EXHIBIT 10.2
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered into
this 21st day of October, 1997, by and between SCANA Petroleum Resources, Inc.,
a South Carolina Corporation ("Seller") and ▇▇▇▇▇▇ Oil & Gas Corporation, a
Delaware Corporation ("Purchaser").
Seller and Purchaser may hereinafter be referred to individually as "Party" or
collectively as "Parties".
WHEREAS, Purchaser desires to purchase and Seller desires to sell all of
Seller's right, title and interest in and to certain oil, gas and mineral leases
and associated assets and contract rights; and
WHEREAS, Seller and Purchaser desire to set forth herein the terms and
provisions of their agreements and understandings;
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties ,
intending to be legally bound, hereby agree as follows:
ARTICLE I
GENERAL TERMS AND CONDITIONS
1.01 SALE OF SUBJECT PROPERTIES.
1.01.01 Seller covenants and agrees to sell to Purchaser, and
Purchaser covenants and agrees to buy from Seller all of Seller's right,
title and interest in and to the properties more specifically described
below (hereinafter the "Subject Properties"):
(A) The oil, gas and mineral leases, mineral interests and
operating rights (the "Leases") as set forth on Exhibit "A"
hereto, and the ▇▇▇▇▇ located thereon or on lands pooled,
unitized or communitized therewith (the "▇▇▇▇▇") as set forth on
Exhibit "A-1" hereto, together with all associated rights (the
Leases and ▇▇▇▇▇ shall collectively be referred to as the "Oil
and Gas Properties").
(B) All presently existing and valid oil, gas or mineral
unitization, pooling, operating and communitization agreements,
declarations and orders, and the units created thereby
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including, without limitation, all units voluntarily formed or
formed under orders, regulations, rules or other official acts of
any federal, state or other governmental authority having
jurisdiction, insofar and only insofar as they relate to the Oil
and Gas Properties.
(C) All presently existing and valid oil and gas sales,
purchase, transportation, gathering, balancing, exchange and
processing contracts, casinghead gas contracts, operating
agreements, farmout and farmin agreements, production handling
agreements, compression agreements, joint venture agreements,
participation agreements and other agreements and instruments
(including without limitation, the Exploration Agreements listed
on Exhibit G hereto, future interests, reversionary rights and
deferred interests), insofar and only insofar as they relate to
the Oil and Gas Properties (the "Contracts") together with all
franchises, licenses, permits, approvals, consents, certificates
and other authorizations and other rights granted by governmental
authorities and all certificates of convenience or necessity,
immunities, privileges, grants and other rights insofar and only
insofar as any of them relate to the Oil and Gas Properties and
are assignable by Seller (the "Permits"). Notwithstanding the
foregoing all former and existing agreements between Seller and
any Affiliate (as hereafter defined) of Seller shall not be
considered as Contracts or assigned to Purchaser, save and except
only that certain Production Handling Agreement by and between
SCANA Energy Marketing, Inc. and Seller dated April 1, 1997,
concerning Seller's handling of certain gas and liquid volumes at
Seller's Vermilion 217 A Platform. For all purposes hereof, the
term "Affiliate" shall mean, as to any person, any other person
that directly or indirectly (through one or more intermediaries
or otherwise) controls, is controlled by, or is under common
control with such person.
(D) All personal property, improvements, lease and well
equipment, easements, licenses and permits (to the extent they
are assignable by Seller), servitudes and rights-of-way
(including as applicable, but not limited to, any ▇▇▇▇▇, tanks,
boilers, buildings, platforms, flowlines, fixtures, machinery,
injection facilities, saltwater disposal facilities, compression
facilities, inventories of tubular goods and other equipment,
supplies and tools, gathering systems, power lines, telephone and
telegraph lines, roads and other appurtenances and easements)
owned by Seller and located on the Oil and Gas Properties as of
the Effective Time (as hereinafter defined) and which are being
used or held for use by Seller in connection with the
exploration, development, operation or maintenance of the Oil and
Gas
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Properties, or any unit or units in which part or parts of the
Oil and Gas Properties may be included, or being used or held for
use by Seller in connection with the production, treating,
storing, transportation or marketing of oil, gas and the
minerals, produced from or allocated to the Oil and Gas
Properties or such unit or units.
(E) The seismic contracts and associated data owned by
Seller reflected on Exhibit "A-2" attached hereto, to the extent
the transfer thereof is not prohibited or restricted by law or
contract.
(F) All lease files, land files, well files, prospect
files, gas and oil sales contract files, gas processing files,
division order files, abstracts, title opinions and all other
books, files and records, information and data and all rights
thereto of Seller insofar as the same are directly related to and
necessary or useful to the realization of any value by Purchaser
of the Oil and Gas Properties and to the extent the transfer
thereof is not prohibited or restricted by law or contract.
(G) All proceeds of and other rights relating to insurance
or condemnation payable or accruing by reason of the loss of,
damage to, diminution in the value of or income or revenues from,
or taking of all or any part of the Subject Properties occurring
after the Effective Time or relating or attributable to the
period subsequent to the Effective Time save and except any
payments or other consideration received by Seller associated
with or arising from any suit or claim or other cause listed on
Exhibit "B-1" hereto.
1.01.02 The Subject Properties shall not include any of Seller's
right, title and/or interest in any of the following (referred to herein
as the "Excluded Assets"); (A) those assets described on Exhibit "B";
(B) Affiliate contracts unless specified in Section 1.01.01(C) above;
(C) all trade credits and all accounts, instruments and general
intangibles (as such terms are defined in the Uniform Commercial Code)
attributable to the Subject Properties with respect to any period of
time prior to the Effective Time; (D) all claims and causes of action of
Seller (i) arising from acts, omissions or events, or damage to or
destruction of property, occurring prior to the Effective Time, (ii)
arising under or with respect to any contracts related to the Subject
Properties that are attributable to periods of time prior to the
Effective Time (including claims for adjustments or refunds), or (iii)
with respect to any of the Excluded Assets; (E) all rights and interests
of Seller (i) under any policy or agreement of insurance or indemnity,
(ii) under any bond, or (iii) to any insurance or condemnation
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proceeds or awards arising, in each case, from acts, omissions or
events, or damage to or destruction of property, occurring prior to the
Effective Time; (F) all oil, gas or other hydrocarbons produced and sold
from the Oil and Gas Properties with respect to all periods prior to the
Effective Time, together with all proceeds from or of such substances;
(G) claims of Seller for refunds or loss carry forwards with respect to
(i) production or any other taxes attributable to any period prior to
the Effective Time, (ii) income or franchise taxes, or (iii) any taxes
attributable to the Excluded Assets; (H) all amounts due or payable to
Seller as adjustments to insurance premiums related to the Subject
Properties with respect to any period prior to the Effective Time; (I)
all proceeds, income or revenues (and any security or other deposits
made) attributable to (i) the Subject Properties for any period prior to
the Effective Time, or (ii) any Excluded Assets; (J) all of Seller's
proprietary computer software, patents, trade secrets, copyrights,
names, trademarks, logos and other intellectual property; (K) all of
Seller's interpretations of geological and geophysical data; (L) all
documents and instruments of Seller that may be protected by an
attorney-client privilege, provided, that if any such document or
instrument relates directly to the Subject Properties and is withheld
from Purchaser based on this provision, Seller shall inform Purchaser of
the nature of the instrument, its date, the parties to it and a general
statement describing the content thereof; (M) all audit rights with
respect to any period prior to the Effective Time; and (N) all claims,
causes of action and other rights related to or arising in connection
with the lawsuits described on Exhibit "B-1."
1.01.03 The conveyance of the Subject Properties shall be
evidenced by assignment ("Assignment") using one of the forms of
assignment attached hereto as Exhibits "C" through "C-4" as applicable,
together with all special federal, state and tribal (if any) assignment
forms as may be required by applicable law, rule or regulation to be
executed in connection with the conveyance of specific Oil and Gas
Properties, provided that the terms and provisions of the Assignment
shall control as to any conflict between the Assignment and any such
special assignment forms. Said conveyance shall be effective as of 7:00
a.m. Central Standard Time on December 1, 1997 (the "Effective Time"),
and shall convey Seller's interest in the Subject Properties to
Purchaser or Purchaser's Nominee (as hereinafter defined) without
warranty of title expressed or implied except for claims arising by,
through or under Seller, but not otherwise.
1.02 CONSIDERATION. The purchase price to be paid by Purchaser for the Subject
Properties shall be One Hundred and Ten Million Dollars ($110,000,000.00)
(hereinafter called the "Base Purchase Price"), which shall be payable by wire
transfer in immediately available funds and actually
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received in Seller's bank account on or before 3:00 p.m. Central Standard Time,
on the date on which Closing occurs (the "Closing Date"). The Base Purchase
Price shall be reduced or increased based on the adjustments to be made pursuant
to Section 1.04 and as otherwise provided for in this Agreement (the "Adjusted
Purchase Price"). The Base Purchase Price shall be allocated (the "Allocated
Values") as set forth on Exhibit "D" attached hereto. Seller and Purchaser agree
and stipulate that such Allocated Values have been established solely for use in
calculating adjustments to the Base Purchase Price as provided herein, such
schedule of Allocated Values being solely for the convenience of the Parties.
Seller and Purchaser do not intend that such schedule of Allocated Values be
treated or interpreted to constitute an allocation of the Base Purchase Price
among the Subject Properties for federal or state income tax purposes.
1.03 DEPOSIT. Contemporaneously with the execution of this Agreement, Purchaser
shall pay to Seller the sum of Five Million and Five Hundred Thousand Dollars
($5,500,000.00) (hereinafter called the "Deposit"). If the sale hereunder is
consummated in accordance with the terms hereof, the Deposit, without interest,
if any, shall be applied to the Base Purchase Price to be paid by Purchaser at
Closing. In the event (A) this Agreement is terminated by Purchaser in writing
in accordance with the terms of Section 10.01 hereof; (B) this Agreement is
terminated by Seller in writing solely because the conditions to Closing
specified in Section 5.01.02 or 5.01.05 are not satisfied or (C) the transaction
contemplated hereby fails to close due solely to the fault of Seller, which
occurs in the absence of a default by Purchaser, then the Deposit, without
interest, if any, shall be returned to Purchaser within three (3) business days
of the resulting termination of this Agreement. In the event the transaction
contemplated by this Agreement does not close on or before December 31, 1997,
for any reason whatsoever (including the fault of Purchaser), except those
specified in the preceding sentence, the Deposit plus interest, if any, shall be
forfeited by Purchaser and permanently retained by Seller as liquidated damages,
as Seller's sole and exclusive remedy for such failure to close (including
default by Purchaser), all other remedies for such failure to close being
expressly waived by Seller. THE PARTIES HEREBY ACKNOWLEDGE THAT THE EXTENT OF
DAMAGES TO SELLER OCCASIONED BY THE FAILURE OF THIS TRANSACTION TO BE
CONSUMMATED WOULD BE IMPOSSIBLE OR EXTREMELY DIFFICULT TO ASCERTAIN AND THAT THE
AMOUNT OF THE DEPOSIT IS A FAIR AND REASONABLE ESTIMATE OF SUCH DAMAGES UNDER
THE CIRCUMSTANCES AND DOES NOT CONSTITUTE A PENALTY. The restriction of Seller's
damages hereunder to the amount of the Deposit shall apply only to damages
arising solely from the failure to close the transaction contemplated hereby and
shall not apply to damages arising from any other act or failure to act by
Purchaser (such as, for example, breach of confidentiality agreements between
Seller and Purchaser).
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1.04 ADJUSTMENTS TO THE BASE PURCHASE PRICE.
1.04.01 Appropriate adjustments shall be made between Purchaser
and Seller so that (A) all expenses (including, without limitation, all
drilling costs, all capital expenditures, and all overhead charges under
applicable operating agreements, whether Seller is the Operator or
whether such operating agreements are with third parties or related
entities, and all other overhead charges actually charged by third
parties or which would be due to Seller as Operator under standard
operating agreement provisions for the area in which the property is
located) which are incurred in the operation of the Subject Properties
before the Effective Time will be borne by Seller and all proceeds (net
of applicable production, severance and similar taxes) from the sale of
oil, gas and/or other minerals produced therefrom before the Effective
Time will be owned by Seller, and (B) all expenses (including, without
limitation, all capital expenditures, all drilling costs, and all
overhead charges under applicable operating agreements, whether such
operating agreements are with third parties or related entities, and all
other overhead charges actually charged by third parties) which are
incurred in the operation of the Subject Properties after the Effective
Time will be borne by Purchaser and all proceeds (net of applicable
production, severance and similar taxes) from the sale of oil, gas
and/or other minerals produced therefrom after the Effective Time will
be owned by Purchaser. It is agreed that, in making such adjustments:
(X) oil which was produced from the Subject Properties and which was, on
the Effective Time, stored in tanks located on the Subject Properties
(or located elsewhere but used by Seller to store oil produced from the
Subject Properties prior to delivery to oil purchaser) and above
pipeline connections shall be deemed to have been produced before the
Effective Time, and (Y) ad valorem taxes assessed with respect to a
period which the Effective Time splits shall be prorated based on the
number of days in such period which fall on each side of the Effective
Time (with the day on which the Effective Time falls being counted in
the period after the Effective Time), and (Z) no consideration shall be
given to the local, state or federal income tax liabilities of any
Party. Notwithstanding the provisions of this Section 1.04.01 there
shall be additional adjustments as may be required pursuant to Section
4.02 or Article VII, or as otherwise provided in this Agreement. Seller
shall deliver to Purchaser not less than two business days before the
Closing Date a statement (the "Closing Statement") setting forth
Seller's best estimate of adjustments to the Base Purchase Price as
provided for in this Section 1.04.01 and elsewhere in this Agreement.
The Closing Statement shall be prepared in accordance with generally
accepted accounting principles. On or before 120 days after Closing,
Purchaser and Seller shall determine the final amounts of such
adjustments, and make such final adjustments by appropriate written
notice and payments from Seller to
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Purchaser or from Purchaser to Seller. Payments resulting from such
invoices shall be made within fifteen (15) days of the date of such
invoice, and if not timely paid, the balance due shall bear interest at
the rate of 1.5% per month from date of invoice until paid.
1.04.02 Attached hereto as Exhibit "E" is a schedule showing with
respect to the Subject Properties as of August 31, 1997, to the best of
Seller's knowledge (A) the total amount of overproduction of gas
attributable to Seller's interest (e.g. volumes of gas taken from the
▇▇▇▇▇ on the Subject Properties, or on lands unitized therewith, by
Seller in excess of those volumes which Seller's interest would entitle
it to receive) and (B) the total amount of underproduction of gas
attributable to Seller's interest (e.g. volumes of gas not taken from
the ▇▇▇▇▇ on the Subject Properties, or on lands unitized therewith, by
Seller despite Seller's interest in and right to receive such volumes).
The Parties acknowledge and agree that the calculation and agreement
herein as to the Base Purchase Price has taken such imbalances through
the Effective Time into account and that no adjustment to the Base
Purchase Price shall be made in consideration of any additions,
deletions, or other changes to the imbalances with respect to the
Subject Properties for any period. At and after Closing Purchaser shall
receive the benefit of and shall bear all obligations of any and all
imbalances attributable to the Subject Properties regardless of when
such imbalances arose or accrued.
1.04.03 If the Parties cannot agree in good faith as to the
amount or validity of any adjustment claimed by either Party under this
Section 1.04, such dispute and supporting documentation shall be
submitted to arbitration pursuant to the provisions of Article XI.
1.05 CLOSING. The completion of the purchase and sale of the Subject Properties
as contemplated by this Agreement, as well as the physical act or acts of
execution and delivery of the documents contemplated hereby and delivery of
consideration as provided above (the "Closing") shall occur at the offices of
Seller, Two ▇▇▇▇▇ Center, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, at a
time and date mutually acceptable to Seller and Purchaser on or before December
1, 1997 (with the Parties agreeing to a pre-closing of the transaction on or
before November 26, 1997).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.01 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to
Purchaser that the following are true and correct as of the date of this
Agreement and will be true at Closing as if made on that date:
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2.01.01 Seller is a South Carolina corporation which:
(A) is duly organized, validly existing and in good
standing under the laws of the state of its incorporation;
(B) has taken all requisite steps to insure its ability to
legally conduct business in the places and manner as required to
own, operate and sell the Subject Properties;
(C) has full corporate power and authority to carry on its
business as now being conducted and is duly licensed or qualified
to do business and is in good standing in each jurisdiction in
which the Subject Properties are located; and
(D) has full corporate power and authority and is duly
authorized by appropriate action of the board of directors,
shareholders, partners, venturers or others, as the case may be,
to enter into this Agreement, to perform the obligations
hereunder, and to convey to Purchaser the Subject Properties.
2.01.02 This Agreement has been duly and validly executed and
delivered by Seller and constitutes, and all other agreements
contemplated herein, when entered into, will constitute, the legal,
valid and binding agreements and obligations of Seller enforceable
against Seller in accordance with their respective terms. Seller has the
right to convey the Subject Properties to Purchaser or Purchaser's
Nominee at Closing.
2.01.03 The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated by this Agreement
do not and will not (A) conflict with or violate or constitute a default
under (with or without notice or lapse of time or both) any agreement
governing Seller's organization or management or any agreement to which
Seller is a party or to which any of the Subject Properties is bound;
(B) result in or give rise to (or with notice or the passage of time of
both could result in or give rise to) the creation or imposition of any
lien, charge penalty, restriction, security interest or encumbrance or
any termination, cancellation or acceleration under the terms,
conditions or provisions of any of the Subject Properties (or any
agreement, instrument or obligation relating to or burdening any Subject
Property) or under any applicable law, rule or regulation; or (C)
violate any judgment, decree, order, regulation or rule of any court or
governmental authority applicable to Seller or the Subject Properties,
subject to the
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expiration of any waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), if applicable, and except for
any violation which is not material or which would not affect Seller's
ability to consummate the transactions contemplated under this
Agreement.
2.01.04 There are no tax liens upon, pending against, or, to the
knowledge of Seller, threatened against any of the Subject Properties.
2.01.05 To Seller's knowledge, there are no judicial,
administrative or arbitration actions or proceedings pending or
threatened that challenge the validity of this Agreement or seek to
restrain or prevent any action taken or to be taken by Seller in
connection with this Agreement. Except as shown on Exhibit "B-1" and
Exhibit "F" , to Seller's knowledge there is no litigation or
arbitration or other proceeding pending or threatened, or any order,
injunction, remediation or decree outstanding against or relating to
Seller or the Subject Properties that, if adversely determined, would
have a material adverse effect upon the Subject Properties or the
continued operation thereof.
2.01.06 Seller has not incurred any obligation or liability,
contingent or otherwise, for brokers' or finders' fees in respect of the
transactions contemplated herein for which Purchaser will be liable.
2.01.07 To the best of Seller's knowledge, as of the Effective
Time, all federal, state and Indian (if any) lease obligations with
respect to the federal, state or Indian oil and gas leases included in
the Subject Properties will be current and all payments required
thereunder will have been made. Seller is qualified to own all federal,
state and Indian leases included in the Subject Properties and does not
exceed any acreage limitation imposed by any applicable law, rule or
regulation on ownership of such leases. Seller is not aware of any fact
relating to Seller or the Subject Properties that could reasonably be
expected to cause the Minerals Management Service or other governmental
authorities to fail to approve the assignment of the Subject Properties
to Purchaser.
2.01.08 To the best of Seller's knowledge, except as set forth on
Schedule 2.01.08: (a) the Subject Properties comply in all material
respects with all applicable laws, rules and regulations of governmental
authorities (provided that this representation and warranty does not
purport to cover compliance with environmental laws, rules or
regulations); (b) Seller has not received any notice of any violation or
alleged violation of any law, rule or regulation
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applicable to the Subject Properties; and (c) Seller has not entered
into any compliance or remediation plans with any governmental authority
which in any way relate to the Subject Properties.
2.01.09 To the best of Seller's knowledge, set forth on Schedule
2.01.09 is a true and correct list as of the date hereof of the
contracts, agreements, leases or similar arrangements, each of which is
included in the Subject Properties or by which any of the Subject
Properties will be bound after the Effective Time, and which:
(a) is with any Affiliate of Seller;
(b) is a contract for the sale, purchase, processing or
transportation of oil, gas or other hydrocarbons produced from or
attributable to the Oil and Gas Properties, except such contracts
which can be terminated by Seller or its assigns upon not more
than thirty (30) days notice; or
(c) evidences a lease or rental of any land, building or
other improvements or portion thereof, excluding those associated
with (i) Oil and Gas Properties and (ii) surface leases which are
not material to the business of owning and operating the Subject
Properties.
2.01.10 To the best of Seller's knowledge, as of the Effective
▇▇▇▇ ▇▇▇▇▇▇ will have paid all taxes on or relating to the Subject
Properties, or any production or revenues attributable thereto, which
are then currently due and payable as required by law, rule or
regulation prior to delinquency.
2.01.11 To the best of Seller's knowledge, all currently existing
▇▇▇▇▇ have been drilled and completed within the limits permitted by
contract, pooling or unit agreement, and by applicable law, rule or
regulation; and all drilling and completion of such ▇▇▇▇▇ and all
related development and operations have been conducted in compliance
with all applicable laws, rules and regulations. To the best of Seller's
knowledge no such Well is subject to penalties on allowables after the
Effective Time because of any overproduction or any other violation of
applicable law, rule or regulation.
2.01.12 To the best of Seller's knowledge, except as set forth in
Schedule 2.01.12, the Subject Properties are not subject to any tax
partnership agreement or provisions
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requiring a tax partnership income tax return to be filed.
2.01.13 There are no bankruptcy, reorganization or arrangement
proceedings pending against, being contemplated by, or, to the knowledge
of Seller, threatened against Seller.
2.02 LIMITATIONS ON WARRANTIES AND OTHER DISCLAIMERS.
THERE ARE NO WARRANTIES THAT EXTEND BEYOND THE FACE OF THIS AGREEMENT. THE
EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN SECTION 2.01 ABOVE
ARE EXCLUSIVE AND ARE IN LIEU OF, AND SELLER EXPRESSLY DISCLAIMS AND NEGATES AND
PURCHASER HEREBY WAIVES, ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE. AS EXAMPLES AND FOR THE AVOIDANCE OF DOUBT, BUT
WITHOUT LIMITATION OF THE FOREGOING, THE SUBJECT PROPERTIES SHALL BE CONVEYED
PURSUANT HERETO WITHOUT ANY WARRANTY OR REPRESENTATION WHETHER EXPRESS, IMPLIED,
STATUTORY OR OTHERWISE, WITH RESPECT TO: (A) THE QUANTITY, QUALITY, CONDITION,
SIZE, WEIGHT, SERVICEABILITY, CONFORMITY TO SAMPLES OF MODELS OR ANY OTHER
ASPECT OF THE ▇▇▇▇▇, WELLBORES, FIXTURES, EQUIPMENT OR OTHER PERSONAL PROPERTY
INCLUDED AMONG THE SUBJECT PROPERTIES, ALL OF WHICH SHALL BE CONVEYED TO
PURCHASER AS IS, WHERE IS, AND WITH ALL FAULTS AND DEFECTS AND IN THEIR PRESENT
CONDITION AND STATE OF REPAIR AND WITHOUT ANY WARRANTIES WHATSOEVER OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE; (B) THE ACCURACY OR
COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OF
MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO PURCHASER
IN CONNECTION WITH THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, RELATIVE TO
PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY)
ATTRIBUTABLE TO THE SUBJECT PROPERTIES OR THE ABILITY OR POTENTIAL OF THE
SUBJECT PROPERTIES TO PRODUCE HYDROCARBONS; (C) THE QUALITY, QUANTITY OR VOLUME
OF THE RESERVES, IF ANY, OF OIL, GAS OR OTHER HYDROCARBONS IN OR UNDER THE
SUBJECT PROPERTIES; (D) THE PHYSICAL AND ENVIRONMENTAL CONDITION OF THE SUBJECT
PROPERTIES, BOTH SURFACE AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO CONDITIONS
SPECIFICALLY RELATED TO THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS
SUBSTANCES, SOLID WASTES, ASBESTOS AND OTHER MAN MADE
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FIBERS, OR NATURALLY OCCURRING RADIOACTIVE MATERIALS; (E) THE COMPLETENESS OR
ACCURACY OF INFORMATION CONTAINED IN THE DATA OR ANY OTHER MATERIALS FURNISHED
OR MADE AVAILABLE TO PURCHASER BY SELLER OR BY SELLER'S AGENTS OR
REPRESENTATIVES OR BY ANY OTHER PARTY, IT BEING AGREED BY PURCHASER THAT ANY AND
ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION AND OTHER MATERIALS
(WRITTEN OR ORAL) FURNISHED OR OTHERWISE MADE AVAILABLE OR DISCLOSED TO
PURCHASER HAVE BEEN AND WILL BE PROVIDED TO PURCHASER AS A CONVENIENCE AND SHALL
NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST SELLER AND ANY RELIANCE
ON OR USE OF THE SAME SHALL BE AT PURCHASER'S SOLE RISK TO THE MAXIMUM EXTENT
PERMITTED BY LAW; (F) OWNERSHIP OR OPERATION OF THE SUBJECT PROPERTIES OR ANY
PART THEREOF; AND (G) ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED
OR STATUTORY. THE DISCLAIMERS AND WAIVERS WITH RESPECT TO REPRESENTATIONS AND
WARRANTIES AS SET FORTH IN THIS SECTION 2.02 SHALL NOT SERVE TO RELIEVE SELLER
FROM THE PERFORMANCE OF ITS EXPRESS COVENANTS IN THIS AGREEMENT OR RESTRICT
PURCHASER'S RIGHTS UNDER ARTICLE VII. PURCHASER ACKNOWLEDGES THAT THIS WAIVER IS
CONSPICUOUS.
2.03 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to Seller that the following are true and correct as of the date of
this Agreement and will be true at Closing as if made on that date:
2.03.01 Purchaser is a Delaware Corporation which together with
its wholly owned subsidiary ▇▇▇▇▇▇ Oil Corporation (herein referred to
as "Purchaser's Nominee):
(A) are duly organized, validly existing and in good
standing under the laws of the state of their incorporation or
organization;
(B) prior to Closing, will have taken all requisite steps
to insure their ability to legally conduct business in the places
and manner as required to acquire, own and operate the Subject
Properties as of the Effective Time;
(C) have full corporate power and authority to carry on
their business as now being conducted and, prior to Closing will
be duly licensed or qualified to do
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business and will be in good standing in each jurisdiction in
the states in which the Subject Properties are located as of the
Effective Time; and
(D) have full corporate power and authority and are duly
authorized by appropriate action of each of their boards of
directors, shareholders, partners, venturers, members or others,
as the case may be, to enter into this Agreement and to perform
the obligations hereunder.
2.03.02 This Agreement has been duly and validly executed and
delivered by Purchaser and constitutes, and all other agreements
contemplated herein, when entered into, will constitute the valid and
binding agreements and obligations of Purchaser enforceable against
Purchaser in accordance with their respective terms, and no additional
consents to the transaction are necessary.
2.03.03 The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated by this Agreement
do not and will not (A) conflict with or violate or constitute a default
under (with or without notice or lapse of time or both) any agreement
governing Purchaser's organization or management or (B) violate any law,
rules or regulation of any governmental authority to which Purchaser is
subject, subject to the expiration of any waiting periods under the HSR
Act, if applicable, and except for any violation which is not material
or which would not affect Purchaser's ability to consummate the
transactions contemplated under this Agreement.
2.03.04 Purchaser has not incurred any obligation or liability,
contingent or otherwise, for brokers' or finders' fees in respect of the
transactions contemplated herein for which Seller will be liable.
2.03.05 To Purchaser's knowledge, there is no suit, action,
claim, investigation, arbitration or inquiry by any person or entity or
by any administrative agency or governmental body (including, without
limitation, expropriation or forfeiture proceedings), and no legal,
administrative, or arbitration proceedings pending or threatened against
Purchaser, or to which Purchaser is a party, that reasonably may be
expected to have a materially adverse effect upon the ability of
Purchaser to consummate the transactions contemplated in this Agreement.
2.03.06 Purchaser has sufficient cash or other sources of
immediately available
13
funds to enable it to make the Deposit payment to Seller as of the date
hereof, and will, as of Closing, have sufficient cash or other sources
of immediately available funds to enable it to make all other payments
to Seller contemplated by this Agreement.
2.03.07 Purchaser and Purchaser's Nominee experienced and
knowledgeable investors in oil and gas properties and have the financial
and business expertise to evaluate the merits and risks of the
transactions contemplated by this Agreement. In entering into this
Agreement, Purchaser has relied solely on the express representations
and covenants of Seller in Section 2.01 of this Agreement, its
independent investigation of, and judgment with respect to, the Subject
Properties and the advice of its own legal, tax, economic,
environmental, engineering, geological and geophysical advisors and not
on any comments or statements of any representatives of, or consultants
or advisors engaged by Seller.
2.03.08 Purchaser is acquiring the Subject Properties for its own
account or that of Purchaser's Nominee, and not with the intent to make
a distribution thereof within the meaning of the Securities Act of 1933
(and the rules and regulations pertaining thereto) or a distribution
thereof in violation of any other applicable securities laws.
2.03.09 Purchaser or Purchaser's Nominee will, on or before the
Effective Time, meet, , and will continue to meet after the Effective
Time, the individual lease bonding, area-wide bonding, supplemental
bonding and any other bonding requirements of the Minerals Management
Service and other governmental authorities. Purchaser and Purchaser's
Nominee are or will prior to Closing, and, after the Effective Time,
will continue to be, otherwise qualified by the Minerals Management
Service and any other governmental authority to own the Subject
Properties. Purchaser and Purchaser's Nominee shall furnish to Seller no
later than Closing written evidence of their compliance with this
Section. The consummation of the transactions contemplated hereby will
not cause Purchaser or Purchaser's Nominee to be disqualified to be an
owner of federal oil, gas, and mineral leases in the Gulf of Mexico
region, or to exceed any acreage limitation imposed by any law, statute,
rule or regulation. Purchaser nor Purchaser's Nominee, are aware of any
fact that could reasonably be expected to cause the Minerals Management
Service or other governmental authorities to fail to approve the
assignment of the Subject Properties to Purchaser or Purchaser's
Nominee.
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ARTICLE III
OWNERSHIP OF THE SUBJECT PROPERTIES
ALLOCATION OF INCOME AND EXPENSES
Subject to the provisions hereof, Seller shall remain entitled to all of the
rights of ownership (including, without limitation, the right to all production,
proceeds of production, and other proceeds) and shall remain subject to the
duties and obligations of such ownership for the period of time prior to the
Effective Time. Subject to the provisions hereof, and subject to the occurrence
of Closing, Purchaser shall be entitled to all of the rights of ownership
(including, without limitation, the rights to all production, proceeds of
production, and other proceeds) and shall be subject to the duties and
obligations of such ownership, in each case, attributable to the Subject
Properties for the period of time from and after the Effective Time.
ARTICLE IV
COVENANTS PENDING CLOSING
4.01 ACCESS. Immediately following the execution of this Agreement and on a
continuing basis until the Closing Date (or earlier termination of this
Agreement ) Seller will give or, in the case of any of the Subject Properties
for which Seller is not the Operator, use its best efforts to cause Purchaser
and its attorneys and other representatives to be given access to the Subject
Properties at Purchaser's sole cost and expense and, at Seller's office, to any
records, documents or information of Seller pertaining to the ownership and/or
operation of the Subject Properties, subject to Purchaser's prior execution of
an access agreement in a form reasonably acceptable to Seller. Such access shall
be at reasonable times on prior notice. Seller shall not be obligated to provide
Purchaser with access to any records or data which Seller cannot legally provide
to Purchaser without, in its opinion, breaching, or risking a breach of,
confidentiality, license or other agreements with other parties. PURCHASER SHALL
NOT CONTACT ANY THIRD PARTY TO VISIT OR OTHERWISE VIEW OR OBTAIN ANY INFORMATION
CONCERNING THE SUBJECT PROPERTIES, WITHOUT AT LEAST THREE (3) BUSINESS DAYS
PRIOR WRITTEN NOTICE TO SELLER OF SUCH CONTACT, AND SELLER SHALL HAVE THE RIGHT
TO HAVE A REPRESENTATIVE PRESENT AT OR PARTICIPATE IN ANY AND ALL SUCH CONTACTS.
Purchaser recognizes and agrees that all materials made available to it (whether
pursuant to this Section or otherwise) in connection with the transaction
contemplated hereby are made available to it as an accommodation, and without
representation or warranty of any kind as to the accuracy and completeness of
such materials.
PURCHASER HEREBY AGREES TO DEFEND, INDEMNIFY, RELEASE, PROTECT, SAVE AND HOLD
HARMLESS SELLER FROM AND AGAINST ANY AND ALL LOSSES ARISING OUT OF OR RELATING
TO ANY CLAIMS RELATING TO ANY PLANT, FIELD OR
15
FACILITY VISIT, OR OTHER DUE DILIGENCE ACTIVITY, CONDUCTED BY PURCHASER OR ANY
OF ITS AGENTS, REPRESENTATIVES, AFFILIATES, SUCCESSORS, ASSIGNS, OFFICERS OR
DIRECTORS INCLUDING WITHOUT LIMITATION ANY LOSSES RESULTING, IN WHOLE OR IN
PART, FROM THE CONCURRENT OR JOINT NEGLIGENCE OR STRICT LIABILITY OF SELLER.
4.02 PREFERENTIAL RIGHTS. Seller will use reasonable efforts, consistent with
industry practices in transactions of this type, to identify, with respect to
all material Oil and Gas Properties, (A) all preferential rights to purchase,
and all rights to require that consents to assignment of any portion of the Oil
and Gas Properties be obtained, which would be applicable to the transactions
contemplated hereby and (B) the parties holding such rights; in attempting to
identify the same, Seller shall in no event be obligated to go beyond its own
records. Schedule 4.02 lists the parties holding preferential rights which would
be applicable to the transactions contemplated hereby which have been identified
by Seller as of the date hereof. Promptly upon the full and proper execution of
this Agreement, and receipt of the Deposit, Seller will request, from the
parties so identified (and in accordance with the documents creating such
rights), waivers of the preferential rights to purchase and consents to assign
which were so identified. Seller shall have no obligation hereunder, other than
to attempt to identify, with respect to such Oil and Gas Properties, such
preferential rights and requirements for consent to assignment and to so request
such waivers and consents, but with the understanding that Seller shall have no
obligation to assure that such waivers and consents are obtained. Seller shall
provide Purchaser with copies of all correspondence sent or received by Seller
in connection with such efforts contemporaneously with the receipt or sending
thereof. The requests and notices sent by Seller to the holders of preferential
rights and consent rights shall be in form reasonably satisfactory to Purchaser.
The Parties further agree with respect to such preferential rights or consents
as follows:
4.02.01 If prior to Closing a party from whom a waiver of a
preferential right to purchase is requested refuses to give such waiver,
Seller will tender the required interest in the Oil and Gas Property
affected by such unwaived preferential right to the holder, or holders
thereof at an amount equal to the proportionate part of the amount
specified in Exhibit D hereto for the affected Lease or Well, reduced
proportionately, if less than the entire interest of Seller in any Lease
or Well must be tendered. If, and to the extent that, such preferential
right to purchase is exercised by such party or parties, and such
interest in such Lease or Well is actually sold to such party or parties
so exercising such right, such interest will be excluded from the
transaction contemplated hereby and the Base Purchase Price will be
reduced by such amount (or proportionate part thereof, as the case may
be) so specified
16
in Exhibit D hereto for the affected Lease or Well.
4.02.02 If, on the Closing Date, (a) there remain preferential
rights to purchase which have not been waived or for which the
applicable time within which the holder thereof may elect to exercise
such rights has not expired and (b) the total amount of adjustments
which would be made to the Base Purchase Price in the event all of such
preferential rights were exercised by the holders thereof, together with
the net aggregate of all other adjustments permitted by this Agreement
(for purposes of this subsection the "Total Possible Adjustments"),
would be sufficient to permit termination (for purposes of this
subsection the "Termination Threshold") of this Agreement under Section
10.01 (B), then Closing shall be extended to the earlier of (i) a date
two (2) business days following the date that sufficient waivers of
preferential rights to purchase are received (or the time period for
exercise thereof has expired without such rights being exercised) to
reduce the then Total Possible Adjustments to a level below the
Termination Threshold or (ii) the first date on which all preferential
rights have been exercised, waived or for which the time period within
which to exercise same has expired without action.
4.02.03 In the event Closing occurs prior to the expiration of
the period within which the holder of any given preferential right is
permitted to make its election, then the Oil and Gas Property affected
by such preferential right will be conveyed to Purchaser at Closing and,
in the event the preferential right is exercised by such third party
after Closing, Purchaser shall convey the affected Oil and Gas Property
to such third person in full compliance with the terms of the agreement
pursuant to which the preferential right exists at the amount specified
in Exhibit D hereto (proportionately reduced, if applicable) for the
applicable portion of the Subject Properties, and Purchaser shall be
entitled to the consideration for the sale of such Oil and Gas Property.
4.02.04 The failure of Seller to obtain any required consent to
assign prior to Closing shall constitute a Title Defect under the
provisions of Section 7.01.02.
4.02.05 Except to the extent that Purchaser can establish that
Seller failed to fulfill the obligations set forth above in this Section
4.02, Purchaser shall indemnify and hold Seller harmless from and
against all claims, actions, liabilities, damages, losses, costs or
expenses (including court costs and attorneys fees) whatsoever that
arises out of the failure to obtain waivers of preferential rights to
purchase or requirements for consent to assignment with respect to any
transfer by Seller to Purchaser of any part of the Subject Properties
and
17
with respect to any subsequent transfers.
4.03 INTERIM OPERATIONS. Seller covenants that from the date hereof to the
Closing Date, except (A) as provided herein, (B) as required by any existing
Contract or (C) otherwise consented to in writing by Purchaser, Seller will:
4.03.01 Continue to operate the Subject Properties prudently and
in the normal course of business and will not (A) operate or in any
manner deal with, incur obligations with respect to, or undertake any
transactions relating to, the Subject Properties other than transactions
(i) in the normal, usual and customary manner, (ii) of a nature and in
an amount consistent with prior practice, (iii) in the ordinary and
regular course of business of owning and operating the Subject
Properties, and (iv) subject to the terms and conditions of this
Agreement; (B) dispose of, encumber or relinquish any of the Subject
Properties (other than relinquishments resulting from the expiration of
Leases that Seller has no right or option to renew); or (C) waive,
compromise or settle any right or claim that would have a material
adverse effect on the ownership, operation or value of any of the
Subject Properties after the Effective Time.
4.03.02 Promptly notify Purchaser of any suit, lessor demand
action, or other proceeding before any court, arbitrator, or
governmental agency and any cause of action which relates to the Subject
Properties or which might result in impairment or loss of any portion of
the Subject Properties or which might hinder or impede the operation of
the Subject Properties.
4.03.03 Make or give all notifications, filings, consents or
approvals from, to or with all governmental authorities, and will
cooperate with Purchaser in obtaining the issuance, assignment or
transfer, as the case may be, by each such authority of such Permits as
may be necessary for Purchaser to own and operate the Subject Properties
following the consummation of the transactions contemplated in this
Agreement; provided that Seller shall not be required to incur any
expense in connection therewith.
4.03.04 Maintain in effect insurance providing the same type
coverage, in the same amounts with the same deductibles as the insurance
maintained in effect by Seller or its Affiliates on the date of this
Agreement.
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4.04.01 SPECIAL INTERIM PERIOD OPERATIONS. For new operations (those which have
not yet commenced and are not a logical continuation to or part of an operation,
or series of operations, previously approved by Seller and commenced by the
operator on or before the date hereof, such as the completion or plugging and
abandonment of a well drilling prior to the date hereof) affecting the Subject
Properties proposed by third parties during the period between the date of this
Agreement and the Effective Time which operations are the type of operation for
which Seller has the opportunity to elect whether or not it will participate,
Seller will, within two (2) business days of receipt of the notice of the
proposal of such operation (a "Routine Proposal"), send a copy of such Proposal
to Purchaser for Purchaser's consideration unless Seller has less than two (2)
business days within which to respond to such notice (an "Emergency Proposal"),
in which case, Seller will immediately notify Purchaser. No later than ten (10)
business days prior to the time when Seller's election to the party proposing
the operation is due pursuant to a Routine Proposal or, no later than 24 hours
prior to the time such an election is due for an Emergency Proposal, Purchaser
will notify Seller of Purchaser's participation election in response to the
applicable proposal. If the Purchaser elects not to participate, Seller shall
notify the party proposing the operation of Seller's election not to
participate. If Purchaser desires to participate, then Seller and Purchaser
shall, as soon as possible and in any event two (2) business days prior to the
applicable election deadline imposed on Seller for a Routine Election, attempt
to agree on the after tax present value (using a 15% per year discount factor)
that would reasonably result from a successful operation, net of any and all
capital costs and expenses associated with such operation (the "Prospect
Value"). If the Parties are unable to timely agree on the Prospect Value, Seller
shall notify the party proposing the operation of Seller's election not to
participate. If the Parties have agreed on the Prospect Value no later than
twenty-four (24) hours prior to the deadline for delivery of a response for a
Routine Election or two (2) hours prior to the deadline for delivery of a
response for an Emergency Election, Seller shall notify the party proposing the
operation of Seller's election to participate in the proposed operation and
Purchaser shall be liable for and shall pay Seller, at least one (1) week in
advance of the date(s) such payment(s) are due from Seller to the party
conducting the operation, for the entirety of the capital costs and expenses of
such operation whether or not the transactions contemplated by this Agreement
has been or is ever finalized. In the event the operation is thereafter
performed and this Agreement is terminated by either Party for any reason
whatsoever without the transactions contemplated hereby having been finalized,
then Purchaser shall pay to Seller the agreed to Prospect Value regardless of
the actual outcome of the operation. Such payment shall be made by Purchaser
within fifteen (15) days of Seller's invoice therefor to Purchaser, and if not
timely paid, shall bear interest at the rate of 1.5% per month from the date due
until paid.
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4.04.02 For operations affecting the Subject Properties proposed by Seller
and/or third parties which are a logical extension to or part of an operation,
or series of operations, previously approved by Seller in the normal and
ordinary course of business and are commenced or provide Seller the opportunity
to elect whether or not it will participate, between the date of this Agreement
and the Effective Time, (i) the Parties agree to follow the notice, response and
election time frames outlined for Routine Proposals and Emergency Proposals
outlined in Section 4.04.01 above, and (ii) Seller agrees that it shall timely
and prudently commence and perform such operations to the extent it is the
Operator or notify the party proposing and responsible for conducting such
operations, in a manner consistent with Purchaser's timely election, which shall
be made in good faith, based upon sound industry and engineering practice, and
economically justifiable from the Purchaser's perspective. Seller shall be
liable and pay for the costs and expenses arising from the activities associated
with such operations, which activities are actually conducted prior to the
Effective Time, regardless of the outcome of the proposed operation(s).
Sidetrack, deepening, redrilling and other operations substantially outside of
the scope previously approved by Seller shall be considered new operations and
covered by Section 4.04.01 above.
4.05 ANTITRUST NOTIFICATION. If required by law, Seller and Purchaser will each
file, within five (5) business days after the execution of this Agreement, with
the Federal Trade Commission and the Department of Justice the notification and
report form required for the transactions contemplated hereby and any
supplemental information that may be reasonably requested in connection
therewith pursuant to the HSR Act and the rules and regulations promulgated
thereunder, which notification and report form and supplemental information will
comply in all material respects with the requirements of the HSR Act. The
Parties will seek early termination of the waiting period of the HSR Act.
4.06 NOTICE OF BREACH OF REPRESENTATIONS OR WARRANTIES. Purchaser and Seller
will immediately notify the other upon the discovery that any representation or
warranty of either Party is, becomes or will be untrue on the Closing Date.
4.07 CHANGE OF OPERATOR. If and to the extent Purchaser or Purchaser's Nominee
becomes the Operator of any of the Subject Properties pursuant to the terms of
all applicable operating agreements or other agreements that control the
appointment of a successor operator, then at the Effective Time, Purchaser or
Purchaser's Nominee shall assume all responsibilities and obligations of being
"Operator" of all of the Subject Properties for which Seller is then Operator.
Within two (2) business days of Closing, subject to receiving from Seller all
documentation or required assistance, the delivery or performance of which is
within the sole control of Seller, Purchaser or
20
Purchaser's Nominee shall have taken all actions necessary to be substituted as
Operator on the records of all governmental agencies or authorities as
appropriate. Seller will assist Purchaser in obtaining the approval of the
working interest owners in each applicable Well or unit to the substitution of
Purchaser or Purchaser's Nominee as Operator in place of Seller. Purchaser
acknowledges and agrees that Seller cannot and does not covenant or warrant that
Purchaser or Purchaser's Nominee shall become successor Operator to Seller since
such ▇▇▇▇▇ or units may be subject to operating or other agreements that control
the appointment of a successor operator.
4.08 SALES OF PRODUCTION. If Closing occurs after the 10th day of the calendar
month preceding the calendar month in which the Effective Time occurs, Purchaser
shall have the right to elect to have Seller, or a designee of Seller, contract
for the sale of all production from the Subject Properties to be produced during
the calendar month in which the Effective Time occurs. If Purchaser elects to
have Seller contract for such sales, it must notify Seller in writing of such
election no later than the 15th day of the calendar month preceding the calendar
month in which Effective Time occurs (or the next business day if the 15th is a
legal holiday). In such event, Purchaser agrees to cooperate with Seller and
operate the daily production of the Subject Properties in conjunction and
accordance with the mutually agreeable nominations made by Seller for such
production for the applicable sales month. Seller will pay (or cause to be paid)
Purchaser 98% of the amount actually received by Seller (or its designee) for
the sale of such production, less any and all costs actually incurred by Seller
(or its designee) of gathering, transportation and/or transportation penalties
not caused directly by the intentional misconduct or gross negligence of Seller
or its designee, compression, treating and/or processing of such production and
less all costs or in-kind volumes of any fuel and shrinkage associated with such
services or operations. Purchaser shall be paid on or before the last day of the
month following the month in which such sales are made, or five (5) business
days after the receipt by Seller (or its designee) of the proceeds from the sale
of Purchaser's production from the Subject Properties, whichever is later.
Except for payment to Purchaser of the proceeds from the sale of such
production, Seller nor its designee shall have any liability to Purchaser
arising from any aspect of the sale thereof, unless arising from the intentional
misconduct or gross negligence of Seller or its designee; it being understood
that all of such sales are being made strictly as an accommodation to Purchaser.
Purchaser acknowledges that after such month of production sales by Seller or
its designee, that Purchaser will assume all obligations and take the actions
necessary to thereafter sell the production from the Subject Properties.
ARTICLE V
CONDITIONS TO CLOSING
21
5.01 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller under this
Agreement are subject to the satisfaction at or prior to Closing, of the
following conditions:
5.01.01 All representations and warranties of Purchaser contained
in this Agreement shall be true in all material respects at and as of
Closing as if such representations and warranties were made at and as of
Closing.
5.01.02 If filing thereof is required by law, the necessary
waiting period with respect to filings under the HSR Act shall have
expired, or the Department of Justice and the Federal Trade Commission
shall have otherwise consented to the consummation of the transactions
contemplated by this Agreement so that Closing may proceed without
violation thereof; provided, if the waiting period has not expired or
consent otherwise received on or before December 1, 1997, then the
Closing shall be delayed until the third business day following the
expiration of the waiting period or receipt of consent.
5.01.03 Purchaser will have performed and complied with, or
caused the performance of and compliance with, in all material respects,
all the obligations, terms, conditions, and agreements required by this
Agreement to be performed or complied with by it on or prior to Closing.
5.01.04 Purchaser shall make payment of the Base Purchase Price
as adjusted at Closing.
5.01.05 As of Closing, no suit, action or other proceeding shall
be pending or threatened before any court or governmental agency seeking
to restrain Seller or prohibit the Closing or seeking damages against
Seller as a result of the consummation of this Agreement.
5.01.06 Purchaser and Purchaser's Nominee shall have delivered to
Seller certified copies of the resolutions of their respective Boards of
Directors authorizing the consummation of the transactions contemplated
in this Agreement by Purchaser.
5.01.07 Purchaser shall have delivered to Seller a certificate
dated and effective as of the Closing Date and executed by a duly
authorized representative of Purchaser, certifying to Seller that all of
Purchaser's representations and warranties are true and correct in all
material respects as of the Closing and that Purchaser has performed all
of its obligations
22
under this Agreement in all material respects.
5.02 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of Purchaser under
this Agreement are subject to the satisfaction at or prior to Closing, of the
following conditions:
5.02.01 If filing thereof is required by law, the necessary
waiting period with respect to filings under the HSR Act shall have
expired, or the Department of Justice and the Federal Trade Commission
shall have otherwise consented to the consummation of the transactions
contemplated by this Agreement so that Closing may proceed without
violation thereof; provided, if the waiting period has not expired or
consent otherwise received on or before December 1, 1997, then Closing
shall be delayed until the third business day following the expiration
of the waiting period or receipt of consent.
5.02.02 Seller will have performed and complied with, or caused
the performance and compliance with, in all material respects, all the
obligations, terms, conditions, and agreements required by this
Agreement to be performed or complied with by Seller on or prior to
Closing, and Seller shall have delivered to Purchaser or Purchaser's
Nominee at Closing the Assignments and all of the other documents and
instruments to be delivered by Seller pursuant hereto.
5.02.03 As of the Closing, no suit, action or other proceeding
shall be pending or threatened before any court or governmental agency
seeking to restrain Purchaser or prohibit the Closing or seeking damages
against Purchaser as a result of the consummation of this Agreement.
5.02.04 Seller shall have delivered to Purchaser a certified copy
of the resolutions of Seller's Board of Directors authorizing the
consummation of the transactions contemplated in this Agreement by
Seller.
ARTICLE VI
CLOSING AND DELIVERIES AT CLOSING
6.01 DELIVERY OF CONVEYANCE. Seller shall execute, acknowledge and deliver to
Purchaser at Closing all Assignments, completely and validly executed, in the
proper form, conveying the Subject
23
Properties to Purchaser or Purchaser's Nominee as of the Effective Time.
6.02 LETTERS IN LIEU. Seller shall execute and deliver to Purchaser at Closing
letters in lieu of transfer orders (or similar documentation), in a form
acceptable to both Parties.
6.03 PAYMENT TO SELLER. Purchaser shall deliver to Seller, by wire transfer of
immediately available funds by 1:00 p.m. Central Standard Time on the Closing
Date to the account specified in Section 12.08(B) herein, an amount equal to the
Adjusted Purchase Price less the Deposit.
6.04 SUCCESSION BY PURCHASER. At Closing Purchaser and Purchaser's Nominee shall
(a) furnish to Seller such evidence (including, without limitation, evidence of
satisfaction of all applicable bonding requirements) as Seller may reasonably
require that Purchaser and Purchaser's Nominee are qualified with the applicable
governmental authorities to succeed Seller as the owner and, where applicable,
the Operator of the Subject Properties; (b) with respect to properties operated
by Seller where Purchaser or Purchaser's Nominee are to succeed Seller as
Operator, execute and deliver to Seller the applicable forms prepared by Seller
for further handling by Purchaser or Purchaser's Nominee, as appropriate
evidence reflecting change of operator as required by all applicable
governmental authorities; and (c) execute and deliver to Seller such forms as
Seller may reasonably request for filing with the applicable authorities to
reflect the assumption of plugging and abandonment liabilities with respect to
the ▇▇▇▇▇ located on the Subject Properties or on units in which the Subject
Properties participate by Purchaser or Purchaser's Nominee.
6.05 NON-FOREIGN STATUS AFFIDAVIT. If Purchaser so requests in writing prior to
Closing, Seller will execute and deliver to Purchaser an affidavit or other
certification (as permitted by such code) that Seller is not a "foreign person"
within the meaning of Section 1445 (or similar provisions) of the Internal
Revenue Code of 1986 as amended (i.e., Seller is not a non-resident alien,
foreign corporation, foreign partnership, foreign trust or foreign estate as
those terms are defined in such code and regulations promulgated thereunder).
6.06 CERTIFICATES OF RESOLUTIONS.Seller shall deliver the certified resolutions
as required by Section 5.02.04 hereof.
6.07 CERTIFICATES OF RESOLUTIONS.Purchaser and Purchaser's Nominee shall deliver
the certified resolutions as required by Section 5.01.06 hereof.
6.08 CERTIFICATES OF COMPLIANCE. Purchaser and Purchaser's Nominee shall deliver
the
24
certificates as required by Section 5.01.07 hereof.
ARTICLE VII
TITLE DEFECTS, ENVIRONMENTAL DEFECTS
CASUALTY LOSS
7.01 DEFENSIBLE TITLE .
7.01.01 For purposes hereof, "Defensible Title" means with
respect to the Oil and Gas Properties such title as (A) will, on the
Effective Time, entitle the owner of a particular Oil and Gas Property
to receive payment for production from such Oil and Gas Property in an
amount not less than the "Net Revenue Interest" ("NRI") for such Oil and
Gas Property as set forth on Exhibit A-1 (except for any reduction,
suspension or termination (i) caused by Purchaser, (ii) that arises as a
result of Permitted Encumbrances or (iii) is set forth in the Exhibit
A-1); (B) will, on the Effective Time, obligate the owner of a
particular Oil and Gas Property, to bear no greater "Working
Interest"("WI") share of costs and expenses attributable to the
maintenance, development and operation of such Oil and Gas Property than
the WI for each of the ▇▇▇▇▇ identified on Exhibit A-1 without a
proportionate increase in the NRI (except for any increase (i) caused by
Purchaser, (ii) that arises as result of Permitted Encumbrances or (iii)
is set forth in the Exhibit A-1); and (C) is free and clear of all
liens, security interests, pledges, collateral assignments, charges,
encumbrances or encroachments except for Permitted Encumbrances.
7.01.02 For purposes hereof a "Title Defect" shall be any defect
or deficiency in title, lien, encumbrance, security interest, claim or
burden, other than Permitted Encumbrances, which causes Purchaser to
receive less than Defensible Title in the Subject Properties including,
without limitation, the failure of Seller to obtain at or before Closing
the necessary consents to assign interests in the Leases. Purchaser
shall be entitled to a reduction in the Base Purchase Price due to the
existence of uncured Title Defects, only in accordance with the
provisions of this Article VII. Unless Purchaser provides affirmative
evidence that any such matters results in a third party or parties'
superior claim of title to the relevant Subject Property, such customary
liens, charges, encumbrances, defects and irregularities that may exist,
including, but not limited to, defects in the early chain of title such
as failure to recite marital status in document, omission of succession
or heirship proceedings, lack of survey, defects that have been cured by
possession and failure to record
25
releases of liens, production payments, leases or mortgages that have
expired by their terms, to the extent such matters are not reasonably
expected to result in claims that will materially and adversely affect
Purchaser's title to the Subject Properties, shall not constitute
"Defects" or "Title Defects" hereunder.
7.01.03 For purposes hereof "Permitted Encumbrances" shall mean
(A) the terms, conditions, restrictions, exceptions, reservations,
limitations and other matters contained in the agreements, instruments
and other documents which create or reserve to Seller its interest in
the Subject Properties, provided that the same do not (i) reduce the NRI
in a Well below that set forth in Exhibit A-1 for such Well or (ii)
increase the WI in a Well above that set forth in Exhibit A-1 for such
Well without a proportionate increase in the NRI for such Well; (B)
changes in the WI or NRI associated with the Subject Properties or any
of them, occurring after the Effective Time from any cause; (C)
statutory and conventional liens securing payments to operators,
mechanics and materialmen or others, payments of taxes or other claims
or payment obligations that are, in each case, not yet delinquent or, if
delinquent, are being contested in good faith in the normal course of
business and which, if contested, have been disclosed to Purchaser; (D)
any obligations or duties to any municipality or public authority with
respect to any franchise, grant, certificate, license or permit, and all
applicable law; (E) Defects that Purchaser fails to assert in accordance
with the provisions of this Article VII prior to the Notice Date (as
hereinafter defined); (F) consents to assignment by a third party or
governmental authority that are obtained by the Closing Date or that are
customarily obtained after the consummation of transactions of the
nature contemplated in this Agreement; (G) any easements, rights-of-way,
servitudes, permits and other rights in respect of surface operations,
pipelines or the like, and easements for pipelines, power lines and
other similar rights-of-way, and encroachments, on, over or in respect
of any of the Leases that do not unreasonably or materially interfere
with the operation of the Leases for the exploration and production of
hydrocarbons or related operations; (H) all royalties, overriding
royalties, net profits interests, production payments, carried
interests, reversionary interests, calls on production and other burdens
on or deductions from the proceeds of production that do not operate to
(i) reduce the NRI in a Well below that set forth in Exhibit A-1 for
such Well or (ii) increase the WI in a Well above that set forth in
Exhibit A-1 for such Well without a proportionate increase in the NRI
for such Well; (I) the terms and conditions of all production sales
contracts, transportation agreements, pooling agreements, unitization
agreements, operating agreements, processing agreements, and all other
contracts, agreements and instruments related to or utilized in
connection with the Leases, or the production, storage, treatment,
transportation, sale or
26
disposal of oil, gas or other hydrocarbons, minerals or substances
therefrom that do not operate to (i) reduce the NRI in a Well below that
set forth in Exhibit A-1 for such Well or (ii) increase the WI in a Well
above that set forth in Exhibit A-1 for such Well without a
proportionate increase in the NRI for such Well; (J) conventional rights
of reassignment prior to abandonment; (K) any preferential purchase
rights in favor of third parties and any required third party consents
to assignment and similar agreements and obligations with respect to
which prior to Closing (i) waivers or consents have been obtained from
the appropriate person, (ii) the applicable period of time for asserting
such rights has expired without any exercise of such rights or (iii)
arrangements have been made by the Parties to allow Purchaser to receive
substantially the same economic benefits as if all such waivers and
consents had been obtained; and (L) any other liens, charges,
encumbrances, contracts, agreements, instruments, obligations, defects
or irregularities of any kind whatsoever affecting the Subject
Properties that individually or in the aggregate are not such as would
materially adversely affect the ownership, operation, value or use of
the Subject Properties.
7.01.04 For purposes hereof an "Environmental Defect" means any
event or condition with respect to air, land, soil, surface, subsurface
strata, surface water, ground water, or sediment which causes a property
to become subject to remediation under, or not be in compliance with,
any applicable federal, state, and local laws, including statutes,
regulations, orders, ordinances, and common law, relating to the
protection of the public health, welfare and the environment, including,
without limitation, those laws relating to the storage, handling, and
use of chemicals and other hazardous materials, those relating to the
generation, processing, treatment, storage, transportation, disposal, or
other management of waste materials of any kind, and those relating to
the protection of environmentally sensitive areas.
7.01.05 For purposes hereof a "Contract Defect" shall exist if
any representation or warranty made by Seller in Section 2.01 is untrue
in any material respect or Seller fails to perform any obligation or
covenant of Seller under this Agreement.
7.01.06 For purposes hereof a "Reporting Defect" shall exist if
any information previously furnished by Seller to Purchaser, and which
information was used by Purchaser in determining the Base Purchase
Price, with respect to (i) Lease operating expenses, (ii) amounts
actually received by Seller and its Affiliates attributable to sales of
production from any particular Well, and (iii) Lease plugging and
abandonment costs are not based upon reasonable historical information
of Seller (covering the same time periods as was covered
27
by such information) and its Affiliates or based on reasonable
information available in the oil and gas industry.
7.02 NOTICE OF DEFECTS. Purchaser shall, as soon as possible, but for Contract
Defects in no event later than ten (10) business days prior to the Closing Date,
and for Title Defects, Environmental Defects and Reporting Defects, in no event
later than December 30, 1997 (the "Notice Date"), give written notice to Seller
specifying all Title Defects, Environmental Defects, Contract Defects and
Reporting Defects ( a "Defect"), for which Purchaser requests a reduction in the
Base Purchase Price (a "Defect Notice"), which Defect Notice shall describe the
alleged Defect with reasonable particularity on a Well by Well or Lease by Lease
basis, if applicable, and include all information in the possession of Purchaser
related to such alleged Defect. Such Defect Notice shall also state the alleged
Defect Amount (as defined in the following sentence) and shall include
specifically, without limitation, a detailed description of the nature of the
alleged Defect and specific documentation which supports the allegation of the
existence of such Defect. For purposes hereof "Defect Amount" shall mean (a) for
a Title Defect, the portion of the Base Purchase Price allocated to the interest
affected by such Defect (as shown on Exhibit D); that is, the amount by which
the Base Purchase Price so allocated to the Oil and Gas Property subject to a
Title Defect must be proportionately reduced to give appropriate remedy to
Purchaser on account of the Title Defect; (b) for an Environmental Defect, an
estimate of the cost to cure such Environmental Defect, but which cost to cure
may never exceed the value of the Oil and Gas Property as reflected on Exhibit
D; (c) for a Contract Defect the amount of the reduction in value of the Subject
Properties, or the portion thereof, as applicable, which is directly caused by
such Contract Defect; provided, that if such Contract Defect affects only a
specified Oil and Gas Property or Properties, the Defect Amount shall never
exceed the value thereof shown on Exhibit D; or (d) for a Reporting Defect, the
amount of the calculated reduction in value to any Oil and Gas Property which is
directly caused by such Reporting Defect, but which may never exceed the value
of such Oil and Gas Property reflected on Exhibit D. Failure by Purchaser to
timely assert a Defect shall be deemed an election by Purchaser to waive such
Defect and to accept and pay for the Subject Properties notwithstanding the
effect of the uncured Defect.
7.03 SELLER'S ELECTION TO CURE. Seller shall have the right to elect, at any
time prior to or after Closing within the 120 day cure period specified below at
Seller's cost, risk and expense, to attempt to cure any asserted Defect to the
reasonable satisfaction of Purchaser. In the event that such Defect is not cured
within the 120 day cure period specified below, then Seller, at its sole option,
shall be entitled to: (a) reduce the Base Purchase Price by the Defect Amount
(or if Closing has already occurred and such Defect Amount was not deducted from
the Base Purchase Price actually paid by
28
Purchaser, refund such Defect Amount to Purchaser) and either (i) retain the
portion of the Subject Properties affected by the Defect, or (ii) convey the
entirety of the affected portion of the Subject Properties to Purchaser; (b)
agree to indemnify Purchaser from and against any and all loss, cost, expense,
claim or cause of action existing or arising from such Defect and, in such
event, the affected portion of the Subject Properties will be conveyed to
Purchaser, the portion of the Base Purchase Price allocated thereto paid to (or
if Closing has already occurred, retained by) Seller, and such Defect will be
considered for all purposes hereunder as having been cured to Purchaser's
satisfaction; or (c) submit for arbitration any remaining dispute as to such
Defect. If Seller disputes whether an asserted Defect is actually a Defect or if
Seller elects to cure any Defect but has not cured such Defect prior to Closing,
then the portion of the Subject Properties affected by such Defect shall be
deleted from the applicable Exhibit(s) hereto and the sale contemplated herein,
and retained by Seller. The portion of the Base Purchase Price attributable to
such portion(s) of the Subject Properties affected by such Defect(s) shall
nevertheless be paid by Purchaser at Closing to NationsBank Texas N.A. as escrow
agent pursuant to a mutually acceptable escrow agreement. Seller shall have 120
days following the later of Closing, the Notice Date, or, if there is any
dispute concerning the existence of any Defect or its value or effect, the final
resolution of such dispute, within which to cure such Defect. If a Defect is
cured by Seller during said 120 day period, Seller shall convey the portion of
the Subject Properties affected by such Defect to Purchaser and as applicable,
either (i) retain the applicable Defect Amount, or (ii) the funds in escrow,
together with interest earned thereon, attributable to the portion of the
Subject Properties as to which such Defect has been cured, shall be immediately
released to Seller. If, at the end of the 120 day period there remains uncured a
Defect, (i) Seller shall pay Purchaser the applicable Defect Amount to the
extent it was not deducted from the Base Purchase Price at Closing and paid into
escrow, or (ii) the funds in escrow, together with interest earned thereon,
attributable to the Oil and Gas Properties or portions thereof affected thereby
shall be returned to Purchaser, and in either event such Oil and Gas Properties
or portions thereof shall be retained by Seller. Costs of the escrow shall be
borne one-half by each Party.
7.04 CONSULTATION AND COOPERATION. Upon timely delivery of a Defect Notice by
Purchaser, Purchaser and Seller shall consult and use their best efforts to
agree on the validity of the alleged Defect and the respective Defect Amount
attributable to each such Defect. If the Parties cannot agree on (A) whether a
problem is a Defect, (B) the Defect Amount, or (C) whether Seller has cured any
Defect, the matter shall be referred to arbitration pursuant to the provisions
of Article XI hereof.
7.05 CASUALTY LOSS. Notwithstanding anything that may be contained herein to the
contrary, to the extent a Casualty Loss occurs prior to Closing, Seller may
elect (i) to delete the property that is
29
subject to the Casualty Loss from the Subject Properties, and the Base Purchase
Price shall be reduced by the value allocated to the deleted interest based on
the value reflected on Exhibit D, or (ii) to proceed with the sale of the
Subject Properties, including that subject to the Casualty Loss, notwithstanding
any such destruction or taking, in which case at Closing, Seller shall pay to
Purchaser all sums paid to Seller by third parties by reason of the destruction
or taking of that portion of the Subject Properties that is subject to Casualty
Loss and make a downward adjustment to the Base Purchase Price equal to the
difference (if any) between the third party amounts paid to Seller and then paid
by Seller to Purchaser as above provided, and the total amount of the damage
caused by such Casualty Loss (never to exceed the allocated value of the
affected property as set forth on Exhibit D hereto). Seller shall retain any and
all claims, causes of action, unpaid proceeds or other payments from third
parties arising out of such destruction or taking. For the purposes hereof the
term "Casualty Loss" means the destruction of all or any portion of the Subject
Properties by fire or other casualty or taking thereof by condemnation or under
the right of eminent domain.
7.06 INCREASES IN SELLER'S INTERESTS. Should Seller or Purchaser discover that
Seller's interest in any of the Subject Properties is greater than that shown on
Exhibit A-1 (because either the NRI in a property is greater than that shown or
the WI is less without a corresponding decrease in the NRI) then Seller shall be
entitled to a dollar for dollar offset of the amount thereof against the amount
of any downward adjustment in the Base Purchase Price otherwise due to Purchaser
under any provision of this Agreement.
7.07 LIMITATIONS ON ADJUSTMENTS. Notwithstanding any provision hereof to the
contrary, if the Purchase Price adjustment which would result under this Article
VII or under Section 12.16 for any individual Adjustment or Defect (regardless
of the Notice Date for such Defect) does not exceed Twenty-five thousand Dollars
($25,000), then the Base Purchase Price shall not be adjusted for such
Adjustment or Defect (even as to adjustments otherwise due under Section
7.03(a)) and such individual Adjustment or Defect Amount shall be considered to
have zero ($0.00) value in calculating the required threshold of net aggregate
amounts as provided in the following sentence. If the net aggregate of all
Adjustment and Defect adjustments (which adjustments individually exceed
$25,000) in the Base Purchase Price which would result under this Article VII
and Section 12.16 (i) does not exceed five percent (5%) of the Base Purchase
Price, then the Base Purchase Price shall not be adjusted. If such net aggregate
does exceed five percent (5%) of the Base Purchase Price, then the Base Purchase
Price shall be adjusted only by the amount by which the net aggregate of all
Adjustment and Defect adjustments exceeds five percent (5%) of the Base Purchase
Price; subject in all cases to the offset rights of Seller pursuant to Section
7.06.
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7.08 EXPLORATION AGREEMENTS. Purchaser acknowledges that a substantial portion
of the Subject Properties and the value thereof consists of rights and interests
owned by Seller under certain exploration and development agreements that will
be assigned to Purchaser on the Effective Time. Those agreements are listed on
Exhibit G attached hereto and shall be referred to herein as the "Exploration
Agreements". Purchaser further acknowledges and agrees that Seller makes no
representation or warranty whatsoever as to the rights of Seller, or Purchaser,
under or pursuant to the Exploration Agreements, all of which have been made
available to and reviewed to the satisfaction of Purchaser prior to the
execution hereof. Without limiting the generality of the statements in this
Section or the limitations on representations and warranties elsewhere in this
Agreement, to avoid any doubt whatsoever, Seller disclaims and Purchaser waives
any representation or warranty, express or implied, as to the Exploration
Agreements or as to that portion of the Subject Properties (or their value)
which exists pursuant to the Exploration Agreements, or any of them. Purchaser
acknowledges that it may not rely on any written or oral statement of any person
concerning the status, condition, title or ownership of properties arising from
or existing pursuant to the Exploration Agreements and Purchaser shall have no
right to assert any Defect under this Article VII or otherwise under this
Agreement or to receive any reduction in the Base Purchase Price or make any
claim against Seller whatsoever, whether prior to or after Closing, which is
attributable to any property, lease, well, right, interest, contract, covenant,
condition, obligation, liability or claim existing or arising under or from any
of the Exploration Agreements.
ARTICLE VIII
ASSUMPTION OF LIABILITIES AND INDEMNIFICATION
8.01 ASSUMPTION OF SELLER'S OBLIGATIONS BY PURCHASER. At Closing, Purchaser
shall assume all obligations and liabilities of Seller attributable to, relating
to or arising in connection in any way with the Subject Properties, including,
without limitation, the following: (A) the obligation to (i) plug and abandon or
remove and dispose of all ▇▇▇▇▇, platforms, structures, flow lines, pipelines,
and the other equipment now or hereafter located on the Leases, (ii) cap and
bury all flow lines and other pipelines now or hereafter located on the Leases,
and (iii) dispose of naturally occurring radioactive material and all other
pollutants, wastes, contaminants, or hazardous, extremely hazardous, or toxic
materials, substances, chemicals or wastes now or hereafter located on the
Leases; (B) all obligations and liabilities arising from or in connection with
any gas production, pipeline, storage, processing or other imbalance
attributable to oil, gas or other hydrocarbons produced from the Leases both
before and after the Effective Time; (C) all of Seller's obligations under all
permits or contracts affecting the Subject Properties; (D) all obligations
arising under any law, rule or regulation which provides with respect to
protection of the environment or the handling, use, disposal or transportation
31
of hazardous materials applicable to the Subject Properties for all time periods
prior to, on or after the Effective Time; (E) all liability, cost and expense
arising from or pursuant to the claims or lawsuits described on Exhibit F; and
(F) all other costs, obligations and liabilities that arise with respect to or
otherwise relate to the Subject Properties for periods after the Effective Time
(collectively the "Assumed Obligations"). All such plugging, replugging,
abandonment, removal, disposal, and restoration operations shall be in
compliance with applicable laws and regulations and contracts, and shall be
conducted in a good and workmanlike manner.
8.02 INDEMNIFICATION. If Closing occurs, Purchaser shall assume all liability
for and indemnify Seller, its directors, officers, employees and
representatives, against all losses, costs, expenses, claims and causes of
action ("Claims") (i) arising from Purchaser's breach of any of its
representations or warranties, (ii) arising under the Assumed Obligations, (iii)
arising from Seller's obligation of indemnification to third parties pursuant to
agreements between Seller and such third parties arising in connection with the
prior acquisition of a portion of the Subject Properties by Seller, and (iv) for
which Seller remains responsible under this Agreement but for which a notice of
the existence thereof is not delivered to Seller within the time provided for in
Section 9.03, for which the claim amount exceeds the limitation on liability
amount stated in Section 9.04 or which may otherwise not be imposed on Seller
pursuant to the provisions of Article IX. Seller shall indemnify Purchaser, its
directors, officers, employees and representatives, subject in all cases to the
limitations provided for in Article IX, against all Claims arising from the
obligations or liabilities retained by Seller pursuant to this Agreement.
8.03 NORM. It is expressly recognized that the land or water bottoms covered by
the Leases listed in Exhibit A with surface facilities and production equipment
located thereon, having been used in connection with oil and gas production
activities, may contain naturally occurring radioactive materials ("NORM") as a
result of these operations. Accordingly, the lands, water bottoms, surface
facilities, and production equipment transferred herein are transferred with the
restriction that they will be used only in connection with oil and gas producing
activities associated with these Leases, and will not be subsequently
transferred for unrestricted use unless and until the concentrations of NORM
associated therewith are below the levels specified as allowable for
unrestricted transfer as set forth in any regulations, and subsequent amendments
thereto. Additionally, if Closing occurs, Purchaser agrees to comply with all
laws and regulations applicable to said lands, water bottoms, surface
facilities, and production equipment relating to NORM and to indemnify and hold
harmless Seller from and against any and all liability, cost or expense arising
from the existence or remediation of NORM.
32
8.04 INDEMNIFICATION PROCEDURES.
8.04.01 Within twenty-one (21) days after any Party (the
"Indemnified Party") becomes aware of facts giving rise to a Claim by it
for indemnification pursuant to this Article VIII, and prior to the
expenditure or approval of the expenditure of any funds, such
Indemnified Party will provide notice thereof in writing by certified
mail (a "Claim Notice") to the Party owing such indemnification (the
"Indemnifying Party") specifying the nature and specific basis for such
Claim and a copy of all papers served with respect to such Claim (if
any). For purposes of this Section, receipt by the Indemnified Party of
written notice of any demand, assertion, claim, action or proceeding
(judicial, administrative or otherwise) by or from any person or entity
other than a Party to this Agreement or any Affiliate thereof which
gives rise to a Claim on behalf of such Party shall constitute the
discovery of facts giving rise to a Claim by it and shall require prompt
notice of the receipt of such matter as provided in the first sentence
of this Section. Each Claim Notice shall set forth a reasonable
description of the Claim as the Indemnified Party shall then have and
shall contain a statement to the effect that the Indemnified Party is
making a Claim pursuant to and formal demand for indemnification under,
this Article VIII. The Claim Notice must set forth the particular
provision in this Article VIII and any related provision in this
Agreement pursuant to which such indemnification Claim is made.
8.04.02 The indemnifications provided by this Agreement are
expressly subject to the following:
(A) In case any legal proceeding or claim, including any
investigatory proceeding, is brought or made against the
Indemnified Party in a manner for which indemnification may be
provided under Section 8.02, the Indemnified Party shall notify
the Indemnifying Party with the delivery of the Claim Notice. The
Indemnifying Party shall have the right, at its sole cost and
expense, to control and assume the defense of any such legal
proceeding or claim, including the employment of counsel
satisfactory to the Indemnifying Party. If the Indemnifying Party
controls and assumes the defense of any proceeding or claim, the
Indemnified Party shall have the right to employ separate
counsel, but the fees and expenses of such counsel shall be at
the expense of the Indemnified Party unless the representation of
both Parties by the same counsel would be inappropriate due to
any actual or potential conflicts of interest. The Indemnifying
Party shall not be liable for the fees and expenses of more than
one separate firm of attorneys at any one time for the
Indemnified Party
33
in connection with any one legal proceeding or claim or
substantially similar related proceedings and claims.
(B) Notwithstanding anything to the contrary in Section
8.04.02(A) above, the Indemnified Party shall be entitled to
reasonable compensation of costs of defense, including reasonable
attorneys fees, in the event that (i) the employment of separate
counsel has been authorized by the Indemnifying Party, (ii) the
Indemnifying Party has failed to defend diligently any Claims, or
(iii) the parties to such action (including any impleaded
parties) include the Indemnified Party and the Indemnifying
Party, and the Indemnified Party has been advised by legal
counsel that there may be legal defenses available to it which
are different from, in addition to or inconsistent with, the
legal defenses available to the Indemnifying Party, or that the
Indemnified Party's interest may be adverse in whole or in part
to the interest of the Indemnifying Party. The Indemnifying Party
shall not, in the defense of any such Claims, except with the
prior written consent of the Indemnified Party, consent to the
entry of any judgment or enter into any settlement which does not
include as an unconditional term, the release by the claimant or
the plaintiff of the Indemnified Party from all further liability
in respect to any such Claims.
(C) If the Claim is of a sort which requires action on the
part of the owners of the Subject Properties, such as restoration
of surface locations, for example, the Indemnified Party shall
provide the Indemnifying Party with the appropriate Claim Notice.
The Indemnifying Party shall have the option to respond in such
manner as it deems prudent to such Claim and shall make all
decisions and take all action in response to the Claim. Only if
the Indemnifying Party fails to timely and reasonably respond to
such Claim may the Indemnified Party take such actions as are
necessary to respond to the Claim.
8.04.03 The indemnification obligations under this Article VIII
(or otherwise under this Agreement) shall not apply to any settlements
effected without the consent of the Indemnifying Party. The
indemnification obligations under this Article VIII (or otherwise under
this Agreement) shall not be deemed to create any rights of subrogation
or other rights in any insurer or third party.
ARTICLE IX
LIMITATIONS OF LIABILITY
34
9.01 EXCLUSIVE REMEDY. If Closing occurs, the sole and exclusive remedy of
Purchaser and Seller with respect to the purchase and sale of the Subject
Properties shall be pursuant to the express provisions of this Agreement.
Purchaser and Seller shall be deemed to have waived, to the fullest extent
permitted under applicable law, any rights of contribution and any and all
rights, claims and causes of action which may exist against Seller or Purchaser,
respectively, arising under or based on any federal, state or local statute,
law, ordinance, rule or regulation or common law or otherwise.
9.02 WAIVER OF RIGHT TO RESCIND. Seller and Purchaser acknowledge that if this
Agreement is not terminated and Closing occurs, the payment of money, as limited
by the terms of this Agreement, shall be adequate compensation for breach of any
representation, warranty, covenant or agreement contained herein or for any
other claim arising in connection with or with respect to the transactions
contemplated in this Agreement. As the payment of money shall be adequate
compensation, Purchaser and Seller waive any right to rescind the transactions
contemplated by this Agreement.
9.03 TIME LIMITATION. Notwithstanding any provision hereof to the contrary, it
is understood and agreed that any and all liabilities of Seller under this
Agreement for which Purchaser has not previously delivered to Seller a Claim
Notice pursuant to Section 8.04.01, if any, shall expire and terminate and no
longer be enforceable for all periods on and after one (1) year from the Closing
(the "Anniversary Date"). On and after the Anniversary Date, except for matters
for which Purchaser has delivered a Claim Notice to Seller prior to the
Anniversary Date, Purchaser shall not be entitled to make any claim against
Seller for any cause attributable to any time period under this Agreement or
otherwise, including, without limitation, rights of contribution arising under
or based on any federal, state or local statute, law, ordinance, rule or
regulation or common law or otherwise.
9.04 LIABILITY CAP. Seller's liability, if any, under this Agreement shall never
exceed, and Seller shall have no obligation for the payment of any amount in
excess of a cumulative total of Twenty-five Million Dollars ($25,000,000).
9.05 DAMAGE LIMITATION. Notwithstanding anything to the contrary herein, in no
event shall any Party be liable to the other for any exemplary, punitive,
special, indirect, consequential, remote or speculative damages; provided,
however, that if a Party is held liable to a third party for any of such damages
and the other Party is obligated to indemnify the liable Party for the matter
that gave rise to such damages pursuant to this Agreement, then the Indemnifying
Party shall be liable for, and obligated to reimburse the Indemnified Party for
such damages.
35
ARTICLE X
TERMINATION
10.01 TERMINATION OF AGREEMENT. This Agreement and the transactions contemplated
hereby may be terminated upon written notice from the Party electing to
terminate this Agreement, in the following instances:
(A) By Seller if the conditions set forth in Section 5.01 are not
satisfied in all materials respects or waived as of Closing.
(B) By Seller or Purchaser, if at or before Closing, for any reason
under this Agreement, Oil and Gas Properties are excluded from the sale,
which have a cumulative value, based on Exhibit D, in excess of
twenty-five percent (25%) of the Base Purchase Price.
(C) By Purchaser if the conditions set forth in Section 5.02 are not
satisfied in all material respects or waived as of Closing.
(D) At any time by the mutual written agreement of Purchaser and Seller.
(E) By either Party if the transaction has not been approved under the
HSR Act, if applicable, either by the expiration of the waiting period
or receipt of consent, on or before ninety (90) days after the filing
has been made under the HSR Act seeking approval of the transaction.
10.02 LIABILITIES UPON TERMINATION. If this Agreement is terminated prior to
Closing for any reason other than those set forth in Section 10.01 or is
breached (it shall be deemed a breach of this Agreement if the conditions set
forth in Section 5.02 are not satisfied through the fault, neglect or failure to
act of Purchaser, or if the conditions set forth in Section 5.01 are not
satisfied through the fault, neglect or failure to act of Seller), nothing
contained herein (other than the provisions of Section 1.03) shall be construed
to limit Seller's or Purchaser's legal or equitable remedies including, without
limitation, damages for the breach or failure of any representation, warranty,
covenant or agreement contained herein and the right to enforce specific
performance of this Agreement.
ARTICLE XI
ARBITRATION
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11.01 BINDING ARBITRATION. On the request of any Party whether made before or
after the institution of any legal proceeding, any action, dispute, claim or
controversy of any kind now existing or hereafter arising between any of the
Parties in any way arising out of, pertaining to or in connection with this
Agreement (a "Dispute") shall be resolved by binding arbitration in accordance
with the terms hereof. Any Party may, by summary proceedings, bring an action in
court to compel arbitration of any Dispute.
11.02 GOVERNING RULES. Any arbitration shall be administered by the American
Arbitration Association (the "AAA") in accordance with the terms of this Article
XI, the Commercial Arbitration Rules of the AAA, and, to the maximum extent
applicable, the Federal Arbitration Act. Judgment on any award rendered by an
arbitrator may be entered in any court having jurisdiction.
11.03 ARBITRATORS. Any arbitration shall be conducted before three arbitrators.
The arbitrator shall be practicing attorneys licensed to practice in the State
of Texas who are knowledgeable in the subject matter of the Dispute selected by
agreement between the Parties. Each of the Parties shall appoint an arbitrator
within thirty (30) days after the request for an arbitration, and the AAA shall
select the third arbitrator. The arbitrators may engage engineers, accountants
or other consultants that the arbitrator deems necessary to render a conclusion
in the arbitration proceeding.
11.04 CONDUCT OF ARBITRATION. To the maximum extent practicable, an arbitration
proceeding hereunder shall be concluded within one hundred eighty (180) days of
the filing of the Dispute with the AAA. Arbitration proceedings shall be
conducted in Houston, Texas. Arbitrators shall be empowered to impose sanctions
and to take such other actions as the arbitrators deem necessary to the same
extent a judge could impose sanctions or take such other actions pursuant to the
Federal Rules of Civil Procedure and applicable law. At the conclusion of any
arbitration proceeding, the arbitrators shall make specific written findings of
fact and conclusions of law. The arbitrators shall have the power to award
recovery of all costs and fees to the prevailing Party. Each Party agrees to
keep all Disputes and arbitration proceedings strictly confidential except for
disclosure of information required by applicable law.
11.05 COSTS OF ARBITRATION.All fees of the arbitrators and any engineer,
accountant or other consultant engaged by the arbitrators, shall be paid by
Purchaser and Seller equally unless otherwise awarded by the arbitrators.
ARTICLE XII
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MISCELLANEOUS
12.01 FILES AND RECORDS. Within thirty (30) days following the Effective Time,
Purchaser shall remove from Seller's office at Purchaser's expense all original
records and files, including, without limitation, regulatory files, joint
interest ▇▇▇▇▇▇▇▇, revenue files, division orders, division order files,
purchasers statements, payout calculations, well logs, well files, land records,
contracts, maps and seismic information (to the extent capable of being legally
transferred by Seller without unreasonable cost or consent) relating to the
Subject Properties. In the event Seller wishes to keep copies of such files and
records, Seller may make and retain copies thereof at any time during normal
business hours within thirty (30) days of the Effective Time. The expense of
copying such files shall be borne by Seller. Purchaser shall retain, or cause to
be retained, all of such files for seven (7) years from the Effective Time and
shall make such files available to Seller for its review and additional copying
at Seller's cost at any time during such seven (7) year period during normal
business hours. Seller agrees to make available to Purchaser during normal
business hours, where and as kept in the normal course of business, at
Purchaser's cost and expense and upon reasonable prior notice, such records
which may be retained by Seller, if any, which may be necessary or beneficial to
Purchaser in connection with the ownership or operation of the Properties or in
order to comply with any law, rule or regulation.
12.02 TAX PRORATIONS. Real and personal property taxes for the Subject
Properties shall be prorated between Purchaser and Seller as of the Effective
Time. If the actual taxes are not known on the Closing Date, Seller's share of
such taxes shall be determined by using (i) the rates and millage for the year
prior to the year in which the Closing occurs, with appropriate adjustments for
any known and verifiable changes thereto, and (ii) the assessed values for the
year in which Closing occurs. No further proration of taxes will be made post
Closing notwithstanding the existence of a different tax amount reflected by the
actual tax statements.
12.03 POST CLOSING FILINGS AND NOTIFICATIONS. Promptly after Closing, Purchaser
shall (a) record the assignments of the Subject Properties executed at Closing
in all applicable real property records, (b) send notices to vendors supplying
goods and services for the Subject Properties of the assignment of the Subject
Properties to Purchaser and, if applicable, the designation of Purchaser or
Purchaser's Nominee as the Operator thereof, (c) actively pursue the
unconditional approval by the Minerals Management Service and all other
applicable governmental authorities of the assignment of the Subject Properties
to Purchaser and the designation of Purchaser or Purchaser's Nominee as the
Operator thereof, and (d) actively pursue all other consents, notices and
approvals that may be required in connection with the assignment of the Subject
Properties to Purchaser or
38
Purchaser's Nominee, and the assumption of the liabilities assumed by Purchaser
hereunder, which have not been obtained prior to Closing. Purchaser obligates
itself and Purchaser's Nominee to take any and all action required by the
Minerals Management Service or any other regulatory agency in order to obtain
such unconditional approval, including but not limited to, the posting of any
and all bonds or other security that may be required in excess of its existing
lease, pipeline or area-wide bond.
12.04 SURVIVAL OF REPRESENTATION, WARRANTIES AND COVENANTS. The obligations and
liabilities of the Parties under each of their representations, warranties and
covenants contained in this Agreement shall survive Closing and the execution
and delivery of the documents to be delivered at Closing and remain in full
force and effect.
12.05 DECEPTIVE TRADE PRACTICES WAIVER. To the extent applicable to the
transaction contemplated hereby or any portion thereof, Purchaser waives the
provisions of the Texas Deceptive Trade Practices Act (Sections 17.41 through
17.63 thereof, inclusive of the Texas Business and Commerce Code, other than
Section 17.555 thereof which is not waived), and any comparable act in any other
state in which the Subject Properties are located. In connection with such
waiver, Purchaser hereby represents and warrants to Seller that Purchaser (i) is
in the business of seeking or acquiring by purchase or lease, goods, or
services, for commercial or business use, (ii) has knowledge and experience in
financial and business matters that enable it to evaluate the merits and risks
of the transaction contemplated hereby, (iii) is not in a significantly
disparate bargaining position, and (iv) has assets of $5,000,000 or more
according to its most recent financial statement.
12.06 NO SALES TAXES. No sales, transfer or similar tax will be collected at
Closing from Purchaser in connection with this transaction. If, however, this
transaction is later deemed to be subject to sales, transfer or similar tax, for
any reason, Purchaser agrees to be solely responsible, and shall indemnify and
hold Seller (and its Affiliates, and the respective directors, officers,
employees, attorneys, contractors and agents of Seller and such Affiliates)
harmless, for any and all sales, transfer or other similar taxes (including
related penalty, interest or legal costs) due by virtue of this transaction on
the Subject Properties transferred pursuant hereto and the Purchaser shall remit
such taxes at that time. Seller agrees that it will cooperate with Purchaser,
and Purchaser agrees to cooperate with Seller, in demonstrating that the
requirements for exemptions from such taxes have been met.
12.07 SUSPENDED FUNDS. All third party funds held by Seller in suspense will be
transferred to Purchaser at Closing. Purchaser shall indemnify and hold harmless
Seller from and against any
39
claim, loss, cost or expense whatsoever arising after Closing from improper,
untimely or other mispayment of such suspended funds transferred to Purchaser at
Closing.
12.08 NOTICES. All communication or notices required or permitted to be given
under this Agreement shall be in writing, and any communication or notice shall
be deemed to have been duly made if actually delivered, including delivery by
facsimile transmission, receipt of which has been duly acknowledged, or if
mailed by registered or certified mail, postage prepaid, and addressed to:
(A) Purchaser: ▇▇▇▇▇▇ Oil & Gas Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(B) Seller: SCANA Petroleum Resources, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇, ▇▇.
Davidson, ▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Wire Transfer Instructions:
40
Bank: NationsBank of Texas
Account Name:SCANA Petroleum Resources, Inc.
ABA Number: ▇▇▇▇▇▇▇▇▇
Account Number: 187167570
Once the wire transfer has been completed,
please notify:
▇▇▇▇▇ ▇▇▇▇▇▇, V.P. and Controller
SCANA Petroleum Resources, Inc.
(▇▇▇) ▇▇▇-▇▇▇▇, Ext. 108
A Party may, by written notice so delivered to the other Party, change the
address to which communications or written notices shall be made under this
Agreement.
12.09 FURTHER ASSURANCES. Seller and Purchaser agree that they will, upon
request, deliver, or will cause to be executed, acknowledged and delivered, all
such documents of further assurance as may be reasonably required for the
assigning, transferring, granting, conveying and confirming to Purchaser, or
reducing to possession by Purchaser of, any of the Subject Properties and will,
perform and take such further actions, as may be necessary or appropriate to
carry out the intent of the transactions provided for in this Agreement. Each
Party shall bear its own costs in connection with the preparation or filing of
any such documents of further assurance. Purchaser and Seller acknowledge that
as of the Closing Date Seller may (a) have unpaid joint interest accounts
receivable due from joint working interest owners in the Subject Properties, (b)
have erroneously overpaid certain royalty interest owners who have not repaid
such sums, and/or (c) be entitled to refunds, such as ad valorem taxes,
attributable to the Subject Properties prior to the Effective Time. Purchaser
agrees to cooperate with Seller and to assist in any proper manner to secure
such monies and to remit to Seller any such monies received.
12.10 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO ANY
PRINCIPLES OF CONFLICTS OF LAWS. THE VALIDITY OF THE VARIOUS CONVEYANCES
AFFECTING THE TITLE TO REAL PROPERTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE JURISDICTION IN WHICH SUCH PROPERTY IS SITUATED.
THE REPRESENTATIONS AND WARRANTIES CONTAINED IN SUCH CONVEYANCES AND THE
REMEDIES AVAILABLE BECAUSE OF A BREACH OF SUCH REPRESENTATIONS AND WARRANTIES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
41
THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE PRINCIPLES OR CONFLICTS OF LAWS.
12.11 ASSIGNMENT. This Agreement shall not be assignable by either Party without
the prior written consent of the other Party.
12.12 BINDING EFFECT. This Agreement contains the entire agreement and
understanding between the Parties with respect to the purchase and sale of the
Subject Properties or other transactions contemplated herein. This Agreement may
not be amended or terminated except in writing, signed by the Parties. In the
event any term or provision of this Agreement is determined to be invalid or
unenforceable, such invalidity or unenforceability thereof shall not affect the
remaining terms and provisions of this Agreement.
12.13 COUNTERPARTS. This Agreement may be executed in any number of counterparts
and each counterpart shall be deemed to be an original instrument, but all such
counterparts shall constitute but one instrument.
12.14 EXPENSES AND FEES. Whether or not the transactions contemplated by this
Agreement are consummated, each of the Parties shall be obligated to pay the
fees and expense of its counsel, accountants and other experts incident to the
negotiation and preparation of this Agreement and consummation of the
transactions contemplated hereby. All sales, use or other taxes (other than
taxes on gross income, net income or gross receipts) and duties, levies or other
governmental charges incurred by or imposed with respect to the property
transfers undertaken pursuant to this Agreement and all costs of recording the
Assignments and any other recordable document shall be the responsibility of,
and shall be paid by, Purchaser. All other costs shall be borne by the Party
incurring such costs. In the event that sales taxes are due on this transaction
which must be remitted by Seller under the laws of the governing jurisdiction,
Seller, at its option, may provide for the payment of such amounts to Seller by
an appropriate increase in the Base Purchase Price at Closing.
12.15 CONFIDENTIALITY. Prior to Closing, unless otherwise required by law,
neither Party will, without the consent of the other issue a press release or
disclose to any third party (not including the officers, directors, advisors,
agents and representatives of the Parties, on a "need-to-know" basis), this
Agreement or the transaction contemplated by its terms and provisions. All
notices to third parties and all other publicity concerning the transactions
contemplated by this Agreement shall be jointly planned and coordinated by and
between Purchaser and Seller, provided that both Seller and
42
Purchaser shall have final approval authority for their own press releases and
securities filings, and are hereby authorized to issue such press releases
concerning this Agreement and to make such filings as Seller or Purchaser and
its counsel may deem necessary or appropriate under applicable securities laws.
Except as provided in the preceding sentence, neither of the Parties shall act
unilaterally in this regard without the prior written approval of the other
Party, however, this approval shall not be unreasonably withheld.
12.16 EXHIBITS. The Exhibits and Schedules referred to in this Agreement are
hereby incorporated in this Agreement by this reference and constitute a part of
this Agreement. Each Party has received a complete set of Exhibits and Schedules
as of the execution of this Agreement. If any Exhibit or Schedule inadvertently
fails to list any information which had been listed on another Exhibit or
Schedule, such information will be deemed to be included on the appropriate
Exhibit or Schedule. Seller may, from time to time prior to or at the Closing,
with the agreement of Purchaser, which shall not be unreasonably withheld,
supplement or amend any such Exhibit or Schedule, one or more supplements or
amendments in order to correct any matter which would constitute a breach of any
representation, warranty or covenant contained herein. The Parties understand
and agree that subject to the terms of Section 7.07 herein, an adjustment to the
Base Purchase Price shall be made at Closing to the extent that any such
supplement or amendment to correct any matter which would constitute a breach of
any representation, warranty or covenant contained herein results in an increase
or decrease in the WI or NRI and corresponding value attributable to the
affected Lease or Well, based on the ratio of the correct interest to that
contained in the applicable Exhibit or Schedule, multiplied by the applicable
Lease or Well allocated value contained in Exhibit D (an "Adjustment"). All
references to any Exhibit or Schedule hereto which is supplemented or amended as
provided in this Section 12.16 shall for all purposes after Closing be deemed to
be a reference to such Exhibit or Schedule as so supplemented or amended.
12.17 EXCHANGE. Either Party may desire to structure the conveyance of the
Subject Properties as part of an exchange under Section 1031 of the Internal
Revenue Code. Each Party agrees to execute all documents, conveyances or other
instruments necessary to effectuate an exchange. In order to structure such a
transaction, Seller and Purchaser will agree upon an allocation of the Base
Purchase Price between real and personal property.
ENTIRETIES This Agreement, including the Exhibits, the other agreements to
be entered into by the Parties under the provisions of this Agreement and the
Confidentiality Agreement dated September 12, 1997, executed by Purchaser and
Seller set forth the entire agreement and understanding of the Parties in
respect of the transactions contemplated hereby and supersede all
43
prior agreements, prior arrangements and prior understandings relating to the
subject matter hereof whether oral or written.
12.19 CORPORATE APPROVALS. The Parties understand and agree that notwithstanding
any provision hereof to the contrary, this Agreement is executed contingent upon
receipt of approval by the Parties' Boards of Directors of this Agreement and
the transaction contemplated hereby. Each Party agrees to promptly submit this
Agreement to its respective Board of Directors for approval. This Agreement
shall automatically terminate and be of no force or effect if such approvals,
which will not unreasonably be withheld, are not given by 2:00 p.m. Central
Daylight Time, October 21, 1997.
[SIGNATURES ON FOLLOWING PAGE]
44
IN WITNESS THEREOF, Purchaser and Seller have duly executed this
Agreement, as of the day and year first above written.
SELLER:
Witnesses: SCANA PETROLEUM RESOURCES, INC.
/S/ C. ▇▇▇▇▇ ▇▇▇▇▇▇ /S/ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ President
PURCHASER:
Witnesses: ▇▇▇▇▇▇ OIL & GAS CORPORATION
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ President
45
PURCHASE AND SALE AGREEMENT
dated October 21, 1997
LIST OF SCHEDULES / EXHIBITS (Not Filed)*
Exhibit A Leases
Exhibit A-1 ▇▇▇▇▇
Exhibit A-2 Seismic Contracts
Exhibit B Excluded Assets
Exhibit B-1 Litigation Retained by Seller
Exhibit C Form of Assignment and ▇▇▇▇ of Sale
Exhibit C-1 Form of Assignment and Mineral Deed
Exhibit C-2 MMS Assignment of Record Title to Oil
and Gas Leases
Exhibit C-3 MMS Assignment of Operating Rights in
Oil and Gas Leases
Exhibit C-4 MMS Assignment of ROW
Exhibit D Base Purchase Price Allocation
Exhibit E Imbalance Schedule for the Subject
Properties
Exhibit F Litigation to be Assumed by Purchaser
Exhibit G Exploration Agreements
* Omitted Schedules/Exhibits will be furnished to the Securities and Exchange
Commission, supplementally, if requested.
46