EXHIBIT 10.6
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (hereinafter called "this Agreement")
is made and entered into this 7th day of May, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ (▇.▇.) CAPITAL CORPORATION, a Delaware corporation (hereinafter
called "Seller"), and PRIMEENERGY CORPORATION, a Delaware corporation
(hereinafter called "Buyer"), with reference to the following circumstances:
Certain properties (the "Foreclosure Properties") are currently subject
to a Notice of Substitute Trustee's Sale (the "Sale"), a copy of which is
attached hereto.
Seller has entered into a Compromise and Settlement Agreement (the
"Settlement Agreement") with Saratoga Resources, Inc., a Texas corporation
("Saratoga Texas"), Saratoga Resources, Inc., a Delaware corporation ("Saratoga
Delaware"), LOBO Energy, Inc., a Texas Corporation ("LEI") and LOBO Operating,
Inc., a Texas corporation ("LOI") (the "Saratoga Companies") pursuant to which
the Saratoga Companies have agreed to not enjoin, restrain or otherwise prevent
the sale and, in the event that the Seller acquires the property at the sale, to
deliver to Seller, or to Buyer as Seller's transferee various documents
confirming the transfer, or transferring, properties and assets as more
particularly described in Exhibit A thereto, which include, but are not limited
to, the Foreclosure Properties, (the Foreclosure Properties and such other
assets, interests, and properties to be conveyed pursuant to the Settlement
Agreement herein collectively called the "Interests").
In the event that Seller acquires the Foreclosure Properties, Seller
desires to sell and Buyer desires to purchase, all of Seller's right, title,
estate and interest in and to Interests, including the Foreclosure Properties,
subject to the satisfaction of the conditions precedent set forth in this
Agreement.
In consideration of the foregoing premises, the following terms,
agreements, covenants, and conditions, and for the purpose of prescribing the
terms and conditions of the purchase and sale of the Interests, Seller and Buyer
agree as follows:
Section 1. SALE OF INTERESTS; PURCHASE PRICE; AGREED VALUE. At the
closing provided for at Section 2 of this Agreement (hereinafter called the
"Closing"), Seller, subject to the terms and conditions of this Agreement, will
sell, convey, and deliver the Foreclosure Properties and the other Interests to
Buyer, and Buyer will purchase and accept delivery of the Foreclosure Properties
and the other Interests from Seller, for Seven Million One Hundred Eighty
Thousand Dollars ($7,180,000) (hereinafter called the "Base Price"), subject to
the adjustments made in connection with the allocation of revenues and expenses
among Seller and Buyer as a result of the deemed "Effective Date" considerations
all as more particularly described at Section 2 of this
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Agreement, and in further consideration of Buyer's execution and delivery at the
Closing (or promptly thereafter) of that certain Conveyance of Production
Payment and Net Profit Overriding Royalty Interest (hereinafter called the
"Conveyance") from Buyer, as grantor, to Seller (hereinafter called the
"Purchase Price").
Section 2. CLOSING; EFFECTIVE DATE ALLOCATION. The purchase and sale of
the Interests shall be held and consummated promptly following the acquisition
of the Foreclosure Properties, and contemporaneously with the delivery of
documents under the Settlement Agreement (hereinafter called the "Closing
Date"). In the event that Seller does not acquire the Foreclosure Properties at
the sale and the other Interests pursuant to the Settlement Agreement, this
Agreement will terminate. The purchase and sale of the Interests shall be
effective for purposes of adjustment to the purchase price as of January 1, 1996
(the "Effective Date"). The computation of the adjustments shall be made as if
Seller had owned the Interests on the Effective Date even though the Interests
are acquired by Seller on the Closing Date. All revenues, proceeds, receipts,
and income ("Revenues") attributable to production from the ▇▇▇▇▇ and the sale
of the Properties prior to the Effective Date shall belong to Seller.
Conversely, all Revenues attributable to production from the ▇▇▇▇▇, the sale of
the Properties or otherwise attributable to the Interests on or after the
Effective Date, including, without limitation, all production of oil, gas, and
other hydrocarbons attributable to the Interests which was in tanks, storage
containers, or other facilities ("Production") on or after the Effective Date
awaiting delivery to the purchaser of same, shall belong to Buyer. All joint
interest ▇▇▇▇▇▇▇▇ related to the use or operation of the Interests prior to the
Effective Date ("Expenses") shall be the sole obligation of Seller. Conversely,
all joint interest ▇▇▇▇▇▇▇▇ related to the use or operation of the Interests on
or after the Effective Date shall be the sole obligation of Buyer; provided,
however, that Seller shall be solely responsible for each Expense incurred on or
after the Effective Date which is payable to any person or entity (other than an
unrelated third party or parties for services performed or materials furnished
with respect to the use, ownership or operation of the Interests from and after
the Effective Date, but prior to the Closing Date) if Seller has not delivered
an itemized documentation of such Expense to Buyer before the Closing Date. Any
party hereto that owes a sum of money to the other party hereto pursuant to the
terms of this Agreement shall promptly pay to the other party such sum. In no
event will the aggregate adjustment to the Base Price for the amount payable by
Seller under this Section 2 exceed $372,000, such adjustment will be calculated
in accordance with Exhibit B.
Section 3. INDEMNITY. PrimeEnergy hereby agrees to indemnify, defend
and hold harmless, ING from and against any loss, expense, liability, claims,
damage, penalties, fines, actions judgments, settlements or disbursements
arising out of or based upon ING's ownership of any of the Interests.
Section 4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents
and warrants to Buyer as of the date hereof, and Seller will represent and
warrant to Buyer as of the Closing Date, as follows:
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(a) ORGANIZATION; QUALIFICATION; AUTHORIZATION. Seller is and
until the date of Closing shall continue to be a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
This Agreement constitutes the valid and binding agreement of Seller enforceable
against Seller in accordance with its terms. All requisite corporate action
necessary to close the transactions contemplated by this Agreement has been
taken by Seller, and Seller has obtained all requisite consents and
authorizations necessary to close such transactions.
Section 5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents
and warrants to Seller as of the date hereof, and Buyer will represent and
warrant to Seller on the Closing Date, as follows:
(a) ORGANIZATION; QUALIFICATION; AGREEMENT AUTHORIZED AND
VALID. Buyer is and until the Closing Date shall continue to be a corporation
validly existing and in good standing under the laws of the state of its
incorporation. This Agreement has been duly authorized, executed and delivered
by Buyer, and all instruments required hereunder to be delivered by Buyer at the
Closing shall be duly authorized, executed and delivered by Buyer. All requisite
corporate action by Buyer necessary to close the transactions contemplated by
this Agreement has been taken. This Agreement constitutes the valid and binding
agreement of Buyer enforceable against Buyer in accordance with its terms.
(b) BROKERS AND FINDERS. Buyer has incurred no liability,
contingent or otherwise, for broker's or finder's fees with respect to this
transaction for which Seller shall have any responsibility whatsoever.
Section 6. INDEPENDENT INVESTIGATION. Buyer acknowledges that in
entering into this Agreement and consummating the transactions contemplated
hereby that it has conducted or it will conduct an independent investigation and
evaluation of the Interests, and that Buyer's decision to consummate the
purchase of the Interests are based solely upon Buyer's independent
investigation and evaluation of the Interests.
Section 7. FURTHER ASSURANCES. Upon delivery of the Purchase Price by
Buyer to Seller and subject to the terms of this Agreement, Seller shall convey
all of Seller's right, title and interest including lien rights, if any, in the
Foreclosure Property to Buyer at the Closing by delivering to Buyer a fully and
properly executed and acknowledged Conveyance in the form attached hereto as
Exhibit C. In addition and from time to time (whether at or after Closing), as
and when reasonably requested by Buyer or its successors or assigns, Seller will
execute, acknowledge and deliver all such additional deeds, releases,
assignments, division orders, transfer orders, letters in lieu of transfer
orders, bills of sale, instruments, files, records, documents and books in
Seller's possession or under Seller's control, and take such other action as
Buyer may reasonably deem necessary or desirable in order to more effectively
convey and transfer to Buyer the Interests, and Seller will assist Buyer in the
collection or reduction to possession of the Interests.
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Section 8. CONDITIONS TO OBLIGATIONS OF BUYER. The obligation of Buyer
to consummate the transactions provided for in this Agreement for Buyer's
consummation shall be subject to the satisfaction of each of the following
conditions as of the Closing Date, subject to the right of Buyer to waive any
one or more of such conditions:
(a) OPINION OF COUNSEL. Counsel of the Saratoga Companies
shall have furnished Seller and Buyer such counsel's written opinion (in form
and substance satisfactory to Seller and Buyer) in the form attached to the
Settlement Agreement.
(b) PERFORMANCE OF THIS AGREEMENT. Seller shall have had its
bid accepted as the highest bid pursuant to the Sale and receive a duly executed
and acknowledged Substitute Trustee Deed covering the Foreclosure Properties.
(c) NO LITIGATION. No suit, action, proceeding, investigation,
injunction, inquiry or request for information by any governmental body or
authority, or private party shall have been instituted or threatened which
questions or reasonably appears to portend subsequent questioning of the
validity or legality of this Agreement or the transactions contemplated by this
Agreement.
(d) SETTLEMENT AGREEMENT. The Saratoga Parties and ING shall
have entered into the Settlement Agreement and the Saratoga Parties shall have
delivered to Buyer the Sale Documents contemplated thereby.
(e) ING RELEASE. Seller shall have secured and deliver to
Buyer at the Closing a properly executed and acknowledged assignment in
recordable form of the liens, security interests, and assignments of production
upon the Interests arising from Sellers' mortgages, deeds of trust and other
lien instruments with ING, with respect to any interest not discharged by the
Sale, which shall be in a form satisfactory to Buyer.
(f) SELLER/ING MUTUAL RELEASE. Seller, ING and Buyer shall
have delivered one to the other at the Closing a properly executed mutual
release of claims in a form satisfactory to Buyer.
(g) OPERATIONS. Buyer, in its good faith judgment, shall have
received the requisite number of agreements and approvals, in form and substance
satisfactory to Buyer, from non-operating working interest participants in the
Saratoga Operated ▇▇▇▇▇ to ensure that Buyer will succeed Saratoga as the duly
designated and appointed operator of the Saratoga Operated ▇▇▇▇▇ from and after
the Closing.
(h) OTHER AGREEMENTS. Buyer shall have received (i) a properly
executed resignation and assignment, in form and substance satisfactory to
Buyer, from LOI resigning as operator of the LOI Operated ▇▇▇▇▇ and transferring
all interest in such operations to Buyer, (ii) a properly executed Shareholders'
Agreement, in form and substance satisfactory to Buyer, from
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. Dryer to Buyer, and (iii) a
properly executed acknowledgment, representation and warranty from Saratoga
Delaware that it has no right, title, interest or claim in and to any asset or
property included within the Interests, whether or not such asset or property is
set forth at Exhibit A attached hereto.
Section 9. CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of
Seller to consummate the transactions provided for in this Agreement for
Seller's consummation shall be subject to the satisfaction of each of the
following conditions as of the Closing Date, subject to the right of Seller to
waive any one or more of such conditions:
(a) REPRESENTATIONS AND WARRANTIES OF BUYER. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects.
(b) PERFORMANCE OF THIS AGREEMENT. Buyer shall have duly
performed or complied with all material obligations to be performed or complied
with by Buyer under the terms of this Agreement on or prior to the Closing Date.
(c) NO LITIGATION. No suit or action, investigation, inquiry
or request for information by any government body or authority, or private party
shall have been instituted or threatened which questions or reasonably appears
to portend subsequent questioning of the validity or legality of this Agreement
or the transactions contemplated by this Agreement.
Section 10. TERMINATION. Anything in this Agreement to the contrary
notwithstanding, this Agreement may be terminated by either of the parties on
the Closing Date if any of the conditions precedent to such party's obligations
at Closing have not been satisfied or waived on or prior to the Closing Date.
Such termination shall be without waiver of and shall not be construed to limit
the legal or equitable remedies of the terminating party.
Section 11. EXPENSES; SALES TAXES. Except as otherwise provided in this
Agreement, each party hereto will bear and pay its own expenses of negotiating
and consummating the transactions contemplated by this Agreement. Buyer shall be
responsible for remitting to the applicable governmental taxing authority all
sales taxes resulting from the sale contemplated by this Agreement. Such taxes
shall be Buyer's sole responsibility. Seller and Buyer shall cooperate with one
another with respect to the timely filing of a sales tax return or other
filings, if required by applicable law, with all applicable governmental
authorities.
Section 12. DTPA WAIVER. AS RESPECTS ANY AND ALL INTERESTS SITUATED IN
THE STATE OF TEXAS, BUYER HEREBY WAIVES THE PROVISIONS OF THE TEXAS DECEPTIVE
TRADE PRACTICES-CONSUMER PROTECTION ACT, CHAPTER 17, SUBCHAPTER E, SECTIONS
17.41-17.63 INCLUSIVE, TEXAS BUSINESS AND COMMERCE CODE, EXCEPT SECTION 17.555,
WHICH IS NOT WAIVED. IN ORDER TO EVIDENCE ITS ABILITY TO GRANT SUCH WAIVER AND
TO ESTABLISH BUYER'S SOPHISTICATION AS A PURCHASER OF OIL AND GAS
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PROPERTIES, BUYER HEREBY REPRESENTS AND WARRANTS TO SELLER THAT BUYER (A) IS IN
THE BUSINESS OF SEEKING OR ACQUIRING, BY PURCHASE OR LEASE, MINERALS, GOODS OR
SERVICES FOR COMMERCIAL OR BUSINESS USE, (B) HAS ASSETS OF $1,000,000 OR MORE
ACCORDING TO BUYER'S MOST RECENT FINANCIAL STATEMENT PREPARED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, (C) HAS KNOWLEDGE AND EXPERIENCE IN
FINANCIAL AND BUSINESS MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS
OF THE TRANSACTIONS CONTEMPLATED HEREBY, (D) IS NOT IN A SIGNIFICANTLY DISPARATE
BARGAINING POSITION, (E) IS AN EXPERIENCED AND KNOWLEDGEABLE INVESTOR IN THE OIL
AND GAS BUSINESS AND IS CAPABLE OF INDEPENDENTLY EVALUATING THE MERITS AND RISKS
OF THE INVESTMENT CONTEMPLATED BY THE AGREEMENT, (F) HAS ENGAGED OR EMPLOYED THE
SERVICES OF INDEPENDENT COUNSEL AND PROFESSIONALS TO ADVISE IT AS IT DEEMS
NECESSARY IN CONNECTION WITH THIS AGREEMENT, (G) HAS MADE ITS OWN ASSUMPTIONS
REGARDING THE RECOVERABILITY, QUANTITY, VALUE AND PRICES OF THE OIL AND GAS
RESERVES INCLUDED IN THE INTERESTS, (H) IS PURCHASING THE INTERESTS IN THE
ORDINARY COURSE OF ITS BUSINESS FOR INVESTMENT PURPOSES AND NOT FOR PURPOSES OF
FURTHER RESALE, DISTRIBUTION OR TRANSFER IN VIOLATION OF THE SECURITIES ACT OF
1933 OR THE RULES AND REGULATIONS THEREUNDER OR [ANY OTHER APPLICABLE SECURITIES
LAWS OF THE UNITED STATES OR ANY APPLICABLE STATE BLUE SKY LAWS AND (I) HAS THE
FUNDS AND FINANCIAL CAPABILITY TO DELIVER TO SELLER THE PURCHASE PRICE AT THE
CLOSING.
Section 13. NOTICES. All communications required or permitted under
this Agreement shall be in writing and any communication or delivery hereunder
shall be deemed to have been duly made if actually delivered, or if mailed by
registered or certified mail, postage prepaid, addressed as set forth below,
shall be deemed to have been duly made on the date received. Either party may,
by written notice so delivered to the other, change the address to which
delivery shall thereafter be made.
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(a) Notices to Seller:
Internationale Nederlanden (U.S.)
Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(b) Notices to Buyer:
PrimeEnergy Corporation
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., President
Section 14. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Buyer may not assign all or any portion of its rights or obligations
under this Agreement without Seller's prior written consent thereto.
Section 15. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, which taken together shall constitute one and the same
instrument and each of which shall be considered an original for all purposes.
Section 16. EXPENSES; ATTORNEYS' FEES. Except as otherwise provided in
this Agreement, each party hereto will bear and pay its own expenses of
negotiating and consummating the transactions contemplated by this Agreement.
The prevailing party in any lawsuit or litigation concerning the construction or
interpretation of this Agreement or the breach by the other party of any
provision of this Agreement shall be entitled to such party's reasonable
attorneys' fees and court costs.
Section 17. HEADINGS. The headings contained in this Agreement are for
convenient reference only and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 18. SUPERSEDING EFFECT. This Agreement supersedes any prior
agreement and understanding between the parties with respect to the subject
matter of this Agreement.
Section 19. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas applicable to
contracts made and performed entirely therein.
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Section 20. WAIVERS. No party's rights under this Agreement will be
deemed waived except by a writing signed by such party. Without limitation, the
occurrence of the Closing shall not be deemed a waiver of any party's 'rights
except its right to refuse to close.
Section 21. EXHIBITS AND SCHEDULES. The exhibits and schedules referred
to herein are attached hereto and by this reference made a part hereof.
Section 22. ANNOUNCEMENTS. Seller and Buyer shall consult with each
other with regard to all press releases and other announcements issued on or
prior to the Closing Date concerning this Agreement or the transactions
contemplated by this Agreement and, except as may be required by applicable laws
or the applicable rules and regulations of any governmental body or stock
exchange, neither Buyer nor Seller shall issue any such press release or other
publicity without the prior written consent of the other party.
Section 23. PARTIAL INVALIDITY. In the event any provision of this
Agreement is determined to be invalid or unenforceable, then the remainder of
this Agreement shall not be affected thereby.
Section 24. SPECIFIC PERFORMANCE. In addition to all other remedies, at
law or in equity, to which either party may be entitled, Seller and Buyer shall
each be entitled to specific performance of this Agreement, because the remedies
provided at law for any breach of this Agreement are inadequate and damages in
respect of any such breach will be difficult or impossible to determine.
IN WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed by an officer thereunto duly authorized as of the day and year
first above written.
"SELLER"
INTERNATIONAL NEDERLANDEN (U.S.)
CAPITAL CORPORATION, a Delaware corporation
ATTEST:
___________________ By: _______________________
Assistant Secretary ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
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"BUYER"
PRIMEENERGY CORPORATION
ATTEST:
___________________ By: _________________________
Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
President
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