Exhibit 10(b)
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
EXECUTION VERSION
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS 1
ARTICLE II - SALE AND PURCHASE 6
ARTICLE III - PURCHASE PRICE AND PAYMENT 6
ARTICLE IV - SELLER'S REPRESENTATIONS 8
ARTICLE V - BUYER'S REPRESENTATIONS 9
ARTICLE VI - ACCESS TO INFORMATION AND INSPECTION 10
ARTICLE VII - TITLE 11
ARTICLE VIII - COVENANTS OF SELLER 13
ARTICLE IX - CLOSING CONDITIONS 14
ARTICLE X - CLOSING 16
ARTICLE XI - EFFECT OF CLOSING 17
ARTICLE XII - SETTLEMENT OF PRORATIONS 19
ARTICLE XIII - ENVIRONMENTAL 19
ARTICLE XIV - MISCELLANEOUS 22
ARTICLE XV - CASUALTY LOSS AND CONDEMNATION 29
ARTICLE XVI - DEFAULT AND REMEDIES 30
-i-
EXHIBITS
A Net Revenue and Working Interests in Subject Interests
A-1 Seller's Subject Interests
B Purchase Price Allocation
C Assignment, ▇▇▇▇ of Sale and Conveyance
D Excluded Assets
E Material Contracts
F - There is no Exhibit F to this Agreement -
G Agency Agreement for Special Use Permits
H Permitted Encumbrances / Contracts with affiliates
I Amendment to State Terms of Series Share of Series A
Redeemable Preferred Stock
J Registration Rights Agreement
K Litigation and Other Liabilities
L There is no Exhibit L.
-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, 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.
1
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 ▇▇▇▇▇,
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 Material Contracts 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
XIII.
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 10.1.
1.8 "Closing Date" is defined in Section 10.1.
1.9 "Conveyance" mean the Assignment, ▇▇▇▇ 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 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.
2
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
11.2(d) of this Agreement) or legal records which directly relate
to the Assets; 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 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;
3
(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 ▇▇▇▇, 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 interests in the firm transportation contracts
as follows: (1) CIG contract number 33053000, and (2) CIG
contract number 33257000.
(o) all vehicles, tractors, trailers and similar
equipment owned by Seller.
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; (iv) the following Hydrocarbon sales,
purchase and exchange contracts: 33160000 and 33195000 both with
CIG, along with 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
4
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 XV 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 "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.
1.18 "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, or (y) for which
Seller is responsible for paying or releasing at Closing;
(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,
5
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;
(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;
(o) any agreement, contract, lease, instrument,
permit, amendment or extension entered into by Seller in
accordance with Article VIII hereof;
(p) the Oil and Gas Purchase and Processing
Agreements; and
(q) that certain eight inch gathering line found in
the southwest part of "Lease ▇▇. ▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇," also
known as the Weston Tract, as described in EXHIBIT A hereto,
servicing ▇▇▇▇▇ on the west-adjacent tract commonly known as the
"Golden Eagle Tract" and connecting, through compression
facilities, to the CIG pipeline, and all associated equipment
related
6
thereto or necessary for the operation thereof, along with a
surface right-of-way, twenty feet in width running the length of
said gathering line with the gathering line, as nearly as
possible, down the middle.
1.19 "Property Taxes" is defined in Section 11.2.
1.20 "Purchase Price" is defined in Section 3.1.
1.21 "Seller's Credits" is defined in Section 3.2.
1.22 "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.
1.23 "Tax Period" is defined in Section 11.2.
1.24 "Title Defect" is defined in Section 7.3.
1.25 "Transfer Taxes" is defined in Section 11.2.
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
One Hundred Forty-One Million Dollars ($U.S.141,000,000.00), as
adjusted in Section 3.1(c) below, (the "Purchase Price"). The
cash portion of the Purchase Price, together with and subject to
such adjustments, if any, as are expressly provided for elsewhere
in this Agreement, shall be paid by Buyer to Seller by means of
completed Federal Funds transfers to Seller's account in Apache
Canyon Gas, L.L.C., routing number ▇▇▇▇▇▇▇▇▇, account number
9870964996 as follows: (i) Thirty-five Million Dollars ($U.S.
35,000,000.00) and (ii) subject to Section 10.4, Shares of
Redeemable Preferred Stock of Buyer with a face value of One
Hundred Million Dollars ($U.S.100,000,000.00) pursuant to the
provisions set out in EXHIBIT I, ("Preferred Stock"). Also at
Closing, subject to Section 10.4, and as a credit to the payment
of the Purchase Price, Buyer shall deliver to Seller a
certificate or certificates, registered in the name of the Seller
7
or its designee, evidencing ownership of shares of common stock
of the Buyer aggregating Six Million Dollars ($US6,000,000.00) of
Buyer's common stock (the "Evergreen Stock") calculated as
provided in (b) below. The $6,000,000.00 in Evergreen Stock, the
Preferred Stock, and the $35,000,000.00 cash paid at Closing,
together, constitute the "Initial Payment."
(b) The amount of Evergreen Stock to be included in
the Initial Payment shall be calculated based on a per-share
price equal to the average closing price of the Evergreen Stock
for the fifteen trading day period ending the day prior to the
Closing. The Evergreen Stock, at Closing, shall not be
registered and shall be initially restricted. The terms of
Seller's holding of such stock shall be subject to the provisions
of EXHIBIT J.
(c) On December 29, 2000, the parties shall calculate
the simple arithmetic average of the settle prices for NYMEX
natural gas futures contracts for the months of January, 2001
through December, 2001, as published in the December 27, 2000,
edition of THE WALL STREET JOURNAL under the heading "Natural
Gas, (NYM) 10,000 MMBtu.; $ per MMBtu's". If such average equals
or exceeds $4.465 per MMBtu, then Buyer shall, on or before
January 5, 2001, deliver to Seller a certificate or certificates,
registered in the name of the Seller or its designee, evidencing
ownership of shares of common stock of the Buyer aggregating Four
Million Dollars ($US4,000,000.00) of Buyer's common stock (the
Adjustment Stock") calculated as provided in the next sentence.
The number of shares of Adjustment Stock shall be calculated
based on a per-share price equal to the average closing price of
the Adjustment Stock for the fifteen trading day period ending
the day prior to the date of delivery of the Adjustment Stock to
Seller. The Adjustment Stock, when issued, shall not be
registered and shall be initially restricted. The terms of
Seller's holding of such stock shall be subject, MUTATIS
MUTANDIS, to the provisions of EXHIBIT J.
(d) Notwithstanding anything set out herein, if, at
December 31, 2000, the Redemption of the Preferred Stock as
provided in Section 2.4 of the Amendment to State Terms, set
forth in Exhibit I hereof (the "Amendment") has not occurred, the
Parties shall make the following calculation: Take the sum of
the Dividends received pursuant to Section 2.1 of the Amendment
(excluding, however, any Dividends received associated with an
increase in Dividends over the initially effective dividend
amount of $95 per share per annum set forth in Section 2.1) plus
the actual proceeds received by the Seller or its assigns
pursuant to that certain production payment reserved in that
certain conveyance from Seller to Buyer set forth in Exhibit C
("Production Payment") and covering certain Leases and Lands in
Las Animas County, Colorado. If such sum does not equal what
Seller would have received had it reserved a production payment
equal to the "Applicable Percentage", as defined below, of the
Hydrocarbons attributable to such Leases and Lands (instead of
the 18.64% that it did reserve), assuming that Seller would have
been paid at precisely the same average rate per Mcf, that
Seller, in fact, received attributable to is Production Payment
reserved in Exhibit C, then Buyer shall be obligated to pay a one-
time payment ("December Adjustment"), as an adjustment to the
Purchase Price, to Seller equal to the difference between what
Seller actually received and what it would have received had it
reserved only the Applicable Percentage production payment and
had not received, and had not been entitled to receive, any
dividend hereunder ("Theoretical Production Payment"). In
addition, at the time of the Redemption of the last share of
Seller's Preferred Stock, Buyer and Seller shall make the
calculation, and Buyer shall be obligated to the payment, if such
results from that calculation, as an adjustment to the Purchase
Price utilizing the formula set out in the preceding sentence,
but calculated from December
8
31, 2000 through the date of the Redemption of the last share of
Seller's Preferred Stock ("Final Adjustment") Buyer and Seller
both recognize that actual proceeds of the Production Payment may
not be paid until the second month after the end of the month in
which production occurred. Accordingly, upon each payment
required in this Section 3.1(d), the Buyer and Seller shall meet
and determine, in good faith, their best estimate of what cash
payments Seller is likely to receive from the Production Payment,
but attributable to the particular time period set out above,
after the relevant date and take that sum into consideration in
calculating each of the one-time adjustments provided for
hereunder. If Buyer and Seller cannot agree, then the average of
the actual proceeds received in the three calendar months next
preceding the Adjustment (whether the December Adjustment or the
Final Adjustment) shall be used for making such estimate. The
Final Adjustment shall be made contemporaneously and as a
condition of the Redemption; provided, however, nothing herein
shall prohibit Buyer from making the Redemption of the last
share of Seller's Preferred Stock on or before December 31, 2000,
in which case there shall be only on Adjustment. The Buyer and
Seller shall meet within 120 days of each Adjustment to make a
final determination of the correct amount of each one-time
dividend. If, on the other hand, the Production Payment and the
Dividends paid actually exceed the Theoretical Production
Payment, then Seller shall refund the excess amount to Buyer.
The term "Redemption" has the meaning ascribed to it in the
Amendment.
(e) As used above, the "Applicable Percentage" means:
i. Initially 59.47%. The Applicable Percentage will remain
59.47% if the preferential purchase right applicable to the
Lorencito properties (as described under the terms of that
certain Agreement for Purchase and Sale between Buyer and Seller
of even date herewith) is NOT exercised by the holder thereof.
ii. If that preferential right is exercised by the holder
thereof, then Buyer, within 10 days following the closing on the
exercise of that preferential right, shall make a Redemption of
$20 million worth of Seller's Preferred Stock, and upon that
Redemption, the Applicable Percentage shall be 56.8%.
3.2 PURCHASE PRICE CREDITS.
(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 plus
$150,000.00 ("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 ▇▇▇▇▇ 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
9
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 12.2
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 at the location of the
Subject Interests, 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
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
10
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 Section 14.1, 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 14.4;
(g) Except as shown on EXHIBIT K 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;
(h) Except as shown on EXHIBIT K 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,
11
tax credits under Section 29 of the Internal Revenue Code with
respect to production from the Subject Interests.
(k) Seller is not in breach or default, or to Seller's
knowledge, alleged to be in breach or default, under any of (i)
the Oil and Gas Purchase and Processing Agreements, (ii) any of
the instruments creating or reserving the Subject Interests, or
(iii) any other Material 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 (k) 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.
(l) There are no gas imbalances, other than imbalances
affecting the pipeline, on the Subject Interests.
(m) The only consents to which the Subject Interests
or the Material Contracts are subject are contained in the
transportation agreements included in Incidental Rights or as
otherwise set forth in Exhibit E.
(n) Seller (a) understands that the offer and sale of
the Evergreen Stock, the Preferred Stock and the Adjustment Stock
have not been and, subject the provisions of Exhibit J, will not
be registered under the Securities Act of 1933, as amended (the
"Securities Act"), or under any state securities laws, and that
such stock is being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public
offering; (b) is acquiring such stock solely for its own account
for investment purposes and not with a view to the distribution
of such stock, and will not transfer any shares of such stock
without compliance with all applicable securities laws; (c) is an
"accredited investor," as that term is defined in Rule 501(a)
promulgated under the Securities Act; (d) is a sophisticated
investor with sufficient knowledge and experience in financial,
investment and business affairs to permit it to evaluate the
merits and risks involved in purchasing such stock and is able to
bear the economic risk and lack of liquidity inherent in holding
such stock for an indefinite period of time; and (e) has received
information concerning Buyer and has had the opportunity to ask
questions of, and receive answers from, Buyer and its
representatives concerning the business of Buyer and the terms of
the Evergreen Stock, the Preferred Stock and the Adjustment Stock
and to obtain additional information as desired in order to
evaluate the merits and risks inherent in holding such stock.
ARTICLE V
BUYER'S REPRESENTATIONS
5.1 BUYER'S REPRESENTATIONS. Buyer represents to Seller as
of the date hereof that:
12
(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 14.1, 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;
(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 and shares to enable the Buyer to
pay in full the Initial Payment, together with all costs and
expenses relative thereto, and otherwise to perform its
obligations under this Agreement.
(i) Buyer 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.
13
(j) All shares of Buyer, whether preferred or common,
issued or to be issued to Seller pursuant to the terms of this
Agreement, are, at the time of issuance, duly and validly
authorized for issuance, validly issued, fully paid and
nonassessable, and have not been issued, and are not held, in
violation of a preemptive rights. All such shares shall be free
and clear of all liens, encumbrances, claims and restrictions,
except as set forth in this Agreement. There are no agreements
or understandings with respect to the voting of such shares.
Buyer has furnished to the Seller true and complete copies of the
Certificate of Incorporation and Bylaws of the Buyer, including
all amendments and restatements thereof.
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 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 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, ▇▇▇▇ 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
14
information, records and data now, heretofore or hereafter made
available to Buyer in connection with this Agreement (including,
without limitation, any description of the Assets, pricing
assumptions, potential for production of Hydrocarbons from the
Subject Interests, or any other matters contained in any other
material furnished to Buyer by Seller or by Seller's agents or
representatives). The Subject Interests are subject to a secured
loan in favor of BankOne, N.A. Agent, which will be released at
or prior to closing.
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
accuracy of such documents, records and materials, and Buyer's
reliance thereon shall be at Buyer's sole risk and expense.
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 7.4
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 send 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.
15
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, ▇▇▇▇ 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 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 VIII 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 VIII. Subject
to Section 14.1 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
16
COVENANTS OF SELLER
8.1 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 8.2 below and the terms of the Material Contracts,
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 VIII,
(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 with any of the
requirements of this Article VIII 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 VIII shall not be
unreasonably withheld or action with respect thereto unduly
delayed.
8.2 LIMITATIONS ON SELLER'S COVENANTS PENDING CLOSING.
17
(a) To the extent Seller is not the operator of any of
the Assets, the obligations of Seller in Section 8.1 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 VIII, 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 8.1 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 ▇▇▇▇
▇▇▇▇▇▇ 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 8.2(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 8.2(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.
8.3. POST-CLOSING. To the extent that the agreement
anticipated to be attached as EXHIBIT G has not been reached and
Closing proceeds under Sections 10.2(i) and 10.3(i), Buyer and
Seller shall use best efforts to enter into such agreements after
the Closing.
ARTICLE IX
CLOSING CONDITIONS
9.1 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
18
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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 14.1
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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 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.
(h) The parties shall have executed a Purchase and
Sale Agreement covering the Lorencito tract and the ownership
interest of seller in Lorencito Gas Gathering, L.L.C.
19
(i) The parties shall have entered into an Agency
Agreement in the form set forth in Exhibit G, under which Seller
shall appoint Buyer as its agent in connection with the special
use permits required with respect to the Subject Interests.
9.2 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 14.1 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 and Material Contracts 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) The parties shall have executed a Purchase and
Sale Agreement covering the Lorencito tract and the ownership
interest of seller in Lorencito Gas Gathering, L.L.C.
20
(h) The parties shall have entered into an Agency
Agreement in the form set forth in Exhibit G, under which Seller
shall appoint Buyer as its agent in connection with the special
use permits required with respect to the Subject Interests.
ARTICLE X
CLOSING
10.1 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 ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ on or before September 30, 2000, 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.
10.2 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 all
Seller's interest in the Assets to Buyer in accordance with the
provisions hereof;
(b) The certificate of Seller referred to in Section
9.2(b) hereof;
(c) Evidence of Seller's compliance with the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 certificate of Seller as to the representation
made in Section 4.1(i).
21
(i) To the extent Buyer and Seller have reached
agreement with respect to Special Use Permits as provided in
EXHIBIT G, such agreement shall be delivered. If agreement has
not been reached with respect to that matter, the lack of such
agreement shall not constitute a condition of Closing and Closing
shall proceed without such agreement and, subject to Section 8.3,
such Special Use Permits shall be governed by the provisions of
Section 13.10.
10.3 BUYER'S CLOSING OBLIGATIONS. At Closing, Buyer shall
deliver to Seller the following:
(a) The Initial Payment portion of 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);
(b) The certificate of Buyer referred to in Section
9.1(b) hereof;
(c) Evidence of Buyer's compliance with the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act (if necessary);
(d) The Redeemable Preferred Stock of Buyer as
described in EXHIBIT I.
(e) The Evergreen Stock in the amount determined by
Section 3.2(b) above, subject to Section 10.4, below; and
(f) The executed agreements as set out in EXHIBITS J .
(g) To the extent Buyer and Seller have reached
agreement with respect to Special Use Permits as provided in
EXHIBIT G, such agreement shall be delivered. If agreement has
not been reached with respect to that matter, the lack of such
agreement shall not constitute a condition of Closing and Closing
shall proceed without such agreement and, subject to Section 8.3,
such Special Use Permits shall be governed by the provisions of
Section 13.10.
10.4 POST CLOSING STOCK LISTINGS AND ADJUSTMENTS. The
Evergreen Stock and the Adjustment Stock are required to be
approved for listing on the New York Stock Exchange ("NYSE")
prior to issuance to Seller. Buyer and Seller acknowledge that
the NYSE could impose conditions in connection with the approval
of the listing of such stock. Upon the signing of this
Agreement, Buyer shall diligently pursue the listing of the
Evergreen Stock and the Adjustment Stock. Buyer shall issue and
deliver the Evergreen Stock to Seller immediately upon the
receipt of NYSE approval for listing. The Redeemable Preferred
Stock shall not be listed on the NYSE, and shall be issued and
delivered to Seller at Closing. The terms of the Redeemable
Preferred Stock as described in Exhibit I shall, however, upon
the signing of this Agreement, be submitted by Buyer to the NYSE
for review, and Buyer and Seller acknowledge that the NYSE may
comment on the terms of such stock. To the extent that the NYSE
suggests or requires any changes to the terms and conditions
contained in Exhibit I, or imposes any conditions in connection
with the approval of the listing of the Evergreen Stock and the
Adjustment Stock, and such changes or conditions, if implemented,
are likely to have an adverse economic effect on Seller, Buyer
and Seller shall
22
negotiate in good faith to agree upon a means to compensate
Seller for such adverse economic effect. Upon agreement on such
means, Seller agrees to accept the changes to the terms of the
Redeemable Preferred Stock and Exhibit I required or requested by
the NYSE and any conditions in connection with the approval of
the listing of the Evergreen Stock and the Adjustment Stock
imposed by the NYSE.
ARTICLE XI
EFFECT OF CLOSING
11.1 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.
11.2 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.
23
(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 11.2(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.
11.3 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 11.2) 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.
11.4 SHARED OBLIGATIONS. If monies are received by any
party hereto which, under the terms of this Article XI, 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 XI 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.
11.5 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.
24
11.6 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 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 XII
SETTLEMENT OF PRORATIONS
12.1 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
XI 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 XI hereof.
12.2 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 12.2 shall be paid one-half (1/2) by Buyer and
one-half (1/2) by Seller.
ARTICLE XIII
ENVIRONMENTAL
13.1 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 13.3 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).
25
13.2 SPILLS AND NORM: Without changing the allocation of
risk reflected in Sections 13.7 and 13.8, and without creating
knowledge on Buyer's part that could or would limit or eliminate
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 ▇▇▇▇▇, materials and equipment as
scale or in other forms, that said ▇▇▇▇▇, 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.
13.3 ACCESS TO CONDUCT ASSESSMENT:
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.
13.4 MATERIAL ADVERSE ENVIRONMENTAL CONDITIONS: Buyer's sole
and exclusive remedy for environmental conditions is as provided
in Section 13.8.
13.5 "AS IS, WHERE IS" PURCHASE: Subject to Section 13.8,
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
▇▇▇▇▇, water ▇▇▇▇▇, 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
13.8.
26
13.6 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 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.
13.7 BUYER'S INDEMNITY:
(a) SUBJECT TO SECTION 13.8, 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 13.8 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 13.8, 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
27
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 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.
13.8 SELLER'S INDEMNITY:
(a) SUBJECT TO THE TERMS AND PROVISIONS OF
SECTIONS 13.7 AND 14.7 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 ANY CLAIM OF
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
28
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
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.
13.9 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 13.8 shall not be
applicable until such time as Seller's share of liability under
Section 13.8 exceeds $1,000,000.00.
13.10. ENVIRONMENTAL PERMITS. Notwithstanding any other
provision of this Agreement, and except as set out in EXHIBIT G
to the extent executed and delivered at Closing, Buyer and
Seller agree as follows:
a. There are various permits and licenses required by
governmental agencies in connection with the operation of
the Subject Interests.
b. With respect to all such licenses, permits and
similar items, the parties agree that
(1) those that can be assigned or transferred
without governmental approval will be so assigned or
transferred at Closing;
(2) those that can be assigned or transferred,
but only with governmental approval, will be requested
to be assigned or transferred at or shortly after
Closing;
(3) as to those that cannot be assigned or
transferred, Buyer will commence its application for
such licenses, permits and similar items at or before
Closing and Seller will cooperate fully with Buyer in
attempting to acquire such items; and
29
(4) the lack of a necessary permit, license, or
similar item will not constitute an unfilled closing
condition of either party and will not constitute a
breach of either party's representations or warranties.
ARTICLE XIV
MISCELLANEOUS
14.1 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.
14.2 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 .
14.3 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.
14.4 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 THROUGH CLOSING (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,
30
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.
14.5 FURTHER ASSURANCES AND RECORDS
(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
31
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 ▇▇▇▇▇
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.
14.6 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 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,
32
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 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 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
33
$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.
14.7 SURVIVAL. No representation, warranty, covenant or
agreement made herein shall survive the Closing except as
provided in this Section 14.7. It is expressly agreed that the
terms and provisions of Articles I, III, IV, V, XII, and XIII and
Sections 6.3, 6.4, 7.1, Sections 13.1 through 13.7 and
Section 13.9, shall survive the Closing. The terms and
provisions of Section 13.8 shall expire according its term.
14.8 SIGNATURE OF KLT INC. This Agreement for Purchase and
Sale is executed by KLT Inc. solely for purposes of Article XIII
and Section 14.4 and for no other purpose.
14.9 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.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: President
If to Buyer: Evergreen Resources, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may, by written notice so delivered to the other,
change the address to which delivery shall thereafter be made.
14.10 INCIDENTAL EXPENSES. Buyer shall bear and pay (i)
any and all Federal, State or local Transfer Taxes as defined in
Section 11.2(b) hereof incident to the transfer, assignment or
other conveyance of the Assets to Buyer, and (ii) all costs or
fees required to obtain consent to assign any Federal, State or
Indian leases included in the Assets. 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.
34
14.11 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.
14.12 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.
14.13 EXHIBITS. All Exhibits and Schedules hereto which
are referred to herein are hereby made a part hereof and
incorporated herein by reference.
14.14 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.
14.15 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.
14.16 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.
14.17 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.
35
14.18 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.
14.19 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, ▇▇▇▇ 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.
14.20 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.
14.21 TERMINATION. In the event the total amount of
adjustments to the Purchase Price under Sections 7.2 and 13.4
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 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.
14.22 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.
14.23 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.
14.24 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
36
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.
14.25 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,
RESPECTIVELY. 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.
14.26 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 XV
CASUALTY LOSS AND CONDEMNATION
15.1 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 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.
15.2 PROCEEDS AND AWARDS. In the event of any loss
described in Section 15.1(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
37
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 15.2, 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 8.1(b).
ARTICLE XVI
DEFAULT AND REMEDIES
16.1 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 16.3)
being expressly waived by Seller.
16.2 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 16.3) being expressly
waived by Buyer.
16.3 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 8.2(b) and such other
portions of this Agreement as are necessary to the enforcement
and construction of Sections 6.3, 6.4 and 8.2(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.
16.4 NOTICE. Notice of termination under this Article
XVI or under Section 14.21 shall be in writing and given as
provided in Section 14.9. 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.
38
[signature page follows]
39
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/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Title: Managing Director
"SELLER"
EVERGREEN RESOURCES, INC.,
a Colorado corporation
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and CEO
'BUYER"
KLT INC.
a Missouri corporation
Executed solely for the purpose of ARTICLE XIII
and Section 14.4
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Title: Managing Director
40
