PURCHASE AND SALE AGREEMENT BETWEEN TAG OPERATING COMPANY, INC. AND INLAND GAS CORPORATION As Sellers AND PACKARD GAS COMPANY As Buyer
Exhibit
10.18
BETWEEN
TAG
OPERATING COMPANY, INC.
AND
INLAND
GAS CORPORATION
As
Sellers
AND
PACKARD
GAS COMPANY
As
Buyer
This
Purchase and Sale Agreement (“Agreement”) is between Tag Operating Company,
Inc., a Texas corporation with an address of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and Inland Gas Corporation, a Texas corporation with an
address of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (collectively,
“Seller”), as sellers, and Packard Gas Company, a Texas corporation with an
address of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (“Buyer”),
as buyer, effective on October 1, 2005.
WHEREAS,
Seller owns properties located within the Orange Field (“Properties”) of Orange
County, Texas (as the same is hereinafter defined);
WHEREAS,
Buyer desires to purchase from Seller, and Seller desires to sell to Buyer,
all
of Sellers interest in and to the Properties;
NOW,
THEREFORE, in consideration of their mutual promises under this Agreement,
the
benefits to be derived by each party, and other good and valuable consideration,
Buyer and Seller agree as follows:
ARTICLE
1. DEFINITIONS
The
following terms, when used in this Agreement, will have the following
definitions:
| 1.01 |
Additional
Instruments.
The instruments executed by Buyer before and at Closing and delivered
to
Seller in connection with this
transaction.
|
| 1.02 |
Ad
Valorem Taxes.
Defined in Section 9.01.
|
| 1.03 |
Associated
Parties.
Successors, assigns, directors, officers, employees, agents, contractors,
subcontractors, and affiliates.
|
| 1.04 |
Base
Purchase Price.
The respective amount set forth in Section
3.01.
|
| 1.05 |
Properties.
Sellers interest in the oil and gas leasehold estates or other interests
set forth on Exhibit A-1, together with Sellers interest in the
following:
|
| (a) |
each
Well located on the leases and land described in Exhibit
A-1.
|
| (b) |
the
easements, permits, licenses, surface and subsurface leases, right-of-way,
servitudes, and other surface and subsurface rights affecting the
land and
leases described in Exhibit A-1.
|
| (c) |
Material,
equipment, and facilities in and on the land and used solely in connection
with the use or operation of the leasehold estates and other interests
described in Exhibit A-1 for oil or gas
purposes.
|
| (d) |
The
facilities and pipelines located pursuant to the rights described
in (b)
above and necessary to market the production from the
Properties.
|
| (e) |
Contracts
affecting the Properties, including agreements for sale or purchase
of
oil, gas and other hydrocarbons; processing agreements; division
orders;
unit agreements; operating agreements; and other contracts and agreements
arising out of, connected with, or attributable to production from
the
Properties.
|
| 1.06 |
Claim
or Claims.
Collectively, claims, demands, causes of action, and lawsuits asserted
or
filed by any person, including an artificial or natural person; a
local,
state, or federal governmental entity; a person holding rights under
any
Related Agreement; an Associated Party of Buyer or Seller; or a third
party.
|
| 1.07 |
Closing.
The delivery of the conveyancing instruments and funds by the parties
to
close the purchase and sale of
Properties.
|
| 1.08 |
Closing
Date.
The date on which Closing is scheduled to and does
occur.
|
| 1.09 |
Effective
Time.
7
a.m. local time where the interests are
located.
|
| 1.10 |
Environmental
laws.
Applicable federal, state and local laws, including statutes, regulations,
orders and ordinances, previously or currently enacted or enacted
in the
future, and common law, relating to protection of public health,
welfare,
and the environment, including those laws relating to storage, handling,
and use of chemicals and other hazardous materials; those relating
to the
generation, processing, treatment, storage, transport, disposal,
cleanup,
remediation, or management of waste materials or hazardous substances
of
any kind; and those relating to the protection of environmentally
sensitive or protected areas. “Environmental Laws” includes the
Comprehensive Environmental response, Compensation and Liability
Act of
1980, the Resource Conservation and Recovery Act of 1976, the Clean
Water
Act, the Safe Drinking Water Act, the Hazardous Materials Transportation
Act, the Toxic Substance Control Act, and the Clean Air Act, as each
is
amended from time to time.
|
| 1.11 |
Execution
Date.
The date on which the last of the parties executes this
Agreement.
|
| 1.12 |
Liability
or
Liabilities..
Collectively, all damages (including consequential and punitive damages),
including those for personal injury, death, or damage to personal
or real
property (both surface and subsurface) and costs for remediation,
restoration, or clean up of contamination, whether the injury, death,
or
damage occurred or occurs on or off the Property by migration, disposal,
or otherwise; losses; fines; penalties, expenses; costs to remove
or
modify facilities on or under the Property; plugging liabilities
for all
▇▇▇▇▇; attorneys’ fees; court and other costs incurred in defending a
Claim; liens; and judgments; in each instance, whether these damages
and
other costs are foreseeable or unforeseeable.
|
| 1.13 |
NORM.
Naturally
occurring radioactive material.
|
| 1.14 |
Oil.
Crude oil, distillate, drip gasoline, condensate, and other liquid
hydrocarbons.
|
| 1.15 |
Permitted
Encumbrances.
(i) royalties, overriding royalties, reversionary interests, production
payments and similar burdens which are in existence on the date here;
(ii)
sales contracts or other arrangements for the sale of production
hydrocarbons which would not (when considered cumulatively with the
matters discussed in clause (i) above) deprive the Buyer of any material
right in respect of the Interests and Property (except for rights
customarily granted with respect to such contracts and arrangements);
(iii) statutory liens for taxes or other assessments that are not
yet
delinquent (or that, if delinquent, are being contested in good faith
by
appropriate proceedings, levy and execution thereon having been stayed
and
continue to be stayed; (iv) easements, rights of way, servitudes,
permits,
surface leases and other rights in respect to surface operations,
pipelines, grazing, logging, canals, ditches, reservoirs or the like,
conditions, covenants and other restrictions, and easements and rights
of
way on, over or in respect of the Interests and property and that
do not
individually or in the aggregate, cause a material adverse effect
upon the
operations or value of Interests and Property; and (v) rights reserved
to
or vested in any municipality, governmental, statutory or other public
authority to control or regulate the Interests and Property in any
manner,
and all applicable laws, rules and orders from any governmental authority.
|
| 1.16 |
Strict
Liability.
Includes strict statutory liability and strict products
liability.
|
| 1.17 |
Well
or
▇▇▇▇▇.
All
wellbores, both abandoned and unabandoned, including oil ▇▇▇▇▇, gas
▇▇▇▇▇,
injection ▇▇▇▇▇, disposal ▇▇▇▇▇, and water
▇▇▇▇▇.
|
ARTICLE
2. PURCHASE AND SALE
|
2.01
|
Sale
of the Properties.
Pursuant to Seller’s offer, Seller agrees to sell the Properties to Buyer,
and Buyer agrees to purchase them from Seller, for the consideration
recited in and subject to the terms of this Agreement, as
follows:
|
| (a) |
All
of Seller’s right, title and interest in and to the
Properties.
|
ARTICLE
3. PURCHASE PRICE
| 3.01 |
Base
Purchase Prices.
The Base Purchase Price for the Properties is as
follows:
|
| (a) |
$2,500,000
|
and
is
subject to adjustment only as provided in this Agreement.
|
3.02
|
Adjustments
to Base Purchase Price.
The Base Purchase Price for the Properties shall be adjusted in the
following manner:
|
| (a) |
Increased
by the following amounts:
|
| (i) |
The
aggregate amount of all non-reimbursed amounts directly attributable
to
the operations and
ownership of the properties incurred and paid in the ordinary course
of
business, exclusive of indirect amounts and overhead allocations,
during
the period from the respective Effective Time to the Closing
Date;
|
| (ii) |
An
amount equal to the agreed value of all Oil and gas in storage above
the
pipeline connection or delivery point, as the case may
be;
|
| (iii) |
Any
other upward adjustment mutually agreed upon by the
parities;
|
| (b) |
Decreased
by the following amounts:
|
| (i) |
The
aggregate amount of proceeds received by Seller from the sale of
Oil and
gas produced from and attributable to the Interests between the Effective
Time and the Closing Date;
|
| (ii) |
The
amount of any downward adjustment relating to Title Defects pursuant
to
Article 5;
|
| (iii) |
Seller’s
share of estimated ad valorem taxes through the Effective Time;
|
| (iv) |
The
amount of any downward adjustment mutually agreed upon by the parties;
and
|
| (v) |
The
Base Purchase Price shall be adjusted downward by the amount of $20,000
per barrel of produced oil if the gross production volumes for a
consecutive 30 day period (prior to the Closing Date), to be selected
by
the Seller, are less than 125 barrels of oil per day (3,750 barrels
of oil
in 30 days). An exception to this adjustment would be an occurrence
or
situation wherein production from the Properties is interrupted by
circumstances beyond the control of Seller. In that event, the days
and
the respective volumes of the Interruption Period shall be excluded
from
the calculation of the production volumes. Seller shall give Buyer
two (2)
days notice prior to starting the 30 day period so that Buyer may
monitor
the production.
|
|
3.03
|
Closing
Settlement Statement.
Seller shall provide to Buyer a closing settlement statement prior
to
Closing presenting adjustments to the Base Purchase Price for the
respective Interests that are subject to this Section 3.03, which
Closing
Settlement Statement shall set out separately the adjustments applicable
to the respective Interests. Prior to Closing, Buyer and Seller shall
agree upon the Closing Settlement Statement which shall include
adjustments, known as of the Closing Date, pursuant to Section 3.02
hereof. The Closing Statement shall also set forth the allocation
of the
Purchase Price to the Seller.
|
ARTICLE
4. SELLER’S REPRESENTATIONS AND WARRANTIES
|
4.01
|
Representations
and Warranties Not Exclusive.
Seller’s representations under this Article are in addition to its other
representations and warranties under this Agreement and the Additional
Instruments.
|
|
4.02
|
Organization;
Name; Organizational Identification Number.
Seller represents and warrants that it is duly organized validity
existing
and in good standing under the laws of its jurisdiction of organization.
Seller is qualified or licensed to conduct business and is in good
standing in each jurisdiction where the nature of its activities
or the
character of the properties utilized in its business make such
qualification or licensing necessary. Seller’s correct legal name is set
forth above Seller’s signature hereto. The location of Seller’s chief
executive office is the address listed in the introductory paragraph
of
this Agreement.
|
|
4.03
|
Power
and Authority: Authorizations; Enforceability; No
Conflicts.
Seller represents and warrants
that:
|
|
(a)
|
Seller
has full corporate power and authority to own its assets and to carry
on
its business as it is now being conducted and to execute and deliver
this
Agreement and each of the Additional Instruments and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.
|
| (b) |
The
execution, delivery and performance by Seller of this Agreement and
the
Additional Instruments to which Seller is a party and the consummation
by
Seller of the transactions contemplated hereby and thereby have been
duly
authorized by all requisite actions of
Seller.
|
| (c) |
This
Agreement and the Additional Instruments to which Seller is a party
have
been duly and validly executed and delivered by Seller and constitute
the
legal, valid and binding obligations of Seller, enforceable against
it in
accordance with their respective
terms.
|
| (d) |
The
execution and delivery by Seller of this Agreement and each of the
Additional Instruments to which it is a party, the performance by
Seller
of its obligations hereunder and thereunder and the consummation
by Seller
of the transactions contemplated hereby and thereby do
not:
|
| (i) |
violate
any provision of the certificate of incorporation or bylaws (or comparable
organizational documents) of
Seller;
|
| (ii) |
result
in a violation or breach of, or constitute (with or without due notice
or
lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under any of
the
terms, conditions or provisions of any oral or written agreement,
instrument, contract, undertaking, mortgage, indenture, lease, license
or
other understanding to which Seller is a party or by which any of
the
properties or assets of Seller may be bound or otherwise subject;
or
|
| (iii) |
contravene
or violate any law, rule, regulation, or order applicable to Seller,
Seller’s Associated Parties, or any of their respective properties or
assets.
|
| (e) |
No
consent of any governmental body or other person is required to be
made or
obtained by Seller in connection with the execution, delivery and
performance by Seller of this Agreement or any other Additional
Instruments to which Seller is a party or the consummation by Seller
of
the transactions contemplated hereby and thereby.
|
|
4.04
|
Title
to the Interests.
Seller represents and warrants that it owns Defensible Title to the
Interests as of the date this Agreement is executed and will convey
to
Buyer Defensible Title to the Interests on the Closing
Date.
|
ARTICLE
5. TITLE AND TITLE DEFECTS
|
5.01
|
Title.
Seller shall transfer title of the Interests to Buyer at Closing
pursuant
to an assignment substantially in the form of the Assignment attached
hereto as Exhibit
B,
and said Assignment shall be adapted to the particular interest to
be
assigned and to conform to the provisions of Article 2 hereof. Seller
will
convey to Buyer Defensible Title to the Interests on the Closing
Date.
Seller shall execute as many Assignments as are necessary to file
for
record Assignments in each jurisdiction and with each governmental
authority where necessary to effect conveyance of the Interests and/or
notice of such conveyance. Buyer shall be entitled to satisfy itself
prior
to Closing that it will be receiving conveyance of Defensible Title
to the
Interests. Seller shall provide to Buyer full and complete access
to its
records and documents relating to the Interests. As used herein,
the term
“Defensible Title” shall mean, as to each of the Interests to be conveyed
to Buyer, a net revenue interest which is not less, and a working
interest
which is not greater, than those set out in Exhibits
A-1 and A-2
hereto with respect to such Interests, and a title which is free
and clear
of liens, encumbrances, defects or environment Conditions, other
than
Permitted Encumbrances, which materially and adversely affect the
value of
such Interests. Any matter which causes an Interest not to have Defensible
Title, and any environmental Condition, shall be considered to be
a “Title
Defect”. If Buyer determines that any Interest is subject to any Title
Defects prior to Closing, Buyer shall notify Seller in writing describing
the Title Defects, after which time, the parties shall meet and exercise
their best efforts to determine the validity of the claimed Title
Defect.
Seller shall have until the Closing to cure the Title Defects to
the
satisfaction of the Buyer. If Seller is not able to cure the Title
Defect
to Buyer’s reasonable satisfaction prior to Closing, then Buyer in its
sole discretion may either (a) reduce the Purchase Price by the Allocation
for the Property(s) with a Title Defect, (b) allow Seller 90 days
after
Closing to cure the Title Defects, (c) waive the Title Defects, or
(d)
terminate this Agreement. Should a Title Defect be discovered after
the
Closing Date, Seller shall undertake to cure such Title Defect to
Buyer’s
reasonable satisfaction; failing cure thereof, Buyer shall have the
right,
but not the obligation, to re-assign the affected Interest to Seller
following the provisions of Section 8.04 hereof as to the Property
so
affected.
|
|
5.02
|
Related
Agreements.
Except as otherwise provided in this Agreement, the sale of the Properties
will be subject to all oil, gas, and mineral leases, assignments,
subleases, farmout agreements, unit agreements, joint operating
agreements, pooling agreements, letter agreements, easements,
rights-of-way, gathering and transportation agreements, sales agreements,
and other agreements concerning or pertaining to the Properties (“Related
Agreements”), to the extent that they are binding on Seller or its
successors or assigns. Buyer will assume all of Seller’s obligations and
liabilities under the Related Agreements as of the respective Effective
Times, insofar as the obligations or liabilities concern or pertain
to the
respective Interests, and the parties will execute all documents
necessary
for Buyer to assume the Related Agreements. Buyer’s obligation applies to
all Related Agreements, whether recorded or not.
|
ARTICLE
6. PRE-CLOSING OBLIGATIONS
| 6.01 |
Preferential
Rights.
|
|
(a)
|
Notice.
Seller will notify the owners, if any, of preferential rights to
purchase
the Properties.
|
| (b) |
Adjustment
to Base Purchase Price.
If a third party gives notice of its intent to exercise a preferential
right to purchase any of the Properties, Seller shall give immediate
notice thereof to Buyer; in such event, Buyer may, at its option,
elect to
either (a) delay Closing as to all of the Properties pending closing
of
the preferential purchase, with no charge to either party for the
delay,
(b) terminate this Agreement, or (c) exclude the affected Property
and
close as to all other Properties as
scheduled.
|
| (c) |
Third-Party
Failure to Purchase.
If a third party gives notice of its intent to exercise a preferential
right to purchase a preferential right property, but does not close
the
purchase for any reason either before or within a reasonable time
after
the scheduled Closing of this Agreement, Buyer may elect in its sole
discretion, to acquire the preferential right property under the
terms of
this Agreement. In such event, Closing as to such property will be
scheduled to occur within forty-five days after Buyer receives Seller’s
notice that the third party has not closed. The effective time for
the
preferential right property will be the applicable Effective Time
under
this Agreement for the Interest of which the preferential right property
is a part.
|
| 6.02 |
Third-Party
Notifications and Approvals.
The sale of the Interests may require the approval or consent of
lessors,
joint interest owners, farmors, sublessors, Sellers, grantors, parties
to
agreements, governmental bodies having jurisdiction, or other third
parties. Seller is responsible for obtaining approvals from all applicable
third parties and will furnish Buyer with proof of each consent,
maintenance-of-uniform interest provisions, if any, from joint-interest
owners. If Seller does not furnish Buyer with all third-party approvals
applicable to any Interest, then Seller may, at its option, elect
to (a)
delay Closing as to any or all of the Interests, with no charge to
either
party for the delay, or (b) terminate this Agreement. To the extent
any
consent or approval is typically obtained after transfer of a given
Interest, Seller agrees that it will exercise its best efforts to
obtain
such consent(s) or approval(s) within 30 days following the Closing,
and
in any event will obtain such consent(s) or approval(s) within the
shortest time practicable after Closing. Buyer shall provide assistance
to
Seller’s efforts to obtain such consent(s) or
approval(s).
|
ARTICLE
7. CLOSING
|
7.01
|
Closing
Date.
The Closing Date will be on or before October 30, 2005. Closing under
this
Agreement shall occur at the offices of Capco Offshore, Inc, ▇▇▇▇
▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. If the parties agree, Closing
may be
handled by exchange of documents (by mail or by courier). No price
adjustment will be made if Closing is
delayed.
|
|
7.02
|
Buyer’s
Right to Delay Closing.
Buyer may, at its sole option and for any reason, delay Closing for
up to
thirty days after the originally-scheduled Closing Date, upon written
notice to Seller.
|
|
7.03
|
Seller’s
Right to Delay Closing.
In the event that production volumes have not averaged 125 BOPD for
a
consecutive 30 (thirty) day period by October 30, 2005 as defined
in
3.02(b)(v) hereinabove, Seller shall have the option to extend the
Closing
Date to November 30, 2005, with an Effective Date of November 1,
2005, in
order to qualify said production. Irrespective of this provision,
Buyer
may elect to close this transaction at any time by tendering the
amount of
the Base Purchase Price due, without adjustment for production
volume.
|
7.04
Closing
Obligations.
|
(a)
|
Certificates
of Authority.
Seller shall deliver to Buyer, at least five days before the Closing
Date,
certificates in form and substance satisfactory to Buyer, effective
as of
the Closing Date and executed by Seller’s duly authorized officer,
partner, or owner, as appropriate, to the effect that (1) Seller
has all
requisite corporate, partnership, or other power and authority to
purchase
the Interests on the terms of this Agreement and to perform its other
obligations under this Agreement and the Additional Instruments and
has
fulfilled all corporate, partnership, or other prerequisites to closing
this transaction, and (2) each individual executing the closing documents
has the authority to act on behalf of Seller.
|
|
(b)
|
Change
of Operatorship.
For Interests that will be operated by Seller in its capacity as
Operator
under the Operating Agreements, and except to the extent waived by
Buyer,
Seller will deliver to Buyer on or before the closing Date evidence
of the
following: (1) that Seller has complied with the requirements of
all laws
and regulations relating to the transfer of operatorship, including
those
regarding the assumption of responsibility for the plugging and abandoning
of each Well that is included in the applicable Interests or located
on
the Property; (2) that the appropriate bond, surety letter, letter
of
credit, or other financial security has been accepted by the relevant
regulatory agency; and (3) that Seller has, to the extent possible
under
applicable regulations, obtained all necessary permits or transfers
of
permits to operate the applicable Interests and Property.
|
| (c) |
Closing
Settlement Statements.
Seller shall provide to Buyer Closing Settlement Statement, as same
may
have been revised pursuant to Section 3.02, including items such
as Base
Purchase Price and adjustments to the Base Purchase Price (if any),
to the
extent this information is available at Closing. Seller will use
estimates
in the respective closing settlement statements, to the extent that
estimates are necessary, and may correct the estimates in the final
settlement statement.
|
| (d) |
Closing
Documents.
The parties, as indicated, will execute the following instruments
to close
this transaction:
|
| (i) |
An
instrument substantially in the form of the Assignment and ▇▇▇▇ of
Sale
attached as Exhibit
B,
modified to the extent necessary to conform to the terms of this
Agreement. The Assignment and ▇▇▇▇ of Sale will be effective as of
the
Effective Time, be with special warranty of title, and restate the
indemnities, releases, and waivers contained in this Agreement. Buyer
may
require the parties to execute separate instruments for each state,
county, or other jurisdiction in which the Properties are located,
or with
respect to state or federal governmental jurisdiction to which the
Interests are subject, to facilitate timely
recording.
|
| (ii) |
Other
documents reasonably required to close this transaction and implement
the
terms of this Agreement, including deeds, bills of sale, and the
like and
instruments necessary under operating agreements, plans of unitization,
laws, and regulations affecting the Interests to transfer the Interests
and related obligations from Seller to
Buyer;
|
| (iii) |
Designation-of-Operator
forms, or such other form as is required by governmental agencies
with
jurisdiction over the Properties.
|
| (iv) |
Seller
shall furnish Buyer with:
|
| i. |
List
of all pumping equipment and tankage for each
lease
|
| ii. |
List
of all related equipment used on the lease premises such as all trucks,
trailers, tractors, etc.
|
| (v) |
The
closing settlement statements.
|
| (e) |
Third-Party
Consents.
Seller will deliver proof of required third-party consents and approvals,
except to the extent waived by buyer in
writing.
|
| (f) |
Payment
to Seller.
At Closing, (i) buyer will pay to Seller $2,000,000.00 and (ii) as
to the
net amount shown on Closing Settlement Statement, in Buyer’s sole and
unfettered discretion Buyer will either (A) offset amounts due hereunder,
(B) pay Seller, or (C) any combination of the above. Cash payments
hereunder shall be made by certified check, cashier’s check, or funds
transfer as that term is defined in Chapter 4 of the Texas Business
and
Commerce Code. The respective closing settlement statement amounts
are
subject to further adjustment after Closing as provided in this Agreement.
|
| (g) |
Delivery
of Possession.
Subject to the terms of applicable joint operating agreements, if
any, the
Related Agreements, and this Agreement, Seller will deliver possession
of
the Properties to Buyer as soon as practicable after the Effective
Time or
the Closing Date, whichever is later.
|
|
7.05
|
Condition
Precedent.
Seller’s performance of its obligations under this article is a condition
precedent to Buyer’s obligation to close this
transaction.
|
|
7.06
|
Seller’s
Representation by Closing.
By closing this transaction, Seller will be deemed to represent to
Buyer
that all Seller’s representations and warranties under this Agreement, the
Additional Instruments, are true as of the Closing Date.
|
ARTICLE
8. POST-CLOSING OBLIGATIONS
|
8.01
|
Filing
and Recording.
Buyer will file or record the conveyance documents by which the Interests
will be conveyed from Seller to Buyer in the appropriate governmental
records and will provide photocopies of the filed or recorded document,
including the recording data, to Seller.
|
|
8.02
|
Further
Assurances.
Seller and Buyer each will, from time to time after Closing and upon
reasonable request, execute, acknowledge, and deliver in proper form
any
conveyance, assignment, transfer, or other instrument reasonably
necessary
to accomplish the purposes of this
Agreement.
|
|
8.03
|
Compliance.
Buyer will comply with all rules, regulations, statutes and laws
applicable to buyer’s ownership of the Interests or Property and with all
Related Agreements, insofar as they concern or pertain to the Interests.
Seller will comply with all rules, regulations, statutes, and laws
applicable to Seller’s management and operation of the Interests or
Property and with all Related Agreements, insofar as they concern
or
pertain to the Interests.
|
|
8.04
|
Reassignment.
Should Buyer elect to reassign any property(s) due to title defect
or due
to other causes as set forth herein, Buyer shall execute and deliver
to
Seller a reassignment, without warranty of any kind (title, fitness,
condition). Seller shall release and discharge Buyer and its Associated
Parties, covenant not to ▇▇▇ Buyer or its Associated Parties, and
indemnify, defend, and hold Buyer and its Associated Parties harmless
as
to any Property(s) that are reassigned, and the reassignment instrument
will reinstate Seller’s obligation.
|
ARTICLE
9. TAXES
|
9.01
|
Taxes.
Any ad valorem, property, production, severance and similar taxes
and
assessments on said Interests shall be borne by Seller for all times
prior
to the Effective Time and by Buyer for all times after the Effective
Time.
|
ARTICLE
10. OIL IN STORAGE, PROCEEDS, COSTS, EXPENSES, AND
DISBURSEMENTS
|
10.01
|
Oil
in Storage.
All Oil in storage at the Effective Time, including working inventory,
belongs to Seller. All storage tanks shall be gauged as of 7:00am,
local
time, or as close thereto as possible. Any oil so shown to be in
storage
shall be valued at the price last paid by purchases during the last
month
of sales, less any applicable taxes, royalties and/or other required
payments. Seller shall have the right to have a representative present
at
the gauging of all tanks.
|
|
10.02
|
Proceeds,
Costs, and Expenses.
All proceeds, receipts, credits, income, and charges attributable
to the
Properties and accruing after the Effective Time will be Buyer’s property
and responsibility.
|
|
10.03
|
Notice
to Remitters of Proceeds.
Seller will make reasonable efforts to cause all remitters to remit
proceeds to Buyer. Notice to the remitters that this transaction
has
closed shall occur by letter-in-lieu-of-transfer order or other documents
required by each remitter.
|
ARTICLE
11. ENVIRONMENTAL MATTERS
|
11.01
|
Acknowledgement
Concerning Possible Contamination of the Interests and
Property.
Buyer and Seller are aware that the Interests and property have been
used
for exploration, development, and production of oil and gas and that
there
may be petroleum, produced water, wastes, or other materials located
on or
under the Properties. Equipment and sites included in the properties
may
contain asbestos, hazardous substances, or NORM. NORM may affix or
attach
itself to the inside of ▇▇▇▇▇, materials, and equipment as scale,
or in
other forms; the ▇▇▇▇▇, materials, and equipment located on the Properties
may contain NORM and other wastes or hazardous substances; and
NORM-containing material and other wastes or hazardous substances
may have
been buried, come in contact with the soil, or otherwise been disposed
of
on the Property. Special procedures may be required for the remediation,
removal, transportation, or disposal of wastes, asbestos, hazardous
substances, and NORM from the Interests and the Property. Buyer shall
undertake, at its sole cost and expense an evaluation of the environmental
status of the Properties and shall inform Seller should this evaluation
reveal any deficiencies as to the environmental status of the Properties.
Any deficiencies so noted by Buyer shall be treated in the same manner
as
a Title Defect and Seller and Buyer shall have the same obligations
and
remedies as set forth in Article 5
hereinabove.
|
ARTICLE
12. BUYER’S REPRESENTATIONS AND COVENANTS
Buyer
represents and warrants to Seller that as of the date hereof:
|
12.01
|
Organization.
Buyer is duly organized, validly existing and in good standing under
the
laws of its own jurisdiction of organization.
|
12.02
Power
and Authority; Authorization; Enforceability; No Conflicts; Etc.
|
(a)
|
Buyer
has all requisite power and authority to execute and deliver this
Agreement and the Additional Instruments to which it is a party and
to
perform its obligations hereunder and thereunder and to consummate
the
transactions contemplated hereby and
thereby.
|
(b)
The
execution, delivery and performance by Buyer of this Agreement and the
Additional Instruments to which it is a party and the consummation by Buyer
of
the transactions contemplated hereby and thereby have been duly authorized
by
all requisite action of Buyer.
|
(c)
|
The
Agreement has been, and the other Additional Instruments to which
Buyer is
a party have been duly and validly executed and delivered by Buyer
and
constitutes the legal, valid and binding obligations of Buyer, enforceable
against it in accordance with their respective
terms.
|
| (d) |
The
execution and delivery by Buyer of this Agreement and of each of
the
Additional Instruments to which it is a party, the performance by
it of
the transactions contemplated hereby and thereby do
not:
|
| (i) |
result
in a violation or breach of, or constitute (with or without due notice
or
lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under any of
the
terms, conditions or provisions of any agreement to which Buyer is
a party
or by which the properties or assets of Buyer may be bound or otherwise
subject; or
|
| (ii) |
contravene
or violate any laws applicable to
Buyer.
|
| (e) |
No
prior or subsequent filing or registration with, notification to,
or
authorization, consent or approval of, any governmental or regulatory
agency is required to be made or obtained by Buyer in connection
with the
execution, delivery and performance of this Agreement by Buyer or
any of
the other Additional Instruments to which Buyer is a party or the
consummation by Buyer of the transactions contemplated hereby and
thereby.
|
| 12.03 |
Securities
Laws.
|
| (a) |
Buyer
acknowledges that the solicitation of an offer for and the sale of
Interests by Seller has not been registered under any securities
laws.
|
| (b) |
Buyer
intends to acquire the Properties for its own benefit and account
and is
not acquiring the Properties with the intent of distributing fractional
undivided interests in them or otherwise selling them in a manner
that
would be subject to regulation by federal or state securities laws.
If
Buyer sells, transfers, or otherwise disposes of the Properties or
fractional undivided interests in them in the future, it will do
so in
compliance with applicable federal and state
laws.
|
| (c) |
Buyer
represents that at no time has it been presented with or solicited
by or
through any public promotion or other form of advertising in connection
with this transaction.
|
ARTICLE
13. GAS IMBALANCES
|
13.01
|
Seller’s
and Buyer’s Respective Obligations.
For those Interests with cumulative gas-production-imbalance accounts
among working interest owners, Buyer acknowledges that the amounts
are
derived from either Seller’s or Operator’s statements based upon current
production, prior sales history, and contract information; were provided
to Buyer before the Execution Date; and were taken into consideration
in
Buyer’s calculation of the Base Purchase Price and the Allocations. After
the Effective Time, all benefits, obligations, and liabilities associated
with these gas-production-imbalance accounts and related agreements
will
accrue to and become Buyer’s responsibility. Buyer will assume Seller’s
overproduced or underproduced position as of the Effective Time and
subject to the other provisions of this Agreement, unless the operating
agreement, plan of unitization, or gas balancing agreement for an
Interest
provides for the cash settlement of gas-production-imbalance accounts
when
the Interest is assigned, in which event Seller reserves the
gas-production-imbalance account and the right to the cash settlement.
Any
gas imbalances attributable to the Interests are disclosed on Exhibit
D
attached hereto.
|
ARTICLE
14. FINAL SETTLEMENT STATEMENT
| 14.01 |
Preparation.
Seller will prepare a final settlement statement relating to the
Interests
and submit it to Buyer within 90 days after the Closing Date. The
final
settlement statement will deduct royalties, operating expenses, taxes,
overhead, and other amounts due to Seller from amounts due to Buyer
as
provided in this Agreement, with adjustments as necessary for items
identified after Closing.
|
| 14.02 |
Final
Settlement.
Buyer must respond in writing with objections and proposed corrections
within thirty days of receiving the final settlement statement relating
to
the interests. If the parties cannot resolve their differences within
ninety days of Seller’s receipt of Buyer’s objections, then the
alternate-dispute-resolution and arbitration procedures of this Agreement
will be triggered. If Buyer does not respond to the final settlement
statement by signing or objecting in writing within the thirty-day
period,
the statement will be deemed approved by Buyer. After approval of
said
final settlement statement, Seller will send a check or invoice to
Buyer
for the net amount.
|
ARTICLE
15. BROKER’S AND FINDER’S FEES
Seller
and Buyer each represents and warrants to the other that it has incurred no
liability, contingent or otherwise, for broker’s or finder’s fees in conjunction
with this Agreement or the transaction contemplated by it for which the other
party will have any responsibility.
ARTICLE
16. COMMUNICATIONS
Unless
otherwise provided in this Agreement, communications (including notices) under
this Agreement that must be in writing and delivered by a specific date will
b
deemed to have been made when received at the following addresses by registered
or certified mail, postage prepaid or by messenger:
|
Seller:
|
Buyer:
|
|
Tag
Operating Company
|
Packard
Gas Company
|
|
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
▇▇▇▇
▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
|
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
|
▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
|
|
Inland
Gas Corporation
|
|
|
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
|
|
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
ARTICLE
17. SELLER’S DEFAULT
If
Seller
defaults under this Agreement in a material way, including Seller’s failure to
perform its obligations to close this transaction, Buyer may, at its sole
option, terminate this Agreement in addition to all of its other rights at
law
or in equity.
ARTICLE
18. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ANTITRUST IMPROVEMENTS
ACT
OF 1976
The
parties have determined that the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of
1976 does not apply to this transaction.
ARTICLE
19. DEPOSIT
Upon
execution of this Agreement by all the Parties hereto, Buyer shall deliver
a non
refundable deposit in the amount of $500,000.00 to Seller. Said deposit shall
be
deducted from the Base Purchase Price as set forth in 3.01 above, at
closing.
ARTICLE
20. MISCELLANEOUS
|
20.01
|
Entire
Agreement.
This Agreement and the Additional Instruments constitute the entire
agreement between the parties as to the transaction described in
this
Agreement. All previous negotiations and communications between the
parties as to these matters are merged into this Agreement and the
Additional Instruments.
|
|
20.02
|
Successors
and Assigns; Amendment; Survival.
This Agreement is binding on and inures to the benefit of the parties
and
their respective successors, heirs, representatives, and assigns
and may
be supplemented, altered, amended, modified, or revoked only in writing
signed by both parties. Neither the assignment of this Agreement
nor of
the Properties or any part of them will relieve Seller of its obligations
under this Agreement unless and to the extent Buyer consents in writing
to
release Seller, which consent may be withheld for any
reason.
|
|
All
provisions of this Agreement and the Additional Instruments that
cannot be
performed before Closing or the earlier termination of this Agreement
and
all representations, promises, releases, and indemnities under this
Agreement and the Additional Instruments will survive Closing or
the
earlier termination of this Agreement.
|
|
|
20.03
|
|
|
20.04
|
Assignment.
Neither this Agreement nor the rights and obligations under it may
be
assigned or delegated by either party without the other party’s prior
written consent, which consent may be withheld for any reason, and
an
attempted assignment or delegation in the absence of such consent
is
void.
|
|
20.05
|
No
Admissions.
Neither this Agreement, nor any part of it, nor any performance under
this
Agreement, nor any payment of any amount under this Agreement will
constitute or may be construed as a finding, evidence of, or an admission
or acknowledgement of any liability, fault, past or present wrongdoing,
or
violation of law, rule, regulation, or policy, be either Seller or
Buyer
or their respective Associated Parties.
|
|
20.06
|
Third-Party
Beneficiaries.
There are no third-party beneficiaries of this
Agreement.
|
|
20.07
|
Public
Communications.
Unless provided otherwise in this Agreement, neither party will make
any
press release or public communication concerning this transaction
without
the other party’s prior written consent, which consent may be withheld for
any reason.
|
|
20.08
|
Headings
and Titles.
The headings and titles in this Agreement are for the guidance and
convenience of reference only and do not limit or otherwise affect
or
interpret the terms or provisions of this Agreement.
|
|
20.09
|
Exhibits.
All exhibits referenced in and attached to this Agreement are incorporated
into it.
|
|
20.10
|
Includes.
The word “includes” and its syntactical variants mean “includes, but is
not limited to” and corresponding syntactical variants. The rule
ejusdem
generis may
not be invoked to restrict or limit the scope of the general term
or
phrase followed or preceded by an enumeration of particular examples.
|
|
20.11
|
Severability.
If any provision of this Agreement is found to be illegal or
unenforceable, the other terms of this Agreement shall remain in
effect,
and this Agreement shall be construed as if the illegal or unenforceable
provision had not been included.
|
|
20.12
|
Counterparts.
This Agreement may be executed in multiple counterparts, all of which
together will be considered one instrument.
|
|
20.13
|
Conflicts.
If the text of this Agreement conflicts with the terms of any exhibit
to
this Agreement, then the text of this Agreement will
control.
|
|
20.14
|
Not
to Be Construed against the Drafter.
Seller acknowledges that it has read this Agreement, has had opportunity
to review it with an attorney of its choice, and has agreed to all
of its
terms. Under these circumstances, the parties agree that the rule
of
construction that a contract be construed against the drafter may
not be
applied in interpreting this Agreement.
|
|
20.15
|
No
Waiver.
No waiver by either party of any part of this Agreement will be deemed
to
be a waiver of any other part of this Agreement or a waiver of strict
performance of the waived part in the future.
|
|
20.16
|
CONSPICUOSNESS.
THE PARTIES ACKNOWLEDGE THAT THE PROVISIONS OF THIS AGREEMENT THAT
ARE
PRINTED IN THE SAME MANNER AS THIS SECTION ARE
CONSPICUOUS.
|
|
20.17
|
Execution
By the Parties. Neither
the submission of this instrument for Seller’s examination, nor
discussions or negotiations between the parties constitutes an offer
to
purchase the Properties and this instrument and the underlying transaction
will become enforceable and binding between the parties only upon
execution and delivery of this instrument by both Seller and
Buyer.
|
|
The
parties have executed this Agreement on the date below their signatures,
to be enforceable and binding as of the Execution
Date.
|
|
Tag
Operating Company, Inc.
a
Texas Corporation
|
Packard
Gas Company
a
Texas Corporation
|
|
| |
|
|
| By: | By: | |
|
Name:
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
Land
&
Contracts
|
|
|
Title: 
60;
|
Date: _______________ | |
|
Date:
|
||
Inland
Gas Corporation
a
Texas
Corporation
By:
__________________________
Name:
________________________
Title:
_________________________
Date:
_________________________
EXHIBIT
“B”
To
that
certain Purchase and Sale Agreement effective October 1, 2005 by and between
Tag
Operating Company, Inc. and Inland Gas Corporation, as Sellers, and Packard
Gas
Company, As Buyer
ASSIGNMENT
AND ▇▇▇▇ OF SALE
OF
OIL, GAS AND MJNERAL LEASES
NOTICE
OF CONFIDENTIALITY RIGHTS: IF YOU ARE ▇▇▇ TURAL PERSON, YOU MAY REMOVE OR STRIKE
ANY OF THE FOLLOWING INFORMA TION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR
RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S
LICENSE NUMBER.
STATE
OF TEXAS
KNOW
ALL MEN BY THESE PRESENTS, THAT:
COUNTY
OF ▇▇▇▇▇▇
This
Assignment and ▇▇▇▇ of Sale of Oil, Gas and Mineral Leases (this "Assignment")
is
made
effective as of 7:00 a.m. the 31st day of October, 2005 (hereinafter referred
to
as the "Effective
Date"), by
and
between Tag Operating Company, Inc. whose mailing address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and Inland Gas Corporation whose mailing
address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
referred to as collectively as the" Assignor") and Packard Gas Company whose
mailing address is ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
(hereinafter referred to as the" Assignee").
I.
NOW,
THEREFORE,
for and
in consideration of the sum of Ten and No/100 Dollars ($10.00), cash in hand
paid, and other good and valuable consideration, the receipt an sufficiency
of
which is hereby acknowledged Assignor does hereby BARGAIN, SELL, ASSIGN and
TRANSFER unto Assignee, subject to all royalty and overriding royalty interests,
any other outstanding interests, depth limitations or reassignment obligations,
if any, that may now burden Assignor's interest covered by this Assignment,
and
the Production Payment hereinafter reserved, the following interests, all of
which are hereinafter sometimes referred to as the "
Assigned Interests", to-wit:
|
a.
|
All
of Assignor's right, title and interest in and to the Oil, Gas and
Mineral
Leases described in Exhibit" A " attached hereto and incorporated
herein
by reference for a]l purposes (the "Leases"),
including,
but not limited to, all of Assignor's leasehold estate and working
interests, reversionary interests, recoupment rights and any other
interests whatsoever in, to and under the Leases, such Leases entitling
Assignee to the Working Interests and Net Revenue Interests in ▇▇▇▇▇
located thereon described on Exhibit " A " and as provided in that
certain
Asset Purchase Agreement dated March 11, 2005, with Assignor and
Assignee
as parties (the "Purchase Agreement") SAVE AND EXCEPT any overriding
royalty interest, mineral interest pr royalty interest in and to
lands
covered by the Leases in favor of Assignor, which are expressly reserved
and excepted herefrom;
|
|
b.
|
All
of Assignor's right, title and interest in and to (i) all of the
personal
property, fixtures and improvements now situated thereon or appurtenant
thereto, and all other equipment, including, but not limited to,
the
tanks, gun barrels, pumping units, dehydrators, tubing, wellhead
equipment, flowlines and compressors, if any and (ii) all wellbores
on the
lands covered by the Leases;
|
|
c.
|
All
of Assignor's right, title and interest in and to all valid and existing
rights-of- way, easements, surface leases, permits, or licenses now
or
hereafter affecting the Assigned Interests;
|
|
d.
|
All
of Assignor's right, title and interest in and to any amendments,
ratifications, renewals or extensions of the Leases; and
|
|
e.
|
All
of Assignor's right, title and interest in and to all oil, gas and
other
minerals that may be produced from all oil and/or gas ▇▇▇▇▇ located
on the
Assigned Interests subsequent to the Effective Date hereof.
|
|
f.
|
All
of Assignor’s right. title and interest in and to all valid and subsisting
contracts insofar and only insofar as they are related to or affecting
the
foregoing specifically enumerated interests assigned hereunder and
the
oil, gas and all other hydrocarbons reduced therefrom including without
limitation all operating agreements, exploration agreements, unit
agreements, facilities use agreements, gas sales contracts, oil or
other
hydrocarbon sales contracts, processing agreements, transportation
agreements, division orders, and all other valid contracts of whatever
nature, including any and all amendments thereto.
|
II.
Assignee,
in consideration of the mutual benefits to be derived hereunder, and by its
acceptance hereof, understands and agrees to the following terms and conditions:
|
a.
|
Assignee
assumes proportionate responsibility for and agrees to plug and abandon
each and every well located on the Assigned Interests and to restore
the
surface of the Assigned Interests in accordance with applicable
governmental rules, regulations, laws and orders, and as may be required
under the Leases or other agreements affecting the Assigned Interests
and
if there is any financial assurance required by any law, rule, or
regulation, then Assignee shall secure anew financial assurance in
the
required amount, and supply it to the regulatory body requiring such
financial assurance, to the end that Assignor's financial assurance
shall
be released and discharged. In the event Assignee fails to do any
of the
foregoing, Assignee agrees to release, indemnify, defend and hold
harmless
Assignor for all liability for such failure.
|
|
b.
|
Assignee
hereby expressly assumes and agrees to be bound by and to perform
all of
the duties and obligations accruing after the Effective Date of this
Assignment under the Leases or any agreement affecting the Assigned
Interests proportionately attributable to the percentage interest
herein
assigned. ASSIGNEE, ITS SUCCESSORS AND ASSIGNS, HEREBY AGREES TO
INDEMNIFY
AND DEFEND ASSIGNOR, ITS OFFICERS, DIRECTORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, FROM AND AGAINST ALL CLAIMS, DEMANDS AND
CAUSES OF
ACTION, INCLUDING COSTS OF CLEAN-UP OR PLUGGING LIABILITIES FOR ANY
AND
ALL ▇▇▇▇▇, BROUGHT BY ANY AND ALL PERSONS, INCLUDING (WITHOUT LIMIT
A
TION), ASSIGNEE'S AND ASSIGNOR'S EMPLOYEES, AGENTS, OR REPRESENTATIVES
AND
ALSO INCLUDING (WITHOUT LIMITATION) ANY PRIVATE CITIZENS, PERSONS,
ORGANIZA TIONS, AND ANY AGENCY, BRANCH OR REPRESENT A TIVE OF FEDERAL,
ST
ATE OR LOCAL GOVERNMENT, ON ACCOUNT OF ANY PERSONAL INJURY OR DEA
TH OR
DAMAGE, DESTRUCTION, OR LOSS OF PROPERTY, CONTAMINATION OF NATURAL
RESOURCE (INCLUDING SOIL, SURFACE WATER OR GROUND WATER) OR THE
ENVIRONMENT, INCLUDING, WITHOUT LIMIT A TION, CLAIMS ARISING UNDER
ENVIRONMENT AL LA WS RESULTING FROM OR ARISING OUT OF ANY LIABILITY
CAUSED
BY OR CONNECTED WITH THE PRESENCE, DISPOSAL OR RELEASE OF ANY MA
TERIAL OF
ANY KIND IN, ON OR UNDER THE ASSIGNED INTERESTS AT OR AFTER THE EFFECTIVE
DA TE, WITHOUT REGARD TO ASSIGNOR'S (1) NEGLIGENCE, WHETHER SUCH
NEGLIGENCE IS ACTIVE OR PASSIVE, JOINT, SOLE OR CONCURRENT, OR (2)
STRICT
LIABILITY. THIS INDEMNIFICA TION SHALL BE IN ADDITION TO ANY OTHER
INDEMNITY PROVISIONS CONT AINED IN THIS ASSIGNMENT , AND IT IS EXPRESSL
Y
UNDERSTOOD AND AGREED THA T ANY TERMS OF THIS PARAGRAPH SHALL CONTROL
OVER
ANY CONFLICTING OR CONTRADICTING TERMS OR PROVISIONS CONT AINED ELSEWHERE
IN THIS ASSIGNMENT .
|
|
d.
|
The
Assigned Interests have been utilized by Assignor for the purpose
of
exploration, development, and production of oil and gas. Assignee
acknowledges that there may have been spills of crude oil and produced
water or other material in the past on the Assigned Interests. In
addition, some production equipment may contain asbestos and/or Naturally
Occurring Radioactive Material (hereinafter referred to as "NORM").
In
this regard, Assignee expressly understands that NORM may affix or
attach
itself to the inside of the ▇▇▇▇▇, materials and equipment as scale,
or in
other forms, and that said ▇▇▇▇▇, materials and equipment located
on the
Assigned Interests may contain NORM and that NORM-containing material
may
be buried or otherwise disposed of on the Assigned Interests. Assignee
also expressly understands that special procedures may be required
for the
removal and disposal of asbestos and NORM from the equipment and
Assigned
Interests where it may be found and that Assignee assumes all liability
for assessment, removal and disposal of any such materials and associated
activities.
|
|
e.
|
ASSIGNEE
UNDERSTANDS AND AGREES THAT THIS TRANSFER IS MADE ON AN "AS IS, WHERE
IS",
AND "WITH ALL FAULTS" BASIS AND ASSIGNEE RELEASES ASSIGNOR FROM ANY
LIABILITY WITH RESPECT THERETO WHETHER OR NOT CAUSED BY OR ATTRIBUTABLE
TO
ASSIGNOR'S NEGLIGENCE EXCEPT AS OTHERWISE EXPRESSLY AGREED UPON IN
WRITING
BY ASSIGNOR OR AS PROVIDED IN THIS PARAGRAPH. WITHOUT LIMITING THE
ABOVE,
AND EXCEPT AS EXPRESSL Y PROVIDED IN THISASSIGNMENT, ASSIGNEE WAIVES
ITS
RIGHT TO RECOVER FROM ASSIGNOR AND FOREVER RELEASES AND DISCHARGES
ASSIGNOR FROM ANY AND ALL DAMAGES, CLAIMS, LOSSES, LIABILITIES, PENAL
TIES, FINES, LIENS, JUDGMENTS, COSTS, OR EXPENSES, WHATSOEVER, (INCLUDING,
WITHOUT LIMITATION, ATTORNEY'S FEES AND COSTS), WHETHER DIRECT OR
INDIRECT, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, THA T MA Y ARISE
ON
ACCOUNT OF OR IN ANY WAY BE CONNECTED WITH THE PHYSICAL CONDITION
OF THE
ASSIGNED INTERESTS OR ANY ENVIRONMENT AL LA W OR REGULA TION APPLICABLE
THERETO.
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III..
This
Assignment is made and executed by Assignor and accepted by Assignee subject
to
a proportionate part of the terms, conditions, reservations and exceptions
set
forth in the following:
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a.
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the
terms, provisions, covenants and royalties set forth in the Leases
and any
pooling, communitization and unitization agreements or orders affecting
the Assigned Interests;
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b.
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all
overriding royalty interests, restrictions, exceptions, reservations,
burdens, encumbrances, conditions, limitations, interests, assignments,
instruments, agreements and other matters, if any, that may burden
or
affect Assignor's interest in the Assigned Interests;
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c.
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the
terms and conditions contained in any Joint Operating Agreement covering
the Assigned Interests; and
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d.
all
Federal, State, and local laws and to all orders, rules, regulations and
standards issued thereunder by all duly constituted political subdivisions
and
agencies having jurisdiction, and Assignee hereby warrants that it will comp]y
with same. Further, Assignee specifically warrants that it will comply with
any
and al] laws, orders, rules, regulations and standards of all Federal, State
and
local political subdivisions and agencies applicable to ( I) a]] exploration,
drilling, production, plugging, and abandonment procedures, and (2) the control,
regulation and prevention of pollution, including, but not limited to, salt
water discharge and contamination.
IV.
ASSIGNEE
ACKNOWLEDGES THAT ASSIGNOR HAS NOT MADE, AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS
AND NEGATES: (a) ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, RELATING
TO
THE CONDITION OF ANY IMMOV ABLE PROPERTY, MOV ABLE PROPERTY, EQUIPMENT,
INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY CONSTITUTING ANY PART
OF
THE ASSIGNED INTERESTS: (b) ANY AND ALL REPRESENTATIONS AND WARRANTIES AS TO
ALL
EQUIPMENT, PERSONAL PROPERTY, AND FIXTURES WHICH ARE SOLD AND CONVEYED ON AN
"
AS IS", "WHERE IS", AND "WITH ALL FAULTS" BASIS: (c) ANY WARRANTY OR
REPRESENTATION, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, RELATING
TO
THE CONDITION, QUANTITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE, CONFORMITY
TO THE MODELS OR SAMPLES OF MATERIALS OR MERCHANTABILITY OF ANY EQUIPMENT;
(d)
ANY WARRANTY OF FITNESS FOR ANY PURPOSE: (e) ANY IMPLIED OR EXPRESS WARRANTY
OF
FREEDOM FROM REDHIBITORY VICES OR DEFECTS OR OTHER VICES OR DEFECTS, WHETHER
KNOWN OR UNKNOWN: (I) ANY AND ALL IMPLIED WARRANTIES EX.ISTING UNDER APPLICABLE
LA W NOW OR HEREAFTER IN EFFECT. ASSIGNEE SHALL HAVE INSPECTED, OR WAIVED (AND
UPON CLOSING SHALL BE DEEMED TO HA VE WAIVED) ITS RIGHT TO INSPECT, THE ASSIGNED
INTERESTS FOR ALL PURPOSES AND SA TISFIED ITSELF AS TO THEIR PHYSICAL CONDITION,
BOTH SURFACE AND SUBSURFACE. ASSIGNEE IS RELYING SOLELY UPON ITS OWN INSPECTION
OF THE ASSIGNED INTERESTS, AND ASSIGNEE SHALL ACCEPT ALL OF THE SAME IN THEIR
"
AS IS, WHERE IS", AND "WITH ALL FAULTS" CONDITION. ALSO WITHOUT LIMITATION
OF
THE FOREGOING, ASSIGNOR MAKES NO WARRANTY OR REPRESENT A TION, EXPRESS, IMPLIED,
ST A TUTORY OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA,
REPORTS, RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW, HERETOFORE OR
HEREAFTER FURNISHED OR MADE AVAILABLE TO ASSIGNEE IN CONNECTION WITH THIS
ASSIGNMENT INCLUDING, WITHOUT L.IMITATION, RELATIVE TO PRICING ASSUMPTIONS
OR
QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY) A TTRIBUT ABLE TO THE
ASSIGNED INTERESTS OR THE ABILITY OR POTENTIAL OF THE ASSIGNED INTERESTS TO
PRODUCE HYDROCARBONS OR THE ENVIRONMENTAL CONDITION OF THE ASSIGNED INTERESTS
OR
ANY OTHER MATTERS CONTAINED IN THE MATERIALS FURNISHED OR MADE AVAILABLE TO
ASSIGNEE BY ASSIGNOR OR BY ASSIGNOR'S AGENTS OR REPRESENTATIVES. ANY AND ALL
SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION AND OTHER MATERIALS
(WRITTEN OR ORAL) FURNISHED BY ASSIGNOR OR OTHERWISE MADE AVA.ILABLE OR
DISCLOSED TO ASSIGNEE SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR
AGAINST ASSIGNOR AND ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT ASSIGNEE'S
SOLE RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW.
ASSIGNEE
REPRESENTS AND WARRANTS THAT SUCH ASSIGNEE IS AN EXPERIENCED AND KNOWLEDGEABLE
INVESTOR IN OIL AND GAS PROPERTIES, HAS THE FINANCIAL AND BUSINESS EXPERTISE
TO
EV ALUA TE THE MERITS AND RISKS OF THE TRANSACTIONS COVERED BY THIS ASSIGNMENT,
AND HAS RELIED SOLEL YON THE BASIS OF ITS OWN INDEPENDENT INVESTIGATION OF
THE
ASSIGNED INTERESTS FOR ALL PURPOSES. ASSIGNEE ACKNOWLEDGES THAT IT HAS HAD
THE
OPPORTUNITY TO SEEK THE ADVICE OF PERSONS IT DEEMED APPROPRIATE CONCERNING
THE
CONSEQUENCES OF THE PROVISIONS OF THIS ASSIGNMENT AND HEREBY WAIVES ANY AND
ALL
RIGHTS TO CLAIM THAT IT IS AN UNSOPHISTICATED INVESTOR IN OIL AND GAS
PROPERTIES.
V.
It
is the
intention and agreement of Assignor and Assignee hereunder that the provisions
of this Assignment be severable. Should the whole or any portion of a section
or
paragraph be judicially held to be void or invalid, such holding shall not
affect other portions which can be given effect without the invalid or void
portion.
Assignor
and Assignee hereby agree that all of the covenants and agreements contained
herein shall extend to and be obligatory upon the heirs, executors,
representatives, administrators, successors, and assigns of Assignor and
Assignee, and shall be covenants running with tJ:1e land.
TO
HAVE
AND TO HOLD the same unto the Assignees, their successors and assigns, according
to the terms, covenants and conditions of the Leases and this Assignment.
Assignee
joins in the execution hereof for the purpose of being bound by all of the
terms, provisions, obligations and covenants herein specified.
Assignee
acknowledges that all bolded provisions herein relating to indemnity
obligations, releases and waivers are conspicuous, satisfy the express
negligence rule under Texas law and represent a material bargained for
allocation of risk between Assignor and Assignee.
IN
WITNESS WHEREOF,
this
instrument is executed as of the acknowledgement date of each of the parties
hereto, but shall be effective as of the Effective Date hereof.
| Witnesses |
ASSIGNOR:
TAG
OPERATING COMPANY, INC.
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Name:
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Title:
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| Witnesses |
ASSIGNOR:
INLAND GAS
CORPORATION
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Name:
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Title:
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| Witnesses |
ASSIGNEE:
PACKARD GAS COMPANY
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Name:
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Title:
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