth limitations set forth on Exhibit A-1), and including all other right, title and interest of
Seller in and to the lands covered by or described in the instruments described on Exhibit A-1
(subject to the depth limitations set forth on Exhibit A-1), whether or not such rights, titles and
interests are listed on Exhibit A-1 (collectively, the “Leases”); and any and all Hydrocarbon,
source water, CO2, (whether producing, inactive, temporarily or permanently abandoned, shut-in
or otherwise) on the Leases or Units, including, but not limited to, the interests in the ▇▇▇▇▇
described on Exhibit A-2 but provided the term “▇▇▇▇▇” does not include any disposal or
injection ▇▇▇▇▇ (whether producing, inactive, temporarily or permanently abandoned, shut-in or
otherwise) (the foregoing collectively, subject to the exclusions, the “▇▇▇▇▇”);
(b) all pooled, communitized or unitized acreage, whether voluntarily formed
or established by order of the Oklahoma Corporation Commission or under communitization
agreements with the Bureau of Indian Affairs, that includes all or part of any Leases or the
▇▇▇▇▇, including those formed pursuant to the pooling orders set forth on Exhibit A-3 (the
“Units”), and all tenements, hereditaments and appurtenances belonging to the Leases, ▇▇▇▇▇ and
Units but provided the term “Oil and Gas Properties” does not include any interest in disposal or
injection ▇▇▇▇▇ (the foregoing, subject to such exclusions, together with the Leases, ▇▇▇▇▇, and
Units, the “Oil and Gas Properties”);
(c) all contracts, agreements and instruments existing as of the Closing Date
to the extent by which the Oil and Gas Properties are bound or subject or that relate to or are
otherwise applicable with respect to the Oil and Gas Properties, including operating agreements,
unitization, pooling, and communitization agreements, declarations and orders, area of mutual
interest agreements, joint venture agreements, farm in and farm out agreements, exploration
agreements, participation agreements, marketing agreements (including those marketing
agreements set forth on Exhibit A-4), exchange agreements, transportation agreements, gathering
agreements, agreements for the sale and purchase of Hydrocarbons, processing and treating
agreements, including, to the extent applicable, the contracts, agreements and instruments listed
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on Schedule 6.8, but provided the term “Contracts” does not include (i) the Leases and the
Surface Contracts, (ii) any item listed on Schedule 6.8 that has expired or is otherwise of no
further force or effect as of the Effective Date with respect to the Oil and Gas Properties
notwithstanding its inclusion on Schedule 6.8, and (iii) any contract, agreement or instrument
that would otherwise fall within the definition of “Material Contract” but is not listed on
Schedule 6.8 unless such document is appurtenant to the Oil and Gas Properties and transfers
therewith as a matter of law (the foregoing, subject to such exclusions, the “Contracts”);
(d) to the extent assignable, all surface fee interests, easements, permits,
licenses, servitudes, rights-of-way, surface leases and other rights to use the surface appurtenant
to, and used or held for use in connection with, the Oil and Gas Properties, but provided the term
“Surface Contracts” does not include any interest in disposal or injection ▇▇▇▇▇ or equipment
related to such ▇▇▇▇▇ (the foregoing, subject to such exclusions, the “Surface Contracts”);
(e) to the extent assignable, all permits, water rights (including water
withdrawal, storage, discharge, treatment, injection and disposal rights), licenses, registrations,
consents, orders, approvals, variances, exemptions, waivers, franchises, rights and other
authorizations issued by any Governmental Authority that are primarily related to the use,
ownership or operation of any of the Oil and Gas Property or Equipment but provided the term
“Permits” does not include any interest in disposal or injection ▇▇▇▇▇ or equipment (the
foregoing collectively, subject to the exclusions, the “Permits”);
(f) all equipment, machinery, fixtures, facilities, gathering systems, pipelines,
flow lines, tank batteries, and materials, and other tangible personal property, fixtures and
improvements used or held for use in connection with the ownership or operation of the Oil and
Gas Properties or the Surface Contracts, together with any movables and immovables located on
the Oil and Gas Properties or the Surface Contracts but provided the term “Equipment” does not
include any equipment or infrastructure associated with disposal or injection ▇▇▇▇▇ (whether
producing, inactive, temporarily or permanently abandoned, shut-in or otherwise) (the foregoing
collectively, subject to such exclusions, the “Equipment”) ;
(g) all Hydrocarbons produced from or attributable to the Oil and Gas
Properties after the Effective Time; all oil, condensate and scrubber liquids inventories and
ethane, propane, iso-butane, nor-butane and gasoline inventories from the Oil and Gas Properties
in storage as of the Effective Time (including pipeline inventories and linefill); all Imbalances as
of the Effective Time, together with all proceeds of any thereof; and all make-up rights
attributable to the period of time from and after the Effective Time with respect to take-or-pay
arrangements;
(h) to the extent assignable, the data and records of Seller (including lease
files; land files; well files; gas and oil sales contract files; gas processing files; division order
files; abstracts; title opinions; land surveys; logs; maps; engineering data and reports; geological
and geophysical data and files; technical evaluations and technical outputs; and other books,
records, data, files and accounting records) to the extent relating to the Oil and Gas Properties or
the other Assets, excluding:
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(1) all corporate, financial, Tax and legal data and records of Seller
that relate to Seller’s business generally;
(2) any data and records to the extent disclosure or transfer is
prohibited, or subjected to payment of a fee or other consideration, by any license
agreement or other agreement with a Person other than Affiliates of Seller, or by
applicable Law, and for which no consent to transfer has been received or for
which Buyer has not agreed in writing to pay the fee or other consideration, as
applicable;
(3) all legal records and legal files of Seller, including, but not limited
to, all work product of, and attorney-client communications with, Seller’s legal
counsel (other than Leases, Surface Contracts, title opinions, Contracts and
Seller’s working files for any Claims included in the Assumed Liabilities);
(4) any data and records relating to the sale of the Assets, including
bids received from and records of negotiations with Non-Parties;
(5) any data and records constituting or relating solely to the Excluded
Assets;
(6) to the extent not assignable without the payment of fees or other
penalties to Persons other than Affiliates of Seller or the securing of a licensor’s
consent, unless Buyer has secured such consent in writing, all seismic, geological,
geochemical or geophysical data licensed by Seller and interpretations of such
data; and
(7) employee information, internal valuation data, business plans,
reserve reports, business studies, and transaction proposals pertaining to the sale
of the Assets and related correspondence.
(The data and records referred to in Clauses (1) through (7) shall hereinafter be referred to as the
“Excluded Records” and, subject to such exclusions, the data and records described in this
Section 2.1(h) shall be referred to as the “Records”);
(i) All (A) trade credits, accounts receivable, notes receivable, take-or-pay
amounts receivable, and other receivables and general intangibles, attributable to the Assets with
respect to periods of time from and after the Effective Time; (B) liens and security interests in
favor of Seller, whether ▇▇▇▇▇▇ or inchoate, under any Law or Contract to the extent arising from,
or relating to, the ownership, operation, or sale or other disposition on or after the Effective Time
of any of the Assets or to the extent arising in favor of Seller as the operator or non-operator of
any Oil and Gas Property; and (C) indemnity, contribution, and other such rights in favor of
Seller or its Affiliates, to the extent relating to obligations or liabilities assumed by Buyer
pursuant to this Agreement or otherwise borne or paid by Buyer or with respect to which Buyer
has an obligation to indemnify Seller;
(j) All rights of Seller to audit the records of any Person and to receive
refunds or payments of any nature, and all amounts of money relating thereto, whether before,
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on, or after the Effective Time, to the extent relating to the obligations assumed by Buyer
pursuant to this Agreement or with respect to which Buyer has an obligation to indemnify Seller;
and
(k) To the extent assignable, all franchises, licenses, permits, approvals,
consents, certificates and other authorizations, and other rights granted by third Persons, and all
certificates of convenience or necessity, immunities, privileges, grants, and other such rights that
relate to, or arise from, the Assets or the ownership or operation thereof.
The Assets shall not include the Excluded Assets or the Excluded Working Interest.
2.2 Purchase Price. The total purchase price, subject to adjustment in accordance
with the terms of this Agreement, to be paid to Seller by Buyer for the Assets is $18,000,000.00
(the “Base Purchase Price”). The Base Purchase Price shall be adjusted as set forth in Section
2.3 (as so adjusted, the “Adjusted Purchase Price”). The estimate set forth on Schedule 2.4
constitutes the Dollar amount to be paid by Buyer to Seller at Closing by wire transfer of
immediately available funds to an account designated by Seller (the “Closing Amount”).
2.3 Purchase Price Adjustments. The Base Purchase Price shall be adjusted, without
duplication, as follows:
(a) Upward by the sum of the following:
(i) an amount equal to the value of all oil, condensate and scrubber
liquids inventories and ethane, propane, iso-butane, nor-butane, and gasoline
inventories from the Assets in storage as of the Effective Time, with the value to
be based on $1.95 per MCF and $36.00 per Barrel, less amounts payable as
royalties, overriding royalties and other burdens upon, measured by or payable in
respect of such Hydrocarbons;
(ii) an amount equal to all Operating Expenses, paid by Seller that are
attributable to the Assets from and after the Effective Time, whether paid before
or after the Effective Time, including, without duplication of any other amounts
set forth in this Section 2.3(a);
(iii) without duplication of any other amounts set forth in this
Section 2.3(a), the amount of all Taxes, if any, allocated to Buyer pursuant to
Article 12 but paid by Seller;
(iv) an amount equal to the value of Imbalances attributable to the
Assets owing to Seller as of the Effective Time, with the value to be based on
$1.95 per MCF and $36.00 per Barrel; and
(v) except as expressly provided otherwise herein, any other amount
provided for elsewhere in this Agreement or otherwise agreed in writing by the
Parties.
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(b) Downward by the sum of the following:
(i) an amount equal to all proceeds received by Seller for the sale of
the Hydrocarbons produced from the Assets from and after the Effective Time
less amounts actually paid by Seller as royalties, overriding royalties and other
burdens measured by or payable out of such production, and less severance taxes
actually paid by Seller applicable to such production, except as otherwise
accounted for pursuant to Section 2.3(a)(i);
(ii) without duplication of any other amounts set forth in this Section
2.3(b), the amount of all Taxes, if any, allocated to Seller pursuant to pursuant to
Article 12 but paid by Buyer;
(iii) an amount equal to the value of Imbalances attributable to the
Assets owed by Seller as of the Effective Time, with the value to be based on
$1.95 per MCF and $36.00 per Barrel;
(iv) the sum of the mutually agreed upon value of the Assets subject to
a Hard Consent being retained by Seller pursuant to Sections 8.2; and
(v) except as expressly provided otherwise herein, any other amount
provided for elsewhere in this Agreement or otherwise agreed in writing by the
Parties.
(c) To the extent applicable, the Adjustments pursuant to this Section 2.3 shall
be determined in accordance with U.S. generally accepted accounting principles.
2.4 Preliminary Settlement Statement. A mutually agreed upon preliminary
settlement statement (the “Preliminary Settlement Statement”) is attached hereto as Schedule 2.4
and sets forth an estimate of the Adjustments and the Adjusted Purchase Price through and
including the Closing Date.
2.5 Final Settlement Statement. No later than 180 Days after the Closing Date, Seller
will deliver to Buyer a final settlement statement (the “Final Settlement Statement”) setting forth
the actual amounts of Adjustments and the resulting Adjusted Purchase Price, together with
associated back-up documentation. As soon as reasonably practicable, but in no event later than
30 Days after Buyer receives the Final Settlement Statement, Buyer may deliver to Seller a
written report containing any changes that Buyer proposes to be made to such statement. If
Buyer fails to timely deliver the written report to Seller containing changes Buyer proposes to be
made to the Final Settlement Statement, the statement as delivered by Seller will be deemed to
be correct and will be final and binding on the Parties and not subject to further audit or
arbitration. As soon as reasonably practicable, but in no event later than 15 Days after Seller
receives Buyer’s written report, the Parties shall meet and undertake to agree on the final
adjustments to the Final Settlement Statement. If the Parties fail to agree on the final
adjustments within such 15-Day period, either Party may submit the disputed items to the
Accounting Referee for resolution. The Parties shall direct the Accounting Referee to resolve the
disputes within 20 Days after having the relevant materials submitted for review. The decision
of the Accounting Referee will be binding on and non-appealable by the Parties. The fees and
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expenses associated with the Accounting Referee will be borne equally by the Parties. Any
amounts owed by one Party to the other as a result of the Final Settlement Statement, together
with interest on such amount from (and including) the Closing Date to (and excluding) the date
of payment at the Prime Rate, will be paid within five Business Days after the date when the
amounts are agreed upon by the Parties or the Parties receive a decision of the Accounting
Referee, and the Adjustments included in the Final Settlement Statement will be final and
binding between the Parties and not subject to further audit or arbitration.
2.6 Purchase Price Allocation. Seller and Buyer agree that the Base Purchase Price
and any liabilities assumed by Buyer under this Agreement (to the extent properly taken into
account under the Code) shall be allocated among the Assets in a manner consistent with Section
743, 754 and 755 of the Code and the Treasury Regulations thereunder.
2.7 Suspense Funds. Seller shall retain the Suspense Funds and shall remain
responsible for administering the Suspense Funds in accordance with all applicable Laws, rules
and regulations and shall be liable for the payment thereof to the proper parties, and such
obligations shall be deemed part of the Retained Liabilities.
2.8 Assumed Liabilities. Upon Closing, subject to the provisions of Section 8.7,
Buyer assumes and hereby agrees to fulfill, perform, be bound by, pay and discharge (or cause to
be fulfilled, performed, paid or discharged) all obligations and liabilities of any kind whatsoever
of Seller arising from or relating to the Assets, or the use and/or ownership thereof, that are
attributable to periods before, on or after the Effective Time, including obligations to (a) furnish
makeup gas and/or settle Imbalances according to the terms of applicable gas sales, processing,
gathering or transportation Contracts included in the Assets, (b) pay working interests, royalties,
overriding royalties and other interests, owners’ revenues or proceeds attributable to sales of
Hydrocarbons, including those held in suspense (excluding the Suspense Funds) to the extent
attributable to the Assets, (c) properly plug and abandon any and all ▇▇▇▇▇ and pipelines,
including future ▇▇▇▇▇, inactive ▇▇▇▇▇ or temporarily abandoned ▇▇▇▇▇, drilled on the Assets, (d)
to re-plug any well, wellbore or previously plugged Well on the Assets to the extent required or
necessary under applicable Laws or under Contracts or Surface Contracts, (e) dismantle or
decommission and remove any Equipment and other property of whatever kind located on the
Assets related to or associated with activities conducted by whomever on the Assets, (f) clean up
and/or remediate the Assets in accordance with any Contracts, Surface Contracts and applicable
Laws, including all Environmental Laws, and (g) perform all obligations applicable to or
imposed on the lessee or owner under the Leases, Permits, Surface Contracts and/or the
Contracts, or as required by Law (the “Assumed Liabilities”); provided, Buyer does not assume
(and Assumed Liabilities shall not include): (i) the Retained Liabilities, (ii) any obligations or
liabilities of Seller to the extent that they are attributable to or arise out of the ownership, use or
operation of the Excluded Assets, (iii) any other Claims for which Seller is required to indemnify
Buyer pursuant to Article 4; and (iv) any Environmental Liabilities arising during, related to or
otherwise attributable to the period prior to the Closing Date.
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2.9 Disputed Well Interests. The Parties acknowledge and agree that Chesapeake
Exploration, L.L.C. has questioned its working interest ownership in certain ▇▇▇▇▇ located in the
▇▇▇▇▇▇▇ and Larissa Units in Sections 26 and 27, T7N, R17E, Pittsburgh County, OK (the
“Disputed Well Interests”). The Parties further acknowledge and agree (a) that the current
circumstances surrounding the Disputed Well Interests shall not constitute a breach of any of the
representations or warranties of Seller herein and (b) that Buyer and Seller hereby reserve all
rights, obligations and liabilities each Party may have with respect to any Claims which may be
brought by Chesapeake Exploration, L.L.C. in connection with the Disputed Well Interests. All
rights, obligations and liabilities arising from or related to the Disputed Well Interests to the
extent (and only to the extent) arising from Seller’s undivided interest in the ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ Units (or any Leases or ▇▇▇▇▇ related thereto) as of the period immediately prior to the
Execution Date (the “Excluded Chesapeake Liabilities”) shall be excluded from the Assumed
Liabilities; provided that, for the avoidance of doubt, the Excluded Chesapeake Liabilities do not
include any rights, obligations or liabilities arising from or related to the Disputed Well Interests
to the extent arising from Buyer’s existing undivided interest in the ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Units
(or any Leases or ▇▇▇▇▇ related thereto) as of the period immediately prior to the Execution Date.
ARTICLE 3
[INTENTIONALLY OMITTED]
ARTICLE 4
ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES
4.1 Opportunity for Review. Each Party represents that it has had an adequate
opportunity to review the release and indemnity provisions in this Agreement, including the
opportunity to submit the same to legal counsel for review and comment. Based upon the
foregoing representation, the Parties agree to the provisions set forth below.
4.2 Seller’s Indemnity Obligation [***]
4.3 Buyer’s Indemnity Obligation. [***]
4.4 Threshold, Aggregate Threshold, Cap. [***]
4.5 Tax Treatment. The Parties shall treat, for Tax purposes, any amounts paid under
this Article 4 as an adjustment to the Adjusted Purchase Price.
4.6 Notice of Claims. If a Claim is asserted against a Person for which a Party may
have Indemnity Obligations under this Agreement (an “Indemnity Claim”), the indemnified
Person shall give the indemnifying Party written notice of the underlying Claim setting forth the
particulars associated with the underlying Claim (including a copy of the written underlying
Claim, if any) as then known by the indemnified Person (“Indemnity Claim Notice”). The
indemnified Person shall, to the extent practicable, give an Indemnity Claim Notice within such
time as will allow the indemnifying Party a reasonable period in which to evaluate and timely
respond to the underlying Claim; provided failure to do so shall not affect an indemnified
Person’s rights hereunder except for, and only to the extent of, any incremental increase in the
cost of the Indemnity Claim resulting from the failure to give notice.
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4.7 Defense of Non-Party Claims. Upon receipt of an Indemnity Claim Notice
involving a Non-Party for which an indemnifying Party believes it may have an obligation of
indemnity under this Agreement, the indemnifying Party shall, if it so elects in accordance with
this Section 4.7 (without prejudice to its right to contest its obligation of indemnity under this
Agreement), assume the defense of the Non-Party Claim with counsel selected by the
indemnifying Party, and the indemnified Person shall cooperate in all reasonable respects. If any
Non-Party Claim involves a fact pattern wherein each Party may have an obligation to indemnify
the other Party, each Party may assume the defense of and hire counsel for that portion of the
Non-Party Claim for which it may have an obligation of indemnity. In all instances, the
indemnified Person may employ separate counsel and participate in the defense of any Non-
Party Claim; provided, if the indemnifying Party has assumed the defense of a Non-Party Claim
pursuant to this Section 4.7 and has agreed to indemnify the indemnified Person, the fees and
expenses of counsel employed by the indemnified Person shall be borne solely by the
indemnified Person. If the indemnifying Party elects by written notice to undertake the defense
of the Non-Party Claim within 30 Days after receipt of the Indemnity Claim Notice, then (i) the
indemnifying Party shall defend the indemnified Person against such Non-Party Claim, (ii) the
indemnifying Party shall pay any judgment entered or settlement with respect to such Non-Party
Claim, (iii) the indemnifying Party shall not consent to the entry of any judgment or enter into
any settlement with respect to such Non-Party Claim that (A) does not include a provision
whereby the plaintiff or claimant in the matter releases the indemnified Person from all liability
with respect to such Non-Party Claim, or (B) would restrict such indemnified Person’s ability to
conduct its business in the ordinary course, and (iv) the indemnified Person shall not consent to
the entry of any judgment or enter into any settlement with respect to such Non-Party Claim
without the indemnifying Party’s prior written consent. If the indemnifying Party has not elected
to undertake the defense of a Non-Party Claim, or if the indemnifying Party assumes the defense
of a Non-Party Claim pursuant to this Section 4.7 but fails to diligently defend against the Non-
Party Claim within 30 Days following any written notice from such indemnified Person asserting
such failure, then the indemnified Person shall have the right to defend, at the sole cost and
expense of the indemnifying Party (to the extent the indemnified Person is entitled to
indemnification hereunder), the Non-Party Claim by all appropriate proceedings. In such
instances, the indemnified Person shall have full control of such defense and proceedings;
provided, the indemnified Person shall not settle such Non-Party Claim without the written
consent of the indemnifying Party; provided further, if the indemnifying Party fails to notify the
indemnified Person in writing as to whether or not it consents to such settlement within 30 Days
following its receipt of notice of such settlement from the indemnified Person, then such consent
shall be deemed given. The indemnifying Party may participate in, but not control, any defense
or settlement controlled by an indemnified Person pursuant to this Section 4.7, and the
indemnifying Party shall bear its own costs and expenses with respect to such participation.
Notwithstanding the other provisions of this Section 4.7, if the indemnifying Party disputes its
potential liability to the indemnified Person under this Section 4.7 and if such dispute is resolved
in favor of the indemnifying Party, the indemnifying Party shall not be required to bear the costs
and expenses of the indemnified Person’s defense pursuant to this Section 4.7.
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4.8 Investigation and Knowledge. Buyer acknowledges that it has had the
opportunity to conduct due diligence and investigation with respect to the Assets, and in no event
shall Seller have any liability to Buyer with respect to any breach of Seller’s representations,
warranties or covenants under this Agreement to the extent Buyer had Knowledge of such breach
as of the Closing Date.
4.9 Waiver of Certain Damages. EACH OF THE PARTIES EXPRESSLY
WAIVES AND RELEASES, AND SHALL CAUSE ITS AFFILIATES TO WAIVE AND
RELEASE, SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE, REMOTE,
SPECULATIVE AND EXEMPLARY DAMAGES, INCLUDING DAMAGES FOR LOST
PROFITS OF ANY KIND WITH RESPECT TO ANY DISPUTE ARISING UNDER,
RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
AGREEMENT, CONTRACT OR INSTRUMENT CONTEMPLATED HEREIN OR IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT,
IN EACH CASE, TO THE EXTENT ANY SUCH PARTY SUFFERS SUCH DAMAGES
(INCLUDING COSTS OF DEFENSE AND REASONABLE ATTORNEY’S FEES
INCURRED IN CONNECTION WITH DEFENDING OF SUCH DAMAGES) TO A
THIRD PARTY, WHICH DAMAGES (INCLUDING COSTS OF DEFENSE AND
REASONABLE ATTORNEY’S FEES INCURRED IN CONNECTION WITH
DEFENDING AGAINST SUCH DAMAGES) SHALL NOT BE EXCLUDED BY THIS
PROVISION AS TO RECOVERY HEREUNDER.
4.10 Extent of Indemnification. WITHOUT LIMITING THE SCOPE OF THE
INDEMNIFICATION, DISCLAIMER, RELEASE AND ASSUMPTION OBLIGATIONS
SET FORTH IN THIS AGREEMENT, TO THE FULLEST EXTENT PERMITTED BY
LAW, AN INDEMNIFIED PERSON SHALL BE ENTITLED TO INDEMNIFICATION
HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF
WHETHER THE CLAIM OR INDEMNIFIABLE LOSS GIVING RISE TO ANY SUCH
INDEMNITY OBLIGATION IS THE RESULT OF THE SOLE, PARTIAL, ACTIVE,
PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, GROSS
NEGLIGENCE, STRICT LIABILITY, OTHER LEGAL FAULT OR RESPONSIBILITY,
OR VIOLATION OF ANY LAW OF OR BY ANY SUCH INDEMNIFIED PERSON.
4.11 Survival. [***]
4.12 Environmental Liabilities. [***]
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ARTICLE 5
DISCLAIMERS
BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN ARTICLE 6 AND IN THE SPECIAL WARRANTY SET
FORTH IN THE ASSIGNMENT, NEITHER SELLER NOR ANY AFFILIATE OF
SELLER MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS,
STATUTORY, IMPLIED OR OTHERWISE WITH RESPECT TO THE ASSETS.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ARTICLE 6 AND IN THE
SPECIAL WARRANTY SET FORTH IN THE ASSIGNMENT, SELLER, FOR ITSELF
AND ITS AFFILIATES, HEREBY EXPRESSLY DISCLAIMS AND NEGATES ANY AND
ALL REPRESENTATIONS AND WARRANTIES, EXPRESS, STATUTORY, IMPLIED
OR OTHERWISE, AND PROJECTIONS, FORECASTS, STATEMENTS OR
INFORMATION MADE, COMMUNICATED OR FURNISHED (ORALLY OR IN
WRITING) TO BUYER OR ANY OF ITS AFFILIATES OR REPRESENTATIVES,
ASSOCIATED WITH THE ASSETS.
EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY REPRESENTED
OTHERWISE IN ARTICLE 6 AND IN THE SPECIAL WARRANTY SET FORTH IN
THE ASSIGNMENT, AND WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR
WARRANTY, EXPRESS, STATUTORY OR IMPLIED, AS TO (a) TITLE TO ANY OF
THE ASSETS, (b) THE CONTENTS, CHARACTER OR NATURE OF ANY REPORT OF
ANY PETROLEUM ENGINEERING CONSULTANT OR ANY ENGINEERING,
GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO THE
ASSETS, (c) THE QUANTITY, QUALITY OR RECOVERABILITY OF
HYDROCARBONS IN OR FROM THE ASSETS, (d) ANY ESTIMATES OF THE VALUE
OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (e) THE
PRODUCTION OF HYDROCARBONS FROM THE ASSETS, (f) THE MAINTENANCE,
REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF
THE ASSETS, (g) THE CONTENT, CHARACTER OR NATURE OF ANY
INFORMATION MEMORANDUM, REPORTS, BROCHURES, CHARTS OR
STATEMENTS PREPARED BY SELLERS OR THIRD PARTIES WITH RESPECT TO
THE ASSETS, (h) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE
BEEN MADE AVAILABLE TO BUYER OR ITS AFFILIATES OR ITS OR THEIR
EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO
AND (i) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT
OR TRADEMARK INFRINGEMENT. EXCEPT AS AND TO THE LIMITED EXTENT
EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE 6 OR THE ASSIGNMENT,
SELLER FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY,
EXPRESS, STATUTORY OR IMPLIED, OF MERCHANTABILITY, FREEDOM FROM
LATENT VICES OR DEFECTS, FITNESS FOR A PARTICULAR PURPOSE OR
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY OF THE
ASSETS, RIGHTS OF A PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM
DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE PRICE, IT
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BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES THAT BUYER
SHALL BE DEEMED TO BE OBTAINING THE ASSETS IN THEIR PRESENT STATUS,
CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL
FAULTS OR DEFECTS (KNOWN OR UNKNOWN, LATENT, DISCOVERABLE OR
UNDISCOVERABLE), AND THAT BUYER HAS MADE OR CAUSED TO BE MADE
SUCH INSPECTIONS OF THE ASSETS AS BUYER DEEMS APPROPRIATE.
OTHER THAN AS AND TO THE LIMITED EXTENT EXPRESSLY
REPRESENTED OTHERWISE IN SECTION 6.14, SELLER HAS NOT AND WILL NOT
MAKE ANY REPRESENTATION OR WARRANTY REGARDING ANY MATTER OR
CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, THE RELEASE OF
HAZARDOUS SUBSTANCES INTO THE ENVIRONMENT OR THE PROTECTION OF
HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT, OR
ANY OTHER ENVIRONMENTAL CONDITION OF THE ASSETS, AND NOTHING IN
THIS AGREEMENT OR OTHERWISE SHALL BE CONSTRUED AS SUCH A
REPRESENTATION OR WARRANTY, AND SUBJECT TO BUYER’S LIMITED
RIGHTS AS EXPRESSLY SPECIFIED IN THIS AGREEMENT FOR A BREACH OF
SELLER’S REPRESENTATIONS SET FORTH IN SECTION 6.14, BUYER SHALL BE
DEEMED TO BE OBTAINING THE ASSETS “AS IS” AND “WHERE IS” WITH ALL
FAULTS FOR PURPOSES OF THEIR ENVIRONMENTAL CONDITION AND THAT
BUYER HAS MADE OR CAUSED TO BE MADE SUCH ENVIRONMENTAL
INSPECTIONS OF THE ASSETS AS BUYER DEEMS APPROPRIATE.
BUYER ACKNOWLEDGES THAT THE ASSETS HAVE BEEN USED FOR
EXPLORATION, DEVELOPMENT, PRODUCTION, GATHERING AND
TRANSPORTATION OF OIL AND GAS AND THERE MAY BE PETROLEUM,
PRODUCED WATER, WASTES OR OTHER SUBSTANCES OR MATERIALS
LOCATED IN, ON OR UNDER THE ASSETS OR ASSOCIATED WITH THE ASSETS.
EQUIPMENT AND SITES INCLUDED IN THE ASSETS MAY CONTAIN ASBESTOS,
NORM OR OTHER HAZARDOUS SUBSTANCES. NORM MAY AFFIX OR ATTACH
ITSELF TO THE INSIDE OF ▇▇▇▇▇, PIPELINES, MATERIALS AND EQUIPMENT
AS SCALE, OR IN OTHER FORMS. THE ▇▇▇▇▇, MATERIALS AND EQUIPMENT
LOCATED ON THE ASSETS OR INCLUDED IN THE ASSETS MAY CONTAIN NORM
AND OTHER WASTES OR HAZARDOUS SUBSTANCES. NORM CONTAINING
MATERIAL AND/OR OTHER WASTES OR HAZARDOUS SUBSTANCES MAY HAVE
COME IN CONTACT WITH VARIOUS ENVIRONMENTAL MEDIA, INCLUDING,
WATER, SOILS OR SEDIMENT. SPECIAL PROCEDURES MAY BE REQUIRED FOR
THE ASSESSMENT, REMEDIATION, REMOVAL, TRANSPORTATION OR DISPOSAL
OF ENVIRONMENTAL MEDIA, WASTES, ASBESTOS, NORM AND OTHER
HAZARDOUS SUBSTANCES FROM THE ASSETS. FOR THE AVOIDANCE OF
DOUBT, NORM SHALL NOT CONSTITUTE THE BASIS OF A BREACH OF
SELLER’S REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 6.14.
ARTICLE 6
SELLER’S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer the following:
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6.1 Organization and Good Standing.
(a) Seller is a limited liability company organized, validly existing and in
good standing under the Laws of the State of Louisiana and has all requisite power and authority
to own and/or dispose of the Assets.
6.2 Authority; Authorization of Agreement. Seller has all requisite power and
authority to execute and deliver this Agreement and the Operative Documents to which it is a
party, to consummate the transactions contemplated by this Agreement and the Operative
Documents to which it is a party and to perform all of its obligations under this Agreement and
the Operative Documents to which it is a party. This Agreement constitutes, and the Operative
Documents to which it is a party, when executed and delivered by Seller, shall constitute, the
valid and binding obligations of Seller, enforceable against it in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency or other Laws
relating to or affecting the enforcement of creditors’ rights and general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law or in equity).
6.3 No Violations. Except for (i) Customary Post-Closing Consents and (ii) any
consents or approvals listed on Schedule 6.3, Seller’s execution and delivery of this Agreement
and the Operative Documents to which it is a party and the consummation of the transactions
contemplated by this Agreement by it shall not:
(a) conflict with any of the terms, conditions or provisions of the
organizational documents of Seller;
(b) violate any material provision of, or require any material filing, consent or
approval under, any Laws applicable to Seller;
(c) conflict with, result in a breach of, constitute a default under or constitute
an event that with notice or lapse of time, or both, would constitute a default under, accelerate or
permit the acceleration of the performance required by, or require any consent, authorization or
approval under any Material Contract or financing instrument; or
(d) result in the creation or imposition of any lien or encumbrance upon one
or more of the Assets, except for the Permitted Encumbrances.
6.4 Liability for Brokers’ Fees. Seller has not incurred any liability, contingent or
otherwise, for investment bankers’, brokers’ or finders’ fees relating to the transactions
contemplated by this Agreement for which Buyer or any Affiliate of Buyer shall, directly or
indirectly, have any responsibility whatsoever.
6.5 Legal Proceedings. Schedule 6.5 sets forth all Legal Proceedings pending or, to
Seller’s Knowledge, threatened in writing, against Seller in respect of any of the Assets.
6.6 Bankruptcy. There are no bankruptcy, reorganization or receivership proceedings
pending, being contemplated by or, to Seller’s Knowledge, threatened against Seller.
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6.7 Taxes. [***]
6.8 Material Contracts.
[***]
6.9 [***]
6.10 Preferential Rights. Except as set forth on Schedule 6.10, there are no
preferential rights to purchase that are applicable to the transaction contemplated hereby (each, a
“Preferential Right”).
6.11 Consents. Except as set forth on Schedule 6.3, there are no third party consent
requirements that are applicable to the transaction contemplated hereby.
6.12 [***]
6.13 Current Commitments. Schedule 6.13 sets forth as of the Execution Date all
authorities for expenditures in excess of $50,000 (“AFE’s”) (net to the interest of Seller) relating
to the Oil and Gas Properties to drill or rework ▇▇▇▇▇ or for other capital expenditures pursuant to
any of the Material Contracts for which all of the activities anticipated in such AFE’s or
commitments have not been completed as of the Execution Date.
6.14 [***]
6.15 Production Imbalances. Schedule 6.15 sets forth all Imbalances with respect to
Oil and Gas Properties.
6.16 [***]
6.17 [***]
6.18 [***]
6.19 Liens. Except for Permitted Encumbrances, the Assets shall be conveyed to
Buyer at the Closing free and clear of all liens and encumbrances by, through or under Seller.
6.20 [Intentionally Omitted].
6.21 [***]
6.22 [***]
6.23 [***]
6.24 [***]
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ARTICLE 7
BUYER’S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller the following:
7.1 Organization and Good Standing. Buyer is a limited liability company duly
organized, validly existing and in good standing under the Laws of the State of Delaware and has
all requisite power and authority to own the Assets.
7.2 Authority; Authorization of Agreement. Buyer has all requisite power and
authority to execute and deliver this Agreement and the Operative Documents to which it is a
party, to consummate the transactions contemplated by this Agreement and the Operative
Documents to which it is a party and to perform all of its obligations under this Agreement and
the Operative Documents to which it is a party. This Agreement constitutes, and the Operative
Documents to which it is a party, when executed and delivered by Buyer, shall constitute, the
valid and binding obligation of Buyer, enforceable against it in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency or other Laws relating to
or affecting the enforcement of creditors’ rights and general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
7.3 No Violations. No consent is required to be obtained with respect to the
consummation of the transactions contemplated by this Agreement by Buyer. Buyer’s execution
and delivery of this Agreement and the Operative Documents, to which it is a party and the
consummation of the transactions contemplated by this Agreement by it shall not:
(a) conflict with or require the consent of any Person under any of the terms,
conditions or provisions of the organizational documents of Buyer;
(b) violate any provision of, or require any filing, consent or approval under
any Laws applicable to Buyer; or
(c) conflict with, result in a breach of, constitute a default under or constitute
an event that with notice or lapse of time, or both, would constitute a default under, accelerate or
permit the acceleration of the performance required by, or require any consent, authorization or
approval under: (i) any material agreement or any mortgage, indenture, loan, credit agreement or
other agreement evidencing indebtedness for borrowed money to which Buyer is a party or by
which Buyer is bound, except (in each case) where such conflict, breach or default would not
materially affect Buyer’s ability to consummate the transactions contemplated hereby or (ii) any
order, judgment or decree of any Governmental Authority.
7.4 Liability for Brokers’ Fees. Buyer has not incurred any liability, contingent or
otherwise, for investment bankers’, brokers’ or finders’ fees relating to the transactions
contemplated by this Agreement for which Seller or any Affiliate of Seller shall, directly or
indirectly, have any responsibility whatsoever.
7.5 Claims, Disputes and Litigation. There are no Legal Proceedings pending or, to
Buyer’s Knowledge, threatened in writing against Buyer, that would prevent the consummation
of the transactions contemplated by this Agreement.
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7.6 Bankruptcy. There are no bankruptcy, reorganization or receivership proceedings
pending, being contemplated by or, to Buyer’s Knowledge, threatened against Buyer.
7.7 Financing; Resources and Other Capabilities. Buyer has sufficient funds with
which to pay the Adjusted Purchase Price and consummate the transactions contemplated by this
Agreement. Buyer has the financial, technical and other capabilities to perform all of Buyer’s
other obligations under this Agreement and all of the obligations assumed from Seller with
respect to the Assets.
7.8 Independent Evaluation. Buyer is sophisticated in the evaluation, purchase,
ownership and operation of oil and gas properties and related facilities. In making its decision to
enter into this Agreement and to consummate the transactions contemplated hereby, Buyer has
(a) relied on the representations and warranties of Sellers set forth in Article 6 and in the other
Operative Documents and (b) relied on its own independent investigation and evaluation of the
Assets and the advice of its own legal, Tax, economic, environmental, engineering, geological
and geophysical advisors and not on any comments, statements, projections or other material
made or given by any representative, consultant or advisor of any Seller. Buyer acknowledges
and affirms that on or prior to Closing, Buyer will have completed its independent investigation,
verification, analysis, and evaluation of the Assets and made all such reviews and inspections of
the Assets as it has deemed necessary or appropriate to consummate the transaction contemplated
hereunder; provided, however, no such investigation, verification, analysis or evaluation (or
absence thereof) shall reduce, modify, release or waive any of Seller’s obligations or liabilities
hereunder or under any of the other Operative Documents.
7.9 Accredited Investor. Buyer is an “accredited investor,” as such term is defined in
Regulation D of the Securities Act of 1933, as amended, and will acquire the Assets for its own
account and not with a view to a sale or distribution thereof in violation of the Securities Act of
1933, as amended, and the rules and regulations thereunder, any applicable state blue sky Laws
or any other applicable securities Laws.
ARTICLE 8
COVENANTS
8.1 Release of Liens. Concurrent with the Closing, Seller shall procure and deliver to
Buyer a release or releases, in recordable form, executed by the applicable Person of those liens
and security interests encumbering any of the Assets, including those set forth on Schedule 8.1,
and secure any debt facilities maintained by Seller or any Affiliate.
8.2 Consents.
(a) Following Closing, Seller shall send to each holder of a right to consent to
assignment pertaining to the Assets and the transactions contemplated hereby set forth on
Schedule 6.3, a notice seeking such holder’s consent to the transactions contemplated hereby.
Seller shall use commercially reasonable efforts to procure the consents set forth on Schedule
6.3, and Buyer shall reasonably cooperate with Seller in seeking to obtain such consents, but, in
each case, without being obligated to pay any consideration or waive or release any right or
privilege to obtain such consent.
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(b) For each consent to assignment set forth on Schedule 6.3, the failure to
obtain such consent would cause or give rise to a Non-Party having a right to cause (i) the
assignment of the Asset(s) affected thereby to Buyer to be void or voidable, (ii) the termination
of a Lease or Surface Contract, or the right of the counterparty thereunder to terminate a Lease or
Surface Contract as a result of such assignment, under the express terms thereof, or (iii) impose
additional conditions on the proposed assignee that involve the payment of money, the posting of
collateral security or the performance of other obligations by the assignee that would not be
required in the absence of Seller’s assignment of the affected Asset (each, a “Hard Consent”), the
affected Asset(s) shall be excluded from the Assets to be acquired by Buyer at Closing hereunder
and the Purchase Price shall be reduced by the sum of the mutually agreed upon value of the
Asset(s) so excluded. In the event that a Hard Consent (with respect to any applicable Asset(s)
excluded pursuant to this Section 8.2) that was not obtained prior to Closing is obtained within
180 days following Closing, then, Buyer shall purchase, within 10 days after such Hard Consent
is obtained, such Asset(s) so excluded by Seller under the terms of this Agreement for the
amount by which the Purchase Price was reduced at Closing due to the exclusion of such
Asset(s) (as such amount is appropriately adjusted in accordance to Section 2.3 with respect to
such Asset(s)), and Seller shall assign to Buyer such Asset(s) pursuant to an assignment in form
substantially similar to the Assignment. Any portion of the Assets which are excluded from
Closing and retained by Seller pursuant to the terms of this Section 8.2 shall be deemed to be
Excluded Assets for all purposes under this Agreement unless and until such Assets are assigned
to Buyer in accordance with the terms hereof.
(c) For all Customary Post-Closing Consents and all consents to assignment
set forth in Schedule 6.3, other than Hard Consents, for which Seller is unable to obtain consent
from the applicable holders of such consents, (i) the Asset(s) subject to such un-obtained
consents shall be acquired by Buyer at Closing as part of the Assets and (ii) Seller shall defend
and indemnify the Buyer Group from any and all Claims arising from the failure to obtain such
consent, but, in each case, only up to the sum of the mutually agreed upon value of the affected
Asset; provided that, for the avoidance of doubt, the defense and indemnity obligations set forth
in this Section 8.2, if applicable, shall not be subject to the limitations set forth in Section 4.4.
8.3 Approvals of Governmental Authorities.
(a) Seller and Buyer shall use their commercially reasonable efforts to take or
cause to be taken all appropriate action, and to do, or cause to be done, all things necessary or
reasonably advisable under applicable Laws to consummate and make effective the transactions
contemplated by this Agreement, including using their commercially reasonable efforts to obtain,
or cause to be obtained, all waivers, permits, consents, approvals, authorizations, qualifications
and orders of all Governmental Authorities and officials and parties to contracts with the Parties
that may be or become necessary for the performance of obligations pursuant to this Agreement
and the consummation of the transactions contemplated by this Agreement and all Parties hereto
will cooperate fully with the other Parties hereto in promptly seeking to obtain all such waivers,
permits, consents, approvals, authorizations, qualifications and orders.
(b) The Parties hereto shall cooperate and assist one another in connection with all
actions to be taken pursuant to Section 8.3(a), including the preparation and making of the filings
referred to therein and, if requested, amending or furnishing additional information hereunder.
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Each Party shall use its commercially reasonable efforts to provide or cause to be provided
promptly to the other Party all necessary information and assistance as any Governmental
Authority may from time to time require in connection with obtaining the relevant waivers,
permits, consents, approvals, authorizations, qualifications, orders or expiration of waiting
periods in relation to these filings or in connection with any other review or investigation of the
transactions contemplated by this Agreement by a Governmental Authority. Each Party shall
permit the other Party to review and discuss in advance, and shall consider in good faith the
views of the other Party in connection with, any analyses, presentations, memoranda, briefs,
written arguments, opinions, written proposals or other materials to be submitted to the
Governmental Authorities with respect to such filings. In addition, neither Party shall agree to
participate in any substantive meeting or discussion with any Governmental Authority in respect
of any filing, review, investigation or other inquiry concerning this Agreement or the transactions
contemplated by this Agreement, or enter into any agreements with any Governmental Authority,
including, without limitation, extending any antitrust waiting periods, unless it consults with the
other Party in advance and, to the extent permitted by such Governmental Authority, gives the
other Party the opportunity to attend and participate thereat. Each Party shall keep the other
apprised of the material content and status of any material communications with, and material
communications from, any Governmental Authority with respect to the transactions
contemplated by this Agreement. The Parties shall, and shall cause their respective Affiliates to
use their commercially reasonable efforts to, provide each other with copies of all material,
substantive correspondence, filings or communications between them or any of their respective
representatives, on the one hand, and any Governmental Authority or members of its staff, on the
other hand, with respect to this Agreement and the transactions contemplated by this Agreement;
provided, however, that materials may be redacted (i) to remove references concerning the
valuation of the Assets; (ii) as necessary to comply with contractual arrangements or applicable
Laws; and (iii) as necessary to address reasonable attorney-client or other privilege or
confidentiality concerns.
(c) Notwithstanding the foregoing, nothing contained in this Agreement shall be
construed so as to require Buyer or Seller, or any of their respective Affiliates, without its written
consent, to sell, license, dispose of, hold separate or operate in any specified manner any assets
or businesses of Buyer or Seller (or to require Buyer or Seller or any of their respective Affiliates
to agree to any of the foregoing).
8.4 Efforts. Each Party shall use commercially reasonable efforts to take all actions
and to do all things necessary to consummate, make effective and comply with all of the terms of
this Agreement. Without limiting the generality of the foregoing, from time to time after
Closing, Seller and Buyer shall each execute, acknowledge and deliver to the other such further
instruments as may be reasonably requested by the other Party, at such requesting Party’s cost,
and as are commercially reasonable to be performed in order to accomplish more effectively the
purposes of the transactions contemplated by this Agreement, including those post-Closing
actions contemplated by Section 8.2. Promptly after Closing, Buyer shall: (a) record the
Assignment and all state and federal assignments executed at the Closing in all applicable real
property records and/or, if applicable, all state and federal Governmental Authorities and Buyer
shall provide to Seller copies of such recorded documents; (b) actively pursue the approval of all
Customary Post-Closing Consents from the applicable Governmental Authorities; and (c) except
as otherwise provided for herein, actively pursue all other consents and approvals that may be
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required in connection with the assignment of the Assets to Buyer and the assumption of the
rights, interests, obligations and liabilities assumed by Buyer hereunder that have not been
obtained prior to Closing, provided that Seller shall reasonably cooperate with Buyer in
obtaining such other consents and approvals. Promptly after Closing, Seller shall deliver all
notices that are required to be delivered in connection with the assignment of the Assets to Buyer
and the assumption of the rights, interests, obligations and liabilities assumed by Buyer
hereunder.
8.5 Governmental Bonds. Buyer acknowledges that none of the bonds, letters of
credit and guarantees, if any, posted by any Seller or its Affiliates with Governmental Authorities
and relating to the Assets (collectively, the “Seller Bonds”) are transferable to Buyer. For so long
as Seller remains as operator under the Applicable ▇▇▇▇, Seller shall use commercially
reasonable efforts to retain and continue to maintain the Seller Bonds after Closing, at Buyer’s
sole cost, to the extent necessary to operate the Assets. On or before 30 days following Seller’s
resignation or termination as operator under the Applicable ▇▇▇▇, Buyer, at its sole cost, shall
obtain replacement bonds, letters of credit and guarantees, including those described on Schedule
8.5, to the extent such replacements are necessary for Buyer’s ownership and/or operation of the
Assets. Following Seller’s resignation or removal as operator under the Applicable ▇▇▇▇, Buyer
and Seller shall cooperate and use commercially reasonable efforts to cause the cancellation of
the Seller Bonds; provided that any costs required for the cancellation of the Seller Bonds shall
be borne solely by Seller. In addition, promptly following Seller’s resignation or removal as
operator under the Applicable ▇▇▇▇, Buyer shall, to the extent applicable, deliver to Seller
evidence of the posting of bonds or other security with all applicable Governmental Authorities
meeting the requirements of such authorities to own and, where appropriate, operate, the Assets.
8.6 Records in Seller’s Possession. For so long as Seller remains operator under the
Applicable ▇▇▇▇, Seller shall retain originals of all Records following Closing, and shall provide
Buyer, its Affiliates and each of their officers, employees and representatives with access to the
Records during normal business hours for review and copying at Buyer’s expense during such
time. Within 10 Business Days following Seller’s resignation or removal as operator under the
Applicable ▇▇▇▇, Seller shall make available to Buyer the Records for pickup from Seller’s
(and/or its Affiliates’) offices during normal business hours. Buyer shall retain and maintain the
Records received from Seller for a period of 5 years after Closing. During such period of time,
Buyer shall (a) provide Seller, its Affiliates and each of their officers, employees and
representatives with access to the Records (to the extent that Seller has not retained the original
or a copy) during normal business hours for review and copying at Seller’s expense, and
(b) provide Seller, and its Affiliates and each of their officers, employees, and representatives
with access, during normal business hours, to materials received or produced after the Closing
relating to any indemnity claim made under Section 4.2 for review and copying at Seller’s
expense subject to such reasonable limitations as Buyer may place upon such review as a result
of such materials being subject to legal privilege, confidentiality obligations, or Buyer’s trade
secrets.
8.7 Operatorship. The Parties acknowledge and agree that subject to this Section 8.7,
from and after Closing, Seller shall continue to serve as the designated operator under each of the
Applicable ▇▇▇▇ in accordance with and subject to the terms of the Applicable ▇▇▇▇.
Notwithstanding anything in the Applicable ▇▇▇▇ to the contrary, the Parties agree as follows:
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(a) With respect to any invoice issued under the terms of any Applicable JOA,
Buyer shall pay Seller (subject to Buyer’s right under the Applicable ▇▇▇▇) for any costs and
expenses set forth on such invoice (including estimated costs and expenses for the subsequent
month to the extent permitted under the Applicable ▇▇▇▇) within fifteen (15) days of Buyer’s
receipt of such invoice. If Buyer fails to pay any undisputed amounts due Seller under any
Applicable JOA or this Section 8.7, then within fifteen (15) days after receipt of written notice
from Seller that such amounts are past due and owing, Seller shall have the right to resign as
designated operator under all (but not less than all) of the Applicable ▇▇▇▇ and such resignation
shall not limit any rights of Seller to pursue any other available legal remedies.
(b) Upon termination of the Affiliate COSA, (i) Seller shall have the right to
resign as designated operator under all (but not less than all) of the Applicable ▇▇▇▇, effective as
of the termination date of the Affiliate COSA, and (ii) Buyer shall have the right to remove
Seller as designated operator under all (but not less than all) the Applicable ▇▇▇▇, effective as of
the termination date of the Affiliate COSA. Promptly following (but in any event, no more than
30 days following) Seller’s resignation or removal as designated operator under all Applicable
▇▇▇▇, Seller shall assign the Excluded Working Interest to Buyer pursuant to an assignment
(effective as of the date of such resignation or removal) in the form of Exhibit D attached hereto.
Following the resignation or removal of Seller as designated operator under the Applicable ▇▇▇▇
and Seller’s assignment of the Excluded Working Interest to Buyer under this Section 8.7(b), the
terms of this Section 8.7 shall have no further force and effect.
ARTICLE 9
[INTENTIONALLY OMITTED]
ARTICLE 10
THE CLOSING
10.1 Closing. Contemporaneously with the execution of this Agreement, the closing
of the transactions contemplated by this Agreement shall take place at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, on this 20th day of April, 2016
(the “Closing Date”). Seller has provided Buyer with wiring instructions designating the account
or accounts to which the Closing Amount is to be delivered.
10.2 Obligations of Seller at Closing. At Closing, Seller shall deliver or cause to be
delivered to Buyer, unless waived by Buyer, the following:
(a) originals of the Assignment executed by Seller in sufficient counterparts
and modified as necessary for recording in all applicable jurisdictions;
(b) assignments in form required by any Governmental Authority for the
assignment of any Assets controlled by such Governmental Authority, duly executed by Seller,
in sufficient duplicate originals to allow recording and/or filing in all appropriate offices;
(c) executed originals of the Certificate of Non-Foreign Status;
(d) certificates of good standing from the states of Oklahoma and Louisiana;
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(d) letters-in-lieu of transfer or division orders executed by Seller relating to
the Assets to reflect the transaction contemplated hereby, which letters shall be on forms
prepared by Seller and reasonably satisfactory to Buyer;
(e) any other forms required by any Governmental Authority relating to the
assignments of the Assets to Buyer; and
(f) duly executed releases and terminations of the mortgages, deeds of trust,
assignments of production, financing statements, fixture filings, and other encumbrances and
interests burdening the Assets (or any thereof), including those set forth on Schedule 8.1, which
shall, in each case, be in form and substance reasonably satisfactory to Buyer and forms of which
shall have been delivered to Buyer on or before the Closing Date.
Seller shall take such other actions and deliver such other documents as are contemplated
by this Agreement or as may be reasonably requested by Buyer.
10.3 Obligations of Buyer at Closing. At Closing, Buyer shall deliver or cause to be
delivered to Seller, unless waived by Seller, the Closing Amount by wire transfer. Buyer shall
also take such other actions and deliver such other documents as are contemplated by this
Agreement or as may be reasonably requested by Seller.
10.4 DDA. The Parties acknowledge and agree that this Agreement provides for the
acquisition of Seller’s remaining Oil and Gas Rights within the “AMI” (as defined in the DDA)
and that neither Seller nor any Affiliate, successor or assign of Seller, is entitled to any carried
cost or carried interest pursuant to the DDA, other than with respect to the Excluded Working
Interest. With the exception of the Applicable ▇▇▇▇, effective as of the Closing Date, the DDA
shall terminate in accordance with the terms of Section 9.1 of the DDA, subject to the provisions
of Section 9.2(a) of the DDA; provided, however, the Parties agree that terms of Section 9.2(b)
and Section 9.2(c) have no force and effect upon such termination and the DDA shall be deemed
to be amended to remove Section 9.2(b) and Section 9.2(c) thereof; provided further that from
and after the Closing Date, Buyer shall continue to carry 15% of all Drilling Costs (as defined in
the DDA) related to any remaining Commitment ▇▇▇▇▇ (as defined in the DDA) attributable to
Seller’s Excluded Working Interest.
10.5 Employees. Buyer or its Affiliates may offer employment, effective as of or after
the Closing Date, to any Oklahoma based employees of Seller or any of its Affiliates who
provide services in relation to the Assets (“Seller Employees”); provided, however, that the
actual hiring date of any Seller Employees to be employed by Buyer, but required by Seller or its
Affiliates for the provision of “Services” under the Affiliate COSA, shall not be earlier than the
termination date of the Affiliate COSA without the mutual agreement of the Parties. Seller
Employees hired by the Buyer or its Affiliates shall be treated as newly hired employees of the
Buyer or its Affiliates for all purposes. Seller shall, and shall cause its Affiliates to, cooperate
with the Buyer or its Affiliates to effect an orderly and cost effective transition of any such Seller
Employees. Seller shall, and shall cause its Affiliates to, cooperate with the Buyer or its
Affiliates by releasing Seller Employees from any covenants not to compete or any similar
applicable agreements.
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ARTICLE 11
[INTENTIONALLY OMITTED]
ARTICLE 12
TAXES
12.1 Tax Partnership. The Parties acknowledge that the Assets are subject to a Tax
partnership (the “Tax Partnership”) with Buyer and Seller treated as partners therein for U.S.
federal income tax purposes, and for the purposes of certain state tax laws that incorporate or
follow U.S. federal income tax principles (“Tax Purposes”). Accordingly, the Parties
acknowledge and agree that the transactions herein shall be treated for Tax Purposes as (i) a sale
by Seller of an interest in the Tax Partnership, and (ii) a purchase by Buyer of an interest in the
Tax Partnership (the “Intended Tax Treatment”). Neither Buyer nor Seller shall take any position
inconsistent with the Intended Tax Treatment.
12.2 Cooperation on Tax Matters. Buyer and Seller shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the filing of any Tax Return
and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall
include the retention and (upon the other party’s request) the provision of records and
information which are reasonably relevant to any such Tax Return, audit, litigation or other
proceeding and making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Each of Buyer and Seller
agrees (a) to retain all books and records with respect to Tax matters pertinent to the acquired
Assets relating to any taxable period beginning before the Closing Date until the expiration of
the statute of limitations (and, to the extent notified by Buyer or Seller, any extensions thereof)
of the respective taxable periods, and to abide by all record retention agreements entered into
with any Taxing Authority, and (b) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the other Party so
requests, each party shall allow the other Party the option of taking possession of such books and
records prior to their disposal. Buyer and Seller further agree, upon request, to use their
commercially reasonable efforts to obtain any certificate or other document from any Taxing
Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that
could be imposed with respect to the transactions contemplated.
12.3 Property and Excise Taxes. All ad valorem, real property, personal property, and
similar Taxes assessed on the Assets (“Property Taxes”) and excise Taxes associated with any of
the Assets (“Excise Taxes”) are Seller’s obligation for periods before the Effective Time and
Buyer’s obligation for periods from and after the Effective Time; provided that, if the taxable
period with respect to such a Tax begins on or before and ends after the Effective Time, then
such Tax shall be attributable to the portions of such taxable period before and after the Effective
Time based on the relative number days in each portion of such taxable period. If either party
pays Property Taxes or Excise Taxes for which the other party is responsible, and the amount of
such payment is not taken into account as an adjustment to the Base Purchase Price under
Section 2.3, then upon receipt of evidence of payment the nonpaying party will reimburse the
paying party promptly for the nonpaying party’s share of such Taxes.
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12.4 Severance Taxes. Seller shall bear and pay all severance or other Taxes based
upon or measured by Hydrocarbon production from the Assets, or the receipt of proceeds
therefrom, to the extent attributable to production from the Assets before the Effective Time.
Buyer shall bear and pay all such Taxes on production from the Assets from and after the
Effective Time. Seller shall withhold and pay on behalf of Buyer all such Taxes on production
from the Assets between the Effective Time and the Closing Date, and the amount of any such
payment shall be reimbursed to Seller as an adjustment to the Base Purchase Price pursuant to
Section 2.3. If either party pays any such Taxes owed by the other, and the amount of such
payment is not taken into account as an adjustment to the Base Purchase Price under Section 2.3,
then upon receipt of evidence of payment the nonpaying party will reimburse the paying party
promptly for the nonpaying party’s share of such Taxes
12.5 Transfer Taxes. Seller shall pay all state and local transfer, sales, use, stamp,
registration or other similar Taxes (the “Transfer Taxes”) resulting from the acquisition of the
Assets contemplated by this Agreement or any other transaction document. Upon receipt of
invoice from Seller, Buyer shall promptly reimburse Seller for all Transfer Taxes paid by Seller.
Buyer and Seller shall cooperate in good faith to minimize, to the extent permissible under
applicable Law, the amount of any such Transfer Taxes.
ARTICLE 13
MISCELLANEOUS
13.1 Notices. All notices and other communications required or desired to be given
hereunder must be in writing and sent (properly addressed as set forth below) by: (a) U.S. mail
with all postage and other charges fully prepaid, (b) electronic mail with a PDF of the notice or
other communication attached (with the original sent by U.S. mail the same day such electronic
mail is sent), or (c) facsimile transmission. A notice shall be deemed effective on the date on
which such notice is received by the addressee, if by mail, or on the date sent, if by facsimile (as
evidenced by fax machine confirmation of receipt) or if by electronic mail (as evidenced by
computer generated confirmation of receipt); provided, if such date is not a Business Day, then
date of receipt shall be on the next date that is a Business Day. Each Party may change its
address by notifying the other Party in writing of such address change.
If to Seller:
PetroQuest Energy, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇, Vice President of Business Development & Land
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
With a copy to (which shall not constitute notice):
PetroQuest Energy, L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇ ▇▇▇▇▇, Executive Vice President & General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
If to Buyer:
▇▇ ▇▇▇▇▇▇▇▇ Properties, LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇, Vice President, Energy Marketing and Trading
Email: ▇▇▇.▇▇▇▇▇▇▇@▇▇▇.▇▇▇
With a copy to (which shall not constitute notice):
c/o NextEra Energy, Legal Department
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Email: ▇▇▇▇▇▇▇.▇▇▇▇▇@▇▇▇.▇▇▇
13.2 Transaction and Filing Costs. Buyer, at its sole cost, shall be responsible for
recording and filing documents associated with the transfer of the Assets to it, including filing
the assignments with appropriate federal, state and local Governmental Authorities as required
by applicable Law. Buyer, at its sole cost, shall also be responsible for any and all stamp,
documentary, real property transfer, sales, gross receipts, use or similar Taxes or assessments
resulting from its acquisition of the Assets contemplated by this Agreement. As soon as
practicable after recording or filing, Buyer shall furnish Seller with all recording data and
evidence of all required filings including filings with the appropriate state counties and parishes.
13.3 Amendments and Severability. No amendments or other modifications to this
Agreement shall be effective or binding on either of the Parties unless the same are in writing,
designated as an amendment or modification, and signed by both Seller and Buyer. The
invalidity of any one or more provisions of this Agreement shall not affect the validity of this
Agreement as a whole, and in case of any such invalidity, this Agreement shall be construed as if
the invalid provision had not been included herein.
13.4 Successors and Assigns. Except as set forth in this Section 13.4, this Agreement
may not be assigned, either in whole or in part, without the express written consent of the non-
assigning Party, such consent not to be unreasonably withheld, conditioned or delayed. The
terms, covenants and conditions contained in this Agreement are binding upon and inure to the
benefit of Seller and Buyer and their respective successors and permitted assigns.
Notwithstanding the foregoing, either Party may assign this Agreement and its rights and
obligations hereunder to any Affiliate of such Party; provided, however, that no such assignment
shall relieve either Party of any of its obligations or liabilities under this Agreement.
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13.5 Headings. The titles and headings set forth in this Agreement have been included
solely for ease of reference and may not be considered in the interpretation or construction of this
Agreement.
13.6 Governing Law; Jurisdiction; Waiver of Trial by Jury.
(A) THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE
STATE OF TEXAS, EXCLUDING ANY CHOICE OF LAW RULES THAT MAY
DIRECT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
(B) THE PARTIES AGREE THAT ANY SUIT, ACTION OR
PROCEEDING SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY
MATTER ARISING OUT OF OR IN CONNECTION WITH, THIS AGREEMENT OR
THE TRANSACTION CONTEMPLATED HEREBY SHALL BE BROUGHT IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS,
SO LONG AS SUCH COURT HAS SUBJECT MATTER JURISDICTION OVER SUCH
SUIT, ACTION OR PROCEEDING (OR, IF REQUIREMENTS FOR FEDERAL
JURISDICTION ARE NOT MET, STATE COURTS LOCATED IN ▇▇▇▇▇▇ COUNTY,
TEXAS), AND THAT ANY CAUSE OF ACTION ARISING OUT OF THIS
AGREEMENT SHALL BE DEEMED TO HAVE ARISEN FROM A TRANSACTION OF
BUSINESS IN THE STATE OF TEXAS, AND EACH OF THE PARTIES HEREBY
IRREVOCABLY CONSENTS TO THE JURISDICTION OF SUCH COURTS (AND OF
THE APPROPRIATE APPELLATE COURTS THEREFROM) IN ANY SUCH SUIT,
ACTION OR PROCEEDING AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. PROCESS IN ANY SUCH SUIT,
ACTION OR PROCEEDING MAY BE SERVED ON ANY PARTY ANYWHERE IN
THE WORLD, WHETHER WITHIN OR WITHOUT THE JURISDICTION OF ANY
SUCH COURT.
(C) WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING
SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY MATTER
ARISING OUT OF OR IN CONNECTION WITH, THIS AGREEMENT OR THE
TRANSACTION CONTEMPLATED HEREBY, THE PARTIES AGREE TO WAIVE
TRIAL BY JURY.
13.7 No Partnership Created. It is not the purpose or intention of this Agreement to
create (and it should not be construed as creating) a joint venture, partnership or any type of
association, and the Parties are not authorized to act as an agent or principal for each other with
respect to any matter related hereto.
13.8 Public Announcements. Neither Seller nor Buyer (including any of their agents,
employees or Affiliates in either case) may issue a public statement or press release with respect
to the transaction contemplated hereby (including the price and other terms) without the prior
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written consent of the other Party, except as required by any applicable securities or other Laws
or regulations or the applicable rules of any stock exchange having jurisdiction over the Parties
or their respective Affiliates.
13.9 No Third Party Beneficiaries. Nothing contained in this Agreement shall entitle
anyone other than Seller and Buyer, their successors and permitted assigns or the express
beneficiaries of indemnity provisions to any Claim, cause of action, remedy or right of any kind
whatsoever; provided that only a Party and its respective successors and permitted assigns will
have the right to enforce the provisions of this Agreement on its own behalf or on behalf of the
express beneficiaries of the indemnity provisions (but shall not be obligated to do so).
13.10 Waiver; Rights Cumulative. Any of the terms, covenants, representations,
warranties or conditions hereof may be waived only by a written instrument executed by or on
behalf of the Party waiving compliance. No course of dealing on the part of Seller or Buyer, or
their respective officers, employees, agents or representatives or any failure by Seller or Buyer to
exercise any of its rights under this Agreement shall operate as a waiver thereof or affect in any
way the right of such Person at a later time to enforce the performance of such provision. No
waiver by Seller or Buyer of any condition or any breach of any term, covenant, representation
or warranty contained in this Agreement, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach or a waiver of any
other condition or of any breach of any other term, covenant, representation or warranty. The
rights of Seller and Buyer under this Agreement shall be cumulative, and the exercise or partial
exercise of any such right shall not preclude the exercise of any other right.
13.11 Construction. The Parties acknowledge that they have had an adequate
opportunity to review each and every provision contained in this Agreement and to submit the
same to legal counsel for review and comment. Moreover, the Parties have participated jointly in
the negotiation and drafting of this Agreement. Based on the foregoing, the Parties agree that the
rule of construction that a contract be construed against the drafter, if any, not be applied in the
interpretation or construction of this Agreement.
13.12 Conspicuousness of Provisions. THE PARTIES ACKNOWLEDGE AND
AGREE THAT THE PROVISIONS CONTAINED IN THIS AGREEMENT THAT ARE
SET OUT IN “BOLD” AND/OR ALL CAPS SATISFY THE REQUIREMENT OF THE
“EXPRESS NEGLIGENCE RULE” AND ANY OTHER REQUIREMENT AT LAW OR
IN EQUITY THAT PROVISIONS CONTAINED IN A CONTRACT BE
CONSPICUOUSLY MARKED OR HIGHLIGHTED.
13.13 Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, all of which when taken together
shall constitute one and the same agreement.
13.14 Entire Agreement. This Agreement supersedes all prior and contemporaneous
negotiations, understandings, letters of intent and agreements (whether oral or written) between
the Parties with respect to the subject matter hereof and constitute the entire understanding and
agreement between the Parties with respect thereto.
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[signatures follow on next page]
[Signature Page to Purchase and Sale Agreement]
5654385v1
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
first set forth above.
SELLER:
PETROQUEST ENERGY, L.L.C.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President – Business
Development and Land
BUYER:
▇▇ ▇▇▇▇▇▇▇▇ PROPERTIES, LLC
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: President