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EXHIBIT 10-viii - ELBRIDGE FIELD ACQUISITION PURCHASE/SALE
AGREEMENT EFFECTIVE MAY 15, 1998
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT dated this 27th day of February, 1998, is between Xxxxxx Oil
Company, ("Seller"), with offices at 00 Xxxxxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxx
and Xxxxxx Resources, Inc., ("Buyer"), with offices at 0000 Xxxxxxxxx Xxxxx
Xxxx., Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000.
WHEREAS, Seller desires to sell, and Buyer desires to purchase, upon and subject
to the terms and conditions hereinafter set forth, all of Seller's right, title
and interest in and to the following:
(i) All of Seller's interest in, to and under oil and gas leases,
leasehold interests, mineral fee interests, rights and interests
attributable or allocable to the oil and gas leases or leasehold
interests by virtue of pooling, unitization, communitization, and
operating agreements, licenses, permits and other agreements, all
more particularly described on Exhibit "A" hereto, together with
identical undivided interests in and to all the property and rights
incident thereto (collectively the "Leases"), including, but not
limited to, all rights in, to and under all agreements, product
purchase and sale contracts, including any and all past, present
and future take-or-pay claims, leases, permits, rights-of-way,
easements, licenses, farmouts, farmins, options, orders and other
contracts or agreements of a similar nature in any way relating
thereto;
(ii) All of Seller's interest in and to all of the xxxxx, equipment,
materials and other personal property, fixtures and improvements on
the Leases as of the Effective Time, appurtenant thereto or used or
obtained in connection with the Leases or with the production,
treatment, sale or disposal of hydrocarbons or waste produced
therefrom or attributable thereto, and all other appurtenances
thereunto belonging (the "Equipment");
(iii) All other leasehold interests, royalty and overriding royalty
interests owned by Seller in, to and under the Leases or
attributable to production therefrom as of the Closing Date (as
hereafter defined);
(iv) All unitization, communitization, pooling and operating agreements,
and the units created thereby which relate to the Leases or
interests therein described in Exhibit "A" or which relate to any
units or xxxxx located on the Leases, including any and all units
formed under orders,
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regulations, rules and other official acts of the governmental
authority having jurisdiction, together with any right, title and
interest created thereby in the Leases;
(v) All rights to claim revenues or gas resulting from any
underproduction attributable to Seller's interest in the Leases;
and
(vi) All lease files, land files, well files, oil and gas sales
contracts files, gas processing files, division order files,
abstracts, title opinions, and all other books, files, maps, logs
and records, and all rights thereto, of Seller related to any of
the property purchased hereunder (the "Records").
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All of Seller's interest in the above-mentioned assets is herein collectively
referred to as the "Interests".
(vii) Seller shall reserve in the Assignment and Xxxx of Sale, in the
form as set forth in Exhibit "B", an overriding royalty in the
Leases equal to 1/32nd of 8/8ths (3.125%). In the event Buyer forms
a governmentally approved Gas Storage Facility which incorporates
any of the Leases, or adjacent thereto, including but not limited
to the "Xxxxx Dome", Seller shall be entitled to 1/32nd of 8/8ths
(3.125%) of the revenue stream generated by the operation of the
Gas Storage Facility.
NOW, THEREFORE, in consideration of the above recitals and of the covenants and
agreements herein contained, Seller and Buyer agree as follows:
1. PURCHASE AND SALE. Subject to and upon all of the terms and conditions
herein set forth, Seller shall sell, transfer, assign, convey and deliver
the Interests to Buyer, and Buyer shall purchase, receive, pay for and
accept the Interests from Seller, effective on or before May 15, 1998, 7
a.m. local time (the "Effective Time"). Except as otherwise specifically
provided in this Agreement, all costs, expenses and obligations relating to
the Interests which were incurred or accrue prior to the Effective Time
shall be paid and discharged by Seller; and all costs, expenses and
obligations relating to the Interests which were incurred or accrue after
the Effective Time shall be paid and discharged by Buyer.
2. PURCHASE PRICE.
(a) The purchase price for the Interests shall be NINTY THOUSAND
DOLLARS ($90,000.00)(the "Base Purchase Price"), subject to any
applicable purchase price adjustment as provided for herein.
(b) Seller and Buyer agree that the Base Purchase Price shall be
allocated among the Interests as set forth on Exhibit "A-1" (the
"Allocated Value") for the purpose of (i) establishing a basis for
certain taxes, (ii) giving notices of value to the owners of any
preferential rights to purchase the Interests, and (iii)
determining the value of a Title Defect or an Environment Defect
and handling those instances in which the Base Purchase Price is to
be adjusted.
3. TITLE DEFECTS. As used herein, the term:
(a) "Defensible Title" shall mean, as to the Interests, such title held
by Seller, that, subject to and except for Permitted Encumbrances
(as hereinafter defined);
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(i) Entitles Seller to receive not less than the "Net Revenue
Interest" as set forth in Exhibit "A-1" of all oil, gas and
associated liquid and gaseous hydrocarbons produced, saved
and marketed from the Interests;
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(ii) Obligates Seller to bear costs and expenses relating to the
maintenance, development, and operation of all xxxxx located
on the Interests in an amount not greater than the "Working
Interest" set forth in Exhibit "A-1"; and
(iii) Is free and clear of any and all encumbrances, liens and
defects.
(b) The term "Permitted Encumbrances", as used herein, shall mean:
(i) Lessors' royalties, overriding royalties, and reversionary
interests if the net cumulative effect of such burdens does
not operate to reduce the Net Revenue Interest of any
Interest to less than the Net Revenue Interest set forth in
Exhibit "A-1";
(ii) Sales contracts covering oil, gas or associated liquid or
gaseous hydrocarbons;
(iii) Preferential rights to purchase and required third party
consents to assignments and similar agreements with respect
to which (x) waivers or consents are obtained from the
appropriate parties, or (y) required notices have been given
to the holders of such rights and the appropriate time
period for asserting such rights has expired without an
exercise of such rights;
(iv) Liens for taxes or assessments not due or not delinquent on
the Closing Date;
(v) All rights to consent by, required notices to, filings with,
or other actions by governmental agencies in connection with
the sale or conveyance of oil and gas leases or interests
therein or sale of production therefrom if the same are
prudently obtained subsequent to such sale or conveyance;
(vi) Easements, rights-of-way, servitudes, permits, surface
leases, and other rights in respect of surface operations on
or over any of the Interests which do not operate to
interfere with current or proposed operations on the
Interests;
(vii) Liens of operators relating to obligations not yet due or
pursuant to which Seller is not in default, and
materialmen's, mechanic's, repairmen's, or other similar
liens or charges arising in the ordinary course of business
incidental to construction,
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maintenance or operation of the Interests that are not such
as to interfere with the operation, value or use of the
Interests; and
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(viii) Such Title Defects or other defects waived by Buyer pursuant
to the terms of this Agreement.
(c) The term "Title Defect", as used herein, shall mean:
(i) Any encumbrance, encroachment, irregularity, defect in or
objection to Seller's title to the Interests (expressly
excluding Permitted Encumbrances) that renders Seller's
title to the Interests less than Defensible Title;
(ii) Seller is in default under some material provision of a
lease, farmout agreement or other contract or agreement
affecting the Interests which could (x) interfere with the
operation, value or use thereof, (y) prevent Seller from
receiving the proceeds of production attributable to
Seller's interest therein, or (z) result in cancellation of
Seller's interest therein;
(iii) Seller is overproduced with respect to any Interest as of
the Effective Time; or
(iv) Any provision or obligation affecting the Interests
contained in any contract or agreement disclosed in the
Records which is not customary to currently accepted oil and
gas industry standards and (x) requires an extraordinary
expenditure in connection with the acquisition, exploration,
development or operation of the Interests or (y) would
materially diminish the Net Revenue Interest set forth on
Exhibit "A-1", or materially increase the Working Interest
set forth on Exhibit "A-1", or (z) would otherwise have a
material and adverse affect on Buyer's ownership and/or
operation of the Interests.
4. PURCHASE PRICE ADJUSTMENTS FOR TITLE DEFECTS. Buyer may, by delivery of
written notice to Seller of the existence of a Title Defect, request
reduction of the purchase price for the Interest affected. Any such notice
by Buyer shall include appropriate evidence to substantiate its position
and shall be delivered to Seller on or before May 10, 1998. In the event
any such notice is not timely delivered, Buyer shall thereafter have no
right to claim a Title Defect; provided, however, Buyer shall retain its
right to claim breaches of the special warranty of title contained in
Section 22 hereof and the Assignment and Xxxx of Sale delivered at Closing.
Seller shall have until May 15, 1998, to cure any Title Defects. In the
event Seller is unable to cure a Title Defect, Buyer and Seller shall meet
and use their best efforts to agree on the validity of the claim and the
amount of any required purchase price adjustment utilizing the Allocated
Value for the Interest as set forth on Exhibit "A-1". In determining any
required purchase price adjustment, it is the intent of the parties to
include,
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when possible, only that portion of the Interest adversely
affected by the Title Defect. If the Allocated Value of the affected
Interest cannot be determined directly from Exhibit "A-1" because the Title
Defect is included within, but does not totally comprise, the Interest to
which the Allocated Value relates, Buyer and Seller shall attempt to agree
on a proportionate reduction of the Allocated Value. In the event the
parties cannot mutually agree on the amount of a purchase price adjustment,
Buyer shall have the right to (i) accept the Interest with the Title
Defect, or (ii) terminate this Agreement as to the Interest affected by the
Title Defect and receive a purchase price adjustment equal to the Allocated
Value for the affected Interest (iii) Buyer and Seller shall have the right
to terminate this Agreement in its entirety.
5. CONDITIONS OF CLOSING BY BUYER. The obligation of Buyer to close is
subject to the satisfaction of the following conditions:
(a) Seller shall have obtained and delivered to Buyer all prerequisite
waivers of preferential rights of purchase and all necessary
consents for transfer of the Interests, or Buyer and Seller shall
have adjusted the purchase price in accordance with the provisions
of Section 4;
(b) Buyer and Seller shall have adjusted the Base Purchase Price for
Environmental Defects in accordance with the provisions of Section
13 hereof;
(d) The representations of Seller contained in Section 7 shall be true
on and as of the Closing Date, and Seller shall have delivered to
Buyer at the Closing a certificate signed on its behalf to such
effect;
(e) Seller shall have performed in all material respects all of its
covenants and agreements contained in this Agreement; and
(f) Prior to Closing, there shall not have been a material adverse
change in the Interests, taken as a whole, excepting depletion due
to normal production and depreciation of equipment through ordinary
wear and tear.
6. CONDITIONS OF CLOSING BY SELLER. The obligation of Seller to close is
subject to the satisfaction of the following conditions:
(a) Transactions contemplated by, this Agreement by Buyer have been
duly authorized by all necessary action on the part of Buyer; and
(iii) this Agreement has been duly executed and delivered by Buyer
and constitutes a legal, valid and binding obligation of Buyer and
is
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enforceable against Buyer in accordance with its terms, except
that such enforcement may be subject to bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights; and
(b) The representations of Buyer contained in Section 8 hereof are true
on and as of the Closing Date, and Buyer shall have delivered to
Seller at the Closing a certificate signed on its behalf to such
effect.
(c) Confirmation by the appropriate agency of the State of Illinois of
transfer of well bonds from Seller to Buyer or evidence acceptable
to Seller that Buyer has acquired new well bonds acceptable to the
State.
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7. REPRESENTATIONS OF SELLER. Seller represents to Buyer that:
(a) Seller is a corporation validly existing and in good standing under
the laws of the State of Indiana and is duly qualified to own its
properties and assets and to carry on its business as now being
conducted;
(b) Seller has the requisite power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Seller and
the consummation of the transactions contemplated hereby have been
duly authorized;
(c) 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 the terms hereof, subject to the
effects of bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights. No other act, approval
or proceeding on the part of Seller or any other party is required
to authorize the execution and delivery of this Agreement by Seller
or the consummation of the transactions contemplated hereby;
(d) This Agreement, and the execution and delivery hereof by Seller,
does not and the consummation of the transactions contemplated
hereby will not (i) conflict with or result in a breach of the
charter or bylaws of Seller or any other governing documents of
Seller, (ii) violate, or conflict with, or constitute a default
under, or result in the creation or imposition of any security
interest, lien or encumbrance upon any property or assets of Seller
under any mortgage, indenture or agreement to which it is a party
or by which the Interests are bound, which violation, conflict or
default might adversely affect the ability of Seller to perform its
obligation under this Agreement, or (iii) violate any statute or
law or any judgment, decree, order, writ, injunction, regulation or
rule of any court or governmental authority, which violation might
adversely affect the ability of Seller to perform its obligations
under this Agreement;
(e) Seller has not been advised directly or indirectly by any owner or
lessor under any Leases of any material default under any lease or
agreement which has not been remedied or waived, or of any
requirements or demands which have not been satisfied;
(f) All royalties, rentals and other payments due under the Leases have
been properly and timely paid, except for those amounts in
suspense, and all conditions necessary to keep the Leases in force
have been duly performed;
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(g) Seller is not obligated to deliver hydrocarbons produced from the
Interests at some future time without receiving full payment
therefor;
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(h) No overbalance of gas deliveries exists with regard to any
producing xxxxx included in the Interests as to the interest of
Seller;
(i) No entity has any call upon, option to purchase or similar rights
under any agreement with respect to the Interests or to the
production therefrom;
(j) There are no actions, suits, proceedings or governmental
investigations or inquiries pending or threatened, against Seller
or the Interests which might delay, prevent or materially hinder
the consummation of the transactions contemplated hereby or
materially adversely affect the title to or value of any of the
Interests;
(k) Seller possesses all licenses, permits, certificates, orders,
approvals and authorizations necessary to own the Interests and to
carry on its business as now being conducted;
(l) Seller has complied with all laws, ordinances, rules, regulations
and orders applicable to the Interests necessary for the conduct of
legal operations of the Interests;
(m) Seller is unaware of any Title Defects;
(n) All ad valorem, property, production, severance, excise and similar
taxes and assessments based on or measured by the ownership of
property or the production of hydrocarbons or the receipt of
proceeds therefrom on the Interests that have become due and
payable have been properly and timely paid;
(o) Seller has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated
by this Agreement for which Buyer shall have any responsibility
whatsoever; and
(p) Seller is unaware of any material inaccuracies in information
furnished relating to the interests, and has not knowingly withheld
material information, but does not warrant completeness or
accuracy.
8. REPRESENTATIONS OF BUYER. Buyer represents and warrants to Seller that:
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(a) Xxxxxx Resources, Inc. is a corporation validly existing and in
good standing under the laws of the State of Colorado and is duly
qualified to own its properties and assets and to carry on its
business as now being conducted;
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(b) Buyer has the requisite power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Buyer and
the consummation of the transactions contemplated hereby have been
duly authorized;
(c) 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 the terms hereof, subject to the
effects of bankruptcy, insolvency, reorganization, moratorium, and
similar laws affecting creditors' rights. No other act, approval
or proceeding on the part of Buyer or any other party is required
to authorize the execution and delivery of this Agreement by Buyer
or the consummation of the transactions contemplated hereby;
(d) This Agreement, and the execution and delivery hereof by Buyer,
does not and the consummation of the transactions contemplated
hereby will not (i) conflict with or result in a breach of the
charter or bylaws of Buyer or any other governing documents of
Buyer, or (ii) violate any statute or law or any judgment, decree,
order, writ, injunction, regulation or rule of any court or
governmental authority, which violation might adversely affect the
ability of Buyer to perform its obligations under this Agreement;
(e) Buyer possesses all required governmental licenses, permits,
certificates, orders and authorizations necessary to own the
Interests; and
(f) Buyer has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated
by this Agreement for which Seller shall have any responsibility
whatsoever.
(g) Buyer has relied upon its own evaluations of written records and
other sources, which Buyer deems reliable, and has not, in
reviewing and assessing the interests, relied on any oral
representations of Seller or its agents or employees.
9. COVENANTS OF SELLER. Seller covenants and agrees that from and after the
Effective Time and until the Closing Date:
(a) SALES. Seller will not sell, transfer, assign, convey or otherwise
dispose of any Interests other than (i) oil, gas and other
hydrocarbons produced, saved and sold in the ordinary course of
business, and (ii) personal property and equipment which is
replaced with property and
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equipment of comparable or better value and utility in the ordinary
and routine maintenance and operation of the Interests;
(b) ENCUMBRANCES. Seller will not create or permit the creation of any
lien, security interest or encumbrance on any Interest, the oil or
gas produced therefrom, or the proceeds thereof;
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(c) OPERATION OF INTERESTS. Seller agrees to:
(i) Cause the Interests to be developed, maintained and operated
in a prudent, good and workmanlike manner, maintain
insurance now in force with respect to the Interests, and
pay or cause to be paid all costs and expenses in connection
therewith;
(ii) Not participate in the drilling of any new well on the
Interests or fail to participate in operations on the
Interests proposed by other parties, without the advance
written consent of Buyer, which consent or non-consent must
be given by Buyer within ten (10) days of the notice from
Seller;
(iii) Maintain and keep the Leases in full force and effect;
(iv) Perform and comply with all of its obligations under
agreements relating to or affecting the Interests;
(v) Take no action which will cause any purchaser of production
to place in suspense any payment for production sold;
(vi) Not enter into or assume any contract, agreement or
commitment which is not in the ordinary course of business
as theretofore conducted or which involves payments,
receipts or potential liabilities with respect to the
Interests without the written approval of the Buyer; and
(vii) Carry on its business with respect to the Interests in
substantially the same manner as it has heretofore, not
introducing any new method of management, operation or
accounting with respect to the Interests;
(d) CONTRACTS AND AGREEMENTS. Seller will not:
(i) Grant any preferential right to purchase or similar right or
agree to require the consent of any party to the transfer
and assignment of the Interests to Buyer;
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(ii) Enter into any gas sales contract or new crude oil sales or
supply contract with respect to the Interests which is not
terminable without penalty or detriment on notice of sixty
(60) days or less;
(iii) Incur or agree to incur any contractual obligation or
liability, absolute or contingent, with respect to the
Interests;
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(iv) Enter into any transaction the effect of which, considered
as a whole, would be to cause Seller's ownership interest in
any of the Interests to be altered from its ownership
interest as of the Effective Time; or
(v) Enter into any settlement of or relinquish any outstanding
receivables (including, without limitation, the right to
receive any retroactive price adjustments, take-or-pay
monies, FERC mandated refunds, accounting adjustments, tax
adjustments, and Minerals Management Service refunds);
(e) CONSENTS. If any approval or consent by any federal, state or
local government authority is required to vest good and Defensible
Title to any of the Interests in Buyer at Closing, Seller agrees to
exercise its best efforts, as reasonably requested by Buyer, to
obtain all such required approvals or consents. Seller will
execute appropriate transfer orders covering the Interests
submitted to it for execution designating Buyer as the appropriate
party for payment, effective as of the Effective Time;
(f) NOTICE OF DEFAULTS. Seller will give prompt written notice to
Buyer of any notice of default (or written threat of default,
whether disputed or denied) received or given by Seller under any
instrument or agreement affecting the Interests to which Seller is
a party or by which it or any of the Interests is bound; and
(g) NOTICE OF EVENTS AND PROPOSALS. If Seller becomes aware of
(i) any action or occurrence which reasonably may materially affect
any of the Interests, (ii) any proposal from a third party to
engage in any material transaction with respect to any of the
Interests, or (iii) any suit, action or other proceeding before
any court or governmental agency which relates to the Interests
or which might result in impairment or loss of the Seller's title
to any of the Interests or the value thereof or which might
hinder or impede the operation of the Interests, it will give
prompt written notice to Buyer of such action, occurrence or
proposal.
10. LIABILITIES AND INDEMNITIES OF SELLER. In connection with the sale,
conveyance, transfer, assignment and delivery of the Interests to Buyer,
Buyer shall not assume or become obligated in any way with respect to the
following:
(a) Any cost, expense or obligation relating to the Interests which
accrued prior to the Effective Time unless specifically assumed by
Buyer in Section 11 hereof;
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(b) Any litigation which affects the Interests, whether pending or
threatened, which is based upon omissions, events or occurrences
prior to the Effective Time;
(c) Any federal or state income tax or other tax liability of Seller
arising by reason of the transaction contemplated by this
Agreement;
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(d) Any federal, state, county, municipal, ad valorem, production,
windfall profits or other tax liability attributable to Seller's
ownership or operation of any of the Interests prior to the
Effective Time except as to prorate taxes for the current tax
period;
(e) Any claims arising out of the production or sale of hydrocarbons
from the Interests, or the proper accounting or payment to parties
for their interests therein, prior to the Effective Time; and
(f) Any other claim or demand against, or liability or obligation of
Seller arising from any act or omission whatsoever of Seller, prior
to the Effective Time, whether such claim, demand, liability or
obligation is fixed or contingent, and whether the same arises by
contract, tort or otherwise.
Seller shall, to the fullest extent permitted by law, protect, defend,
indemnify and hold Buyer and its affiliates, including its directors,
officers, employees, agents and representatives of each of them, harmless
from and against any and all claims, losses, damages, costs, expenses,
diminutions in value, suits, causes of action or judgments of any kind or
character with respect to any and all liabilities and obligations or
alleged or threatened liabilities and obligations, including, but not
limited to, any interest, penalty and any attorneys' fees and other costs
and expenses incurred in connection with investigating or defending any
claims or actions, whether or not resulting in any liability, attributable
to or arising out of (i) Seller's ownership or operation of the Interests
prior to the Effective Time, (ii) the breach by Seller of the
representations and warranties contained in Sections 7 and 22 hereof, (iii)
the breach by Seller of the covenants contained in Sections 9, 14 and 22
hereof, and (iv) the sale, conveyance, transfer, assignment and delivery of
the Interests from Seller to Buyer.
11. ASSUMPTION OF OBLIGATIONS AND INDEMNITIES OF BUYER. Buyer shall assume, as
of the Effective Time, all contractual obligations of Seller related to the
Interests which are recorded or were disclosed by Seller to Buyer in the
Records, including without limitation, Seller's obligations under Quit
Claim and Release dated _________ ___, 1998, between Midwestern Gas
Transmission Company and Xxxxxx Oil, Inc.; provided, however, Buyer shall
not assume any obligation of Seller to pay for another party's debts,
expenses or costs incurred prior to the Effective Time owed to an operator
of an Interest pursuant to the terms of an Operating Agreement applicable
to any of the Interests, or any agreement or obligation claimed as a Title
Defect. Buyer shall, to the fullest extent permitted by law, protect,
defend, indemnify and hold Seller and its directors, officers, employees,
agents and representatives of each of them, harmless from and against any
and all claims, losses, damages, costs, expenses, diminutions in value,
suits, causes of action or judgments of any kind or character with respect
to any and all liabilities and obligations or alleged or threatened
liabilities and obligations, including, but not limited to, any interest,
penalty and any attorneys' fees and other costs and
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expenses incurred in connection with investigating or defending any
claims or actions, whether or not resulting in any liability,
attributable to or arising out of (i) Buyer's ownership or operation of
the Interests subsequent to the Effective Time, (ii) the breach by
Buyer of the representations contained in Section 8 hereof, and (iii)
the breach by Buyer of the covenants contained in Section 14 hereof.
12. ACCESS OF BUYER.
(a) Seller will make available to Buyer for examination and copying any
of the Records as Buyer may reasonably request, including, but not
limited to, engineering, geological, and geophysical data, reports,
maps, electric logs, mud logs, production logs, well records
relating to the Interests, files relating to claims against or
relating to the Interests, if any, and information relating to the
physical condition of the Interests and the land adjoining the
Interests, including, if any, results of any water or soil testing,
NORM and PCB evaluations.
(b) Seller shall permit Buyer and Buyer's authorized representatives to
consult with Seller's employees during reasonable business hours
and to conduct, at Buyer's sole risk and expense, inspections and
inventories of the Interests that are Seller-operated. During such
inspections, Buyer shall have the right to review and conduct tests
on the Interests to determine the environmental condition of the
Equipment and Lease premises. To the extent Buyer desires similar
access to Seller's non-operated Interests, Seller shall assist
Buyer in obtaining such access.
13. PURCHASE PRICE ADJUSTMENTS FOR ENVIRONMENTAL DEFECTS
(a) "Environmental Defect" shall mean a violation (i) of any
environmental rule, regulation or order of any governmental agency
having jurisdiction over the Interests and (ii) to which remedial
or corrective action either is required or would be undertaken by a
prudent operator.
(b) Buyer may, by delivery of written notice to Seller of the existence
of an alleged Environmental Defect, request reduction of the
purchase price for the Interest affected. The Environmental Defect
notice shall indicate the nature and a description of the
Environmental Defect, the Interest to which it relates, and the
dollar amount which Buyer believes it would take to rectify or
remediate the Environmental Defect.
(c) The Environmental Defect notice by Buyer shall be delivered to
Seller on or before May 10, 1998. In the event any such notice is
not timely delivered, all Environmental Defects shall be
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deemed waived for the purposes of Closing. Seller shall have the
right, but not the obligation, to attempt to cure any alleged
Environmental Defect prior to Closing. In the event Seller is
unable or unwilling to cure an alleged Environmental Defect, Buyer
and Seller shall meet and use their best efforts to agree on the
validity of the claim of the Environmental Defect and the amount of
any required purchase price adjustment.
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(d) In the event the parties cannot mutually agree on the purchase
price adjustment for an alleged Environmental Defect, Buyer shall
have the right to (i) proceed to Closing and accept the Interest
with the alleged Environmental Defect, or (ii) terminate this
Agreement as to the Interest affected by the alleged Environmental
Defect and receive a purchase price adjustment for such Interest as
set forth in Exhibit "A-1", or, where feasible, the proportionate
allocated value.
(e) In the event Seller elects not to cure the alleged Environmental
Defect or reduce the purchase price, Seller and Buyer shall have
the right to terminate this Agreement in its entirety.
14. CONFIDENTIALITY. All engineering, geological and geophysical data, reports
and maps, and all other confidential data provided to Buyer, whether before
or after the date of this Agreement, relating to the Interests shall be
treated by Buyer as strictly confidential, and shall not be disclosed to
any person, firm or corporation without the prior written consent of
Seller. In the event this purchase and sale does not close, this covenant
shall survive termination of this Agreement; and in the event the sale
closes, this covenant with respect to Buyer shall terminate at Closing.
After Closing, any information, data or records, either originals or copies
thereof, relating to the Interests and retained by Seller shall be treated
by Seller as strictly confidential and shall not be disclosed to any
person, firm or corporation without the prior written consent of Buyer.
15. CLOSING. The Closing shall be held at 9:00 a.m. on or before May 15, 1998,
at the offices of Seller at 00 Xxxxxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000 or at
such other time and place as Seller and Buyer may mutually agree in writing
(the "Closing" or the "Closing Date").
16. TRANSACTIONS AT CLOSING. On the Closing Date:
(a) Seller shall execute, acknowledge and deliver to Buyer an
Assignment and Xxxx of Sale in the form as set forth in Exhibit "B"
hereto (in sufficient counterparts to facilitate recording in
applicable counties and filing with the Bureau of Land Management
or other governmental authorities) conveying the Interests;
(b) Seller and Buyer shall execute and deliver a settlement statement
that shall set forth the purchase price and each adjustment and the
calculation of such adjustments used to determine such amount (the
"Closing Amount");
(c) Seller shall deliver to Buyer originals of the Records;
-24-
(d) Seller and Buyer shall execute, acknowledge and deliver transfer
orders or letters-in-lieu prepared by Seller, and approved by
Buyer, directing all purchasers of production to make payment to
Buyer of proceeds attributable to production from the Interests;
-25-
(e) Seller shall deliver to Buyer exclusive possession of the
Interests; and
(f) Buyer shall deliver to Seller cash by wire transfer or a cashier's
check in the amount of the Closing Amount.
17. POST-CLOSING ADJUSTMENTS. Within ninety (90) days after the Closing, the
parties shall undertake to agree with respect to the adjustments or
payments that were not finally determined as of the Closing, and the amount
due from Buyer or Seller, as the case may be, pursuant to the Post-Closing
adjustment. Seller shall provide Buyer access to such of Seller's records
as may be reasonably necessary to a determination of Post-Closing
adjustments. Payment by Buyer or Seller shall be made in immediately
available funds within five (5) days of agreement. If the Post-Closing
adjustment has not been agreed upon within the time period set forth
herein, either party may seek to enforce any rights it claims hereunder.
18. PRORATION OF TAXES. All ad valorem taxes, real property taxes, and similar
obligations with respect to the tax period in which the Effective Time
occurs (the "current tax period") shall be apportioned between Seller and
Buyer as of the Effective Time based on an estimate of the immediately
preceding tax period assessment, and the purchase price shall be reduced at
Closing by the amount of such estimated taxes owed by Seller for that
portion of the current tax period prior to the Effective Time.
19. PROCEEDS OF PRODUCTION. Seller shall be entitled to all proceeds of
production attributable to the Interests and accruing to the period prior
to the Effective Time. Buyer shall be entitled to all proceeds of
production attributable to the Interests and accruing to the period on and
after the Effective Time. Seller shall receive a credit in an amount equal
to the proceeds received for all production in storage or in transit as of
the Effective Time and not previously sold by Seller, which production
Seller shall have the right to cause to be measured or gauged as of the
Effective Time. All proceeds held in suspense or escrow from the sale of
production by Seller prior to the Effective Time attributable to the
Interests shall be delivered to Buyer at Closing. Seller shall have no
responsibility or liability for the proper distribution of proceeds from
and after the Closing Date; provided, however, in the event Seller receives
distributions for proceeds of production after the Closing Date for
production on or after the Effective Time, Seller will promptly remit such
proceeds, along with the supporting documentation, to Buyer.
20. NOTICES. All communications required or permitted under this Agreement
shall be in writing and any communication or delivery hereunder shall be
deemed to have been fully made if actually delivered, or if mailed by
registered or certified mail, postage prepaid, return receipt requested, to
the address as set forth below:
SELLER BUYER
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Xxxxxx Oil Company Xxxxxx Resources, Inc.
00 Xxxxxxxxx Xxxxx 0000 Xxxxxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxx Xxxxx, XX 00000 Xxxxxxxxx, XX 00000
Attn.: Xxxxxxx Xxxxxxxxxx Attn.: Xxxx X. Xxxxxxxxxxx
-27-
21. FURTHER ASSURANCE. Incidental and subsequent to Closing, each of the
parties shall execute, acknowledge, and deliver to the other such further
instruments, and take such other actions as may be reasonably necessary to
carry out the provisions of this Agreement.
22. WARRANTIES. THE ASSIGNMENT AND XXXX OF SALE EXECUTED PURSUANT HERETO SHALL
BE EXECUTED WITHOUT ANY WARRANTY OF TITLE, EITHER EXPRESS OR IMPLIED;
PROVIDED, HOWEVER, SELLER SHALL SPECIALLY WARRANT AND AGREE TO DEFEND THE
TITLE TO THE INTERESTS AS SET FORTH ON EXHIBIT "A" and "A-1" HERETO AGAINST
THE LAWFUL CLAIMS AND DEMANDS OF ALL PERSONS OR ENTITIES CLAIMING THE SAME
OR ANY PART THEREOF BY, THROUGH OR UNDER SELLER, BUT NOT OTHERWISE. SELLER
MAKES NO EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION AS TO THE EQUIPMENT,
WHICH SHALL BE CONVEYED TO BUYER "AS IS, WHERE IS," AND WITH ALL FAULTS AND
DEFECTS, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PURPOSE.
23. CASUALTY LOSS. Seller assumes the risk of any casualty loss prior to
Closing.
24. TERMINATION. This Agreement may be terminated at any time by mutual
consent of Seller and Buyer. In addition, this Agreement may be terminated
(i) by Seller by notice to Buyer if all conditions described in Section 6
and 15 shall not have been met and such non-compliance shall not have been
caused or waived by the actions or inactions of Seller, (ii) by Buyer by
notice to Seller if all conditions described in Section 5 shall not have
been met and such non-compliance shall not have been caused or waived by
the actions or inactions of Buyer, or (iii) by Buyer or Seller by notice to
the other party if purchase price adjustments for Title Defects required by
Section 4 and/or Environmental Defects required by Section 13 hereof exceed
ONE DOLLARS ($1.00). Upon termination of this Agreement the parties shall
thereafter be under no further obligation to one another hereunder.
25. EXPENSES. Whether or not the transactions contemplated by this Agreement
are consummated, each of the parties hereto shall pay its own fees and
expenses incident to the negotiation, preparation and execution of this
Agreement, including attorneys' and accountants' fees.
26. ENTIRE AGREEMENT. This instrument states the entire agreement between the
parties and may be supplemented, altered, amended, modified or revoked by
writing only, signed by both parties.
-28-
27. SURVIVAL OF REPRESENTATIONS AND COVENANTS. All representations,
warranties, and covenants of the parties to the extent not fully performed
or waived prior to Closing shall survive the Closing, other than those
contained in Sections 3, 4, 5, 6 and 13 hereof.
-29-
28. COUNTERPART. This Agreement may be executed by Buyer and Seller in any
number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute one and the same
instrument.
29. TIME OF ESSENCE. Time is of the essence in this Agreement.
30. ANNOUNCEMENTS. Seller and Buyer shall consult with each other prior to the
release of any press releases and other announcements concerning this
Agreement or the transactions contemplated hereby.
31. SEVERABILITY. If, at any time subsequent to the date hereof, any provision
of this Agreement shall be held by any court of competent jurisdiction to
be illegal, void or unenforceable, such provision shall be of no force and
effect, but the illegality or unenforceability of such provision shall have
no effect upon and shall not impair the enforceability of any other
provision of this Agreement.
32. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois. The validity of the
various conveyances and transfers affecting the title to the Interests
shall be governed by and construed in accordance with the laws of the
jurisdiction in which such Interests are situated.
EXECUTED as of the date first above mentioned.
SELLER
XXXXXX OIL COMPANY
By:
----------------------------
Title:
-------------------------
BUYER
XXXXXX RESOURCES, INC.
By:
----------------------------
Xxxx X. Xxxxxxxxxxx
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Title: Chief Executive Officier
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Attached to and made a part of Purchase and Sale Agreement dated February 27,
0000
XXXXXXX "X"
XXXXX XXXXXX, XXXXXXXX
XXXXXXX-XXXXXX-XXXXX UNIT
-------------------------
E/2 NE/4 of Xxxxxxx 0, Xxxxxxxx 00 Xxxxx, Xxxxx 00 Xxxx
Xxxxxx: Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx, husband and wife
Lessee: X. X. Xxxxxxx
Lease Date: March 5, 1949
Lease Description: Lot #5 of the County Clerk's Subdivision of the Northeast
Quarter, containing 32.5 acres as shown by plat in Plat Book
1, page 237, except that part of said lot lying North of the
Paris and Terre Haute Wagon Road, leaving 20 acres, more or
less, Xxxxxxx 0, Xxxxxxxx 00 Xxxxx, Xxxxx 11 Xxxx, Xxxxx Co.
IL
Recording Data: Book 3, Page 158
Lessor: Hartvig X. Xxxxxx and Xxxx Xxxxxx, husband and wife
Lessee: X. X. Xxxxxxx
Lease Date: March 3, 1949
Lease Description: The North 26 acres of even width of the Northwest Quarter of
the Southeast Quarter: all that part of Lot 2 of the County
Clerk's subdivision of the Northeast Quarter lying south of
the Paris and Terre Haute Wagon road, (27.64 acres by
survey); Lot 34 of the County Clerk's subdivision of said
Northeast Quarter (NE/4), (34.20 acres), all in Xxxxxxx 0,
Xxxxxxxx 00 Xxxxx, Xxxxx 00 Xxxx; Also, the East 15.48
acres of the South 35.48 acres of the E/2 SW/4 Section 1,
and a part of the E/2 SW/4 Section 1 described as the North
14.08 acres of the South 49.56 acres of said E/2 SW/4,
except that part lying south of the North Bank of the ditch
running East and West near the South line of said 14.08 acre
tract: Also a part of the E/2 SW/4 of said section 1
described as beginning in the East line thereof at a point
180 feet south of the Northeast Corner of said E/2 SW/4,
said point being in the North line of lot #16 of the
original town of Elbridge, thence South 50 rods to the North
line of tract first above described; thence West 55 rods,
thence North to the Northwest Corner of Lot #13 in Xxxxxx'x
addition to the said town of Elbridge, thence East to the
Northwest Corner of Lot #17 in said addition, thence North
to the Northwest corner of Lot #9 in said original town of
Elbridge, thence East with the South line of Main Street in
said original town to the Place of Beginning, containing 17
acres, more or less, containing in total 134.40 acres ,
more or less, in Township 00 Xxxxx, Xxxxx 00 Xxxx, Xxxxx Xx.
XX
Recording Data: Book 3, Page160
Lessor: Xxxxx Xxxxx and Xxxx Xxxxx, husband and wife
Lessee: X. X. Xxxxxxx
Lease Date: March 10, 1949
Lease Description: The West 55 acres of even width of that part of the
Northwest Quarter(NW/4) of Section 1, that lies north of the
Paris and Terre Haute wagon road except 1/4 acre in the
Southwest Corner thereof being used for cemetery purposes;
and that part of the Northeast Quarter (NE/4) of Section 2
bounded and described
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as follows: Beginning at the Northeast Corner of said
Section 2, thence West along the North line of said
Section 2, 126 rods, thence South to the center of the
Paris and Terre Haute Wagon road, thence Southeasterly
with said centerline of the Paris and Terre Haute Wagon
Road to the east line of the said section 2, thence North
along the east line of said Section 2 to the Place of
beginning, containing in all One Hundred Two (102) acres,
more or less, being in Township 12 North, Range 11 Xxxx,
Xxxxx Co. IL
Recording Data: Book 3, Page 161
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XXXXX-XXXXXXXXX UNIT
--------------------
W/2 NW/4 of Xxxxxxx 0, Xxxxxxxx 00 Xxxxx, Xxxxx 00 Xxxx
Xxxxxx: Xxxxx Xxxxxxxx and Xxxxxx X. Xxxxxxxx, husband and wife and
Xxxxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxxxx, his wife
Lessee: X. X. Xxxxxxx
Lease Date: March 3, 1949
Lease Description: Lots 1 and 2 of County Clerk's subdivision of the E/2 SW/4
(9.85 acres); Lot #5 except the West 150 feet of the County
Clerk's Subdivision of the NW/4 (3.18 acres), Lot 38 of the
County Clerk's subdivision of the NW/4 (.61 acres) and Xxxx
00 xxxxx xx Xxx #0 xx Xxxxxx Clerk's Subdivision of the
NW/4, containing 116.64 acres, more or less Section 0, X00
Xxxxx, Xxxxx 00 Xxxx, Xxxxx Xx. Xxxxxxxx
Recording Data: Book 3, Page 159
Lessor: Trustees of Schools of Township 12 North, Range 11 West
Lessee: Xxxxxxx X. Xxxxxxx
Lease Date: June 21, 1949
Lease Description: Lot #6 of the County Clerk's Subdivision of the NW/4 and
Lots # 4 and 5 of Tailors Addition to the Town of Elbridge,
Illinois, Section 1, Township 12 North, Range 11 Xxxx,
Xxxxx Co. Il
Recording Data Book 3, page 164
Lessor: Xxxxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxxxx, his wife
Lessee Xxxxxxx X. Xxxxxxx
Lease Date June 7, 1949
Lease Description The West 10 acres of that part of the NW/4 lying South of
the Paris and Terre Haute Wagon Road in Xxxxxxx 0, Xxxxxxxx
00 Xxxxx, Xxxxx 11 Xxxx, Xxxxx Co. IL
Recording Data Book 3, page 144
Lessor: Xxxxxxxx Xxxx Etal
Lessee Xxxxxxx X. Xxxxxxx
Lease Date September 7, 1949
Lease Description 1/2 acre, more or less, out of the Xxxxxxxxx Xxxxxx xx Xxx
#0 xx Xxxxxx Clerk's Subdivision of the NW/4, Section 1,
Township 12 North, Range 11 Xxxx, Xxxxx Co. IL
Recording Data Book 5, page 223
Lessor: Halalie Xxxxxxx Etal
Lessee Xxxxxxx X. Xxxxxxx
Lease Date September 7, 1949
Lease Description 1/2 acre, more or less, out of the Xxxxxxxxx Xxxxxx xx Xxx
#0 xx Xxxxxx Clerk's Subdivision of the NW/4, Section 1,
Township 12 North, Range 11 Xxxx, Xxxxx Co. IL
Recording Data Book 2, page 432
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X. X. XXXXXXXXX UNIT
--------------------
W/2 SW/4 of Xxxxxxx 0, Xxxxxxxx 00 Xxxxx, Xxxxx 00 Xxxx
Xxxxxx: Xxxxx Xxxxxxxx and Xxxxxx X. Xxxxxxxx, husband and wife and
Xxxxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxxxx, his wife
Lessee: X. X. Xxxxxxx
Lease Date: March 3, 1949
Lease Description: Lots 1 and 2 of County Clerk's subdivision of the E/2 SW/4
(9.85 acres); Lot #5 except the West 150 feet of the County
Clerk's Subdivision of the NW/4 (3.18 acres), Lot 38 of the
County Clerk's subdivision of the NW/4 (.61 acres) and Xxxx
00 xxxxx xx Xxx #0 xx Xxxxxx Clerk's Subdivision of the
NW/4, Containing 116.64 acres, more or less Section 0, X00
Xxxxx, Xxxxx 00 Xxxx, Xxxxx Xx. Xxxxxxxx
Recording Data: Book 3, Page 159
W. I. XXXXXXX UNIT
------------------
E/2SE/4 of Xxxxxxx 0, Xxxxxxxx 00 Xxxxx, Xxxxx 00 Xxxx
Xxxxxx: W. I. Xxxxxxx and Xxxxxxxxx Xxxxxxx, husband and wife
Lessee: Xxxxxxx X. Xxxxxxx
Lease Date: March 21, 1949
Lease Description: W/2 SW/4, lying South of Sugar Creek, Containing 74 acres,
more or less, Xxxxxxx 00, Xxxxxxxx 00 Xxxxx, Xxxxx 11 Xxxx,
Xxxxx Co. IL
Recording Data: Book 3, Page 34
Lessor: W. I. Xxxxxxx and Xxxxxxxxx Xxxxxxx, husband and wife
Lessee: Xxxxxxx X. Xxxxxxx
Lease Date: May 21, 1949
Lease Description: E/2 SE/4 and East 28 acres of the South 54 acres of the W/2
SE/4, containing 148 acres, more or less, Xxxxxxx 0,
Xxxxxxxx 00 Xxxxx, Xxxxx 11 Xxxx, Xxxxx Co. IL
Recording Data: Book 3, Page 114
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Attached to and made a part of Purchase and Sale Agreement dated February 27,
----------------------------------------------------------------------------
1998
----
EXHIBIT "A-1"
XXXXX COUNTY, ILLINOIS
WORKING NET REVENUE ALLOCATED
PROPERTY DESCRIPTION INTEREST INTEREST
VALUE
XXXXXXX-XXXXXX-XXXXX UNIT 100.00% 87.50%
$32,535.00
E/2NE/4 of Xxxxxxx 0, Xxxxxxxx 00 Xxxxx, Xxxxx 11 West
Containing 80.00 acres, more or less
XXXXX-XXXXXXXXX UNIT 100.00% 86.682420%
$31,428.00
W/2NW/4 of Xxxxxxx 0, Xxxxxxxx 00 Xxxxx, Xxxxx 11 West
Containing 80.00 acres, more or less
X. X. XXXXXXXXX UNIT
$19,386.00 100.00% 87.50%
W/2SW/4 of Xxxxxxx 0, Xxxxxxxx 00 Xxxxx, Xxxxx 11 West
Containing 80.00 acres, more or less
W. I. XXXXXXX UNIT 100.00%
87.50% $6,651.00
E/2SE/4 of Xxxxxxx 0, Xxxxxxxx 00 Xxxxx, Xxxxx 11 West
Containing 80.00 acres, more or less ----------
$90,000.00
