OVERRIDING ROYALTY PURCHASE AGREEMENT BETWEEN O'BRIEN RESOURCES, LLC AS SELLER AND BERRY PETROLEUM COMPANY AS PURCHASER DATED AS OF JUNE 10, 2008
Execution
Version
BETWEEN
O'BRIEN
RESOURCES, LLC
AS
SELLER
AND
▇▇▇▇▇
PETROLEUM COMPANY
AS
PURCHASER
DATED
AS OF JUNE 10, 2008
This Overriding Royalty Purchase
Agreement (this "Agreement"), is dated
as of June 10, 2008, by and between O'Brien Resources, LLC, a Texas limited
liability company ("Seller"), and ▇▇▇▇▇
Petroleum Company, a Delaware corporation ("Purchaser"), but
effective for all purposes as of the Effective Date. Seller and
Purchaser are sometimes referred to herein collectively as the "Parties" and
individually as a "Party."
RECITALS:
Pursuant
to that certain Purchase and Sale Agreement by and among Purchaser, Seller, and
certain other parties dated as of June 10, 2008 (the "Purchase Agreement")
Seller assigned to Purchaser certain interests in and to, among other things,
certain oil and gas leases more specifically described therein;
Seller
specifically excluded from the Purchase Agreement certain overriding royalty
interests reserved by Seller prior to the date of the Purchase Agreement in and
to the oil and gas leases covering the lands shown on Exhibit A
hereto, including, without limitation those overriding royalty interests more
specifically described on Exhibit B-1
hereto (the "Overriding Royalty
Interests"); and
Seller
desires to sell and Purchaser desires to Purchase the Overriding Royalty
Interests pursuant to the terms hereof.
NOW
THEREFORE, for and in consideration of the premises and of the mutual promises,
representations, warranties, covenants, conditions, and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as
follows:
Article
1
PURCHASE
AND SALE
1.1 Purchase
and Sale. On the terms and conditions contained in this
Agreement, Seller agrees to sell to Purchaser, effective as of February 1, 2008
(the "Effective
Date") and Purchaser agrees to purchase, accept, and pay for the
Overriding Royalty Interests.
1.2 Certain
Excluded Assets. Notwithstanding anything to the contrary in
this Agreement or the Purchase Agreement, it is understood and agreed by the
Parties that the Overriding Royalty Interests shall not include, and there shall
not be transferred to Purchaser at Closing (a) any Tax refund (whether by
payment, credit, offset, or otherwise) with respect to Taxes applicable to the
Overriding Royalty Interests prior to the Effective Date and (b) refunds
relating to severance Tax abatements (whether by payment, credit, offset, or
otherwise, and together with any interest thereon) with respect to all taxable
periods or portions thereof ending on or prior to the Effective Date, whether
received before, on, or after the Effective Date (including, without limitation,
refunds relating to the designation by the Railroad Commission of Texas of any
Well or Unit as "High Cost" pursuant to the terms of 16 Tex. Admin.
Code § 3.101).
1.3 Incorporation
of Certain Definitions. Capitalized terms used herein but not
defined shall have the meanings ascribed to such terms in the Purchase
Agreement.
Article
2
PURCHASE
PRICE
2.1 Purchase
Price. The purchase price for the Overriding Royalty Interests
(the "Purchase Price") shall be Thirty-Two Million Three Hundred Fifty-Six
Thousand dollars ($32,356,000) (the "Unadjusted Purchase
Price"), adjusted as provided in Section 2.4.
2.2 Allocated
Values. The allocations set forth in Schedule 2.2
(the "Allocated
Values") shall be used by Seller and Purchaser as the basis for
calculating Title Defect Amounts and reporting asset values and other items,
including preparing Internal Revenue Service Form 8594, Asset Acquisition
Statement (which Form 8594 shall be completed, executed and delivered by such
parties as soon as practicable after the Closing but in no event later than 15
days prior to the date such form is required to be filed). Seller and
Purchaser agree not to assert, and will cause their Affiliates not to assert, in
connection with any audit or other proceeding with respect to Taxes, any asset
values or other items inconsistent with the amounts set forth in Schedule 2.2.
2.3 Division
of Proceeds, Expenses, and Taxes.
(a) Seller
shall be entitled to all amounts earned from the sale of Hydrocarbons produced
from, or attributable to, the Overriding Royalty Interests during the period up
to but excluding the Effective Date (net of any (i) gathering, processing,
and transportation costs paid in connection with sales of Hydrocarbons from an
Overriding Royalty Interest, and (ii) production Taxes, severance Taxes,
and other Taxes measured by units of production, in each case, to the extent not
otherwise deducted by a third Person, including, without limitation, a purchaser
of production), and to all other income earned with respect to the Overriding
Royalty Interests up to but excluding the Effective Date. Purchaser
shall be entitled to all such amounts with respect to periods of time from and
after the Effective Date.
(b) Seller
shall be responsible for (and entitled to any refunds and indemnities with
respect to) the costs, expenses, and expenditures (if any) incurred up to but
excluding the Effective Date, to the extent that the same have not been
otherwise deducted by a third Person (including, without limitation, a purchaser
or production, and Purchaser shall be responsible for all other costs, expenses,
and expenditures (if any).
(c) Without
duplication of any amounts otherwise paid or received (or, in the case of costs,
expenses, and expenditures, deducted or otherwise accounted for by a third
Person, including, without limitation a purchaser of production) with respect to
the Overriding Royalty Interests, (i) should any Party or its Affiliates
receive any proceeds or other income to which the other Party is entitled under
this Section 2.3, such Party shall fully disclose, account for, and
promptly remit the same to such other Party, and (ii) should any Party pay
any costs, expenses, or expenditures for which the other Party is responsible
under this Section 2.3, such Party shall reimburse the other Party promptly
after receipt of such other Party's invoice, accompanied by copies of the
relevant vendor or other invoice and proof of payment.
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(d) Real and
personal property Taxes, severance Taxes, and any other Taxes measured by units
of Production with respect to the Overriding Royalty Interests shall be prorated
between Purchaser and Seller as of the Effective Date. If the actual
Taxes are not known on the Closing Date, Seller's share of such Taxes shall be
determined by using (i) the rates and millages for the year prior to the
year in which the Closing occurs, with appropriate adjustments for any known and
verifiable changes thereto, and (ii) the assessed values for the year in
which Closing occurs. When Purchaser receives the actual tax
statements for or applicable to the Overriding Royalty Interests from the
appropriate taxing authorities, Purchaser shall deliver to Seller a copy of such
statements, together with the amount, if any, by which Seller's proration
exceeds the proration that would have been made had actual tax statements been
used to calculate Seller's proration. If the proration for Seller
that would have been made using actual tax statements exceeds that made at
Closing, Seller shall pay to Purchaser such difference within five (5) days of
receipt of such statement.
(e) "Earned"
or "Incurred," as used in this Section 2.3 shall be interpreted in
accordance with accounting recognition under the Accounting
Principles.
2.4 Adjustments
to Purchase Price. The Unadjusted Purchase Price shall be
adjusted as follows:
(a) Increased
or decreased, as appropriate, in accordance with Article 3; and
(b) Increased
or decreased, as appropriate, to give effect to the terms and provisions of
Section 2.3.
Article
3
TITLE
MATTERS
3.1 Seller's
Title.
(a) Seller
represents and warrants to Purchaser that Seller's title to the Overriding
Royalty Interests shown on Exhibit B-2 is
(and as of the Closing Date shall be) Defensible Title as defined in
Section 3.2. This representation and warranty provides
Purchaser's exclusive remedy with respect to any Title Defects. The
conveyance to be delivered by Seller to Purchaser at Closing (the "Conveyance") shall be
in form identical to the Conveyance attached hereto as Exhibit C and
shall contain a special warranty of title to the Overriding Royalty Interests
by, through, and under Seller, but not otherwise, subject to the Permitted
Encumbrances.
(b) With
respect to each Overriding Royalty Interest that relates to an Undeveloped
Location, it is understood and agreed by Purchaser that the representation of
Seller in Section 3.1(a) is based upon the Undeveloped Assumption
Data. Purchaser shall not be entitled to protection under Seller's
representation in Section 3.1(a) against any Title Defect to the extent
based upon, or arising out of, Purchaser's disagreement with, or change to, the
Undeveloped Assumption Data. The Undeveloped Assumption Data was
provided to Purchaser previously in connection with the transactions
contemplated by the Purchase Agreement, and copies of the Undeveloped Assumption
Data described in Section 3.1(c)(i) and (ii) of the Purchase Agreement have
been provided to Purchaser in connection with the execution of the Purchase
Agreement.
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3.2 Definition
of Defensible Title.
(a) As used
in this Agreement, the term "Defensible Title"
means that title of Seller which, subject to the Permitted
Encumbrances:
(i) entitles
Seller to receive not less than the "net revenue interest" share or percentage
shown in Exhibit B-2 of
all Hydrocarbons from a Lease, Well, or Unit attributable to the aggregate of
the Overriding Royalty Interests, whether in cash, in kind, or otherwise, except
decreases resulting from the establishment or amendment of pools or units, and
except as otherwise stated in Exhibit B-2;
and
(ii) is free
of liens, encumbrances, obligations, or defects, other than Permitted
Encumbrances. As used herein, the term "Permitted Encumbrances" shall
include (without limiting the definition set forth in the Purchase Agreement),
the failure to record assignments or reservations of any Overriding Royalty
Interest to the extent that the same would not reduce Seller's net revenue
interest below that shown in Exhibit B-2.
(b) As used
in this Agreement, the term "Title Defect" means
any lien, charge, encumbrance, obligation, or defect, including, without
limitation, a discrepancy in net revenue interest that causes a breach of
Seller's representation and warranty in Section 3.1.
3.3 Notice of
Title Defects. To assert a claim arising out of a breach of
Section 3.1, Purchaser must deliver a defect claim notice or notices to
Seller on or before ten (10) Business Days prior to the Target Closing Date (the
"Defect Claim
Date"); provided, however,
that Purchaser shall use its commercially reasonable efforts to deliver a defect
claim notice with respect to a specific alleged Title Defect on or before five
(5) Business Days after Purchaser obtains knowledge of the existence of such
Title Defect, even if the date of delivery of such defect claim notice is prior
to the Defect Claim Date. Each such notice shall be in writing and
shall include:
(a) a
description of the alleged Title Defect(s);
(b) the
Overriding Royalty Interests affected;
(c) the
Allocated Values of the Overriding Royalty Interest(s) subject to the alleged
Title Defect(s);
(d) true and
complete copies of any documentation supporting the existence, nature, and basis
of the alleged Title Defect(s); and
(e) the
amount by which Purchaser reasonably believes the Allocated Values of those
Overriding Royalty Interests are reduced by the alleged Title Defect(s) and the
computations and information upon which Purchaser's belief is
based.
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PURCHASER
SHALL BE DEEMED TO HAVE WAIVED ALL BREACHES OF SECTION 3.1 OF
WHICH SELLER HAS NOT BEEN GIVEN NOTICE ON OR BEFORE THE DEFECT CLAIM
DATE.
3.4 Title
Defect Amounts. The Title Defect Amount resulting from a Title
Defect (the "Title
Defect Amount") shall be determined as follows:
(a) if
Purchaser and Seller agree on the Title Defect Amount, that amount shall be the
Title Defect Amount;
(b) if the
Title Defect is a lien, encumbrance, or other such charge, then the Title Defect
Amount shall be the amount necessary to be paid to remove the Title Defect from
Seller's interest in the affected Overriding Royalty Interests;
(c) if the
Title Defect represents a discrepancy between (i) the net revenue interest
for any Overriding Royalty Interest and (ii) the net revenue interest or
percentage stated on Exhibit B-2 with
respect to such Overriding Royalty Interest, then the Title Defect Amount shall
be the product of the Allocated Value of such Overriding Royalty Interest
multiplied by a fraction, the numerator of which is the net revenue interest or
percentage ownership decrease and the denominator of which is the net revenue
interest or percentage ownership stated on Exhibit B-2,
provided that if the Title Defect does not affect the Overriding Royalty
Interest throughout its entire productive life, the Title Defect Amount
determined under this Section 3.4(c) shall be reduced to take into account
the applicable time period only;
(d) if the
Title Defect represents an obligation, encumbrance, burden, or charge upon or
other defect in title to the affected Overriding Royalty Interest of a type not
described in subsections (a), (b),or (c) above, the Title Defect Amount shall be
determined by taking into account the Allocated Value of the Overriding Royalty
Interest so affected, the legal effect of the Title Defect, the potential
economic effect of the Title Defect over the life of the affected Property to
which the Overriding Royalty Interest relates, the values placed upon the Title
Defect by Purchaser and Seller, and such other factors as are necessary to make
a proper evaluation (including, without limitation, the reasonable cost to cure
such Title Defect);
(e) notwithstanding
anything to the contrary in this Article 3, (i) an individual claim for a Title
Defect for which a claim notice is given in accordance with Section 3.3
shall not be considered to be a Title Defect pursuant to this Article 3
unless and until the Title Defect Amount with respect thereto exceeds
One-Hundred Thousand dollars ($100,000), and (ii) with respect to any Title
Defects entitled to an adjustment pursuant to subsection (i), unless and until
the aggregate amount of such Title Defects exceed One-Million dollars
($1,000,000); and
(f) the Title
Defect Amount with respect to a Title Defect shall be determined without
duplication of any costs or losses included in another Title Defect Amount
hereunder.
3.5 Cure
Notice.
(a) Seller
shall have the right, but not the obligation, to attempt, at Seller's sole cost,
to cure or remove on or before sixty (60) days after the Closing Date (the
"Cure Period")
any Title Defects of which Seller has been advised by Purchaser if Seller has
provided written notice of its intent to cure or remove such Title Defects (a
"Cure
Notice").
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(b) In the
event that Seller delivers a Cure Notice to Purchaser, Sections 3.6(a) and
3.7 shall apply with respect to any Overriding Royalty Interests for which
Seller has elected to attempt to cure or remove a Title
Defect. Seller's election to attempt to cure a Title Defect shall not
constitute a waiver of any rights of Seller under this Article 3, including,
without limitation, Seller's right to dispute the existence, nature or value of,
or cost to cure, the Title Defect.
3.6 Response
to Title Defect Claim. In the event that Purchaser delivers to
Seller a notice pursuant to Section 3.3, Seller may, on or before a date
that is two (2) Business Days prior to the Closing Date (provided that, if
Seller does not provide such notice, Seller shall be deemed to have elected
Section 3.6(a), below):
(a) deliver a
Cure Notice, in which case (i) the Unadjusted Purchase Price shall be
decreased by the Allocated Value of the Overriding Royalty Interests covered in
the Cure Notice, (ii) the affected Overriding Royalty Interests shall not
be conveyed to Purchaser at Closing pending Seller's attempt to cure such Title
Defect, and (iii) Seller shall have the rights set forth in
Section 3.7;
(b) exclude
the Overriding Royalty Interests affected by the Title Defect from this
Agreement, in which case the Unadjusted Purchase Price shall be decreased by the
Allocated Value of any such Overriding Royalty Interest and the affected
Overriding Royalty Interest shall be deemed to be deleted from this Agreement
for all purposes and shall not be conveyed to Purchaser at Closing;
or
(c) include
the Overriding Royalty Interests affected by the Title Defect in this Agreement
and convey the same to Purchaser at Closing, in which case the Unadjusted
Purchase Price shall be decreased by the Title Defect Amount of such Title
Defect.
3.7 Title
Defects Subject to Cure.
(a) If, with
respect to any Title Defect that Seller has elected to attempt to cure pursuant
to Section 3.6(a), if such Title Defect is cured on or before the end of
the Cure Period, Seller shall sell to Purchaser, and Purchaser shall purchase
from Seller, the affected Overriding Royalty Interests effective as of the
Effective Date pursuant to the terms of this Agreement.
(b) Subject
to a final determination of the existence or Title Defect Amount with respect to
such Title Defect pursuant to Section 3.8, if Seller has not cured such
Title Defect on or before the end of the Cure Period, Seller shall not be
obligated to sell to Purchaser, and Purchaser shall not be obligated to
purchase, the affected Overriding Royalty Interests.
(c) Notwithstanding
anything to the contrary contained herein, Seller shall have the right, at any
time before, during, or after the Cure Period, and without notice to, or consent
by, Purchaser, to cease its attempt to cure any alleged Title Defect and retain
the Overriding Royalty Interests affected thereby without liability or
obligation to Purchaser.
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3.8 Title
Defect Resolution; Arbitration.
(a) Seller
and Purchaser shall attempt to agree on all Title Defect Amounts and Title
Benefit Amounts on or before the Closing Date. If Seller and
Purchaser are unable to agree by that date, the affected Overriding Royalty
Interests shall be not be conveyed to Purchaser at Closing, and, except to the
extent that Seller has elected to attempt to cure a Title Defect, all Title
Defect Amounts and Title Benefit Amounts in dispute shall be exclusively and
finally resolved by arbitration pursuant to this Section 3.8.
(b) During
the 10-day period following the Closing Date, Title Defect Amounts and Title
Benefit Amounts in dispute shall be submitted to a title attorney with at least
10 years' experience in oil and gas titles in Texas as selected by mutual
agreement of Purchaser and Seller, or, absent such agreement during the 10-day
period, by the Houston office of the American Arbitration Association (the
"Title
Arbitrator"). Likewise, if by the end of the Cure Period,
Seller has failed to cure any Title Defects with respect to which it delivered a
Cure Notice or a dispute exists as to whether (or the extent to which) a Title
Defect has been cured, and Seller and Purchaser have been unable to agree on the
Title Defect Amounts for such Title Defects (or their existence), the Title
Defect Amounts in dispute shall be submitted to the Title
Arbitrator. The Title Arbitrator shall not have worked as an employee
or outside counsel for any Party or its Affiliates during the five (5) year
period preceding the arbitration or have any financial interest in the
dispute. The arbitration proceeding shall be held in Houston, Texas
and shall be conducted in accordance with the Commercial Arbitration Rules of
the American Arbitration Association, to the extent such rules do not conflict
with the terms of this Section. The Title Arbitrator's determination
shall be made within forty-five (45) days after submission of the matters in
dispute and shall be final and binding upon the Parties, without right of
appeal. In making his determination, the Title Arbitrator shall be
bound by the rules set forth in this Article 3 and may consider such other
matters as in the opinion of the Title Arbitrator are necessary or helpful to
make a proper determination. Additionally, the Title Arbitrator may
consult with and engage disinterested third Persons to advise the arbitrator,
including title attorneys from other states and petroleum
engineers. The Title Arbitrator shall act as an expert for the
limited purpose of determining the specific disputed Title Defect Amounts
submitted by any Party and may not award damages, interest, or penalties to any
Party with respect to any matter. Seller and Purchaser shall each
bear its own legal fees and other costs of presenting its
case. Purchaser shall bear one-half of the costs and expenses of the
Title Arbitrator and Seller shall be responsible for the remaining one-half of
the costs and expenses.
(c) On or
before five (5) Business Days after the date on which (i) the Parties agree
upon the existence or Title Defect Amounts with respect to all disputed Title
Defects affecting an Overriding Royalty Interest or Seller receives the final
determination of the Title Arbitrator with respect thereto and (ii) the
Cure Period with respect to all alleged Title Defects has expired, Seller shall
elect to sell or retain any Overriding Royalty Interest affected by a Title
Defect pursuant to Section 3.6(b) or 3.6(c); provided, however,
that, if Seller does not timely make such an election, Seller shall be deemed to
have elected to exclude such affected Overriding Royalty Interest pursuant to
Section 3.6(b).
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3.9 Limitations;
Disclaimers.
(a) THE REMEDIES PROVIDED FOR
IN THIS ARTICLE 3 SHALL, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BE THE EXCLUSIVE RIGHT AND
REMEDY OF PURCHASER WITH RESPECT TO SELLER'S BREACH OF ITS WARRANTY AND
REPRESENTATION IN SECTION 3.1. EXCEPT
AS SPECIFICALLY PROVIDED IN THIS ARTICLE 3 AND THE CONVEYANCE,
PURCHASER ACKNOWLEDGES AND AGREES THAT THE OVERRIDING ROYALTIES ARE BEING SOLD
HEREBY WITHOUT WARRANTY OF TITLE, EXPRESS OR IMPLIED, AND HEREBY RELEASES,
REMISES, AND FOREVER DISCHARGES SELLER AND ITS AFFILIATES AND ALL SUCH PARTIES'
MEMBERS, PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS, AND
REPRESENTATIVES FROM ANY AND ALL SUITS, LEGAL OR ADMINISTRATIVE PROCEEDINGS,
CLAIMS, DEMANDS, DAMAGES, LOSSES, COSTS, LIABILITIES, INTEREST, OR CAUSES OF
ACTION WHATSOEVER, IN LAW OR IN EQUITY, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT
NOW OR SUBSEQUENTLY MAY HAVE, BASED ON, RELATING TO OR ARISING OUT OF, ANY TITLE
DEFECT OR DEFICIENCY IN TITLE WHATSOEVER.
(b) The
representation and warranty in Section 3.1 shall terminate as of the Defect
Claim Date and shall have no further force and effect thereafter, provided there
shall be no termination of Purchaser's or Seller's rights under this Article 3
with respect to any Title Defect claim properly reported pursuant to
Section 3.3 on or before the Defect Claim Date.
Article
4
DISCLAIMERS;
REPRESENTATIONS AND WARRANTIES
4.1 Environmental. PURCHASER ACKNOWLEDGES THAT SELLER
HAS NOT MADE, AND WILL NOT MAKE, ANY REPRESENTATION OR WARRANTY REGARDING THE
RELEASE OF MATERIALS INTO THE ENVIRONMENT, THE PROTECTION OF THE ENVIRONMENT,
HEALTH OR SAFETY, OR ANY OTHER MATTERS RELATED TO THE ENVIRONMENTAL CONDITION OF
THE OVERRIDING ROYALTY INTERESTS OR ANY ENVIRONMENTAL DEFICIENCY WITH RESPECT
THERETO.
4.2 Other
representations. EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN
THIS AGREEMENT OR IN THE CONVEYANCE, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, SELLER MAKES NO, AND EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO (A) TITLE TO ANY OF THE OVERRIDING
ROYALTY INTERESTS, (B) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE
MEMORANDUM, OR ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY
GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO THE OVERRIDING ROYALTY
INTERESTS, (C) THE QUANTITY, QUALITY, OR RECOVERABILITY OF PETROLEUM
SUBSTANCES IN OR FROM THE OVERRIDING ROYALTIES, (D) THE EXISTENCE OF ANY
PROSPECT, RECOMPLETION, INFILL, OR STEP-OUT DRILLING OPPORTUNITIES, (E) ANY
ESTIMATES OF THE VALUE OF THE OVERRIDING ROYALTIES OR FUTURE REVENUES GENERATED
BY THE OVERRIDING ROYALTIES, (F) THE PRODUCTION OF PETROLEUM SUBSTANCES
FROM THE OVERRIDING ROYALTIES, OR WHETHER PRODUCTION HAS BEEN CONTINUOUS, OR IN
PAYING QUANTITIES, OR ANY PRODUCTION OR DECLINE RATES, (G) THE MAINTENANCE,
REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN, OR MARKETABILITY OF THE
OVERRIDING ROYALTIES, (H) INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHT,
OR (I) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE
OR COMMUNICATED TO PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES,
AGENTS, CONSULTANTS, REPRESENTATIVES, OR ADVISORS IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE PURCHASE AGREEMENT OR ANY
DISCUSSION OR PRESENTATION RELATING THERETO, AND FURTHER DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE, OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, IT BEING
EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT, EXCEPT AS EXPRESSLY
PROVIDED HEREIN, THE OVERRIDING ROYALTIES ARE BEING TRANSFERRED "AS IS, WHERE
IS," WITH ALL FAULTS AND DEFECTS, AND THAT PURCHASER HAS MADE OR CAUSED TO BE
MADE SUCH INSPECTIONS AS PURCHASER DEEMS APPROPRIATE.
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4.3 Seller's
Representations. Section 5.1 of the Purchase Agreement is
incorporated herein by this reference, with all references therein to "Seller
Party" deemed to mean "Seller" (as defined in this Agreement) and all references
to "Assets" deemed to mean "Overriding Royalty Interests."
4.4 Purchaser's
Representations.
(a) Sections 6.1
through 6.4, inclusive, of the Purchase Agreement are incorporated herein by
this reference.
(b) Purchaser
is acquiring the Overriding Royalty Interests for its own account and not with a
view to their sale or distribution in violation of the Securities Act of 1933,
as amended, the rules and regulations thereunder, any applicable state blue sky
Laws, or any other applicable securities Laws.
(c) Purchaser
is (or its advisors are) experienced and knowledgeable in the oil and gas
business and aware of the risks of that business. Purchaser
acknowledges and affirms that (i) it has been provided the opportunity to
conduct its independent investigation, verification, analysis, and evaluation of
the Overriding Royalty Interests, and (ii) it has made all such reviews and
inspections of the Overriding Royalty Interests as it has deemed necessary or
appropriate to enter into this Agreement. Except for the
representations and warranties expressly made by Seller in Article 3 of this
Agreement or in the Conveyance, Purchaser acknowledges that there are no
representations or warranties, express or implied, as to the financial
condition, liabilities, operations, business, or prospects of the Overriding
Royalty Interests and that, in making its decision to enter into this Agreement
and to consummate the transactions contemplated hereby, Purchaser has relied
solely upon its own independent investigation, verification, analysis, and
evaluation. Purchaser understands and acknowledges that neither the
United States Securities and Exchange Commission nor any federal, state, or
foreign agency has passed upon the Overriding Royalty Interests or made any
finding or determination as to the fairness of an investment in the Overriding
Royalty Interests or the accuracy or adequacy of the disclosures made to
Purchaser, and except as set forth in Article 7, Purchaser is not entitled to
cancel, terminate, or revoke this Agreement.
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(d) Purchaser
and its representatives have (i) been permitted full and complete access to
all materials relating to the title to the Overriding Royalty Interests,
(ii) been afforded the opportunity to ask all questions of Seller (or one
or more Persons acting on Seller's behalf) concerning the title to the
Overriding Royalty Interests, (iii) been afforded the opportunity to investigate
the condition, including the subsurface condition, of the Overriding Royalty
Interests, and (iv) had the opportunity to take such other actions and make
such other independent investigations as Purchaser deems necessary to evaluate
the Overriding Royalty Interests and understand the merits and risks of an
investment therein and the verify the truth, accuracy, and completeness of the
materials, documents, and other information provided or made available to
Purchaser (whether by Seller or otherwise).
4.5 Further
Assurances. After Closing, Seller and Purchaser each agrees to
take such further actions and to execute, acknowledge, and deliver all such
further documents as are reasonably requested by the other for carrying out the
purposes of this Agreement or of any document delivered pursuant to this
Agreement.
Article
5
CONDITIONS
TO CLOSING
5.1 Conditions
of Seller to Closing. The obligations of Seller to consummate
the transactions contemplated by this Agreement are subject, at the option of
Seller, to the satisfaction on or prior to Closing of each of the following
conditions:
(a) Representations. The
representations and warranties of Purchaser set forth in
Section 4.4 shall be true and correct in all material respects
(considering the transaction as a whole) as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date;
(b) No
Action. On the Closing Date, no injunction, order, or award
restraining, enjoining, or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement, or granting substantial damages in
connection therewith, shall have been issued and remain in force, and no suit,
action, or other proceeding (excluding any such matter initiated by Seller or
any of its Affiliates) shall be pending before any Governmental Authority or
body of competent jurisdiction seeking to enjoin or restrain or otherwise
prohibit the consummation of the transactions contemplated by this Agreement or
recover substantial damages from Seller or any Affiliate of Seller resulting
therefrom;
-10-
(c) Governmental
Consents. All material consents and approvals of any
Governmental Authority or other Person required for the transfer of the
Overriding Royalty Interests from Seller to Purchaser as contemplated under this
Agreement, except consents and approvals of assignments by Governmental
Authorities that are customarily obtained after closing, shall have been
granted, or the necessary waiting period shall have expired, or early
termination of the waiting period shall have been granted;
(d) Purchase
Agreement. The closing contemplated by Article IX of the
Purchase Agreement shall have occurred, or shall be consummated
contemporaneously herewith; and
(e) No
termination. Neither Purchaser nor Seller shall have
terminated this Agreement pursuant to the terms of Article 7.
5.2 Conditions
of Purchaser to Closing. The obligations of Purchaser to
consummate the transactions contemplated by this Agreement are subject, at the
option of Purchaser, to the satisfaction on or prior to Closing of each of the
following conditions:
(a) Representations. The
representations and warranties of Seller set forth in Section 4.3 shall be
true and correct in all material respects (considering the transaction as a
whole) as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date.
(b) No
Action. On the Closing Date, no injunction, order, or award
restraining, enjoining, or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement, or granting substantial damages in
connection therewith, shall have been issued and remain in force, and no suit,
action, or other proceeding (excluding any such matter initiated by Purchaser or
any of its Affiliates) shall be pending before any Governmental Authority or
body of competent jurisdiction seeking to enjoin or restrain or otherwise
prohibit the consummation of the transactions contemplated by this Agreement or
recover substantial damages from Purchaser or any Affiliate of Purchaser
resulting therefrom;
(c) Governmental
Consents. All material consents and approvals of any
Governmental Authority or other Person required for the transfer of the
Overriding Royalty Interests from Seller to Purchaser as contemplated under this
Agreement, except consents and approvals of assignments by Governmental
Authorities that are customarily obtained after closing, shall have been granted
or the necessary waiting period shall have expired, or early termination of the
waiting period shall have been granted;
(d) Encumbrances. Seller
shall have delivered to Purchaser partial releases of the liens set forth under
the heading "Liens to be Released at Closing" on Schedule 3.3 of
the Purchase Agreement with respect to the Overriding Royalty
Interests;
(e) Purchase
Agreement. The closing contemplated by Article IX of the
Purchase Agreement shall have occurred, or shall be consummated
contemporaneously herewith.
(f) No
termination. Neither Purchaser nor Seller shall have
terminated this Agreement pursuant to the terms of Article 7.
-11-
Article
6
CLOSING
6.1 Time and
Place of Closing. The consummation of the purchase and sale of
the Overriding Royalty Interests contemplated by this Agreement (the "Closing") shall,
unless otherwise agreed to in writing by Purchaser and Seller, take place at the
offices of Bracewell & ▇▇▇▇▇▇▇▇ LLP located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, at 10:00 a.m., local time, on July 15, 2008 (the "Target Closing
Date"), or if all conditions in Article 5 to be satisfied prior to
Closing have not yet been satisfied or waived, as soon thereafter as such
conditions have been satisfied or waived, subject to the provisions of Article
7. The date on which the Closing occurs is referred to herein as the
"Closing
Date."
6.2 Obligations
of Seller at Closing. At the Closing, upon the terms and
subject to the conditions of this Agreement, and subject to the simultaneous
performance by Purchaser of its obligations pursuant to Section 6.3, Seller
shall deliver or cause to be delivered to Purchaser, among other things, the
following:
(a) Counterparts
of the Conveyance in the form attached hereto as Exhibit C, duly
executed by Seller, in sufficient duplicate originals to allow recording in all
appropriate jurisdictions and offices;
(b) Assignments
in form required by any Governmental Authority necessary for the assignment of
any Overriding Royalty Interests, duly executed by Seller, in sufficient
duplicate originals to allow recording in all appropriate offices;
(c) A
certificate by an authorized officer of Seller, dated as of Closing, certifying
on behalf of Seller that the condition set forth in Section 5.2(a) has been
fulfilled.
(d) Executed
certificates described in Treasury Regulation § 1.1445-2(b)(2) certifying
that Seller is not a foreign person within the meaning of the Code;
(e) A
certificate duly executed by the secretary or any assistant secretary (or other
authorized officer) of Seller, dated as of the Closing, (i) attaching and
certifying on behalf of Seller complete and correct copies of (A) the
resolutions of the Board of Directors, managers, or other equivalent governing
body of Seller authorizing the execution, delivery, and performance by Seller of
this Agreement and the transactions contemplated hereby and (B) any
required approval by the stockholders, members, or partners, as applicable, of
Seller of this Agreement and the transactions contemplated hereby and
(ii) certifying on behalf of Seller the incumbency of each officer of
Seller executing this Agreement or any document delivered in connection with the
Closing;
(f) Releases
of the liens listed on Schedule 3.3 of
the Purchase Agreement under the heading "Liens to be Released at Closing" with
respect to the Overriding Royalty Interests; and
(g) All other
instruments, documents, and other items reasonably necessary to effectuate the
terms of this Agreement, as may be reasonably requested by
Purchaser.
-12-
6.3 Obligations
of Purchaser at Closing. At the Closing, upon the terms and
subject to the conditions of this Agreement, and subject to the simultaneous
performance by Seller of its obligations pursuant to Section 6.2, Purchaser
shall deliver or cause to be delivered to Seller, among other things, the
following:
(a) A wire
transfer of the Closing Payment in same-day funds;
(b) Counterparts
of the Conveyance, duly executed by Purchaser, in sufficient duplicate originals
to allow recording in all appropriate jurisdictions and offices;
(c) Assignments
in form required by any Governmental Authority for the assignment of any
Overriding Royalty Interests controlled by such Governmental Authority, duly
executed by Purchaser, in sufficient duplicate originals to allow recording in
all appropriate offices;
(d) A
certificate by an authorized corporate officer of Purchaser, dated as of the
Closing, certifying on behalf of Purchaser that the condition set forth in
Section 5.1(a) has been fulfilled;
(e) A
certificate duly executed by the secretary or any assistant secretary (or other
authorized officer) of Purchaser, dated as of the Closing, (i) attaching
and certifying on behalf of Purchaser complete and correct copies of
(A) the resolutions of the Board of Directors, managers, or other
equivalent governing body of Purchaser authorizing the execution, delivery, and
performance by Purchaser of this Agreement and the transactions contemplated
hereby and (B) any required approval by the stockholders, members, or
partners, as applicable, of Purchaser of this Agreement and the transactions
contemplated hereby and (ii) certifying on behalf of Purchaser the
incumbency of each officer of Purchaser executing this Agreement or any document
delivered in connection with the Closing;
(f) All other
instruments, documents, and other items reasonably necessary to effectuate the
terms of this Agreement, as may be reasonably requested by Seller.
6.4 Closing
and Post-Closing Purchase Price Adjustments.
(a) Not later
than five (5) Business Days prior to the Closing Date, Seller shall prepare and
deliver to Purchaser, using and based upon the best information available to
Seller, a preliminary settlement statement estimating the Purchase Price for the
Assets after giving effect to all adjustments set forth in
Section 2.4. The estimate delivered in accordance with this
Section 1.1(a) shall constitute the dollar amount to be payable by Purchaser to
Seller at the Closing (the "Closing Payment").
-13-
(b) As soon
as reasonably practicable after the Closing but not later than the later of
(a) the one hundred and twentieth (120th) day following the Closing Date
and (b) the fifth (5th) Business Day after the Title Arbitrator finally
determines all disputed Title Defect and Title Benefit Amounts pursuant to
Section 3.8, Seller shall prepare and deliver to Purchaser a draft
statement setting forth the final calculation of the Purchase Price and showing
the calculation of each adjustment under Section 2.4, based on the most
recent actual figures for each adjustment. Seller shall, at
Purchaser's request, make reasonable documentation available to support the
final figures. As soon as reasonably practicable, but not later than
the thirtieth (30th) day following receipt of Seller's statement hereunder,
Purchaser shall deliver to Seller a written report containing any changes that
Purchaser proposes be made to such statement. Seller may deliver a
written report to Purchaser during this same period reflecting any changes that
Seller proposes to be made to such statement as a result of additional
information received after the statement was prepared. The Parties
shall undertake to agree on the final statement of the Purchase Price no later
than ninety (90) days after delivery of Seller's statement. In the
event that the Parties cannot reach agreement within such period of time, any
Party may refer the items of adjustment which are in dispute to the Houston
office of Deloitte & Touche LLP, or, if such firm is not able or willing to
serve, a nationally-recognized independent accounting firm or consulting firm
mutually acceptable to both Purchaser and Seller (the "Accounting
Arbitrator"), for review and final determination by
arbitration. The Accounting Arbitrator shall conduct the arbitration
proceedings in Houston, Texas in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, to the extent such rules do not
conflict with the terms of this Section. The Accounting Arbitrator's
determination shall be made within forty-five (45) days after submission of the
matters in dispute and shall be final and binding on all Parties, without right
of appeal. In determining the proper amount of any adjustment to the
Purchase Price, the Accounting Arbitrator shall be bound by the terms of
Sections 2.3 and 2.4 and may not increase the Purchase Price more than the
increase proposed by Seller nor decrease the Purchase Price more than the
decrease proposed by Purchaser, as applicable. The Accounting
Arbitrator shall act as an expert for the limited purpose of determining the
specific disputed aspects of Purchase Price adjustments submitted by any Party
and may not award damages, interest (except as expressly provided for in this
Section), or penalties to any Party with respect to any
matter. Seller and Purchaser shall each bear their own legal fees and
other costs of presenting their case. Seller shall bear one-half and
Purchaser shall bear one-half of the costs and expenses of the Accounting
Arbitrator. Within ten (10) days after the earlier of
(i) the expiration of Purchaser's thirty (30) day review period
without delivery of any written report or (ii) the date on which the
Parties or the Accounting Arbitrator finally determine the Purchase Price,
(x) Purchaser shall pay to Seller the amount by which the Purchase Price
exceeds the Purchase Price or (y) Seller shall pay to Purchaser the amount
by which the Closing Payment exceeds the Purchase Price, as
applicable.
(c) Purchaser
shall assist Seller in preparation of the final statement of the Purchase Price
under this Section 6.4 by furnishing invoices, receipts, reasonable access
to personnel and such other assistance as may be requested by Seller to
facilitate such process post-Closing.
Article
7
TERMINATION
7.1 Termination. This
Agreement may be terminated at any time prior to Closing: (a) by the mutual
prior written consent of Seller and Purchaser; (b) by either Seller or
Purchaser, if Closing has not occurred on or before January 1, 2009; (c) by
either Party if the Purchase Agreement is terminated; or (d) by either
Party if the aggregate adjustment to the Unadjusted Purchase Price pursuant to
Article 3 is greater than ten percent (10%) of the Unadjusted Purchase Price;
provided,
however, that no Party shall be entitled to terminate this Agreement
under Section 7.1(b) if the Closing has failed to occur because such Party
negligently or willfully failed to perform or observe in any material respect
its covenants and agreements hereunder or such Party is in breach of its
representations and warranties set forth in this Agreement.
-14-
7.2 Effect of
Termination. If this Agreement is terminated pursuant to
Section 7.1, this Agreement shall become void and of no further force or
effect (except for the provisions of Sections 9.1, 9.2, 9.4, 9.5, 9.6, 9.7,
9.8, 9.9, 9.10, 9.12, 9.13, and 9.14, all of which shall continue in full force
and effect). Notwithstanding anything to the contrary in this
Agreement, the termination of this Agreement under Section 7.1 shall not
relieve any Party from liability for any willful or negligent failure to perform
or observe in any material respect any of its agreements or covenants contained
herein that are to be performed or observed at or prior to
Closing. In the event this Agreement terminates under
Section 7.1 and any Party has willfully or negligently failed to perform or
observe in any material respect any of its agreements or covenants contained
herein which are to be performed or observed at or prior to Closing, then the
other Party shall be entitled to all remedies available at law or in equity and
shall be entitled to recover court costs and attorneys' fees in addition to any
other relief to which such Party maybe entitled.
Article
8
ASSUMPTION
AND INDEMNIFICATION
8.1 Assumption.
On the Closing Date Purchaser shall assume and hereby agrees to fulfill,
perform, pay and discharge (or cause to be fulfilled, performed, paid or
discharged) all obligations and liabilities of Seller and its Affiliates,
whether known or unknown (the "Assumed Obligations")
with respect to the Overriding Royalty Interests, regardless of whether such
obligations or liabilities arose prior to, on, or after the Effective Date,
including, without limitation, obligations arising from or relating to Title
Defects or title to the Overriding Royalty Interests.
8.2 Indemnification. From
and after Closing Purchaser shall indemnify, defend and hold harmless each
Seller Party and their Affiliates and their respective officers, directors,
employees, and agents (the "Seller Group") from
and against all Damages (irrespective of any limitation upon amount) incurred or
suffered by Seller Group caused by, arising out of, or resulting from the
Assumed Obligations.
8.3 Procedures. Section 12.3
of the Purchase Agreement shall be incorporated herein mutatis
mutandis.
8.4 Survival. The
representations, warranties, covenants, and agreements of the Parties hereunder
and the corresponding representations and warranties given in the certificates
delivered at Closing pursuant to Sections 6.2(c) and 6.3(d), as applicable,
shall survive the Closing indefinitely except with respect the representation
set forth in Section 3.1, which representation shall terminate as of the
date more specifically set forth therein.
8.5 Claims by
Related Third Persons. Any claim for indemnity under this
Section 8.2 by any Affiliate, director, officer, employee, or agent must be
brought and administered by the applicable Party to this
Agreement. No Indemnified Person other than the Seller and Purchaser
shall have any rights against either the Seller or Purchaser under the terms of
this Section 8.2 except as may be exercised on its behalf by Purchaser or
Seller, as applicable, pursuant to this Section 8.5. Each of
Seller and Purchaser may elect to exercise or not exercise indemnification
rights under this Section on behalf of the other Indemnified Persons affiliated
with it in its sole discretion and shall have no liability to any such other
Indemnified Person for any action or inaction under this Section.
-15-
8.6 Exclusive
Remedies. Each Party's sole and exclusive remedy against the
other Party for (a) any and all breaches of the representations,
warranties, covenants, and agreements of such other Party contained in this
Agreement, respectively; and (b) the Assumed Obligations, is set forth in
this Article 8, and if no such right of indemnification is expressly provided,
then such claims are hereby waived to the fullest extent permitted by
Law. Except as expressly set forth above, each Party hereto releases,
remises, and forever discharges the other Party and its Affiliates, and its and
their respective officers, directors, employees, and agents from any and all
suits, legal, or administrative proceedings, claims, demands, damages, losses,
costs, liabilities, interest, or causes of action whatsoever, in law or in
equity, known or unknown, which such Parties might now or subsequently may have,
based on, relating to, or arising out of, this Agreement or the ownership, use,
or operation of the Overriding Royalty Interests, or the condition, quality,
status, or nature of the Overriding Royalty Interests, INCLUDING
RIGHTS TO CONTRIBUTION UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, BREACHES OF STATUTORY AND
IMPLIED WARRANTIES, NUISANCE OR OTHER TORT ACTIONS, RIGHTS TO PUNITIVE DAMAGES,
COMMON LAW RIGHTS OF CONTRIBUTION, ANY RIGHTS UNDER INSURANCE POLICIES ISSUED OR
UNDERWRITTEN BY THE OTHER PARTY OR ANY OF ITS AFFILIATES, AND ANY RIGHTS UNDER
AGREEMENTS BETWEEN SELLER AND ANY AFFILIATE OF SELLER, EVEN IF CAUSED IN WHOLE
OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), STRICT
LIABILITY OR OTHER LEGAL FAULT OF ANY RELEASED PERSON INVITEE, OR THIRD
PARTY. Notwithstanding the foregoing, this Article 8 shall not
apply in respect of title matters and Title Defects which are exclusively
covered by Article 3 and the Conveyance.
Article
9
MISCELLANEOUS
9.1 Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original instrument, but all such counterparts together shall constitute but one
agreement.
9.2 Notices. All
notices that are required or may be given pursuant to this Agreement shall be
sufficient in all respects if given in writing, in English and delivered
personally, by telecopy or by recognized courier service, as
follows:
|
|
If
to Seller:
|
O'Brien
Resources, LLC
|
|
|
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
|
|
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Attention: ▇▇▇▇▇▇▇
▇. ▇'▇▇▇▇▇, III
|
|
|
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
|
-16-
|
|
with
a copy to:
|
Bracewell
& ▇▇▇▇▇▇▇▇ LLP
|
|
|
Pennzoil
Place, South Tower
|
|
|
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
|
|
|
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Attention:
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇ III
|
|
|
Telephone:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
|
|
Telecopy:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
|
|
If
to Purchaser:
|
▇▇▇▇▇
Petroleum Company
|
|
|
950
– 17th Street, Suite 2400
|
|
|
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Attention:
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
|
|
Telephone:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
|
|
Telecopy:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
|
|
With
a copy to:
|
Holland
& ▇▇▇▇ LLP
|
|
|
555
– 17th Street, Suite 3200
|
|
|
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Attention:
|
▇▇▇▇▇
▇'▇▇▇▇▇▇
|
|
|
Telephone:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
|
|
Telecopy:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
Either
Party may change its address for notice by notice to the other in the manner set
forth above. All notices shall be deemed to have been duly given at
the time of receipt by the Party to which such notice is addressed.
9.3 Sales or
Use Tax, Recording Fees and Similar Taxes and Fees. Purchaser
shall bear any sales, use, excise, real property transfer or gain, gross
receipts, goods and services, registration, capital, documentary, stamp or
transfer Taxes, recording fees, and similar Taxes and fees incurred and imposed
upon, or with respect to, the property transfers or other transactions
contemplated hereby. Should any Seller Party or any Affiliate of any
Seller Party pay any amount for which Purchaser is liable under this
Section 9.3, Purchaser shall, promptly following receipt of Seller's
invoice, reimburse the amount paid. If such transfers or transactions
are exempt from any such taxes or fees upon the filing of an appropriate
certificate or other evidence of exemption, Purchaser shall timely furnish to
Seller such certificate or evidence.
9.4 Expenses. Except
as provided to the contrary herein or in the Purchase Agreement all expenses
incurred by Seller in connection with or related to the authorization,
preparation or execution of this Agreement, and the Exhibits and Schedules
hereto and thereto, and all other matters related to the Closing, including
without limitation, all fees and expenses of counsel, accountants and financial
advisers employed by Seller, shall be borne solely and entirely by Seller, and
all such expenses incurred by Purchaser shall be borne solely and entirely by
Purchaser.
9.5 Governing
Law and Venue. This Agreement and the legal relations between
the Parties shall be governed by and construed in accordance with the laws of
the State of Texas, without regard to principles of conflicts of laws that would
direct the application of the laws of another jurisdiction.
-17-
9.6 Dispute
Resolution. Each Party consents to personal jurisdiction in
any action brought in the United States federal courts located in the State of
Texas with respect to any dispute, claim, or controversy arising out of or in
relation to or in connection with this Agreement, and each of the Parties hereto
agrees that any action instituted by it against the other with respect to any
such dispute, controversy, or claim (except to the extent a dispute,
controversy, or claim arising out of or in relation to or in connection the
determination of a Title Defect Amount pursuant to Section 3.8 is referred
to an expert pursuant to that Section) will be instituted exclusively in the
United States District Court for the Southern District of Texas, Houston
Division. The Parties hereby waive trial by jury in any action,
proceeding, or counterclaim brought by any Party against another in any matter
whatsoever arising out of or in relation to or in connection with this
Agreement.
9.7 Captions. The
captions in this Agreement are for convenience only and shall not be considered
a part of or affect the construction or interpretation of any provision of this
Agreement.
9.8 Waivers. Any
failure by any Party to comply with any of its obligations, agreements, or
conditions herein contained may be waived by the Party to whom such compliance
is owed by an instrument signed by the Party to whom compliance is owed and
expressly identified as a waiver, but not in any other manner. No
waiver of, or consent to a change in, any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of, or consent to a change in,
other provisions hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
9.9 Assignment. No
Party shall assign (including, without limitation, by change of control, merger,
consolidation, or stock purchase) or otherwise transfer all or any part of this
Agreement, nor shall any Party delegate any of its rights or duties hereunder
(including, without limitation, by change of control, merger, consolidation, or
stock purchase), without the prior written consent of the other Party and any
transfer or delegation made without such consent shall be
void. Subject to the foregoing, this Agreement shall be binding upon
and inure to the benefit of the Parties hereto and their respective successors
and assigns.
9.10 Entire
Agreement. This Agreement and the documents to be executed
hereunder, and the Exhibits and Schedules attached hereto, constitute the entire
agreement among the Parties pertaining to the subject matter hereof, and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties pertaining to the subject matter
hereof.
9.11 Amendment. This
Agreement may be amended or modified only by an agreement in writing signed by
Seller and Purchaser and expressly identified as an amendment or
modification.
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9.12 No
Third-Person Beneficiaries. Nothing in this Agreement shall
entitle any Person other than Purchaser and Seller to any claim, cause of
action, remedy or right of any kind, except the rights expressly provided to the
Persons described in Section 8.3.
9.13 References.
In this
Agreement:
(d) References
to any gender includes a reference to all other genders;
(e) References
to the singular includes the plural, and vice versa;
(f) Reference
to any Article or Section means an Article or Section of this
Agreement;
(g) Reference
to any Exhibit or Schedule means an Exhibit or Schedule to this Agreement, all
of which are incorporated into and made a part of this Agreement;
(h) Unless
expressly provided to the contrary, "hereunder", "hereof", "herein", and words
of similar import are references to this Agreement as a whole and not any
particular Section or other provision of this Agreement;
(i) References
to "$" or "dollars" means United States dollars; and
(j) "Include"
and "including" shall mean include or including without limiting the generality
of the description preceding such term.
9.14 Construction. Purchaser
is capable of making such investigation, inspection, review and evaluation of
the Assets as a prudent purchaser would deem appropriate under the
circumstances, including with respect to all matters relating to the Assets,
their value, operation, and suitability. Each of Seller and Purchaser
has had the opportunity to exercise business discretion in relation to the
negotiation of the details of the transaction contemplated
hereby. This Agreement is the result of arm's-length negotiations
from equal bargaining positions. It is expressly agreed that this
Agreement shall not be construed against any Party, and no consideration shall
be given or presumption made, on the basis of who drafted this Agreement or any
particular provision thereof.
-19-
IN
WITNESS WHEREOF, this Agreement has been signed by each of the Parties as of the
date first above written.
SELLER:
O'BRIEN
RESOURCES, LLC
By:
▇▇▇▇▇▇▇
▇. ▇'▇▇▇▇▇ III
Chairman
and Chief Executive Officer
PURCHASER:
▇▇▇▇▇
PETROLEUM COMPANY
By:
Name:
Title: