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PIPELINE PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into effective as of the 31st day of
December, 1998 (the "Effective Date"), by and between UNITED STATES GAS
GATHERING CO., INC., a Delaware corporation (the "Seller"), and NORTHERN OSAGE
GAS ASSOCIATION, L.L.C. (the "Buyer").
WHEREAS, Seller is the owner of an undivided 50% interest in a natural
gas pipeline in Osage County, Oklahoma; and
WHEREAS, Seller desires to sell and Buyer desires to purchase the
Seller's interest in the Pipeline upon the terms and conditions contained
herein;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties hereto agree as
follows:
1. Purchase and Sale of Pipeline. On the terms and subject to the
conditions set forth in this Agreement, Seller agrees to sell, assign, transfer
and deliver to Buyer and Buyer agrees to purchase from the Seller, all of the
Seller's right, title and interest, if any, in the pipeline depicted on Exhibit
A as the ZCA Pipeline, including all of the assets, properties, rights and
operations of Seller constituting part of or used directly in the operation of
such pipeline, all agreements relating to such pipeline and the operation or
maintenance thereof, including contracts for the purchase, transportation or
sale of gas, and all inventories of natural gas liquids in such pipeline as of
the Effective Date (collectively, the "Pipeline"). The assets included in the
Pipeline are more particularly described in the Quit Claim Deed, Assignment and
▇▇▇▇ of Sale attached hereto as Exhibit B (the "Quit Claim").
2. Purchase Price and Delivery. The total purchase price (the "Purchase
Price") that shall be paid by Buyer for the Pipeline shall be $245,000, payable
by wire transfer to Seller at the Closing. Seller shall deliver to Buyer at
Closing, concurrently with the payment of the Purchase Price, (i) the Quit
Claim, duly executed and acknowledged by Seller and (ii) a certificate of the
Secretary of the Seller, in form and substance reasonably satisfactory to Buyer,
certifying the incumbency of each of the officers of Seller executing this
Agreement or any other document delivered hereunder.
3. Closing. The consummation of this transaction (the "Closing") shall
occur contemporaneously with the execution of this Agreement at the office of
United States Exploration, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ or at such other place as the parties may agree.
4. Assignment and Assumption of Contracts. Effective as of the
Effective Date, Seller hereby assigns to Buyer, and Buyer hereby assumes and
agrees to promptly and fully perform all of Seller's obligations under, all
contracts and agreements relating to the Pipeline, including, without
limitation, all contracts for the purchase, transportation or sale of natural
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gas and natural gas liquids. Without limiting the generality of the foregoing,
Seller assigns and Buyer assumes and agrees to perform the contracts described
in Exhibit C.
5. Representations and Warranties of Seller. Seller represents and
warrants to Buyer that the statements contained in this Paragraph 5 are correct
as of the date of this Agreement. Said representations and warranties are made
by Seller to Buyer for the sole benefit of Buyer and shall survive the Closing
until the date which is the earlier of (i) one (1) year from the date of the
Closing; or (ii) Buyer's subsequent sale of the Pipeline to a third party (not
at all times controlled by Buyer):
(a) Seller is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware. Seller has the
legal capacity and authority to enter into this Agreement. This Agreement is a
valid and legally binding obligation of Seller and is fully enforceable against
Seller in accordance with its terms, except as such enforceability may be
limited by general principles of equity, bankruptcy, insolvency, moratorium and
similar laws relating to creditors' rights generally.
(b) To the knowledge of the Seller, and except as otherwise
disclosed to Buyer in writing, (i) the Pipeline is in compliance in all material
respects with all applicable laws and regulations, and (ii) the Seller is not in
default of any order, writ, injunction or decree relating to the Pipeline. This
representation and warranty shall not apply to liabilities attributable to
environmental matters, subject to subparagraph 5(g) below.
(c) Seller has no knowledge of (i) any threatened or pending
lawsuits relating to the Pipeline or (ii) any threatened or pending proceedings
or governmental investigations relating to the Pipeline, except, in each case,
as otherwise disclosed to Buyer in writing.
(d) To the knowledge of Seller, (i) Seller possesses all
material governmental licenses, permits, certificates, orders, consents,
approvals, franchises and authorizations legally required to enable it to own
and operate the Pipeline and (ii) Seller is in compliance in all material
respects with the requirements of the foregoing. Seller makes no representation
or warranty that any such licenses, permits, certificates, orders, consents,
approvals, franchises or authorizations are assignable to Buyer or that Buyer
will be able to obtain new ones in its own name after the Closing.
(e) The Seller has made available to the Buyer all material
information concerning the Pipeline that is known to the Seller.
(f) The Seller has no knowledge of the existence of any liens
or encumbrances on the Pipeline, other than liens for taxes not yet due and
mechanics liens, operators liens and the like securing obligations arising in
the ordinary course of business that are not overdue.
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(g) In the opinion of the Chief Executive Officer of Seller,
based solely upon his own actual knowledge, there are no environmental problems
relating to the Pipeline that would have a material adverse effect upon the
Pipeline or its operation.
(h) To the knowledge of the Seller, the Seller has not
received any notice of default under the agreements described in Exhibit C.
(i) The consummation by Seller of the transactions
contemplated hereby will not (i) violate or constitute a default under the
Articles of Incorporation or Bylaws of Seller or (ii) result in the creation or
imposition of any lien, charge or encumbrance upon the Pipeline.
6. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller that the statements contained in this Paragraph 6 are correct
as of the date of this Agreement. Said representations and warranties shall
survive the Closing for a period of one year from the date of the Closing:
(a) Buyer has the legal capacity and authority to enter into
this Agreement. This Agreement is a valid and legally binding obligation of
Buyer and is fully enforceable against Buyer in accordance with its terms,
except as such enforceability may be limited by general principles of equity,
bankruptcy, insolvency, moratorium and similar laws relating to creditors'
rights generally.
(b) No broker, finder, agent or other intermediary has acted
for or on behalf of Buyer in connection with this Agreement and the transactions
contemplated hereby, nor is any third party entitled to any fee or commission in
connection herewith.
7. Taxes. Buyer shall be responsible for any sales, transfer, excise,
documentation, stamp tax or other taxes levied in connection with and/or
applicable to the sale and transfer of the Pipeline and Buyer hereby agrees to
indemnify and hold Seller harmless from and against any and all claims
(including interest, fines, penalties and reasonable attorneys' fees) which are
asserted at any time against Seller in connection with any of the foregoing,
except to the extent such claims are caused by a breach of the obligations of
Seller under this Section 7. At the Closing, Buyer shall pay to Seller the
amount Buyer believes in good faith to be due as sales tax as a result of the
sale of the Pipeline hereunder and Seller shall file the appropriate return with
the appropriate taxing authority and remit such amount to the appropriate taxing
authority all in a timely manner. Such payment shall not limit Buyer's
obligations under this Section 7. Seller shall deliver to Buyer's Agent a copy
of such return along with evidence of payment.
8. Covenants Subsequent to Closing. From time to time after the
Closing, Buyer shall provide to Seller, as reasonably requested by Seller in
each instance, access to the books and records relating to the Pipeline for
periods prior to the Closing, for Seller's legitimate business purposes,
including, without limitation, preparation of tax returns, preparation for tax
audits, etc. Buyer shall perform the obligations of Seller and its parent,
United States Exploration, Inc., under the contracts described in Exhibit C,
except (i) insofar as such obligations do not relate to the Pipeline and
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(ii) insofar as such obligations arise from operations of Seller's parent after
the Closing in the Area (as defined in the agreement described in paragraph 2 of
Exhibit C).
9. Indemnification by Seller. Seller shall indemnify and hold Buyer
harmless from and against any and all claims, threats, liabilities, taxes,
interest, fines, penalties, suits, damages, losses, costs and expenses
(including reasonable attorneys' fees and court costs) of every kind and nature
("Claims") arising solely out of (i) any misrepresentation or breach by Seller
of any representation or warranty contained in this Agreement of which Seller
receives written notice from Buyer prior to the survival date for Seller's
representations and warranties under Paragraph 5, which notice shall specify in
reasonable detail the facts alleged to constitute the breach; or (ii) any
nonfulfillment, failure or breach by Seller of or with any covenant, promise or
agreement of Seller contained in this Agreement; PROVIDED, that under no
circumstances shall Seller be obligated to indemnify Buyer for Claims in excess
of the Purchase Price and PROVIDED FURTHER, that Buyer's right to
indemnification hereunder shall be its sole remedy in respect of any Claims
under this Agreement.
10. Indemnification by Buyer. Buyer shall indemnify and hold Seller and
its current and future officers, directors and stockholders harmless from and
against any and all Claims, of every kind and nature arising solely out of (i)
any misrepresentation or breach by Buyer of any representation or warranty
contained in this Agreement of which Buyer receives written notice from Seller
prior to the survival date for Buyer's representations and warranties under
Paragraph 6, which notice shall specify in reasonable detail the facts alleged
to constitute the breach; (ii) any nonfulfillment, failure or breach by Buyer of
or with any covenant, promise or agreement of Seller contained in this
Agreement; or (iii) any liability or obligation relating to the Pipeline
subsequent to the Closing. Seller's right to indemnification hereunder shall be
its sole remedy in respect of any Claims under this Agreement.
11. Warranty Disclaimer. Except for the express warranties made by
Seller in Section 5, Seller makes no representation or warranty of any kind with
respect to the Pipeline. All rights and assets comprising the Pipeline are sold
AS IS, WHERE IS AND WITH ALL FAULTS. All other warranties that would otherwise
arise by operation of law are hereby expressly disclaimed. Without limiting the
generality of the foregoing, Seller makes no warranty of title with respect to
the Pipeline or any component thereof.
12. Severability. The agreements and covenants contained herein are
severable, and in the event any of them shall be held to be invalid by a court
of competent jurisdiction, this Agreement shall be interpreted as if such
invalid agreements or covenants were not contained herein.
13. Notices. Any notice under this Agreement shall be given in writing
to the party to whom the notice is addressed, personally by facsimile or by
certified mail, return receipt requested, or by private carrier, at the
following address or such other address or addresses as may hereafter be
furnished in writing by any party hereto:
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If to Buyer: Northern Osage Gas Association L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller: United States Exploration, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Receipt of any notice sent pursuant to this paragraph shall be the date of
personal delivery of such notice or notice by facsimile or, if mailed, three (3)
business days after mailing of such notice, or if by private carrier, one (1)
business day after sending of such notice, provided such delivery or mailing is
in accordance with the terms of this paragraph.
14. Governing Law. This Agreement and any performance hereunder shall
be construed and enforced in accordance with, and governed by, the internal laws
of the State of Oklahoma.
15. Amendment, Assignment. Neither this Agreement nor any term or
provision hereof may be changed, waived, discharged, amended, modified or
terminated orally, or in any manner other than by an instrument in writing
signed by the parties hereto. Except for an assignment to an entity at all times
controlled by the assigning party, neither party hereto shall assign this
Agreement, or its rights or obligations hereunder, to any third party, and any
such assignment in violation of this prohibition shall be void and of no legal
effect.
16. Further Action. Each party shall execute and deliver such other
certificates, agreements and other documents and take such other actions as may
reasonably be requested by the other parties in order to consummate or implement
the transactions contemplated by this Agreement. Without limiting the generality
of the foregoing, in the event that Buyer discovers any easement or right-of-way
constituting part of the Pipeline that is owned by Seller and is not
specifically described in the Quit Claim, Seller shall, at Buyer's request and
expense, execute another instrument of transfer in the same form as the Quit
Claim assigning all of its right, title and interest in such easement or
right-of-way to Buyer
17. Section Headings. The headings of the several sections of this
Agreement are inserted solely for convenience of reference and are not a part of
and are not intended to govern, limit or aid in the construction of any term or
provision hereof.
18. Facsimile Signatures. Facsimile signatures shall be binding as
executed originals. The parties shall promptly exchange executed originals
through overnight conveyance.
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19. Knowledge Representations. Except as specifically indicated in
Section 5(g), representations and warranties in this Agreement based on the
knowledge of Seller mean the actual knowledge of the current officers of Seller.
IN WITNESS WHEREOF, the parties hereto executed this Agreement
effective as of the day and year first above written.
SELLER:
United States Gas Gathering Co., Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President
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BUYER:
Northern Osage Gas Association, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Manager
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