Exhibit 10(a)
AGREEMENT FOR PURCHASE AND SALE
dated September 19, 2000
by and between
APACHE CANYON GAS, L.L.C.,
a Delaware limited liability
company
as Seller
and
EVERGREEN RESOURCES, INC.
a Colorado corporation
as Buyer
(Lorencito)
EXECUTION VERSION
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS 1
ARTICLE II - SALE AND PURCHASE 6
ARTICLE III - PURCHASE PRICE AND PAYMENT 7
ARTICLE IV - SELLER'S REPRESENTATIONS 8
ARTICLE V - BUYER'S REPRESENTATIONS 10
ARTICLE VI - ACCESS TO INFORMATION AND INSPECTION 12
ARTICLE VII - TITLE 12
ARTICLE VIII - PREFERENTIAL PURCHASE RIGHTS AND 14
CONSENTS
ARTICLE IX - COVENANTS OF SELLER 14
ARTICLE X - CLOSING CONDITIONS 16
ARTICLE XI - CLOSING 17
ARTICLE XII - EFFECT OF CLOSING 18
ARTICLE XIII - SETTLEMENT OF PRORATIONS 21
ARTICLE XIV - ENVIRONMENTAL 21
ARTICLE XV - MISCELLANEOUS 24
-i-
EXHIBITS
A Net Revenue and Working Interests in Subject Interests
A-1 Seller's Subject Interests
A-2 Ownership Interest
B Purchase Price Allocation
C Assignment, Xxxx of Sale and Conveyance
D Excluded Assets
E Material Contracts
F Advance Payments and Prepayments
G Oil and Gas Purchase and Processing Agreements
H Permitted Encumbrances / Contracts with affiliates
I Preferential Rights and Consents
J Litigation and Claims
K There is no Exhibit K
L There is no Exhibit L
M Gas Balancing Statements
-ii-
AGREEMENT FOR PURCHASE AND SALE
THIS AGREEMENT dated as of the 19th day of September, 2000,
between Apache Canyon Gas, L.L.C., a Delaware limited liability
company ("Seller"), and Evergreen Resources, Inc., a Colorado
corporation (herein referred to as "Buyer").
W I T N E S S E T H:
WHEREAS, Seller owns certain real estate oil and gas
leasehold and mineral interests and related equipment situated in
the State of Colorado along with an interest in an LLC holding
similar interests, all of which it holds in connection with its
business of petroleum exploration and production; and
WHEREAS, Seller desires to sell and Buyer desires to acquire
these interests and related assets on the terms and conditions
hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
The following terms, as used herein, shall have the following
meanings:
1.1 "Agreement" means this Agreement for Purchase and Sale
between Seller and Buyer.
1.2 "Assets" means the following described assets and
properties (except to the extent constituting Excluded Assets):
(a) "Real Property Assets" which consist of the
following:
(1) the Subject Interests;
(2) the Lands;
(3) the Incidental Rights;
(4) the Claims; and
(5) all Hydrocarbons produced from or
attributable to the Subject Interests with
respect to all periods subsequent to the
Effective Time, together with all proceeds
from or of such Hydrocarbons.
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(b) The Ownership Interest.
(c) In the event a preferential right to purchase is
exercised with regard to any part of the Assets, the definition
of "Assets" herein shall be amended to exclude such properties
for which the preferential right has been exercised.
1.3 "Assumed Obligations" means (i) all liabilities and
obligations of Seller with respect to the Claims, (ii) all
liabilities and obligations of Seller arising or accruing under
or with respect to the Assets from and after the Effective Time,
(iii) all liabilities and obligations of Seller, whether accrued
or not, with respect to plugging and abandoning any xxxxx,
removing structures and facilities and the restoration of the
surface pertaining to the Assets, (iv) a pro-rata share of
Property Taxes with respect to the Assets for the Tax Period in
which Closing occurs and all Transfer Taxes, (v) all liabilities
and obligations of Seller arising or accruing under or with
respect to the Oil and Gas Purchase and Processing Agreements
from and after the Effective Time, (vi) all liabilities and
obligations under the Basic Documents from and after the
Effective Time except to the extent that a particular obligation
is otherwise expressly retained by Seller hereunder, and (vii)
all other liabilities and obligations assumed by Buyer under this
Agreement, including but not limited to liabilities and
obligations assumed by Buyer under Article XIV.
1.4 "Basic Documents" means all Material Contracts,
agreements, and other legally binding rights and obligations to
which the Assets may be subject, or that may relate to the Assets
including, without limitation, leases, assignments in the chain
of title, overriding royalty assignments, farmout and farmin
agreements, option agreements, pooling and unitization
agreements, operating agreements. production sales and marketing
agreements, processing agreements, transportation agreements,
production purchasing agreements, permits, licenses and orders.
1.5 "Buyer's Credits" is defined in Section 3.2.
1.6 "Claims" means all obligations and benefits with
respect to gas production, pipeline, transportation or processing
imbalances, all of which are to be assumed or received by Buyer
pursuant to this Agreement.
1.7 "Closing" is defined in Section 11.1.
1.8 "Closing Date" is defined in Section 11.1.
1.9 "Conveyance" mean the Assignment, Xxxx of Sale and
Conveyance of the Real Property Assets a form of which is set out
in EXHIBIT C.
1.10 "Defensible Title" means such title to a Subject
Interest that, subject to and except for Permitted Encumbrances,
(a) entitles Seller to receive not less than the net revenue
interest of Seller for the well or unit as set forth in EXHIBIT A
of all Hydrocarbons produced, saved and marketed from or
attributable to such well or unit and (b) obligates Seller to
bear the costs and expenses relating to the maintenance,
development and operation of such well or unit in an amount not
greater
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than the working interest of Seller for such well or unit as set
forth in EXHIBIT A (unless Seller's net revenue interest therein
is proportionately increased) it being understood that the
existence of Permitted Encumbrances affecting any Asset shall not
form the basis for a claim that Seller does not have Defensible
Title to such Asset.
1.11 "Effective Time" means either: (i) 7:00 a.m. Mountain
Time on September 1, 2000 if the Closing Date occurs on or before
September 22, 2000; or (ii) 7:00 a.m. Mountain Time on September
30, 2000 if the Closing Date is after September 22, 2000.
1.12. "Excluded Assets" mean the following:
(a) all rights, interests, assets and properties of
Seller which are expressly excluded from this sale under other
provisions of this Agreement or which are set forth in EXHIBIT D;
(b) (i) except to the extent constituting or
attributable to Claims, all trade credits, accounts receivable,
notes receivable and other receivables attributable to Seller's
interest in the Assets with respect to any period of time prior
to the Effective Time, and (ii) all deposits, cash, checks in
process of collection, cash equivalents and funds attributable to
Seller's interest in the Assets with respect to any period of
time prior to the Effective Time;
(c) all corporate, financial, tax and legal (other
than title) records of Seller, however, Buyer shall be entitled
to receive copies of any financial, tax (subject to Section
12.2(d) of this Agreement) or legal records which directly relate
to the Subject Interests or to the Ownership Interest; provided,
however, that Buyer's said entitlement shall not extend to any
records whose disclosure may expose Seller to any possible claim
of breach of privilege or confidentiality under any agreement or
under federal or state laws;
(d) except to the extent constituting Claims and
except as otherwise provided in this Agreement, all claims and
causes of action of Seller (i) arising from acts, omissions or
events, or damage to or destruction of property, occurring prior
to the Effective Time, or (ii) with respect to any of the
Excluded Assets;
(e) except as otherwise provided in clause (vi) of the
definition of Incidental Rights or in Article XV hereof, all
rights, titles, claims and interests of Seller (i) under any
policy or agreement of insurance or indemnity, (ii) under any
bond or (iii) to any insurance or condemnation proceeds or
awards;
(f) all (i) Hydrocarbons produced from or attributable
to the Assets with respect to all periods prior to the Effective
Time, together with all proceeds from or of such Hydrocarbons,
and (ii) Hydrocarbons which, at the Effective Time, are owned by
Seller or to which Seller has title and are in storage, within
processing plants, or in pipelines;
(g) Seller's share of any and all claims, as well as
Seller's claims, for refund of or loss carry forwards with
respect to (i) federal, state and local, sales and use, ad
valorem, property, excise, production, severance, gross receipts,
payroll, withholding or other taxes attributable to any
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period prior to the Effective Time; (ii) federal, state and local
income or franchise taxes; or (iii) any taxes attributable to the
Excluded Assets;
(h) all amounts due or payable to Seller as
adjustments or refunds under any audit pertaining to periods
prior to the Effective Time;
(i) all amounts due or payable to Seller as
adjustments or refunds under any contracts or agreements
respecting periods prior to the Effective Time, other than
Claims;
(j) all amounts due or payable to Seller as
adjustments to insurance premiums related to the Assets with
respect to any period prior to the Effective Time;
(k) except to the extent included in the Claims, all
proceeds, benefits, income or revenues accruing (and any security
or other deposits made) with respect to (i) the Assets prior to
the Effective Time or (ii) any Excluded Assets;
(l) any logo, service xxxx, copyright, trade name or
trademark associated with Seller or any business of Seller; and
(m) all files, information and data expressly excluded
from the definition of Incidental Rights.
(n) all vehicles, tractors, trailers and similar
equipment owned by Seller.
(o) Seller's obligation for 50% of legal costs of the
Lessor in the MGP litigation referred to on EXHIBIT J in
accordance with that agreement evidenced by letters from Xxxxxxxx
& Associates, LLC to Xxxx Xxxxxxxx and Xxxxx Xxxxxx, dated June
28, 1999 and June 29, 1999, respectively
1.13 "GAAP" means Generally accepted accounting principles,
consistently applied.
1.14 "Hydrocarbons" means crude oil, natural gas, casinghead
gas, condensate, sulphur, natural gas liquids and other liquid or
gaseous hydrocarbons (including C02), and also refers to all
other minerals of every kind and character which may be covered
by or included in the Subject Interests.
1.15 "Incidental Rights" shall mean all right, title
and interest of Seller in and to or derived from the following
insofar as the same directly relate to the Subject Interests: (i)
all unitization, communitization and pooling designations,
declarations, agreements and orders covering Hydrocarbons in or
under the Lands or any portion thereof and the units and pooled
or communitized areas created thereby; (ii) all easements,
rights-of-way, surface leases, permits, licenses, servitudes or
other interests, including; (iii) all equipment and other
personal property, fixtures and improvements situated upon the
Lands and used or held for use in connection with the
exploration, development or operation of the Subject Interests or
Lands or the production, treatment, storage, compression,
processing or transportation of Hydrocarbons from or in the
Subject Interests or Lands;
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(iv) all Material Contracts; (v) originals of all lease files,
land files, well files, gas and oil sales contract files, gas
processing files, division order files, abstracts, title
opinions, and all other books, files and records, information and
data (including copies of engineering, geological and geophysical
data to the extent same may be transferred, but subject in all
events to any and all consents concerning ownership and
transfer), and all rights thereto, of Seller insofar as the same
are directly related to and necessary to the realization of value
by Buyer of any of the Subject Interests or Lands and to the
extent the transfer thereof is not prohibited by existing
contractual obligations with third parties; and (vi) to the
extent transferable and subject to Article XVI hereof, all
interest of Seller in and to all claims and causes of action
which Seller may have against insurance companies and others by
reason of injury or damage to or destruction or loss of all or
any part of the Assets by reason of events occurring subsequent
to the Effective Time.
1.16 "Lands" mean, except to the extent constituting
Excluded Assets, each and every kind and character of right,
title, claim or interest which Seller has in and to the lands
covered by the Subject Interests.
1.17 "LGG" means Lorencito Gas Gathering, L.L.C., a Colorado
limited liability company.
1.18 "Material Contracts" means all contracts related to the
Assets, the absence of which would cause a material change either
in the operations of the Assets or their value, as set forth on
EXHIBIT E.
1.19 "Ownership Interest" means Seller's ownership in
LGG described in Exhibit A-2, hereto.
1.20 "Permitted Encumbrances" shall mean any of the
following matters:
(a) the terms, conditions, restrictions, exceptions,
reservations, limitations and other matters contained in the
agreements, instruments and documents which create or reserve to
Seller its interests in any of the Assets provided they do not
operate to reduce the net revenue interest, nor increase the
working interest (unless Seller's net revenue interest therein is
proportionately increased) of Seller in the Subject Interests as
reflected in EXHIBIT A hereto;
(b) encumbrances that arise under operating agreements
to secure payment of amounts not yet delinquent and are of a type
and nature customary in the oil and gas industry;
(c) encumbrances that arise as a result of pooling and
unitization agreements, declarations, orders or laws to secure
payment of amounts not yet delinquent;
(d) any materialman's, mechanics', repairman's,
employees', contractors', operators' or other similar liens or
charges for liquidated amounts arising in the ordinary course of
business, (w) which are inchoate, (x) which Seller has agreed to
assume or pay pursuant to the terms hereof, (y) for which Seller
is responsible for paying or releasing at Closing;
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(e) any liens for taxes, tax assessments not yet
delinquent, or tax assessments that are being contested in good
faith, and other assessments not yet delinquent, or if
delinquent, that are being contested in good faith;
(f) any liens or security interests created by law or
reserved in oil and gas leases for royalty, bonus or rental or
for compliance with the terms of the Subject Interests;
(g) any obligations or duties affecting the Assets to
any municipality or public authority with respect to any
franchise, grant, license or permit, and all applicable laws,
rules and orders of governmental authority;
(h) any (i) easements, rights-of-way, servitudes,
permits, surface leases and other rights in respect of surface
operations, pipelines, grazing, hunting, fishing, logging,
canals, ditches, reservoirs, or the like, or (ii) easements for
streets, alleys, highways, pipelines, telephone lines, power
lines, railways and other similar rights-of-way, on, over, or in
respect of property owned or leased by Seller or over which
Seller owns rights-of-way, easements, permits, or licenses, to
the extent such matters, individually or in the aggregate, do not
interfere materially with oil and gas operations currently
conducted on the Subject Interests;
(i) all lessors' royalties, overriding royalties, net
profits interests, carried interests, reversionary interests and
other burdens to the extent that the net cumulative effect of
such burdens does not operate to reduce the net revenue interest
of Seller in any of the Subject Interests to below the applicable
net revenue interest set forth in EXHIBIT A hereto;
(j) all defects and irregularities affecting title to
the Subject Interests which individually or in the aggregate do
not operate to reduce the net revenue interest, nor increase the
working interest (unless Seller's net revenue interest is
increased proportionately) of Seller in the Subject Interests as
reflected in EXHIBIT A hereto or otherwise interfere materially
with the operation, value or use of the Subject Interests;
(k) preferential rights to purchase and required third
party consents to assignments and similar agreements with respect
to which waivers or consents are obtained from the appropriate
parties with respect to the sale contemplated hereunder or,
following the furnishing by Seller to the appropriate party of
all requisite notices and information, the applicable time period
for asserting such rights has expired without an exercise of such
rights with respect to such sale;
(l) all rights to consent by, required notices to,
filings with, or other actions by governmental entities in
connection with the sale or conveyance of oil and gas leases or
interests therein if the same are customarily obtained
contemporaneously with or subsequent to such sale or conveyance;
(m) (i) Material Contracts, division orders,
unitization and pooling designations, declarations, orders and
agreements, and (ii) contracts and agreements with affiliates of
Seller of the kind enumerated in subclause (i) of this clause (m)
that have been disclosed to Buyer in EXHIBIT H hereto;
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(n) any encumbrance, title defect or matter (whether
or not constituting a Title Defect) waived or deemed waived by
Buyer pursuant to Article VII hereof; and,
(o) any agreement, contract, lease, instrument,
permit, amendment or extension entered into by Seller in
accordance with Article IX hereof.
1.21 "Property Taxes" is defined in Section 12.2.
1.22 "Purchase Price" is defined in Section 3.1.
1.23 "Seller's Credits" is defined in Section 3.2.
1.24 "Subject Interests" means, except to the extent
constituting Excluded Assets, any and all interests owned by
Seller and set forth in EXHIBIT A-1 or which Seller is now
entitled to receive by reason of any existing participation,
joint venture, farm-in or other agreement, in and to the oil, gas
and/or mineral leases, permits, licenses, concessions, leasehold
estates, fee, royalty and overriding royalty interests described
in EXHIBIT A-1 attached hereto including, without limitation,
Seller's minerals, mineral fee and reversionary interests in, on
and under the lands described in EXHIBIT A.
1.25 "Tax Period" is defined in Section 12.2.
1.26 "Title Defect" is defined in Section 7.3.
1.27 "Transfer Taxes" is defined in Section 12.2.
ARTICLE II
SALE AND PURCHASE
Subject to the terms and conditions of this Agreement and
the Permitted Encumbrances, Seller agrees to sell and convey to
Buyer and Buyer agrees to purchase and pay for the Assets.
ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 PURCHASE PRICE. (a) The total consideration for the
sale and conveyance of the Assets to Buyer is Buyer's payment of
Thirty-Five Million Dollars ($U.S. 35,000,000.00) (the "Purchase
Price"). The Purchase Price, together with and subject to such
adjustments, if any, as are expressly provided for elsewhere in
this Agreement, shall be paid by Buyer to Seller at Closing by
means of completed Federal Funds transfers to Seller's account in
Apache Canyon Gas,
L.L.C., routing number 000000000, account number 9870964996
3.2 PURCHASE PRICE CREDITS.
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(a) Within 10 days after December 31, 2000, the
parties shall exchange information with respect to revenues
received from production and other operating sources (excluding
interest income), from or attributable to the Assets for periods
on or after the Effective Date received by Seller ("Buyer's
Credits") and shall calculate all exploration, production,
development, operating, overhead, general and administrative and
other costs paid or incurred by Seller with respect to the Assets
for such period charged under applicable operating agreements or,
if no operating agreement is applicable, then under the most
recent XXXXX Accounting Procedure Joint Operations ("Seller's
Credits") excluding all non-cash charges attributable to
depletion, depreciation, bad debt losses, lease abandonment,
etc.; provided that Seller shall have no obligation to make any
payment that would constitute a Seller's Credit after the
Effective Time. Only items of revenue, cost and expense
attributable to the Assets shall be included in the foregoing
calculations. If Seller's Credits exceed Buyer's Credits, the
difference shall be due Seller by Buyer. If Buyer's Credits
exceed Seller's Credits, the difference shall be due Buyer by
Seller. Prior to the end of the ten day period beginning with
December 31, 2000, Seller shall furnish Buyer with an estimated
accounting showing the amount of Seller's Credits and the
amount of Buyer's Credits. The amount of the final credit, as
adjusted, shall be paid in cash on final adjustment by the party
owing it. If within such time period, the parties are unable to
agree as to whether an item of income or expense belongs in the
period before or after the Effective Time, or is properly
included in Seller's Credits or Buyer's Credits, or as to any
other accounting matters, then such item or matter may be
submitted for determination to a mutually acceptable accounting
firm in accordance with Section 13.2 hereof. Final settlement
shall be made within ten (10) business days following agreement
by the Buyer and Seller or final determination by said accounting
firm (which final determination shall be binding upon Buyer and
Seller).
(b) Seller and Buyer or representatives of each shall
determine the amount of the Hydrocarbons existing in storage
tanks, gathering lines, pipelines, gasoline plants, and other
facilities as of the Effective Date using the point or points of
delivery to Seller's purchasers as a zero reference point.
Seller shall receive a credit in the final adjustment of the
Purchase Price as provided for in paragraph (a) above equal to an
amount calculated by multiplying the volume of such Hydrocarbons
by (i) in the case of oil, the posted price in the field, as of
the Effective Time (or if none, a mutually agreeable price) or
(ii) in the case of gas, the prevailing spot market price net of
transportation and basis differential, as of the Effective Time
. 3.3 PURCHASE PRICE ALLOCATIONS. Seller and Buyer mutually
agree to allocate the Purchase Price among the Assets as set
forth in EXHIBIT B attached hereto. Seller and Buyer agree that
said allocation as set forth in EXHIBIT B is the proper
allocation of the Purchase Price in accordance with the fair
market value of the Assets, and that said allocation of the
Purchase Price of the Assets as set forth in EXHIBIT B shall
apply for purposes of Sections 755 and 1060 of the Internal
Revenue Code of 1986 (as amended and together with any
regulations promulgated thereunder, the "Code"). Seller and
Buyer agree (and each agrees to cause its affiliates) to report
the federal, state and local income and other tax consequences of
the transactions contemplated herein, and in particular to report
the information required under Section 1060(b) of the Code (and
any regulations promulgated thereunder), in a manner consistent
with such allocation. Seller and Buyer further agree (and each
agrees to cause its affiliates) to not take any tax position
inconsistent with such allocation in connection with the
examination of any of their tax returns, refund claims or
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litigation, investigations or other proceedings involving any of
their tax returns. Seller and Buyer each further agree that they
will not take any position inconsistent with this allocation in
preparing financial statements, tax returns, reports to
shareholders or government authorities or otherwise.
Buyer and Seller each agree to furnish the other a copy of
IRS Form 8594 (Asset Acquisition Statement under Section 1060 of
the Code) as filed with the Internal Revenue Service by such
party or any affiliate thereof, pursuant to Sections 755 and 1060
of the Code, as a result of the consummation of the transactions
contemplated hereby, within thirty (30) days of the filing of
such form with the Internal Revenue Service.
ARTICLE IV
SELLER'S REPRESENTATIONS
4.1 SELLER'S REPRESENTATIONS. Seller represents to Buyer
as of the date hereof that:
(a) Seller is a limited liability company duly formed
and existing pursuant to the laws of the State of Delaware and is
qualified to do business in the State of Colorado.
(b) Subject to Sections 8.1, 8.2, and 15.1, and except
as set forth on EXHIBIT I, the consummation of the transactions
contemplated by this Agreement will not violate, or be in
conflict with, any provision of the governing documents of
Seller, any provision of any agreement or instrument to which
Seller is a party or by which Seller is a party or by which it
is bound or to the knowledge of Seller, any judgment, decree,
order, statute, rule or regulation applicable to Seller.
(c) The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action by
Seller.
(d) This Agreement constitutes, and all documents and
instruments required hereunder to be executed and delivered by
Seller at Closing will constitute, legal, valid and binding
obligations of Seller in accordance with their respective terms,
subject to applicable bankruptcy and other similar laws of
general application with respect to creditors;
(e) There are no bankruptcy, reorganization or
arrangement proceedings pending, being contemplated by, or to the
actual knowledge of the officers of Seller, threatened against
Seller;
(f) Seller may contract for brokerage or finder's
services against which it shall hold Buyer harmless pursuant to
Section 15.4;
(g) Except as shown on EXHIBIT J hereto, there is no
claim, demand or suit, action or other proceeding pending in
which Seller has been served with process, or to Seller's
knowledge threatened, before any, court or governmental agency
which if adversely decided could reasonably be expected to result
in a material impairment or loss of title to any material part of
the Assets taken as a whole or the value thereof taken as a whole
or which might materially hinder or impede the operation of the
Assets taken as a whole;
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(h) Except as shown on EXHIBIT J and as may be
referred to in Article XIV, Seller, to its knowledge, has not
violated, and to Seller's knowledge there are no alleged
violations by Seller of, any applicable rules, regulations or
orders of any governmental agency having jurisdiction over the
Assets which would affect in any material respect the value of
the Assets taken as a whole; and
(i) Seller is a United States person within the
meaning of Section 7701(a)(30) of the Internal Revenue Code of
1986, as amended.
(j) Seller makes no representation or warranty,
express or implied with respect to whether any of the Subject
Interests are qualified for, or whether Buyer might be qualified
to take, tax credits under Section 29 of the Internal Revenue
Code with respect to production from the Subject Interests.
(k) Seller is not a Public Utility Holding Company as
defined in the Public Utility Holding Company Act of 1935, and,
to the knowledge of Seller, it is not a partner with any party
who is a Public Utility Holding Company.
(l) Seller is not in breach or default, or to Seller's
knowledge, alleged to be in breach or default, under any of (i)
the Material Contracts, (ii) any of the instruments creating or
reserving the Subject Interests, or (iii) any other material
agreement or contract affecting or included within the Assets,
other than a breach or default which would not have a material
adverse effect, and, to Seller's knowledge, no other party to any
of the instruments and agreements described in (i) through (iii),
of this paragraph (l) is in breach of or default thereunder. No
event, condition or occurrence exists which after notice or lapse
of time or both would constitute a breach or default by Seller
under any of the foregoing except for such breaches or defaults
that would not have a material adverse effect.
(m) There are no gas imbalances, other than imbalances
affecting the pipeline, on the Subject Interests except as
described on Exhibit M.
(n) Solely with respect to the LLC Ownership Asset,
the Seller represents and warrants to Buyer the following:
(i) LGG is a limited liability company duly
organized, validly existing and in good
standing under the laws of Colorado and is
duly qualified and in good standing to carry
on its business in Colorado.
(ii) Except as set forth on EXHIBITS I AND J: (i)
the Ownership Interest is duly and validly
authorized for issuance, legally issued,
fully paid and nonassessable, and has not
been issued, and is not held, in violation of
any preemptive rights; (ii) Seller is the
lawful and beneficial owner of record of the
Ownership Interest and has full right, title
and interest to such Ownership Interest free
and clear of all liens, encumbrances, claims
and restrictions; (iii) there are no
agreements or
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understandings with respect to the voting of
the Ownership Interest and there are no
options, subscriptions, warrants or rights to
purchase, convert into or otherwise acquire
any ownership interest of LGG, nor are there
any plans, understandings or agreements to
issue any such options, subscriptions,
warrants or rights to purchase, convert into
or otherwise acquire any ownership interest
of LGG.
(iii) To the best of Seller's knowledge,
except as set forth on EXHIBITS I AND J, (i)
the execution, delivery and performance of
this Agreement by Seller and the consummation
by it of the transactions contemplated hereby
does not require the consent, waiver,
approval, license or authorization of any
person, entity or public authority which will
not have been obtained on or prior to
Closing; does not, with or without the giving
of notice or the passage of time or both,
violate any provision of law or the
organizing documents of LGG, or conflict with
or result in a breach, termination or
acceleration of any provision of, constitute
a default under, or result in the creation of
any lien, claim, security interest or
encumbrance upon any of the assets of Seller
or LGG pursuant to any mortgage, deed of
trust, indenture or other agreement or
instrument, or any order, judgment, decree or
any other restriction of any kind or
character, to which either Seller or LGG are
a party or by which they or any of their
assets may be bound.
(iv) Seller and Buyer agree that, except as
otherwise expressly provided in this
Agreement, the Ownership Interest is being
purchased "AS IS," "WHERE IS" and "WITH ALL
FAULTS," latent and patent. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER
HAS NOT MADE AND WILL NOT MAKE, AND HEREBY
EXPRESSLY DISCLAIMS, ANY WARRANTIES
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT
TO OR RELATING TO THE OWNERSHIP INTEREST AND
UNDERLYING ASSETS OR ANY PORTION THEREOF,
INCLUDING WITHOUT LIMITATION,
MERCHANTABILITY, HABITABILITY OR FITNESS FOR
A PARTICULAR PURPOSE. Buyer expressly
acknowledges that, except as specifically
provided for in this Agreement, Buyer is not
authorized to rely, has not relied and will
not rely on any representation, statement or
warranty of Seller or of any representative
and will not rely on any representation,
statement or warranty of Seller or of any
representative Seller.
Except as otherwise expressly provided
herein, Seller makes no representations,
warranties or indemnities for any claim,
condition or liability arising before or
after this Agreement pursuant to, or arising
under, any federal, state or local law, rule
or ordinance, including
11
those relating to protection of the
environment such as, without limitation, the
Clean Water Act, the Resource Conservation
and Recovery Act and/or the Comprehensive
Environmental Response, Compensation, and
Liability Act.
(o) Seller is aware of no liabilities of LGG other
than those included on the balance sheet provided by Seller to
Buyer. Seller is aware of no other Material Contracts other than
those included on EXHIBIT E hereto.
ARTICLE V
BUYER'S REPRESENTATIONS
5.1 BUYER'S REPRESENTATIONS. Buyer represents to Seller as
of the date hereof that:
(a) It is a corporation, duly organized, validly
existing and in good standing under the laws of the State of
Colorado, and Buyer is or prior to Closing will be duly qualified
pursuant to any and all applicable laws, statutes and regulations
to own and operate the Assets;
(b) It has all requisite power and authority to carry
on its business as presently conducted, to enter into this
Agreement and the other documents and agreements contemplated
hereby, to purchase the Assets on the terms described in this
Agreement, and to perform its other obligations under this
Agreement and the other documents and agreements contemplated
hereby. Subject to Section 15.1, the consummation of the
transactions contemplated by this Agreement will not violate.,
nor be in conflict with, any provision of Buyer's charter, or
governing documents, or any material agreement or instrument to
which Buyer is a party or by which it is bound, or any judgment,
decree, order, statute, rule or regulation applicable to Buyer;
(c) The execution, delivery and performance of this
Agreement and the transactions contemplated hereunder have been
duly and validly authorized by all requisite action on the part
of Buyer;
(d) This Agreement constitutes, and all documents and
instruments required hereunder to be executed and delivered by
Buyer at Closing will constitute, legal, valid and binding
obligations of Buyer in accordance with their respective terms,
subject to bankruptcy and other similar laws of general
application with respect to creditors;
(e) There are no bankruptcy, reorganization or
arrangement proceedings pending, being contemplated by, or to the
actual knowledge of the officers of Buyer, threatened against
Buyer;
(f) No broker or finder has acted for or on behalf of
Buyer in connection with this Agreement or the transactions
contemplated by this Agreement, and no broker or finder is
entitled to any brokerage or finder's fee or commission in
respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer;
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(g) Buyer is now or prior to Closing will be, and
after Closing shall continue to be, qualified to own Federal and
State oil, gas and mineral leases in all jurisdictions where any
such Subject Interests are located, and the consummation of the
transactions contemplated hereby will not cause Buyer to be
disqualified as such an owner or to exceed any acreage limitation
imposed by any law, statute, rule or regulation;
(h) Buyer has arranged to have available by the
Closing Date sufficient funds to enable the Buyer to pay in full
the Purchase Price, together with all costs and expenses relative
thereto, and otherwise to perform its obligations under this
Agreement.
(i) Buyer is purchasing the Ownership Interest for its
own account and sole interest, and is purchasing the Ownership
Interest for investment and not with a view to, or in connection
with, any offering, resale, disposition or distribution of any of
the Ownership Interest.
(j) Buyer understands and acknowledges that no
registration statement relating to the Ownership Interest has
been filed under the Securities Act of 1933, as amended (the
"Act") and that consequently the Ownership Interest will
constitute "restricted securities" within the meaning of Rule 144
under the Act and accordingly must be held by Buyer indefinitely
and may not be sold or otherwise disposed of in the absence of
registration or an exemption from registration under the Act and
under applicable state securities laws. Buyer realizes that
there is no existing public market for the Ownership Interest and
that even if such market did exist, reliance upon Rule 144 under
the Act for public sales in limited amounts could occur only if
adequate public information about LL was available and only after
Buyer has held the Ownership Interest continuously for a period
of at least two years from and after the date on which the full
purchase price for the Ownership Interest is paid. Buyer
understands and acknowledges that the Seller is under no
obligation to register the Ownership Interest under the Act or to
aid Buyer in obtaining any exemption from registration under the
Act.
(k) The following is made as of the Closing Date only:
Buyer has had the opportunity to examine all information
regarding LGG provided by Seller, and Buyer has had the
opportunity to ask questions of directors and officers of Seller.
The investment decision of Buyer to acquire the Ownership
Interest has been based solely upon Seller's representations with
respect to the LGG and the evaluation made by Buyer.
(l) Seller is not a Public Utility Holding Company as
defined in the Public Utility Holding Company Act of 1935, and,
to the knowledge of Seller, it is not a partner with any party
who is a Public Utility Holding Company.
ARTICLE VI
ACCESS TO INFORMATION AND INSPECTION
6.1 FILES. Seller has permitted Buyer and its representatives
access to all accounting records, abstracts of title, title
opinions, title files, ownership maps, lease files, assignments,
division
13
orders, check vouchers, payout statements and agreements
pertaining to the Assets insofar as the same are now in existence
and in the possession of Seller. Buyer and Seller acknowledge
that Buyer has had access to such records and information, prior
to the execution of this Agreement.
6.2 OTHER FILES. Seller has made available to Buyer for
inspection by Buyer all geological, geophysical, production and
engineering books, records and data in possession of Seller,
except such records or data which Seller is prevented by
contractual obligations with third parties from disclosing.
6.3 CONFIDENTIALITY AGREEMENT. Buyer and Seller entered
into that certain Confidentiality Agreement dated June 23, 2000,
between Seller and Buyer, the terms of which are incorporated
herein by reference and made a part of this Agreement. The
Confidentiality Agreement shall expire at Closing.
6.4 INSPECTIONS. Seller has permitted Buyer and its
representatives at reasonable times and at their sole risk, cost
and expense, to conduct reasonable inspections of the Assets;
provided, however, Buyer shall repair any damage to the Assets
resulting from such inspections and Buyer does hereby indemnify
and hold harmless Seller from and against any and all losses,
costs, damages, obligations, claims, liabilities, expenses or
causes of action arising from Buyer's inspection of the Assets,
including, without limitation, claims for personal injuries,
property damage and reasonable attorney's fees and further
including claims arising in whole or part from Seller's
negligence.
ARTICLE VII
TITLE
7.1 NO WARRANTY OR REPRESENTATION. Seller shall convey
Seller's interests in and to the Real Property Assets to Buyer
subject to the Permitted Encumbrances and without any warranty of
title, express or implied, except as to claims by, through and
under Seller, but not otherwise, as provided in the form of
Assignment, Xxxx of Sale and Conveyance attached as EXHIBIT C
hereto. Seller makes no warranty or representation, express or
implied, with respect to the accuracy or completeness of the
information, records and data now, heretofore or hereafter made
available to Buyer in connection with this Agreement (including,
without limitation, any description of the Real Property Assets,
pricing assumptions, potential for production of Hydrocarbons
from the Subject Interests, prospects for LGG, or any other
matters contained in any other material furnished to Buyer by
Seller or by Seller's agents or representatives).
7.2 BUYER'S TITLE REVIEW.
(a) For 45 calendar days after Closing, Buyer may at
Buyer's sole cost and expense commence and diligently pursue such
examination of title to the Subject Interests as Buyer desires.
Seller shall fully cooperate with Buyer and shall make available
to Buyer at Seller's offices in Overland Park, Kansas, all
documents, records and material in Seller's possession (except to
the extent disclosure of same is prohibited pursuant to
agreements with third parties) and all assistance reasonably
necessary to assist Buyer in determining the validity of Seller's
title in and to the Subject Interests. In no event, however,
does Seller warrant or represent the sufficiency, completeness or
14
accuracy of such documents, records and materials, and Buyer's
reliance thereon shall be at Buyer's sole risk and expense. In
the event more than one property is being conveyed hereunder,
Buyer will review title on a property by property basis
commencing with the property being deemed to have the greatest
value and then in descending order of value as set forth on
EXHIBIT B. Immediately upon completion of Buyer's title review
of each property, Buyer shall notify Seller of any Title Defects
associated with such property in accordance with Section 7.3
below. Buyer will conclude Buyer's title review and give notice
to Seller of all asserted Title Defects not later than five (5)
days after the end of said 45 day period. To be effective,
Buyer's written notice of a Title Defect must include (i) a brief
description of the matter constituting the asserted Title Defect
and (ii) supporting documents reasonably necessary for Seller (or
a title attorney or examiner hired by Seller) to verify the
existence of such asserted Title Defect. Any matters not
described in a written notice of Title Defect as provided above
shall conclusively be deemed to have been waived and accepted by
Buyer, and shall be deemed Permitted Encumbrances hereunder.
(b) Upon receipt of the notice set forth under Section
7.2(a) Seller shall have the right, but not the obligation, for
10 calendar days to cure all or any portion of asserted Title
Defects, such curative costs to be borne solely by Seller. If
Buyer elects to waive or is deemed to have waived any asserted or
unasserted Title Defects, such waived or unasserted Title Defects
shall be deemed Permitted Encumbrances hereunder. If Seller
within the time provided above is unable, elects not, or refuses,
to cure such asserted Title Defects, Buyer may, subject to
Section 7.4 below, by written notice delivered to Seller not
later than two (2) business days after the end of such period,
and as Buyer's sole and exclusive remedy and only if the
thresholds of Section 12.9 have been met, elect to have Seller
refund to Buyer, a portion of the Purchase Price by an amount
attributable to the reserves to which title has failed as
mutually agreed upon by the parties and based upon the
allocations made pursuant to Section 3.3, and Buyer shall
reconvey such portion of the Subject Interests to Seller.
Failure by Buyer to timely assert a claim for an adjustment to
the Purchase Price shall be deemed an election by Buyer to waive
such claim and retain the interest covered by the asserted but
uncured Title Defect. In the event Buyer and Seller are unable to
agree upon the amount of the downward adjustment of the Purchase
Price attributable to a Title Defect for the purposes of the
foregoing, then the same shall be submitted for determination to
a mutually acceptable reservoir engineering firm whose
determination shall be final.
(c) Matters set out in EXHIBIT I shall not constitute
a Title Defect; provided, however, any mortgages listed in
Exhibit I, if not released at Closing, shall constitute a Title
Defect.
7.3 TITLE DEFECTS. For the purposes of this Agreement, a
portion of the Subject Interests shall be deemed to have a "Title
Defect" if any one or more of the following statements is untrue
in any material respect with respect to such portion of the
Subject Interests as of the Effective Time:
(i) Seller has Defensible Title thereto.
(ii) All royalties, rentals, Xxxx clause payments,
shut-in gas payments and other payments due with respect to such
portion of the Subject Interests have been properly and timely
paid, except for payments held in suspense for title or other
reasons which are customary in the
15
industry and which will not result in grounds for cancellation of
Seller's rights in such portion of the Subject Interests.
(iii) Except as set forth in any of the Exhibits
hereto, Seller is not in default under the material terms of any
leases, farmout agreements or other contracts or agreements
respecting such portion of the Subject Interests which could (1)
materially interfere with the operation; value or use thereof,
(2) materially prevent Seller from receiving the proceeds of
production attributable to Seller's interest therein, or (3)
result in cancellation of Seller's interest therein.
(iv) There is no lien, charge, encumbrance, defect or
objection (other than a Permitted Encumbrance) against, in or to
Seller's title thereto or right or interest therein, and no fact
or circumstance relative thereto exists of such significance that
a reasonable and prudent person engaged in the business of the
ownership, development and operation of oil and gas properties
with knowledge of all the facts and appreciation of their legal
significance would be unwilling to accept and pay for the Subject
Interest or portion thereof which is affected thereby.
Notwithstanding the foregoing, loss of any Subject Interest
or portion thereof following the Effective Time due to (i) any
election or decision made by Seller in accordance with Article IX
or (ii) expiration of the primary or secondary term of a lease
shall not constitute a Title Defect as long as Seller shall not
have breached the provisions of Article IX. Subject to
Section 15.1 below, the failure of any governmental office to
approve or consent to any assignment or other conveyance of a
Subject Interest filed with such office shall not constitute a
Title Defect; provided that such office has not expressly and
specifically refused to grant such consent or approval as a
result of the existence of a Title Defect.
7.4 TITLE INDEMNIFICATION. Notwithstanding any other
provisions of this Article VII, Seller shall have the option to
execute and deliver to Buyer a title indemnity whereby Seller
shall keep Buyer indemnified from and against any and all
liability, loss, costs (including legal costs), suits, judgments,
causes of action, claims or damages arising or incurred in
connection with any uncured Title Defects, to the extent the same
relate to acts, omissions or other matters occurring prior to the
Effective Time and only with respect to such uncured Title
Defects. The title indemnity shall be limited to the amount
determined in accordance with this Article VII with respect to
the particular Asset for which the indemnity is given. If Seller
provides such a title indemnity, the relevant uncured Title
Defects shall be deemed to be cured and removed for the purposes
of this Agreement.
ARTICLE VIII
PREFERENTIAL PURCHASE RIGHTS AND CONSENTS
8.1 PREFERENTIAL RIGHT. A preferential purchase right
exists with respect to the Subject Interests and the Ownership
Interest. Immediately upon signing of this Agreement, a copy of
this Agreement along with the requisite notices under the
preferential purchase rights shall be sent to the parties
entitled thereto.
8.2 CONSENTS. A consent to the transfer of the Ownership
Interest is required. In the event the consent is not received
before Closing, Seller shall, at Closing, transfer the beneficial
16
ownership of the Ownership Interest to Buyer and shall designate,
as Seller's representatives with respect to management of LGG,
persons designated by Buyer. Seller shall provide all notices to
Buyer that it receives and shall act as Buyer's agent with
respect to LGG, but only based on instructions from Buyer. Buyer
shall indemnify Seller with respect to all any and all claims
made against Seller with respect to Seller's actions on Buyer's
behalf with respect to LGG.
ARTICLE IX
COVENANTS OF SELLER
9.1 COVENANTS OF SELLER PENDING CLOSING. From and after
the date of execution of this Agreement and until the Closing,
except as otherwise consented to by Buyer in writing and subject
to Section 9.2 below and the terms of applicable operating and
other agreements, Seller shall:
(a) Subject to Seller's right to obtain Seller's
Credits pursuant to Section 3.2, continue to operate the Assets
owned by it for the account of Buyer in a manner consistent with
past practices;
(b) Maintain in full force and effect all policies of
insurance covering the Assets now maintained by Seller;
(c) Use reasonable efforts to preserve in full force and effect
all material leases, operating agreements, easements,
rights-of-way, permits, licenses, contracts and other material
agreements included in the Incidental Rights which relate to the
Assets in which it owns an interest and perform all material
obligations of Seller in or under any such agreement relating to
such Assets;
(d) Not enter into any agreement or arrangement
granting any preferential right to purchase any of the Assets or
requiring the consent of any person to the transfer and
assignment of any of the Assets hereunder, except in connection
with the performance by Seller of an obligation or agreement
existing on the date hereof or pursuant to this Agreement;
(e) Not dedicate, sell, farm out, encumber or dispose
of any Assets without Buyer's written consent except (i) sales of
oil and gas production in the ordinary course of business and
(ii) as to a portion of the Assets that do not, in the aggregate,
constitute a material portion of the Assets; and
(f) Maintain all material equipment included in the
Assets in accordance with customary industry operating practices
and procedures.
Notwithstanding the other provisions of this Article IX, (i)
Seller may take any action with respect to the Assets if
reasonably necessary under emergency circumstances and provided
Buyer is notified as soon thereafter as reasonably practical,
(ii) except as to a reduction in the Purchase Price attributable
to a Title Defect, Seller shall have no liability to Buyer for
the incorrect payment of royalties, shut-in royalties or similar
payments or for any failure to pay any such payments through
mistake or oversight (including Seller's negligence), and (iii)
Seller's non-willful failure to comply
17
with any of the requirements of this Article IX shall not be
deemed a default by Seller hereunder, serve as a basis for a
claim by Buyer for damages (other than a reduction of the
Purchase Price as a result of the failure of title), afford Buyer
the right to make a claim for damages or permit Buyer not to
close this sale if such failure does not have a material adverse
effect on the value of the Assets taken as a whole. Any consent
requested of Buyer with respect to the matters covered by this
Article IX shall not be unreasonably withheld or action with
respect thereto unduly delayed.
9.2 LIMITATIONS ON SELLER'S COVENANTS PENDING CLOSING.
(a) To the extent Seller is not the operator of any of
the Assets, the obligations of Seller in Section 9.1 above, which
have reference to operations or activities which normally or
pursuant to existing contracts are carried out or performed by
the operator, shall be construed to require only that Seller use
reasonable efforts (without being obligated to incur any expense
or institute any cause of action) to cause the operator of such
Assets to take such actions or render such performance within the
constraints of the applicable operating agreements and other
applicable agreements.
(b) Notwithstanding anything to the contrary in this
Article IX, should Seller not wish to pay any lease rental or
other payment or participate in any reworking, deepening,
drilling, completion, equipping or other operation on or with
respect to any well or other Asset which may otherwise be
required by Section 9.1 above, Seller shall give Buyer timely
written or oral notice thereof as soon as reasonably practicable
after Seller receives written notice thereof from the operator of
such property (or if Seller is the operator, at the same xxxx
Xxxxxx gives written notice thereof to the non-operators of such
property); and Seller shall not be obligated to make any such
payment or to elect to participate in any such operation which
Seller does not wish to make or participate in unless Seller
receives from Buyer, within a reasonable time prior to the date
when such payment or election is required to be made by Seller,
(i) the written election and agreement of Buyer to require Seller
to take such action and to indemnify Seller therefrom and (ii)
all funds necessary for such action. Notwithstanding the
foregoing, Seller shall not be obligated to pay any lease rental
or other payment or to elect to participate in any operation if
the third party operator of the property involved recommends that
such action not be taken. If Buyer advances any funds pursuant
to this Section 9.2(b) and the Assets to which such payments
relate are not conveyed to Buyer at Closing, and Seller does not
reimburse Buyer for all advances made by Buyer with respect to
such Assets pursuant to this Section 9.2(b) within thirty (30)
days after this Agreement terminates with respect to such Assets,
then (i) Buyer shall own and be entitled to any right of Seller
that would have lapsed but for such payment, and (ii) in the case
of operations, Buyer shall be entitled to receive the penalty
which Seller, as nonconsenting party, would have suffered under
the applicable operating agreement with respect to such
operations as if Buyer were a consenting party thereunder.
ARTICLE X
CLOSING CONDITIONS
18
10.1 SELLER'S CLOSING CONDITIONS. The obligations of Seller
under this Agreement are subject, at the option of Seller, to the
satisfaction at or prior to the Closing of the following
conditions:
(a) All representations and warranties of Buyer
contained in this Agreement shall be true in all material
respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Buyer shall
have performed and satisfied all agreements required by this
Agreement to be performed and satisfied by Buyer at or prior to
the Closing;
(b) Seller shall have received a certificate dated as
of the Closing, executed by a duly authorized officer of Buyer,
to the effect that to such officer's knowledge the statements
made under Article V above are true at and as of the Closing;
(c) Seller believes that, pursuant to Section 802.3 of
the FTC regulations, no Xxxx-Xxxxx-Xxxxxx Act filing is
necessary, with respect to this transaction. If Buyer disagree
with Seller's determination, the Buyer shall notify Seller within
10 days after the execution of this Agreement. If Buyer and
Seller cannot agree, then the following becomes a Seller's
Closing Condition: Except for approvals covered by Section 15.1
hereof, all necessary consents of and filings with the Federal
Trade Commission and any other state or federal governmental
authority or agency relating to the consummation of the
transactions contemplated by this Agreement shall have been
obtained, accomplished or waived, and the applicable waiting
periods prescribed in connection with the Xxxx-Xxxxx-Xxxxxx Act
shall have elapsed or terminated (by early termination or
otherwise) since the dates of the filings by the parties with
respect thereto; and
(d) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by Seller) shall
be pending or threatened before any court or governmental agency
seeking to restrain Seller or prohibit the Closing or seeking
damages against Seller as a result of the consummation of this
Agreement.
(e) All material third party consents required for the
transfer of the Subject interests to Buyer shall have been
received, waived, or the time for exercise has expired so as to
bar their exercise.
(f) Satisfactory releases of Seller's lender's
mortgages on the Assets shall have been received.
(g) Seller reserves the right to exchange, for other
property of like kind and qualifying use within the meaning of
Section 1031 of the Internal Revenue Code of 1986 and the
regulations promulgated thereunder, the Real Property Assets
which, in part, are the subject of this Agreement. Seller
expressly reserves the right to assign its rights, but not its
obligations, hereunder to a "qualified intermediary" as provided
in Section 1.103(k)-1(g)(4) of the U.S. Treasury regulations on
or before the Closing Date. Buyer agrees to take all actions
reasonably required of it, including, but not limited to,
executing and delivering documents, to permit Seller to effect
the exchange described in the this Section. The Seller agrees to
indemnify and hold harmless the Buyer from all costs, losses,
expenses, and liabilities arising out of the Buyer's cooperation
with the Seller in
19
accomplishing such an exchange. The Buyer makes no warranty or
representation with regard to the Seller's ability to qualify for
a tax-free exchange pursuant to Section 1031 of the Internal
Revenue Code.
10.2 BUYER'S CLOSING CONDITIONS. The obligations of Buyer
under this Agreement are subject, at the option of Buyer, to the
satisfaction at or prior to the Closing of the following
conditions:
(a) All representations and warranties of Seller
contained in this Agreement shall be true in all material
respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Seller shall
have performed and satisfied all agreements required by this
Agreement to be performed and satisfied by Seller at or prior to
the Closing;
(b) Buyer shall have received a certificate dated as
of the Closing, executed by a duly authorized officer of Seller,
to the effect that to such officer's knowledge the statements
made under Article IV above by Seller are true at and as of the
Closing;
(c) Seller believes that, pursuant to Section 802.3 of
the FTC regulations, no Xxxx-Xxxxx-Xxxxxx Act filing is
necessary, with respect to this transaction. If Buyer disagree
with Seller's determination, the Buyer shall notify Seller within
10 days after the execution of this Agreement. If Buyer and
Seller cannot agree, then the following becomes a Buyer's Closing
Condition: Except for approvals covered by Section 15.1 hereof,
all necessary consents and filings with the Federal Trade
Commission and any other state or federal governmental authority
or agency relating to the consummation of the transactions
contemplated by this Agreement shall have been obtained,
accomplished or waived, and the applicable waiting periods
prescribed in connection with the Xxxx-Xxxxx-Xxxxxx Act shall
have elapsed or terminated (by early termination or otherwise)
since the dates of the filings by the parties with respect
thereto; and
(d) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by Buyer) shall
be pending or threatened before any court or governmental agency
seeking to restrain Buyer or prohibit the Closing or seeking
damages against Buyer as a result of the consummation of this
Agreement.
(e) All material third party consents required for the
transfer of the Subject interests to Buyer shall have been
received, waived, or the time for exercise has expired so as to
bar their exercise.
(f) Satisfactory releases of Seller's lender's
mortgages on the Assets shall have been received.
ARTICLE XI
CLOSING
20
11.1 CLOSING. The closing of this transaction (the
"Closing") shall be held at 10:00 a.m., Central Standard Time, at
the offices of Seller at 10740 Xxxx, Xxxxx 000, Xxxxxxxx Xxxx,
Xxxxxx 00000 on the second business day following the expiration
of the ten day preferential right period provided to Xxxxxxxx &
Associates, Inc. in accordance with LGG's operating agreement and
the joint operating agreement and joint development agreement on
the property, or at such other date or place as the parties may
agree in writing (herein called "Closing Date"). Regardless of
when the Closing shall occur, Closing shall be effective with
respect to each Asset as of the Effective Time, as specified in
Section 1.11.
11.2 SELLER'S CLOSING OBLIGATIONS. At Closing (except
Seller shall have a reasonable period after the Closing for items
d, e, f and g), Seller shall deliver to Buyer the following:
(a) The Assignments, Bills of Sale and Conveyances
substantially in the form attached hereto as EXHIBIT C and such
other documents as may be reasonably necessary to convey Seller's
interest in the Assets to Buyer in accordance with the provisions
hereof;
(b) The certificate of Seller referred to in Section
10.2(b) hereof;
(c) Evidence of Seller's compliance with the
Xxxx-Xxxxx-Xxxxxx Act (if necessary);
(d) Transfer or division orders, or letters-in-lieu
thereof, to be effective at the Effective Time in the form
required by the purchasers of the Hydrocarbons from the producing
properties, provided that if any purchasers prepare the same, the
execution and delivery thereof may be deferred until they are
prepared;
(e) All title opinions, abstracts of title, lease
records, data sheets, status and other reports pertaining to the
Subject Interests heretofore received by Seller or to which
Seller has access;
(f) All of the Basic Documents, and the files
pertaining thereto, and all other contracts, documents and files
affecting title to the Subject Interests to which Seller has
access; and
(g) All lease files, land files, well files, gas and
oil sales contract files, gas processing files, division order
files, abstracts, title opinions, and all other books, files and
records information and data, except insofar as Seller is
prevented from transferring same by contractual obligations to
third parties or applicable law.
(h) A tax certificate representing the fact that
Seller is not a foreign entity.
11.3 BUYER'S CLOSING OBLIGATIONS. At Closing, Buyer shall
deliver to Seller the following:
(a) The Purchase Price (subject to such adjustments,
if any, as are expressly provided for in this Agreement) in
immediately available funds to Seller as provided in Section 3.1
hereof (or to such other account within the continental United
States of America designated by Seller to Buyer at least five
(5) days prior to the Closing Date);
21
(b) The certificate of Buyer referred to in Section
10.1(b) hereof;
(c) Evidence of Buyer's compliance with the
Xxxx-Xxxxx-Xxxxxx Act (if necessary).
ARTICLE XII
EFFECT OF CLOSING
12.1 REVENUES. To the extent not included in the
reimbursements under Section 3.2 hereof, all proceeds, accounts
receivable, notes receivable, revenues, monies and other items
included in or attributable to the Excluded Assets and all other
Excluded Assets shall belong to and be paid over to Seller and
all other proceeds, accounts receivable, notes receivable,
revenues, monies and other items relating to the period of time
after the Effective Time and included in or attributable to the
Assets shall belong to and be paid over to Buyer.
12.2 TAXES.
(a) Apportionment of Ad Valorem and Property Taxes.
All ad valorem, real property taxes and personal property taxes,
including interest and penalties attributable thereto
(hereinafter "Property Taxes"), attributable to the Assets with
respect to the tax assessment period ("Tax Period") during which
the Effective Time occurs shall be apportioned as of the
Effective Time between Seller and Buyer, with Seller paying a
fraction thereof based upon the number of days in the Tax Period
prior to the Effective Time and Buyer paying the balance thereof.
This allocation prevails even if the assessment for the Tax
Period is attributable, in whole or in part, to a prior calendar
year. The owner of record on the assessment date shall file or
cause to be filed all required reports and returns incident to
the Property Taxes and shall pay or cause to be paid to the
taxing authorities all Property Taxes relating to the Tax Period
during which the Effective Time occurs. If Seller is the owner
of record on the assessment date, then Buyer shall pay to Seller
Buyer's pro rata portion of Property Taxes within thirty (30)
days after receipt of Seller's invoice therefor, except to the
extent taken into account as an adjustment to the Purchase Price
pursuant to Section 3.2. If Buyer is the owner of record as of
the assessment date then Seller shall pay to Buyer Seller's pro
rata portion of Property Taxes within thirty (30) days after
receipt of Buyer's invoice therefor, except to the extent taken
into account as an adjustment to the Purchase Price pursuant to
Section 3.2.
(b) Sales Taxes. The Purchase Price provided for
hereunder excludes, and Buyer shall be liable for, any Transfer
Taxes (as defined below) required to be paid in connection with
the sale of the Assets pursuant to this Agreement. To the extent
required by applicable law, Seller shall collect and remit any
Transfer Taxes that are required to be paid as a result of the
transfer of the Assets by Seller to the Buyer. If the transfer
of the Assets pursuant to this Agreement is exempt from any
Transfer Taxes, Buyer shall, at Closing, provide Seller with
properly executed exemption certificates or other documentation
acceptable under applicable law. As used here, the term
"Transfer Taxes" shall mean any sales, use, excise, stock, stamp,
document, filing, recording, registration, authorization and
similar taxes, fees and charges.
22
(c) Other Taxes. With the exception of income and
franchise taxes, all other federal, state and local taxes
(including interest and penalties attributable thereto) on the
ownership or operations of the Assets which are imposed with
respect to periods or portions of periods prior to the Effective
Time shall be paid by Seller and all such taxes imposed with
respect to periods or portions of periods beginning on or after
the Effective Time shall be paid by Buyer.
(d) Cooperation. After the Closing, each party to
this Agreement shall provide the other party with reasonable
access to all relevant documents, data and other information
(other than that which is subject to any attorney-client
privilege) which may be required by the other party for the
purpose of preparing tax returns, filing refund claims and
responding to any audit by any taxing jurisdiction. Each party
to this Agreement shall cooperate with all reasonable requests of
the other party made in connection with contesting the imposition
of taxes. Notwithstanding anything to the contrary in this
Agreement, neither party to this Agreement shall be required at
any time to disclose to the other party any Tax Return or other
confidential tax information. Except where disclosure is
required by applicable law or judicial order, any information
obtained by a party pursuant to this Section 12.2(d) shall be
kept confidential by such party, except to the extent disclosure
is required in connection with the filing of any Tax Returns or
claims for refund or in connection with the conduct of an audit,
or other proceedings in response to an audit, by a taxing
jurisdiction.
12.3 EXPENSES. To the extent not included in the
reimbursements under Section 3.2 hereof or in the Assumed
Obligations, all accounts payable and other costs and expenses
(other than taxes described in Section 12.2) with respect to the
Seller's interest in the Assets which are attributable under GAAP
to the period prior to the Effective Time shall be the obligation
of and be paid by Seller, and those which are attributable under
GAAP to the period commencing with the Effective Time, as well as
all Assumed Obligations, shall be the obligation of and be paid
by Buyer.
12.4 SHARED OBLIGATIONS. If monies are received by any
party hereto which, under the terms of this Article XII, belong
to another party, the same shall immediately be paid over to the
proper party. If an invoice or other evidence of an obligation
is received which under the terms of this Article XII is
partially the obligation of Seller and partially the obligation
of Buyer, then the parties shall consult each other and each
shall promptly pay its portion of such obligation to the obligee,
provided that if either party hereto shall fail promptly to pay
its portion of such obligation to the obligee, the other party
hereto shall have the right (but not the obligation) to pay such
portion of such obligation, whereupon the defaulting party shall
promptly reimburse such other party for the defaulting party's
portion so paid, plus interest on said amounts until reimbursed,
at the rate applicable under Article III above.
12.5 SELLER OPERATED PROPERTIES. It is expressly understood
and agreed that Seller shall not be obligated to continue
operating any of the Assets following the Closing Date and Buyer
hereby assumes full responsibility for operating (or causing the
operation of) all Assets following the Closing Date.
12.6 RESERVATION OF RIGHT TO QUALIFY UNDER SECTION 29 OF THE
CODE. Seller hereby retains, and Buyer consents thereto, the
right to seek qualification of certain of the Real Property
Assets
23
under Section 29 of the Internal Revenue Code of 1986, as
amended, and as gas produced from coal seams under Section 503 of
the Natural Gas Policy Act of 1978 (and including any successor
or similar state or federal legislation) before the Federal
Energy Regulatory Commission, or its successor agency. This
reservation is not intended to reserve any rights to claim
Section 29 credits with respect to production occurring after the
Effective Date, but rather is to assure Seller's right to such
credits prior to the Effective Date. Buyer agrees to cooperate
fully with Seller at Seller's expense and to permit access to
Buyer's records and all reasonable time to permit Seller to
complete this qualification process.
ARTICLE XIII
SETTLEMENT OF PRORATIONS
13.1 ACCOUNTING. Prior to Closing, Seller shall furnish
Buyer with an estimated accounting showing in reasonable detail
the prorating of any amounts described in and subject to Article
XII of this Agreement. If pursuant to such estimated accounting
either Seller or Buyer shall owe any obligation to the other
which is not included in the reimbursements under Section 3.2,
then the Purchase Price paid at Closing shall be further adjusted
to reflect such charges and credits which are necessary to
accomplish such adjustment. Promptly after the Closing Date (but
not later than one hundred twenty (120) days thereafter), Seller
shall furnish Buyer with a final accounting showing in reasonable
detail the prorating of any amounts described in and subject to
Article XII hereof.
13.2 SETTLEMENT OF DISPUTES. If within thirty (30) days
after Seller furnishes such final accounting to Buyer, Buyer and
Seller are unable to agree on such final accounting or the
adjustments provided for in Section 3.2 hereof, then either
Seller or Buyer may submit such proration or allocation dispute
to a mutually acceptable accounting firm, and the determination
made as to such proration or allocation by such accounting firm
shall be final and binding upon Seller and Buyer. Final
settlement shall be made within ten (10) business days following
agreement by the Buyer and Seller or final determination by said
accounting firm. All determinations and adjustments with respect
to allocating items to the periods before or after the Effective
Time shall be in accordance with GAAP. The fees charged by said
accounting firm for making determinations under Section 3.2 or
this Section 13.2 shall be paid one-half (1/2) by Buyer and
one-half (1/2) by Seller.
ARTICLE XIV
ENVIRONMENTAL
14.1 AVAILABILITY OF DATA TO BUYER: The Assets which are the
subject of this Agreement have been utilized by Seller for the
purposes of exploration, development and production of oil and
gas, for related oilfield operations and possibly for the storage
and disposal of waste materials or hazardous substances. Seller
shall make available to Buyer, during the environmental
assessment period described in Section 14.3 below, Seller's
historical files regarding the foregoing operations, to the
extent available and to the extent Seller is authorized to
disclose same (excepting documents subject to confidentiality
restrictions or legal privilege).
14.2 SPILLS AND NORM: Without changing the allocation of
risk reflected in Section 13.7 and 13.8, and without creating
knowledge on Buyer's part that could or would limit or eliminate
24
Seller's indemnification under Section 13.8(c)(ii). Buyer
acknowledges that in the past there may have been spills of
wastes, crude oil, produced water, or other materials (including,
without limitation, any toxic, hazardous or extremely hazardous
substances) onto the Lands. In addition, some production
equipment may contain asbestos and/or Naturally Occurring
Radioactive Material (hereinafter referred to as "NORM"). In
this regard Buyer expressly understands that NORM may affix or
attach itself to the inside of xxxxx, materials and equipment as
scale or in other forms, that said xxxxx, materials and equipment
located on the Lands or included in the Assets described herein
may contain NORM and that NORM-containing material may have been
buried or otherwise disposed of on the Lands. Buyer also
expressly understands that special procedures may be required for
the remediation, removal, transportation and disposal of
asbestos, NORM or other materials from the Assets and Lands where
such material may be found and that Buyer assumes all liability
for or in connection with the assessment, containment, removal,
remediation, transportation and disposal of any such materials,
in accordance with all past, present or future applicable laws,
rules, regulations and other requirements of any governmental or
judicial entities having jurisdiction and also with the terms and
conditions of all applicable leases and other contracts.
14.3 BUYER AGREES TO RELEASE, INDEMNIFY, DEFEND AND HOLD
SELLER HARMLESS FROM ANY CLAIM, CAUSE OF ACTION, JUDGMENT,
LIABILITY, LOSS, DAMAGE OR OTHER COST WHATSOEVER BROUGHT BY OR IN
FAVOR OF ANY PERSON FOR INJURY, ILLNESS OR DEATH, DAMAGE TO OR
LOSS OF PROPERTY, FOR DAMAGE OR HARM TO THE ENVIRONMENT OR FOR
ANY OTHER MATTER CAUSED BY BUYER'S ACCESS TO THE LANDS OR THE
ENVIRONMENTAL ASSESSMENT OR TESTING THEREOF, EVEN IF SUCH
LIABILITY IS ATTRIBUTABLE TO THE CONTRIBUTORY NEGLIGENCE OF
SELLER; PROVIDED, THE FOREGOING SHALL NOT APPLY TO ANY CLAIM,
CAUSE OF ACTION, JUDGMENT, LIABILITY, LOSS, DAMAGE OR OTHER COST
WHATSOEVER TO THE EXTENT ARISING FROM CONDITIONS ON THE LANDS AS
OPPOSED TO BUYER'S ACTIVITIES ON THE LAND PRIOR TO CLOSING.
14.4 MATERIAL ADVERSE ENVIRONMENTAL CONDITIONS: Buyer's sole
and exclusive remedy for environmental conditions is as provided
in Section 14.8.
14.5 "AS IS, WHERE IS" PURCHASE: Subject to Section 14.8,
Buyer shall acquire the Assets in an "AS IS, WHERE IS" condition
and shall assume all risks that the Assets may contain waste
materials (whether toxic, hazardous, extremely hazardous or
otherwise) or other adverse physical conditions, including, but
not limited to, the presence of unknown abandoned oil and gas
xxxxx, water xxxxx, sumps, pits, pipelines or other waste or
spill sites which may not have been revealed by Buyer's
investigation. On and after the Effective Time, all
responsibility and liability related to all such conditions,
whether known or unknown, fixed or contingent, will be
transferred from Seller to Buyer, except as provided in Section
14.8.
14.6 DISPOSAL OF MATERIALS, SUBSTANCES AND WASTES: Buyer shall
properly handle, remove, transport and dispose of any material,
substance or waste (whether toxic, hazardous, extremely hazardous
or otherwise) from the Assets or Lands (including, but not
limited to, produced water, drilling fluids and other associated
wastes), whether present before or after the Effective Time, in
accordance with applicable local, state and federal laws and
regulations. To the extent that the Lands
25
are not sold in fee to Buyer, Buyer shall keep records of the
types, amounts and location of materials, substances and wastes
which are transported, handled, discharged, released or disposed
onsite and offsite. When and if any lease, an interest in which
has been assigned pursuant to this Agreement, is terminated,
Buyer shall take whatever additional testing, assessment,
closure, reporting or remedial action with respect to the Assets
or Lands as is necessary to meet any local, state or federal
requirements directed at protecting human health or the
environment in effect at that time, and any other action as
necessary to restore the Lands or Assets to their original
condition.
14.7 BUYER'S INDEMNITY:
(a) SUBJECT TO SECTION 14.8, AND (i) BEGINNING ON A
DATE TWO YEARS FROM CLOSING, WITH RESPECT TO ALL LIABILITIES
DESCRIBED HEREIN AND (ii) FROM THE CLOSING DATE WITH RESPECT TO
ALL LIABILITIES NOT SUBJECT TO SECTION 14.8 BELOW, BUYER SHALL
INDEMNIFY, HOLD HARMLESS, RELEASE AND DEFEND SELLER FROM AND
AGAINST ALL DAMAGES, LOSSES, CLAIMS, DEMANDS, CAUSES OF ACTION,
JUDGMENTS AND OTHER COSTS (INCLUDING BUT NOT LIMITED TO ANY CIVIL
FINES, PENALTIES, COSTS OF ASSESSMENT, CLEAN-UP, REMOVAL AND
REMEDIATION OF POLLUTION OR CONTAMINATION, AND EXPENSES FOR THE
MODIFICATION, REPAIR OR REPLACEMENT OF FACILITIES ON THE LANDS)
BROUGHT BY ANY AND ALL PERSONS AND ANY AGENCY OR OTHER BODY OF
FEDERAL, STATE OR LOCAL GOVERNMENT, ON ACCOUNT OF ANY PERSONAL
INJURY, ILLNESS OR DEATH, ANY DAMAGE TO, DESTRUCTION OR LOSS OF
PROPERTY, AND ANY CONTAMINATION OR POLLUTION OF NATURAL RESOURCES
(INCLUDING SOIL, AIR, SURFACE WATER OR GROUNDWATER) TO THE EXTENT
ANY OF THE FOREGOING DIRECTLY OR INDIRECTLY IS CAUSED BY OR
OTHERWISE INVOLVES ANY ENVIRONMENTAL CONDITION OF THE ASSETS OR
LANDS, WHETHER CREATED OR EXISTING BEFORE, ON OR AFTER THE
EFFECTIVE TIME, INCLUDING, BUT NOT LIMITED TO, THE PRESENCE,
DISPOSAL OR RELEASE OF ANY MATERIAL (WHETHER HAZARDOUS, EXTREMELY
HAZARDOUS, TOXIC OR OTHERWISE) OF ANY KIND IN, ON OR UNDER THE
ASSETS OR THE LANDS.
(b) SUBJECT TO SECTION 14.8, BUYER'S INDEMNIFICATION
OBLIGATIONS SHALL EXTEND TO AND INCLUDE, BUT NOT BE LIMITED TO
(I) THE NEGLIGENCE OR OTHER FAULT OF SELLER, BUYER AND THIRD
PARTIES, WHETHER SUCH NEGLIGENCE IS ACTIVE OR PASSIVE, GROSS,
JOINT, SOLE OR CONCURRENT, (II) SELLER'S OR BUYER'S STRICT
LIABILITY, AND (III) SELLER'S OR BUYER'S LIABILITIES OR
OBLIGATIONS UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED (42 U.S.C.
Sections 9601 ET. SEQ.), THE RESOURCE CONSERVATION AND RECOVERY
ACT OF 1976 (42 U.S.C. SECTION 6901 ET. SEQ.), THE CLEAN WATER
ACT (33 U.S.C. SECTIONS 466 ET. SEQ.), THE SAFE DRINKING WATER
ACT (14 U.S.C. SECTIONS 1401-1450), THE HAZARDOUS MATERIALS
TRANSPORTATION ACT (49 U.S.C. SECTIONS 1801 ET. SEQ.), THE TOXIC
SUBSTANCES CONTROL ACT (15 U.S.C. SECTIONS 2601-2629), THE CLEAN
AIR ACT (42 U.S.C. SECTION 7401 ET. SEQ,) AS AMENDED, THE CLEAN
AIR ACT AMENDMENTS OF 1990 AND ALL STATE AND LOCAL LAWS AND ANY
REPLACEMENT OR SUCCESSOR LEGISLATION OR
26
REGULATION THERETO. THIS INDEMNIFICATION SHALL BE IN ADDITION TO
ANY OTHER INDEMNITY PROVISIONS CONTAINED IN THIS AGREEMENT, AND
IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT ANY TERMS OF THIS
ARTICLE SHALL CONTROL OVER ANY CONFLICTING OR CONTRADICTING TERMS
OR PROVISIONS CONTAINED IN THIS AGREEMENT.
14.8 SELLER'S INDEMNITY:
(a) SUBJECT TO THE TERMS AND PROVISIONS OF
SECTIONS 14.7 AND 15.7 OF THIS AGREEMENT, AND WITH RESPECT TO ANY
CLAIM DESCRIBED IN THIS SECTION 13.8(a), WRITTEN NOTICE OF WHICH
BUYER HAS GIVEN SELLER WITHIN A TWO-YEAR PERIOD FOLLOWING THE
CLOSING DATE, SELLER SHALL INDEMNIFY, HOLD HARMLESS, RELEASE AND
DEFEND BUYER FROM AND AGAINST DAMAGES, LOSSES, CLAIMS, DEMANDS,
CAUSES OF ACTION, JUDGMENTS AND OTHER COSTS (INCLUDING BUT NOT
LIMITED TO ANY CIVIL FINES, PENALTIES, COSTS OF ASSESSMENT,
CLEAN-UP, REMOVAL AND REMEDIATION OF POLLUTION OR CONTAMINATION,
AND EXPENSES FOR THE MODIFICATION, REPAIR OR REPLACEMENT OF
FACILITIES ON THE LANDS BUT ONLY TO THE EXTENT SUCH ITEMS EXCEED
$1 MILLION) BUT ONLY IF BROUGHT BY ANY AGENCY OR OTHER BODY OF
FEDERAL, STATE OR LOCAL GOVERNMENT OR A THIRD PARTY, WHICH IS
ENTIRELY UNAFFILIATED WITH BUYER, ON ACCOUNT OF CLAIM OR
VIOLATION OF ANY ENVIRONMENTAL LAW OR REGULATION TO THE EXTENT
ANY OF THE FOREGOING DIRECTLY OR INDIRECTLY IS CAUSED BY OR
OTHERWISE INVOLVES ANY ENVIRONMENTAL CONDITION OF THE ASSETS OR
LANDS, CREATED OR EXISTING BEFORE THE EFFECTIVE TIME, AND WHICH
CONSTITUTES A VIOLATION OF APPLICABLE ENVIRONMENTAL LAWS IN
EFFECT AS OF THE EFFECTIVE TIME, INCLUDING, BUT NOT LIMITED TO,
THE PRESENCE, DISPOSAL OR RELEASE OF ANY MATERIAL (WHETHER
HAZARDOUS, EXTREMELY HAZARDOUS, TOXIC OR OTHERWISE) OF ANY KIND
IN, ON OR UNDER THE ASSETS OR THE LANDS.
(b) SELLER'S INDEMNIFICATION OBLIGATIONS SHALL EXTEND
TO AND INCLUDE, BUT NOT BE LIMITED TO (I) THE NEGLIGENCE OR OTHER
FAULT OF SELLER, BUYER AND THIRD PARTIES, WHETHER SUCH NEGLIGENCE
IS ACTIVE OR PASSIVE, GROSS, JOINT, SOLE OR CONCURRENT, (II)
SELLER'S OR BUYER'S STRICT LIABILITY, AND (III) SELLER'S OR
BUYER'S LIABILITIES OR OBLIGATIONS UNDER THE COMPREHENSIVE
ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980,
AS AMENDED (42 U.S.C. SECTIONS 9601 ET. SEQ.), THE RESOURCE
CONSERVATION AND RECOVERY ACT OF 1976 (42 U.S.C. SECTION 6901 ET.
SEQ.), THE CLEAN WATER ACT (33 U.S.C. SECTIONS 466 ET. SEQ.), THE
SAFE DRINKING WATER ACT (14 U.S.C. SECTIONS 1401-1450), THE
HAZARDOUS MATERIALS TRANSPORTATION ACT (49 U.S.C. SECTIONS 1801
ET. SEQ.), THE TOXIC SUBSTANCES CONTROL ACT (15 U.S.C.
SECTIONS 2601-2629), THE CLEAN AIR ACT (42 U.S.C. SECTION 7401
ET. SEQ.) AS AMENDED, THE CLEAN AIR ACT AMENDMENTS OF 1990 AND
ALL STATE AND LOCAL LAWS, AS IN EFFECT AS OF THE DATE OF THIS
AGREEMENT. THIS INDEMNIFICATION SHALL BE IN ADDITION TO ANY
OTHER INDEMNITY PROVISIONS CONTAINED IN THIS AGREEMENT, AND IT IS
EXPRESSLY
27
UNDERSTOOD AND AGREED THAT ANY TERMS OF THIS ARTICLE SHALL
CONTROL OVER ANY CONFLICTING OR CONTRADICTING TERMS OR PROVISIONS
CONTAINED IN THIS AGREEMENT.
(c) SELLER'S INDEMNIFICATION SHALL NOT EXTEND TO
MATTERS OR CONDITIONS (i) FOR WHICH AN ADJUSTMENT OF THE PURCHASE
PRICE WAS MADE, OR (ii) WHICH WERE DISCLOSED TO OR KNOWN BY BUYER
ON OR BEFORE BUYER'S EXECUTION OF THIS AGREEMENT.
14.9 REDUCTION. There shall be no reduction in the Purchase
Price under Section 7.2 unless Seller's share of a proposed
reduction as to any single incident exceeds $50,000.00; this
shall be determined on an incident by incident basis. In
addition, if Seller's share of the proposed reduction under
Section 7.2 as to any single incident exceeds $50,000.00, there
shall be no reduction in the Purchase Price until such time as
the total of these excess amounts (over $50,000.00) exceeds
$500,000.00. Seller's indemnity under Section 14.8 shall not be
applicable until such time as Seller's share of liability under
Section 14.8 exceeds $1,000,000.00.
ARTICLE XV
MISCELLANEOUS
15.1 CERTAIN GOVERNMENTAL CONSENTS. At the Closing, Seller
shall execute and deliver to Buyer such assignments of Federal
and State leases as require consent to assignment, on the forms
required by the governmental agency having jurisdiction thereof.
Seller and Buyer will use reasonable efforts after Closing to
obtain approval of such assignments.
15.2 PUBLIC ANNOUNCEMENTS. The parties hereto agree that
prior to making any public announcement or statement with respect
to the transaction contemplated by this Agreement, the party
desiring to make such public announcement or statement shall
consult with the other party hereto and exercise reasonable
efforts to (i) agree upon the text of a joint public announcement
or statement to be made by both of such parties or (ii) obtain
approval of the other party hereto to the text of a public
announcement or statement to be made solely by Seller or Buyer,
as the case may be. Nothing contained in this paragraph shall be
construed to require either party to obtain approval of the other
party hereto to disclose information with respect to the
transaction contemplated by this Agreement to any state or
federal governmental authority or agency to the extent required
by applicable law or by any applicable rules, regulations or
orders of any governmental authority or agency having
jurisdiction or necessary to comply with disclosure requirements
of any major stock exchange and applicable securities laws .
15.3 FILING AND RECORDING OF ASSIGNMENTS, ETC. Buyer shall be
solely responsible for all filings and recording of assignments
and other documents related to the Assets and for all fees
connected therewith, and upon request Buyer shall advise Seller
of the pertinent recording data. Seller shall not be responsible
for any loss to Buyer because of Buyer's failure to file or
record documents correctly or promptly. Buyer shall promptly
file all appropriate forms, declarations or bonds with Federal,
State and Indian agencies relative to its assumption of
operations and Seller shall cooperate with Buyer in connection
with such filings.
28
15.4 ASSUMPTION AND INDEMNITY. SUBJECT TO THE OTHER
PROVISIONS HEREIN, BUYER SHALL ASSUME ALL RISK OF LOSS WITH
RESPECT TO ANY CHANGE IN THE CONDITION OF THE ASSETS FROM AND
AFTER THE EFFECTIVE TIME (EVEN THOUGH DUE IN WHOLE OR IN PART TO
SELLER'S NEGLIGENCE). BUYER AGREES TO ASSUME AND PAY, PERFORM,
FULFILL AND DISCHARGE ALL ASSUMED OBLIGATIONS, AND AGREES TO
INDEMNIFY, DEFEND AND HOLD SELLER HARMLESS FROM AND AGAINST ANY
AND ALL CLAIMS, LOSSES, DAMAGES, COSTS, EXPENSES, CAUSES OF
ACTION OR JUDGMENTS OF ANY KIND OR CHARACTER WITH RESPECT TO ALL
LIABILITIES AND OBLIGATIONS OR ALLEGED OR THREATENED LIABILITIES
AND OBLIGATIONS ATTRIBUTABLE TO OR ARISING OUT OF THE ASSUMED
OBLIGATIONS, INCLUDING, WITHOUT LIMITATION, ANY INTEREST,
PENALTY, REASONABLE ATTORNEY'S FEES AND OTHER COSTS AND EXPENSES
INCURRED IN CONNECTION THEREWITH OR THE DEFENSE THEREOF. TO THE
EXTENT NOT INCLUDED IN ASSUMED OBLIGATIONS AND SUBJECT TO THE
OTHER PROVISIONS HEREIN, SELLER AGREES TO PAY, PERFORM, FULFILL
AND DISCHARGE ALL COSTS, EXPENSES AND LIABILITIES INCURRED BY
SELLER WITH RESPECT TO THE OWNERSHIP OR OPERATION OF SELLER'S
INTEREST IN THE ASSETS AND ACCRUING PRIOR TO THE EFFECTIVE TIME
EVEN THOUGH ASSERTED AFTER THE EFFECTIVE TIME, AND AGREES TO
INDEMNIFY, DEFEND AND HOLD BUYER HARMLESS FROM AND AGAINST ANY
AND ALL CLAIMS, LOSSES, DAMAGES, COSTS, EXPENSES, CAUSES OF
ACTION OR JUDGMENTS OF ANY KIND OR CHARACTER WITH RESPECT TO ALL
LIABILITIES AND OBLIGATIONS OR ALLEGED OR THREATENED LIABILITIES
AND OBLIGATIONS ATTRIBUTABLE TO OR ARISING OUT OF SUCH
OBLIGATIONS OF SELLER, INCLUDING, WITHOUT LIMITATION, ANY
INTEREST, PENALTY, REASONABLE ATTORNEY'S FEES AND OTHER COSTS AND
EXPENSES INCURRED IN CONNECTION THEREWITH OR THE DEFENSE THEREOF.
FOR EXAMPLE, WITH RESPECT TO OPERATIONS COMMITTED TO BY SELLER
AND COMMENCED PRIOR TO THE EFFECTIVE TIME, BUT NOT COMPLETED
UNTIL AFTER THE EFFECTIVE TIME, THE COSTS ACCRUING WITH RESPECT
THERETO PRIOR TO THE EFFECTIVE TIME SHALL BE THE OBLIGATION OF
SELLER AND THE COSTS ACCRUING WITH RESPECT THERETO AFTER THE
EFFECTIVE TIME SHALL BE THE OBLIGATION OF BUYER. WITHOUT
LIMITING THE PARTIES' RESPECTIVE REPRESENTATIONS IN
SECTIONS 4.1(f) AND 5.1(f) HEREOF, EACH PARTY HEREBY AGREES TO
INDEMNIFY AND HOLD THE OTHER HARMLESS FROM AND AGAINST ANY CLAIM
FOR A BROKERAGE OR FINDER'S FEE OR COMMISSION IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
TO THE EXTENT SUCH CLAIM ARISES FROM OR, IS ATTRIBUTABLE TO THE
ACTIONS OF SUCH INDEMNIFYING PARTY, INCLUDING, WITHOUT
LIMITATION, ANY AND ALL LOSSES, DAMAGES, ATTORNEY'S FEES, COSTS
AND EXPENSES OF ANY KIND OR CHARACTER ARISING OUT OF OR INCURRED
IN CONNECTION WITH ANY SUCH CLAIM OR DEFENDING AGAINST THE SAME.
15.5 FURTHER ASSURANCES AND RECORDS
29
(a) After the Closing, each of the parties will
execute, acknowledge and deliver to the other such further
instruments, and take such other action, as may be reasonably
requested in order to more effectively assure to said party all
of the respective properties, rights, titles, interests, estates,
and privileges intended to be assigned, delivered or inuring to
the benefit of such party in consummation of the transactions
contemplated hereby.
(b) Buyer agrees to maintain the files and records of
Seller that are acquired pursuant to this Agreement until the
tenth (10th) anniversary of the Closing Date (or for such longer
period of time as Seller shall advise Buyer is necessary in order
to have records available with respect to open years for tax
audit purposes), or, if any of such records pertain to any claim
or dispute pending on the tenth (10th) anniversary of the Closing
Date, Buyer shall maintain any of such records designated by
Seller until such claim or dispute is finally resolved and the
time for all appeals has been exhausted. Buyer shall provide
Seller and its representatives reasonable access to and the right
to copy such files and records for the purposes of (i) preparing
and delivering any accounting provided for under this Agreement
and adjusting, prorating and settling the charges and credits
provided for in this Agreement, (ii) complying with any law, rule
or regulation affecting Seller's interest in the Assets prior to
the Closing Date, (iii) preparing any audit of the books and
records of any third party relating to Seller's interest in the
Assets prior to the Closing Date, or responding to any audit
prepared by such third parties, (iv) preparing tax returns, (v)
responding to or disputing any tax audit or (vi) asserting,
defending or otherwise dealing with any claim or dispute under
this Agreement. In no event shall Buyer destroy any such files
and records without giving Seller sixty (60) days advance written
notice thereof and the opportunity, at Seller's expense, to
obtain such files and records prior to their destruction.
(c) Buyer agrees that, as soon as practicable after
the Closing, it will remove or cause to be removed the names and
marks used by Seller and all variations and derivatives thereof
and logos relating thereto from the Assets and will not
thereafter make any use whatsoever of such names, marks and
logos.
(d) To the extent not obtained or satisfied as of
Closing, Seller agrees to continue to use reasonable efforts, but
without any obligation to incur any cost or expense in connection
therewith, and to cooperate with Buyer's efforts to obtain for
Buyer (i) access to files, records and data relating to the
Assets in the possession of third parties; (ii) access to xxxxx
constituting a part of the Assets operated by third parties for
purposes of inspecting same; and (iii) the waiver of
confidentiality or other restrictions on the review by and/or
transfer to Buyer of seismic, geophysical, engineering or other
data pertaining to the Subject Interests.
15.6 LIMITATIONS. The express representations and warranties of
Seller contained in this Agreement (i) are made by Seller solely
with respect to Assets owned by Seller, (ii) are enforceable
against the owner of the respective Assets and are not a joint or
collective liability and (iii) are exclusive and are in lieu of
all other representations and warranties, express, implied or
statutory, including without limitation any representation or
warranty with respect to title to the Assets or the quality,
quantity or volume of the reserves of oil, gas or other
Hydrocarbons in or under the Subject Interests and unless
specifically provided otherwise in this Agreement, such express
representations and warranties of Seller shall terminate at
Closing and be of no further force and effect. The items
30
of personal property, equipment, fixtures and appurtenances
conveyed as part of the Assets are sold hereunder "AS IS, WHERE
IS" and no warranties or representations of any kind or
character, express or implied, including any warranty of quality,
merchantability, fitness for a particular purpose or condition,
are given by or on behalf of Seller. THE WARRANTIES OF SELLER
CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, AND BUYER HEREBY WAIVES ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR CONDITION. BUYER ACKNOWLEDGES THAT SELLER HAS NOT
MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, AND
BUYER HEREBY EXPRESSLY WAIVES, ANY REPRESENTATION OR WARRANTY,
EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE RELATING
TO (a) PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE
RATES, GAS BALANCING INFORMATION OR THE QUALITY, QUANTITY OR
VOLUME OF THE RESERVES OF HYDROCARBONS, IF ANY, ATTRIBUTABLE TO
THE ASSETS, (b) THE ACCURACY, COMPLETENESS OR MATERIALITY OF ANY
INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL) NOW,
HERETOFORE OR HEREAFTER FURNISHED TO BUYER BY OR ON BEHALF OF
SELLER, AND (c) THE ENVIRONMENTAL CONDITION OF THE ASSETS.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT,
SELLER EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER HEREBY WAIVES,
AS TO PERSONAL, MOVABLE AND IMMOVABLE PROPERTY, EQUIPMENT AND
FIXTURES CONSTITUTING A PART OF THE ASSETS (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 OR RETURN OF THE
PURCHASE PRICE, (v) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM
FROM VICES OR DEFECTS, WHETHER KNOWN OR UNKNOWN, AND (vi) ANY AND
ALL IMPLIED WARRANTIES EXISTING UNDER APPLICABLE LAW AND (vii)
ANY IMPLIED OR EXPRESS WARRANTY REGARDING ENVIRONMENTAL LAWS, THE
RELEASE OF MATERIALS INTO THE ENVIRONMENT OR PROTECTION OF THE
ENVIRONMENT OR HEALTH, IT BEING THE EXPRESS INTENTION OF BUYER
AND SELLER THAT (EXCEPT TO THE EXTENT EXPRESSLY PROVIDED IN
ARTICLE IV) THE REAL PROPERTY, IMMOVABLE PROPERTY, MOVABLE
PROPERTY, EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND PERSONAL
PROPERTY SHALL BE CONVEYED TO BUYER AS IS AND IN THEIR PRESENT
CONDITION AND STATE OF REPAIR, AND BUYER REPRESENTS TO SELLER
THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS WITH
RESPECT TO THE REAL PROPERTY, IMMOVABLE PROPERTY, MOVABLE
PROPERTY, EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND PERSONAL
PROPERTY AS BUYER DEEMS APPROPRIATE AND BUYER WILL ACCEPT THE
REAL PROPERTY, IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT,
INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY AS IS, IN
THEIR PRESENT CONDITION AND STATE OF REPAIR, IT BEING THE EXPRESS
INTENTION OF BOTH BUYER AND SELLER THAT THE PERSONAL PROPERTY,
EQUIPMENT AND FIXTURES INCLUDED WITHIN THE ASSETS ARE HEREBY
CONVEYED TO BUYER IN
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THEIR PRESENT CONDITION AND STATE OF REPAIR, "AS IS" AND "WHERE
IS" WITH ALL FAULTS, AND THAT BUYER HAS MADE OR CAUSED TO BE MADE
SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE. SELLER AND BUYER
AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE
EFFECTIVE, THE DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED IN
THIS SECTION ARE "CONSPICUOUS" DISCLAIMERS FOR THE PURPOSES OF
ANY APPLICABLE LAW, RULE OR ORDER. To the maximum extent
permitted by law, Buyer waives all provisions of the Texas
Deceptive Trade Practices Act, Chapter 17, Texas Business and
Commerce Code (other than Section 17.555 thereof) and, to the
extent permitted by law, similar such provisions in like Acts in
all other applicable jurisdictions, insofar as the provisions of
such act may be applicable to this Agreement or the transactions
contemplated hereby. To evidence its ability to grant such
waiver, Buyer hereby represents and warrants to Seller that the
Buyer (i) is seeking or acquiring, by purchase or lease, goods or
services for commercial or business use, (ii) has assets of $5
million or more according to its most recent financial statement
prepared in accordance with GAAP, (iii) has knowledge and
experience in financial and business matters that enable it to
evaluate the merits and risks of the transaction contemplated
hereby and (iv) is not in a significantly disparate bargaining
position. Seller makes no representation or warranty, express or
implied with respect to whether any of the Subject Interests are
qualified for, or whether Buyer might be qualified to take, tax
credits under Section 29 of the Internal Revenue Code with
respect to production from the Subject Interests.
15.7 SURVIVAL. No representation, warranty, covenant or
agreement made herein shall survive the Closing except as
provided in this Section 15.7. It is expressly agreed that the
terms and provisions of Articles I, III, IV, V, VIII, XII, XIII,
and XV and Sections 6.3, 6.4, 7.1, Sections 14.1 through 14.7
and Section 14.9, shall survive the Closing. The terms and
provisions of Section 14.8 shall expire according to its terms.
15.8 GAS IMBALANCE: Buyer acknowledges and agrees to the
following regarding gas imbalances as of the Effective Time on
any of the Assets to be transferred pursuant to this Agreement:
(a) GAS UNDERPRODUCTION: In the event Seller is
underproduced as to any xxxxx located on the Lands or if any
amounts are owed Seller with respect to any pipeline,
transportation or processing imbalances, Buyer agrees not to hold
Seller liable for such underproduction or such amounts. Seller,
however, agrees to assign to Buyer all of its contractual rights
to make up such underproduction, and to recover all amounts owed.
(b) GAS OVERPRODUCTION: In the event Seller is overproduced as
to any xxxxx located on the Lands or if any amounts are due from
Seller with respect to any pipeline, transportation or processing
imbalances, Buyer acknowledges and agrees that its share of gas
from any such overproduced xxxxx may at some point be curtailed
by underproduced working interest owners and it may be required
to satisfy, in kind or in value, such third party transporters
and processors for such imbalances. Seller shall not be liable
to Buyer in the event such curtailment occurs or satisfaction is
required.
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(c) GAS BALANCING STATEMENTS: Seller has furnished
Buyer with statements in its possession showing the most current
status of the before mentioned imbalances and these statements
are summarized in EXHIBIT M.
(d) FUTURE LIABILITY: From and after the Effective
Time, any and all benefits, liabilities associated with such
imbalance accounts shall accrue to and be the responsibility of
Buyer. Buyer shall assume Seller's overproduced or underproduced
position in the Assets as of the Effective Time, including but
not limited to Buyer's responsibility for payment of royalties on
the volume of such gas which Seller took in excess of its
entitlement and any obligation to balance whether in cash or in
kind. Except as provided in Section 17.9(e), there shall be no
adjustment to the Purchase Price as a result of the imbalance
accounts attributable to the Assets.
(e) ADJUSTMENT TO PURCHASE PRICE: In the event either
Seller or Buyer determines no later than sixty (60) days after
the Closing Date that a "material" error was made with the
imbalance account set forth in EXHIBIT M or that a material
change (either increase or decrease) exists between the imbalance
represented in EXHIBIT M and the imbalance as of the Effective
Time in such an account, the adjustments under Section 3.2,
shall be adjusted to compensate for the economic impact of the
error or change. Such an error or change is material only if the
total difference in the value of the imbalance accounts as set
forth in EXHIBIT M and the correct or changed imbalance accounts
exceeds ten percent (10%) of the value of the imbalance accounts
as set forth in EXHIBIT M, but in no event less than $100,000.00.
For the purposes of this Section only, the value of such an
imbalance account adjustment shall be calculated by multiplying
the applicable volume of gas by $2.50 per MMBtu which shall
represent the value of such imbalance and then making appropriate
adjustments for royalties and severance taxes and similar taxes,
if any, actually paid on such amount or which will be required to
be paid. The Purchase Price shall be reduced or increased by the
adjustments for such gas imbalance changes on the Effective Time
for material errors discovered prior to the Effective Time.
Adjustments for material errors discovered after the Closing Date
shall be included in a final settlement statement as provided
herein.
15.9 SIGNATURE OF KLT INC. This Agreement for Purchase and
Sale is executed by KLT Inc. solely for the purposes of Article
XIV and 15.4 and for no other purpose.
15.10 NOTICES. All notices authorized or required by
any of the provisions of this Agreement, unless otherwise
specifically provided, shall be in writing and delivered in
person or by United States mail, courier service, telegram,
telex, telecopier, or any other form of facsimile, postage or
charges prepaid, and addressed to the parties at the addresses
set forth below:
If to Seller: Apache Canyon Gas, L.L.C.
00000 Xxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
Attention: President
33
If to Buyer: Evergreen Resources, Inc.
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
Any party may, by written notice so delivered to the other,
change the address to which delivery shall thereafter be made.
15.11 INCIDENTAL EXPENSES. Buyer shall bear and pay any
and all Federal, State or local Transfer Taxes as defined in
Section 12.2(b) hereof incident to the transfer, assignment or
other conveyance of the Assets to Buyer. Each party shall bear
its own respective expenses incurred in connection with the
Closing of this transaction, including its own consultants' fees,
attorneys' fees, accountants' fees, and other similar costs and
expenses.
15.12 ENTIRE AGREEMENT. Except for the Confidentiality
Agreement referenced in Section 6.3, this Agreement embodies the
entire agreement between the parties (superseding all prior
agreements, arrangements and understandings related to the
subject matter hereof), and may be supplemented, altered,
amended, modified or revoked by writing only, signed by all of
the parties hereto. No supplement, amendment, modification,
waiver or termination of this Agreement shall be binding unless
in writing and executed by both parties hereto. The headings
herein are for convenience only and shall have no significance in
the interpretation hereof.
15.13 GOVERNING LAW. Except for matters of title to the
Subject Interests or their transfer, which shall be governed by
the law of their situs, this Agreement shall be governed by and
interpreted in accordance with the laws of the State of Colorado
without regard for any conflict of laws or choice of laws
principles that would permit or require the application of the
laws of any other jurisdiction.
15.14 EXHIBITS. All Exhibits and Schedules hereto which
are referred to herein are hereby made a part hereof and
incorporated herein by reference.
15.15 CERTAIN TERMS. As used in this Agreement, the term
"knowledge" means actual knowledge of any fact, circumstance or
condition by the officers or management employees of the party
involved at a supervisory or higher level, but does not include
(i) knowledge imputed to the party involved by reason of
knowledge of or notice to any person, firm or corporation other
than its officers or employees at a supervisory or higher level
or (ii) knowledge deemed to have been constructively given by
reason of any filing, registration or recording of any document
or instrument in any public record or with any governmental
entity. As used in this Agreement, the term "day" means any
calendar day, and the term "business day" means any day exclusive
of Saturdays, Sundays and national holidays.
15.16 INTERIM ACCOUNTING, PAYMENT AND COLLECTION
SERVICES. Buyer and Seller agree to cooperate to transfer
financial accounting services for the Assets as promptly as
practicable after the Effective Time.
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15.17 COUNTERPARTS. This Agreement may be executed in
any number of counterparts, and each and every counterpart shall
be deemed for all purposes one (1) agreement.
15.18 WAIVER. Any of the terms, provisions, covenants,
representations, warranties or conditions hereof may be waived,
only by a written instrument executed by the party waiving
compliance. Except as otherwise expressly provided in this
Agreement, the failure of any party at any time or times to
require performance of any provision hereof shall in no manner
affect such party's right to enforce the same. No waiver by any
party of any condition, or of the breach of any term, provision,
covenant, representation or warranty contained in this Agreement,
whether by conduct or otherwise, in any one or more instances,
shall be deemed to be or construed as a further or continuing
waiver of any such condition or breach or a waiver of any other
condition or of the breach of any other term, provision,
covenant, representation or warranty.
15.19 BINDING, EFFECT; ASSIGNMENT. All the terms,
provisions, covenants, representations, warranties and conditions
of this Agreement shall be binding upon and inure to the benefit
of and be enforceable by the parties hereto and their respective
successors; but this Agreement and the rights and obligations
hereunder shall not be assignable or delegable by Buyer without
the express written consent of Seller. Any assignment or
delegation without such consent will be void. In addition to its
rights under Section 10.1(g), Seller shall have the right to
transfer its rights and obligations hereunder without Buyer's
consent so long as such transferee is capable of delivering to
Buyer the same title Seller is capable of delivering and Seller
remains liable for its warranties and representation made
hereunder to the same extent Seller would have been liable had
such transfer not been made.
15.20 NO RECORDATION. Without limiting any party's
right to file suit to enforce its rights under this Agreement and
except as to those portions of this Agreement set forth in the
Assignment, Xxxx of Sale and Conveyance, EXHIBIT C, Buyer and
Seller expressly covenant and agree not to record or place of
record this Agreement or any copy or memorandum hereof.
15.21 INDEPENDENT INVESTIGATION. Buyer represents and
acknowledges that it is knowledgeable of the oil and gas business
and of the usual and customary practices of producers such as
Seller and that it has had access to the Assets, the offices and
employees of Seller, and the books, records and files of Seller
relating to the Assets and in making the decision to enter into
this Agreement and consummate the transactions contemplated
hereby, Buyer has relied solely on the basis of its own
independent due diligence investigation of the Assets and upon
the representations and warranties made in Article IV.
Accordingly, Buyer acknowledges that Seller has not made, and
Seller hereby expressly disclaims and negates any representation
or warranty (other than those express representations and
warranties made in Article IV), express, implied, at common law,
by statute or otherwise, relating to the Assets.
15.22 TERMINATION. In the event the total amount of
adjustments to the Purchase Price under Sections 7.2 and 14.4
exceeds twenty-five percent (25%) of the Purchase Price, either
party may terminate this Agreement by notifying the other party
of its intention to terminate on or before the Closing Date and
in the event of such termination, neither Seller nor Buyer shall
be under any
35
obligation to the other with regard to the purchase and sale of
any of the Assets or Subject Interests, such termination to be
without liability to either party.
15.23 COSTS. Each party shall pay its own costs,
including fees and expenses of its own counsel and accountants,
in connection with the purchase and sale of the Properties.
Seller shall discharge all Encumbrances other than the Permitted
Encumbrances. Seller shall pay all sales and other transfer
taxes, if any, incurred in connection with the transaction
contemplated by this Agreement. Buyer shall pay all documentary,
filing and recording fees.
15.24 NO THIRD PARTY BENEFICIARIES. Nothing in this
Agreement shall entitle any Person, other than the parties hereto
or their respective permitted successors and assigns, to any
claim, cause of action, remedy or right of any kind.
15.25 LIABILITIES OF THE PARTIES. The liability of the
parties shall be several, not joint or collective. Each party
shall be responsible only for its obligations. It is not the
intention of the parties to create, nor shall this agreement be
construed as creating, a mining or other partnership, joint
venture, agency relationship or association, or to render the
parties liable as partners, co-venturers, or principals. In
their relations with each other under this agreement, the parties
shall not be considered fiduciaries or to have established a
confidential relationship but rather shall be free to act on an
arm's-length basis in accordance with their own respective
interest.
15.26 JURISDICTION AND VENUE. ALL ACTIONS OR
PROCEEDINGS WITH RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN
CONNECTION WITH, OUT OF, RELATED TO, OR FROM THIS AGREEMENT MAY
BE LITIGATED ON IN STATE OR FEDERAL COURTS IN COLORADO. BUYER
AND SELLER HEREBY SUBMIT TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN COLORADO, AND EACH HEREBY WAIVES ANY
RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR
VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE OTHER.
15.27 WAIVER OR RIGHTS TO JURY TRIAL. BUYER AND SELLER
HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY, AND
UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT
RELATES TO OR ARISES OUT OF ANY OF THIS AGREEMENT OR OTHERWISE
WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE
MATERIAL INDUCEMENT FOR SELLER ENTERING INTO THIS AGREEMENT.
ARTICLE XVI
CASUALTY LOSS AND CONDEMNATION
16.1 NO TERMINATION.
(a) Buyer shall assume all risk of loss with
respect to, and any change in the condition of, the Assets from
the Effective Time until Closing for production of oil, gas
and/or other
36
hydrocarbons through depletion (including the watering-out of any
well, collapsed casing or sand infiltration of any well) and the
depreciation of personal property due to ordinary wear and tear.
(b) If after the Effective Time and prior to the
Closing any part of the Assets shall be destroyed by fire or
other casualty or if any part of the Assets shall be taken in
condemnation or 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 destruction, taking or proceeding or the
threat thereof.
16.2 PROCEEDS AND AWARDS. In the event of any loss
described in Section 16.1(b), Seller shall either (i) at the
Closing pay to Buyer all sums paid to Seller by reason of such
destruction less any costs and expenses incurred by Seller in
collecting same, or (ii) commit, use, or apply such sums (less
any costs and expenses incurred by Seller in collecting same) to
repair, restore or replace such damaged or taken Assets. To the
extent the insurance proceeds, condemnation awards or other
payments are not committed, used or applied by Seller prior to
the Closing Date to repair, restore or replace such damaged or
taken Assets, Seller shall at the Closing pay to Buyer all sums
paid to Seller by reason of such destruction or taking, less any
costs and expenses incurred by Seller in collecting same. In
addition and to the extent such proceeds, awards or payments have
not been committed, used or applied by Seller in repair,
restoration or replacement as aforesaid, Seller shall assign,
transfer and set over unto Buyer, without recourse against
Seller, all of the right, title and interest of Seller in and to
any claims against third parties with respect to the event or
circumstance causing such loss and any unpaid insurance proceeds,
condemnation awards or other payments arising out of such
destruction or taking, less any costs and expenses incurred by
Seller in collecting same. Any such funds which have been
committed by Seller for repair, restoration or replacement as
aforesaid shall be paid by Seller for such purposes or, at
Seller's option, delivered to Buyer upon Seller's receipt from
Buyer of adequate assurance and indemnity from Buyer that Seller
shall incur no liability or expense as a result of such
commitment. Notwithstanding anything to the contrary in this
Section 16.2, Seller shall not be obligated to carry or maintain,
and shall have no obligation or liability to Buyer for its
failure to carry or maintain, any insurance coverage with respect
to any of the Assets, except as required by Section 9.1 (b).
ARTICLE XVII
DEFAULT AND REMEDIES
17.1 SELLER'S REMEDIES. Upon failure of Buyer to comply herewith
by the Closing Date, as it may be extended in accordance
herewith, Seller, at its sole option, may (i) enforce whatever
legal or equitable rights may be appropriate and applicable in
Seller's sole discretion or (ii) terminate this Agreement, all
other remedies (except as expressly retained in Section 17.3)
being expressly waived by Seller. Upon failure of Buyer to pay
the Installment Payment when due (including extensions, if any,
under the Grace Period), Seller shall have the right to exercise
its rights under the Note and Mortgage and to exercise any other
rights to which it may be entitled under applicable law. In
addition, and not in lieu of any other remedies, Seller has the
right to retain, free and clear of any claim by Buyer, all
amounts previously paid by Buyer to Seller, including, without
limitation, the Initial Payment, proceeds from the Production
Payment and all consideration, if any, paid in connection with
the Grace Period.
37
17.2 BUYER'S REMEDIES. Upon failure of Seller to comply
herewith by the Closing Date, as it may be extended in accordance
herewith, Buyer, at its sole option and as its sole and exclusive
remedy, may (i) bring an action for specific performance of this
Agreement or (ii) terminate this Agreement , all other remedies
(except as expressly retained in Section 17.3) being expressly
waived by Buyer.
17.3 OTHER REMEDIES. Notwithstanding the foregoing,
termination of this Agreement shall not prejudice or impair
Buyer's obligations under Sections 6.3 (and the Confidentiality
Agreement referenced therein), 6.4 and 9.2(b) and such other
portions of this Agreement as are necessary to the enforcement
and construction of Sections 6.3, 6.4 and 9.2(b). The prevailing
party in any legal proceeding brought under or to enforce this
Agreement shall be additionally entitled to recover court costs
and reasonable attorney's fees from the non-prevailing party.
17.4 NOTICE. Notice of termination under this Article
XVII or under Section 15.22 shall be in writing and given as
provided in Section 15.10. The party receiving the notice shall
have 30 days from receipt of such notice to cure of remedy the
circumstance giving rise to the termination right to the
satisfaction of the party delivering such notice.
[signature page follows]
38
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their duly authorized officers as of the date
first above written.
APACHE CANYON GAS, L.L.C.,
a Delaware limited liability company
By: KLT Inc., as designated director of KLT Gas,
Inc., sole member
By: /s/Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx, III
Title: Managing Director
"SELLER"
EVERGREEN RESOURCES, INC.,
a Colorado corporation
By: /s/Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: President and CEO
`BUYER"
KLT INC.
a Missouri corporation
Executed solely for the purpose of ARTICLE XIV
and Section 15.4
By: /s/Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx, III
Title: Managing Director
39
