PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
ENERGEN RESOURCES MAQ, INC.
AS SELLER
AND
BELLWETHER EXPLORATION COMPANY
AS BUYER
INDEX
PAGE
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ARTICLE 1. DEFINITIONS........................................................... 1
ARTICLE 2. SALE AND PURCHASE..................................................... 7
ARTICLE 3. PURCHASE PRICE........................................................ 7
3.1 Purchase Price.................................................... 7
3.2 ▇▇▇▇▇▇▇ Money Deposit............................................. 7
3.3 Allocation........................................................ 7
3.4 Preferential Rights............................................... 7
3.5 Consents.......................................................... 8
ARTICLE 4. REVIEW BY BUYER....................................................... 8
4.1 Review of Records................................................. 8
4.2 Alleged Adverse Matters........................................... 8
4.3 Adjustment of Purchase Price for Title Defects.................... 9
4.4 Waiver............................................................ 10
ARTICLE 5. INSPECTION OF PROPERTIES.............................................. 10
ARTICLE 6. ACCOUNTING............................................................ 10
6.1 Revenues, Expenses and Capital Expenditures....................... 10
6.2 Taxes............................................................. 11
6.3 Obligations and Credits........................................... 11
6.4 Gas Imbalances.................................................... 11
6.5 Miscellaneous Accounting.......................................... 12
6.6 Final Accounting Settlement....................................... 12
6.7 Post-Final Accounting Settlement.................................. 12
6.8 Audit Rights...................................................... 13
ARTICLE 7. CASUALTY AND CONDEMNATION............................................ 13
ARTICLE 8. INDEMNITIES........................................................... 14
8.1 Seller's Indemnity Obligations (excluding Environmental Claims)... 14
8.2 Buyer's Indemnity Obligations (excluding Environmental Claims).... 14
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8.3 Environmental Claims.............................................. 15
8.4 Asbestos and NORM................................................. 15
8.5 Notice and Cooperation............................................ 15
8.6 Defense of Claims................................................. 15
8.7 Waiver of Certain Damages......................................... 16
8.8. Limitation on Indemnities......................................... 16
ARTICLE 9. WARRANTIES AND DISCLAIMERS........................................... 16
9.1 Special Warranty of Title......................................... 16
9.2 Disclaimer - Representations and Warranties....................... 16
9.3 Disclaimer - Statements and Information........................... 17
ARTICLE 10. SELLER'S REPRESENTATIONS AND WARRANTIES............................. 17
10.1 Organization and Good Standing.................................... 17
10.2 Corporate Authority; Authorization of Agreement................... 17
10.3 No Violations..................................................... 18
10.4 Absence of Certain Changes........................................ 18
10.5 Operating Costs................................................... 18
10.6 Litigation and Other Disputes..................................... 18
10.7 Bankruptcy........................................................ 19
10.8 Material Contracts................................................ 19
10.9 Approvals and Preferential Rights................................. 19
10.10 Compliance with Law and Permits................................... 19
10.11 Environmental Compliance.......................................... 20
10.12 Status of Contracts............................................... 20
10.13 Production Burdens, Taxes, Expenses and Revenues.................. 20
10.14 Production Sales Matters.......................................... 20
10.15 Capital Commitments............................................... 21
10.16 Limitation on Representations..................................... 21
ARTICLE 11. BUYER'S REPRESENTATIONS AND WARRANTIES............................... 21
11.1 Organization and Good Standing.................................... 21
11.2 Corporate Authority; Authorization of Agreement................... 21
11.3 No Violations..................................................... 22
11.4 SEC Disclosure.................................................... 22
11.5 Independent Evaluation............................................ 22
11.6 Buyer's Reliance.................................................. 22
11.7 Qualified Leaseholder............................................. 22
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ARTICLE 12. ADDITIONAL AGREEMENTS................................................ 23
12.1 Covenants of Seller............................................... 23
12.2 Notice of Loss.................................................... 23
12.3 Subsequent Operations............................................. 23
12.4 Buyer's Assumption of Obligations................................. 23
12.5 Records........................................................... 24
ARTICLE 13. ARBITRATION.......................................................... 24
ARTICLE 14. CONDITIONS PRECEDENT TO CLOSING...................................... 25
14.1 Conditions Precedent to Seller's Obligation to Close.............. 25
14.2 Conditions Precedent to Buyer's Obligation to Close............... 26
ARTICLE 15. TERMINATION.......................................................... 26
15.1 Grounds for Termination........................................... 26
15.2 Effect of Termination............................................. 27
15.3 Dispute over Right to Terminate................................... 27
15.4 Return of Documents............................................... 28
15.5 Confidentiality................................................... 28
ARTICLE 16. THE CLOSING.......................................................... 28
16.1. Preliminary Closing Statement..................................... 28
16.2 Obligations of Seller at Closing.................................. 28
16.3 Obligations of Buyer at Closing................................... 29
16.4 Site of Closing................................................... 29
ARTICLE 17. MISCELLANEOUS........................................................ 29
17.1 Notices........................................................... 29
17.2 Conveyance Costs.................................................. 30
17.3 Brokers' Fees..................................................... 30
17.4 Further Assurances................................................ 30
17.5 Survival of Representations and Warranties........................ 30
17.6 Amendments and Severability....................................... 30
17.7 Successors and Assigns............................................ 31
17.8 Headings.......................................................... 31
17.9 Governing Law..................................................... 31
17.10 No Partnership Created............................................ 31
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17.11 Public Announcements.............................................. 31
17.12 No Third Party Beneficiaries...................................... 31
17.13 Deceptive Trade Practices......................................... 31
17.14 Tax Deferred Exchange Election.................................... 32
17.15 Not to be Construed Against Drafter............................... 32
17.16 Entire Agreement.................................................. 32
17.17 Conspicuousness of Provisions..................................... 32
17.18 Execution in Counterparts......................................... 32
17.19 High Island Block 71.............................................. 32
EXHIBITS
EXHIBIT A - DESCRIPTION OF PROPERTIES
EXHIBIT B - NONE
EXHIBIT C - ASSIGNMENT AND ▇▇▇▇ OF SALE
EXHIBIT D - CERTIFICATE
EXHIBIT E - NON-FOREIGN AFFIDAVIT
EXHIBIT F - LIST OF CONTRACTS
EXHIBIT G - LITIGATION AND CLAIMS
EXHIBIT H - ALLOCATION OF PURCHASE PRICE
EXHIBIT I - GAS IMBALANCES
EXHIBIT J - APPROVALS AND PREFERENTIAL RIGHTS
EXHIBIT K - VIOLATIONS OF LAWS
EXHIBIT L - PRODUCTION SALES MATTERS
EXHIBIT M - CAPITAL COMMITMENTS
EXHIBIT N - HI 71 FORM OF ASSIGNMENT
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is dated June 11, 1999,
by and between ENERGEN RESOURCES MAQ, INC., a Delaware corporation, with an
office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (hereinafter
referred to as "Seller") and BELLWETHER EXPLORATION COMPANY, a Delaware
corporation, with an office at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(hereinafter referred to as "Buyer"), and is based on the following premises:
WHEREAS, Seller desires to sell, assign and convey to Buyer and Buyer
desires to purchase and accept certain oil and gas properties and related
interests; and
WHEREAS, the parties have reached agreement regarding such sale and
purchase.
NOW, THEREFORE, for valuable consideration and the mutual covenants and
agreements herein contained, Seller and Buyer agree as follows:
ARTICLE 1. DEFINITIONS
1. Definitions: In this Agreement, capitalized terms have the meanings
provided in this Article 1, unless expressly provided otherwise in other
Articles. All defined terms include both the singular and the plural. All
references to Articles or Sections refer to Articles or Sections in this
Agreement, and all references to Exhibits refer to the Exhibits attached to this
Agreement. The Exhibits which are attached hereto are incorporated in and made
a part of this Agreement.
"Accounting Referee" has the meaning set forth in Section 6.8.
"Affiliate" means and includes any entity that, directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with the entity specified.
"Alleged Adverse Matters" has the meaning set forth in Section 4.2.
"Alleged Title Defect" means a Title Defect (as hereinafter defined) which
is asserted by Buyer in accordance with Section 4.3.
"Assignment and ▇▇▇▇ of Sale" means a document in the form of Exhibit C.
"Assumed Obligations" has the meaning set forth in Section 12.4.
"Business Day" means a Day (as hereinafter defined) excluding Saturdays,
Sundays and U.S. legal holidays.
"Casualty Loss" means any loss, damage or reduction in value resulting from
mechanical failure or defects, catastrophic occurrences, acts of God and any
other losses which are not the result of normal wear and tear or of natural
reservoir changes.
"Certificate" means a document in the form of Exhibit D.
"Claim" means any and all claims, demands, suits, causes of action,
investigations, administrative proceedings, other legal proceedings, losses,
damages, liabilities, judgments, assessments, settlements, fines, notices of
violation, penalties, interest, obligations, responsibilities and costs
(including attorneys' fees and costs of litigation) of any kind or character
(whether or not asserted prior to the date hereof, and whether known or unknown,
fixed or unfixed, conditional or unconditional, based on negligence, strict
liability or otherwise, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated, secured
or unsecured, accrued, absolute, contingent or otherwise) which are brought by
or owed to a Third Party (as hereinafter defined).
"Close" or "Closing" means the consummation of the transfer of title to the
Properties to Buyer, including execution and delivery of all documents provided
herein.
"Closing Date" means June 30, 1999, or such other date as may be mutually
agreed upon by the parties or on which Closing occurs in accordance with the
terms of this Agreement.
"Day" means a calendar day consisting of twenty-four (24) hours from
midnight to midnight.
"Defensible Title" means, as to the Leases, such title held by Seller that,
subject to and except for the Permitted Encumbrances (as hereinafter defined):
(a) Entitles Seller to own and receive payment of revenues for not
less than the "Net Revenue Interests" set forth on Exhibit A of all oil,
gas and associated liquid and gaseous hydrocarbons produced, saved and
marketed from the Leases;
(b) Obligates Seller to bear costs and expenses relating to the
ownership, operation, maintenance and repair of the ▇▇▇▇▇ and facilities
located on or attributable to the Leases in an amount not greater than the
"Working Interests" set forth on Exhibit A, unless there is a corresponding
proportionate increase in the Net Revenue Interests; and
(c) Is free and clear of all liens, encumbrances, burdens and defects
that a reasonable and prudent person engaged in the business of ownership,
development and operation of oil and gas properties with knowledge of all
applicable facts and circumstances and the understanding of their legal
significance would not be willing to accept with respect to portions of the
Leases affected thereby.
"▇▇▇▇▇▇▇ Money Deposit" has the meaning set forth in Section 3.2.
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"Effective Time" means January 1, 1999, at 7:00 a.m., local time where the
Properties are located.
"Environmental Claims" means all Claims for pollution or environmental
damages of any kind, including without limitation, those relating to: (a)
remediation and/or clean-up thereof, (b) damage to and/or loss of any property
or resource, and/or (c) injury or death of any person(s) whomsoever, including
without limitation Claims relating to breach of Environmental Laws, common law
causes of action such as negligence, gross negligence, strict liability,
nuisance or trespass, or fault imposed by statute, rule, regulation or otherwise
(but specifically excluding any Claims relating to asbestos or NORM (as
hereinafter defined), which are covered by Section 8.4 hereof), and including
all costs associated with remediation and clean up, and fines and penalties
associated with any of the foregoing.
"Environmental Laws" means all laws, statutes, ordinances, permits,
orders, judgments, rules or regulations which are promulgated, issued or enacted
by a governmental entity having appropriate jurisdiction that, (a) relate to the
prevention of pollution or environmental damage, (b) the remediation of
pollution or environmental damage, or (c) the protection of the environment
generally; including without limitation, the Clean Air Act, as amended, the
Clean Water Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Federal Water Pollution
Control Act, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, the Safe Drinking Water Act, as amended, the Toxic Substance and
Control Act, as amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, the Hazardous and the Solid Waste Amendments Act of 1984, as
amended, and the Oil Pollution Act of 1990, as amended.
"Final Accounting Settlement" has the meaning set forth in Section 6.6.
"Final Settlement Date" has the meaning set forth in Section 6.6.
"Forest Imbalance Claim" has the meaning given to such term on Exhibit G.
"Hydrocarbons" has the meaning given to such term in the definition of
Properties.
"Laws" means any and all applicable laws, statutes, ordinances, permits,
decrees, orders, judgments, rules or regulations (including without limitation
Environmental Laws) which are promulgated, issued or enacted by a governmental
entity having appropriate jurisdiction.
"Leases" has the meaning given to such term in the definition of
Properties.
"Material Contracts" means those contracts listed on Exhibit F.
"NPDES Claim" has the meaning given to such term on ▇▇▇▇▇▇▇ ▇.
▇
"▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇" means a document in the form of Exhibit E.
"NORM" means naturally occurring radioactive materials.
"Permitted Encumbrances" means:
(a) Royalties, overriding royalties, production payments, reversionary
interests, convertible interests, net profits interests, division orders
and similar burdens encumbering the Properties as of the Effective Time to
the extent the net cumulative effect of such burdens do not operate to (i)
reduce the net revenue interests of the Properties to less than the net
revenue interests set forth on Exhibit A or (ii) cause an increase in the
working interest in any Property from that shown on Exhibit A without a
proportionate increase in the net revenue interest for such Property;
(b) Preferential purchase rights and consents to assignment and
similar contractual provisions encumbering the Properties with respect to
which, prior to Closing, (i) waivers or consents are obtained from the
appropriate parties, or (ii) the appropriate time period for asserting such
rights have expired without an exercise of such rights;
(c) Preferential purchase rights encumbering the Properties which are
exercised by a Third Party, if the affected Properties are withdrawn from
this sale transaction and handled in accordance with Section 3.4;
(d) All rights to consent by, required notices to, filings with, or
other actions by governmental entities in connection with the sale or
conveyance of the Properties, if the same are customarily obtained
subsequent to the transfer of title;
(e) Rights reserved to or vested in any governmental entity having
appropriate jurisdiction to control or regulate the Properties in any
manner whatsoever, and all Laws of any such governmental entity;
(f) Easements, rights-of-way, servitudes, surface leases, sub-surface
leases, pipelines, platforms, facilities, utility lines, telephone lines,
power lines, and structures on, over and through the Properties, to the
extent such rights, interests or structures do not materially interfere
with the operation of the Properties;
(g) Liens for taxes or assessments not yet due or not yet delinquent
or, if delinquent, that are being contested by Seller in good faith in the
normal course of business;
(h) Liens of operators relating to obligations not yet due or not yet
delinquent;
(i) The Material Contracts; and
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(j) Alleged Adverse Matters and Title Defects which Buyer has waived
under Section 4.4.
"Properties" means the following properties (real, personal or mixed) and
rights (contractual or otherwise):
(a) All of Seller's right, title and interest in, to and under or
derived from the oil and gas leasehold interests, record title interests,
operating rights interests, fee interests, mineral interests and overriding
royalty interests described on Exhibit A (collectively, the "Leases");
(b) All of Seller's right, title and interest in and to, or derived
from, all of the presently existing and valid unitization and pooling
agreements and units (including all units formed by voluntary agreement and
those formed under the rules, regulations, orders or other official acts of
any governmental entity having appropriate jurisdiction) to the extent they
relate to any of the interests which are expressly described on Exhibit A;
(c) All of Seller's right, title and interest in and to all oil, gas
and/or other liquid or gaseous hydrocarbons (collectively, the
"Hydrocarbons") produced from or attributable to Seller's interest in the
Leases and attributable to the period from and after the Effective Time;
(d) All of Seller's right, title and interest in and to, or derived
from, all of the presently existing and valid oil sales contracts,
casinghead gas sales contracts, gas sales contracts, processing contracts,
gathering contracts, transportation contracts, easements, rights-of-way,
servitudes, surface leases and other contracts (including the Material
Contracts), to the extent the same are assignable and relate to any of the
interests which are expressly described on Exhibit A;
(e) All of Seller's right, title and interest in and to all personal
property and improvements (collectively, the "Equipment"), including
without limitation, ▇▇▇▇▇ (whether producing, plugged and abandoned, shut-
in, injection, disposal or water supply), tanks, boilers, platforms,
buildings, fixtures, machinery, equipment, pipelines, utility lines, power
lines, telephone lines, telegraph lines and other appurtenances located on,
in, under and about the Leases, to the extent the same are situated upon
and used or held for use by Seller solely in connection with the ownership,
operation, maintenance and repair of the interests which are expressly
described on Exhibit A, subject to the reservations stated below;
(f) All of Seller's Records;
(g) All franchises, licenses, permits, approvals, consents,
certificates and other authorizations and other rights granted by
governmental authorities and all certificates of convenience or necessity,
immunities, privileges, grants and other rights that relate to the
5
Properties or the ownership or operation of any thereof, to the extent the
same are assignable (the "Permits"); and
(h) All (i) accounts, instruments and general intangibles (as such
terms are defined in the Uniform Commercial Code of Texas) attributable to
the Properties with respect to any period of time on or after the Effective
Time, and (ii) liens and security interests in favor of Seller, whether
▇▇▇▇▇▇ or inchoate, under any law, rule or regulation or under any of the
Material Contracts (a) arising from the ownership, operation or sale or
other disposition on or after the Effective Time of any of the Properties
or (b) arising in favor of Seller whether by contract or statute as the
operator or non-operator of certain of the Properties.
"Purchase Price" has the meaning set forth in Section 3.1.
"Records" means all of Seller's books, records and files related to the
Properties, including all (i) abstracts, title opinions, title reports,
environmental site assessments, environmental compliance reports, lease and land
files, surveys, analyses, compilations, correspondence, filings with and reports
to regulatory agencies and other documents and instruments that in any manner
relate to the Properties, (ii) computer databases that are owned by or licensed
to Seller that relate to the Properties, (iii) geophysical, geological,
engineering, exploration, production and other technical data, magnetic field
recordings, digital processing tapes, field prints, summaries, reports and maps,
whether written or in electronically reproducible form, that are in the
possession of Seller and relate to the Properties and (iv) all other books,
records, files and magnetic tapes containing title or other information that are
in the possession of Seller and relate to the Properties (the "Data"), but
specifically excluding (i) previous offers and economic analyses associated with
the acquisition, sale or exchange of the Properties, (ii) interpretive
information, (iii) personnel information, (iv) corporate, legal, financial and
tax information, (v) information covered by a non-disclosure obligation, (vi)
information covered by a legal privilege and (vii) any other information that
Seller does not have the right to assign to Buyer.
"Title Adjustment" has the meaning set forth in Section 4.3.
"Title/Casualty Basket Amount" means the sum of U.S. $50,000.
"Title Defect" means any lien, encumbrance, encroachment or defect
associated with Seller's title to the Properties (excluding Permitted
Encumbrances) that would cause Seller not to have Defensible Title.
"Third Party" means any person or entity, governmental or otherwise, other
than Seller and Buyer.
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ARTICLE 2. SALE AND PURCHASE
On the Closing Date, effective as of the Effective Time, and upon the terms
and conditions herein set forth, Seller agrees to sell and assign the Properties
to Buyer and Buyer agrees to buy and accept the Properties.
ARTICLE 3. PURCHASE PRICE
3.1 Purchase Price. Subject to adjustments as set forth herein, the
total purchase price for the Properties shall be Twenty-Two Million Two Hundred
Fifty Thousand Dollars (US $22,250,000.00) (the "Purchase Price"), payable in
full at Closing in immediately available funds.
3.2 ▇▇▇▇▇▇▇ Money Deposit. Upon the execution of this Agreement, Buyer
shall pay to Seller a deposit in the amount of Three Million Dollars (US
$3,000,000.00) (the "▇▇▇▇▇▇▇ Money Deposit"). If Closing occurs, the Purchase
Price shall be credited by the amount of the ▇▇▇▇▇▇▇ Money Deposit. If Closing
does not occur, the ▇▇▇▇▇▇▇ Money Deposit shall be refunded to Buyer, unless (a)
Closing does not occur because of Buyer's failure or refusal to Close in breach
of this Agreement or (b) because the conditions precedent to Seller's obligation
to Close provided in Section 14.1 are unmet at the time set for Closing, in
which case Seller shall retain the ▇▇▇▇▇▇▇ Money Deposit as liquidated damages
and not as a penalty. If, however, in the case of either (a) or (b) above, any
conditions precedent to Buyer's obligation to Close provided in Section 14.2 are
unmet at the time set for Closing, Seller shall not be entitled to retain the
▇▇▇▇▇▇▇ Money Deposit as hereinabove provided. In the event that Closing occurs
after June 30, 1999, through no fault of Seller, interest shall be payable on
the Purchase Price from June 30, 1999 through and including the Closing Date at
the rate of ten percent (10%) per annum.
3.3 Allocation. Attached hereto as Exhibit H is Buyer's good faith
allocation of the Purchase Price which shall be used in providing any required
preferential purchase right notifications.
3.4 Preferential Rights. If any of the Properties are burdened with
preferential purchase rights, the assignment of the Properties subject to such
preferential rights shall be conditioned upon Seller obtaining the necessary
waiver or expiration of such right, and this Agreement shall not constitute an
assignment or attempted assignment thereof without such waiver or expiration. If
the time for exercising any preferential purchase right has not expired and the
holder thereof has not waived the same prior to the Closing Date, the Property
affected by such preferential right shall be conveyed to Buyer at Closing,
subject to the preferential right and without any reduction in the Purchase
Price. If the holder of the preferential right elects to purchase the Property
affected by the preferential right after Closing, Buyer shall be obligated to
convey such Property to the holder of such preferential right and Buyer shall be
entitled to the proceeds resulting therefrom. If, prior to Closing, a holder of
a preferential purchase right notifies Seller that it intends to exercise its
rights with respect to any of the Properties to which its preferential purchase
right applies, the Properties covered by said preferential purchase right shall
be excluded from the Properties to be conveyed to Buyer, and the Purchase Price
shall be reduced by the value allocated to said Properties by Buyer in
accordance with Section 3.3. If the holder of the preferential purchase right
fails to consummate the purchase of the Properties, Seller shall promptly notify
Buyer in writing. Within five (5) Business Days after Buyer's
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receipt of such notice or the Closing Date, whichever is later, Seller shall
sell to Buyer, and Buyer shall purchase from Seller, such Properties under the
terms of this Agreement for a price equal to the aforesaid value allocated to
such Properties. Notwithstanding the foregoing, Buyer shall have no obligation
to purchase such Properties if Buyer is not notified in writing of the
preferential purchase right holder's failure to consummate the purchase of such
Properties within sixty (60) Days following Closing.
3.5 Consents. If any of the oil, gas or mineral leases which are part
of the Properties require the consent of a Third Party to assign Seller's
interest therein, the assignment of such lease(s) subject to consent
requirements shall be conditioned upon Seller obtaining such consent prior to
Closing (except for consents from governmental bodies customarily obtained after
assignment which shall not be required to be obtained prior to Closing). With
respect to any leasehold interest for which consent is not obtained prior to
Closing, such interest shall not be conveyed to Buyer at Closing and the
Purchase Price shall be reduced to account for exclusion of the affected
Property. If Seller obtains the required consent(s) within sixty (60) days
following Closing, Seller shall sell and Buyer shall purchase the interest(s)
affected thereby under the terms of this Agreement for a price equal to the
Purchase Price adjustment made therefor at Closing. There shall be no
obligations of sale or purchase of the affected interest(s) in the Properties
following sixty (60) days after the Closing Date.
ARTICLE 4. REVIEW BY BUYER
4.1 Review of Records. Seller shall make available to Buyer Records in
Seller's possession relating to the Properties. Buyer shall be entitled to
review said Records and shall have a right to request a reasonable number of
copies of such Records, at Buyer's expense.
4.2 Alleged Adverse Matters. If, as a result of Buyer's due diligence
review and inspection of Seller's Records, Buyer discovers provisions of any
contract(s) (including the Material Contracts) which would (as to each such
contractual or other matter discovered) have a material adverse effect on the
value or operation of the Properties or any portion thereof (collectively, the
"Alleged Adverse Matters"), then as soon as reasonably practicable after Buyer's
review of the applicable Records, but in no event later than ten (10) Business
Days prior to the Closing Date, Buyer shall notify Seller in writing of any such
Alleged Adverse Matters. For purposes hereof "material" means (i) as to each
Alleged Adverse Matter a value or effect net to Seller's interest in the
Properties greater than Twenty-Five Thousand Dollars (US $25,000) and (ii) as to
all Alleged Adverse Matters a value or effect net to Seller's interest in the
Properties greater than Two Hundred Fifty Thousand Dollars (US $250,000) in the
aggregate. Buyer's notice of Alleged Adverse Matters shall include a
description and full explanation of each such matter being claimed and a value
which Buyer in good faith attributes to such matter. Seller may undertake to
satisfy some, all or none of Buyer's Alleged Adverse Matters at Seller's sole
cost and expense. Buyer and Seller shall meet at least three (3) Business Days
prior to the Closing Date in an attempt to mutually agree on a proposed
resolution with respect to any Alleged Adverse Matters which remain uncured.
For all Alleged Adverse Matters which are established by agreement of the
parties or pursuant to the arbitration procedures established
8
herein and not otherwise resolved by Seller prior to Closing, there shall be a
reduction in the Purchase Price equal to the amount or value thereof, as agreed
by the parties or decided by arbitration, and an adjustment therefor shall be
made in the preliminary Closing statement or in the Final Accounting Statement,
as appropriate. If the parties cannot reach resolution of Alleged Adverse
Matters within the time period specified above, Closing shall not be delayed,
postponed or canceled, but either party has the right, exercisable within sixty
(60) days after the Closing Date, to refer the same to arbitration in accordance
with Article 13. Subject to the terms of Article 13, the decision of the
arbitrators regarding such dispute over Alleged Adverse Matters shall be final
as between the parties.
4.3 Adjustment of Purchase Price for Title Defects. As soon as
reasonably practicable after Buyer's review of the Records in accordance with
Section 4.1, but in no event later than ten (10) Business Days prior to the
Closing Date, Buyer shall notify Seller in writing of any Properties which are
subject to Alleged Title Defects and/or whose net revenue interest and/or
working interest is/are less than or greater than that amount specified on
Exhibit A (collectively, the "Title Adjustments"). Seller also shall promptly
notify Buyer in writing of any such instances of which Seller becomes aware.
Notice of Title Defects or Title Adjustments shall include a description and
full explanation of each Title Defect and Title Adjustment being claimed and a
value which Buyer in good faith attributes to each. With respect to Alleged
Title Defects, Seller may undertake to satisfy some, all or none of those raised
by Buyer, at Seller's sole cost and expense. Buyer and Seller shall meet at
least three (3) Business Days prior to the Closing Date in an attempt to
mutually agree on a resolution with respect to any Alleged Title Defects or
Title Adjustments which by such time have not been agreed between the parties in
writing. It is recognized that good faith differences of opinion may exist
between Buyer and Seller in connection with Alleged Title Defects or Title
Adjustments, including without limitation, disputes as to (i) whether or not the
alleged defect constitutes a Title Defect within the meaning of this Agreement,
(ii) whether or not the magnitude of such defect is great enough that Buyer is
contractually entitled to assert such Title Defect, (iii) whether or not the
Title Defect was properly and timely asserted by Buyer pursuant to this Article,
and (iv) the appropriate upward or downward adjustment, if any, to be made to
the Purchase Price on account of such Title Defect. In determining whether a
portion of a Property contains a Title Defect, it is the intent of the parties
to include, when possible, only that portion of the Property adversely affected.
If the value properly allocated to a Title Defect cannot be determined directly
from Exhibit H because the Title Defect is included within, but does not totally
comprise the Property to which the allocated value relates, Seller and Buyer
shall attempt to proportionately reduce the allocated value on Exhibit H.
Closing shall not be delayed, postponed or canceled because a resolution of a
Title Defect or Title Adjustment is not agreed prior to the Closing Date, except
to the extent that the Alleged Title Defect being asserted is failure of
Seller's title in whole or in part to any portion(s) of the Properties (a
"Material Defect"). To the extent that any portion(s) of the Properties are
alleged to be affected by a Material Defect which remains on the scheduled
Closing Date uncured or otherwise unresolved by the parties, such affected
portion(s) of the Properties shall be excluded from the Properties conveyed to
Buyer at Closing and the Purchase Price shall be reduced accordingly. If the
parties cannot mutually agree on a Purchase Price adjustment for a Material
Defect, Buyer shall have the right to (i) proceed to Closing and accept the
Property with the Material Defect with no Purchase Price adjustment or (ii)
terminate this Agreement as to the Property affected by the Material Defect and
receive a
9
Purchase Price adjustment for such Property as set forth on Exhibit H or, where
applicable, the proportionate allocated value. If any difference of opinion
regarding an Alleged Title Defect (excluding any Material Defect) or Title
Adjustment or value of the Title Defect (excluding any Material Defect) or Title
Adjustment (collectively, the "Title Defect Dispute") is not resolved by mutual
agreement of Buyer and Seller prior to the Closing Date, then either party has
the right, exercisable within sixty (60) days after the Closing Date, to refer
the same to arbitration in accordance with Article 13, but using one (1)
mutually agreeable arbitrator who is an attorney licensed in the state in which
the Properties are located and who has at least fifteen (15) years oil and gas
title experience in such state. Subject to the terms of Article 13, the decision
of the arbitrator regarding Title Defect Dispute(s) shall be final as between
the parties.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN NO EVENT SHALL EITHER
PARTY HAVE ANY OBLIGATIONS HEREUNDER WITH RESPECT TO ANY TITLE DEFECTS OR TITLE
ADJUSTMENTS EXCEPT TO THE EXTENT THAT (I) EACH SUCH TITLE DEFECT OR TITLE
ADJUSTMENT EXCEEDS FIFTEEN THOUSAND DOLLARS ($15,000) AND (II) ALL SUCH TITLE
DEFECTS AND TITLE ADJUSTMENTS, TOGETHER WITH THE VALUE OF ALL CASUALTY LOSSES
AND/OR TAKINGS UNDER ARTICLE 7, EXCEED IN THE AGGREGATE THE TITLE/CASUALTY
BASKET AMOUNT, AND EACH PARTY HEREBY WAIVES ALL UPWARD OR DOWNWARD ADJUSTMENTS
TO THE PURCHASE PRICE FOR TITLE DEFECTS AND/OR TITLE ADJUSTMENTS THE INDIVIDUAL
VALUE OF WHICH IS $15,000 OR LESS AND THE CUMULATIVE VALUE OF WHICH, TOGETHER
WITH THE VALUE OF ALL CASUALTY LOSSES AND/OR TAKINGS UNDER ARTICLE 7, IS LESS
THAN THE TITLE/CASUALTY BASKET AMOUNT.
4.4 WAIVER. EXCEPT FOR CLAIMS BUYER ASSERTS UNDER SELLER'S SPECIAL
WARRANTY OF TITLE DESCRIBED IN SECTION 9.1 AND CLAIMS ASSERTED UNDER ARTICLE 8,
ALL ALLEGED ADVERSE MATTERS, ALLEGED TITLE DEFECTS AND TITLE ADJUSTMENTS WHICH
ARE NOT RAISED BY BUYER WITHIN THE TIME PERIODS PROVIDED IN SECTIONS 4.2 AND 4.3
OR WHICH ARE RAISED AND NOT THEREAFTER SUBMITTED TO ARBITRATION IN ACCORDANCE
WITH SUCH SECTIONS SHALL BE DEEMED WAIVED BY BUYER FOR ALL PURPOSES, AND BUYER
SHALL HAVE NO RIGHT TO SEEK AN ADJUSTMENT TO THE PURCHASE PRICE, MAKE A CLAIM
AGAINST SELLER OR SEEK INDEMNIFICATION FROM SELLER ON ACCOUNT OF THE SAME. ALL
UPWARD TITLE ADJUSTMENTS WHICH ARE NOT RAISED BY SELLER WITHIN THE TIME PERIOD
PROVIDED IN SECTION 4.3 OR WHICH ARE RAISED AND NOT THEREAFTER SUBMITTED TO
ARBITRATION IN ACCORDANCE WITH SUCH SECTION SHALL BE DEEMED WAIVED BY SELLER FOR
ALL PURPOSES, AND SELLER SHALL HAVE NO RIGHT TO SEEK AN ADJUSTMENT TO THE
PURCHASE PRICE, MAKE A CLAIM AGAINST BUYER OR SEEK INDEMNIFICATION FROM BUYER ON
ACCOUNT OF THE SAME.
ARTICLE 5. INSPECTION OF PROPERTIES
Prior to entering into this Agreement, Seller has allowed Buyer access to
the Properties for the purpose of conducting a physical and environmental
inspection thereof.
ARTICLE 6. ACCOUNTING
6.1 Revenues, Expenses and Capital Expenditures. All Hydrocarbons
produced prior to the Effective Time (irrespective of whether payment for the
same has been made or received) which
10
are attributable to the Properties shall belong to Seller, and all such
Hydrocarbons produced from and after the Effective Time shall belong to Buyer.
Seller shall be entitled to all revenues and related accounts receivable
attributable to the ownership or operation of the Properties, and shall be
responsible for all costs and expenses and related accounts payable attributable
to the ownership or operation of the Properties, to the extent they relate to
the time prior to the Effective Time. Buyer shall be entitled to all revenues
and related accounts receivable attributable to the ownership or operation of
the Properties, and shall be responsible for all costs and expenses and related
accounts payable attributable to the ownership or operation of the Properties,
to the extent they relate to the time from and after the Effective Time. The
actual amounts or values associated with the above shall be accounted for in the
Final Accounting Settlement. Buyer shall assume Seller's suspense funds
associated with the acquired Properties as of the Effective Time, and these
funds shall be accounted for in the Final Accounting Settlement.
6.2 Taxes. All taxes and assessments, including without limitation,
excise, ad valorem, property, production and severance taxes and any other
federal, state and local taxes and assessments attributable to the ownership or
operation of the Properties prior to the Effective Time shall remain Seller's
responsibility, and all deductions, credits and refunds pertaining to the
aforementioned taxes and assessments, no matter when received, shall belong to
Seller. All taxes and assessments, including without limitation, excise, ad
valorem, property, production and severance taxes and any other federal, state
and local taxes and assessments attributable to the ownership or operation of
the Properties after the Effective Time shall be Buyer's responsibility, and all
deductions, credits and refunds pertaining to the aforementioned taxes and
assessments, no matter when received, shall belong to Buyer. The actual
amounts or values associated with the above, if any, shall be accounted for in
the Final Accounting Settlement. The parties agree that the transaction
contemplated herein is an occasional sale of assets by Seller in which Seller
does not trade in the ordinary course of its business. Accordingly, the
parties will take commercially reasonable actions to establish the occasional
sale exemption from any sales tax associated with the transaction contemplated
herein. Notwithstanding the foregoing, Buyer shall be solely responsible for all
transfer, sales, use or similar taxes resulting from or associated with the
transaction contemplated under this Agreement.
6.3 Obligations and Credits. Any and all prepaid insurance premiums,
utility charges, taxes, rentals and any other prepays, to the extent applicable
to periods of time after the Effective Time and to the extent attributable to
the Properties shall be reimbursed to Seller by Buyer; and accrued payables
applicable to periods of time prior to the Effective Time, if any, and
attributable to the Properties shall be the responsibility of Seller. The
actual amounts or values associated with the above shall be accounted for in the
Final Accounting Settlement.
6.4 Gas Imbalances. Seller's estimate of the aggregate gas imbalance as
of the Effective Time for all the Properties (exclusive of the Forest Imbalance
Claim) is 716,363 mcf overproduced (cumulative working interests), as more
particularly set forth for each of the Properties on Exhibit I. On or before
three (3) Business Days prior to the Closing Date, Seller shall provide Buyer
with a revised gas imbalance schedule for all the Properties as of the Effective
Time. There shall be a Purchase Price adjustment at Closing for the volumetric
difference in the estimated and revised
11
imbalance calculated on Seller's net revenue interest at a price of $1.70 per
mcf. To the extent that there is any difference between Seller's actual
aggregate gas imbalance as of the Effective Time and the imbalance position
settled at Closing, then an adjustment shall be made at the $1.70 per net mcf
rate in the Final Accounting Settlement. There shall be no further gas imbalance
adjustments after the Final Settlement Date. In the event of a Title Defect
affecting all or a portion of the Properties, the aggregate gas imbalance shown
above shall be adjusted to take into account the affected Property. Any Purchase
Price adjustments for gas imbalances shall be made only on those Properties
purchased by Buyer.
6.5 Miscellaneous Accounting.
6.5.1 A preliminary Closing statement will be prepared for Closing,
as provided in Section 16.1.
6.5.2 In addition to the items set forth in Sections 6.1 and 6.2, any
other amounts due between Buyer and Seller related to the ownership or
operation of the Properties shall be accounted for in the Final Accounting
Settlement.
6.6 Final Accounting Settlement. As soon as reasonably practicable,
but in no event later than ninety (90) Days after Closing, Seller shall deliver
to Buyer a post-Closing statement setting forth a detailed final calculation of
all post-Closing adjustments applicable to the period between the Effective Time
and the Closing Date ("Final Accounting Settlement"). As soon as reasonably
practicable, but in no event later than thirty (30) Days after Buyer receives
the post-Closing statement, Buyer shall deliver to Seller a written report
containing any changes Buyer proposes to be made to such statement. As soon as
reasonably practicable, but in no event later than thirty (30) days after Seller
receives Buyer's proposed changes to the post-Closing statement, the parties
shall meet and undertake to agree on the post-Closing adjustments. If the
parties fail to agree on the post-Closing adjustments, resolution shall be
handled in accordance with Section 6.8. The date upon which all amounts
associated with the Final Accounting Settlement are agreed to by the parties,
whether by decision of the Accounting Referee or otherwise, shall be herein
called the "Final Settlement Date". Any amounts owed by either party to the
other as a result of such post-Closing adjustments shall be paid within five (5)
Business Days after the Final Settlement Date. The adjustments to the Purchase
Price under this Article 6 and the payments under this Section 6.6 shall not be
limited by or applied against the deductible amounts set forth in Article 8
hereof.
6.7 Post-Final Accounting Settlement. Any revenues received or costs
and expenses paid by Buyer after the Final Accounting Settlement which are
attributable to the ownership or operation of the Properties prior to the
Effective Time shall be billed to or reimbursed to Seller, as appropriate. Any
revenues received or costs and expenses paid by Seller after the Final
Accounting Settlement which are attributable to the ownership or operation of
the Properties after the Effective Time shall be billed to or reimbursed to
Buyer, as appropriate.
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6.8 Audit Rights. In order to verify the information provided by the
parties under this Article 6, Buyer and Seller shall each have the right to
conduct, at such party's sole expense, an audit of the other party's records
relating thereto for a period of one (1) year after the Closing Date.
OBJECTIONS OR EXCEPTIONS WHICH ARE NOT RAISED WITHIN SUCH ONE-YEAR AUDIT PERIOD
SHALL BE CONCLUSIVELY DEEMED TO BE WAIVED BY THE PARTIES FOR ALL PURPOSES, AND
NEITHER PARTY SHALL HAVE THE RIGHT TO MAKE A CLAIM AGAINST THE OTHER PARTY OR
SEEK INDEMNIFICATION OR REIMBURSEMENT FROM THE OTHER PARTY ASSOCIATED WITH THE
SAME. If within such fifteen (15) Days after receiving the results of a
party's audit conducted in accordance with this Article, the parties still
cannot reach agreement, the disputed items shall be resolved by submitting the
same to Price Waterhouse Coopers, or if such firm declines to act in such
capacity, by such other firm of independent nationally recognized accountants
mutually acceptable to the parties (the "Accounting Referee"). The Accounting
Referee shall be instructed to resolve the accounting dispute(s) within thirty
(30) Days after having the relevant materials submitted to it for review. The
decision of the Accounting Referee shall be binding and non-appealable by the
parties. The fees and expenses associated with the Accounting Referee shall be
borne equally by Buyer and Seller.
ARTICLE 7. CASUALTY AND CONDEMNATION
If a substantial part of the Properties shall be (a) destroyed prior to
Closing by a Casualty Loss, or (b) taken in condemnation or if proceedings for
such purposes shall be pending (collectively referred to as a "Taking"); then
either Buyer or Seller may terminate this Agreement prior to the Closing. For
the purpose of this Section 7.1, the term "substantial" shall be defined as ten
percent (10%) of the unadjusted Purchase Price. If either party terminates
this Agreement in accordance with this Section, neither party shall have any
further obligations, except as provided in this Article and in Section 15.2.1.
If neither party terminates this Agreement, this Agreement shall remain in
full force and effect, and Seller and Buyer shall attempt to agree on a
reduction in the Purchase Price, reflecting the reduction in the value of the
Properties affected by the Casualty Loss and/or Taking. If the parties cannot
agree on a reduction, the Seller's good faith calculation shall be used for
purposes of Closing. Notwithstanding anything herein to the contrary, in no
event shall either party have any obligations hereunder with respect to any
Casualty Loss and/or Taking except to the extent that the value of all such
Casualty Losses and/or Takings, together with the amount of all Title Defects
and/or Title Adjustments allowed under Section 4.3, exceed in the aggregate the
Title/Casualty Basket Amount, and Buyer hereby waives all downward adjustments
to the Purchase Price for all Casualty Losses and/or Takings the cumulative
value of which (together with the amount of all Title Defects and/or Title
Adjustments allowed under Section 4.3) is less than the Title/Casualty Basket
Amount. Unless otherwise agreed by the parties, Seller shall retain any and
all sums paid to Seller, unpaid awards, insurance proceeds and other payments
associated with or attributable to Casualty Losses and/or Takings.
If there is a dispute over the value of any Casualty Loss and/or Taking,
Buyer may submit the matter to arbitration in accordance with Article 13 within
sixty (60) Days after Closing, or if a party
13
terminates this Agreement under this provision and the other party disputes the
party's right to terminate hereunder, the disputing party may submit the matter
to arbitration in accordance with Article 13 within sixty (60) Days after the
date which had been scheduled for Closing. IF BUYER DISPUTES THE PURCHASE PRICE
ADJUSTMENT FOR ANY CASUALTY LOSS AND/OR TAKING OR A PARTY DISPUTES TERMINATION,
AND BUYER OR THE DISPUTING PARTY, AS APPLICABLE, DOES NOT INITIATE AN
ARBITRATION PROCEEDING TO RESOLVE THE MATTER WITHIN THE APPLICABLE TIME PERIODS
SPECIFIED IN THE FOREGOING SENTENCE, SUCH PARTY IN EITHER CASE SHALL BE DEEMED
TO HAVE WAIVED ITS RIGHTS WITH RESPECT TO SUCH DISPUTE.
ARTICLE 8. INDEMNITIES
8.1 SELLER'S INDEMNITY OBLIGATIONS (EXCLUDING ENVIRONMENTAL CLAIMS)
EXCEPT FOR ENVIRONMENTAL CLAIMS WHICH SHALL BE HANDLED IN ACCORDANCE WITH
SECTION 8.3, SELLER SHALL RELEASE BUYER AND BUYER'S AFFILIATES AND THEIR
RESPECTIVE OFFICERS, DIRECTORS AND EMPLOYEES (COLLECTIVELY, THE "BUYER GROUP")
FROM AND SHALL FULLY PROTECT, INDEMNIFY, AND DEFEND BUYER GROUP FROM AND AGAINST
ANY AND ALL CLAIMS AND ANY AND ALL OCCURRENCES AND CONDITIONS WHICH WOULD
CONSTITUTE CLAIMS BUT WHICH ARE ASSERTED BY SELLER, RELATING TO, ARISING OUT OF,
OR CONNECTED WITH (I) THE BREACH BY SELLER OF THE REPRESENTATIONS CONTAINED IN
ARTICLE 10 HEREOF, (II) THE MATTERS SET FORTH ON EXHIBIT G AND (III) SELLER'S
OWNERSHIP OR OPERATION OF THE PROPERTIES PRIOR TO THE EFFECTIVE TIME, REGARDLESS
OF ANY NEGLIGENCE OF ACT OR OMISSION BY BUYER GROUP; PROVIDED, HOWEVER, THAT,
EXCEPT WITH RESPECT TO THE MATTERS DESCRIBED ON EXHIBIT G, PROPER NOTICE UNDER
SECTION 8.5 SHALL HAVE BEEN SUBMITTED TO SELLER WITHIN NINE (9) MONTHS AFTER THE
CLOSING DATE, AND FURTHER PROVIDED THAT BUYER SHALL BEAR SOLE RESPONSIBILITY FOR
THE COSTS ASSOCIATED WITH ALL SUCH CLAIMS (IN AGGREGATE) UP TO TWO HUNDRED FIFTY
THOUSAND DOLLARS (US $250,000). WITH RESPECT TO THE MATTERS DESCRIBED ON
EXHIBIT G, THERE SHALL BE NO TIME LIMIT FOR BUYER TO ASSERT A CLAIM FOR
INDEMNITY AND BUYER SHALL NOT BEAR RESPONSIBILITY FOR ANY OF THE COSTS
ASSOCIATED WITH SUCH MATTERS.
8.2 BUYER'S INDEMNITY OBLIGATIONS (EXCLUDING ENVIRONMENTAL CLAIMS)
EXCEPT FOR ENVIRONMENTAL CLAIMS WHICH SHALL BE HANDLED IN ACCORDANCE WITH
SECTION 8.3, BUYER SHALL RELEASE SELLER AND SELLER'S AFFILIATES AND THEIR
RESPECTIVE OFFICERS, DIRECTORS AND EMPLOYEES (COLLECTIVELY, THE "SELLER GROUP")
FROM AND SHALL FULLY PROTECT, INDEMNIFY, AND DEFEND THE SELLER GROUP FROM AND
AGAINST ANY AND ALL CLAIMS AND ANY AND ALL OCCURRENCES AND CONDITIONS WHICH
WOULD CONSTITUTE CLAIMS BUT WHICH ARE ASSERTED BY BUYER RELATING TO, ARISING OUT
OF, OR CONNECTED WITH (I) THE BREACH BY BUYER OF THE REPRESENTATIONS CONTAINED
IN ARTICLE 11 HEREOF, (II) THE ASSUMED OBLIGATIONS AND (III) THE OWNERSHIP OR
OPERATION OF THE PROPERTIES (A) PERTAINING TO THE PERIOD AFTER THE EFFECTIVE
TIME, AND (B) PERTAINING TO THE PERIOD PRIOR TO THE EFFECTIVE TIME, UNLESS SUCH
CLAIMS OR OCCURRENCES AND CONDITIONS SHALL HAVE BEEN SUBMITTED TO SELLER IN
ACCORDANCE WITH THE NOTICE PROVISIONS HEREOF WITHIN NINE (9) MONTHS AFTER THE
CLOSING DATE AND ARE IN THE AGGREGATE GREATER THAN TWO HUNDRED FIFTY THOUSAND
DOLLARS (US $250,000). THIS INDEMNITY SHALL APPLY REGARDLESS OF ANY NEGLIGENCE
OF ACT OR OMISSION BY SELLER GROUP.
14
8.3 ENVIRONMENTAL CLAIMS. BUYER SHALL RELEASE SELLER GROUP AND SHALL
FULLY PROTECT, INDEMNIFY, AND DEFEND SELLER GROUP FROM AND AGAINST ANY AND ALL
ENVIRONMENTAL CLAIMS (SPECIFICALLY EXCLUDING, HOWEVER, THE NPDES CLAIM) AND ANY
AND ALL OCCURRENCES AND CONDITIONS WHICH WOULD CONSTITUTE ENVIRONMENTAL CLAIMS
BUT WHICH ARE ASSERTED BY BUYER, RELATING TO, ARISING OUT OF OR CONNECTED WITH
THE OWNERSHIP OR OPERATION OF THE PROPERTIES (I) PERTAINING TO THE PERIOD AFTER
THE EFFECTIVE TIME, AND (II) PERTAINING TO THE PERIOD PRIOR TO THE EFFECTIVE
TIME, UNLESS SUCH ENVIRONMENTAL CLAIMS OR OCCURRENCES AND CONDITIONS SHALL HAVE
BEEN SUBMITTED TO SELLER IN ACCORDANCE WITH THE NOTICE PROVISIONS HEREOF WITHIN
NINE (9) MONTHS AFTER THE CLOSING DATE AND ARE IN THE AGGREGATE GREATER THAN TWO
HUNDRED FIFTY THOUSAND DOLLARS (US $250,000), IN WHICH CASE SELLER SHALL
INDEMNIFY BUYER WITH RESPECT TO SUCH ENVIRONMENTAL CLAIMS AS PROVIDED IN SECTION
8.1 ABOVE.
8.4 Asbestos and NORM. The parties acknowledge that the Properties may
contain asbestos and/or NORM, and that special procedures may be required for
the assessment, remediation, removal, transportation or disposal of asbestos and
NORM. Buyer agrees to assume any and all liability associated with or
attributable to the assessment, remediation, removal, transportation and
disposal of the asbestos or NORM associated with or attributable to the
Properties and shall conduct said activities in accordance with all applicable
Laws.
8.5 Notice and Cooperation. If a Claim is asserted against a party for
which the party would be liable under the provisions of this Agreement, it is a
condition precedent to the indemnifying party's obligations hereunder that the
indemnified party gives the indemnifying party written notice of such Claim
setting forth full particulars of the Claim, as known by the indemnified party,
including a copy of the Claim (if it was a written Claim.) The indemnified
party shall make a good faith effort to notify the indemnifying party within one
(1) month of receipt of a Claim and shall in all events effect such notice
within such time as will allow the indemnifying party to defend against such
Claim and no later than three (3) calendar months after receipt of the Claim by
the indemnified party. The notice of a Claim given hereunder is referred to as
a "Claim Notice."
8.6 Defense of Claims.
8.6.1 Counsel. Upon receipt of a Claim Notice, the indemnifying
party may assume the defense thereof with counsel selected by the
indemnifying party and reasonably satisfactory to the indemnified party.
The indemnified party shall cooperate in all reasonable respects in such
defense. If any Claim involves Claims with respect to which Buyer
indemnifies Seller and also Claims for which Seller indemnifies Buyer, each
party shall have the right to assume the defense of and hire counsel for
that portion of the Claim for which it has liability. The indemnified
party shall have the right to employ separate counsel in any Claim and to
participate in the defense thereof, provided the fees and expenses of
counsel employed by an indemnified party shall be at the expense of the
indemnified party unless otherwise agreed between the parties.
15
8.6.2 Settlement. If the indemnifying party does not notify the
indemnified party within the earlier to occur of: (a) the time a response
is due in the relevant litigation matter, or (b) three (3) calendar months
after receipt of the Claim Notice, that the indemnifying party elects to
undertake the defense thereof, the indemnified party has the right to
defend, at the sole expense of the indemnifying party, the Claim with
counsel of its own choosing, subject to the right of the indemnifying party
to assume the defense of any Claim at any time prior to settlement or final
determination thereof at the indemnifying party's sole expense. In such
event, the indemnified party shall send a written notice to the
indemnifying party of any proposed settlement of any Claim, which
settlement the indemnifying party may accept or reject, in its reasonable
judgment, within thirty (30) days of receipt of such notice, unless the
settlement offer is limited to a shorter period of time in which case the
indemnifying party shall have such shorter period of time in which to
accept or reject the proposed settlement. Failure of the indemnifying
party to accept or reject such settlement within the thirty (30)-day period
shall be deemed to be its rejection of such settlement. The indemnified
party may settle any matter over the objection of the indemnifying party
but shall in so doing be deemed to have waived any right to indemnity
therefor as to (and only as to) liabilities with respect to which the
indemnifying party has recognized its liability.
8.7 WAIVER OF CERTAIN DAMAGES. EACH OF THE PARTIES HEREBY WAIVES, AND
AGREES NOT TO SEEK, INDIRECT, CONSEQUENTIAL, PUNITIVE, EXEMPLARY OR SPECIAL
DAMAGES OF ANY KIND WITH RESPECT TO ANY CLAIM, OCCURRENCE, CONDITION OR DISPUTE,
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR BREACH HEREOF; PROVIDED,
HOWEVER, THAT THIS PROVISION DOES NOT DIMINISH OR AFFECT IN ANY WAY THE PARTIES'
RIGHTS AND OBLIGATIONS UNDER ANY INDEMNITIES PROVIDED FOR IN THIS AGREEMENT.
8.8. LIMITATION ON INDEMNITIES. IN NO EVENT SHALL AN INDEMNIFYING PARTY
HAVE ANY OBLIGATION OF INDEMNIFICATION TO THE OTHER PARTY, IF THE CLAIM,
OCCURRENCE, CONDITION OR DISPUTE FOR WHICH INDEMNITY IS SOUGHT WAS CAUSED BY THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF THE INDEMNIFIED PARTY
AND/OR ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, CONTRACTORS, SUBCONTRACTORS
OR AFFILIATES.
ARTICLE 9. WARRANTIES AND DISCLAIMERS
9.1 SPECIAL WARRANTY OF TITLE. SELLER SHALL WARRANT AND DEFEND TITLE TO
THE PROPERTIES CONVEYED TO BUYER AGAINST EVERY PERSON WHOMSOEVER LAWFULLY
CLAIMING THE PROPERTIES OR ANY PART THEREOF BY, THROUGH OR UNDER SELLER, BUT NOT
OTHERWISE, AND SUBJECT TO THE PERMITTED ENCUMBRANCES.
9.2 DISCLAIMER - REPRESENTATIONS AND WARRANTIES. BUYER ACKNOWLEDGES AND
AGREES THAT THE PROPERTIES ARE BEING SOLD, ASSIGNED AND CONVEYED FROM SELLER TO
BUYER "AS-IS, WHERE-IS", AND WITH ALL FAULTS IN THEIR PRESENT CONDITION AND
STATE OF REPAIR, WITHOUT RECOURSE. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, SELLER HEREBY
16
DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES CONCERNING THE PROPERTIES,
EXPRESS, STATUTORY, IMPLIED OR OTHERWISE, INCLUDING WITHOUT LIMITATION, ANY
WARRANTY OF TITLE (EXCEPT AS SET FORTH IN SECTION 9.1), THE QUALITY OF
HYDROCARBON RESERVES, THE QUANTITY OF HYDROCARBON RESERVES, THE AMOUNT OF
REVENUES, THE AMOUNT OF OPERATING COSTS, CONDITION (PHYSICAL OR ENVIRONMENTAL),
QUALITY, COMPLIANCE WITH APPLICABLE LAWS, ABSENCE OF DEFECTS (LATENT OR PATENT),
SAFETY, STATE OF REPAIR, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
AND BUYER EXPRESSLY RELEASES SELLER FROM THE SAME.
9.3 DISCLAIMER - STATEMENTS AND INFORMATION. EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, SELLER DISCLAIMS ANY AND ALL LIABILITY AND
RESPONSIBILITY FOR AND ASSOCIATED WITH THE QUALITY, ACCURACY, COMPLETENESS OR
MATERIALITY OF THE RECORDS AND ANY OTHER INFORMATION PROVIDED AT ANY TIME
(WHETHER ORAL OR WRITTEN) TO BUYER, ITS OFFICERS, AGENTS, EMPLOYEES AND
REPRESENTATIVES IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREIN,
INCLUDING WITHOUT LIMITATION, QUALITY OF HYDROCARBON RESERVES, QUANTITY OF
HYDROCARBON RESERVES, AMOUNT OF REVENUES, AMOUNT OF OPERATING COSTS, FINANCIAL
DATA, CONTRACT DATA, ENVIRONMENTAL CONDITION OF THE PROPERTIES, PHYSICAL
CONDITION OF THE PROPERTIES AND CONTINUED FINANCIAL VIABILITY OF THE PROPERTIES,
AND BUYER EXPRESSLY RELEASES SELLER FROM THE SAME.
ARTICLE 10. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer that on the date hereof and as of
the Closing Date:
10.1 Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, and has all requisite corporate power and authority to own and lease
the Properties. Seller is duly licensed or qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which the
Properties are located.
10.2 Corporate Authority; Authorization of Agreement. Seller has all
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated herein and to perform all of the
terms and conditions to be performed by it as provided for in this Agreement.
The execution and delivery of this Agreement by Seller, the performance by
Seller of all of the terms and conditions to be performed by it and the
consummation of the transactions contemplated herein have been duly authorized
and approved by all necessary corporate action. This Agreement has been duly
executed and delivered by Seller and constitutes the valid and binding
obligation of Seller, enforceable against it in accordance with its terms,
except as such
17
enforceability may be limited by bankruptcy, insolvency or other Laws relating
to or affecting the enforcement of creditors' rights and general principles of
equity (regardless of whether such enforceability is considered in a proceeding
at law or in equity).
10.3 No Violations. The execution and delivery of this Agreement by
Seller does not, and the fulfillment and compliance with the terms and
conditions hereof and the consummation of the transactions contemplated herein,
will not:
(a) Conflict with or require the consent of any person or entity under
any of the terms, conditions or provisions of the certificate of
incorporation or bylaws of Seller;
(b) Violate any provision of, or require any filing, consent or
approval under any Law applicable to or binding upon Seller (assuming
receipt of all consents and approvals of governmental entities customarily
obtained subsequent to the transfers of title);
(c) Conflict with, result in a breach of, constitute a default under
or constitute an event that with notice or lapse of time, or both, would
constitute a default under, accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or approval
under, (i) any mortgage, indenture, loan, credit agreement or other
agreement, evidencing indebtedness for borrowed money to which Seller is a
party or by which Seller is bound or (ii) any order, judgment or decree of
any governmental entity or tribal authority; or
(d) Result in the creation or imposition of any lien or encumbrance
upon the Properties.
10.4 Absence of Certain Changes. Between the execution date hereof and
the Closing Date, there have not been and there shall not be without Buyer's
prior written consent:
(a) A sale, lease or other disposition of any material part of the
Properties;
(b) A mortgage, pledge or grant of a lien or security interest in any
of the Properties; or
(c) A contract or commitment to do any of the foregoing.
10.5 Operating Costs. To the best of Seller's knowledge, all costs
incurred in connection with operation of the Properties have been fully paid and
discharged by Seller, except normal expenses incurred in operating the
Properties within the previous sixty (60) Days or as to which Seller has not yet
been billed or as to which Seller is disputing in good faith.
10.6 Litigation and Other Disputes. Except the matters listed on Exhibit
G (liability for which shall be retained by Seller), there is no action, suit or
proceeding pending or, to the best of
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Seller's knowledge, threatened against Seller or the Properties which would
reasonably be expected to have a material adverse effect on Buyer or Buyer's
interest in the Properties after Closing or to prevent the consummation of the
transaction contemplated by this Agreement. For purposes of this provision,
"material" means an impact of greater than Twenty-Five Thousand Dollars (US
$25,000).
10.7 Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by or, to the best of Seller's
knowledge, threatened against Seller.
10.8 Material Contracts. To the best of Seller's knowledge, Exhibit F
sets forth a list of the following contracts, agreements, and commitments to
which any of the Properties are bound: (a) any agreement with any affiliate of
Seller; (b) any agreement or contract of Seller for the sale, exchange or other
disposition of Hydrocarbons produced from the Properties that is not cancelable
without penalty on not more than 60 days prior written notice; (c) any agreement
of Seller to sell, lease, farmout or otherwise dispose of any of its interests
in any of the Properties other than conventional rights of reassignment; (d) any
tax partnership agreement of Seller affecting any of the Properties; (e) any
operating agreement to which Seller's interests in any of the Properties is
subject; (f) any agreement pursuant to which Seller has not consented to, or
forfeited, its rights to participate in future oil and gas operations; (g) any
agreement pursuant to which Seller has received an advance payment, prepayment
or similar deposit, and has a refund obligation, with respect to any gas or
products purchased, sold, gathered, processed or marketed by or for Seller out
of the Properties, (h) any contract that requires Seller to expend more than
$200,000 in any year in connection with the Properties; (i) any option to
purchase or call on the Hydrocarbons produced from the Properties; and (j) any
lease, title retention agreement, or security interest affecting any of the
Equipment.
10.9 Approvals and Preferential Rights. To the best of Seller's
knowledge, except for those consents and approvals customarily obtained
subsequent to the transfer of title, Exhibit J contains a complete and accurate
list of all approvals, consents, filings and notifications required to be
obtained, made or given by Seller for the assignment or transfer of the
Properties (including, without limitation, the Permits) to Buyer and all
preferential purchase rights that affect the Properties.
10.10 Compliance with Law and Permits. Except for those matters set forth
on Exhibit K hereto and such other matters as would not have a material adverse
effect on the value of the Properties, to the best of Seller's knowledge, Seller
and those third parties operating any portion of the Properties, (a) are in
material compliance with all laws, rules, regulations, ordinances, orders,
decisions and decrees of all governmental authorities having jurisdiction with
respect to the Properties or the ownership or operation of any thereof; (b) have
obtained all necessary governmental permits, licenses, approvals, consents,
certificates and other authorizations with regard to the ownership or operation
of the Properties and have maintained the same in effect and no material
violations exist in respect of such permits, licenses, approvals, consents,
certificates or authorizations; and (c) are not aware of any facts, conditions
or circumstances in connection with, related to or associated with the
Properties or the ownership or operation of any thereof that could reasonably be
expected to give rise to any claim or assertion that Seller, the Properties or
the ownership or operation of any thereof is not in material compliance with any
applicable law, rule, regulation, ordinance, order, decision or
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decree of any governmental authority or with any term or conditions of any
applicable permit, license, approval, consent, certificate or other
authorization.
10.11 Environmental Compliance. Except for those matters set forth on
Exhibit K hereto and such other matters as would not have a material adverse
effect on the value of the Properties, to the best of Seller's knowledge, Seller
and those third parties operating any portion of the Properties, (a) have
obtained and maintained in effect all environmental and health and safety
permits, licenses, approvals, consents, certificates and other authorizations
necessary for the ownership or operation of the Properties ("Environmental
Permits"); (b) are in material compliance with all applicable Environmental Laws
and with all terms and conditions of all Environmental Permits, and all prior
instances of noncompliance have been fully and finally resolved to the
satisfaction of all governmental authorities with jurisdiction over such
matters; (c) are not subject to any Environmental Claims arising from, based
upon, associated with or related to the Properties or the ownership or operation
of any thereof; (d) have not received any notice of any Environmental Claim or
any violation, noncompliance or possible noncompliance with any Environmental
Law or the terms or conditions of any Environmental Permit, arising from, based
upon, associated with or related to the Properties or the ownership or operation
of any thereof; and (e) are not otherwise aware of any facts, conditions or
circumstances in connection with, related to or associated with the Properties
or the ownership or operation of any thereof, that could reasonably be expected
to give rise to any Environmental Claim or any claim or assertion that Seller,
the Properties or the ownership or operation thereof is not in compliance with
Environmental Laws or the terms or conditions of any Environmental Permit.
10.12 Status of Contracts. (a) All of the Material Contracts are in full
force and effect, and (b) neither Seller nor, to the knowledge of Seller, any
other party to the Material Contracts (i) is in breach of or default, or with
the lapse of time or the giving of notice, or both, would be in breach or
default, with respect to any of its obligations thereunder to the extent that
such breaches or defaults would have a material adverse impact on any of the
Properties or (ii) has given or threatened to give notice of any default under
or inquiry into any possible default under, or action to alter, terminate,
rescind or procure a judicial reformation of any Material Contract.
10.13 Production Burdens, Taxes, Expenses and Revenues. To the best of
Seller's knowledge, (a) all rentals, royalties, excess royalty, overriding
royalty interests and other payments due under or with respect to the Properties
have been properly and timely paid, (b) all ad valorem, property, production,
severance and other taxes based on or measured by the ownership of the
Properties or the production of Hydrocarbons from the Properties have been
properly and timely paid, (c) all expenses payable by Seller under the terms of
the Material Contracts have been properly and timely paid except for such
expenses as are being currently paid prior to delinquency or are being contested
in good faith in the ordinary course of business and (d) all of the proceeds
from the sale of Hydrocarbons are being properly and timely paid to Seller by
the purchasers of production without suspension or indemnity other than standard
division order indemnities.
10.14 Production Sales Matters. Except as set forth on Exhibit L, to the
best of Seller's knowledge, (a) none of the purchasers under any production
sales contracts is entitled to "makeup"
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or otherwise receive deliveries of Hydrocarbons without paying at the time of
such deliveries the full contract price therefor by reason of payments made
prior to the Effective Time; (b) none of the purchasers under any production
sales contracts has exercised any economic out provision; (c) none of the
purchasers under any production sales contracts has curtailed its takes of
natural gas in violation of such contracts; (d) none of the purchasers under any
production sales contracts has given notice that it desires to amend the
production sales contracts with respect to price or quantity of deliveries under
take-or-pay provisions or otherwise; and (e) Seller is not obligated to pay any
penalties or other payments under any gas transportation or other agreement as a
result of the delivery of quantities of gas from the Properties in excess of the
contract requirements.
10.15 Capital Commitments. Exhibit M contains a complete and accurate
list as of the date of this Agreement of (a) all authorities for expenditures
("AFEs") to drill or rework ▇▇▇▇▇ or for capital expenditures pursuant to any of
the Material Contracts that have been proposed by any person on or after the
Effective Time, whether or not accepted by Seller or any other person, and (b)
all AFEs and oral or written commitments to drill or rework ▇▇▇▇▇ or for other
capital expenditures pursuant to any of the Material Contracts that are equal to
or greater than US $200,000 and for which all of the activities anticipated in
such AFEs or commitments have not been completed by the date of this Agreement.
10.16 Limitation on Representations. The representations contained in
Sections 10.5 through 10.15 shall survive Closing for a period of nine (9)
months after the Closing Date and shall thereupon terminate. Furthermore, the
representations contained in Sections 10.5 through 10.15 are limited in scope to
those matters that either occurred or that Seller received actual knowledge of
during the time period extending from October 15, 1998 through the Closing Date.
ARTICLE 11. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller that on the date hereof and as of
the Closing Date:
11.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware and has all requisite corporate power and authority to own and lease
the Properties. Buyer is duly licensed or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the Properties
are located.
11.2 Corporate Authority; Authorization of Agreement. Buyer has all
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated herein and to perform all the terms
and conditions to be performed by it as provided for in this Agreement. The
execution and delivery of this Agreement by Buyer, the performance by Buyer of
all the terms and conditions to be performed by it and the consummation of the
transactions contemplated herein have been duly authorized and approved by all
necessary corporate action. This Agreement has been duly executed and delivered
by Buyer and constitutes the valid and binding obligation of Buyer, enforceable
against it in accordance with its terms, except as such enforceability
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may be limited by bankruptcy, insolvency or other Laws relating to or affecting
the enforcement of creditors' rights and general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law
or in equity).
11.3 No Violations. The execution and delivery of this Agreement by
Buyer does not, and the fulfillment and compliance with the terms and conditions
hereof and the consummation of the transactions contemplated herein, do not:
(a) Conflict with or require the consent of any person or entity under
any of the terms, conditions or provisions of the certificate of
incorporation or bylaws of Buyer;
(b) Violate any provision of, or require any filing, consent or
approval under any Law applicable to or binding upon Buyer; or
(c) Conflict with, result in a breach of, constitute a default under
or constitute an event that with notice or lapse of time, or both, would
constitute a default under, accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or approval
under, (i) any mortgage, indenture, loan, credit agreement or other
agreement evidencing indebtedness for borrowed money to which Buyer is a
party or by which Buyer is bound, or (ii) any order, judgment or decree of
any governmental entity or tribal authority.
11.4 SEC Disclosure. Buyer is an experienced and knowledgeable investor
and operator in the oil and gas business. Buyer is acquiring the Properties for
its own account for use in its trade or business, and not with a view toward or
for sale in connection with any distribution thereof, nor with any present
intention of making a distribution thereof within the meaning of the Securities
Act of 1933, as amended.
11.5 INDEPENDENT EVALUATION. AS OF CLOSING, BUYER REPRESENTS THAT IT IS
SOPHISTICATED IN THE EVALUATION, PURCHASE, OPERATION AND OWNERSHIP OF OIL AND
GAS PROPERTIES AND THAT IN MAKING ITS DECISION TO ENTER INTO THIS AGREEMENT AND
TO CONSUMMATE THE TRANSACTION CONTEMPLATED HEREIN, BUYER HAS RELIED AND SHALL
RELY SOLELY ON SELLER'S REPRESENTATIONS CONTAINED HEREIN AND ON ITS OWN
INDEPENDENT INVESTIGATION AND EVALUATION OF THE PROPERTIES AND HAS SATISFIED
ITSELF AS TO THE PHYSICAL CONDITION AND ENVIRONMENTAL CONDITION OF THE
PROPERTIES.
11.6 BUYER'S RELIANCE. BUYER ACKNOWLEDGES AND AGREES THAT IT IS ENTITLED
TO RELY ONLY ON THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
AGREEMENT.
11.7 Qualified Leaseholder. Buyer meets the area-wide bonding and any
other bonding requirements of the Minerals Management Service and other
governmental authorities, and, after the Closing, Buyer anticipates that it will
continue to be able to meet such bonding requirements. Buyer is and, after the
Closing, is expected to continue to be, otherwise qualified to own the
Properties.
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The consummation of the transactions contemplated hereby will not cause Buyer to
be disqualified to be an owner of federal oil, gas, and mineral leases in the
Gulf of Mexico region, or to exceed any acreage limitation imposed by any law,
statute, rule or regulation. Buyer is not aware of any fact that could
reasonably be expected to cause the Minerals Management Service or other
governmental authorities to fail to unconditionally approve the assignment of
the Properties to Buyer.
ARTICLE 12. ADDITIONAL AGREEMENTS
12.1 Covenants of Seller. From the date hereof until Closing, without
first obtaining the consent of Buyer, Seller has not and will not:
(a) waive any right of material value relating to the Properties;
(b) convey, encumber, mortgage, pledge any of the Properties nor
dispose of any of the Properties, other than the sale of production in the
ordinary course of business and except as may be required in connection
with the exercise of preferential rights affecting the Properties;
(c) enter into, modify or terminate any contracts relating to the
Properties;
(d) vote to commit to any material project or material expenditure
under any operating agreement affecting the Properties or elect to
participate in any operation on the Properties requiring an expenditure of
greater than Two Hundred Thousand Dollars (US $200,000) to Seller's
interest, except to the extent required in an emergency to protect life or
property from immediate harm or destruction; or
(e) contract or commit itself to do any of the foregoing.
12.2 Notice of Loss. From the date hereof until Closing, Seller shall
promptly notify Buyer of any loss or damage to the Properties, or any part
thereof, known to Seller and in the aggregate exceeding Twenty-five Thousand
Dollars (US $25,000) net to Seller's interest.
12.3 Subsequent Operations. Seller makes no representations or
warranties to Buyer as to the transferability or assignability of operatorship
of the Properties. Buyer acknowledges that the rights and obligations
associated with operatorship of the Properties are governed by the applicable
agreement(s) and that operatorship of the Properties shall be decided in
accordance with the terms of said agreement(s); provided, however, Seller agrees
to provide reasonable assistance to Buyer (at no expense to Seller) in
connection with Buyer's effort to be designated as operator of the Properties.
12.4 Buyer's Assumption of Obligations. Except as otherwise expressly
provided in this Agreement, Buyer agrees to assume and shall timely perform and
discharge all duties and obligations of Seller insofar as the same relate to or
arise out of Seller's interest in the Properties relating to the period of time
after the Closing, including, without limitation, all duties and obligations of
Seller
23
under all the Material Contracts (the "Assumed Obligations"), and Buyer shall
indemnify and hold Seller harmless from and against any and all liabilities of
whatsoever nature arising out of Buyer's failure to properly perform or
discharge the Assumed Obligations, except to the extent the same relate to the
breach of any representation or warranty of Seller as set forth in and limited
by this Agreement, or the breach of, or failure to perform or satisfy any
covenant of Seller set forth in this Agreement. Buyer agrees to accept full
responsibility for Seller's proportionate share of the costs and expenses
associated with or attributable to the plugging and abandonment of all ▇▇▇▇▇,
and the removal of all equipment, platforms and facilities conveyed to Buyer
under this Agreement and the remediation, restoration and clean up of the
Properties. In conducting the duties and obligations contained in this Section
12.4, Buyer shall comply with the applicable Laws of all governmental entities
and tribal authorities having appropriate jurisdiction. Buyer shall not assume
(i) any duties, obligations or liabilities with respect to or relating to any
matter disclosed under, or that should have been disclosed, under Exhibit G and
(ii) any obligation of Seller to pay or discharge any refunds, including
interest and penalties, if any, that may be imposed by any governmental
authority arising from the sale of Hydrocarbons and operation of the Properties
prior to the Effective Time.
12.5 Records. Within thirty (30) Days after Closing, Seller shall
furnish to Buyer all Records which are maintained by Seller, provided, however,
that Seller is entitled to retain copies of any or all such Records and to
retain as long as needed, the originals of any Records required in connection
with any litigation or other proceedings listed on Exhibit G. Buyer agrees to
maintain the Records received from Seller in accordance herewith for a period of
six (6) years after the Closing Date and to afford Seller reasonable access to
the Records as requested by Seller. If Buyer desires to dispose of any such
Records prior to the end of the six (6) year period, Buyer shall offer in
writing to Seller to deliver such Records to Seller; if Seller elects not to
receive such Records or fails to respond to Buyer's notice within thirty (30)
Business Days after receipt thereof, then Buyer may dispose of such Records
within its discretion.
ARTICLE 13. ARBITRATION
ANY DISPUTE ARISING UNDER THIS AGREEMENT ("ARBITRABLE DISPUTE") SHALL BE
REFERRED TO AND RESOLVED BY BINDING ARBITRATION IN BIRMINGHAM, ALABAMA BY THREE
(3) ARBITRATORS, IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION; AND, TO THE MAXIMUM EXTENT APPLICABLE, THE
FEDERAL ARBITRATION ACT (TITLE 9 OF THE UNITED STATES CODE). IF THERE IS ANY
INCONSISTENCY BETWEEN THIS ARTICLE AND ANY STATUTE OR RULES, THIS ARTICLE SHALL
CONTROL. ARBITRATION SHALL BE INITIATED (A) WITHIN THE APPLICABLE TIME LIMITS
SET FORTH IN THIS AGREEMENT AND NOT THEREAFTER, PROVIDED THAT IF NO TIME LIMIT
IS GIVEN, WITHIN THE TIME PERIOD ALLOWED BY THE APPLICABLE STATUTE OF
LIMITATIONS, (B) BY ONE PARTY ("CLAIMANT") GIVING WRITTEN NOTICE TO THE OTHER OR
ADVERSARIAL PARTY ("RESPONDENT") AND TO THE BIRMINGHAM REGIONAL OFFICE OF THE
AMERICAN ARBITRATION ASSOCIATION ("AAA"), ATTENTION:
24
REGIONAL VICE PRESIDENT, WITH A COPY TO THE ADMINISTRATOR OF THE AAA, THAT THE
CLAIMANT ELECTS TO REFER THE ARBITRABLE DISPUTE TO ARBITRATION, AND THAT THE
CLAIMANT HAS APPOINTED AN ARBITRATOR, WHO SHALL BE IDENTIFIED IN SUCH NOTICE.
THE RESPONDENT SHALL NOTIFY THE CLAIMANT AND THE AAA WITHIN TEN (10) DAYS AFTER
RECEIPT OF CLAIMANT'S NOTICE, IDENTIFYING THE ARBITRATOR WHO THE RESPONDENT HAS
APPOINTED. THE TWO (2) ARBITRATORS SO CHOSEN SHALL SELECT A THIRD ARBITRATOR
WITHIN TEN (10) DAYS AFTER THE SECOND ARBITRATOR HAS BEEN APPOINTED. UPON
FAILURE OF A PARTY TO ACT WITHIN THE TIME SPECIFIED FOR NAMING AN ARBITRATOR,
SUCH ARBITRATOR SHALL BE APPOINTED BY THE ADMINISTRATOR'S DESIGNEE. SELLER SHALL
PAY THE COMPENSATION AND EXPENSES OF THE ARBITRATOR NAMED BY OR FOR IT, BUYER
SHALL PAY THE COMPENSATION AND EXPENSES OF THE ARBITRATOR NAMED BY OR FOR IT,
AND SELLER AND BUYER SHALL EACH PAY ONE-HALF OF THE COMPENSATION AND EXPENSES OF
THE THIRD ARBITRATOR, PROVIDED HOWEVER THAT ALL COSTS CAN BE ASSESSED AGAINST
THE LOSING PARTY, IF THE ARBITRATORS SO DECIDE. ALL ARBITRATORS MUST BE NEUTRAL
PARTIES WHO HAVE NEVER BEEN OFFICERS, DIRECTORS OR EMPLOYEES OF THE PARTIES OR
ANY OF THEIR AFFILIATES, MUST HAVE NOT LESS THAN FIFTEEN (15) YEARS EXPERIENCE
IN THE OIL AND GAS INDUSTRY, AND MUST HAVE A FORMAL FINANCIAL/ACCOUNTING,
ENGINEERING OR LEGAL EDUCATION. THE HEARING SHALL BE COMMENCED WITHIN THIRTY
(30) DAYS AFTER THE SELECTION OF THE ARBITRATORS. THE PARTIES AND THE
ARBITRATORS SHALL PROCEED DILIGENTLY AND IN GOOD FAITH IN ORDER THAT THE
ARBITRAL AWARD SHALL BE MADE AS PROMPTLY AS POSSIBLE. THE INTERPRETATION,
CONSTRUCTION AND EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF
TEXAS, AND TO THE MAXIMUM EXTENT ALLOWED BY LAW, IN ALL ARBITRATION PROCEEDINGS
THE LAWS OF TEXAS SHALL BE APPLIED, WITHOUT REGARD TO ANY CONFLICTS OF LAWS
PRINCIPLES. ALL STATUTES OF LIMITATION AND OF REPOSE THAT WOULD OTHERWISE BE
APPLICABLE SHALL APPLY TO ANY ARBITRATION PROCEEDING. THE TRIBUNAL SHALL NOT
HAVE THE AUTHORITY TO GRANT OR AWARD INDIRECT, CONSEQUENTIAL, PUNITIVE,
EXEMPLARY OR SPECIAL DAMAGES.
ARTICLE 14. CONDITIONS PRECEDENT TO CLOSING
14.1 Conditions Precedent to Seller's Obligation to Close. Seller shall
be obligated to consummate the sale of the Properties as contemplated by this
Agreement on the Closing Date, provided the following conditions precedent have
been satisfied or have been waived by Seller:
14.1.1 All representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at and as of
Closing as though such representations and warranties were made at and as
of such time;
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14.1.2 Buyer shall have complied in all material respects with all
obligations and conditions contained in this Agreement to be performed or
complied with by Buyer at or prior to the Closing; and
14.1.3 No suit, action or other proceedings shall be pending before
any court or governmental entity in which it is sought by a person or
entity (other than the parties hereto or any of their Affiliates, officers,
directors, or employees) to restrain, enjoin or otherwise prohibit the
consummation of the transactions contemplated by this Agreement, or to
obtain substantial damages in connection with the transaction contemplated
herein, nor shall there be any investigation by a governmental entity
pending which might result in any such suit, action or other proceedings
seeking to restrain, enjoin or otherwise prohibit the consummation of the
transaction contemplated by this Agreement.
14.2 Conditions Precedent to Buyer's Obligation to Close. Buyer shall be
obligated to consummate the purchase of the Properties as contemplated by this
Agreement on the Closing Date, provided that the following conditions precedent
have been satisfied or have been waived by Buyer:
14.2.1 All representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects at and as of
Closing as though such representations and warranties were made at and as
of such time;
14.2.2 Seller shall have complied in all material respects with all
obligations and conditions contained in this Agreement to be performed or
complied with by Seller at or prior to the Closing; and
14.2.3 No suit, action or other proceedings shall be pending before
any court or governmental entity in which it is sought by a person or
entity (other than the parties hereto or any of their Affiliates, officers,
directors, or employees) to restrain, enjoin or otherwise prohibit the
consummation of the transactions contemplated by this Agreement, or to
obtain substantial damages in connection with the transaction contemplated
herein, nor shall there be any investigation by a governmental entity
pending which might result in any such suit, action or other proceedings
seeking to restrain, enjoin or otherwise prohibit the consummation of the
transaction contemplated by this Agreement.
ARTICLE 15. TERMINATION
15.1 Grounds for Termination. This Agreement may be terminated at any
time prior to Closing:
15.1.1 By the mutual written agreement of Seller and Buyer;
15.1.2 By Seller if Buyer fails or refuses to Close in breach of this
Agreement or if the conditions precedent to Seller's obligation to Close
are unmet at the time set for Closing;
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15.1.3 By Buyer if Seller fails or refuses to Close in breach of this
Agreement or if the conditions precedent to Buyer's obligation to Close are
unmet at the time set forth Closing;
15.1.4 By either Seller or Buyer pursuant to Article 7;
15.1.5 By either Seller or Buyer pursuant to Section 5.2.3(b)(iv).
15.1.6 By Seller if the Purchase Price would be adjusted downward by
ten percent (10%) or more or by Buyer if the Purchase Price would be
adjusted upward by ten percent (10%) in accordance with Article 4; or
15.17 By either party (provided the terminating party is not then in
breach of any provisions of this Agreement), if Closing shall not have
occurred within sixty (60) days following the originally scheduled Closing
Date.
15.2 Effect of Termination.
15.2.1 Except as provided in Section 15.2.2 below, if this Agreement
is terminated in accordance with Section 15.1, such termination shall be
without liability of either party or any Affiliate, officer, director, or
employee of such party, except for Seller's obligation (if applicable) to
return the ▇▇▇▇▇▇▇ Money Deposit, as provided in Article 3, the obligations
to arbitrate any dispute arising from such termination and the obligations
provided in Sections 15.3, 15.4, 15.5, and 17.3.
15.2.2 If this Agreement is terminated because of Buyer's failure or
refusal to Close in breach of this Agreement or because the conditions
precedent to Seller's obligation to Close provided in Section 14.1 are
unmet at the time set for Closing, Seller shall be entitled to retain the
▇▇▇▇▇▇▇ Money Deposit as liquidated damages to reimburse Seller for its
out-of-pocket fees and expenses incurred in connection with the
transactions contemplated by this Agreement, unless any of the conditions
precedent to Buyer's obligation to Close provided in Section 14.2 are also
unmet at the time set for Closing, in which case Seller shall return the
▇▇▇▇▇▇▇ Money Deposit to Buyer.
15.3 Dispute over Right to Terminate. If there is a dispute between the
parties over either party's right to terminate this Agreement under Section
15.1, Closing shall not occur, as scheduled. The party which disputes the other
party's right to terminate may initiate arbitration proceedings in accordance
with Article 13 within thirty (30) Days after the date on which Closing was
scheduled to occur and, if arbitration is so initiated, the dispute will be
resolved through such arbitration proceeding. IF THE PARTY WHICH DISPUTES THE
TERMINATION RIGHT DOES NOT INITIATE AN ARBITRATION PROCEEDING TO RESOLVE THE
DISPUTE WITHIN THE TIME PERIOD SPECIFIED HEREINABOVE, SUCH PARTY SHALL BE DEEMED
TO HAVE WAIVED ITS RIGHT TO OBJECT TO SUCH TERMINATION.
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15.4 Return of Documents. If this Agreement is terminated, each party
shall return to the party which owns or is otherwise entitled thereto all books,
records, maps, files, papers and other property in such party's possession
relating to the transaction contemplated by this Agreement.
15.5 Confidentiality. Notwithstanding the termination of this Agreement
or any other provision of this Agreement to the contrary, the terms of the
Confidentiality Agreement executed by Seller and Buyer, dated March 16, 1999, as
amended by letter agreement dated May 24, 1999, shall remain in full force and
effect.
ARTICLE 16. THE CLOSING
16.1. Preliminary Closing Statement. At least five (5) Days prior to the
Closing Date, Seller shall provide Buyer with a preliminary Closing statement
setting forth the adjusted Purchase Price and wiring instructions designating
the account or accounts to which the adjusted Purchase Price is to be delivered
in accordance with Section 16.3.2. Within two (2) Business Days after receipt
of the preliminary Closing statement from Seller, Buyer shall furnish Seller
with Buyer's requested adjustments to such statement. Seller and Buyer shall
attempt in good faith to resolve any differences between them, but if the
parties are unable to agree, Seller's preliminary Closing statement shall be
used for Closing.
16.2 Obligations of Seller at Closing. At the Closing, Seller shall
deliver to Buyer, unless waived by Buyer, the following:
16.2.1 Documents substantially in the form of the Assignment and ▇▇▇▇
of Sale attached hereto as Exhibit C, conveying all of Seller's right,
title and interests in and to the Properties. The Assignment and ▇▇▇▇ of
Sale shall be executed and acknowledged in five (5) multiple originals or
such greater number as agreed between the parties;
16.2.2 Evidence that all consents and approvals prerequisite to the
sale and conveyance of the Properties (except for consents and approvals of
governmental entities customarily obtained subsequent to the transfer of
title or with respect to Properties which have been withdrawn from the
transaction in accordance with the terms hereof) have been obtained, as
well as evidence of waiver or lapse of any unexercised preferential
purchase rights applicable to the Properties;
16.2.3 A Certificate substantially in the form of Exhibit D, executed
by an authorized officer of Seller, certifying as to the matters specified
in Section 14.2.1;
16.2.4 A Non-Foreign Affidavit substantially in the form of Exhibit
E, executed by an authorized officer of Seller; and
16.2.5 Such other instruments as are necessary to carry out Seller's
obligations under this Agreement.
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16.3 Obligations of Buyer at Closing. At the Closing, Buyer shall
deliver to Seller, unless waived by Seller, the following:
16.3.1 The Assignment and ▇▇▇▇ of Sale referred to in Section 16.2.1,
executed and properly acknowledged;
16.3.2 The adjusted Purchase Price, less the ▇▇▇▇▇▇▇ Money Deposit,
by wire transfer in accordance with Article 3;
16.3.3 A Certificate substantially in the form of Exhibit D, executed
by an authorized representative of Buyer, certifying as to the matters
specified in Section 14.1.1.
16.3.4 Evidence of compliance with all requirements, if any, of the
Minerals Management Service and the states in which the Properties are
located for the posting of plugging or other applicable bonds relating to
the ownership or operation of the Properties; and
16.3.5 Such other instruments as are necessary to carry out Buyer's
obligations under this Agreement.
16.4 Site of Closing. Closing shall be held in Seller's offices in
Birmingham, Alabama or any other location mutually agreed in writing by Seller
and Buyer.
ARTICLE 17. MISCELLANEOUS
17.1 Notices. All notices and other communications required, permitted
or desired to be given hereunder must be in writing and sent by U.S. mail,
properly addressed as shown below, and with all postage and other charges fully
prepaid or by hand delivery or by facsimile transmission. Date of service by
mail and hand delivery is the date on which such notice is received by the
addressee and by facsimile is the date sent (as evidenced by fax machine
confirmation of receipt), or if such date is not on a Business Day, then on the
next date which is a Business Day. Each party may change its address by
notifying the other party in writing.
If to Seller Energen Resources MAQ, Inc.
by mail or hand delivery: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
If to Seller Energen Resources MAQ, Inc.
by facsimile: Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
29
If to Buyer Bellwether Exploration Company
by mail or hand delivery: ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇. ▇▇▇▇▇ Sere', President
If to Buyer Bellwether Exploration Company
by facsimile: Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇. ▇▇▇▇▇ Sere', President
17.2 Conveyance Costs. Buyer shall be solely responsible for filing and
recording documents related to the transfer of the Properties from Seller to
Buyer and for all costs and fees associated therewith, including filing the
assignment of the Properties with appropriate federal, state and local
authorities as required by applicable Law. Promptly following Buyer's receipt
of the recorded documents, Buyer shall furnish Seller with all recording data
and evidence of all required filings.
17.3 Brokers' Fees. Neither party has retained any brokers, agents or
finders and none are affiliated with either party or authorized to act on behalf
of either party in this matter. EACH PARTY AGREES TO RELEASE, PROTECT,
INDEMNIFY, DEFEND AND HOLD THE OTHER HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS WITH RESPECT TO ANY COMMISSIONS, FINDERS' FEES OR OTHER REMUNERATION DUE
TO ANY BROKER, AGENT OR FINDER CLAIMING BY, THROUGH OR UNDER SUCH PARTY.
17.4 Further Assurances. From and after Closing, at the request of
Seller but without further consideration, Buyer will execute and deliver or use
reasonable efforts to cause to be executed and delivered such other instruments
of conveyance and take such other actions as Seller reasonably may request to
more effectively put Seller in possession of any property which was not intended
by the parties to be conveyed by Buyer. From and after Closing, at the request
of Buyer but without further consideration, Seller shall execute and deliver or
use reasonable efforts to cause to be executed and delivered such other
instruments of conveyance and take such other actions as Buyer reasonably may
request to more effectively put Buyer in possession of the Properties. If any
of the Properties are incorrectly described, the description shall be corrected
upon proof of the proper description.
17.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. UNLESS OTHERWISE
EXPRESSLY LIMITED HEREIN, ALL REPRESENTATIONS, WARRANTIES, INDEMNITIES,
COVENANTS AND AGREEMENTS CONTAINED IN THIS AGREEMENT, TO THE EXTENT NOT FULLY
PERFORMED OR WAIVED PRIOR TO CLOSING, SHALL SURVIVE THE CLOSING INDEFINITELY.
THE PARTIES HAVE MADE NO REPRESENTATIONS OR WARRANTIES EXCEPT THOSE EXPRESSLY
SET FORTH IN THIS AGREEMENT.
17.6 Amendments and Severability. No amendments or other changes to this
Agreement shall be effective or binding on either of the parties unless the same
shall be in writing and signed by both Seller and Buyer. The invalidity of any
one or more provisions of this Agreement shall not affect
30
the validity of this Agreement as a whole, and in case of any such invalidity,
this Agreement shall be construed as if the invalid provision had not been
included herein.
17.7 Successors and Assigns. This Agreement shall not be assigned,
either in whole or in part, without the prior express written consent of the
non-assigning party. Assignment of this Agreement by either party shall not
relieve the assigning party of liability hereunder in the event of non-
performance or breach of this Agreement by such party's assignee. The terms,
covenants and conditions contained in this Agreement shall be binding upon and
shall inure to the benefit of Seller and Buyer and their respective successors
and assigns, and such terms, covenants and conditions shall be covenants running
with the land and with each subsequent transfer or assignment of the Properties.
17.8 Headings. The titles and headings set forth in this Agreement have
been included solely for ease of reference and shall not be considered in the
interpretation or construction of this Agreement.
17.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CHOICE OF LAW RULES WHICH
MAY DIRECT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. THIS PROVISION
SURVIVES TERMINATION OF THIS AGREEMENT.
17.10 No Partnership Created. It is not the purpose or intention of this
Agreement to create (and it shall not be construed as creating) a joint venture,
partnership or any type of association, and the parties are not authorized to
act as agent or principal for each other with respect to any matter related
hereto.
17.11 Public Announcements. Neither the Seller Group nor the Buyer Group
(as defined in Article 8) shall issue a public statement or press release with
respect to the transaction contemplated herein (including the price and other
terms) without the prior written consent of the other party, except as required
by Law or listing agreement with a national security exchange and then only
after prior consultation with the other party.
17.12 No Third Party Beneficiaries. Nothing contained in this Agreement
shall entitle anyone other than Seller or Buyer or their authorized successors
and assigns to any claim, cause of action, remedy or right of any kind
whatsoever.
17.13 DECEPTIVE TRADE PRACTICES. AS PARTIAL CONSIDERATION FOR THE PARTIES
AGREEING TO ENTER INTO THIS AGREEMENT, THE PARTIES EACH CAN AND DO EXPRESSLY
WAIVE THE PROVISIONS OF ALL CONSUMER PROTECTION LAWS OF THE STATE OF ALABAMA, OR
ANY OTHER STATE, APPLICABLE TO THIS TRANSACTION THAT MAY BE WAIVED BY THE
PARTIES; IT IS NOT THE INTENT OF THE PARTIES TO WAIVE AND THE PARTIES SHALL NOT
WAIVE ANY APPLICABLE LAW OR PROVISION THEREOF WHICH IS PROHIBITED BY LAW FROM
BEING WAIVED. EACH PARTY REPRESENTS TO THE OTHER THAT SUCH PARTY HAS HAD AN
ADEQUATE OPPORTUNITY TO REVIEW THE PRECEDING WAIVER PROVISION, INCLUDING THE
OPPORTUNITY TO SUBMIT THE SAME TO LEGAL COUNSEL FOR REVIEW AND COMMENT, AND
UNDERSTANDS THE RIGHTS BEING WAIVED HEREIN.
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17.14 Tax Deferred Exchange Election. Either party may elect to structure
the conveyance of the Properties as part of an exchange under Article 1031 of
the Internal Revenue Code of 1986, as amended. The parties agree to execute all
documents, conveyances or other instruments necessary to effectuate an exchange.
17.15 NOT TO BE CONSTRUED AGAINST DRAFTER. THE PARTIES ACKNOWLEDGE THAT
THEY HAVE HAD AN ADEQUATE OPPORTUNITY TO REVIEW EACH AND EVERY PROVISION
CONTAINED IN THIS AGREEMENT AND TO SUBMIT THE SAME TO LEGAL COUNSEL FOR REVIEW
AND COMMENT, INCLUDING EXPRESSLY BUT WITHOUT LIMITATION THE WAIVERS AND
INDEMNITIES IN ARTICLES 4, 6, 8, 9, AND 17. BASED ON SAID REVIEW AND
CONSULTATION, THE PARTIES AGREE WITH EACH AND EVERY TERM CONTAINED IN THIS
AGREEMENT. BASED ON THE FOREGOING, THE PARTIES AGREE THAT THE RULE OF
CONSTRUCTION THAT A CONTRACT BE CONSTRUED AGAINST THE DRAFTER, IF ANY, SHALL NOT
BE APPLIED IN THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT.
17.16 Entire Agreement. This Agreement supersedes all prior negotiations,
understandings, letters of intent and agreements (whether oral or written) and
any contemporaneous oral agreements between the parties relating to the
Properties and constitutes the entire understanding and agreement between the
parties with respect to the sale and purchase of the Properties.
17.17 CONSPICUOUSNESS OF PROVISIONS. THE PARTIES ACKNOWLEDGE THAT THE
PROVISIONS CONTAINED IN THIS AGREEMENT THAT ARE SET OUT IN "BOLD" SATISFY THE
REQUIREMENT OF THE EXPRESS NEGLIGENCE RULE AND ANY OTHER REQUIREMENT AT LAW OR
IN EQUITY THAT PROVISIONS CONTAINED IN A CONTRACT BE CONSPICUOUSLY MARKED OR
HIGHLIGHTED.
17.18 Execution in Counterparts. This Agreement may be executed in
counterparts, which shall when taken together constitute one valid and binding
agreement.
17.19 High Island Block 71. Notwithstanding any provisions herein to the
contrary, this Agreement may be partially assigned on a limited basis to a third
party identified by Buyer insofar only as to High Island Block 71 and the
Properties directly related thereto (the "HI 71 Properties") at Buyer's option,
upon written notice to Seller no later than three (3) Business Days prior the
Closing Date. In the event Buyer elects to assign its rights hereunder with
respect to the HI 71 Properties:
(i) Buyer shall provide to Seller all pertinent information necessary
for Seller to prepare the Assignment and ▇▇▇▇ of Sale to be delivered to
and executed by the third party, which Assignment and ▇▇▇▇ of Sale shall be
in the form attached hereto as Exhibit N;
(ii) Exhibit A of this Agreement shall be amended to delete the HI 71
Properties from the description of the Properties to which this Agreement
is subject and Buyer shall have no obligations to Seller with respect
thereto; and
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(iii) Closing with the third party and Seller shall occur
simultaneously with the Closing hereunder.
The parties have executed this Agreement on the day and year first set
forth above.
ENERGEN RESOURCES MAQ, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
President
BELLWETHER EXPLORATION COMPANY
By: /s/ ▇. ▇▇▇▇▇ Sere'
-----------------------------
▇. ▇▇▇▇▇ Sere'
President
Energen Resources Corporation hereby joins in the execution of this
Agreement for the sole purpose of evidencing its agreement to guarantee the
obligations of Seller hereunder in the event, and only in the event, that Seller
disposes of, in one or more transactions, fifty percent (50%) or more of its
assets (excluding the sale of the Properties to Buyer) during the nine (9) month
period following the Closing Date.
ENERGEN RESOURCES CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
President
33
