Purchase and Sale Agreement by and between Range Resources - Appalachia, LLC seller and EnerVest Institutional Fund XI-A, L.P. EnerVest Institutional Fund XI-WI, L.P. CGas Properties, L.P. and EnerVest Operating, L.L.C. collectively, buyer
FINAL
EXECUTION VERSION
by
and between
Range
Resources - Appalachia, LLC
seller
and
EnerVest Institutional Fund XI-A, L.P.
EnerVest
Institutional Fund XI-WI, L.P.
CGas
Properties, L.P. and EnerVest Operating, L.L.C.
collectively,
buyer
EXHIBITS
|
Exhibit
A
|
Part
1
|
Leases,
Mineral Interests, Easements, Rights-of-Way, Surface Leases, Facilities,
Field Offices and Rolling Stock
|
|
Exhibit
A
|
Part
2
|
▇▇▇▇▇
|
|
Exhibit
A
|
Part
3
|
Material
Contracts
|
|
Exhibit
A
|
Part
4
|
Buyer’s
Proportionate Share
|
|
Exhibit
B
|
–
|
Excluded
Assets (including the Retained Leases and a list of the conveyed
wellbores)
|
|
Exhibit
C
|
–
|
Allocated
Values
|
|
Exhibit
D
Exhibit
E
|
–
|
Form
of Assignment(s) and Deed (to include assignment of leases, conveyance of
real property for offices and rolling stock)
Future
▇▇▇▇▇
|
|
Exhibit
F
|
–
|
Form
of Letter Regarding
Operatorship
|
SCHEDULES
|
Schedule
6.01(c)
|
–
|
Consents
|
|
Schedule
6.01(f)
|
–
|
Litigation
|
|
Schedule
6.01(i)
|
–
|
Disputed
Production Taxes
|
|
Schedule
6.01(j)
|
–
|
Royalty
Payments
|
|
Schedule
6.01(l)
|
–
|
Environmental
Matters
|
|
Schedule
6.01(n)
|
–
|
Breaches
of Material Contracts
|
|
Schedule
6.01(o)
|
–
|
AFEs
|
|
Schedule
6.01(p)
|
–
|
Preferential
Purchase Rights
|
|
Schedule
6.01(t)
|
–
|
Mortgages
and Security Interests
|
|
Schedule
7.05(a)
|
–
|
Seller
Bonds
|
|
Schedule
7.05(b)
|
–
|
Replacement
Bonds
|
|
Schedule
10.06
|
–
|
Suspense
Funds
|
i
This
Purchase and Sale Agreement (this “Agreement”) is made and
entered into this 5th day
of February 2010, by and between Range Resources - Appalachia, LLC, a Delaware
limited liability company (“Seller”), and EnerVest Energy
Institutional Fund XI-A, L.P., a Delaware limited partnership (“Fund XI-A”), EnerVest Energy
Institutional Fund XI-WI, L.P., a Delaware limited partnership (“Fund XI-WI”), CGAS Properties,
L.P., a Delaware limited partnership (“CGAS”, with Fund XI-A, Fund
XI-WI and CGAS collectively called herein “Buyer”) and EnerVest
Operating, L.L.C., a Delaware limited liability company (“EVOC”). Buyer,
Seller, and EVOC are sometimes referred to collectively as the “Parties” and, individually, as
a “Party.”
WITNESSETH:
WHEREAS, Seller is the owner
of the Assets (as defined below); and
WHEREAS, Seller is willing to
sell the Assets other than the Buildings to Buyer and Buyer is willing to
purchase the Assets (other than the Buildings) from Seller on the terms and
conditions set forth in this Agreement; and
WHEREAS, Seller is willing to
sell the Buildings to EVOC and EVOC is willing to purchase the Buildings from
Seller on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in
consideration of the mutual promises, representations, warranties, covenants,
conditions and agreements in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged by each
Party, Buyer, Seller and EVOC agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.01 Defined
Terms. As used in this Agreement, the following terms shall have the
meanings set forth below:
“1031 Assets” shall have the
meaning given that term in Section 14.01(a).
“Accounting Arbitrator” shall
have the meaning given that term in Section 10.01(b).
“Additional Assignments” shall
have the meaning given that term in Section 9.03(a).
“Adjusted Purchase Price” shall
have the meaning given that term in Section 3.01.
“AFEs” shall have the meaning
given that term in Section 6.01(o).
“Affiliate” shall mean any
Person that, directly or indirectly, through one or more entities, controls, is
controlled by or is under common control with the Person
specified. For the purpose of the immediately preceding sentence, the
term “control” and its syntactical variants mean the power to direct or cause
the direction of the management of such Person, whether through the ownership of
voting securities, by contract, agency or otherwise.
1
“Agreement” shall have the
meaning given that term in the preamble.
“Allocated Value” shall have
the meaning given that term in Section 3.03.
“Asset” shall have the meaning
given that term in Section 3.03.
“Assets” shall have the meaning
given that term in Section 2.02.
“Assignment” shall have the
meaning given that term in Section 9.03(a).
“Assumed Obligations” shall
have the meaning given that term in Section 12.01.
“Benefit Deductible” shall have
the meaning given that term in Section 4.06(a).
“Buildings” shall have the
meaning given that term in Section 2.02(j).
“Business Day” shall mean any
day other than a Saturday, a Sunday or a legal holiday on which banks in Fort
Worth, Texas or Pittsburgh, Pennsylvania are authorized or obligated by Law to
close.
“Buyer” shall have the meaning
given that term in the preamble.
“Buyer Indemnitees” shall mean
Buyer and its members, partners, shareholders and Affiliates, and the officers,
directors, employees, agents and representatives of all of the foregoing
Persons.
“Buyer’s Proportionate Share”
shall have the meaning given that term in Section 2.01.
“Buyer’s Title Defect Amount”
shall have the meaning given that term in Section 4.03.
“Claim” shall have the meaning
given that term in Section 12.10(b).
“Claim Notice” shall have the
meaning given that term in Section 12.10(b).
“Closing” shall have the
meaning given that term in Section 9.01.
“Closing Date” shall have the
meaning given that term in Section 9.01.
“Code” shall have the meaning
given that term in Section 14.01(a).
“Condition” shall have the
meaning given that term in Section 5.02.
“Confidentiality Agreement”
shall mean that certain Confidentiality Agreement executed by Buyer dated
December 16, 2009.
“Contracts” shall have the
meaning given that term in Section 2.02(f).
2
“Defect Deductible” shall have
the meaning given that term in Section 4.06(b).
“Defensible Title” shall have
the meaning given that term in Section 4.02.
“Deposit” shall have the
meaning given that term in Section 3.02(a).
“Dispute Notice” shall have the
meaning given that term in Section 10.01(a).
“Effective Time” shall have the
meaning given that term in Section 2.01.
“Environmental Asset Escrow
Funds” shall have the meaning given that term in Section
5.04.
“Environmental Defect” shall
have the meaning given that term in Section 5.02.
“Environmental Defect Amount”
shall have the meaning given that term in Section 5.05.
“Environmental Defect Notice”
shall have the meaning given that term in Section 5.03.
“Environmental Defect Property”
shall have the meaning given than term in Section 5.03.
“Environmental Examination
Period” shall have the meaning given that term in Section
5.01.
“Environmental Indemnity
Agreement” shall have the meaning given that term in Section
5.04(a).
“Environmental Laws” shall mean
applicable federal and state statutes and regulations and applicable local
statutes, regulations and/or ordinances (in each case, as the same have been
amended) to protect human health and the environment, including the Clean Air
Act, the Clean Water Act, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Occupational Safety and Health Act of 1970, the
Resource Conservation and Recovery Act of 1976, the Safe Drinking Water Act, the
Toxic Substances Control Act and the Oil Pollution Act of 1990.
“Environmental Permits” shall have the
meaning given that term in Section 6.01(l).
“Excluded Assets” shall have
the meaning given that term in Section 2.03.
“Facilities” shall have the
meaning given that term in Section 2.02(c).
“Files” shall have the meaning
given that term in Section 2.02(h).
“Final Accounting Statement”
shall have the meaning given that term in Section 10.01(a).
“Final Title Defect Amount”
shall have the meaning given that term in Section 4.07.
3
“Future Location” shall mean
each well location for the Future ▇▇▇▇▇, as represented by the maps and
information reflecting those drilling locations contained in that data room
prepared for Seller by RBC ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
“Future Well” shall mean a well
to be drilled in the future as identified on Exhibit E, subject to any
restriction to a formation or reservoir set forth on such Exhibit E with respect
to such well.
“Governmental Authority” shall
mean any federal, state, local or foreign government or any court of competent
jurisdiction, regulatory or administrative agency, commission or other
governmental authority that exercises jurisdiction over any of the
Assets.
“Hydrocarbons” shall mean oil
and gas and other hydrocarbons produced or processed in association
therewith.
“Imbalance” shall mean any
imbalance at the wellhead between the amount of Hydrocarbons produced from a
Well and taken by and allocated to Seller and the amount of Hydrocarbons
produced from a Well and allocable to Seller’s interest therein.
“Indemnitee” shall have the
meaning given that term in Section 12.10(a).
“Indemnitor” shall have the
meaning given that term in Section 12.10(a).
“Interim Period” shall mean
that period commencing on the date of the execution of this Agreement and
terminating upon the earlier of the Closing or the termination of this
Agreement.
“Knowledge” shall mean, with
respect to Seller, the actual knowledge (after reasonable investigation and
inquiry) of ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇
▇▇▇▇▇▇.
“Law” shall mean any applicable
statute, law, rule, regulation, ordinance, order, code, ruling, writ,
injunction, decree or other official act of or by any Governmental
Authority.
“Leases” shall have the meaning
given that term in Section 2.02(a).
“Liabilities” shall mean,
except as provided in Section 12.09, any and all claims, causes of actions,
payments, charges, judgments, assessments, liabilities, losses, damages,
penalties, fines or costs and expenses, including any attorneys’ fees, legal or
other expenses incurred in connection therewith and including liabilities,
costs, losses and damages for personal injury or death or property
damage.
“Like-Kind Exchange” shall have
the meaning given that term in Section 14.01(a).
“Lowest Cost Response” shall
mean the response allowed under Environmental Laws that a reasonably prudent
operator would take to address the Condition to bring it into compliance with
applicable Environmental Laws at the lowest reasonable cost (considered as a
whole taking into consideration any negative impact such response may have on
the operations of the relevant Asset(s)) as compared to any other response that
is consistent with and permitted under Environmental Laws. With
regard to soil contamination, Lowest Cost Response shall be based on remediation
in place without excavation and removal of soil unless the Condition cannot,
under any circumstances, be remediated without excavation and replacement of
soil.
4
“Material Adverse Effect” shall
mean any one or more events, occurrences or circumstances that, individually or
in the aggregate, result in a material adverse effect on the condition
(financial or otherwise), use, ownership or operation of the Assets, which,
taken as a whole, results in a reduction in the value of the Assets of
$3,000,000 or more, or any one or more events, occurrences or circumstances
that, individually or in the aggregate, materially hinders or impedes the
consummation by Seller of the transactions contemplated by this Agreement;
provided, however, that none of the following shall constitute a Material
Adverse Effect: (a) any effect resulting from the announcement of the
transaction(s) contemplated by this Agreement; (b) any effect resulting from
changes in general market, economic, financial or political conditions in the
area in which the Assets are located, the United States or worldwide including
any outbreak of hostilities or war; (c) any effect resulting from a change in
Laws from and after the date of this Agreement; (d) any reclassification or
recalculation of reserves in the ordinary course of business; (e) any changes in
the prices of Hydrocarbons; and (f) any decline in Well
performance.
“Material Contract” shall mean
any Contract that has or could reasonably be expected to have a material
economic impact on the use, ownership or operation of the Assets
(excluding any Leases and any instruments transferring title to any Asset or
interest therein that are filed of record in the appropriate public records),
including the following:
(a) any
Contract that can reasonably be expected to result in aggregate payments by
Seller with respect to the Assets of more than $500,000 during the current or
any subsequent calendar year based solely on the terms of the Contract and not
on increases in other factors including volumes or revenues;
(b) any
Contract that can reasonably be expected to result in aggregate revenues to
Seller with respect to the Assets of more than $500,000 during the current or
any subsequent calendar year based solely on the terms of the Contract and not
on increases in other factors including volumes or revenues;
(c) any
purchase and sale, exchange, transportation, gathering, treating, processing,
refining or similar Contract (in each case) to which Seller is a party with
respect to Hydrocarbons from the Assets or to which any of the Assets are
subject that (in each case) is not terminable without penalty on 30 days or less
notice;
(d) any
indenture, mortgage, loan, note, credit, sale-leaseback or similar Contract (in
each case) to which any of the Assets are subject (whether Seller is the
borrower or the lender) and all related security agreements or similar
agreements associated therewith, unless such Assets are to be released from such
Contracts on or before the Closing;
(e) any
Contract between an Affiliate of Seller and Seller that will not be terminated
on or prior to Closing;
5
(f)
any Contract obligating Seller to sell, acquire, lease, farmout, farmin, grant,
convey or otherwise dispose of any of its interests in any of the Assets other
than conventional rights of reassignment;
(g) any
operating agreement, exploration agreement, development agreement, participation
agreement, joint venture agreement, partnership agreement, farmout agreement,
farmin agreement, unitization agreement, pooling agreement, plant agreement,
injection, repressuring or recycling agreement or other similar
agreement;
(h) any
contract or agreement that creates any area of mutual interest with respect to
the acquisition of any interest in any oil, gas, minerals, lands or
assets;
(i) any
contract or agreement to acquire or shoot seismic; and
(j) any
contract or agreement that evidences a lease or rental of any land, building or
other improvements or portion thereof, excluding any oil and gas
lease.
“Mineral Interests” shall have
the meaning given that term in Section 2.02(a).
“Non-Assumed Liabilities” shall
have the meaning given that term in Section 12.02.
“Operating Expenses” shall mean
all operating expenses (including costs of insurance and Production Taxes) and
capital expenditures incurred in the ownership or operation of the Assets in the
ordinary course of business and, where applicable, in accordance with the
relevant operating or unit agreement, if any, and overhead costs charged to the
Assets under the relevant operating agreement or unit agreement, if any, but
excluding (a) Liabilities for personal injury or death, property damage or
violation of any Law, (b) obligations to plug ▇▇▇▇▇, dismantle Facilities, close
pits or restore the surface around such ▇▇▇▇▇, Facilities and pits, (c)
environmental Liabilities, including obligations to remediate any contamination
of groundwater, surface water, soil, sediments, Facilities or personal property
under applicable Environmental Laws, (d) obligations with respect to Imbalances
and (e) obligations to pay working interests, royalties, overriding royalties or
other interest owners revenues or proceeds attributable to sales of Hydrocarbons
relating to the Leases and/or ▇▇▇▇▇, including those held in
suspense.
“Overhead Costs” shall mean the
amount representing the general and administrative fee charged to working
interest owners as set forth in the lease operating expenses statement that
would be attributable to Seller’s interest in those ▇▇▇▇▇ operated by Seller for
the time period between the Effective Time and the Closing Date.
“Permitted Encumbrances” shall
mean any of the following:
(a) the
terms, conditions, restrictions, exceptions, reservations, limitations and other
matters contained in the agreements, instruments and documents that create or
reserve the rights which are to be assigned to Buyer as part of the Assets to
the extent that (i) such agreements, instruments and documents do not operate to
reduce any net revenue interest of Seller which is to be assigned to Buyer (as
set forth in Exhibit A – Part 2 or Exhibit E, as applicable) or increase any
working interest of Seller which is to be assumed by Buyer (as set forth in
Exhibit A – Part 2 or Exhibit E, as applicable) without a proportionate increase
in the corresponding net revenue interest of Seller which is to be assigned to
Buyer or (ii) such terms, conditions, restrictions, exceptions, reservations,
limitations and other matters are within general industry standards and do not
materially adversely affect the ownership, operation or use of any of the
Assets;
6
(b) any
(i) undetermined or inchoate liens or charges constituting or securing the
payment of expenses that were incurred incidental to maintenance, development,
production or operation of the Assets or for the purpose of developing,
producing or processing Hydrocarbons therefrom or therein, and (ii)
materialman’s, mechanic’s, repairman’s, vendor’s, construction, employee’s,
contractor’s, operator’s or other similar liens or charges for the payment of
expenses arising in the ordinary course of business (in each case that are not
yet delinquent or, if delinquent, that are being contested in good faith in the
ordinary course of business (provided that Seller shall be responsible for all
such obligations attributable to periods prior to the Effective
Time);
(c) any
liens for Taxes or assessments not yet delinquent or, if delinquent, that are
being contested in good faith in the ordinary course of business (provided that
Seller shall be responsible for all such obligations attributable to periods
prior to the Effective Time);
(d) any
liens or security interests created by Law, reserved in oil and gas leases for
royalties, bonuses or rentals or created to secure compliance with the terms of
the agreements, instruments and documents that create or reserve to Seller its
interests in the Assets that are not yet delinquent or, if delinquent, that are
being contested in good faith in the ordinary course of business (provided that
Seller shall be responsible for all such obligations attributable to periods
prior to the Effective Time);
(e) any
obligations or duties affecting the Assets to any municipality or Governmental
Authority with respect to any franchise, grant, license or permit and all
applicable Laws that are not yet delinquent or, if delinquent, that are being
contested in good faith in the ordinary course of business (provided that Seller
shall be responsible for all such obligations attributable to periods prior to
the Effective Time);
(f) any
easements, rights of way, servitudes, licenses, permits and other similar rights
for the purposes of pipelines, transmission lines, Facilities or other similar
fixtures or personalty to the extent the same do not materially interfere with
the operation of any of the Assets;
(g) all
lessors’ royalties, overriding royalties, net profits interests, carried
interests, production payments, reversionary interests, house gas rights and
other burdens on or deductions from the proceeds of production that do not
operate to reduce any net revenue interest of Seller (as set forth in Exhibit A
– Part 2 or Exhibit E, as applicable) or increase any working interest of Seller
(as set forth in Exhibit A – Part 2 or Exhibit E, as applicable) without a
proportionate increase in the corresponding net revenue interest of
Seller;
(h) preferential
rights to purchase or similar agreements;
7
(i) Third
Party consents to assignments or similar agreements;
(j) conventional
rights of reassignment upon abandonment;
(k) such
Title Defects as Buyer may have waived or for which a remedy is provided at
Closing pursuant to Section 4.04;
(l)
all rights to consent by, required notices to, filings with or other actions by
any Governmental Authority in connection with the sale or conveyance of oil and
gas leases or interests therein;
(m) all
Contracts, including all production sales contracts; division orders; contracts
for sale, purchase, exchange, refining or processing of Hydrocarbons;
unitization and pooling designations, declarations, orders and agreements;
operating agreements; agreements of development; area of mutual interest
agreements; gas balancing or deferred production agreements; processing
agreements; plant agreements; pipeline, gathering and transportation agreements;
injection, repressuring and recycling agreements; carbon dioxide purchase or
sale agreements; salt water or other disposal agreements; seismic or geophysical
permits or agreements; and any and all other agreements, (in each case) that do
not operate to reduce any net revenue interest of Seller (as set forth in
Exhibit A – Part 2 or Exhibit E, as applicable) or increase any working interest
of Seller (as set forth in Exhibit A – Part 2 or Exhibit E, as applicable)
without a proportionate increase in the corresponding net revenue interest of
Seller; and do not otherwise materially adversely affect the ownership, operator
or use of any of the Assets.
(n) the
claims described on Schedule 6.01(f) and all Liabilities arising in connection
therewith;
(o) all
defects and irregularities affecting the Assets that do not or will not with
notice or the passage of time or both (i) operate to reduce any net revenue
interest of Seller (as set forth in Exhibit A – Part 2 or Exhibit E, as
applicable), increase any working interest of Seller (as set forth in Exhibit A
– Part 2 or Exhibit E, as applicable), without a proportionate increase in the
corresponding net revenue interest of Seller or (i) otherwise interfere
materially with the ownership, operation or use of any of the Assets;
and
(p) any
indenture, mortgage, loan, note, credit, sale-leaseback or similar Contract (in
each case) to which the Assets are subject (whether Seller is the borrower or
lender) and all related security agreements or similar agreements associated
therewith, so long as such Assets are released as security under or from such
Contracts on or before the Closing.
“Person” shall mean an
individual, corporation, partnership, association, trust, limited liability
company or any other entity or organization, including government or political
subdivisions or an agency, unit or instrumentality thereof.
8
“Production Taxes” shall mean
ad valorem, property, severance, production and similar Taxes based upon or
measured by the ownership or operation of the Assets or the production of
Hydrocarbons therefrom.
“Properties” shall have the
meaning given that term in Section 2.02(b).
“Purchase Price” shall have the
meaning given that term in Section 3.01.
“QI” shall have the meaning
given that term in Section 14.01(a).
“Retained Files” shall have the
meaning given that term in Section 2.02(h).
“Retained Leases” shall have
the meaning given that term in Section 2.02(h).
“Retained Obligations” shall
have the meaning given that term in Section 12.04(a).
“Seller” shall have the meaning
given that term in the preamble.
“Seller Indemnitees” shall mean
Seller and its members, partners, shareholders, Affiliates, successors and
assigns, and the officers, directors, employees, agents, and representatives of
all of the foregoing Persons.
“Subject Preferential Rights”
shall have the meaning given that term in Section 4.08.
“Subject Well” shall mean a
Well or a Future Well, as the context requires.
“Tax Returns” shall mean all
returns, reports, statements and other similar filings with respect to Taxes,
and any amendments thereof.
“Taxes” shall mean any taxes,
assessments and other governmental charges imposed by any Governmental
Authority, including net income, gross income, profits, gross receipts,
alternative or add-on minimum, ad valorem, property, transfer, real property
transfer, value added, sales, use, environmental, excise, withholding, social
security, unemployment, disability, payroll, fuel, excess profits, windfall
profit, severance, estimated or other tax, including any interest, penalty or
addition thereto.
“Third Party” shall mean any
Person other than a Party to this Agreement or an Affiliate of a Party to this
Agreement.
“Title Benefit” shall mean any
right, circumstance or condition that (a) operates to increase the net revenue
interest of the Seller in any Subject Well above that shown on
Exhibit A – Part 2 or Exhibit E, as applicable, to the extent not
causing a greater than proportionate increase in Seller’s working interest in
such Subject Well above that shown in Exhibit A – Part 2 or Exhibit E, as
applicable; or (b) to decrease the working interest of Seller in any Subject
Well below that shown for such Subject Well in Exhibit A - Part 2 or Exhibit E,
as applicable, to the extent the same causes a decrease in Seller’s working
interest that is proportionately greater than the decrease in Seller’s net
revenue interest below that shown in Exhibit A - Part 2 or Exhibit E, as
applicable.
9
“Title Benefit Amount” shall
have the meaning given that term in Section 4.05(b).
“Title Benefit Property” shall
have the meaning given that term in Section 4.05(a).
“Title Defect” shall have the
meaning given that term in Section 4.02.
“Title Defect Cure Deadline”
shall have the meaning given such term in Section 4.04.
“Title Defect Notice” shall
have the meaning given such term in Section 4.03.
“Title Defect Property” shall
have the meaning given such term in Section 4.03.
“Title Examination Period”
shall have the meaning given that term in Section 4.01.
“Transfer Taxes” shall mean
transfer, sales, use, real property transfer, documentary, stamp, retailer
occupation and other similar taxes.
“Unit Interests” shall have the
meaning given that term in Section 2.02(a).
“▇▇▇▇▇” shall have the meaning
given that term in Section 2.02(b).
Section
1.02 Interpretation. Unless the
context otherwise requires, the term “includes” and its syntactical variants
means “includes but is not limited to.” The headings and
captions contained in this Agreement have been inserted for convenience only and
do not modify, explain, enlarge or restrict any of the provisions of this
Agreement or its Exhibits. Preparation of this Agreement has been a
joint effort of the Parties and therefore shall not be construed more strictly
against one of the Parties than the other. All references to
“Sections” and “Articles” in this Agreement refer to the corresponding section
and article of this Agreement unless specific reference is made to such sections
of another document or instrument. The words “hereof,” “herein” and
“hereunder” and words of similar import refer to this Agreement or a referenced
agreement or instrument as a whole and not to any particular provision of such
agreement or instrument. The information included on a schedule or in a
disclosure is not limited to the particular section of the Agreement in
connection with which the disclosure is made and shall be deemed a disclosure
for all purposes under this Agreement if listed on any schedule.
ARTICLE
II
ASSETS
Section
2.01 Agreement to Sell and
Purchase. Subject to the terms and conditions of this Agreement, (a)
Buyer agrees to purchase the Assets (less and except the Buildings) from Seller
in the respective undivided proportionate shares set forth in Exhibit A, Part 4
(“Buyer’s Proportionate
Share”), and Seller agrees to sell, transfer and assign the Assets (less
and except the Buildings) to Buyer in each Buyer’s Proportionate Share free and
clear of all liens and encumbrances except for Permitted Encumbrances and (b)
EVOC agrees to purchase the Buildings from Seller, and Seller agrees to sell,
transfer and assign the Buildings to EVOC free and clear of all liens and
encumbrances except for Permitted Encumbrances. If the transactions
contemplated by this Agreement are consummated in accordance with the terms and
provisions of this Agreement, the ownership of the Assets (other than the
Buildings) shall be transferred from Seller to Buyer and (b) the ownership of
the Buildings shall be transferred from Seller to EVOC on the Closing Date but
effective as of 7:00 a.m. local time where the Assets are located on January 1,
2010 (the “Effective
Time”).
10
Section
2.02 Assets. Subject to
Section 2.03, the term “Assets” shall mean, less and
except the Excluded Assets, all of Seller’s right, title and interest in and to
the following:
(a) (i)
the interest of the lessee under the oil and gas leases more particularly
described in Exhibit A – Part 1 (Seller’s interests in such leases,
collectively, the “Leases”), (ii) the mineral fee
interests, royalty interests, overriding royalty interests, production payments,
net profits interests, carried interests and reversionary interests described in
Exhibit A – Part 1 and/or relating to the lands described in any instrument
described in Exhibit A – Part 1 (Seller’s interests in the foregoing, the “Mineral Interests”) and (iii)
the interests in any units arising on account of the Leases or Mineral Interests
having been pooled or unitized into such units (Seller’s interests in such
units, the “Unit
Interests”);
(b) all
existing oil and gas ▇▇▇▇▇ on or attributable to the Leases, Mineral Interests
or Unit Interests (Seller’s interests in such ▇▇▇▇▇, including the ▇▇▇▇▇ set
forth on Exhibit A – Part 2, being collectively referred to as the “▇▇▇▇▇”) (the Leases, the
Mineral Interests, the Unit Interests and the ▇▇▇▇▇ being collectively referred
to as the “Properties”);
(c) all
production facilities, structures, tubular goods, well equipment (including
SCADA or other equipment allowing or facilities remote monitoring of the ▇▇▇▇▇),
lease equipment, production equipment, pipelines, inventory and all other
personal property, fixtures and facilities to the extent appurtenant to, located
on, or used primarily in connection with, the Properties including the equipment
and rolling stock set forth on Exhibit A – Part 1(collectively, the “Facilities”);
(d) to
the extent transferable, all permits, licenses, servitudes, easements,
rights-of-way, surface fee tracts and other surface use agreements to the extent
used or held for use in connection with the ownership or operation of the
Properties or the Facilities, including those described in Exhibit A – Part
1;
(e) the
Hydrocarbons produced from or attributable to the Properties from and after the
Effective Time;
(f) to
the extent transferable, all contracts and agreements to the extent related to
the Assets, including the contracts and agreements listed in Exhibit A – Part 3
(collectively, the “Contracts”);
(g) all
Imbalances relating to the Properties;
11
(h) all
books, records, files (including Lease files, Well files, division order files,
accounting files and gas sales, gathering and processing files), muniments of
title, title opinions, reports and similar documents and materials held and used
solely in connection with the Properties, the Facilities and/or the Contracts
(and copies of such items used in connection with the Properties, the Facilities
and/or the Contracts, but not solely in connection with the Properties, the
Facilities and/or the Contracts), but excluding any of the foregoing to the
extent that (i) transfer is restricted by third-party agreement or applicable
Law and (ii) Seller is unable to obtain, using commercially reasonable efforts,
a waiver of, or otherwise satisfy, such transfer restriction (provided that
Seller shall not be required to, but shall offer Buyer the opportunity to,
provide consideration or undertake obligations to or for the benefit of the
holders of such rights in order to obtain any necessary consent or waiver of
such transfer restriction) (subject to such exclusion, collectively, the “Files”); all other books,
records, files and documents, including electronic data and information some of
which is stored on the Hartville servers (including, without limitation, any and
all geological and geophysical information regarding the Seller’s assets and
operations in Pennsylvania, including information regarding its Marcellus Shale
leases and prospects) of the Company kept at or stored by personnel in the
Company’s Hartville, Ohio, Ravenna or Waynesburg offices shall be the “Retained Files”);
(i) all
Well logs, gravitational data and geological, 2D and/or 3D seismic and other
geophysical data, information maps, interpretations and schematics attributable
to the Properties (and copies of such items if attributable to the Properties
but not solely attributable to the Properties), to the extent that Seller has
the right to transfer same to Buyer without the payment of any fee, penalty or
other consideration unless Buyer agrees to pay any such fee, penalty or other
consideration for such transfer but excluding any of the foregoing to the extent
that (i) transfer is restricted by third party agreement or applicable Law and
(ii) Seller is unable to obtain, using commercially reasonable efforts, a waiver
of, or otherwise satisfy, such transfer restriction (provided that Seller shall
not be required to, but shall offer Buyer the opportunity to, provide
consideration or undertake obligations to or for the benefit of the holders of
such rights in order to obtain any necessary consent or waiver of such transfer
restriction); and,
(j) The
building and land described as located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ (commonly referred to as the Hartville, Ohio office, the building and land
at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ (commonly referred to as the Ravenna
office) and the building and land at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ (commonly referred to as the Waynesburg office and the furniture,
fixtures, office equipment, two way radio systems and the license(s) thereto
except any and all files and documents concerning the Company and transactions
engaged in or entered into by the Company (the “Buildings”);
The
Parties recognize that the intent of this Agreement is for Seller to convey to
Buyer all of Seller’s right, title and interest in all of the oil and gas ▇▇▇▇▇
owned by Seller in the States of Ohio and Michigan and certain oil and gas
assets in Pennsylvania together with all of Seller’s rights in the properties
associated with such oil and gas ▇▇▇▇▇ and the Parties agree that all such
properties are included within the definition of Assets, as such term is used in
this Agreement, save and except the oil and gas leases owned by the Company in
(i) Belmont and Jefferson Counties, Ohio on which there are no producing ▇▇▇▇▇
and (ii) Columbiana County, Ohio (the “Retained Leases”) provided
that Buyer shall receive a well bore assignment of the currently producing ▇▇▇▇▇
on the Retained Leases in Columbiana County, Ohio limited to the currently
producing reservoir.
12
Section
2.03 Excluded and Reserved Assets. The Assets do not
include, and there is excepted, reserved and excluded from the sale contemplated
under this Agreement, the Excluded Assets. “Excluded Assets” shall
mean:
(a)
all corporate, financial, tax and legal records of Seller that relate to
Seller’s business generally (including the acquisition, ownership and operation
of the Assets) including the Retained Files or that relate to the other Excluded
Assets, together with a copy (electronic or otherwise) of all of the Files;
provided, however, that the Seller covenants to keep confidential and not use or
permit the use by third parties of such data relating to the Assets in a manner
that will be disadvantageous to Buyer’s ownership, operation or subsequent
transfer of the Assets;
(b) any
trade credits, accounts receivable, proceeds or revenues attributable to the
Assets accruing prior to the Effective Time;
(c) all
Hydrocarbons produced from or attributable to the Properties with respect to any
periods of time prior to the Effective Time including oil in storage tanks as
measured at the Effective Time and natural gas and its constituent products that
are downstream of the sales metering point as of the Effective Time, and all
proceeds attributable to such production of Hydrocarbons prior to the Effective
Time;
(d)
all refunds of costs, Production Taxes or expenses attributable to any periods
of time prior to the Effective Time;
(e) all
proceeds from the settlements of contract disputes with purchasers of
Hydrocarbons from or attributable to the Properties, including settlement of
take-or-pay disputes, insofar as said proceeds are attributable to any periods
of time prior to the Effective Time;
(f) all
area-wide permits and licenses or other permits, licenses or authorizations used
in the conduct of Seller’s business generally, including software license
agreements, except to the extent that a transfer or partial transfer of such
permits, licenses or authorizations is required for the ownership, operation and
subsequent transfer of any Assets and can be effected without cost to the Seller
or such cost and expense is paid by Buyer;
(g) all
bonds, letters of credit and guarantees, if any, posted by Seller or its
Affiliates with Governmental Authorities and relating to the
Assets;
(h) subject
to the provisions of Section 13.02, all rights, titles, claims and interests of
Seller or its Affiliates under any insurance policy or agreement, to any
insurance proceeds or to or under any bond or bond proceeds;
(i) all
rights and claims relating to the Assets and attributable to periods of time
prior to the Effective Time;
13
(j)
all patents, patent applications, logos, service marks, copyrights, trade names
or trademarks of or associated with Seller or its Affiliates and their
businesses subject to Buyer’s right to the continued use of Seller’s stylized
name of logo on lease identification signs for not more than 30 days after the
Closing;
(k)
all privileged attorney-client communications and attorney work product other
than title opinions related to the Properties;
(l) all
materials and information that cannot be disclosed to the Buyer as a result of
confidentiality obligations to third parties;
(m) all
audit rights arising under any of the Contracts with respect to any periods of
time prior to the Effective Time or to any of the Excluded Assets, except for
any Imbalances;
(n) all
materials, information and analyses developed or prepared in connection with
marketing the Assets, including presentations, valuations and bidder lists, and
all communications with marketing advisors;
(o) the
rights, titles or interests described in Exhibit B or otherwise expressly
retained by Seller under the terms of this Agreement;
(p) all
indenture, mortgage, loan, note, credit, sale-leaseback and similar Contracts,
under which Seller is the borrower or the lender and all related security and
similar agreements, but expressly excluding any Asset described in Exhibit
A;
(q) all
amounts paid by Third Parties to Seller or its Affiliates as overhead for
periods of time accruing prior to Closing under any joint operating agreements
burdening the Properties;
(r) the
computer network equipment and servers listed as part of Exhibit B;
and
(s) any
matter required to be excluded pursuant to the provisions of
Section 2.02(h) or Section 2.02(i); and the Retained Leases (less and
except Buyer’s rights to the existing ▇▇▇▇▇ on the Retained
Leases).
Section
2.04 Revenues and
Expenses. Seller shall remain entitled to all of the rights of
ownership (including the right to all production, proceeds of production and
other proceeds) and shall remain responsible for all Operating Expenses
attributable to the Assets for the period of time prior to the Effective
Time. Subject to the provisions of this Agreement and subject to the
occurrence of the Closing, Buyer shall be entitled to all of the rights of
ownership (including the right to all production, proceeds of production and
other proceeds) and shall be responsible for all Operating Expenses attributable
to the Assets for the period of time from and after the Effective
Time. All Operating Expenses attributable to the Assets that
are: (a) incurred with respect to operations conducted or
Hydrocarbons produced prior to the Effective Time shall be paid by or allocated
to Seller and (b) incurred with respect to operations conducted or Hydrocarbons
produced from and after the Effective Time shall, subject to the provisions of
this Agreement and subject to the occurrence of the Closing, be paid by or
allocated to Buyer.
14
ARTICLE
III
CONSIDERATION
Section
3.01 Purchase Price. The total
consideration for the purchase, sale and assignment of the Assets by Seller to
Buyer is Buyer’s payment to Seller of the sum of $330,000,000.00 (Three Hundred
and Thirty million Dollars) (the “Purchase Price”), as adjusted
pursuant to this Agreement (the “Adjusted Purchase
Price”). The Adjusted Purchase Price less the Deposit shall be
paid by Buyer to Seller at the Closing by means of a completed wire transfer to
the account of Seller’s parent, Range Resources Corporation, as
follows:
Range
Resources Corporation
Amegy
Bank, N.A.
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Section
3.02 Deposit.
(a) Concurrently
with the execution and delivery of this Agreement, Buyer has deposited by wire
transfer to the account set forth in Section 3.01 in same day funds with Seller
the sum of $15,000,000.00 (the “Deposit”).
(b) If
(i) all conditions precedent to the obligations of Buyer set forth in Article
VIII have been met and (ii) the transactions contemplated by this Agreement are
not consummated on or before the Closing Date because of: (A) the
failure of Buyer to perform any of its obligations hereunder or (B) the failure
of any of Buyer’s representations or warranties hereunder to be true and correct
as of the Closing, then, in such event, Seller shall have, as Seller’s sole and
exclusive remedy, the right to terminate this Agreement and retain the Deposit,
together with all interest earned thereon, as liquidated damages, SELLER WAIVING ALL OTHER RIGHTS,
REMEDIES AND DAMAGES THAT IT MAY HAVE IN SUCH EVENT.
(c) If
(i) this Agreement is terminated by the mutual written agreement of Buyer and
Seller, (ii) the Closing does not occur on or before the Closing Date for any
reason other than as set forth in Section 3.02(b) or (iii) this Agreement is
terminated for any reason other than as set forth in Section 3.02(b), then Buyer
shall be entitled to the return of, and Seller shall immediately return to
Buyer, the Deposit free of any claims by Seller. Buyer and Seller
shall, in that event, have the rights and obligations set forth in Section
11.02.
15
Section
3.03 Allocated
Values. Buyer and Seller agree that the unadjusted Purchase Price is
allocated among the Assets in the amounts set forth in Exhibit C. The
“Allocated Value” for
any individual asset or group of assets valued together (such single asset or
group of assets valued together listed individually in Exhibit C an “Asset”) equals the portion of
the unadjusted Purchase Price allocated to such Asset on Exhibit C and such
Allocated Value shall be used in calculating adjustments to the Purchase Price
as provided herein. Buyer and Seller agree (a) that the Allocated
Values, as adjusted, shall be used by Seller and Buyer as the basis for
reporting Asset values and other items for purposes of all federal, state and
local Tax Returns, including without limitation Internal Revenue Service Form
8594 and (b) that neither they nor their Affiliates will take positions
inconsistent with such Allocated Values in notices to Governmental Authorities,
in audit or other proceedings with respect to Taxes, in notices to preferential
purchaser right holders or in other documents or notices relating to the
transactions contemplated by this Agreement.
ARTICLE
IV
TITLE
MATTERS
Section
4.01 Title Examination
Period. Commencing on the date of the execution of this Agreement and
ending on March 23, 2010, at 5:00 p.m. local time where the Assets are located
(the “Title Examination
Period”), Seller shall, subject to Section 7.01, (a) permit Buyer, and
EVOC with respect to the Buildings, and/or their respective representatives to
examine, in a reasonable manner, at reasonable times and in Seller’s offices,
abstracts of title, title opinions, title files, ownership maps, Property files,
assignments, division orders, operating records, agreements (including the
Contracts) and all other files and records pertaining to the Assets insofar as
same may now be in existence and in the possession of Seller and (b) subject to
Third Party operator approval (to the extent applicable and which Seller shall
use commercially reasonable efforts to obtain), permit Buyer and EVOC, with
respect to the Buildings, and/or their respective representatives, at reasonable
times and at Buyer’s and EVOC’s sole risk, cost and expense, to conduct
reasonable inspections of the Assets (other than environmental inspections which
are covered by Section 5.01).
Section
4.02 Title Defects. An
Asset shall be deemed to have a “Title Defect” if Seller is
found to have less than Defensible Title and it is reasonably estimated (a) with
respect to an Asset, the Allocated Value of which is less than $150,000, to
require an expenditure, or reduce the value of such Asset by an amount, in
excess of $5,000 or (b) with respect to an Asset, the Allocated Value of which
is greater than $150,000, to require an expenditure, or reduce the value of such
Asset by an amount, in excess of $10,000. For purposes of this
Agreement, the term “Defensible
Title” shall mean, with respect to all Assets other than the Buildings,
such title of Seller that, subject to and except for the Permitted
Encumbrances:
(i) with
respect to any Asset other than the Buildings (but limited to any currently
producing interval or specified formation or reservoir set forth in the
applicable Exhibit):
(A) entitles
Seller to receive not less than the percentage set forth in Exhibit A – Part 2
or Exhibit E, as applicable, as the net revenue interest for such Asset of all
Hydrocarbons produced, saved and marketed from such Asset, all without reduction
of such interest throughout the duration of the life of such Asset, except (1)
as set forth in Exhibit A – Part 2 or Exhibit E, as applicable, (2)
decreases in connection with those operations in which Seller may, from and
after the date of this Agreement, elect to be a non-consenting co-owner, and (3)
decreases resulting from the establishment or amendment of pools or units from
and after the date of this Agreement;
16
(B) obligates
Seller to bear the percentage of the costs and expenses relating to the
maintenance, development and operation of such Asset not greater than the
working interest for such Asset (shown in Exhibit A – Part 2 or Exhibit E, as
applicable), without increase throughout the duration of the life of such Asset,
except (1) as set forth in Exhibit A – Part 2 or Exhibit E, as applicable, (2)
increases, after the date of this Agreement, resulting from contribution
requirements with respect to defaulting co-owners under applicable operating
agreements, and (3) increases to the extent that they are accompanied by a
proportionate increase in Seller’s corresponding net revenue interest (set forth
in Exhibit A – Part 2 or Exhibit E, as applicable);
(ii)
is free and clear of all material liens, encumbrances,
encroachments, charges, claims, burdens and defects;
(iii) is
deducible from applicable federal, state and county records;
(iv) is
filed of record so as to be sufficient against competing claims of bona fide
purchasers for value without notice or other persons entitled to protection of
applicable recording laws; and
(v) permits
Seller and its assigns and designees rights of ingress and egress over the
Properties for purposes of oil and gas exploration, development, gathering, and
production.
Notwithstanding
the foregoing, none of the following shall constitute a Title Defect: the loss
of or reduction of interest in any Well or other Property following the
Effective Time due to: (A) any election or decision made by Seller in accordance
with applicable joint operating agreements as permitted under this Agreement;
provided, however, Seller shall not make any such election or decision without
Buyer’s prior written consent or (B) the expiration of the primary or secondary
term of any Lease after the date of this Agreement, except in the event of the
failure to make a delay rental payment or other lease maintenance
payment.
With
respect to the Buildings “Defensible Title” shall mean
legal title in fee simple, free and clear of all liens and encumbrances other
than Permitted Encumbrances.
Section
4.03 Notice of Title
Defects. If Buyer discovers any Title Defect, Buyer shall promptly
notify Seller prior to the expiration of the Title Examination
Period. To be effective, such notice (a “Title Defect Notice”) shall be
in writing and shall include (a) a description of the alleged Title Defect(s),
(b) the Assets or group of Assets affected (each “Title Defect Property”),
(c) documentation sufficient to reasonably support and explain the
asserted Title Defect(s), and (d) the amount which Buyer reasonably believes to
be the amount necessary to remedy the alleged Title Defect(s) (the
“Buyer’s Title Defect
Amount”) and the computations and information upon which Buyer’s belief
is based. Subject to Buyer’s rights with respect to any breach by
Seller of Section 7.03 or the special warranty of title in the Assignment, any
matters that may otherwise constitute Title Defects but that are not
specifically disclosed to Seller pursuant to a Title Defect Notice delivered to
Seller prior to the expiration of the Title Examination Period shall be deemed
to have been waived by Buyer, on behalf of itself and its successors and
assigns, for all purposes.
17
Section
4.04 Remedies for Title
Defects. Seller shall have the option, but not the obligation, to
attempt to cure any Title Defect prior to five (5) days after the end of the
Title Examination Period (the “Title Defect Cure
Deadline”). In the event that any Title Defect is not cured to
Buyer’s reasonable satisfaction on or before the Title Defect Cure Deadline, the
Final Title Defect Amount (as defined below) shall be included in the
calculation described below in Section 4.06 regarding the Defect
Deductible.
Section
4.05 Title
Benefits.
(a) Should Seller
discover any Title Benefit on or before the end of the Title Examination Period,
Seller shall have the right to notify the Buyer on or before the end of the
Title Examination Period, which notice shall include (i) a description of the
Title Benefit(s), (ii) the Assets affected (each, a “Title Benefit Property”),
(iii) the Allocated Value of each Title Benefit Property, (iv) documentation
sufficient to reasonably support and explain the asserted Title Benefit(s) and
(v) the amount by which the Seller reasonably believes the Allocated Value of
each Title Benefit Property is increased by the alleged Title Benefit(s) and the
computations and information upon which such Party’s belief is
based.
(b) With
respect to each Title Benefit Property reported under Section 4.05(a), if the
net revenue interest of each Title Benefit Property is greater than the net
revenue interest stated on Exhibit A – Part 2 or Exhibit E, as applicable, then
the Purchase Price shall be determined as set out in Section
4.07. The amount by which the Purchase Price is increased pursuant to
the preceding sentence of this Section 4.05(b) shall be referred to as the
“Title Benefit Amount.”
Buyer shall have no obligation to Seller with regard to any Title Benefit
discovered by Buyer after the Title Examination Period.
Section
4.06 Limitations; Adjustment to Purchase Price for Title Defects and
Environmental Defects
(a) Notwithstanding
anything in this Agreement to the contrary, (i) in no event shall there be any
adjustments to the Purchase Price or other remedies under this Agreement for any
Title Defect if the sum of all Final Title Defect Amounts does not exceed One
Percent (1%) of the Purchase Price, (ii) in no event shall there be any
adjustments to the Purchase Price or other remedies under this Agreement for any
Environmental Defect if the sum of all Environmental Defect Amounts does not
exceed One Percent (1%) of the Purchase Price (in the case of either (i) or
(ii), such amount being called the “Defect Deductible”); (iii) in
the event that the sum of all Final Title Defect Amounts exceeds the Defect
Deductible, then the Purchase Price shall be adjusted by the amount by which the
sum of all Final Title Defect Amounts exceeds the Defect Deductible; and (iv) in
the event that the sum of all Environmental Defect Amounts exceeds the Defect
Deductible, then the Purchase Price shall be adjusted by the amount by which the
sum of all Environmental Defect Amounts exceeds the Defect Deductible; and (v)
any such Purchase Price Adjustment shall be the exclusive right and remedy of
Buyer with respect to any Title Defect and/or Environmental Defect and any other
title or environmental matter related to the Assets. Buyer waives any
and all other rights or remedies, at Law or in equity, with respect
thereto.
18
(b) Notwithstanding
anything in this Agreement to the contrary, (i) in no event shall there be any
adjustments to the Purchase Price or other remedies under this Agreement for any
Title Benefit if the sum of all Title Benefit Amounts does not exceed one
Percent (1%) of the Purchase Price (the “Benefit Deductible”), (ii) in
the event that the sum of all Title Benefit Amounts exceeds the Benefit
Deductible, then any adjustments to the Purchase Price or other remedies for
Title Benefits pursuant to Section 4.05 shall be applicable only to the portion
that exceeds the Benefit Deductible, and (iii) Section 4.05 as limited by this
Section 4.06 shall, to the fullest extent permitted by applicable Law, be the
exclusive right and remedy of Seller with respect to any Title
Benefit.
Section
4.07 Final Title Defect Amount. The Final Title Defect
Amount resulting from a Title Defect shall be the amount by which the Allocated
Value of each Title Defect Property is reduced as a result of the existence of
such Title Defect and shall be determined in accordance with the following terms
and conditions:
(a)
if Buyer and Seller agree on the Buyer’s Title Defect Amount or Title Benefit
Amount, then that amount shall be the Final Title Defect Amount or Title Benefit
Amount;
(b)
if the Title Defect is an encumbrance that is undisputed and liquidated in
amount, then the Final Title Defect Amount shall be the amount necessary to be
paid to remove the Title Defect from the Title Defect Property;
(c) if
the Title Defect represents a discrepancy between (i) the net revenue interest
for any Subject Well and (ii) the net revenue interest stated in Exhibit A -
Part 2 or Exhibit E, as applicable, and there is not a proportional decrease in
working interest then the Parties shall attempt to agree on the Final Title
Defect Amount. If the Parties are unable to agree, then the Final
Title Defect Amount shall be determined pursuant to Section 4.07(g)
below.
(d) if
the Title Defect represents a discrepancy between (i) the net revenue interest
for any Asset and
(ii) the net revenue interest stated in Exhibit A – Part 2 or Exhibit E, as
applicable and the corresponding working interest decreases
proportionally, then the Final Title Defect Amount shall be the
product of the Allocated Value of such affected Asset multiplied by a fraction,
the numerator of which is the net revenue interest decrease and the denominator
of which is the net revenue interest stated in Exhibit A – Part 2 or Exhibit E,
as applicable;
19
(e) if
the Title Defect represents an obligation upon, encumbrance upon or other defect
in title to the Title Defect Property of a type not described above, the Final
Title Defect Amount shall be determined by taking into account the Allocated
Value of the Title Defect Property, the portion of the Title Defect Property
affected by the Title Defect, the legal effect of the Title Defect, the
potential economic effect of the Title Defect over the life of the Title Defect
Property, the values placed upon the Title Defect by Buyer and Seller and such
other reasonable factors as are necessary to make a proper evaluation; provided,
however, that if such Title Defect is reasonably capable of being cured, the
Final Title Defect Amount shall not be greater than the reasonable cost and
expense of curing such Title Defect;
(f) the
Final Title Defect Amount with respect to each Title Defect Property shall be
determined without duplication of any costs or losses included in another Title
Defect Amount;
(g) if
Seller and Buyer are unable to agree upon any Title Defect, Final Title Defect
Amount or Title Benefit Amount adjustment under this Section 4.07, Seller and
Buyer shall, in good faith, mutually agree upon an attorney experienced in oil
and gas law licensed to practice law in the State of Ohio and/or Commonwealth of
Pennsylvania as the arbiter of the alleged Title Defects and/or Final Title
Defect Amount, whose decision on all such matters must be rendered within thirty
(30) business days of the date of his or her designation, and will be final and
binding on the Parties. The costs and expenses of the arbitrator
shall be shared one-half by Seller and one-half by Buyer. If any
dispute is not resolved by the Closing Date, the Closing Date shall occur as
scheduled, and the Parties shall make any adjustments to the Purchase Price that
may be necessitated by the resolution of the dispute in connection with the
Final Accounting Statement; and
(h) notwithstanding
anything to the contrary in this Section 4.07, the aggregate Final Title Defect
Amounts attributable to the effects of all Title Defects upon a Title Defect
Property shall not exceed the Allocated Value of such Title Defect
Property.
Section
4.08 Preferential Rights To
Purchase. Prior to the Closing, Seller shall use commercially
reasonable efforts to comply with all preferential rights to purchase or similar
rights relative to the sale of any of the Assets as set forth in Schedule
6.01(p) (the “Subject
Preferential Rights”). Seller shall not be required to provide
consideration or undertake obligations to or for the benefit of the holders of
the Subject Preferential Rights (other than as set forth in the instrument
creating the Subject Preferential Right) in order to satisfy its obligations
under this Section 4.08. In accordance with this Agreement and the
applicable Contracts, promptly after the execution of this Agreement, Seller
shall deliver by mail written notices of the proposed transfer of any Asset
subject to the Subject Preferential Rights to the holders of such Subject
Preferential Rights. Seller shall promptly notify Buyer if any
Subject Preferential Right is exercised or if the requisite period has elapsed
without said right having been exercised. If a Third Party who has
been offered an interest in any Asset pursuant to a Subject Preferential Right
elects, prior to the Closing, to purchase such Asset pursuant to the aforesaid
offer, then the Asset or part thereof so affected will be eliminated from the
Assets, the Purchase Price will be reduced by the Allocated Value attributable
to such Asset and subject to the other terms of this Agreement, the Parties
shall proceed to Closing. Otherwise the Assets shall be conveyed to
Buyer at Closing subject to any preferential right to purchase or similar right
applicable to the transactions that has not been waived; provided, however, if
(i) the holders of one or more of the Subject Preferential Rights have not
either waived or exercised such Subject Preferential Rights because the time
periods to exercise such Subject Preferential Rights have not expired as of the
time Scheduled for Closing hereunder and (ii) the total of the Allocated Values
of the Assets subject to such Subject Preferential Rights exceeds 10% of the
Purchase Price, then Buyer shall have the right to delay the Closing until such
time periods have expired. If a Third Party elects to purchase any
Asset pursuant to a preferential right to purchase or similar right applicable
to the transactions after the Closing Date, Buyer shall be obligated to convey
such Asset to such Third Party and shall be entitled to the consideration for
the sale of such Asset.
20
Section
4.09 Consents to Assignment. Prior to
Closing, Seller shall use commercially reasonable efforts to obtain all consents
set forth in Schedule 6.01(c). Seller shall not be required to
provide consideration or undertake obligations to or for the benefit of the
holders of such consents other than as set forth in the instrument creating such
consent right. Promptly after execution of this Agreement, Seller
shall deliver by mail written requests for such consents to the holders
thereof. If Seller fails to obtain a consent prior to the Closing,
and the failure to obtain such consent would cause the assignment of such Asset
to Buyer to be void, then the portion of the Asset subject to such failed
consent shall be removed from this transaction and the Purchase Price reduced by
the Allocated Value thereof.
ARTICLE
V
ENVIRONMENTAL
Section
5.01 Environmental Examination
Period. Commencing on the date of the execution of this Agreement and
ending March 22, 2010 at 5:00 p.m. local time where the Assets are
located (the “Environmental
Examination Period”), Seller shall, subject to Third Party operator and
surface owner approval (which, upon Buyer’s request, Seller shall use
commercially reasonable efforts to obtain, provided that Seller shall not be
required to, but shall offer Buyer the opportunity to, provide consideration or
undertake obligations to or for the benefit of the holders of such approval
rights) and the provisions of Section 7.01, permit Buyer and/or its
representatives, in a reasonable manner, at reasonable times and at Buyer’s sole
risk, cost and expense, to conduct reasonable environmental inspections of the
Assets; provided however, that Buyer shall not conduct a Phase 2 environmental
survey or collect or analyze samples of any media including soil or water
without the prior written consent of Seller, which consent shall not be
unreasonably withheld. In the event that Seller consents to and Buyer
does conduct a Phase 2 environmental survey or testing of media, Seller reserves
the right to collect split samples and have such samples analyzed at its own
expense and all reports, analyses, test results, samples and other work product
resulting from or relating to such Phase 2 survey shall be provided to Seller
and shall be kept confidential and shall not be disclosed by Buyer to any other
Person unless required by Law to be disclosed by Buyer, in which case Buyer
shall notify Seller in writing reasonably in advance of any such
disclosure.
21
Section
5.02 Environmental Defect. An
Asset shall be deemed to have an “Environmental Defect” if Buyer
shows that such Asset is subject to a condition or occurrence constituting a
violation of Environmental Laws (a “Condition”) with respect to
which the Lowest Cost Response is reasonably estimated to require expenditure in
excess of $20,000. In the event the Assets are located on, or use the surface
estate of, real property in an area where other commercial activities are or
have been conducted, including (but not limited to) oil and gas exploration
activities, in no event shall a Condition form the basis for an Environmental
Defect unless such Condition directly affects, or results from, an Asset, or the
operation of an Asset including the drilling, completion and production
operations reasonably anticipated to occur in the future. Further,
each Environmental Defect shall be based on the analysis of each separate
Condition as the same results from discrete individual events at a single
continuous geographic location, even if multiple Conditions are located on or in
close proximity to the same well location or pad, tank battery site, pump, meter
or compressor location, pipeline easement, right of way or ditch line of the
like. In no event shall any Condition that was previously remediated
pursuant to, and in accordance with, Environmental Law in effect at the time of
such remediation, including a former pit or earthen disposal site, whether lined
or unlined, form the basis of an Environmental Defect if such Condition did not
constitute a violation of an Environmental Law or regulation at the time the
Condition was created or resulted from the operations utilizing such pit or
disposal site; provided, however, if, as a result of a change in condition or
operations utilizing such pit or disposal site subsequent to its prior
remediation, a Condition exists, such may form the basis of an Environmental
Defect. Further, no Condition involving naturally occurring
radioactive material (“NORM”) shall constitute the
basis of an Environmental Defect unless such NORM results in measured
radioactivity in excess of (i) a level of 50 µR/hr (50 micro roentgen per hour)
and more than 30 piC/gram for Radium 226 and Radium 228 or (ii) applicable
Environmental Laws, whichever is more stringent. The fact that a well is no
longer capable of producing sufficient quantities of oil or gas to continue to
be classified as a producing well or that such a well should be temporarily
abandoned or permanently plugged and abandoned shall not form the basis of a
Condition.
Section
5.03 Notice of Environmental
Defects. If Buyer discovers any Environmental Defect, Buyer shall
promptly notify Seller within 3 business days of such discovery and, in any
event, prior to the expiration of the Environmental Examination
Period. To be effective, notice of an Environmental Defect (an “Environmental Defect Notice”)
shall be in writing and shall include (a) a description of the alleged
Environmental Defect(s) including the GPS coordinates of the Condition (when
available), (b) the Asset(s) affected (each “Environmental Defect
Property”), (c) documentation, including any physical measurements or, to
the extent permitted by Seller under section 5.01, lab analyses, or photographs
sufficient to reasonably support the asserted Environmental Defect(s), (d) the
amount which Buyer reasonably believes to be the Lowest Cost Response to cure
the alleged Environmental Defect(s) and the computations and information upon
which Buyer’s belief is based, and (e) The Specific Environmental Regulation
(and date promulgated) that has been violated. Any matters that may
otherwise constitute Environmental Defects but that are not specifically
disclosed to Seller pursuant to an Environmental Defect Notice prior to the
expiration of the Environmental Examination Period shall be deemed to have been
accepted and waived by Buyer.
22
Section
5.04 Addressing Environmental Defects
Identified Before Closing. Seller shall have the option, but
not the obligation, to attempt to cure any Environmental Defect identified by
Buyer prior to Closing. In the event that any Environmental Defect
identified by Buyer before Closing is not cured on or before Closing, Seller
may, at its sole election: (a) retain the subject Asset(s) for a period of up to
60 days in order to attempt to cure the Environmental Defect and proceed to
Closing with regard to all of the other Assets with the Allocated Value and the
assignment for each Environmental Defect Property to be escrowed (collectively
the “Environmental Asset Escrow
Funds”) and, once any Environmental Defect has been cured, each such
Asset which was an Environmental Defect Property shall be conveyed to Buyer, and
the Environmental Asset Escrow Funds with respect to such Asset(s) shall be paid
to Seller and during such time as the Environmental Defect Property remains the
property of Seller, Buyer shall gather and transport the gas produced from each
such Environmental Defect Property at its actual cost and market the gas along
with the gas produced from the remainder of the Assets; or (b) at Seller’s sole
election, Seller may:
(a) indemnify
Buyer against all Liabilities resulting from all such Environmental Defects
pursuant to a form mutually agreeable by the Parties (an “Environmental Indemnity
Agreement”), in which event (subject to the other terms of this
Agreement) the Parties shall proceed to Closing and each Environmental Defect
Property shall be conveyed by Seller to Buyer subject to such Environmental
Defect, with no payment or settlement at the Closing as a result of such
Environmental Defect and no reduction or adjustment to the Purchase Price shall
occur; or
(b)
to the extent the Defect Deductible for Environmental Defects is met as defined
in Section 4.06, reduce the Purchase Price by an amount equal to the sum of all
Environmental Defect Amounts minus the Defect Deductible, as provided in Section
4.06, in which event (subject to the other terms of this Agreement) the Parties
shall proceed to Closing, and Buyer shall pay to Seller the Purchase Price as so
adjusted.
Section
5.05 Environmental Defect
Amount. The Environmental Defect Amount shall be determined in
accordance with the following terms and conditions:
(a) if
Buyer and Seller agree on the Environmental Defect Amount, then that amount
shall be the Environmental Defect Amount;
(b) if
Seller and Buyer are unable to agree upon any Environmental Defect Amount,
Seller and Buyer shall, in good faith, designate an attorney experienced in
environmental law as it relates to producing oil and gas properties, licensed to
practice law in the state or states in which the Environmental Defect Property
exists, as the arbiter(s) of the Environmental Defect Value(s) in dispute, whose
decision on all such matters must be rendered within fifteen (15) business days
of the date of his or her designation, and will be final and binding on all
Parties. To the extent necessary, the Closing shall occur and the
affected Assets shall be excluded from the transaction. The Parties
shall close on the affected Assets upon determination of such amounts in
accordance with this Section 5.05(b). The costs and expenses of the arbiter
shall be shared one-half by Seller and one-half by Buyer; and
Notwithstanding
any other term or provision of this Agreement, if the amount by which the
Purchase Price is reduced by Environmental Defect Amounts and Final Title Defect
Amounts is equal to or exceeds 10% of the Purchase Price, then either Seller or
Buyer shall have the right to terminate this Agreement.
23
Section
5.06
Limitations. Notwithstanding anything to the contrary, (a) in no
event shall there be any adjustments to the Purchase Price or other remedies
under this Agreement for any Environmental Defect if the sum of all
Environmental Defect Amounts and Final Title Defect Amounts does not exceed the
Defect Deductible, (b) in the event that the sum of all Environmental Defect
Amounts and Final Title Defect Amounts exceeds the Defect Deductible, then any
adjustments to the Purchase Price or other remedies for Environmental Defects
provided by Seller pursuant to Section 5.04 shall, except for Seller’s breach of
any representation with respect to Environmental Laws, be the exclusive right
and remedy of Buyer with respect to any Environmental Law, any other
environmental matter with respect to the Assets, and Buyer waives any and all
other rights, at Law or in equity, with respect thereto.
ARTICLE
VI
REPRESENTATIONS
AND WARRANTIES
Section
6.01 Representations and Warranties of Seller. Seller
represents and warrants to Buyer as follows:
(a) Organization. Seller
is duly formed, validly existing and (to the extent applicable) in good standing
under the Laws of the jurisdiction of its formation.
(b) Qualification. Seller
is duly qualified to do business, and is in good standing, in each jurisdiction
in which the nature of the business makes such qualification necessary, except
where the failure to be so qualified or in good standing would not have a
Material Adverse Effect.
(c) Authorization
/ Consents. The execution and delivery by Seller of this Agreement
and the performance of its obligations hereunder have been duly and validly
authorized by all requisite action by Seller’s governing body and under its
organizational documents. Subject to compliance with those matters
set forth on Schedule 6.01(c) and those consents of Governmental Authorities
customarily obtained post-Closing, Seller is not required to (i) give any notice
to, make any filing with or obtain any authorization, consent or approval from
any Governmental Authority or (ii) obtain any consent from any other third party
(in each case) in order for Seller to consummate the transactions contemplated
by this Agreement, except for those consents the absence of which would not have
a Material Adverse Effect.
(d) Enforceability. This
Agreement has been duly executed and delivered by Seller and constitutes the
valid and legally binding obligation of Seller, enforceable in accordance with
its terms and conditions except insofar as the enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar Laws affecting the enforcement of creditors’ rights
generally and by general principles of equity, regardless of whether such
principles are considered in a proceeding at Law or in equity.
(e) Noncontravention.
Assuming compliance with all consent requirements, all preferential rights to
purchase or similar rights applicable to the transactions contemplated under
this Agreement and, if applicable, the release at the Closing of the mortgages
and security interests upon the Assets securing Seller’s credit facilities,
neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated by Seller will violate or breach the terms of,
cause a default under, result in acceleration of, create in any party the right
to accelerate, terminate, modify or cancel this Agreement or any Material
Contract or require any notice under: (i) any applicable Law, (ii)
the organizational documents of Seller, or any Material Contract of the
Seller.
24
(f) Litigation. Except
for the claims described on Schedule 6.01(f), there are no suits, actions,
litigation, arbitration, mediation, judgments or other proceedings pending, or
to Seller’s Knowledge, threatened (i) against Seller that would affect Seller’s
ability to perform its obligations hereunder, (ii) which affect, or could
reasonably be expected to affect, the Assets. To Seller's Knowledge,
there have been no events, occurrences, facts or circumstances on or with
respect to the ownership or operation of the Assets that could give rise to a
claim by any Person for property damage, personal or bodily injury or
death.
(g) Brokers’
Fees. Seller has no Liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement for which Buyer will be liable or
obligated.
(h) Bankruptcy. There
are no bankruptcy, reorganization or arrangement proceedings pending, being
contemplated by or, to Seller’s Knowledge, threatened against Seller or any
Affiliate of Seller.
(i) Taxes. (i)
All Tax Returns required to be filed by Seller with respect to Production Taxes
have been timely filed with the appropriate Governmental Authorities, (ii) such
Tax Returns are true and correct in all material respects, (iii) all Production
Taxes reported on such Tax Returns that have become due and payable have been
duly paid, except to the extent being disputed in good faith, (iv) there are no
administrative proceedings or lawsuits pending against Seller or the Assets by
any Governmental Authority with respect to such Taxes, and (v) there are no Tax
liens (other than Permitted Encumbrances) on any of the Assets.
(j) Royalty
Payments. Except as noted in Schedule 6.01(j), all shut-in royalties,
overriding royalties and other royalties or similar burdens on production with
respect to the Leases that have become due and payable by Seller as of the
Effective Time have been duly paid other than those funds held in suspense by
Seller as described in Section 10.06. Schedule 10.06 sets forth a
description of all funds currently held in suspense by Seller with respect to
the Assets including an indication of any such funds that must be escheated to
the state.
(k) Hydrocarbon
Sales. (i) Seller is not obligated by virtue of and the Properties are not
subject to: (A) a prepayment arrangement under any Contract for the
sale of Hydrocarbons, including any that contains a “take or pay” provision, (B)
a production payment, or (C) any other arrangement, other than gas balancing
arrangements, to deliver Hydrocarbons produced from the Assets at some future
time without then or thereafter receiving payment for the production
commensurate with Seller’s ownership in and to the Assets or at a price less
than the then current market value of such production, and, (ii) Seller is not
subject to any penalties or other payments under any gas transportation or other
agreement as a result of the delivery of quantities of gas from the Assets in
excess of the Contract requirements.
25
(l) Environmental
Matters. Except as noted in Schedule 6.01(l), as of the date of this
Agreement, Seller (i) has not received any written notice of violation of any
Environmental Laws by any Governmental Authority relating to the Assets where
such violation has not been previously cured or otherwise remedied, (ii) to
Seller’s knowledge, it has obtained and maintained in effect all environmental
and health and safety permits, licenses, approvals, consents, certificates and
other authorizations necessary for the ownership or operation of the Properties
("Environmental
Permits"), (iii) to Seller’s knowledge is in material compliance with all
applicable Environmental Laws and, to Seller’s knowledge, with all terms and
conditions of all Environmental Permits, and all prior instances of
noncompliance have been fully and finally resolved to the satisfaction of all
Governmental Authorities with jurisdiction over such matters; (iv) to Seller’s
knowledge is not subject to any material violation of Environmental Laws arising
from, based upon, associated with or related to the Properties or the ownership
or operation of any thereof; and (v) is not otherwise aware of any facts,
conditions or circumstances in connection with, related to or associated with
the Properties or the ownership or operation of any thereof, that could
reasonably be expected to give rise to the material violation of an
Environmental Law or any claim or assertion that Seller, the Properties or the
ownership or operation thereof is not in compliance with Environmental Laws or
the terms or conditions of any Environmental Permit.
(m) Compliance
with Laws.
(i)
Seller’s operation of the Assets has been in accordance
with all Laws, orders, rules and regulations (other than Environmental Laws) of
all Governmental Authorities having or asserting jurisdiction relating to the
ownership and operation of the Assets, including the production of all
Hydrocarbons from the Assets;
(ii) To
Seller’s knowledge, all necessary governmental certificates, consents, permits,
licenses or other authorizations with regard to Seller’s ownership or operation
of the Assets (other than those required pursuant to Environmental Laws) have
been obtained and no violations exist or have been recorded in respect of such
certificates, consents, licenses, permits or authorizations; and
(iii) Since
the Effective ▇▇▇▇ ▇▇▇▇▇▇ has not received any written notice of any such
violation where such violation has not been previously cured or otherwise
remedied.
Notwithstanding
the foregoing, Seller makes no representation or warranty in this Section
6.01(m) with respect to any matters relating to the environment or Environmental
Law.
26
(n) Contracts;
Leases. Exhibit A – Part 4 lists all Material
Contracts. Except as set forth on Schedule 6.01(n), (i) Seller has
not received any written notice alleging any breach by Seller of any Material
Contract, (ii) to Seller's Knowledge, the Material Contracts and the Leases are
in full force and effect, (iii) neither Seller nor, to Seller's Knowledge, any
other party to the Material Contracts is in default thereunder, and (iv) to
Seller’s Knowledge, there exists no state of facts that with notice or the
passage of time or both would constitute a default under any Lease, Material
Contract, or joint operating agreement.
(o) AFEs. Schedule
6.01(o) contains a true and correct list as of the date of this Agreement of all
authorities for expenditures, proposals and/or commitments (collectively, “AFEs”) to drill, complete,
re-complete, deepen, plug back, plug and abandon or rework ▇▇▇▇▇, to shoot
seismic or perform other geophysical surveys or for capital expenditures with
respect to the Assets that have been proposed by any Person having authority to
do so other than internal AFEs of Seller not delivered to Third
Parties. For the purposes of this Section 6.01(o), an AFE shall
be material if, net to Seller’s interest, such AFE exceeds $75,000 and the
activities covered by such AFE have not been paid for and completed by the date
of this Agreement. Except as set forth in Schedule 6.01(o), Seller
has not gone or been deemed to have gone “non-consent” or failed to participate
in the drilling or reworking of a well, any seismic program, or any other
operation which would cause Seller or Buyer to suffer a penalty or lose or
forfeit any interests in the Assets.
(p) Preferential
Purchase Rights. To Seller’s Knowledge, Schedule 6.01(p) sets forth
those preferential rights to purchase or similar rights that are applicable to
transfers of the Properties in connection with the transactions contemplated
under this Agreement.
(q) Imbalances. There
are no imbalances associated with the Assets.
(r) Foreign
Person. Seller is not a “foreign person” within the meaning of
Section 1445 of the Code.
(s) Operating
Costs. All costs incurred in connection with the operation of the
Properties, other than any costs or charges that are being contested by Seller
in good faith, have been fully paid and discharged by Seller, except normal
expenses incurred in operating the Properties within the previous sixty (60)
days or as to which Seller has not yet been billed.
(t) Title
and Mortgages and Security Interests. Except as set forth herein,
Seller has good and marketable title to the Assets subject to the Permitted
Encumbrances. Schedule 6.01(t) sets forth a list of all mortgages,
deeds of trust, security interests and financing statements encumbering the
Assets in connection with Seller’s credit facilities, which mortgages, deeds of
trust, security interests and financing statements will be released and/or
terminated at Closing.
27
(u) Future
▇▇▇▇▇ and Future Locations. None of the Future ▇▇▇▇▇ or Future
Locations is or will be subject to the Deep Rights Participation Option held by
Marbel Holdco, Inc. pursuant to that certain Purchase and Sale Agreement dated
as of June 1, 2004 between Marbel Holdco, Inc., as seller, and Range Resources
Corporation, as buyer.
Section
6.02 Representations and Warranties of Buyer. Each Buyer,
severally, but not jointly, with respect to itself, its Proportionate Share of
the Assets it is acquiring or, in the case of EVOC, with respect to the
Buildings, represents and warrants to Seller as follows:
(a) Organization. Buyer
is duly formed, validly existing and in good standing under the Laws of the
jurisdiction of its formation.
(b) Qualification. Buyer
is duly qualified to do business and is in good standing in each jurisdiction in
which the nature of the business as now conducted makes such qualification
necessary, except where the failure to be so qualified or in good standing would
not materially hinder or impede the consummation by Buyer of the transactions
contemplated by this Agreement.
(c) Authorization/Consents. The
execution and delivery by Buyer of this Agreement and the performance of its
obligations hereunder have been duly and validly authorized by all requisite
action by Buyer’s governing body and under its organizational
documents. Buyer is not required to give any notice to, make any
filing with or obtain any authorization, consent, or approval from any
Governmental Authority in order for Buyer to consummate the transactions
contemplated by this Agreement.
(d) Enforceability. This
Agreement has been duly executed and delivered by Buyer and constitutes the
valid and legally binding obligation of Buyer, enforceable in accordance with
its terms and conditions, except insofar as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar Laws affecting the enforcement of
creditors’ rights generally and by general principles of equity, regardless of
whether such principles are considered in a proceeding at Law or in
equity.
(e) Noncontravention. Except
where same would not materially hinder or impede the consummation by Buyer of
the transactions contemplated by this Agreement, neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby by Buyer will violate or breach the terms of, cause a
default under, result in acceleration of, create in any party the right to
accelerate, terminate, modify or cancel this Agreement or require any notice
under: (i) any applicable Law, (ii) the organizational documents of
Buyer, or (iii) any material contract of Buyer.
(f) Litigation. There
are no suits, actions or litigation before or by any Governmental Authority that
are pending against Buyer that would materially hinder or impede the
consummation by Buyer of the transactions contemplated by this
Agreement.
(g) Brokers’
Fees. Buyer has no Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Seller will be liable or
obligated.
28
(h) Bankruptcy. There
are no bankruptcy, reorganization or arrangement proceedings pending, being
contemplated by or, to Buyer’s knowledge, threatened against Buyer or any
Affiliate of Buyer.
(i) Qualifications. Buyer
is and shall continue to be qualified to own and operate the Assets in all
jurisdictions where such Assets are located, and the consummation of the
transactions contemplated by this Agreement will not cause Buyer to be
disqualified as such owner or operator. Buyer currently has and will
continue to maintain lease bonds and any other surety bonds as may be required
by, and in accordance with, all applicable Laws governing the ownership and
operation of the Assets. To Buyer’s knowledge, there are no matters or
circumstances applicable to Buyer that would preclude or inhibit unconditional
approval by Governmental Authorities of the assignment of the Assets from Seller
to Buyer.
(j) Financing. Buyer
has sufficient cash, available lines of credit or other sources of immediately
available funds (in United States dollars) to enable Buyer to pay the Purchase
Price to Seller at the Closing.
(k) Investment. Buyer
is an experienced and knowledgeable investor in the oil and gas
business. Prior to entering into this Agreement, Buyer was advised by
and has relied solely on its own legal, tax and other professional counsel
concerning this Agreement, the Assets and the value of such
Assets. In making the decision to enter into this Agreement and
consummate the transactions contemplated under this Agreement, Buyer has relied
solely on the basis of its own independent valuation and due diligence
investigation of the Assets and not on Seller.
(l) Accredited
Investor. Buyer is an “accredited investor,” as such term is defined
in Regulation D of the Securities Act of 1933, as amended. Buyer is
acquiring the Assets for its own account and not for distribution or resale in
any manner that would violate any state or federal securities
Law. Buyer understands and acknowledges that if any of the Assets
were held to be securities, they would be restricted securities.
Section
6.03 Materiality. For purposes of this Article VI,
the term "material" (or any variation thereof) shall mean any matter reasonably
anticipated to cost or have an adverse effect on the value, ownership, operation
or use of any of the Assets in excess of $500,000.00, net to Seller’s interest
in the affected portion of the Assets.
ARTICLE
VII
PRE-CLOSING
OBLIGATIONS
Section
7.01 Access. Buyer
agrees to release and indemnify the Seller Indemnitees and all co-owners of the
Assets from and against any and all Liabilities arising out of or relating to
access to Seller’s offices or the Assets by Buyer, its officers, employees,
agents, advisors or representatives in connection with this Agreement or any due
diligence activity conducted by Buyer or any of its officers, employees, agents,
advisors or representatives in connection with the transactions contemplated by
this Agreement, except to the extent (i) of
Liabilities caused by the sole negligence or willful misconduct of any of the
Seller Indemnitees or (ii) of pre-existing Liabilities of Seller merely
discovered or disclosed by Buyer’s activities.
29
Section
7.02 Confidentiality. Buyer
acknowledges that, pursuant to its right of access to the Files and the Assets,
Buyer will become privy to confidential and other information of Seller and that
such confidential information shall be held confidential by Buyer and Buyer’s
officers, employees, agents, advisors or representatives in accordance with the
terms of the Confidentiality Agreement. If the Closing should occur,
the foregoing confidentiality restrictions on Buyer, including the
Confidentiality Agreement, shall terminate (except as to (a) such portion of the
Assets that are not conveyed to Buyer pursuant to the provisions of this
Agreement and (b) the Excluded Assets).
Section
7.03 Dispositions of
Assets. During the Interim Period, Seller shall not, without the
prior consent of Buyer, transfer, farmout, sell, encumber, remove or otherwise dispose of any Assets,
except for (a) sales and dispositions of Hydrocarbon production in the ordinary
course of business, or (b) sales of
equipment for which replacement equipment of at least equal value is
obtained.
Section
7.04 Operations during
Interim Period.
(a) During
the Interim Period, Seller shall take all
reasonable steps, consistent with Seller's past practices, to (i) keep in full
force and effect all of Seller’s rights in and to the Assets by the proper
payment of rentals, royalties and other sums due and payable under the Leases
and the Contracts and by the proper performance of all obligations thereunder,
(ii) to the extent that Seller is the operator of any of the Assets, produce,
operate and maintain such Assets in compliance with all applicable Laws and as a
prudent operator and (iii) pay or cause to be paid when due all expenses
incurred by Seller for maintaining, developing and operating the
Assets.
(b) Seller
shall not, without Buyer’s prior consent, which consent shall not be
unreasonably withheld or delayed: (i) propose, under any joint operating
agreement or other agreement, any operation
with respect to the Assets reasonably expected to cost Seller in excess of
$50,000; (ii) consent to any operation with respect to the
Assets reasonably expected to cost Seller in excess of $50,000 that is proposed by any third party; (iii) enter into any contract with a
term in excess of 90 days; (iv) reduce or terminate (or cause to be reduced
or terminated) any insurance coverage now held in connection with the
Assets; (v) waive any right of material value
relating to the Assets; (vi) modify or terminate any of the Contracts; (vii)
incur any other costs or expenses in connection with the Assets for which Buyer
will be responsible if Closing occurs which individually exceeds $50,000 or in
the aggregate exceeds $200,000; (viii) materially alter any of the Assets; (ix)
take any other actions with respect to the Assets outside of the ordinary course
of business, consistent with Seller’s past practices; except in each case
of subsections (i) and (ii)
above, where such operation is (1) in
connection with an AFE listed in Schedule 6.01(o), (2) in
response to an emergency or, (3) necessary to maintain or prevent the
termination of a Lease or prevent the loss of other Property; (x) settle any
litigation set forth on Schedule 6.01(f) without prior notification to and
consent of Buyer. Buyer acknowledges that Seller owns undivided
interests in certain of the Properties
comprising the Assets that it does not
operate, and Buyer agrees that the acts or
omissions of the other working interests owners (including the operators) who
are not Seller or any Affiliates of Seller shall not constitute a breach of the
provisions of this Section 7.04, nor shall any action required by a vote of
working interest owners constitute such a breach so long as Seller has voted its
interest in a manner that complies with the provisions of this Section
7.04.
30
Section
7.05 Governmental
Bonds. Buyer acknowledges that the bonds, letters of credit and
guarantees described on Schedule 7.05(a)
posted by Seller or its Affiliates with Governmental Authorities and relating to
the Assets, are not transferable and will not be transferred to
Buyer. On or before the Closing Date, Buyer shall obtain, or cause to
be obtained in the name of Buyer, replacements for such bonds, letters of credit
and guarantees, to the extent such replacements are necessary to permit the
cancellation of the bonds, letters of credit and guarantees posted by Seller
and/or its Affiliates. In addition, at or prior to Closing, Buyer
shall deliver to Seller evidence of the posting of such bonds, letters
of credit and guarantees or other security with all applicable
Governmental Authorities meeting the requirements of such authorities to own
and, where appropriate, operate, the Assets, such
required bonds, letters of credit and guarantees being more particularly
described on Schedule 7.05(b).
Section
7.06 Operatorship. Seller
will make no representations or warranties that Buyer will become the operator
of the Assets or any portion of the Assets that are currently operated by
Seller, as such matter will be controlled by the applicable joint operating
agreement(s) and governmental regulations. Seller will, however, use its reasonable
efforts to assist Buyer in any of Buyer's efforts to be elected successor
operator of the Assets.
Section
7.07 Notice of Loss. During the Interim Period,
Seller shall promptly notify Buyer of the occurrence of any loss or damage to
the Assets, or any part thereof, of which Seller is aware or discovers,
exceeding $50,000 with respect to any individual occurrence or $200,000 in the
aggregate (in each case) net to Seller's interest.
Section
7.08 Notice of Defaults or Breaches and Right to
Cure.During the Interim Period, Buyer shall
promptly notify Seller, and Seller shall promptly notify Buyer, of the
occurrence of or upon such Party receiving notice or having knowledge of any
event which is or could reasonably become a breach or a default of any warranty,
representation or obligation of either Party or any warranty or representation
that either Party would be obligated to make at Closing under the terms of this
Agreement, and the Party in breach (or potentially in breach) shall have not
less than 30 days from the receipt of any such notice to take action to cure any
such breach or default or to address any such situation or circumstance which
could be a breach of a warranty or representation at Closing and, to the extent
necessary to allow the Party in, or potentially in, breach such 30 day period
right to cure, Closing shall be delayed until such time period has
expired.
Section
7.09 Access to Accounting Records. Beginning on
the date of execution of this Agreement through the date of Closing, Seller will
make available to Buyer accounting records relating to the Assets, including,
without limitation, historical data relating to product revenue, direct
operating expenses, depreciation, depletion and amortization beginning with the
calendar year 20__. Additionally, if requested by Buyer, Seller
agrees to assist Buyer in obtaining audited revenue, direct operating expense
and production information relating to the Assets for a period of up to three
(3) years prior to the Closing Date in connection with CGAS Properties, L.P.’s
preparation of financial statements required by the Securities and Exchange
Commission, provided that the preparation of such audited financial information
is not a condition to Closing. Buyer agrees to pay all auditing fees
generated in connection with obtaining such information.
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Section
7.10 Hedging
Transactions. Seller shall use its reasonable efforts to enter
into, on behalf of and in consultation with Buyer, certain assignable hedging
transactions covering production from the Properties as described
herein. Upon execution of this Agreement, representatives from each
of Seller and Buyer shall jointly obtain quotations from at least two (2)
counterparties chosen by Buyer from the parties with whom Seller has current
ISDA agreements for straight swaps for quantities of the future proved developed
producing oil and gas reserves attributable to the Assets and for reasonable
terms to be provided by Buyer at the time of the execution of the Hedging
Transactions. Upon receipt of oral instructions from the Buyer
directing Seller which swaps to enter into and with which counterparty, subject
to the indemnities set forth herein, Seller shall use its reasonable efforts to
execute, on behalf of and for the benefit and liability of Buyers, such
transactions with the counterparty providing the terms acceptable to the Buyers
as set forth in such instructions (the “Hedging
Transactions”). Immediately thereafter, Buyers will provide
written confirmation to Seller confirming Buyers’ oral
instructions. At Closing, or as soon thereafter as practicable, all
such hedging arrangements shall be transferred to or novated in favor of
Buyers. Whether the Closing occurs or not, Buyers shall pay, be
responsible for and indemnify and hold Seller harmless from and against any and
all costs, expenses and other liabilities arising from or attributable to the
Hedging Transactions. In any event, Seller will liquidate or novated
in favor of Buyer (as Buyer’s election) the Hedging Transaction no later than
March 31, 2010. In the event the closing of the transaction
contemplated herein has not occurred on or before March 31, 2010 or this
Agreement is terminated for any reason prior to the closing of the transactions
contemplated herein, Buyers shall indemnify and hold Seller harmless from and
against any and all losses, costs, expenses or other liabilities arising from or
related to the Hedging Transactions within in ten (10) days after receipt of
invoice with respect thereto.
Section
7.11 Employee
Matters. Not later than 14 days prior to Closing, Buyer will provide
Seller with a list of employees of Seller who Buyer expects to offer to hire
after Closing together with the position, work location and base compensation
expected by Buyer to be offered to such employees. Buyer will also
provide Seller with a list of employees Buyer does not expect to offer
employment to after Closing. Buyer agrees that, for a period of 6
months from and after Closing, it will provide to any former employee of Seller
hired by Buyer for full-time, long-term employment who is terminated for any
reason other than for cause severance benefits equivalent to 6 months of the
employee’s base compensation. Seller agrees to be responsible for the
payment of any severance benefits to any employees of Seller terminated by
Seller at Closing who are not offered full-time, long-term employment with
Buyer. Buyer shall not be required to pay severance benefits to any
employees of Seller to whom Seller pays severance benefits.
ARTICLE
VIII
CONDITIONS
TO CLOSING
Section
8.01 Conditions to Seller’s
Obligations. The obligations of Seller to consummate the transactions
contemplated by this Agreement are subject, at the option of Seller, to the
fulfillment on or prior to the Closing Date of each of the following
conditions:
32
(a) Representations. The
representations and warranties of Buyer set forth in this Agreement shall be
true and correct as of the date of this Agreement and as of the Closing Date as
though made on the Closing Date (except to the extent such representations and
warranties expressly related to an earlier date, in which case as of such
earlier date), except where the failure of such representations and warranties
to be so true and correct would not prevent or materially delay the consummation
of the transactions contemplated hereby;
(b) Performance. Buyer
shall have materially performed or complied with all obligations, agreements and
covenants contained in this Agreement as to which performance or compliance by
Buyer is required prior to or at the Closing Date.
(c) Pending
Matters. No suit, action or other proceeding shall be pending or
threatened that seeks to restrain, enjoin or otherwise prohibit the consummation
of the transactions contemplated by this Agreement.
(d) Execution
and Delivery of Closing Documents. Buyer shall have executed and
acknowledged, as appropriate, and shall be ready, willing and able to deliver to
Seller all of the documents described in Section 9.04 and Buyer shall be ready,
willing and able to deliver to Seller the Adjusted Purchase Price.
(e) Performance
Bonds. Buyer shall have obtained, or caused to be obtained, in the
name of Buyer or its designee, replacements for Seller’s and/or Seller’s
Affiliates’ bonds, letters of credit and guarantees, and such other bonds,
letters of credit and guarantees to the extent required by Section 7.05.
(f) Officer’s Certificate. Buyer shall have
delivered to Seller a certificate of an authorized officer of Buyer dated as of
Closing, certifying on behalf of Buyer that, to the best of his or her
knowledge, the conditions set forth in Section 8.01(a) and (b) above have been
fulfilled.
(g) No Prior Termination. This Agreement has not
been previously terminated by either Party pursuant to the provisions
hereof.
Section
8.02 Conditions to Buyer’s
Obligations. The obligations of Buyer to consummate the transactions
contemplated by this Agreement are subject, at the option of Buyer, to the
fulfillment on or prior to the Closing Date of each of the following
conditions:
(a) Representations. The
representations and warranties contained in Section 6.01(a), (b), (c), (g) and
(t) shall be true and correct as of the date of this Agreement and as of the
Closing Date as though made on the Closing Date (except to the extent such
representations and warranties expressly relate to an earlier date, in which
case as of such earlier date) in all respects and (ii) all of the other
representations and warranties of Seller set forth in this Agreement
(disregarding all qualifications or limitations as to “materiality”, “Material
Adverse Effect” and words of similar import set forth therein) shall be true and
correct in all material respects on and as of the Closing Date, with the same
force and effect as though such representations and warranties had been made or
given on and as of the Closing Date (except to the extent such representations
and warranties expressly relate to an earlier date, in which case as of such
earlier date);
33
(b) Performance. Seller
shall have performed or complied with all obligations, agreements and covenants
contained in this Agreement as to which performance or compliance by Seller is
required prior to or at the Closing Date.
(c) Pending
Matters. No suit, action or other proceeding shall be pending or
threatened that seeks to restrain, enjoin or otherwise prohibit the consummation
of the transactions contemplated by this Agreement.
(d) Execution
and Delivery of Closing Documents. Seller shall have executed and
acknowledged, as appropriate, and shall be ready, willing and able to deliver to
Buyer all of the documents described in Section 9.03.
(e) Officer’s Certificate. Seller shall have
delivered to Buyer a certificate of an authorized officer of Seller dated as of
Closing, certifying on behalf of Seller that, to the best of his or her
knowledge, the conditions set forth in Section 8.02(a) and (b) above have been
fulfilled.
(f) No Prior Termination. This Agreement has not
been previously terminated by either Party pursuant to the provisions
hereof.
(g) No Material Adverse Effect. No Material
Adverse Effect shall have occurred.
ARTICLE
IX
CLOSING
Section
9.01 Time and Place of
Closing. If the conditions to Closing in this Agreement have been
satisfied or waived in writing, the sale by Seller and the purchase by Buyer of
the Assets pursuant to this Agreement (the “Closing”) shall take place at
the offices of Seller located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., local time. The day on which
the Closing occurs (the “Closing Date”) shall be on or
before March 30th, 2010,
or such earlier or later date as is mutually agreed by the Parties or determined
under the terms of this Agreement.
Section
9.02 Adjustments to
Purchase Price at Closing.
(a) At
the Closing, the Purchase Price shall be increased by the Seller’s estimate (as set forth in a
statement delivered by Seller to Buyer not
later than 5 business days prior to Closing) of the following
amounts:
(i) the
sum of all Title Benefit Amounts in excess of the Title Benefit
Deductible;
34
(ii) any
other amount provided for in this Agreement or agreed upon by Seller and Buyer
to be used to adjust the Purchase Price at Closing.
(b) At
the Closing, the Purchase Price shall be decreased by the Seller’s estimate (as set forth in a
statement delivered by Seller to Buyer not
later than 5 days prior to Closing) of the following amounts:
(i) in
accordance with Section 4.06, the amount (if any) by which the aggregate sum of
all Final Title Defect Amounts exceeds the Defect Deductible;
(ii) in
accordance with Section 5.03, the amount (if any) by which the aggregate sum of
all Environmental Defect Amounts exceeds the Defect Deductible;
(iii) the
Allocated Value of any Assets removed from the transaction pursuant to Section
4.08, Section 4.09 or Section
5.04;
(iv) the
amount representing suspended funds determined pursuant to Section
10.06;
(v) the
amount provided for in Section 13.02(c);
(vi) any downward adjustment for Taxes as determined pursuant
to Section 10.08; and
(vii) any
other amount provided for in this Agreement or agreed upon by Seller and Buyer
to be used to adjust the Purchase Price at Closing.
Section
9.03 Actions of
Seller at Closing. At the Closing, Seller shall:
(a) execute,
acknowledge and deliver to Buyer the Conveyance,
Assignment and ▇▇▇▇ of Sale, substantially in the form of Exhibit D (the
“Assignment”) which
Assignment shall provide for a special warranty of title by through and under
Seller but not otherwise, and such other conveyances, assignments, transfers,
bills of sale and other instruments, whether state or federal, in form and
substance mutually agreed upon by Buyer and Seller, as may be necessary or
desirable to convey ownership, title and possession of the Assets to Buyer (the
“Additional
Assignments”);
(b) deliver
to Buyer an executed statement described in Treasury
Regulation §1.1445-2(b)(2) certifying that Seller is not a “foreign person”
within the meaning of the Code;
(c) deliver
to Buyer releases and/or terminations of
any mortgages, deeds of trust, security interests and financing statements applicable to the Assets
securing Seller’s credit facilities, including
those listed on Schedule 6.01(t);
(d) for
▇▇▇▇▇ of which Seller or its Affiliate is the designated operator, execute and
deliver to Buyer: (i) a validly executed blanket transfer forms
designating Buyer as operator of the ▇▇▇▇▇ with the States of Ohio and Michigan
and (ii) any other forms or documents required to designate Buyer as operator of
those ▇▇▇▇▇;
35
(e)
execute and deliver to Buyer letters in lieu of transfer or division
orders;
(f) execute and deliver to Buyer the certificate described
in Section 8.02(e);
(g) execute and deliver to Buyer a Transition Agreement in a
form mutually acceptable to Seller and;
(h) except as otherwise provided in Section 10.03, deliver
possession of the Assets to Buyer;
(i) For each Property included in the Assets for which
Seller is the operator, Seller shall execute and deliver to Buyer, in the form
of Exhibit F, letters addressed to each of the non-operating working interest
owners of such Property, pursuant to which (1) Seller resigns as operator, (2)
Seller proposes a vote for the election of a new operator pursuant to the terms
of the applicable operating agreement and (3) Seller recommends to such
non-operating working interest owners that they vote in favor of Buyer as the
new operator; and
(j) execute,
acknowledge and deliver any other agreements that are provided for under this
Agreement or are necessary or desirable to effectuate the transactions
contemplated by this Agreement.
Section
9.04 Actions of Buyer at
Closing. At the Closing, Buyer shall:
(a) execute
and acknowledge the Assignment and such Additional Assignments (in form and
substance mutually agreed upon by Buyer and Seller) as may be necessary or
desirable to convey the Assets and any Third Party Seismic Data to
Buyer;
(b) deliver
to Seller the Adjusted Purchase Price less the
Deposit by wire transfer as set forth in Section 3.01;
(c) execute and deliver to Seller the certificate described
in Section 8.01(f); and
(d) execute,
acknowledge and deliver any other agreements provided for under this Agreement
or necessary or desirable to effectuate the transactions contemplated by this
Agreement.
Section
9.05 Obligation to
Close. Buyer shall have the
right to specific performance in the event of breach by Seller of its obligation to perform its Closing
obligations in Section 9.03, upon satisfaction of
the conditions to Closing set forth in Section 8.01. Seller’s sole
remedy in the event of breach by Buyer of its obligation to perform its Closing
obligations in Section 9.04, upon satisfaction of the conditions to
Closing set forth in Section 8.02, shall be the
retention of the Deposit, all other damages, rights and remedies being waived by
Seller. IN NO
EVENT SHALL EITHER PARTY BE ENTITLED TO RECOVER CONSEQUENTIAL, INDIRECT OR
PUNITIVE DAMAGES, INCLUDING LOST PROFITS OR LOSS OF BUSINESS OPPORTUNITY, AS A
RESULT OF BREACH OF A PARTY’S CLOSING OBLIGATIONS.
36
ARTICLE
X
POST-CLOSING
OBLIGATIONS
Section
10.01 Post-Closing Adjustments to
Purchase Price; Accounting Disputes.
(a) Seller
shall prepare within 90 days after the Closing Date and furnish to Buyer a final
accounting statement setting forth the adjustments and pro-rating of any amounts
provided for in Articles IV, V, IX or elsewhere in this Agreement (the “Final Accounting Statement”)
together with reasonable supporting documentation. Buyer shall within
30 days after receipt of the Final Accounting Statement deliver to Seller a
written report (together with reasonable supporting documentation) containing
any changes that Buyer proposes be made to such Final Accounting Statement (the
“Dispute
Notice”). The Parties shall undertake to agree on the final
adjustment amounts and such final adjustment amounts shall be paid by Buyer or
Seller, as appropriate, not later than 5 business days after such
agreement. During the foregoing periods of time, either Party may, at
its own expense, audit the other Party’s books, accounts and records relating to
production proceeds, Operating Expenses,
Taxes paid that may have been adjusted on account of this transaction and any other item in the Final Accounting
Statement. Such audit shall be conducted so as to cause a
minimum of inconvenience to the audited Party. The occurrence of the
Closing shall not relieve either Party of its obligation to account to the other
Party after the Closing with respect to amounts that are received or become due
after the Closing and that are properly payable or chargeable to either Party
pursuant to any provision of this Agreement.
(b) If
Seller and Buyer are unable to resolve the matters addressed in the Dispute
Notice, each of Buyer and Seller shall, within 5 Business Days after the
delivery of such Dispute Notice, summarize its position with regard to such
dispute in a written document of twenty pages or less and submit such summaries
to a mutually agreeable accounting firm selected by the Parties (the “Accounting Arbitrator”),
together with the Dispute Notice, the Final Accounting Statement and any other
documentation such Party may desire to submit. Within 10 Business
Days after receiving the Parties’ respective submissions, the Accounting
Arbitrator shall render a decision with respect to each matter addressed in any
Dispute Notice, based on the materials described above. Any decision
rendered by the Accounting Arbitrator pursuant hereto shall be final, conclusive
and binding on Seller and Buyer and will be enforceable against the Parties in
any court of competent jurisdiction. The costs of such Accounting
Arbitrator shall be borne one-half by Buyer and one-half by Seller.
Section
10.02 Operation of the Assets After
Closing. It is expressly understood and agreed that neither Seller
nor any of its Affiliates shall be obligated to continue operating any of the
Assets following the Closing, and Buyer assumes full responsibility for
operating (or causing the operation of) all Assets following the
Closing. Seller does not warrant or guarantee that Buyer will become
the operator under any applicable joint operating agreements. Without
implying any obligation on Seller’s part to continue operating any Assets after
the Closing, if Seller or any of its Affiliates continues to operate any Assets
following the Closing at the request of Buyer or any Third Party working
interest owner, due to constraints of applicable joint operating agreements,
failure of a successor operator to take over operations or other reasonable
cause, such continued operation by such Person shall be for the account of Buyer
and at the sole risk, cost and expense of Buyer (including such Person’s
overhead) and Buyer releases and indemnifies Seller and its Affiliates from any
Liabilities in connection with such operations,
except to the extent caused by the gross negligence or willful misconduct of
Seller or any of its Affiliates.
37
Section
10.03 Files/Retained
Files. Buyer shall make the Retained Files available for pickup by
Seller within 30 days of Closing, provided that Seller shall have access to the
Files or Retained Files for any reasonable purpose as provided in Section 10.05.
The Files are stored or maintained by the Company at its Hartville, Ohio,
Ravenna or Waynesburg offices which are being conveyed to Buyer at Closing, and
Buyer will receive such Files at Closing.
Section
10.04 Further
Cooperation. After the Closing, each Party, at the request of the
other and without additional consideration, shall execute and deliver, or shall
cause to be executed and delivered from time to time, such further instruments
of conveyance and transfer and shall take such other action as the other Party
may reasonably request to convey and deliver the Assets to Buyer, to accomplish the orderly transfer of the
Assets to Buyer in the manner contemplated by this
Agreement and/or to otherwise carry out the purpose and intent of this
Agreement. After the Closing, the Parties will cooperate to have all
proceeds received attributable to the Assets paid to the proper Party and to
have all expenditures to be made with respect to the Assets made by the proper
Party.
Section
10.05 Document Retention.
(a) Inspection. Subject
to the provisions of Section 10.05(b), Buyer agrees, and will cause its assigns
to agree, that the Files and any Retained Files not delivered to Seller shall be
open for inspection by representatives of Seller at reasonable times and upon
reasonable notice during regular business hours for a period of 4 years
following the Closing Date (or for such longer period as may be required by Law
or Governmental Authorities) and that Seller may, during such period, at its expense
and in Buyer’s offices during normal business hours, make such copies
thereof or retrieve and obtain or take possession of the Retained Files as it
may reasonably request.
(b) Destruction. Without
limiting the generality of the foregoing, for a period of 4 years after the
Closing Date (or for such longer period as may be required by Law or by
Governmental Authorities), Buyer shall not, and shall cause its assigns to agree
that they shall not, destroy or give up possession of any original or final copy
of the Retained or the Files without first offering Seller the opportunity, at
Seller’s expense (without any payment to Buyer), to obtain such original or
final copy.
38
Section
10.06 Suspense Accounts. At
Closing, by adjustment to the Purchase Price, Seller shall transfer to Buyer all
funds held by Seller in suspense related to proceeds of production and
attributable to Third Parties’ interests in the Properties or Hydrocarbon
production from the Properties, including those listed in Schedule 10.06, funds
suspended awaiting minimum disbursement requirements, funds suspended under
division orders and funds suspended for title and other defects; provided,
however, Seller shall not transfer to Buyer any amounts that are (or will be
within 6 months after the Closing Date) required to be escheated to the relevant
state pursuant to applicable state law. Buyer agrees to administer
all such accounts and assume all payment obligations relating to such funds in
accordance with all applicable Laws, rules and regulations and shall be liable
for the payment of such amounts to the proper parties and such obligations shall
become part of the Assumed Obligations. Seller shall retain all
duties, liabilities and obligations relating to any suspense amounts which are
required (or will be required within 6 months after the Closing Date) to be
escheated to the relevant state pursuant to applicable state law.
Section
10.07 Imbalances. Seller represents and
warrants that there are no Imbalances. Seller shall be entitled to receive any
and all benefits and shall bear any and all burdens of such Imbalances and
Seller shall indemnify Buyer against any claims with respect thereto, without
any deductible amount.
Section
10.08 Tax Obligations. All
Taxes attributable to the Assets with respect to Tax periods ending at or prior to the Effective Time, including any taxes
associated with the transfer of the Assets to Buyer, shall be and remain
Seller's responsibility, and all deductions, credits and refunds pertaining to
such Taxes, no matter when claimed or received, shall belong to
Seller. All Taxes attributable to the Assets with respect to Tax
periods beginning at or after, the Effective Time shall be Buyer's
responsibility, and all deductions, credits and refunds pertaining to such
Taxes, no matter when claimed or received, shall belong to Buyer. The
actual amounts or values associated with the above, if any, shall be accounted
for to the extent known in the adjustments to the Purchase Price at Closing and
finally reconciled in the Final Accounting Settlement. Taxes on real
and personal property with respect to the Assets which have not been assessed
and paid for calendar year 2009 by the Effective Time shall be estimated based
on the last available assessment, prorated through the Effective Time and
reflected in the adjustments to the Purchase Price at Closing; provided,
however, within thirty (30) Days after the actual ad valorem tax liability for
the 2009 calendar year is known, Buyer and Seller shall make such payments or
credits between themselves as are necessary so that each Party bears only its
pro-rata portion of the actual 2009 ad valorem tax
liability.
ARTICLE
XI
TERMINATION
Section
11.01 Right of
Termination. This Agreement and the transactions contemplated by this
Agreement may be completely terminated at any time at or prior to the
Closing:
(a) by
mutual consent of the Parties;
(b) by
either Party if the Closing shall not have occurred on or before the date which
is 6 months after the execution of this Agreement; provided, however, that neither Party can terminate this Agreement if
such Party is in material breach of this Agreement;
39
(c) by
Seller, at Seller’s option, in the event the conditions set forth in Section
8.01 are not satisfied to the satisfaction of Seller as of the Closing
Date;
(d) by
Buyer, at Buyer’s option, if the conditions set forth in Section 8.02 are not
satisfied to the satisfaction of Buyer as of the Closing Date; or
(e) by
either Party (i) if the sum of (y) all Final Title
Defect Amounts less the Defect Deductible and (z) all Environmental Defect
Amounts less the Defect Deductible, exceeds 10% of the Purchase Price,
(ii) if the value of Assets destroyed or rendered inoperable as a result of
casualty loss exceeds 10% of the Purchase Price, or (iii) if any court or
Governmental Authority shall have issued an order, judgment or decree or taken
any other action challenging, delaying, restraining, enjoining, prohibiting or
invalidating the consummation of any of the transactions contemplated.
Section
11.02 Effect of
Termination. In the event that the Closing does not occur as a result
of either Party exercising its right not to close pursuant to Section 11.01,
then, except as expressly provided by the terms of this Agreement, this
Agreement shall terminate and neither Party shall have any rights or obligations
under this Agreement, except that nothing shall relieve any Party from Liability
for any willful breach of its covenants or agreements; provided that retention
of the Deposit, together with any interest earned thereon, by Seller pursuant to
Section 3.02(b) shall be Seller’s sole and exclusive remedy, shall serve as
liquidated damages, and such retention of the Deposit shall constitute full and
complete satisfaction of any and all damages Seller may have against Buyer, and all other rights, remedies and damages are waived
by Seller. NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE ENTITLED TO
RECEIVE ANY INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OR DAMAGES
FOR LOST PROFITS OF ANY KIND OR LOSS OF BUSINESS OPPORTUNITY IN CONNECTION WITH
THE TERMINATION OR BREACH OF THIS AGREEMENT.
ARTICLE
XII
ASSUMPTION
OF OBLIGATIONS AND INDEMNIFICATION
Section
12.01 Assumption of Obligations and
Indemnity. As of the Closing, but without limiting Buyer’s rights to
indemnity under this Agreement, any Environmental Indemnity Agreement or Buyer’s
rights under the Transition Agreement, Buyer assumes and agrees to pay, perform
and discharge all obligations and Liabilities with respect to the Assets other than the Retained Obligations, regardless
of whether such obligations or Liabilities arose prior to, on or after the
Effective Time, including:
(a) all
obligations, whether arising by Law or by
contract, to properly plug and abandon all
▇▇▇▇▇ and dismantle, decommission or remove all personal property, fixtures and
related equipment now located on the land covered by or attributable to the
Properties or other personal property, fixtures and related equipment placed on
such Properties, and all obligations to cleanup and restore such
lands;
(b) except as otherwise provided in the definition of the
Retained Obligations, all Taxes, including ad valorem Taxes, attributable
to the Assets or Hydrocarbons produced from the Assets after the
Closing;
40
(c) all
Liabilities attributable to the Assets arising from, attributable to or alleged
to be arising from or attributable to, a violation of or the failure to perform
any obligation imposed by any Environmental Law;
(d) all
Liabilities related to the Litigation set forth on Schedule 6.01(f) other than
the liability for all periods prior to the Effective Date with respect to the
litigation listed in Item 1 of Schedule 6.01(f) styled ▇▇▇▇▇▇▇▇▇ ▇. Range
Resources - Appalachia, LLC.
(e) all
obligations applicable to the lessee under any of the Leases; and
(f) any
obligations or Liabilities arising out of Section 10.06
All such
assumed obligations and Liabilities described above in this Section 12.01 are
collectively referred to as the “Assumed
Obligations.”
Section
12.02 Non-Assumed
Liabilities.
Notwithstanding
anything to the contrary set forth in Section 12.01, Buyer does not assume
liabilities related to the following issues and Seller assumes and agrees to
pay, perform and discharge all of the following obligations:
(a) Personal
injury or wrongful death relating to events occurring prior to the Closing
Date.
(b) The
litigation listed in item 1 of Schedule 6.01(f); liability for all periods prior
to the Effective Time with respect to the litigation styled ▇▇▇▇▇▇▇▇▇ ▇. Range
Resources - Appalachia, LLC.
(c) Mispayment of royalties and revenues (including, without
limitation, overriding royalties, net profits interest and revenue distributions
to non-operating working interest owners), the mispayment of which occurred
prior to the Closing Date.
(d) The mispayment or non-payment of taxes incurred prior to
the Closing Date.
(e) Mispayment or mishandling of the Suspense Accounts,
which mispayment or mishandling occurred prior to Closing
Date.
(f) Offsite waste disposal occurring prior to the Closing
Date.
(g) Any Imbalances.
(h) The
Michigan Brine Spill and the Ohio Notices of Violations as described on Schedule
6.01(l).
41
All such
non-assumed obligations and Liabilities being collectively referred to as the
“Non-Assumed
Liabilities.”
Section
12.03 Indemnification by
Buyer.
(a) Effective
as of Closing, but without limiting Buyer’s rights to indemnity under this
Agreement or any Environmental Indemnity Agreement or Buyer’s rights under the
Transition Agreement, Buyer agrees to defend, release, indemnify and hold
harmless the Seller Indemnitees from and against (i) the Assumed Obligations and (ii) the breach by Buyer of any
of its representations, warranties, covenants or agreements contained in this
Agreement.
(b) Notwithstanding
anything to the contrary, in addition to the indemnities set forth in Section
12.03(a), but without limiting Buyer’s rights to indemnity under this Agreement, any Environmental Indemnity Agreement
or the Transition Agreement, effective as of the Closing, Buyer and its
successors and assigns shall assume (as part of the Assumed Obligations), be
responsible for, shall pay on a current basis and defend, indemnify, hold
harmless and forever release the Seller Indemnitees from and against any and all
Liabilities arising from, based upon, related to or associated with any
environmental condition or other environmental matter related or attributable to
the Assets, regardless of whether such Liabilities arose prior to, on or after
the Effective Time, including the presence, disposal or removal of any hazardous
substance or other material of any kind in, on or under the Assets or other
neighboring property and including any
Liability of any Seller Indemnitees with respect to the Assets under
Environmental Laws.
Section
12.04 Non-Assumed Liabilities and Indemnification by Seller.
(a) Retained Obligations. Notwithstanding
anything to the contrary herein contained, Seller shall retain and agrees to
pay, perform and discharge all obligations and Liabilities with respect to the
Non-Assumed Liabilities and any claims in any way arising out of or related to
the Excluded Assets (“Retained Obligations”).
(b) Indemnification by Seller. From and
after Closing, Seller agrees to defend, release,
indemnify and hold harmless the Buyer Indemnitees from and against (i) the Non-Assumed Liabilities and (ii) the
breach by Seller of any of its representations, warranties, covenants or
agreements contained in this Agreement.
Section
12.05 Negligence and
Fault. THE DEFENSE, RELEASE, INDEMNIFICATION AND HOLD HARMLESS
OBLIGATIONS SET FORTH IN THIS AGREEMENT SHALL ENTITLE THE INDEMNITEE TO SUCH
DEFENSE, RELEASE, INDEMNIFICATION AND HOLD HARMLESS HEREUNDER IN ACCORDANCE WITH
THE TERMS OF THIS AGREEMENT, REGARDLESS OF WHETHER THE CLAIM GIVING RISE TO SUCH
OBLIGATION IS THE RESULT OF: (A) STRICT LIABILITY, (B) THE VIOLATION OF ANY LAW
BY SUCH INDEMNITEE OR BY A PRE-EXISTING CONDITION, OR (C) THE SOLE, CONCURRENT
OR COMPARATIVE NEGLIGENCE OR FAULT OF ANY NATURE OF SUCH
INDEMNITEE.
42
Section
12.06 Exclusive Remedy.
(a) Except
for Purchase Price adjustments provided for herein, from and after Closing, each
of the Parties acknowledges and agrees that its sole and exclusive remedy with
respect to any and all Liabilities pursuant to or in connection with this
Agreement or relating to the Assets, the purchase of the Assets by Buyer and the
sale of the Assets by Seller or otherwise in connection with the transactions
contemplated by this Agreement shall be limited to the indemnification
provisions set forth in this Agreement and any Environmental Indemnity
Agreement, the special warranty of title contained
in the Assignment, and Buyer’s rights under the Transition
Agreement. Except for the remedies contained in this Article
XII, any Environmental Indemnity Agreement, the
special warranty of title contained in the Assignment and the Transition
Agreement, effective as of Closing, each
Party, on its own behalf and on behalf of its Affiliates, releases and
forever discharges the other Party and its
Affiliates and all such parties' shareholders, partners, members, directors,
officers, employees, agents and representatives from any and all suits, legal or
administrative proceedings, claims, demands, damages, losses, costs,
Liabilities, interest or causes of action, at Law or in equity, known or
unknown, which such Party or its Affiliates
might now or subsequently may have, based on, relating to or arising out of this
Agreement, the transactions contemplated by this Agreement, the ownership, use
or operation of the Assets or the condition, quality, status or nature of the
Assets, including rights to contribution under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, and any other
Environmental Law, breaches of statutory or implied warranties, nuisance or
other tort actions, rights to punitive damages, common law rights of
contribution and rights under insurance maintained by either Party or any of its Affiliates, excluding,
however, any contractual rights (apart from this Agreement) existing as of
Closing between (a) Buyer or any of Buyer's Affiliates, on the one hand, and (b)
Seller or any of Seller's Affiliates, on the other hand, under contracts between
them relating to the Assets (if any).
(b) Notwithstanding anything to the contrary contained
herein, from and after the Closing Seller shall not incur and shall have
no obligation or Liability to the Buyer Indemnitees under this Agreement (except
for matters relating to fraud or for unpaid taxes applicable to the Assets due
with respect to the period prior to Closing) or in connection with the
transactions contemplated by this Agreement where (a) the aggregate total of all
such Liabilities is less than $5,000,000 or to the extent that such aggregate
total exceeds 20% of the Purchase Price or (b) to
the extent that a Claim Notice of such Liabilities is provided by Buyer to
Seller later than 12 months after the Closing Date; PROVIDED, HOWEVER, that
under no circumstances shall Seller’s indemnity obligations or any other
obligations of Seller to Buyer ever exceed 100% of the Purchase Price in the
aggregate.
Section
12.07 Expenses. Notwithstanding
anything to the contrary, the foregoing defense, release, indemnity and hold
harmless obligations shall not apply to, and each Party shall be solely
responsible for, all expenses, including due diligence expenses, incurred by it
to consummate the transactions contemplated by this Agreement.
43
Section
12.08 Survival.
(a) The
representations and warranties of Seller in (i)
Section 6.01(a), (b), (c), (d), (e), (g),
and (i) shall survive Closing indefinitely, and (ii) ▇▇▇▇▇▇▇ ▇.▇▇(▇), (▇), (▇),
(▇), (▇), (▇), (▇), (▇), (▇), (▇), (▇), (s) and (t) shall survive the
Closing for a period of one
year. Articles X and XII and Sections 2.04, 3.03, 7.01, 7.02, 13.01,
13.02(c), 14.02, 14.03, 14.04, 14.05, 14.06, 14.07, 14.08, 14.09, 14.10, 14.11,
14.12, 14.13 and 14.14 shall survive Closing
indefinitely. Subject to the foregoing and as set forth in
Section 12.08(b), the remainder of this Agreement shall not survive the
Closing. Representations, warranties, covenants and agreements shall
be of no further force and effect after the date of their expiration; provided,
however, that there shall be no termination of any bona fide claim asserted
pursuant to this Agreement with respect to (i)
such a representation or warranty
prior to its expiration date or (ii) such a
covenant or agreement within one year after its expiration
date.
(b) The
indemnities in Section 12.04(b)(i) shall terminate to the extent that a Claim
Notice of such Liabilities is provided by Buyer to Seller later than one year
after the Closing Date. The indemnities in Section 12.04(b)(ii) shall terminate (i) as of the termination date of each respective
representation or warranty that is subject to
indemnification, except in each case as to matters for which a specific written
claim for indemnity has been delivered to Seller on or before such termination
date and (ii) as of the termination date of each respective covenant or
agreement that is subject to indemnification, except in each case as to matters
for which a specific written claim for indemnity has been delivered to Seller on
or before one year after such termination
date.
Section
12.09 Non-Compensatory Damages. NONE OF THE BUYER INDEMNITEES NOR
SELLER INDEMNITEES SHALL BE ENTITLED TO RECOVER FROM SELLER OR BUYER, OR THEIR
RESPECTIVE AFFILIATES, ANY INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY
DAMAGES OR DAMAGES FOR LOST PROFITS OF ANY KIND OR LOSS OF BUSINESS OPPORTUNITY
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, EXCEPT TO THE EXTENT ANY SUCH PARTY SUFFERS SUCH
DAMAGES (INCLUDING COSTS OF DEFENSE AND REASONABLE ATTORNEYS’ FEES INCURRED IN
CONNECTION WITH DEFENDING OF SUCH DAMAGES) TO A THIRD PARTY, WHICH DAMAGES
(INCLUDING COSTS OF DEFENSE AND REASONABLE ATTORNEYS’ FEES INCURRED IN
CONNECTION WITH DEFENDING AGAINST SUCH DAMAGES) SHALL NOT BE EXCLUDED BY THIS
PROVISION. SUBJECT TO THE PRECEDING SENTENCE, BUYER, ON BEHALF OF
EACH OF THE BUYER INDEMNITEES, AND SELLER, ON BEHALF OF EACH OF SELLER
INDEMNITEES, WAIVE ANY RIGHT TO RECOVER PUNITIVE, SPECIAL, EXEMPLARY AND
CONSEQUENTIAL DAMAGES, INCLUDING DAMAGES FOR LOST PROFITS OR LOSS OF BUSINESS
OPPORTUNITY, ARISING IN CONNECTION WITH OR WITH RESPECT TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section
12.10 Indemnification
Actions. All claims for indemnification under this Article XII shall
be asserted and resolved as follows:
44
(a) For
purposes of this Agreement, the term “Indemnitor” when used in
connection with particular damages shall mean the Person having an obligation to
indemnify another Person or Persons with respect to such damages pursuant to
this Agreement, and the term “Indemnitee” when used in
connection with particular damages shall mean a Person having the right to be
indemnified with respect to such damages pursuant to this
Agreement.
(b) To
make claim for indemnification under this Article XII, an Indemnitee shall
notify the Indemnitor of its claim, including the specific details of and
specific basis under this Agreement for its claim (the “Claim Notice”). In
the event that the claim for indemnification is based upon a claim by a Third
Party against the Indemnitee (a “Claim”), the Indemnitee shall
provide its Claim Notice promptly after the Indemnitee has actual knowledge of
the Claim and shall enclose a copy of all papers (if any) served with respect to
the Claim; provided that the failure of any Indemnitee to give notice of a Claim
as provided in this Section 12.10 shall not relieve the Indemnitor of its
obligations under this Article XII except to the extent (and only to the extent
of such incremental damages incurred) such failure results in insufficient time
being available to permit the Indemnitor to effectively defend against the Claim
or otherwise prejudices the Indemnitor’s ability to defend against the
Claim. In the event that the claim for indemnification is based upon
an inaccuracy or breach of a representation, warranty, covenant or agreement,
the Claim Notice shall specify the representation, warranty, covenant or
agreement that was inaccurate or breached.
(c) In
the case of a claim for indemnification based upon a Claim, the Indemnitor shall
have 30 days from its receipt of the Claim Notice to notify the Indemnitee
whether or not it agrees to indemnify and defend the Indemnitee against such
Claim under this Article XII. The Indemnitee is authorized, prior to
and during such 30 day period, to file any motion, answer or other pleading that
it shall deem necessary or appropriate to protect its interests or those of the
Indemnitor and that is not prejudicial to the Indemnitor.
(d) If
the Indemnitor agrees to indemnify the Indemnitee, it shall have the right and
obligation to diligently defend, at its sole cost and expense, the
Claim. The Indemnitor shall have full control of such defense and
proceedings, including any compromise or settlement of the Claim. If
requested by the Indemnitor, the Indemnitee agrees to cooperate in contesting
any Claim which the Indemnitor elects to contest (provided, however, that the
Indemnitee shall not be required to bring any counterclaim or cross-complaint
against any Person). The Indemnitee may participate in, but not
control, at its sole cost and expense, any defense or settlement of any Claim
controlled by the Indemnitor pursuant to this Section 12.10. An
Indemnitor shall not, without the written consent of the Indemnitee, such
consent not to be unreasonably withheld or delayed, settle any Claim or consent
to the entry of any judgment with respect thereto that (i) does not result in a
final resolution of the Indemnitee’s Liability with respect to the Claim
(including, in the case of a settlement, an unconditional written release of the
Indemnitee from all Liability in respect of such Claim) or (ii) may materially
and adversely affect the Indemnitee (other than as a result of money damages
covered by the indemnity).
45
(e) If
the Indemnitor does not agree to indemnify the Indemnitee within the 30 day
period specified in Section 12.10(c), fails to give notice to the Indemnitee
within such 30 day period regarding its election or if the Indemnitor agrees to
indemnify, but fails to diligently defend or settle the Claim, then the
Indemnitee shall have the right to defend against the Claim (at the sole cost
and expense of the Indemnitor, if the Indemnitee is entitled to indemnification
hereunder), with counsel of the Indemnitee’s choosing; provided, however, that
the Indemnitee shall make no settlement, compromise, admission or acknowledgment
that would give rise to Liability on the part of any Indemnitor without the
prior written consent of such Indemnitor, which consent shall not be
unreasonably withheld, conditioned or delayed.
(f) In
the case of a claim for indemnification not based upon a Claim, the Indemnitor
shall have 30 days from its receipt of the Claim Notice to (i) cure the damages
complained of, (ii) agree to indemnify the Indemnitee for such Damages, or (iii)
dispute the claim for such damages. If such Indemnitor does not
respond to such Claim Notice within such 30 day period, such Person will be
deemed to dispute the claim for damages.
ARTICLE
XIII
LIMITATIONS
ON REPRESENTATIONS AND WARRANTIES
Section
13.01 Disclaimers of Representations
and Warranties.
(a) EXCEPT
AS AND TO THE EXTENT EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE ASSIGNMENT, (i) SELLER MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS, STATUTORY OR IMPLIED AND (ii) SELLER
EXPRESSLY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION,
WARRANTY, STATEMENT OR INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING)
TO BUYER OR ANY OF ITS AFFILIATES, EMPLOYEES, AGENTS, CONSULTANTS OR
REPRESENTATIVES (INCLUDING, WITHOUT LIMITATION, ANY OPINION, INFORMATION,
PROJECTION OR ADVICE THAT MAY HAVE BEEN PROVIDED TO BUYER BY ANY OFFICER,
DIRECTOR, EMPLOYEE, AGENT, CONSULTANT, REPRESENTATIVE OR ADVISOR OF SELLER OR
ANY OF ITS AFFILIATES).
(b) EXCEPT
AS AND TO THE EXTENT EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE ASSIGNMENT, AND WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR
WARRANTY, EXPRESS, STATUTORY OR IMPLIED, AS TO (i) TITLE TO ANY OF THE ASSETS,
(ii) THE CONTENTS, CHARACTER OR NATURE OF ANY REPORT OF ANY PETROLEUM
ENGINEERING CONSULTANT, OR ANY ENGINEERING, GEOLOGICAL OR SEISMIC DATA OR
INTERPRETATION, RELATING TO THE ASSETS, (iii) THE QUANTITY, QUALITY OR
RECOVERABILITY OF HYDROCARBONS IN OR FROM THE ASSETS, (iv) ANY ESTIMATES OF THE
VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (v) THE
PRODUCTION OF HYDROCARBONS FROM THE ASSETS, (vi) THE MAINTENANCE, REPAIR,
CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, (vii)
THE CONTENT, CHARACTER OR NATURE OF ANY INFORMATION MEMORANDUM, REPORTS,
BROCHURES, CHARTS OR STATEMENTS PREPARED BY SELLER OR THIRD PARTIES WITH RESPECT
TO THE ASSETS, (viii) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE
AVAILABLE TO BUYER, ITS AFFILIATES OR THEIR EMPLOYEES, AGENTS, CONSULTANTS,
REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO, AND (ix) ANY
IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK
INFRINGEMENT.
46
(c) EXCEPT
AS AND TO THE EXTENT EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER EXPRESSLY
DISCLAIMS AND NEGATES, AND BUYER WAIVES (i) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (ii) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, (iii) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS, (iv) ANY RIGHTS OF PURCHASERS UNDER APPROPRIATE
STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, (v) ANY CLAIMS BY BUYER FOR
DAMAGES BECAUSE OF REDHIBITORY VICES OR DEFECTS, WHETHER KNOWN OR UNKNOWN AS OF
THE EFFECTIVE TIME OR THE CLOSING DATE, AND (vi) ANY AND ALL IMPLIED WARRANTIES
EXISTING UNDER APPLICABLE LAW; IT BEING THE EXPRESS INTENTION OF BOTH BUYER AND
SELLER THAT, EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN SECTION 6.01 OF
THIS AGREEMENT OR THE ASSIGNMENT, THE
ASSETS SHALL BE CONVEYED TO BUYER IN THEIR PRESENT CONDITION AND STATE OF
REPAIR, “AS IS” AND “WHERE IS,” WITH ALL FAULTS, AND THAT BUYER HAS MADE OR
SHALL MAKE PRIOR TO CLOSING SUCH INSPECTIONS AS BUYER DEEMS
APPROPRIATE.
(d) OTHER
THAN EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER HAS NOT, DOES NOT AND WILL
NOT MAKE ANY REPRESENTATION OR WARRANTY REGARDING ANY MATTER OR CIRCUMSTANCE
RELATING TO ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT,
THE PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT OR
ANY OTHER ENVIRONMENTAL CONDITION OF THE ASSETS, AND NOTHING IN THIS SALE OR
OTHERWISE SHALL BE CONSTRUED AS SUCH A REPRESENTATION OR
WARRANTY. EXCEPT FOR ANY LIABILTY OF
SELLER UNDER ANY ENVIRONMENTAL INDEMNITY AGREEMENT, IF ANY EXECUTED BY BUYER AND
SELLER UNDER THIS AGREEMENT, BUYER ACCEPTS THE ASSETS “AS IS” AND “WHERE
IS,” WITH ALL FAULTS FOR PURPOSES OF THEIR ENVIRONMENTAL CONDITION, AND THAT
BUYER HAS MADE OR CAUSED TO BE MADE SUCH ENVIRONMENTAL INSPECTIONS AS BUYER
DEEMS APPROPRIATE.
47
(e) SELLER
AND BUYER AGREE THAT THE DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED IN THIS
SECTION 13.01 ARE “CONSPICUOUS” DISCLAIMERS FOR THE PURPOSES OF ANY APPLICABLE
LAW, RULE OR ORDER.
Section
13.02 Casualty Loss.
(a) Except
as set forth in Section 13.02(c), Buyer assumes all risk of loss with respect
to, and any change in the condition of, the Assets from the Effective Time until
Closing, including for production of Hydrocarbons through normal depletion
(including the watering-out of any well, collapsed casing, sand infiltration or
other mechanical failures of any well), the depreciation of personal property
due to ordinary wear and tear or any diminution of value resulting from
fluctuation in markets or economies.
(b) If,
after the Effective Time and prior to the Closing, any part of the Assets shall
be damaged or destroyed by fire or other casualty or if any part of the Assets
shall be taken in condemnation, under the right of eminent domain or if
proceedings for such purposes shall be pending or threatened, this Agreement
shall remain in full force and effect notwithstanding any such damage, destruction, taking, proceeding or the
threat thereof.
(c) In
the event of any such damage, destruction or
taking described in Section 13.02(b), (i) the Purchase Price shall be
reduced at the Closing by the total of the cost to
repair all such damage or destruction and the value of the Assets taken by
condemnation or under the right of eminent domain (in each case, up to
the Allocated Value of the affected Asset) less a
deductible amount of $100,000. Notwithstanding anything to the
contrary in this Section 13.02, Seller shall not be obligated to carry or maintain, and shall have no obligation or Liability to
Buyer for the failure to carry or maintain, any insurance coverage with
respect to any of the Assets; provided, however,
the foregoing shall not operate to modify Seller’s obligations under Section
7.04 and Seller shall name Buyer as an additional insured under all existing
insurance policies covering all of any of the Assets for the period from the
Effective Date through the Closing Date. Seller shall provide Buyer
with evidence of being name as an additional insured under such policies at the
time of execution of this Agreement.
ARTICLE
XIV
MISCELLANEOUS
Section
14.01 1031 Exchange.
(a) Seller
reserves the right, at or prior to Closing, to assign its rights under this
Agreement with respect to all or a portion of the Purchase Price, and that
portion of the Assets associated therewith (the “1031 Assets”), to a Qualified
Intermediary (as that term is defined in Section 1.1031(k)-1(g)(4)(v) of the
Treasury Regulations) (“QI”) designated by Seller to
accomplish this Closing, in whole or in part, in a manner that will comply with
the requirements of a like-kind exchange (“Like-Kind Exchange”) pursuant
to Section 1031 of the Internal Revenue Code of 1986, as amended (“Code”). If Seller
so elects, Seller may assign its rights to the 1031 Assets under this Agreement
to the QI. Buyer hereby (i) consents to Seller’s assignment of its
rights in this Agreement with respect to the 1031 Assets and (ii) if such
assignment is made, agrees to pay all or a portion of the Purchase Price into
the qualified trust account at Closing as directed in writing by
Seller. Seller and Buyer acknowledge and agree that a whole or
partial assignment of this Agreement to a QI shall not release either Party from
any of its respective Liabilities and obligations to each other or expand any
such respective Liabilities or obligations under this
Agreement. Neither Party represents to the other that any particular
Tax treatment will be given to either Party as a result of such Like-Kind
Exchange. Buyer shall cooperate with Seller in connection with such
Like-Kind Exchange but shall not be obligated to pay any additional costs or
incur any additional obligations as a result thereof.
48
(b) Buyer
shall have the right to request that Seller assign all or any portion of the
Assets to a QI designated by Buyer in order for such QI to effect a Like-Kind
Exchange for Buyer with respect to such Assets and other assets. Such
an assignment of the Assets shall not release either Party from any of its
respective Liabilities and obligations to each other or expand any such
respective Liabilities or obligations under this Agreement. Neither
Party represents to the other that any particular Tax treatment will be given to
either Party as a result of such Like-Kind Exchange. Seller shall
cooperate with Buyer in connection with the assignment of such Assets to effect
such Like-Kind Exchange but shall not be obligated to pay any additional costs
or incur any additional obligations as a result thereof.
(c) Any
Party electing to assign to a QI all or a portion of its rights under this
Agreement with respect to 1031 Assets shall indemnify and hold harmless all
other Parties hereto and their respective partners, employees, officers,
directors and affiliates from and against any and all costs, expenses,
liabilities, fines, penalties, taxes or other assessments resulting from such
transaction.
Section
14.02 Transfer Taxes. 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 shall be the responsibility of, and shall be paid by,
Buyer.
Section
14.03 Filings, Notices and Certain
Governmental Approvals. Promptly after Closing, (a) Buyer shall record the Assignment of the
Assets and any Additional Assignments of the Assets executed at Closing in all
applicable real property records and at the offices of all relevant Governmental
Authorities, (b) Buyer shall send notices
to vendors supplying goods and services for the Assets of the assignment of such
Assets to Buyer and, if applicable, the designation of Buyer as the operator
thereof, (c) Buyer shall actively pursue
the unconditional approval of all applicable Governmental Authorities of the
assignment of the Assets to Buyer and, if applicable, the designation of Buyer
as the operator, and (d) Buyer and Seller shall
actively pursue all other consents and approvals that may be required in
connection with the assignment of the Assets to Buyer and the assumption of the
Liabilities and obligations assumed by Buyer that shall not have been obtained
prior to Closing. Buyer obligates itself to take any and all action
required by any Governmental Authority in order to obtain such unconditional
approval, including 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.
49
Section
14.04 Entire Agreement. This
Agreement, the documents to be executed pursuant to this Agreement and the
Exhibits and Schedules attached to this Agreement constitute the entire
agreement between the Parties pertaining to the sale and assignment of the
Assets from Seller to Buyer and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties pertaining
to such subject matter. No supplement, amendment, alteration,
modification, waiver or termination of this Agreement shall be binding unless
executed in a writing signed by authorized representatives of both the Parties
which expressly references this Agreement or a provision of this Agreement as
being supplemented, amended, altered, modified, waived or
terminated.
Section
14.05 Waiver. No waiver of
any of the provisions of this Agreement or rights under this Agreement shall be
deemed or shall constitute a waiver of any other provisions or right (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided in writing.
Section
14.06 Publicity. Each Party
shall provide a copy of any public release concerning this Agreement or the
transactions contemplated by this Agreement to the other Party not less than
four (4) business hours prior to issuing such public release; provided, however,
(i) if a Party desires to issue any such public release prior to the opening of
the New York Stock Exchange on any day, then such Party shall only be required
to provide a copy of such public release to the other Party no later than 5:00
p.m., Central Time, on the day before the issuance of such public release, and
(ii) if applicable Law, Governmental Authority or the New York Stock Exchange
requires the prior issuance of any such public release, then such public release
can be issued without providing such prior notice to the other
Party.
Section
14.07 No Third Party
Beneficiaries. Except with respect to the Persons included within the
definition of Seller Indemnitees or Buyer Indemnitees, nothing in this Agreement
shall provide any benefit to any Third Party or entitle any Third Party to any
claim, cause of action, remedy or right of any kind, it being the intent of the
Parties that this Agreement shall not be construed as a Third Party beneficiary
contract.
Section
14.08 Assignment. Subject to
Section 14.01, neither Party may assign or
delegate any of its rights or duties under this Agreement without the prior
written consent of the other Party and any
assignment made without such consent shall be void. Any assignment of
this Agreement made as permitted by this Section 14.08 shall not relieve the assigning Party from any Liability or
obligation under this Agreement. Except as otherwise provided in this
Agreement, this Agreement shall be binding upon and inure to the benefit of the
Parties and their respective permitted successors, assigns and legal
representatives.
Section
14.09 Governing Law. THIS
AGREEMENT AND THE LEGAL RELATIONS AMONG THE PARTIES SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY
CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REFER CONSTRUCTION OF SUCH
PROVISIONS TO THE LAWS OF ANOTHER JURISDICTION. EACH
PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT.
50
Section
14.10 Notices. Any notice,
communication, request, instruction or other document required or permitted
shall be given in writing and delivered in person or sent by United States mail
(postage prepaid, return receipt requested), facsimile or telecopy to the
addresses of Seller and Buyer set forth below. Any such notice shall
be effective upon receipt only if received during normal business hours or, if
not received during normal business hours, on the next business
day.
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Seller:
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Range
Resources - Appalachia, LLC
Attention: ▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile
Number: (▇▇▇) ▇▇▇-▇▇▇▇
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Buyer:
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EnerVest
Energy Institutional Fund XI-A, L.P.,
EnerVest
Energy Institutional Fund XI-WI, L.P., CGAS Properties, L.P.,
and
EnerVest
Operating, L.L.C.
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
Facsimile
Number: (▇▇▇) ▇▇▇-▇▇▇▇
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Either
Party may, by written notice so delivered, change its address for notice
purposes.
Section
14.11 Severability. If any
term or other provision of this Agreement is invalid, illegal or incapable of
being enforced by any rule of Law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated is
not affected in any adverse manner to either Party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
are fulfilled to the extent possible.
Section
14.12 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. Any signature delivered by a Party by
facsimile transmission or electronically in .pdf format shall be deemed an
original signature.
Section
14.13 Amendment. This
Agreement may be amended only by an instrument in writing executed by all
Parties in accordance with Section 14.04.
51
Section
14.14 Schedules and
Exhibits. The inclusion of any matter upon any Schedule or any
Exhibit to this Agreement does not constitute an admission or agreement that
such matter is material with respect to the representations and warranties of
the Parties.
[The
remainder of this page is left intentionally blank.]
52
IN WITNESS WHEREOF, Seller and
Buyer have executed this Agreement as of the date first written
above.
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SELLER:
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RANGE
RESOURCES - APPALACHIA, LLC
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By:
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇
▇. ▇▇▇▇▇
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General
Counsel
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BUYER:
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ENERVEST
ENERGY INSTITUTIONAL FUND XI-A, L.P.
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ENERVEST
ENERGY INSTITUTIONAL FUND XI-WI, L.P.
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By:
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EnerVest,
Ltd., Its General Partner
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By:
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EnerVest
Management GP, L.C., Its General Partner
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By:
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇
▇. ▇▇▇▇▇▇
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President
and Chief Executive Officer
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CGAS
PROPERTIES, L.P.
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By:
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EVCG
GP, LLC, Its General Partner
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By:
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
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Senior
Vice President and Chief Financial Officer
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EVOC:
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ENERVEST
OPERATING, L.L.C.
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By:
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇
▇. ▇▇▇▇▇▇
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Vice
President
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