EX-2.2
Purchase and Sale Agreement
PURCHASE AND SALE AGREEMENT
between
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ENERGY, L.L.C. AND E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY, L.L.C.
AND ▇-▇ GAS GATHERING, L.L.C.
and
Quest Oil & Gas Corporation
Agreement Date: April 1, 2003
Effective Date: May 31, 2003
TABLE OF CONTENTS
Page
1. Sale Agreement............................................ 1
2. Purchase Price............................................ 3
2.1 Deposits.............................................3
2.2 Cash at Closing.................................... 4
2.3 Allocated Value.................................... 4
2.4 Section 1031 Exchange.............................. 4
3. Representations and Warranties............................ 5
3.1 Organization, Good Standing, Etc................... 5
3.2 Authority.......................................... 5
3.3 Absence of Liabilities............................. 5
3.4 Contracts.......................................... 5
3.5 Consents and Approvals............................. 5
3.6 Litigation......................................... 5
3.7 Compliance with Laws............................... 5
3.8 Taxes.............................................. 5
3.9 Tax Partnerships................................... 6
3.10 Insurance.......................................... 6
3.11 Powers of Attorney................................. 6
3.12 Payout and Gas Balancing........................... 6
3.13 Affiliate.......................................... 6
3.14 Broker's or Finder's Fees............................6
3.15 Survival........................................... 6
3.16 Survival........................................... 6
3.17 Survival........................................... 7
4. Purchaser's Representations and Warranties................ 7
4.1 Organization, Good Standing, Etc................... 7
4.2 Authority.......................................... 7
4.3 Consents and Approvals............................. 7
4.4 Broker's or Finder's Fees.......................... 7
4.5 Survival........................................... 7
5. Covenants.................................................. 7
5.1 Access to Information.............................. 7
5.2 Title Matters....................................... 8
5.3 Conduct of Businesses.............................. 12
5.4 Consents............................................12
5.5 Conditions......................................... 12
5.6 Preferential Right Notices
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6. Purchaser's Conditions Precedent.......................... 13
7. Seller's Conditions Precedent............................. 14
8. The Closing............................................... 14
8.1 Purchaser's Deliveries............................. 14
8.1.1 Payment.................................... 14
8.1.2 Closing Memorandum..........................15
8.2 Seller's Deliveries................................ 15
8.2.1 Assignments................................ 15
8.2.2 Releases................................... 15
8.2.3 Notices.................................... 15
8.2.4 Closing Memorandum......................... 15
8.3 Costs ...........................................15
8.4 Change of Operator .................................15
8.5 Further Assurances .................................15
9. Adjustments............................................... 16
9.1 Taxes ........................................... 16
9.2 Suspended Proceeds ................................ 17
10. Assumption of Obligations................................. 17
10.1 Employees.......................................... 17
11. Environmental Matters..................................... 18
11.1 Seller's Representations .......................... 18
11.2 Notice of Adverse Environmental Conditions......... 18
11.3 Remedies........................................... 19
12. Indemnification............................................19
13. Termination............................................... 20
14. Default................................................... 21
15. Miscellaneous............................................. 21
15.1 Time............................................... 21
15.2 Notices............................................ 21
15.3 Choice of Law...................................... 22
15.4 Headings........................................... 22
15.5 Entire Agreement................................... 22
15.6 Assignment......................................... 22
15.7 Amendment.......................................... 22
15.8 Severability....................................... 22
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15.9 Attorney Fees...................................... 22
15.10 Waiver............................................. 23
15.11 No Third Party Beneficiaries....................... 23
15.12 Execution in Counterparts.......................... 23
15.13 Public Announcement................................ 23
Schedule "1.1" Description of Leases
Schedule "1.2" Schedule of ▇▇▇▇▇, Net Revenue Interest, and Purchase
Price Allocation
Schedule "1.5" ▇▇▇▇▇▇ Yard Location - Materials
Schedule "2.1" Escrow Agreement
Schedule "3.4" Contracts
Schedule "3.13" Affiliate Transactions
Exhibits "8.2.1" Assignment, ▇▇▇▇ of Sale and Conveyance
Exhibits "8.2.4" Letters in Lieu of Transfer Orders
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PURCHASE AND SALE AGREEMENT
This agreement is entered into the 1st day of April 2003 by and between
the following:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ENERGY, L.L.C. AND E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY,
L.L.C. AND ▇-▇ GAS GATHERING, L.L.C., Kansas limited liability
companies (jointly and severally the "Seller"); and
QUEST OIL & GAS CORPORATION, a Kansas corporation
(the "Purchaser").
In consideration of the mutual covenants herein contained and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Seller and the Purchaser agree as follows:
1. Sale Agreement. Subject to the terms and conditions of this Agreement,
the Seller agrees to sell and convey and the Purchaser agrees to
purchase and pay for 100% of Seller's right, title and interest in the
Properties, effective at 12:01 a.m. on May 31, 2003 (the "Effective
Date"). As used herein, "Properties" means the following:
1.1 All of the Seller's right, title and interest in and to oil and
gas leases described in Schedule 1.1 covering certain mineral
interests underlying lands described in such leases or including
in units with which any of such leases may be pooled or unitized,
whether developed or undeveloped (the "Leases"), and all of
Seller's right, title and interest in and to overriding royalty
interests, carried interests, net revenue interests, net profits
interests, licenses, production payments, permits and other
interests and agreements relating to the lands and the ▇▇▇▇▇
located thereon (the "Interests") subject to the terms,
conditions, covenants, and obligations set forth in the Leases or
subsequent assignments of the Leases. Notwithstanding the
foregoing, this sale does not include royalty interests owned by
Seller as a result of Seller's fee ownership of the mineral
interests and not as a result of Seller's present or past
ownership of the Leases.
1.2 All of the Seller's right, title, and interest in and to all
▇▇▇▇▇, including but not limited to oil, gas, injection and water
▇▇▇▇▇, located on the Leases including without limitation, those
▇▇▇▇▇ described on Schedule 1.2 (collectively, the "▇▇▇▇▇")
1.3 All oil, gas and other hydrocarbons ("Hydrocarbons") produced
from the Properties or allocated to the Properties or sold after
the Effective Date.
1.4 All of the Seller's interest in and to all operating agreements,
gas balancing agreements,joint venture agreements, farmout
agreements,
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farmin agreements, dry hole agreements, bottom hole
agreements, acreage contribution agreements, area of mutual
interest agreements, easements, permits, salt water disposal
agreements, surface agreements, unitization or pooling agreements,
warranties, covenants, indemnities and representations from third
parties related to the Properties.
1.5 All of the Seller's interest in and to all surface and subsurface
equipment, supplies, machinery, signage, gathering assets,
distribution and disposal facilities and tanks and all other real
or tangible personal property and fixtures which are located on
the Properties including all equipment, material, inventory and
other personal property at Seller's ▇▇▇▇▇▇ Yard in the ▇▇▇▇ Area
as described in Schedule 1.5 herein, excluding portable tools,
vehicles and any other items of personal property temporarily
located on the Properties.
1.6 All of the Seller's interest and estate in, to or derived under
any oil, gas and mineral unitization, pooling and communitization
agreements, declarations or orders relating to the Properties,
and the units, pools or communitized areas, if any, created
thereby (including, without limitation, all units, pools or
communitized areas formed under orders, regulations, rules or
other official acts of any federal, state or other governmental
agency having or asserting jurisdiction) and all interests in any
▇▇▇▇▇ within the units, pools or communitized areas associated
with the Properties.
1.7 To the extent the same are assignable or transferable all of the
Seller's interests in and to all: (i) orders, contracts, title
opinions and documents, abstracts of title, leases, deeds,
unitization agreements, pooling agreements, operating agreements,
division of interest statements, participation agreements, and
all other agreements and instruments, easements, rights-of-way,
licenses, authorizations, permits and similar rights and
interests, subject to the rights of third parties (the "Related
Agreements"); (ii) except as expressly provided otherwise herein,
all warranties, covenants and representations from third parties,
and all claims, rights and causes of action against third
parties, asserted and unasserted, known and unknown; related to
the Properties arising from the Related Agreements; and (iii) all
sales contracts and pipeline access agreements.
1.8 All lease files, land files, well files, division order files,
abstracts, title files, geophysical data, maps, accounting
records, and other information in the possession of the Seller or
copies thereof (the "Records") specifically related to the
Properties, and all rights thereto.
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2. Purchase Price. Subject to the adjustments and prorations hereinafter
described, the total purchase price to be paid by the Purchaser to the
Seller for the purchase of the Properties is the sum of $2,000,000 (the
"Purchase Price"). The Purchase Price will be adjusted and paid as follows:
2.1 Deposit. Upon execution of this Agreement, the Purchaser shall pay to
the Seller's account a deposit in the amount of Two Hundred Thousand
Dollars ($200,000.00) (the "Deposit"). Such payment shall be tendered
into escrow in accordance with the Escrow Agreement attached as
Schedule 2.1 and made a part hereof, with Emprise Bank, by wire
transfer in immediately available funds to the account designated by
Emprise Bank.
2.1.1 In the event the Closing (as hereinafter defined) has not
occurred on or before May 31, 2003, the Purchaser may extend
the date of Closing for 30 days by paying to the Seller the
additional sum of Twenty Thousand Dollars ($20,000.00) (the
"Extension Deposit"). Such payment shall be tendered by wire
transfer in immediately available funds to the above escrow
account.
2.1.2 In the event the Closing occurs on or before June 30, 2003, the
Deposit and the Extension Deposit, if paid, exclusive of
interest earned, shall be applied toward the Purchase Price,
less and except any portion of the Deposit and Extension
Deposit which is refunded to Purchaser pursuant to any Post-
Closing Title Defect adjustment made under Section 5.2.7.
2.1.3 In the event the Closing has not occurred on or before May 31,
2003 for any reason other than Purchaser's termination under
Section 13(b) or 13(d), and the Purchaser has not paid to
the Seller the Extension Deposit, the Deposit will be
forfeited to the Seller, including all accrued interest.
2.1.4 In the event the Closing has not occurred on or before June 30,
2003, for any reason other than Purchaser's termination under
Section 13(b) or 13(d), the Deposit and the Extension
Deposit will be forfeited to the Seller, including all
accrued interest.
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2.2 Cash at Closing. On the Closing Date (as hereafter defined), the
Purchaser will pay to the Seller's account, in immediately available
funds, the Purchase Price as adjusted under paragraphs 5.2 and 9 of
this Agreement (the "Adjusted Purchase Price") less the Deposit and
Extension Deposit. The Adjusted Purchase Price shall be tendered by
wire transfer in immediately available funds as directed by Seller.
2.3 Allocated Value. Schedule 1.2 sets forth the allocation of the
Purchase Price among each of the Properties for purposes of adjusting
the Purchase Price for Title Defects pursuant to Sections 5.2.4,
5.2.6, and 5.2.7 and serving notices of rights of first refusal or
preferential rights to purchase elections under Section 5.6. The
"Allocated Value" for any Property shall equal the portion of the
unadjusted Purchase Price allocated to such Property on Schedule1.2.
Any adjustments to the Purchase Price for Title Defects under Section
5.2 shall be applied to the amount set forth in Schedule 1.2 for the
particular affected Property. Purchaser shall accept such agreed
Allocated Values for purposes of this Agreement and the transactions
contemplated hereby, but otherwise makes no representation or warranty
as to the accuracy of such values. Seller and Purchaser agree to use
the Allocated Values as the basis for reporting asset values and all
other purposes of all federal, state, and local tax returns including
without limitation Internal Revenue Service Form 8594 and for all
other purposes.
2.4 Section 1031 Exchange. Any of the parties constituting Seller may not
desire to sell the Properties for cash, but rather to exchange one,
more or all of such parties' interests in the Properties for
properties of like kind, character and value in transactions
qualifying for the deferral of income pursuant to Internal Revenue
Section 1031. Accordingly, any or all of the parties constituting
Seller may designate such parties' interests in the Properties for
exchange, and in connection therewith to assign this Agreement to the
extent of the applicable proceeds of such interests to a qualified
intermediary for purposes of affecting a simultaneous or deferred
exchange of properties. Purchaser agrees to reasonably accommodate
Seller in this regard provided that such accommodation does not entail
any degree of risk or expense and does not significantly obligate
Purchaser other than to the extent of remitting designated proceeds
to the qualified intermediary.
3. Seller's Representations and Warranties. As an inducement to the Purchaser
to enter into this Agreement, each Seller represents and warrants to the
Purchaser that as of the date of this Agreement and as of the Closing Date:
3.1 Organization, Good Standing. The Seller is a limited liability
company duly organized, validly existing and in good standing
under the laws of the State of Kansas and has the authority to
own the Properties and to carry on such Seller's business as now
being conducted.
3.2 Authority. The Seller has taken all necessary action to
authorize the execution, delivery and performance of this
Agreement and has the authority and legal right to enter into,
execute, deliver and perform the transactions contemplated by
this Agreement. This Agreement is legal, valid and binding with
respect to the Seller and is enforceable in accordance with its
terms.
3.3 Absence of Liabilities. Except for a loan from the Bank of
Oklahoma that shall be satisfied on or before Closing, the Seller
has no debt, liability, obligation or commitment, absolute or
contingent, that relates to the Properties. Seller has complied
and will continue to comply with all applicable federal, state or
local statutes, laws and regulations. On or before the Closing
Date the Properties shall be free and clear of all mortgages,
pledges, liens, charges, burdens and encumbrances (other than the
Permitted Encumbrances) created by, through or under Seller.
3.4 Contracts. All material contracts, commitments or agreements
related to the Properties are disclosed in Schedule 3.4.
3.5 Consents and Approvals. Seller has made or obtained all notices,
filings, authorizations, consents or approvals of any
governmental entity, person or other entity that are required for
the Seller to consummate the transactions contemplated by this
Agreement.
3.6 Litigation. No action, suit or proceeding is pending, nor to
Seller's knowledge threatened or contemplated, against the Seller
or the Properties.
3.7 Compliance with Laws. Seller has not violated any applicable
law, ordinance, regulation, writ, judgement, decree or order of
any court or government or government unit in connection with the
Properties, the consequence of which singly or in the aggregate
would have a material adverse effect on the Seller or the
Properties.
3.8 Taxes. All ad valorem, property, production, severance and
similar taxes and assessments relating to the Properties,
including taxes and assessments based on or measured by the
ownership of property
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comprising the Properties or the production or removal of
hydrocarbons or the receipt of proceeds therefrom, have been
timely paid when due and are not in arrears.
3.9 Tax Partnerships. None of the Properties are treated for income
tax purposes as being owned by a partnership (other than the
Seller).
3.10 Insurance. The Seller will maintain or cause to be maintained
through the Closing Date, with financially sound and reputable
insurers, insurance to the extent and against such hazards and
liabilities and in such types and amounts as is commonly
maintained by entities similarly situated.
3.11 Powers of Attorney. No outstanding powers of attorney relate to
or affect any of the Properties.
3.12 Gas Balancing None of the Properties have gas imbalances.
3.13 Affiliate. There are no transactions affecting any of the
Properties between the Seller and any of the Seller's affiliates
except as set forth in Schedule 3.13 attached hereto as a part
hereof. As used in this Agreement, "affiliate" means, with
respect to any person or entity, each other person or entity
directly or indirectly controlling, controlled by or under common
control with such person (including Producers Services, Inc., E.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ Oil Enterprises,
Inc.).
3.14 Broker's or Finder's Fee. The Seller has not incurred any liability
contingent or otherwise, for broker's fees in respect of this
Agreement for which the Purchaser will have any responsibility
whatsoever.
3.15 Seller has made or has caused to be made proper and timely payments
of all royalties, bonus payments, option payments, rentals and
deposits due under the Leases and has complied with, performed,
observed and satisfied or has caused to be complied with,
performed, observed and satisfied all material terms, conditions,
obligations and liabilities which have arisen under any of the
provisions of any of the Leases or any agreements or instruments
or any statute, order, writ, injunction or decree of any
governmental agency or of any court relating to the Properties.
3.16 Subject to the rents, covenants, conditions and stipulations
contained in the Leases, Purchaser may enter into and upon, hold
and enjoy the Leases for the residue of their respective terms
and all renewals or extensions of the Leases for its own use and
benefit, without any lawful interruption by Seller or any
individual or entity claiming, or to claim, by, through or under
Seller, except pursuant to Permitted Encumbrances;
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3.17 Survival. Seller's Representations and Warranties shall survive
Closing.
4. Purchaser's Representations and Warranties. As an inducement to the
Seller to enter into this Agreement, the Purchaser represents and
warrants to the Seller that as of the date of this Agreement and the
Closing Date:
4.1 Organization, Good Standing, Etc. The Purchaser is a duly
organized, validly existing corporation in good standing under
the laws of the State of Kansas. The Purchaser has the power to
execute and deliver this Agreement and to consummate the
transaction contemplated hereby.
4.2 Authority. The Purchaser has taken all necessary action to
authorize the execution, delivery and performance of this
Agreement and has adequate power, authority and legal right to
enter into, execute, deliver and perform the transactions
contemplated by this Agreement. This Agreement is legal, valid
and binding with respect to the Purchaser and is enforceable in
accordance with its terms
4.3 Consents and Approvals. No notice to, filing with, or
authorization, consent or approval of any governmental entity,
person or other entity is necessary for the Purchaser to
consummate the transactions contemplated by this Agreement.
4.4 Broker's or Finder's Fees. The Purchaser has not incurred any
liability, contingent or otherwise, for broker's or finder's fees
in respect of this Agreement for which the Seller will have any
responsibility whatsoever.
4.5 Survival. Purchaser's Representations and Warranties shall
survive Closing.
5. Covenants. The parties agree to perform the following prior to the
Closing Date:
5.1 Access to Information. The Seller will make available to the
Purchaser all title opinions, division orders, and other
information regarding the Properties available in the Seller's
files. Existing abstracts and title opinions will not be brought
down to date by the Seller. All such material, and the material
referred to in the section below, shall be made available at the
Seller's office in ▇▇▇▇▇▇, Kansas, during normal working hours.
The Seller will also permit the Purchaser to examine and copy,
the following files and records relating to the Properties:
(a) All production records, gas pricing certifications and
contracts;
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(b) All land, geological, production, engineering and accounting
records necessary to assume operations of the Properties;
and
(c) All records necessary to reconstruct financial information
for the period the Seller has owned the Properties to the
extent such records are reasonably available and are in the
Seller's possession.
The Purchaser will be given copies of files pertaining to the
Properties at Closing.
5.2 Title Matters-Leases.
5.2.1 An amount has been listed on Schedule 1.2 attached hereto
for the Seller's interests in the Leases for purposes of
providing a mechanism to adjust the Purchase Price in the
event of title defects with respect to such Leases and for
purposes of valuing any Properties or portions thereof that
may be subject to a right of first refusal or preferential
right to purchase. A Lease, or any Interest included in or
attributable to such Lease, shall be deemed to have a "Title
Defect" if Seller on the Closing Date has less than
"Defensible Title."
As used herein, the term "Defensible Title" shall mean, with
respect to each Lease, such title, that, except for and
subject to the Permitted Encumbrances (as defined below): (1)
as of the Effective Date entitles Seller to receive not less
than the "Net Revenue Interest" set forth in Schedule 1.2 of
all Hydrocarbons produced, saved and marketed from or
attributable to such Lease without decrease during the life of
the Lease, after satisfaction of all royalties, overriding
royalties, net profits interest or other similar burdens on or
measured by production of oil or gas; (2) obligates Seller to
bear costs and expenses relating to the maintenance,
development and operation of such Lease in an amount not
greater than the "Working Interest" set forth in Schedule 1.2
without increase during the term of the Lease; and (3) is free
and clear of all material encumbrances, liens, conditions,
and defects that a prudent owner of producing properties would
be unwilling to accept and pay for the affected Lease without
a reduction in the Purchase Price; and (4) includes all
access, ingress and egress rights as are reasonably necessary
to operate the Property.
5.2.2 The term "Permitted Encumbrances" shall mean:
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(1) lessors' royalties, overriding royalties, and division
orders and sales contracts covering Hydrocarbons,
unitization and pooling designations and agreements,
reversionary interests and similar burdens if the net
cumulative effect of such burdens does not operate to
reduce Sellers' Net Revenue Interest in any affected
Lease to less than the Net Revenue Interest for such
afflicted Lease set forth in Schedule 1.2 attached hereto
or to increase Seller's Working Interest in any affected
Lease to more than the Working Interest for such affected
Lease set forth on Schedule 1.2 attached hereto;
(2) inchoate liens for taxes or assessments not yet due
or not yet delinquent;
(3) all rights to consent by, required notices to, filings
with, or other actions by governmental entities in
connection with the sale or conveyance of oil and gas
leases or interests therein if the same are customarily
obtained subsequent to such sale or conveyance, but only
to the extent such relate to the sale or conveyance
contemplated by this Agreement;
(4) easements for streets, alleys, highways, pipelines,
telephone lines, power lines, railways and other
easements and rights-of-way, servitudes, permits, surface
leases and other rights in respect of surface operations,
pipelines, grazing, logging, canals, ditches, reservoirs
or the like that are not such as to materially interfere
with operations on the Lease;
(5) such Title Defects or other defects as Purchaser has
elected to waive pursuant to the terms of this Agreement;
(6) the terms and conditions of the Leases and all
agreements, orders, instrumental, documents and other
matters expressly described in or referred to in Schedule
1.1 or Schedule 3.4 attached hereto;
(7) valid, subsisting and applicable laws, rules or
orders of any governmental authority to the extent the
same affect (a) the rate or amount of production from or
attributable to any Lease; or (b) the sale,
transportation, marketing or other disposition of any
such production or (c) potential obligations to plug
▇▇▇▇▇ or restore surface area (to the extent Seller has
not received a notice, request or order to meet such
obligations);
(8) required third party consents to assignment and
similar agreements with respect to the Properties and
rights of first
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refusal and/or preferential rights to purchase in favor
of third parties as to which (A) waivers or consents are
obtained from the appropriate parties, or (B) the
appropriate time period for asserting such rights, after
the giving of any applicable notice, has expired without
an exercise of such rights;
(9) materialmen's, mechanics', repairmen's, employees',
contractors', operators' or other similar liens or
charges arising in the ordinary course of business
incidental to construction, maintenance or operation of a
Lease, (A) if not filed pursuant to law, (B) if filed,
have not yet become due and payable or payment is being
withheld as provided by law or (C) if their validity is
being contested in good faith by appropriate action, so
long as such liens or charges do not interfere with
operations on the affected Lease;
(10) mortgages or security interests to the Bank of
Oklahoma or any other lending institution to the extent
they are released by the Closing Date.
5.2.3 Purchaser shall give Seller written notice on or before 11:59
p.m., CST, on the date 10 days before closing, of each Title
Defect that Purchaser is entitled under Section 5.2.1 to treat,
and has so elected to treat, as a Title Defect for purposes of
adjusting the Purchase Price at Closing or, subject to the
provisions of Section 5.2.6 below, of terminating this Agreement.
Provided, however, that if a third party asserts a claim with
respect to the Interests, or otherwise alleges the existence of a
matter which would be a Title Defect, Seller shall notify
Purchaser of such fact promptly, and in any event on or before
the earlier of the Closing Date or five (5) days after such
assertion; any such matter of which Purchaser so receives notice
of may be asserted as a Title Defect at any time up to Closing.
5.2.4 If (a) Purchaser timely gives notice pursuant to Section 5.2.3
of any Title Defect that Purchaser is entitled under Section
5.2.1 to treat, and has so elected to treat, as a Title Defect,
and (b), unless on or before the Closing Date, such Title Defect
has been cured or the basis for treating such defect as a Title
Defect has been removed, or Purchaser agrees to waive such Title
Defect and purchase the defective Lease notwithstanding such
Title Defect, and (c) the Title Defect would result in the total
impairment of the Lease, then the Purchase Price allocated to
each Lease with such a Title Defect (the "Defect Interest") shall
be reduced by the aggregate of the amounts allocated to such
Defect Interest pursuant to Section 1.2 in which case the Defect
Interest shall be removed from Schedules 1.1 and 1.2 and shall be
retained by the Seller.
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In the event the Title Defect would not result in Purchaser
receiving less than a 51% Net Revenue Interest and less than a
51% working interest in a Lease, the dollar amount listed on
Schedule 1.2 for each Lease that has a Title Defect shall be
used to determine adjustments to the Purchase Price in the
proportion that the Title Defect impairs the value of the
Lease, assuming the total value of such Lease is the amount
listed therefor on Schedule 2.3 and the Purchaser shall be
deemed to have accepted the assignment of such Defect Interest
subject to such Title Defect.
If the Purchaser and the Seller cannot agree on the amount of
adjustment to the Purchase Price for a Title Defect, then the
applicable Lease shall be deleted in its entirety from
Schedules 1.1 and 1.2 retained by the Seller and the Purchase
Price shall be reduced by the amount set forth for such Lease
on Schedule 1.2
5.2.5 In connection with its examination of title data and other due
diligence, Purchaser shall notify Seller in writing of any Title
Defect which Purchaser is entitled under Section 5.2.1 to treat,
and has elected to treat, as a Title Defect as soon as reasonably
practicable after Purchaser has actual knowledge of such Title
Defect or other defect but in any event on or before 11:59 p.m.,
CST, ten days before Closing. Seller shall have the right, but
not the obligation, to attempt to cure any such Title Defect or
other defect pursuant to Section 5.2.4.
5.2.6 In the event that the Title Defects which Purchaser is entitled
under Section 5.2.1 to treat, and has elected to treat as a Title
Defect, result in a total reduction under Section 5.2.4 above in
an amount equal to or greater than twenty percent (20%) of the
Purchase Price, then Purchaser or Seller shall have the right to
terminate this Agreement upon written notice to the other party.
In the event that the aggregate of Title Defect adjustments do
not result in a total reduction under Section 5.2.4 above equal
to or greater than twenty percent (20%) of the Purchase Price,
then neither Purchaser nor Seller shall have the right to
terminate this Agreement and there shall only be a reduction of
the Purchase Price as provided in Section 5.2.4 above.
5.2.7 After Closing, Purchaser shall have an additional period of
sixty (60) days (the "Post-Closing Title Defect Period") within
which to identify additional Title Defects and to provide notice
of same to Seller in the same manner as set forth in Section
5.2.3. With respect to asserted Title Defects discovered within
the applicable Post-Closing Title Defect Period that are not
cured by Seller within thirty (30) days of receipt of any notice
of such Title Defect, the
11
parties shall either (a) agree that Purchaser shall retain the
affected Lease and accept Seller's separate written
indemnification for all damages attributed to such Title
Defect, or (b) agree to accept an adjustment to the Purchase
Price for such Defect, or (c) absent any such agreement,
Purchaser shall reconvey the affected Lease to Seller, free
and clear of all encumbrances, except encumbrances in
existence on the Effective Date (and adjust revenues received
and expenses paid accordingly), whereupon Seller shall pay a
refund to Purchaser in the amount of the Unadjusted Purchase
Price allocated to the Lease on Schedule 2.3.
5.3 Conduct of Businesses. Prior to the Closing Date, the Seller
will operate the Properties in a businesslike manner in
accordance with the Seller's prior practices and will use the
Seller's best efforts to maintain and preserve the Properties.
5.4 Consents. The parties will use their best efforts to obtain all
licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties
to contracts with the Seller as are necessary for the
consummation of the transactions contemplated by this Agreement.
5.5 Conditions. The Seller and the Purchaser will use their
respective best efforts to cause the conditions in sections 6 and
7 to be satisfied.
5.6 Preferential Right Notices. The Seller shall prepare and
distribute third party notices of right of first refusal or
preferential right to purchase that Seller is aware of which are
identified on Schedule 3.4 within three (3) business days after
execution of this Agreement by all parties.
6. Purchaser's Conditions Precedent. The obligation of the Purchaser to
consummate the transactions contemplated by this Agreement is subject to
the satisfaction on or before the Closing Date or waiver (subject to
applicable law) of each of the following conditions:
6.1 No preliminary or permanent injunction or other order will have
been issued by any court of competent jurisdiction or any
regulatory body preventing consummation of the transactions
contemplated by this Agreement.
6.2 No action will have been commenced or threatened against the
Seller, the Purchaser or any of their respective affiliates,
associates, officers or directors seeking damages arising from,
or to prevent or challenge the transactions contemplated by this
Agreement.
12
6.3 All representations and warranties of the Seller contained herein
will be true and correct in all material respects.
6.4 The Seller will have performed or satisfied as of the Closing
Date all obligations, covenants, agreements and conditions
contained in this Agreement to be performed or complied with by
the Seller.
6.5 The Purchaser shall have obtained financing of this transaction
from ▇▇▇▇▇ Fargo Bank Texas, N. A. and/or ▇▇▇▇▇ Fargo Energy
Credit, Inc.
6.6 The Purchaser shall have entered into a contract satisfactory to
Purchaser for the purchase of the Seller's gas gathering business
assets, including pipelines, compressors, plants, taps, and
contracts (or for the purchase of all of the outstanding
ownership interests in Seller or in Seller's owners).
6.7 The Purchaser shall have entered into employment contracts or
consulting agreements, satisfactory to Purchaser, with the
following persons: E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
6.8 Purchaser shall have conducted an environmental audit or
inspection of the Properties and be satisfied that there are no
Environmental Liabilities with respect to any of the Properties.
6.9 All mortgages or security interests to the Bank of Oklahoma or
any other lending institution are released.
13
7. Sellers' Conditions Precedent. The obligation of the Seller to consummate
the transactions contemplated by this Agreement is subject to the
satisfaction, on or before the Closing Date of each of the following
conditions, any or all of which may be waived in whole or in part:
7.1 No preliminary or permanent injunction or other order will have
been issued by any court of competent jurisdiction or any
governmental or regulatory body preventing consummation of the
transactions contemplated by this Agreement.
7.2 No action will have been commenced or threatened against the
Seller, the Purchaser or any of their respective affiliates,
associates, officers or directors seeking damages arising from,
to prevent or to challenge the transactions contemplated by this
Agreement.
7.3 All representations and warranties of the Purchaser contained
herein will be true and correct in all material respects.
7.4 The Purchaser will have performed in all material respects all
obligations, agreements and conditions contained in this
Agreement to be performed or complied with by the Purchaser.
8. The Closing. The exchange of Purchaser's Deliveries for Seller's
Deliveries shall constitute "the Closing". Unless extended pursuant to
paragraph 2.1 or otherwise by written agreement executed by the Seller
and the Purchaser, the Closing will be consummated at 1:00 p.m. local
time in the offices of the Seller in ▇▇▇▇▇▇, Kansas on May 31, 2003 (the
"Closing Date").
8.1 Purchaser's Deliveries. On the Closing Date, the Purchaser will
deliver or cause to be delivered to the Seller the following
items (all documents will be duly executed and acknowledged where
required):
8.1.1 Payment. The portion of the Purchase Price due under
section 2 as adjusted under paragraphs 5.2 and 9 of this
Agreement.
8.1.2 Closing Memorandum and Regulatory Forms. Approval of the
memorandum (subject to the post-closing adjustments as
provided in Section 9) prepared by the Seller, setting
forth the items delivered and accounting for the payments
made on the Closing Date, and the properly executed and
acknowledged regulatory forms provided by the Seller that
are necessary to transfer operations from the Seller to
the Purchaser. The Seller will execute and file such
forms with the appropriate state or federal agency and
provide copies thereof to Purchaser.
14
8.2 Sellers' Deliveries. On the Closing Date, the Seller will
deliver or cause to be delivered to the Purchaser the following
items (all documents will be duly executed and acknowledged where
required):
8.2.1 Assignments. Assignments and conveyances in
substantially the form of Exhibit "8.2.1" attached hereto
as a part hereof conveying to the Purchaser all of the
Seller's right, title and interest in and to the
Properties.
8.2.2 Releases. Releases and termination statements with
respect to any and all liens, claims, security interests
and other encumbrances covering any of the Properties.
8.2.3 Notices. Letters in lieu of transfer orders addressed to
all purchasers of production from the Properties in the
form of Exhibit "8.2.4" attached hereto as a part hereof.
8.2.4 Closing Memorandum. A memorandum to be prepared by the
Seller setting forth the items delivered and accounting
for the payments made on the Closing Date.
8.3 Costs. The Seller will pay the Seller's attorneys' fees. The
Purchaser will pay the following closing costs: (i) the
Purchaser's attorneys' fees; and (ii) the cost of recording all
documents.
8.4 Change of Operator. After Closing, the Seller will reasonably
cooperate with the Buyer to effect a change of operator from
Seller to Purchaser on the Properties pursuant to the any
applicable operating agreements, including signing letters of
resignation and support for Purchaser and successor operator.
Seller represents and warrants that Purchaser shall have the right
to be named successor operator of each of the Properties. The
Purchaser's right to be successor operator of any of the
Properties is a condition of this transaction.
8.5 Further Assurances. After Closing, Seller and Purchaser each
agrees to take such further actions and to execute, acknowledge
and deliver all such further documents as are reasonably
requested by the other party for carrying out the purposes of
this Agreement or of any document delivered pursuant to this
Agreement.
15
9. Adjustments. All receipts and disbursements with respect to the
Properties will be prorated as of the Effective Date except as otherwise
addressed herein as follows:
(a) gross proceeds from production of Hydrocarbons prior to the
Effective Date attributable to the Properties will be the property
of and payable to the Seller;
(b) gross proceeds from production of Hydrocarbons after the
Effective Date attributable to the Properties will be the property
of and payable to the Purchaser;
(c) all costs, expenses and expenditures attributed directly to the
Properties and arising prior to the Effective Date will be the
obligation of the Seller;
(d) all costs, expenses and expenditures attributed directly to the
Properties and arising after the Effective Date will be the
obligation of the Purchaser; and
(e) all taxes shall be handled in accordance with paragraph 9.1
below.
Any of the foregoing adjustments which can be quantified on the
Closing Date and any adjustments under paragraph 5.2 will be
treated as an adjustment to the Purchase Price.
On or before 45 days after Closing, the Seller shall prepare a
post-closing schedule and the Purchaser and the Seller will account
for and agree on all of the foregoing adjustments and any
adjustments required under paragraph 5.2 and the net adjustment
will be paid to the appropriate party on or before 60 days after
Closing.
9.1 Taxes. Purchaser shall be responsible for the economic burden of
all taxes relating to the Property from and after the Effective
Date. Seller shall be responsible for payment of all taxes
relating to the Property prior to the Effective Date.
Taxes payable on an annual basis shall be prorated between the
Purchaser and the Seller as of the Effective Date. Regardless of
when assessed or due, ad valorem and all other taxes based on
production attributable to the Properties shall be the obligation
of the party entitled to the production during the period on
which such tax is based. Taxes payable on an annual basis shall
be prorated between the Purchaser and the Seller as of the
Effective Date. Ad Valorem taxes payable for 2002 shall be paid
by the Seller prior to Closing. The portion of Ad Valorem taxes
payable for 2003 and applicable to the period prior to the
Effective Date shall be paid by Seller to Purchaser as an
adjustment to the Purchase Price at Closing. Such portion shall
be an amount equal to the
16
2002 ad valorem tax liability for the Properties multiplied by
the number of days in 2003 prior to the Effective Date and
divided by 365. Seller shall provide a copy to Purchaser of any
2002 tax bills upon execution of this Agreement.
9.2 Suspended Proceeds. The Seller shall deliver to the Purchaser at
Closing an accounting of all suspended proceeds in Seller's
possession attributable to the Properties. The Seller shall pay
over to the Purchaser at Closing all such suspended proceeds by
way of adjustment to the Purchase Price. Upon receipt of such
suspended proceeds, the Purchaser shall assume all obligations
and liabilities with regard to such suspended proceeds and shall
indemnify and hold the Seller harmless of all claims relating
thereto, notwithstanding anything otherwise provided in Section
12.
10. Assumption of Obligations. From and after the Closing, the Purchaser
assumes and agrees to perform all express or implied covenants and
obligations of the Seller relating to the Properties arising after the
Closing. The Purchaser also assumes the Seller's proportionate part of the
expenses and costs of plugging and abandoning ▇▇▇▇▇ and restoration of
▇▇▇▇▇ or operation sites, all in accordance with the applicable laws,
regulations and contractual provisions. The Purchaser shall assume the
risk of any change in the condition of the Properties from the Effective
Date to the Closing, except to the extent any change of condition is
attributable to the willful misfeasance or negligence of the Seller
occurring while the Properties are under Seller's control.
Except as otherwise provided in paragraph 5.2 with respect to Title
Defects, the Properties are understood to be subject to all existing
operating agreements, unit operating agreements, unitization agreements,
pooling agreements, gas sales agreements, and other contracts or
obligations relating to the Properties that are of record, have been
disclosed to the Purchaser, are described in Schedule 3.4 or referred to
in any document described in Schedule 3.4 or are of a nature generally
encountered in the oil and gas industry. The Purchaser shall assume and be
responsible for all such obligations of the Seller arising after the
Effective Date. The Purchaser shall assume all rights and duties of the
operator of any Properties that are presently operated by the Seller,
including but not limited to all necessary filings with state agencies to
properly effectuate such transfer arising after the Effective Date. The
Seller agrees that it will not enter into any new contracts, or modify any
existing contracts, without the written consent of the Purchaser which,
however, shall not unreasonably be withheld.
17
11. Environmental Matters. With respect to all Environmental
Liabilities, as that term is used hereinafter, the following
provisions shall govern:
11.1 Seller's Representations. To Seller's knowledge, The Seller has
operated the Properties in compliance with all applicable
Environmental Laws and no governmental or private third party has
made a demand, asserted any claim or commenced any suit, action or
proceeding arising from or in connection with any Environmental
Liabilities with respect to the Properties.
The term "Environmental Liabilities" shall mean any liabilities,
claims, expenses, penalties, fines or other obligations, including
reasonable fees of attorneys, for environmental conditions,
situations, circumstances, events or incidents on, at or
concerning, originating at or relating to the Properties arising
directly or indirectly from (i) the use, transportation, handling,
storage, treatment, disposal, emission, discharge, spill, leak,
injection, escape, dumping, release or threatened release in any
work place or to the air, land, surface waters, groundwaters or
other medium, on or off site, of any Hazardous Substances, or (ii)
the related investigation, reporting, study, cleanup, corrective
action, removal, remediation, or monitoring with respect thereto.
The term "Hazardous Substances" shall mean petroleum, crude oil,
saltwater, or any fractional or constituent part thereof, and any
substance, material, waste, toxic substance, pollutant,
contaminant, constituent, petroleum (including without limitation
crude oil, saltwater, or any fraction thereof), or any variation
thereof, defined as hazardous in (I) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendment and Reauthorization Act of 1986
and otherwise, 42 U.S.C. ss.9601, et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. ss.6901, et seq., the Clean Air Act, 42
U.S.C. ss.7401, et seq., the Toxic Substances Control Act, 15 U.S.C.
ss.2601, et seq., the Safe Drinking Water Act, 42 U.S.C. ss.300f, et
seq., the Federal Water Pollution Control Act, 33 U.S.C. ss.125 1, et
seq., the Oil Pollution Act of 1990, 33 U.S.C. ss.2701, et seq., and
other federal laws relating to protection of the environment; (ii)
regulations relating to such federal laws; or (iii) similar state
and local laws, ordinances, and regulations (collectively,
"Environmental Laws"). Seller has provided Purchaser with any and
all environmental inspections and assessments in Seller's
possession, including, without limitation, all written reports,
data, and conclusion with respect to the Properties.
11.2 Notice of Adverse Environmental Conditions. If, prior to Closing,
Purchaser determines that any adverse environmental conditions
exist with respect to the Properties, then Purchaser will notify
Seller in writing of any such adverse environmental conditions.
18
An adverse environmental condition shall not include a well site
which is in need of plugging, the removal of equipment, filling in
of pits, restoration of the surface and other nonhazardous clean up
in the ordinary course of operations following the completion or
abandonment of a well.
The cost of an adverse environmental condition for purposes of this
subsection 11.2 will be all costs and claims associated with the
existence, remediation or correction of the adverse environmental
condition.
11.3 Remedies for Adverse Environmental Conditions. With respect to any
adverse environmental condition affecting the Properties and for
which timely notice is given to Seller, Purchaser may (a) request
Seller to cure the adverse environmental condition, but Seller will
have no obligation to cure the adverse environmental condition, or
(b) receive a mutually acceptable reduction in the Purchase Price
equal to the cost of the adverse environmental condition; or (c)
exclude the effected Property from the transaction.
12. INDEMNIFICATION. FROM AND AFTER THE CLOSING DATE, EACH SELLER AND ITS
MEMBER OR MEMBERS SHALL DEFEND, INDEMNIFY AND SAVE AND HOLD HARMLESS,
PURCHASER, ITS SHAREHOLDER, DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
AGAINST ALL CLAIMS AND SANCTIONS OF EVERY KIND AND CHARACTER, INCLUDING
WITHOUT LIMITATION REASONABLE ATTORNEYS' FEES, COURT COSTS AND COSTS OF
INVESTIGATION THAT RELATE (1) TO THE PROPERTIES AND ARISE FROM OR ARE
ATTRIBUTABLE TO THE PERIOD PRIOR TO THE EFFECTIVE DATE, AND (2) TO THE
OBLIGATIONS AND LIABILITIES OF SELLER TO PURCHASER UNDER THIS AGREEMENT
OR ANY RELATED AGREEMENT.
FROM AND AFTER THE CLOSING DATE, PURCHASER SHALL DEFEND, INDEMNIFY AND
SAVE AND HOLD HARMLESS EACH SELLER, ITS MEMBERS, MANAGERS, EMPLOYEES AND
AGENTS AGAINST ALL CLAIMS, OF EVERY KIND AND CHARACTER, INCLUDING
WITHOUT LIMITATION REASONABLE ATTORNEYS' FEES, COURT COSTS AND COSTS OF
INVESTIGATION, THAT RELATE (1) TO THE PROPERTIES AND ARISE FROM AND ARE
ATTRIBUTABLE TO THE PERIOD COMMENCING ON OR AFTER THE EFFECTIVE DATE;
(2) TO THE OBLIGATIONS AND LIABILITIES OF PURCHASER TO SELLER UNDER THIS
AGREEMENT OR ANY RELATED AGREEMENT.
12.1 Claims Defined. As used in this section, "claims" include costs,
expenses, obligations, claims, demands, causes of action,
liabilities, damages, fines, penalties and judgment of any kind or
character, whether matured or unmatured, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, known or unknown
and all costs and fees (including without
19
limitation, interest, attorneys' fees, costs of experts, court
costs and costs of investigation) incurred in connection therewith,
including, but not limited to claims arising from or directly or
indirectly related to royalty, operating, suspense and capital
obligations attributable to the Properties.
12.2 Intent. Except as otherwise provided in this Agreement and the
Assignment, it is the express intent and agreement of the Seller
and the Purchaser that the Purchaser accepts the Properties in
their "as is, where is" condition, subject to any and all defects,
deficiencies, irregularities and claims related or attributable in
any manner thereto, including, without limitation, any matter
affecting in any respect the title or physical condition of, or the
right to own, use, operate, develop or enjoy, the Properties,
whether known or unknown, liquidated or unliquidated, fixed or
contingent, direct or indirect.
12.3 The parties hereto agree promptly to notify the other party of
the making of any demand, the assertion of any claim, or the
commencement of any suit, action or proceeding by any third party
for which indemnity may be sought under this Agreement (an
"Indemnity Obligation") prior to expending or committing to expend
funds for which indemnity may be sought. The party from whom
indemnification is sought (the "Indemnifying Party") shall have the
right, but not the obligation, to assume the defense or settlement
of any Indemnity Obligation of which the party seeking
indemnification (the "Indemnified Party") gives notice, provided,
however, that if the Indemnifying Party does not elect to assume
such defense or settlement, the Indemnified Party shall have the
right, but not the obligation, to assume such defense or settlement
but shall not thereby waive any right to indemnity therefor by the
Indemnifying Party pursuant to this Agreement, and the Indemnifying
Party shall at all times have the right, at its option and expense,
to participate fully therein. Each party shall have reasonable
access to the books, records and personnel in the possession or
control of the other party which are pertinent to the defense or
settlement of any Indemnity Obligation. The parties shall cooperate
in the defense or settlement of any Indemnity Obligation, but the
party electing to assume such defense or settlement shall have full
authority, to the extent permitted the owner of the Interests, to
determine all action to be taken with respect thereto and the terms
of the settlement, provided, however, that without the consent of
the Indemnified Party, no settlement shall be entered into that
does not include as an unconditional term thereof the giving by the
person asserting such claims an unconditional release of the
Indemnified Party from all personal liability with respect to such
claim.
13. Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned by: (a) mutual consent of the
Seller and the Purchaser; (b) the Purchaser if the Purchaser is not in
default, and the condition precedents set forth in section 6 of this
Agreement have not been satisfied or waived by the Purchaser; (c) the
Seller, if the Seller is not in default, and the
20
conditions precedent set forth in section 7 of this Agreement have not
been satisfied or waived by the Seller, or (d) by either the Seller or
the Purchaser if adjustments under paragraph 5.2 or paragraph 11.3
exceed twenty percent (20%) of the Purchase Price. In the event of
termination, written notice thereof will be given to the other party
specifying the provision pursuant to which such termination is made. On
termination pursuant to this section 13, this Agreement will become void
and have no effect, and there will be no liability hereunder on the part
of the Purchaser or the Seller or any of their respective members,
managers, officers, directors, employees, agents, stockholders or
principals. In the event of such termination, the Deposit and Extension
Deposit shall be returned to Purchaser.
14. Default. If a party fails to perform any obligation contained in this
Agreement, the party claiming default will serve written notice to the
other party specifying the nature of such default and demanding
performance. If the Seller fails to cure such default within ten (10)
days after receipt thereof, the Purchaser will have the option to waive
such default, to demand specific performance, to exercise any other
remedy available at law or in equity or to terminate this Agreement. If
the Purchaser fails to cure such default within ten (10) days after
receipt thereof, the Seller will have the option to waive such default
or to terminate this Agreement and retain as its exclusive remedy all of
the Deposit and Extension Deposit as liquidated damages and not as a
penalty.
15. Miscellaneous. It is further agreed as follows:
15.1 Time. Time is of the essence of this Agreement.
15.2 Notices. Any notice, demand or communication required or
permitted to be given by any provision of this Agreement will be
in writing and will be deemed to have been given and received
when delivered personally or by telefacsimile to the party
designated to receive such notice, or on the date following the
day sent by overnight courier, or on the third (3rd) business day
after the same is sent by certified mail, postage and charges
prepaid, directed to the following addresses or to such other or
additional addresses as any party might designate by written
notice to the other parties:
To the Seller: ▇-▇ Gas Gathering, LLC, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Energy, LLC and E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy, LLC
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇\E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Purchaser:
21
Quest Oil & Gas Corporation
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
15.3 Choice of Law. This Agreement will be interpreted, construed and
enforced in accordance with the laws of the State of Kansas.
15.4 Headings. The paragraph headings contained in this Agreement are
for reference purposes only and are not intended to affect in any
way the meaning or interpretation of this Agreement.
15.5 Entire Agreement. This Agreement, the Related Agreements and any
document executed in connection herewith or therewith on or after
the date of this Agreement constitute the entire agreement
between the parties with respect to the subject matters hereof
and thereof.
15.6 Assignment. It is agreed that the parties may not assign such
party's rights nor delegate such party's duties under this
Agreement without the express written consent of the other party
to this Agreement.; provided however, Seller hereby gives its
consent to Purchaser to assign this agreement to any other
subsidiary or a newly formed entity owned by Quest Resource
Corporation, provided such assignee specifically and expressly
agrees in writing to be bound by all covenants and conditions
contained herein.
15.7 Amendment. Neither this Agreement, nor any of the provisions
hereof can be changed, waived, discharged or terminated, except
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought.
15.8 Severability. If any clause or provision of this Agreement is
illegal, invalid or unenforceable under any present or future
law, the remainder of this Agreement will not be affected
thereby. It is the intention of the parties that if any such
provision is held to be illegal, invalid or unenforceable, there
will be added in lieu thereof a provision as similar in terms to
such provisions as is possible and to be legal, valid and
enforceable.
15.9 Attorney Fees. If any party institutes an action or proceeding
against any other party relating to the provisions of this
Agreement, the party to such action or proceeding which does not
prevail will reimburse the prevailing party therein for the
reasonable expenses of attorneys' fees and disbursements incurred
by the prevailing party.
15.10 Waiver. Waiver of performance of any obligation or term
contained in this
22
Agreement by any party, or waiver by one party of the other's
default hereunder will not operate as a waiver of performance of
any other obligation or term of this Agreement or a future waiver
of the same obligation or a waiver of any future default.
15.11 No Third Party Beneficiaries. This Agreement has been and is
made solely for the benefit of and shall be binding upon the
parties hereto and their respective successors and permitted
assigns and no other person will acquire or have any rights under
or by virtue of this Agreement.
15.12 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and
delivered will be deemed an original and which together will
constitute one and the same instrument.
15.13 Public Announcements. There will be no public release of
information of any kind by either of the parties with respect to
this Agreement, other than the recordation of the assignments and
certain other documents exchanged at Closing, and the
transactions herein provided for, unless mutually approved by the
parties, which approval will not be unreasonably withheld, or, if
such release is required by the law, including necessary
disclosure under the security laws, then each of the parties will
receive a copy of such release at least forty eight (48) hours
prior to its dissemination.
In witness whereof, the Seller and the Purchaser have executed this
Agreement on the date first above written to be effective on the Effective
Date.
"Seller"
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ENERGY, LLC
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Manager
"Member"
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
23
E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY, LLC
By /s/ E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Manager
"Member"
/s/ E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇-▇ GAS GATHERING, LLC
By /s/ E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Manager
"Member"
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
"Purchaser"
Quest Oil & Gas Corporation
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Co-Chief Executive Officer
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Co-Chief Executive Officer
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