SALE AND PURCHASE AGREEMENT
THIS SALE AND PURCHASE AGREEMENT (this "Agreement") is made and entered
as of the 16th day of June, 1997, by and between XXXXXXX DRILLING
CORPORATION, an Oklahoma corporation ("Seller"), and RAMCO-NYL 1987 LIMITED
PARTNERSHIP, a Texas limited partnership ("Buyer").
WITNESSETH THAT:
WHEREAS, Seller is the owner of the Interests, as hereinafter defined);
and
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller the Interests on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereinafter expressed, it is hereby agreed as
follows:
ARTICLE 1
INTERESTS
1.1 INTERESTS DEFINED. As used herein, the term "Interests"
means the aggregate of all right, title and interest owned by Seller in, to
and under the following:
(a) The oil and gas leases, the oil, gas and mineral leases,
and the licenses, permits and orders (the "Leases") which authorize or relate
to the exploration for and production of oil, gas and other minerals from the
lands described in Exhibit A (the "Land");
(b) All xxxxx, personal property, fixtures, gathering
systems (including, without limitation, the Camelot System located in Xxxxx
County, Oklahoma), inventory, equipment and improvements located on the
Leases or the Land, or used or obtained in connection with the ownership,
exploration, development or operation of the Leases or the Land, or the
production, sale, processing, treating, storing, gathering, transportation or
disposal of hydrocarbons, water or any other substances produced therefrom or
attributable thereto;
(c) All contracts, agreements, leases, licenses, easements,
rights under orders of regulatory authorities having jurisdiction with
respect to, and other properties and rights of every nature whatsoever in or
incident to the ownership, exploration, development, use or occupancy of the
Leases or the Land or any interest therein, or the production, sale,
processing, treating, storing, gathering, transportation or disposal of
hydrocarbons, water or any other substance produced therefrom or attributable
thereto, including, without limitation, all mineral, royalty, overriding
royalty, production payment, net profits and
other rights and interests in or to share in the proceeds from the sale of
production from the Leases or the Land, and all rights relating to gas
imbalances (including the right to balance in kind or by cash payment);
(d) All other oil and gas properties, rights and interests
of every nature whatsoever owned by Assignor, including, but not limited to,
undeveloped leasehold; provided, however, that properties not described in
Exhibit A may be excluded from the Interests by written notice given by Buyer
to Seller within a reasonable time after discovery of such properties by
Buyer, whether before of after the Closing; and
(e) All of the properties, interests and rights described in
(a) through (d) above as the same may be enlarged by the discharge of any
payments out of production or by the removal of any charges or encumbrances
to which any of said properties, interests or rights are subject; any and all
renewals and extensions of any of said properties, interests or rights; all
contracts and agreements supplemental to or amendatory of or in substitution
for the contracts and agreements described above; and all rights, titles and
interests accruing or attributable to the Leases by virtue of being included
in any unit.
1.2 EXCEPTION; RESERVATION. There is hereby excepted from the
Interests and reserved unto Seller (i) all accounts receivable accruing prior
to the Effective Time; (ii) all hydrocarbon production from or attributable
to the Interests with respect to all periods prior to the Effective Time,
including all proceeds attributable thereto and all hydrocarbons owned by
Assignor and in storage at the Effective Time; and (iii) any refunds or
additional revenues accruing to the Interests and any adjustments for
expenses paid by Assignor to the extent attributable to the period prior to
the Effective Time.
1.3 PROPERTY DEFINED. As used herein, the term "Property" shall
mean each individual well or unit scheduled separately on Exhibit A, together
with all of the Leases, personal property, fixtures, equipment and other
rights and interests related exclusively thereto.
ARTICLE 2
SALE AND PURCHASE OF THE INTERESTS
2.1 AGREEMENT FOR SALE AND PURCHASE; EFFECTIVE TIME. Seller
hereby agrees to sell to Buyer and Buyer hereby agrees to purchase from
Seller on the Closing Date (as hereinafter defined) the Interests. The
effective time of the sale and purchase of the Interests shall be 7:00 a.m.
local time (in each locality where the various items of the Interests are
located) on April 1, 1997 (the "Effective Time").
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2.2 PURCHASE PRICE. The purchase price for the Interests (the
"Purchase Price") shall be the sum of (i) $11,200,000 the "Base Price"), less
(ii) the Net Adjustment (as hereinafter defined). The Purchase Price shall
be paid by Buyer in immediately available funds at the Closing (as
hereinafter defined).
2.3 NET ADJUSTMENT. The Net Adjustment shall be the sum of the
adjustment amounts described in Sections 3.4 (Title Defects), Section 7.4
(Gas Imbalances), Section 7.5 (Disapproved Operations), Section 7.6
(Preferential Rights), Section 7.7 (Operations Subsequent to the Effective
Time), Section 8.5 (Environmental Defects) and Section 9.3 (Material Adverse
Changes).
2.6 AGREED VALUES. The Base Price has been allocated by the
parties among the various items of the Interests as set out in Exhibit A.
The amounts so allocated and are referred to herein as the "Agreed Values" of
such items of the Interests.
ARTICLE 3
TITLE EXAMINATION; ADJUSTMENTS
3.1 TITLE MATERIALS. From the date hereof to the Closing Date,
Seller shall provide Buyer full opportunity to examine the books, records and
files of Seller insofar as they pertain to the Interests. Seller makes no
warranty or representation, express or implied, with respect to the accuracy
or completeness of any title information, records or other data made
available to Buyer in connection with this Agreement.
3.2 TITLE DEFECTS; DEFENSIBLE TITLE.
(a) As used herein, the term "Title Defect" shall mean any
lien, claim, defect, encumbrance, security interest, burden or deficiency
such that Seller does not have Defensible Title (hereinafter defined), as
distinguished from technically marketable title, to any Property; provided,
no Permitted Encumbrance (hereinafter defined) shall constitute a Title
Defect.
(b) As used herein, the term "Defensible Title" shall mean
clear, unencumbered, uncontested, record title to a Property in Seller, such
that (i) after giving effect to existing spacing orders, operating
agreements, unit agreements, unitization orders and pooling designations, and
subject to the limitations, if any, described in Exhibit A, and after taking
into account all royalty interests, overriding royalty interests, net profit
interests, production payments and other burdens on production, Seller is
entitled to a share (expressed as a decimal) of all oil, gas and other
minerals produced from each well on such Property which is not less than the
Net Revenue Interest set out in Exhibit A in connection with the description
of such Property, (ii) Seller owns an undivided interest (expressed as a
decimal) equal to the
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Working Interest set out in Exhibit A in connection with the description of
such Property in and to all property and rights incident thereto, including
all rights in, to and under all agreements, leases, permits, easements,
licenses and orders in any way relating thereto, and in and to all xxxxx,
personal property, fixtures and improvements thereon, appurtenant thereto or
used or obtained in connection therewith or with the production or treatment
or sale or disposal of hydrocarbons or water produced therefrom or
attributable thereto, (iii) Seller is obligated for a fraction of the costs
relating to the exploration, development and operation of such Property no
greater than the Working Interest set out in Exhibit A in connection with the
description of such Property, and (iv) except as shown in Exhibit A, Seller's
interest in such Property and in the production therefrom is not subject to
being reduced by virtue of reversionary interests owned by third parties.
(c) As used herein, the term "Permitted Encumbrances" means
(i) matters described without material omission in any of the Exhibits or
Schedules attached hereto, (ii) royalties, overriding royalties, net profits
interests, production payments and other burdens on production which do not
reduce Seller's Net Revenue Interest in any Property to less than that
described in Exhibit A, (iii) liens for taxes, assessments, labor and
materials where payment is not due, (iv) operating agreements, unit
agreements, unitization and pooling designations and declarations, gathering
and transportation agreements, processing agreements, gas, oil and liquids
purchase, sale and exchange agreements, and other similar agreements which
are not required by the terms of this Agreement to be disclosed on any
Schedule hereto, provided (A) they contain terms and conditions customary in
the oil and gas industry, (B) they do not adversely affect or burden the
ownership or operation of the Interests affected thereby, (C) all amounts due
and payable by Seller thereunder have been paid, and (D) Seller is not in
material default thereunder, (v) regulatory authority of governmental
agencies not presently or previously violated, easements, surface leases and
rights, plat restrictions and similar encumbrances, provided that they do not
materially detract from the value, materially increase the cost of operation
of any of the Properties or otherwise adversely affect the operation thereof,
and (vi) liens, charges, encumbrances and irregularities in the chain of
title which, because of remoteness in or passage of time, statutory cure
periods, marketable title acts or other similar reasons, have not affected or
interrupted, and are not reasonably expected to affect or interrupt, the
ownership of Seller or its predecessors in or the receipt of production
revenues from the Properties affected thereby.
3.3 TITLE EXAMINATION; NOTICE OF DEFECTS.
(a) Promptly after execution of this Agreement, Buyer shall,
at Buyer's sole cost and expense, commence and pursue
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such examination of title to the Interests as Buyer deems necessary or
proper. Buyer will conclude its title review and give notice to Sellers of
any asserted Title Defects affecting the Interests not later than five (5)
business days prior to the date scheduled for the Closing in Section 12.1
hereof (the "Title Notice Date"). Each such notice shall include a brief
description of each Title Defect of which notice is being given, the action
required to cure such Title Defect and the proposed adjustment to the Base
Price by reason of the existence of such Title Defect. Buyer shall be deemed
to have waived any Title Defects existing with respect to the Interests
except to the extent such Title Defects are set out in a notice given on or
prior to the Title Notice Date.
(b) Seller shall have a period of three (3) business days
after the Title Notice Date to cure all or any portion of the Title Defects
described in any notice(s) of Title Defects properly given by Buyer prior to
such date. In the event Seller is unable or unwilling to cure any of the
asserted Title Defects prior to the expiration of each cure period, the
parties shall proceed in accordance with Section 3.4.
3.4 ADJUSTMENTS.
(a) If any uncured Title Defect is based on Buyer's notice
that Seller owns a Net Revenue Interest in any Property less than that shown
on Exhibit A with respect to such Property, then the Agreed Value of such
Property shall be reduced in the same proportion that the actual Net Revenue
Interest bears to the Net Revenue Interest shown therefor on Exhibit A and
the amount of such reduction shall constitute the approved adjustment amount
with respect to such Title Defect.
(b) If any uncured Title Defect involves a claim against or
uncertainty with respect to Seller's title to a particular Property, the
parties shall attempt to negotiate a mutually acceptable reduction in the
Agreed Value of the affected Property by reason of such defect. In the event
the parties agree on an appropriate reduction in the Agreed Value, such
amount shall constitute the principal amount of Buyer's approved claim with
respect to such Title Defect. If the parties are unable to agree on an
appropriate reduction and Buyer elects not to waive the Title Defect, then
Seller shall have the option of (i) proceeding to Closing with respect to
such Property (provided Buyer elects to accept such Property) but reducing
the Base Price by the Agreed Value of such Property, or (ii) excluding the
affected Property from the Interests and reducing the Base Price by the
Agreed Value thereof, or (iii) proceeding to Closing but directing the Buyer
to deposit in escrow pursuant to Section 3.5 the amount described in Section
3.5 with respect to the affected Property and resolving the outstanding Title
Defect after the Closing pursuant to the terms of such Section.
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(c) Notwithstanding the provisions of subsections (a) and
(b) above, Buyer shall not be entitled to any adjustment of the Purchase
Price at the Closing by reason of asserted Title Defects unless the sum of
all such claims approved pursuant to Section 3.4(a), agreed to by the parties
pursuant to Section 3.4(b), treated by as a reduction of the Base Price or
subject to being deposited in escrow pursuant to Section 3.4(b), exceeds the
sum of $50,000.
3.5 ESCROW FOR TITLE DEFECTS. In the event Seller desires
additional time to cure any Title Defect that Seller is unable to cure prior
to Closing, Seller shall so notify Buyer not later than one (1) business day
prior to the Closing Date. Such notice shall constitute the agreement of
Seller to use its reasonable best efforts following the Closing to cure the
Title Defect(s) specified in such notice. With respect to each Property
specified in such notice, at the Closing Buyer shall either (i) waive the
Defect(s) affecting such Property, or (ii) deposit in escrow with a mutually
acceptable escrow agent (a bank or trust company having an office in Tulsa,
Oklahoma) the Agreed Value of such Property, plus or minus the amount of any
Closing adjustments relating to such Property. Seller shall deposit with the
escrow agent a properly executed and acknowledged Assignment, Conveyance and
Xxxx of Sale, in the form attached hereto as Exhibit B, covering each
Property for which the asserted Defect(s) are not waived and the prescribed
amount is deposited in escrow by Buyer. Seller shall have a period of thirty
(30) days after the Closing to cure the specified Title Defect(s) affecting
each such Property, and upon concurrence by Buyer that the required curative
action has been completed with respect to any Property, Seller and Buyer
shall jointly direct the escrow agent to distribute to Seller the amount
deposited in escrow with respect to such Property, and to Buyer the
Assignment covering such Property. Any adjustment items arising after the
Closing Date with respect to such Property promptly shall be accounted for
between Seller and Buyer. The escrow agreement shall direct the escrow agent
to return to Buyer the entire amount deposited in escrow with respect to any
Property, and to Seller the Assignment covering any Property, for which a
joint notice of distribution is not received by the escrow agent by the day
that is thirty-five (35) days after the Closing Date, whereupon the escrow
shall be terminated. Any remaining disagreement between the parties with
respect to the exclusion of or deferred closing with respect to such
Properties shall be resolved between Seller and Buyer without involvement of
the escrow agent. All fees and expenses of the escrow agent shall be borne
and paid equally by Seller and Buyer; provided, however, that if either party
makes any claim or assertion that extends the involvement of the escrow agent
beyond the thirty-five (35) day period hereinabove described, such party
alone shall bear and pay all fees and expenses of the escrow agent thereafter
incurred.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
4.1 ORGANIZATION; AUTHORITY TO CONDUCT BUSINESS. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, and is duly qualified as a foreign
corporation and in good standing under the laws of each state where
Properties are located, except to the extent failure to so qualify is not
required under the laws of any such state and Seller furnishes to Buyer an
opinion of counsel to that effect from an attorney licensed to practice law
in such state. Seller has the power and authority under its corporate
charter and applicable law to own and use its properties and to transact the
business in which it is engaged, and holds all franchises, licenses and
permits necessary and required therefor.
4.2 AGREEMENT AUTHORIZED; BINDING EFFECT. This Agreement has
been duly authorized, executed and delivered by Seller and all requisite
corporate action has been taken to authorize the execution hereof, the
transactions contemplated hereby and all things necessary or desirable in
order to accomplish the sale of the Interests, and Seller otherwise has good
right and lawful authority to consummate the same. This Agreement
constitutes the valid and binding agreement of Seller, enforceable against
Seller in accordance with its terms, and all instruments required hereunder
to be executed and delivered by Seller at the Closing will constitute valid
and binding agreements of Seller, enforceable against Seller in accordance
with their terms.
4.3 STATUS OF PROPERTIES; NO LIENS. Seller has not since the
Effective Time made any assignment, conveyance or encumbrance of the
Interests. To Seller's knowledge, (i) the Leases to which production has been
attributed for purposes of calculating the working interests and net revenue
interests in Exhibit A are in full force and effect, have not been cancelled
or terminated, and no basis exists for the assertion of any such claim, and
(ii) the Interests are not subject to or burdened by any mortgage, security
interest or other lien, and no basis exists for the assertion of any such
lien.
4.4 BROKERS AND FINDERS. Seller has incurred no liability,
contingent or otherwise, for brokers' or finders' fees in respect of this
transaction for which Buyer shall have any responsibility whatsoever.
4.5 COMPLIANCE WITH AGREEMENTS AND LAWS. No default exists under
any of the terms and provisions, express or implied, of the Leases or of any
material agreement, contract or commitment to which Seller is a party or to
which any part of the Interests is
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subject, and Seller has not received any notice of any claim of such default.
All xxxxx included in the Interests have been drilled, completed and
operated, and all production therefrom has been accounted for and paid to the
persons entitled thereto, and the Properties have been operated, in
substantial compliance with all applicable Federal, Indian, state and local
laws and applicable rules and regulations of the Federal, Indian, state and
local regulatory authorities having jurisdiction thereof.
4.6 SALE OF PRODUCTION. Except as disclosed in Schedule 4.6,
Seller is not obligated by virtue of any prepayment made under any production
sales contract or any other contract containing a take-or-pay clause, or
under any similar arrangement, to deliver oil, gas or other minerals produced
from or allocated to any of the Properties at any time after the Effective
Time without receiving full payment therefor at the time of delivery. Except
for routine suspense on new xxxxx, proceeds from the sale of oil and gas from
the Properties are being received by Seller in a timely manner and are not
being held in suspense for any reason. Seller has described in Schedule 4.6
and made available to Buyer for examination all agreements having a term
extending beyond August 1, 1997 (other than agreements terminable upon less
than sixty (60) days' notice) pursuant to which hydrocarbons produced from
the Properties are sold, transported, processed or otherwise disposed of or
marketed.
4.7 PRODUCTION AND AD VALOREM TAXES. All ad valorem, property,
production, severance and similar taxes based on or measured by the ownership
of property or the production or removal of hydrocarbons or the receipt of
proceeds therefrom have been timely paid and all required returns and reports
related thereto filed.
4.8 MATERIAL EXECUTORY CONTRACTS RELATING TO THE INTERESTS.
Except for operating agreements, gas purchase and sale contracts and similar
operating and disposition of production contracts containing terms and
provisions reasonably customary in the industry, or as disclosed in Schedule
4.8, there are no material contracts or agreements affecting the Interests
for which Buyer will have any responsibility or liability after the Closing.
To Seller's knowledge, there are no express provisions under any Lease or
other agreement which the require the drilling of any well or the conduct of
any other operations involving a material capital expenditure to earn or
continue to own any of the Interests.
4.9 CLAIMS OR LITIGATION. Except as disclosed in Schedule 4.9,
there is neither any suit, action or other proceeding pending before any
court or governmental agency nor, to the knowledge of Seller, any claim,
dispute, suit, action or other proceeding threatened against Seller or any of
the Interests or any third party which might result in the impairment or loss
of
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Seller's title to any of the Interests or the value thereof, or increase
the cost of operation thereof.
4.10 EQUIPMENT AND OFF-LEASE FACILITIES. With the exception of
the real and personal property described in Schedule 4.10, all of which is
being retained by Seller, the Interests include and there will be conveyed to
Buyer at the Closing all property, equipment, easements, rights and
facilities utilized in connection with the operation of the Interests at the
Effective Time, and there are no properties, equipment, easements, rights or
facilities necessary for the continued operation of the Interests which are
not included in the Interests.
4.11 OPERATIONS. No operations of the types prohibited by Section
6.2 hereof have been conducted since the Effective Time or are now being
conducted.
4.12 CONSUMMATION OF TRANSACTIONS. The consummation of the
transactions contemplated hereby will not constitute a violation or breach
of, or an event of default under, any contract or agreement affecting the
Interests or constitute the happening of a condition upon which any other
party to such a contract may exercise any right or option which will
adversely affect any of the Interests.
4.13 STATUS OF XXXXX. Except as disclosed in Schedule 4.13, all
xxxxx included in the Interests, and all xxxxx located on the Land and not
included in the Interests but with respect to which Seller has, or after the
Closing Buyer may have, any liability to plug, either (i) are producing or
capable of producing hydrocarbons in commercial quantities without the
necessity of rework or recompletion operations, or (ii) are being utilized as
injection, water supply or disposal xxxxx and are properly permitted and
fully equipped for such operations, or (iii) have been properly plugged and
abandoned in accordance with all applicable rules and regulations of
governmental authorities having jurisdiction with respect thereto.
4.14 GAS IMBALANCES. Certain gas imbalances existed at the
Effective Time with respect to production from or attributable to certain of
the Properties. The best information concerning such imbalances available to
Seller as of the date of this Agreement is set forth on Schedule 4.14 and
such imbalances have been taken into account by Buyer in determining the
Purchase Price.
4.15 ENVIRONMENTAL CONDITIONS. Except as disclosed in Schedule
4.15, to Seller's knowledge the Properties are in compliance with the
environmental standards set out in Section 8.4.
4.16 NO RESTRICTIONS ON SEISMIC DATA. To Seller's knowledge,
except as provided in the Abbeville 3-D Participation
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Agreement (the "Abbeville Agreement"), no restrictions exist under any
contract, license or other agreement with respect to the transfer or
assignment by Seller to Buyer of any raw, processed or other seismic data
owned by or available to Seller with respect to the Interests or the
assignment by Seller to Buyer of the right to access and use any such data in
the possession of third parties. Seller agrees to use its best efforts to
obtain all consents or waivers required under the Abbeville Agreement in
order to permit the assignment to Buyer of all of Seller's rights thereunder,
including, without limitation, access to all raw, processed and interpretive
data heretofore obtained under the Abbeville Agreement to the same extent
presently available to Seller, and the right to participate in and receive
the benefit of future seismic operations thereunder to the same extent
presently available to Seller. In the event Seller is unable to obtain such
consents and waivers prior to the Closing, the Base Price shall be adjusted
downward at the Closing by the Agreed Value of the Abbeville Seismic data as
set out in Exhibit A; however, if within three (3) months after the Closing,
either Seller or Buyer is successful in obtaining such consents and waivers,
then upon receipt of same by Buyer in form and substance reasonably
satisfactory to Buyer, Buyer shall pay to Seller the Agreed Value of the
Abbeville Seismic data as set out in Exhibit A, less any actual out-of-pocket
costs or expenses incurred by Buyer in obtaining such consents and waivers.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1 ORGANIZATION. Buyer is a limited partnership, duly organized
and validly existing under the laws of the State of Texas.
5.2 AGREEMENT AUTHORIZED; BINDING EFFECT. This Agreement has
been duly authorized, executed and delivered by Buyer and all requisite
partnership action has been taken to authorize the execution hereof, the
transactions contemplated hereby and all things necessary or desirable in
order to accomplish the purchase of the Interests, and Buyer has all
necessary authority under its partnership agreement and other governing
documents and otherwise has good right and lawful authority to consummate the
same. This Agreement constitutes the valid and binding agreement of Buyer
enforceable against Buyer in accordance with its terms, and all instruments
required hereunder to be executed and delivered by Buyer at the Closing will
constitute valid and binding agreements of Buyer enforceable against Buyer in
accordance with their terms.
5.3 BROKERS AND FINDERS. Buyer has incurred no liability,
contingent or otherwise, for brokers' or finders' fees
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in respect of this transaction for which Seller shall have any responsibility
whatsoever.
ARTICLE 6
COVENANTS OF SELLER PENDING CLOSING
Seller covenants and agrees with Buyer that from and after the date
of this Agreement and until the Closing, Seller will conduct its business
subject to the following provisions and limitations:
6.1 ORDINARY COURSE. The Properties will be maintained and
operated in a good and workmanlike manner consistent with historical
practices, and Seller will timely pay or cause to be paid all costs and
expenses incurred in connection therewith.
6.2 RESTRICTIONS ON OPERATIONS. Subject to the provisions of
Section 7.5 hereof, except with Buyer's prior written consent no operations
will be conducted for the drilling of any new well, the reworking or
redrilling of any existing well or the making of any other capital
expenditure on the Properties requiring an expenditure by Seller in excess of
$20,000 for any single project. Insofar as any of the following described
actions would affect the Interests, Seller will not waive any rights or enter
into any new agreements or commitments other than in the ordinary course of
business, abandon any well capable of commercial production (based upon
prevailing economic conditions), release or abandon any Properties, or
encumber, sell or otherwise dispose of any of the Properties other than
personal property thereon which is replaced by equivalent property or
consumed in the operation of such Properties in the ordinary course of
business.
6.3 MAINTENANCE OF FILES. Seller will exercise reasonable
diligence in safeguarding and maintaining secure all files, books and records
currently maintained.
6.4 ACCESS OF BUYER. Buyer shall have access to the employees,
offices, properties, records, files, geological and geophysical data,
engineering reports and evaluations, books of account, and all other
information of the Seller pertaining to the Interests; provided, however,
that such investigation shall be conducted during normal business hours and
in a manner that does not unreasonably interfere with Seller's normal
operations. Seller shall reasonably assist Buyer in making such
investigation and shall cause the counsel, accountants, employees and other
representatives of Seller to be reasonably available to Buyer for such
purposes. During such investigation, Buyer shall have the right to make
copies of such records, files and other materials as Buyer may deem
advisable.
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ARTICLE 7
ADDITIONAL AGREEMENTS OF THE PARTIES
7.1 RETURN OF INFORMATIONAL MATERIAL. If this Agreement is not
consummated, Buyer shall return to Seller all of the items of information
which Seller has delivered to Buyer hereunder, including all copies of same
made by Buyer, together with all due diligence studies and reports prepared
by or for Buyer.
7.2 CONFIDENTIALITY OF INFORMATION. If the purchase and sale of
the Interests as contemplated by this Agreement is not completed, Buyer (i)
will keep the information furnished to Buyer hereunder or in contemplation
hereof strictly confidential, except to the extent such information (A)
becomes public other than as a result of dissemination by Buyer, (B) was
already known to Buyer other than as a result of a breach of a
confidentiality restriction, or (C) is furnished to Buyer by a third party
independently of Buyer's investigation pursuant to this Agreement, and (ii)
will not use any of such information to Buyer's financial advantage or in
competition with Seller. Notwithstanding the provisions of Section 14.6
hereof, this provision shall not be construed as superseding or limiting the
provisions of any confidentiality agreement heretofore executed by and
between Buyer and Seller.
7.3 COMPLIANCE WITH CONDITIONS. Buyer and Seller, respectively,
will proceed diligently using all reasonable efforts to cause all of the
conditions to the obligations of Seller and Buyer, respectively, to be timely
satisfied.
7.4 GAS IMBALANCES. If, prior to the Title Notice Date, Buyer
determines that the net gas imbalance (that is, the difference between
aggregate overproduction attributable to Seller's interest in the Properties
and the aggregate underproduction attributable to such interest) at the
Effective Date was greater than that set forth on Schedule 4.14, Buyer shall
so notify Seller. If such increase is confirmed, the Base Price shall be
adjusted at the Closing by an amount equal to $1.00 per Mcf for the increase
in net overproduction over that shown in Schedule 4.14; provided, however,
that no adjustment shall be made unless the increase in net overproduction
exceeds 10,000 Mcf. If, within the period ending December 1, 1997, Buyer
determines that the net gas imbalance at the Effective Time was greater than
that set forth in Schedule 4.14 (adjusted for any imbalance for which a
Purchase Price adjustment was made at the Closing), Buyer shall so notify
Seller. If such increase is confirmed, Seller promptly shall make a payment
to Buyer in an amount equal to $1.00 per Mcf for such increase; provided,
however, that no adjustment shall be made unless such increase exceeds 10,000
Mcf.
7.5 CAPITAL EXPENDITURES. During the period from the execution
of this Agreement to the Closing Date, Seller will
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consult with Buyer from time to time with respect to any operation proposed
to be conducted on the Properties which reasonably is expected to require an
expenditure by Seller in excess of $20,000 for any single project, and will
provide Buyer with all information reasonably available to Seller with
respect thereto. Buyer shall, within ten (10) days after receipt of Seller's
recommendation for conducting or participating in any such project, or within
such lesser period as may be required by the terms of any applicable
agreement, approve or disapprove such project. Failure of Buyer to respond
within the time required will be deemed to constitute disapproval by Buyer of
the project. In the event Buyer approves such project, Seller shall conduct,
propose or elect to participate in such project and shall incur and pay as
they become due the expenditures associated therewith. In the event the
project or operation is a well proposed by an unrelated third party and
Seller must, by operation of an applicable agreement or order of a regulatory
agency, elect either to participate in such well or lose the right to
participate in such well and/or other rights in the unit in which such well
is proposed (for example, but not by way of limitation, a non-consent penalty
under a joint operating agreement, requirement to accept consideration in
lieu of participation under a pooling order or forfeiture of the right to
participate in future development under an area of mutual interest
agreement), and Buyer disapproves or is deemed to have disapproved
participation by Seller in such well, then, upon five (5) days written notice
to Buyer (during which time Buyer may reverse its decision and approve
participation by Seller), Seller may elect to exclude from the Interests and
the sale hereunder the Property on which such operation is to be conducted
and reduce the Base Price by the Agreed Value of such Property.
7.6 CONSENTS; PREFERENTIAL RIGHTS TO PURCHASE. Promptly after
execution hereof, Seller will proceed diligently to solicit any consents to
the transfers contemplated hereby which are required to be obtained from
third parties and will give all notices required by existing contracts with
respect to preferential rights to purchase on the part of third parties and
to obtain waivers of such preferential rights. At the request of either
Seller or Buyer, the Closing may be deferred for a period of not more than
thirty (30) days solely with respect to those Properties, if any, for which a
consent is required and is not obtained by the Closing Date, or for which a
preferential right is outstanding as of the Closing Date, in order to obtain
the required consent or the waiver or exercise of the open preferential
right. Any item of the Interests which requires the consent of a third party
for transfer where such consent cannot be obtained prior to the Closing Date
or within such thirty (30) day period (other than routine consents required
in connection with federal, state and Indian leases), or which is subject to
a preferential right to purchase which is exercised prior to the Closing or
within such thirty (30) day period, shall be excluded from the Interests and
the sale hereunder and the Base Price reduced by the Agreed Value of such
Property.
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7.7 ADJUSTMENTS FOR OPERATIONS SUBSEQUENT TO THE EFFECTIVE TIME.
The following adjustments shall be made to the Base Price for operations
conducted subsequent to the Effective Time to the extent the following described
items of revenue and expense relate to the Interests:
(a) The Base Price shall be adjusted upward by all amounts
actually paid by Seller in respect of (i) actual direct operating expenses and
capital expenditures (other than those prohibited by the terms hereof), (ii)
overhead or indirect expenses required to be paid by the terms of existing
operating agreements, and (iii) ad valorem, property, production, severance and
similar taxes and assessments based upon or measured by the ownership of
property, the production or removal of hydrocarbons or the receipt of proceeds
therefrom; to the extent such expenditures relate to the period between the
Effective Time and the Closing Date on the accrual method of accounting. Ad
valorem taxes shall be prorated on the basis of time, and if the taxes cannot be
determined for the current taxable year, then the amount thereof for the taxable
year most recently ended shall be used in determining ad valorem taxes
attributable to a particular period of time.
(b) The Base Price shall be adjusted downward by all proceeds
actually received by Seller (including proceeds from sale or salvage of any
personal property forming a part of the Interests as well as the hydrocarbons
produced therefrom and attributable thereto) to the extent such proceeds relate
to the period from the Effective Time to the Closing Date on the accrual method
of accounting. Proceeds received by Seller after the Effective Time for the
sale of production in storage at the Effective Time shall remain the property of
Seller and shall not give rise to an adjustment.
7.8 REVENUES IN SUSPENSE. Promptly after the execution of this
Agreement, Seller shall furnish Buyer a schedule listing all revenues held in
suspense by Seller relating to the Interests, including the Property to which
such revenues relate, the owners of the suspensed revenues (to the extent known
to Seller), the reasons such revenues are being in suspense and the date such
revenues were received by Seller. Such schedule shall include interest accrued
on the suspensed revenues to the extent required by applicable law. At the
Closing, Seller shall deliver to Buyer an amount equal to the amount of the
suspensed revenues and accrued interest described in such schedule, as updated
to the Closing Date. Buyer agrees to pay when due to the owners thereof, or
otherwise in accordance with applicable law, all suspense revenues and accrued
interest listed on the schedule furnished by Seller, as updated to the Closing
Date, and to indemnify and hold harmless Seller with respect to the payment
thereof up to but not exceeding the amounts reflected in such schedule and
delivered to Buyer at Closing. Any suspense obligations not listed on the above
described schedule, including
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interest not listed, shall remain the obligations of Seller and shall not be
assumed by Buyer.
ARTICLE 8
ENVIRONMENTAL MATTERS
8.1 PHYSICAL CONDITION OF THE PROPERTIES. The Properties have been
used for oil and gas drilling, production, gathering and processing operations,
related oil field operations and possibly for other operations, whether of a
similar or dissimilar nature. Physical changes in or under the Properties or
adjacent lands may have occurred as a result of such uses. The Properties also
may contain buried pipelines and other equipment, whether or not of a similar
nature, the locations of which may not be known to Seller or be readily apparent
by a physical inspection of the Properties. Third parties may have used the
Properties or the surface rights thereon for other purposes as well. Buyer
understands that Seller does not have the requisite information with which to
determine the exact nature or condition of the Properties nor the effect any
such use has had on the physical condition of the Properties. Buyer is hereby
notified that detectable amounts of regulated and unregulated chemicals and
other substances which may pose a threat to health or to plants or wildlife, or
which are known to cause illnesses, diseases, cancer, birth defects and other
reproductive harm, may be found in, on or around the Properties. Adverse
physical conditions, including the presence of such chemicals and other
substances, may not be revealed by Buyer's investigation. In addition, Buyer
acknowledges that some oil field production equipment may contain various
contaminants or hazardous substances, including without limitation, asbestos
and/or naturally-occurring radioactive material ("NORM"). In this regard, Buyer
expressly understand that NORM may affix or attach itself to the inside of
xxxxx, materials, pipes and equipment as scale or in other forms, and that
xxxxx, materials, pipes and equipment located on the Properties may contain NORM
and that NORM-containing materials may be buried or have been otherwise disposed
of on the Properties. Buyer also expressly understands that special procedures
may be required for the removal and disposal of various contaminants or
hazardous substances, including without limitation asbestos and NORM, from the
Properties where it may be found. The statements in this Section 8.1 are
intended as disclosures and acknowledgments of possible conditions existing on
the Properties.
8.2 ENVIRONMENTAL ASSESSMENT. Buyer shall have the right, at
Buyer's sole cost, risk, and expense, to undertake an environmental assessment
of the Properties during the period prior to the Closing. Buyer and its agents
shall have the same right as Seller to enter upon the Properties, inspect the
same, conduct soil and water sampling, analysis and monitoring, including soil
borings (and, after notice and consultation with Seller, drilling groundwater
monitoring xxxxx), an generally conduct such tests,
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examinations, investigations and studies as Buyer deems necessary or
appropriate for preparing appropriate engineering and other reports and
making judgments relating to the Properties, their condition, and the
presence of chemicals and other substances. Seller shall cooperate with any
efforts of Buyer and its agents to obtain third party consents for access to
those parcels of land within the Properties to which Seller may not presently
have access. Buyer and its agents shall have reasonable access to Seller's
agents and employees in the course of conducting Buyer's environmental
assessment. Buyer shall keep any data or information acquired in the course
of such examinations and the results of all analyses of such data and
information strictly confidential and not disclose same to any person or
agency without the prior written approval of Seller, except that Buyer may
disclose to authorities having jurisdiction such information as is required
by law or by court order at the same time that Buyer provides such
information to Seller. If Buyer determines that conditions on a Property do
not satisfy the environmental standards set forth in Section 8.4 below in a
material respect, then Buyer may notify Seller of such condition by providing
Seller, on or prior to the day that is ten (10) business days prior to the
date scheduled for Closing in Section 12.1 hereof (the "Environmental Notice
Date"), a written "Notice of Environmental Defect" setting forth in detail
the facts giving rise to the claimed defect, the environmental standard which
Buyer claims is not satisfied, and any Applicable Environmental Law
(hereinafter defined) which Buyer contends has been breached or violated.
Buyer shall be deemed to have accepted without objection (i) the
environmental conditions described in Schedule 4.15, and (ii) except to the
extent an environmental condition was known to Seller and not disclosed
pursuant to Section 4.15, any Property which does not meet the environmental
standards or which is subject to an environmental defect unless a Notice of
Environmental Defect is given with respect to such Property on or prior to
the First Title Notice Date.
8.3 ACCESS; INDEMNIFICATION. Access to the Properties to conduct
Buyer's environmental assessment shall be subject to the following conditions:
Buyer waives and releases all claims against Seller and its partners, employees
and agents, for injury to or death of persons or damage to property arising in
any way from the exercise of rights granted to Buyer hereby or the activities of
Buyer or its employees, agents or contractors on the Properties, provided that
Buyer does not hereby assume the risk of damage, injury or death attributable to
the willful misconduct or gross negligence of Seller. Buyer shall indemnify
Seller, its partners employees, and agents, and shall hold each and all of said
indemnities harmless from and against any and all loss whatsoever arising out of
(i) any and all statutory or common-law liens or other encumbrances for labor or
materials furnished in connection with such tests, samplings, studies or surveys
as Buyer may conduct with respect to the Properties, and (ii) any injury to or
death of persons or damage to property occurring in, on or about the Proper-
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ties as a result of such exercise or activities (except for any such injuries
or damages caused by the gross negligence or willful misconduct of any said
indemnities). Notwithstanding any provision of this Agreement to the
contrary, the foregoing obligation of indemnity shall survive the Closing or
the termination of this Agreement without Closing.
8.4. ENVIRONMENTAL STANDARDS. This section sets out the
environmental standards applicable to the Properties for purposes of this
Agreement and, except as provided in Section 4.15, do not constitute covenants,
representations or warranties of Seller.
(a) The Properties shall not have been used for the generation,
treatment, storage or disposal of a Hazardous Substance (as defined below) in a
manner or to an extent that would subject Seller to a material liability for
violation of any Applicable Environmental Laws (as defined below). Except as
disclosed in Schedule 4.15, there shall not have been any release or discharge
of a Hazardous Substance from the Properties in a manner or to an extent that
would subject Seller to a material liability for violation of any Applicable
Environmental Laws. "Hazardous Substance" shall mean any hazardous substance,
pollutant, contaminant, solid or hazardous waste, hazardous waste constituents,
hazardous material or toxic substance subject to regulation or liability under
Applicable Environmental Laws in force as of the date hereof, including
asbestos, radioactive substances, and any other substance or material that would
constitute or cause a health, safety or environmental hazard on or at the
Properties under Applicable Environmental Laws. "Applicable Environmental Laws"
shall mean (i) all federal statutes regulating or prescribing restrictions
regarding the use of the Properties or other activities affecting the
environment (air, water, land, animal and plant life), including but not limited
to the following: the Clean Air Act, Clean Water Act, Comprehensive
Environmental Response, Compensation and Liability Act, Emergency Planning and
Community Right-to-Know Act, Endangered Species Act, Hazardous Materials
Transportation Act, Migratory Bird Treaty Act, National Environmental Policy
Act, Occupational Safety and Health Act, Oil Pollution Act of 1990, Resource
Conservation and Recovery Act, Safe Drinking Water Act, and Toxic Substances
Control Act, (ii) any regulations promulgated under such federal statutes, (iii)
any state law counterparts of such federal statutes and the regulations
promulgated thereunder, (iv) any other state or local statutes, rules,
regulations or ordinances regulating the use of or affecting the environment,
and (v) all common law rights, duties and obligations regarding the use of or
matters affecting the environment.
(b) Except as disclosed in Schedule 4.15, there are no
agreements, consent or administrative orders, injunctions, decrees, judgments,
license or permit conditions, or other directives of governmental authorities
based on any Applicable
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Environmental Laws that require any material change in the present condition
of the Properties, and Seller has not received any notice from any
governmental authority or private or public entity advising Seller that it is
or is potentially responsible for response costs under an Applicable
Environmental Law as a result of Seller's ownership or activities in
connection with the Properties.
(c) Except as disclosed in Schedule 4.15, no conditions or
circumstances exist on the Properties that would subject Seller to any material
damages, penalties, injunctive relief or cleanup or closure costs under any
Applicable Environmental Laws or that would require cleanup, removal, remedial
or corrective action or other response involving a material expenditure by
Seller pursuant to Applicable Environmental Laws.
8.5 PROPERTIES SUBJECT TO ENVIRONMENTAL DEFECT. Seller shall have a
period of seven (7) days after the Environmental Notice Date to cure or
remediate the environmental defect(s) set out in any Notice of Environmental
Defect timely and properly given by Buyer. In the event Seller is unable or
unwilling to cure or remediate any such defect prior to Closing, one of the
following shall occur:
(a) The parties shall agree upon an adjustment to the Purchase
Price to compensate Buyer (i) for the defect and all future liability associated
therewith or resulting therefrom, and (ii) for agreeing to indemnify, defend and
hold harmless Seller from and against any and all loss, cost, liability or
expense associated therewith or resulting therefrom.
(b) If the parties are unable to reach agreement pursuant to
(a) above, Seller may elect to proceed to Closing but exclude the affected
Property from the Interests and the sale hereunder and reduce the Base Price by
the Agreed Value of such Property.
(c) Notwithstanding the provisions of (a) and (b) above, Buyer
shall not be entitled to an adjustment of the Base Price pursuant to the
provisions of this Section 8.5 unless the cumulative amount of all such
adjustments exceeds $20,000.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to consummate the transactions provided for in
this Agreement shall be subject to the satisfaction of each of the following
conditions on or before the Closing Date, subject to the right of Buyer to waive
any one or more of such conditions:
9.1 REPRESENTATIONS AND WARRANTIES OF SELLER. At and as of the
Closing Date, the representations and warranties of
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Seller contained in Article 4 hereof shall be true and correct in all
material respects as though made on such date.
9.2 PERFORMANCE OF THIS AGREEMENT. Seller shall have duly performed
or complied in all material respects with all of the obligations to be performed
or complied with by Seller under the terms of this Agreement on or prior to the
Closing Date.
9.3 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the production levels from the Properties from that projected
in the most recent engineering report furnished by Seller and no material
adverse change in the value of the Properties as a result of economic or other
conditions occurring between the date of this Agreement and the Closing Date;
provided, however, that Buyer may waive this condition with respect to any
Property for which an adjustment to the Base Price is agreed upon between Seller
and Buyer. In this regard, Seller and Buyer have agreed to adjust the Base
Price downward by the sum of $150,000 attributable to the Xxxxxxxx #1-D Well and
to exclude such Property from the Interests.
ARTICLE 10
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions provided for
in this Agreement shall be subject to the satisfaction of each of the following
conditions on or before the Closing Date, subject to the right of Seller to
waive any one or more of such conditions:
10.1 REPRESENTATIONS AND WARRANTIES OF BUYER. The representations
and warranties of Buyer contained in Article 5 hereof shall be true and correct
in all material respects at and as of the Closing Date.
10.2 PERFORMANCE OF THIS AGREEMENT. Buyer shall have duly performed
or complied in all material respects with all of the obligations to be performed
or complied with by Buyer under the terms of this Agreement on or prior to the
Closing Date.
ARTICLE 11
TERMINATION
11.1. NONCOMPLIANCE BY SELLER. Buyer may terminate this Agreement by
written notice to Seller if the conditions to Buyer's obligations under this
Agreement, as set forth in Article 9 hereof, shall not have been complied with
or performed in all material respects (and Seller shall not be prepared to
comply with or perform the same) by the date on which the Closing is to occur
(as set forth in Section 12.1), and such non-compliance or non-performance shall
not have been waived in writing by Buyer. In the event such termination is a
result of Seller's failure or refusal
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to close the transaction contemplated hereby under circumstances in which all
conditions precedent to Seller's obligations as set forth in Article 10 have
been performed or satisfied in all material respects, Buyer shall be entitled
to pursue any remedies for breach of this Agreement available at law or in
equity.
11.2. NONCOMPLIANCE BY BUYER. Seller may terminate this Agreement by
written notice to Buyer if the conditions to Seller's obligations under this
Agreement, as set forth in Article 10 hereof, shall not have been complied with
or performed in all material respects (and Buyer shall not be prepared to comply
with or perform the same) by the date on which the Closing is to occur (as set
forth in Section 12.1), and such non-compliance or non-performance shall not
have been waived in writing by Seller. In the event such termination is as a
result of Buyer's failure or refusal to close the transaction contemplated
hereby under circumstances in which all conditions precedent to Buyer's
obligations as set forth in Article 9 have been performed or satisfied in all
material respects, Seller shall be entitled to pursue any remedies for breach of
this Agreement existing at law or in equity.
11.3 EXCESSIVE ADJUSTMENTS. In the event the Base Price is reduced
at the Closing by an amount in excess of $560,000 by reason of adjustments
effected pursuant to Sections 3.4 (Title Defects), 7.4 (Gas Imbalances), and 8.5
(Environmental Defects), then either (i) Buyer, or (ii) Seller (provided the
representations and warranties of Seller under Sections 4.3, 4.14 and 4.15 with
respect to the Properties and conditions giving rise to such Defects are true on
the date hereof), shall have the right to terminate this Agreement by written
notice to the other at any time prior to the Closing. Specific adjustments
agreed to by the parties shall not be taken into account in determining the
above-described termination threshold amount.
11.4. COOPERATION BY BUYER. In the event of termination of this
Agreement, Seller shall be free to sell the Interests to any third party without
any limitation under or by reason of this Agreement. Buyer shall cooperate with
Seller in effectuating any such sale by promptly executing any instrument
reasonably requested by Seller evidencing the termination of this Agreement or
Buyer's right to acquire the Interests.
ARTICLE 12
CLOSING
12.1 DATE AND PLACE. The Closing shall be held at 9:00 o'clock a.m.
on July 29, 1997 (the date on which the Closing actually occurs is referred to
herein as the "Closing Date"). The Closing shall take place in the offices of
Seller at 0000 X. Xxxxx, Xxxxx 000, Xxxxx, Xxxxxxxx.
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12.2 SATISFACTION OF CONDITIONS. Not later than two (2) business
days prior to the Closing Date, each party shall provide the other party such
evidence of satisfaction of conditions under Sections 9.2 and 10.2 hereof as the
other party shall have reasonably and timely requested.
12.3 ASSIGNMENTS. At the Closing, Seller shall deliver to Buyer a
fully executed and acknowledged Assignment, Conveyance and Xxxx of Sale, in the
form attached hereto as Exhibit B, assigning to Buyer Seller's interest in the
Interests.
12.4 DETERMINATION AND PAYMENT OF PURCHASE PRICE. On the day that is
two (2) business days prior to the Closing Date, Seller shall furnish to Buyer
(i) a summary of the Base Price adjustments to be effected at the Closing
pursuant to Sections 3.4, 7.4, 7.5, 7.6, 7.7, 8.5 and 9.3 hereof, and (ii) based
upon the information at (i), a calculation of the Purchase Price. Buyer and
Seller shall work together diligently and in good faith prior to the Closing in
an effort to agree upon the amount of the adjustments necessary to determine the
Purchase Price, and if they do so agree, the agreed amount shall be paid by
Buyer to Seller by wire transfer of immediately available funds at the Closing.
If the parties cannot agree on the adjustment amounts necessary to determine the
Purchase Price, the Closing shall occur as scheduled based on Seller's
reasonable, good faith estimate of the Purchase Price ("Seller's Estimate") and
the difference between Seller's Estimate and Buyer's calculation of the Purchase
Price shall be deposited in escrow with a mutually acceptable escrow agent (a
bank or trust company having a office in Tulsa, Oklahoma) pending a
determination of the final Purchase Price. In such event the final Purchase
Price shall be determined either (i) by subsequent agreement of the parties, or
(ii) by binding arbitration pursuant to an arbitration proceeding initiated and
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"). The arbitration proceedings shall be conducted
in Tulsa, Oklahoma, by a single arbitrator agreed to by the parties, or if they
are unable to agree, selected by the AAA. The arbitrator shall be a businessman
experienced in transactions involving the sale and purchase of oil and gas
properties. The decision of the arbitrator shall be conclusive and binding on
the parties. In the event arbitration is necessary to determine the Purchase
Price, prior to initiating the arbitration, each party shall furnish to the
other a statement of such party's calculation of the Purchase Price. All fees
and expenses of the arbitration, including attorneys' fees and expert witness
fees of BOTH parties, shall be paid by the party whose calculation of the
Purchase Price bears the greatest difference from the Purchase Price determined
by the arbitrator. The award of the arbitrator shall not be subject to appeal
or judicial review of any nature and shall be promptly furnished to the escrow
agent who shall make distribution of the escrowed funds in a manner consistent
with such award.
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12.5 LETTERS IN LIEU. Seller shall execute and deliver to Buyer at
the Closing, on forms prepared by Buyer, transfer orders or letters in lieu
thereof directing all purchasers of production to make payment to Buyer of
proceeds attributable to production from the Interests.
12.6 CHANGE OF OPERATOR FORMS. At the Closing, Seller will execute
and deliver to Buyer all forms required by State or Federal law or regulations
to reflect the resignation of Seller and the appointment of Buyer (or its
designated affiliate) as operator of the Properties currently operated by
Seller, and Seller will use its reasonable best efforts to assist Buyer in being
designated or elected operator of such Properties under applicable operating and
similar agreements.
ARTICLE 13
POST-CLOSING MATTERS
13.1 SALES TAXES. It is understood that the Purchase Price does not
include sales taxes imposed on account of the transactions contemplated hereby.
Buyer will be responsible for all such taxes, will remit same to the proper
governmental authorities within the time allowed by law for payment thereof and
will hold Seller harmless with respect thereto, including any penalties or
interest assessed for late payment.
13.2 RECEIPTS AND DISBURSEMENTS. If, after the Closing, Buyer
receives any funds relating to operations on or production from the Interests
prior to the Effective Time, or Seller receives any funds relating to operations
on or production from the Interests after the Effective Time, then the party
receiving such funds shall account therefor and pay the same to the other party
promptly after receipt thereof. Likewise, if Buyer shall be required to pay any
amount relating to items of the Interests which accrued to the owner of the
Interests before the Effective Time, or if Seller shall be required to pay any
amount (not otherwise prohibited by the terms of this Agreement) relating to
items of the Interests which accrued to the owner of the Interests after the
Effective Time, then the party making such payment shall invoice the other party
for the amount of such payment and the party receiving such invoice promptly
shall pay the same. Notwithstanding the foregoing, there shall be no accounting
for amounts received or paid which have already been taken into account in
calculating the Purchase Price. In determining the amount paid by a party
accruing during a period of time in respect of ad valorem taxes, the taxes shall
be prorated as provided in Section 7.7.
13.3 ALLOCATION OF LIABILITY. Seller shall remain liable and
responsible for all costs and expenses attributable to the ownership or
operation of the Interests prior to the Effective Time. Buyer shall be
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liable and responsible for all costs and expenses attributable to the
ownership or operation of the Interests after the Effective Time.
13.4 BOOKS AND RECORDS. Seller shall deliver to Buyer, as soon as
practicable after the Closing Date (but in no event more than ten (10) days
after the Closing Date), all books, files, records and other information
(including tapes, disks and other media for storing information) of Seller,
including, without limitation, land, geological, geophysical (raw and
interpretive data), engineering and accounting files, records and other
material, relating to the Interests. For a period of two (2) years after the
delivery of such files and records, Buyer shall permit Seller reasonable access
to such files and records solely for tax and accounting purposes, but such right
of access shall not constitute an obligation of Buyer to maintain such files in
the same form as maintained by Seller prior to delivery thereof.
13.5 SUBSEQUENT DISPOSITIONS BY BUYER. If within the period ending
two (2) years after the Closing Date, Buyer intends to offer for sale, whether
in a bid package or in a negotiated transaction, any group of properties that
includes at least five (5) of the Properties acquired from Seller pursuant to
this Agreement, Buyer shall give prior written notice to Seller of the proposed
sale, describing the Properties to be offered and the terms of sale, and
including any sale materials compiled by Buyer with respect to such Properties.
Seller shall have the right to submit to Buyer, within ten (10) days after
receipt of such notice, an offer to purchase the Properties described therein.
Buyer shall have the absolute right in its sole discretion to accept or reject
Seller's offer and shall be under no obligation to sell such Properties to
Seller, even if Seller offers more than any other prospective purchaser,
provided Buyer determines in good faith and for a valid business purpose that
the retention of such Properties by Buyer or the sale of such Properties to
another purchaser is more advantageous to Buyer. This provision shall not be
applicable with respect to any sale or transfer by Buyer to an affiliate or in
connection with the sale or other disposition by Buyer of all or substantially
all of its oil and gas properties. Seller's rights under this Section 13.5
shall not be assignable.
ARTICLE 14
MISCELLANEOUS
14.1 NOTICES. All communications required or permitted to be given
under this Agreement shall be in writing and delivered, mailed or transmitted to
the parties at the addresses set out below. Notices shall be deemed given when
received except that notices given by facsimile transmission on weekends,
holidays or after 5:00 p.m. Central Time, shall be deemed received on the next
business day. If delivered by commercial delivery service or
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mailed by registered or certified mail, the delivery receipt shall be
evidence of the date of receipt. Either party may, by written notice so
delivered to the other, change the address to which delivery shall thereafter
be made.
(a) Notices to Buyer:
RAMCO Operating Company
Xxxxxxxx Xxxxx, Xxxxx 000
0000 X. Xxxxxx Xxxxx
Xxxxx, XX 00000
Attn: Xx. Xxxxx X. Xxx, President
Fax No. (000) 000-0000
With copy to:
C. Xxxxx Xxxxxxx, Esq.
McAfee & Xxxx A Professional Corporation
00xx Xxxxx, Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Fax No. (000) 000-0000
(b) Notices to Seller:
Xxxxxxx Drilling Corporation
0000 X. 00xx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxxxxx, President
Fax No. (000) 000-0000
With copy to:
Xxx X. Xxxxxxxx, Esq.
0000 X. Xxxxx, Xxxxx 0000
Xxxxx, Xx 00000
Fax No. (000) 000-0000
14.2 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
14.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts which taken together shall constitute one and the same instrument
and each of which shall be considered an original for all purposes.
14.4 EXPENSES. Each party hereto will bear and pay its own expenses
of negotiating and consummating the transactions contemplated hereby.
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14.5 SECTION HEADINGS. The section headings contained in this
Agreement are for convenient reference only and shall not in any way affect the
meaning or interpretation of this Agreement.
14.6 SUPERSEDING EFFECT. This Agreement supersedes any prior
agreement or understanding between the parties with respect to the subject
matter hereof.
14.7 GOVERNING LAW; ENFORCEMENT. This Agreement shall be governed
by, construed and enforced in accordance with the laws of the State of Oklahoma
applicable to contracts made and to be performed entirely therein. The
prevailing party in any litigation initiated to enforce rights under or collect
damages for breach of this Agreement shall be entitled to reimbursement from the
non-prevailing party of all costs and expenses, including attorneys' fees,
incurred by the prevailing party in connection with such litigation.
14.8 EXHIBITS AND SCHEDULES. The Exhibits and Schedules referred to
herein are attached hereto and by this reference made a part hereof.
14.9 ANNOUNCEMENTS. Seller and Buyer shall consult with each other
with regard to all press releases and other announcements issued by either party
concerning this Agreement or the transaction contemplated hereby and, except as
may be required by applicable laws or the applicable rules and regulations of
any governmental agency or stock exchange, neither Buyer nor Seller shall issue
any such press release or other publicity without the prior written consent of
the other party.
14.10 SURVIVAL. The representations and warranties of the parties set
out herein shall survive the Closing; provided, however, that any claim by
either party for inaccuracy of representation or breach of warranty hereunder
shall be asserted by written notice to the other party given within six (6)
months after the Closing Date, and any claim not asserted within such period
shall be forever barred. The covenants of the parties under this Agreement
shall survive the Closing without limitation (for this purpose, nothing
contained in Article 4 or 5 hereof shall be deemed to be a covenant).
14.11 INDEMNITY. Each party agrees to indemnify, defend and hold the
other party harmless from and against any and all damage, loss, cost, liability
and expense, including court costs and attorneys' fees, resulting from (i) any
inaccuracy of representation or breach of warranty hereunder, provided notice of
any claim therefor is given within the period set out in Section 14.10, and (ii)
any breach of covenant hereunder.
14.12 FURTHER ASSURANCES. After the Closing the parties shall, at the
sole cost and expense of the requesting party if more
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than an immaterial expense is involved, (i) furnish such additional
information, (ii) execute and deliver such additional documents, and (iii)
perform such additional acts, as may be necessary and reasonably requested by
the other party or parties to effect the transaction contemplated by this
Agreement.
14.13 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power or privilege under this Agreement or
the documents referred to herein will operate as a waiver of such right, power
or privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the
maximum extent permitted by applicable law, (i) no waiver of any claim or right
under this Agreement will be valid unless evidenced by a writing signed by the
waiving party, (ii) no waiver given by a party will be applicable except in the
specific instance for which it is given, and (ii) no notice to or demand on a
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to
herein.
Executed as of the date first above written.
SELLER:
XXXXXXX DRILLING CORPORATION
By /s/ Xxxxxx X. Xxxxxxx
---------------------------------
President
BUYER:
RAMCO-NYL 1987 LIMITED PARTNERSHIP,
a Texas limited partnership
By: RAMCO Operating Company, its
Managing General Partner
By /s/ Drake X. Xxxxxx
----------------------------------
Vice President
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LIST OF EXHIBITS AND SCHEDULES
EXHIBIT
-------
A Description of Interests; Agreed Values
B Assignment, Conveyance and Xxxx of Sale
SCHEDULES
---------
4.6 Prepayments received, Properties subject to makeup rights; long
term production sale contracts
4.8 Other material executory contracts
4.9 Pending and threatened litigation/claims
4.10 Real and personal property excluded from sale
4.13 Inactive/abandoned xxxxx not plugged
4.14 Gas balancing status
4.15 Environmental conditions on the Properties
