Exhibit 2.1
FORM OF PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into
as of this _____ day of _______________, 1999, by and between __________
("SELLER") and Middle Bay Oil Company Inc., an Alabama corporation, or its
assigns ("PURCHASER").
W I T N E S S E T H: That
WHEREAS, Seller is a participant in (i) certain investment programs
for institutional investors ("Institutional Programs") and\or (ii) an
investment entity which acts as general partner or sponsor of the
Institutional Programs ("Equity Programs"), both of which programs were
developed by Xxxxx Oil Company, Inc., a Texas corporation ("Xxxxx Oil") for
the primary purpose of acquiring and developing producing oil and gas
properties (the Institutional Programs and the Equity Programs are hereafter
referred to as the "Programs" and the oil and gas properties associated with
the Programs are hereafter referred to as the "Properties"); and
WHEREAS, part of the Properties included in the Programs include
certain overriding royalty interests managed for the Programs by Xxxxx Oil
which are described by Xxxxx Oil as the Anadarko Royalty, the Quinoco Royalty
and the Sacatosa Royalty (the "Designated Royalties"); and
WHEREAS, Purchaser has entered into an agreement with Xxxxx Oil (the
"Xxxxx Exchange Agreement") to acquire all of Xxxxx Oil's ownership interests
in the Programs (other than Xxxxx Oil's interest in the Designated Royalties)
in exchange for that portion of the Designated Royalties not already owned by
Xxxxx Oil which will be acquired by Purchaser from participants in the
Programs; and
WHEREAS, Purchaser desires to purchase from Seller, and Seller
desires to sell to Purchaser, all of Seller's right, title and interests in
and to the Programs, all as set forth on Exhibit "A" (the "Purchased
Interests" or the "Interests") in a transaction that will close immediately
prior to the closing of the Xxxxx Exchange Agreement. Purchaser is also
contracting with all other participants in the Programs ("Program
Participants") to acquire their respective interests whether they be in the
form of working interests, overriding royalty interests or partnership
interests (all such interests in the Programs shall be referred to as the
"Program Interests") and intends to close all such purchases and the purchase
contemplated by this Agreement simultaneously. The Program Interests will be
conveyed by the Program Participants through the execution and delivery of
assignments of overriding royalty interests, assignments of partnership
interests or the delivery of stock certificates, such documents being
hereafter referred to collectively as "Interest Conveyance Documents";
NOW THEREFORE, in consideration of the covenants and agreements
contained herein, the parties agree as follows:
1. SALE AND PURCHASE. Subject to the terms, conditions, limitations,
exceptions, disclaimers and reservations of this Agreement, Seller agrees to
sell and convey and Purchaser agrees to purchase for the Purchase Price (as
defined below) all of Seller's right, title and interest in and to the
Purchased Interests, together with all rights, claims and causes of action
associated with such Interests (including but not limited to, any and all
contract rights, accounting adjustments, mispayments, erroneous payments or
other claims of any nature, including claims against any Program sponsor or
general partner of any of the Programs arising from Seller's participation in
the Programs).
2. PURCHASE PRICE AND PAYMENT TERMS. The Base Purchase Price for the
Purchased Interests shall be as set forth on Exhibit "B". Such Base Purchase
Price shall be adjusted as provided in Section 9 below in the amount set
forth on Exhibit "B". Such Base Purchase Price, as adjusted shall be referred
to as the "Purchase Price" and shall be the amount set forth on Exhibit "B".
If the Purchase Price is to be paid in cash it shall be paid by wire transfer
to the Escrow Agent (as defined below) at Closing. If the Purchase Price is
to be paid by the issuance of Purchaser's common stock ("Purchaser Stock"),
stock certificates representing the appropriate number of shares of Purchaser
Stock (as set forth on Exhibit "B") shall be delivered to Seller as soon as
practicable after Closing and Escrow Agent (as defined below) shall have
delivered to it on or before Closing a letter from Purchaser's stock transfer
agent (the "Transfer Agent") stating that it will promptly issue such shares
to Seller upon notification by the Escrow Agent that the Closing has occurred.
3. PROVISIONS RELATING TO PURCHASER STOCK. If part or all of the
Purchase Price for the Purchased Interests is to is to be paid in Purchaser
Stock, the following shall apply: (i) each $4.00 of the Purchase Price will
represent one share of Purchaser Stock. No fractional shares of Purchaser
Stock shall be issued to Seller. In lieu of a fractional share of Purchaser
Stock to which the Seller would otherwise be entitled, Purchaser shall be
issued one additional share of Purchaser Stock; (ii) as soon as practicable
after Closing, Purchaser will make all reasonable efforts to file, and
maintain in effect for a two (2) year period, a registration statement with
the Securities and Exchange Commission (the "Commission") on Form S-3 (the
"Registration Statement") to register the shares of Purchaser Stock being
transferred to Seller and will use all reasonable efforts to have the
Registration Statement declared effective by the Commission; and (iii) in the
event of any change in Purchaser Stock between the date of this Agreement and
the Closing by reason of any stock dividend, stock split, reverse stock split
or the like, the agreed value of the Purchaser Stock shall be appropriately
adjusted.
4. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and
warrants to Purchaser as of the date hereof as follows:
(a) TITLE. Seller warrants and represents that Seller
is the owner of the Interests described on Exhibit "A", free and clear
of all mortgages or liens; that it has the right and authority to sell
and assign the Interests; and that Seller will warrant and defend the
same unto Purchaser, its successors and assigns, against Seller and all
or every person or persons whomsoever claiming by, through or under
Seller. The foregoing covenants of warranty of title shall survive the
Closing.
(b) ORGANIZATION AND AUTHORITY. If Seller is a corporation,
partnership, limited partnership, limited liability company or limited
liability partnership, such Seller is duly organized and legally
existing under the laws of its state of organization. Seller
has all requisite power and authority to enter into this Agreement and
to perform its obligations hereunder.
(c) NO DEFAULT. There are no provisions in any indenture,
operating contract, limited partnership agreement (other than approval
from the general partner that may be required under the terms of a
limited partnership agreement) or other contract or document
controlling the Seller or to which the Seller is bound which prohibits
the execution and delivery by Seller of this Agreement and the transfer
of the Interests to Purchaser and such actions by Seller will not
violate any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in
effect.
(d) EFFECTIVENESS OF TRANSFER. This Agreement constitutes, and
all documents and instruments required hereunder to be executed and
delivered by Seller at Closing including the Interest Conveyance
Documents attached hereto as Exhibit "D", will constitute, valid, legal
and binding obligations of Seller in accordance with their respective
terms, subject to applicable bankruptcy and other similar laws of
general application with respect to creditors.
(e) BANKRUPTCY OR INSOLVENCY. There are no bankruptcy,
reorganization or arrangement proceedings pending or being contemplated
by Seller, or to the knowledge of Seller, threatened against Seller.
(f) BROKERS. Seller has incurred no liability, contingent or
otherwise, for broker's or finder's fees with respect to the
transactions contemplated by this Agreement for which Purchaser shall
have any responsibility whatsoever.
(g) LITIGATION. Seller has no knowledge of any demand or suit,
action or other proceeding pending or threatened before any court or
governmental agency which might result in a material impairment or loss
of Seller's title to any material part of the Interests, or the value
thereof.
(h) DISCLOSURES. None of the information concerning the
Interests contained herein, in any exhibit hereto or in any document
referred to herein, contains any untrue statement of material fact or
omits to state a material fact necessary to make the statements
contained herein or therein misleading in any material respect.
(i) ENVIRONMENTAL. Seller has received no notice from any
governmental authority (directly or indirectly) relating to a violation
of an Applicable Environmental Law (as defined herein) in connection
with the Interests.
(j) INVESTMENT REPRESENTATION. If any portion of the Purchase
Price is to be paid in Purchaser Stock the following shall apply: (ii)
Seller is receiving the Purchaser Stock with the intent of holding the
Purchaser Stock for investment and without the intent of participating,
directly or indirectly, in a distribution of the Purchaser Stock; (ii)
Seller is knowledgeable and experienced in finance, securities and
investments and has had sufficient experience analyzing and investing
in securities similar to the Purchaser Stock so as to be capable of
evaluating the merits and risks of an investment
in the Purchaser Stock; and (iii) Seller is able to bear the
economic risk of an investment in the Purchaser Stock.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser
represents and warrants to Seller as of the date hereof that:
(a) ORGANIZATION. Purchaser is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Alabama, and Purchaser is duly qualified to carry on its business.
(b) AUTHORITY AND APPROVALS. Purchaser has all requisite power
and authority to carry on its business as presently conducted, to enter
into this Agreement, to purchase the Interests on the terms described
in this Agreement, and to perform its other obligations under this
Agreement. The consummation of the transactions contemplated by this
Agreement will not violate, or be in conflict with, any provision of
Purchaser's articles of incorporation, by-laws or governing documents,
or any material agreement or instrument to which Purchaser is a party
or by which Purchaser is bound, or any judgment, decree, order,
statute, rule or regulation applicable to Purchaser.
(c) AUTHORIZATION. The execution, delivery and performance of
this Agreement and the transactions contemplated hereunder have been
duly and validly authorized by all requisite action on the part of
Purchaser.
(d) BROKERS. Purchaser has not incurred any liability,
contingent or otherwise, for broker's or finder's fees in connection
with the transactions contemplated by this Agreement for which Seller
shall have any responsibility whatsoever.
5. DUE DILIGENCE REVIEW.
(a) REVIEW BY PURCHASER. Purchaser may conduct, at its sole
cost and expense, such title examination or investigation, and other
examinations and investigations, as it may in its sole discretion
choose to conduct with respect to the Properties in order to determine
whether Defects (as defined below) exist. In the event Defects are
found which are material to Purchaser's overall acquisition of the
Program Interests, Purchaser may terminate this Agreement by giving
written notice to Seller prior to Closing and in such event neither
Purchaser or Seller shall have any further obligations hereunder.
(b) NATURE OF DEFECTS. The term "Defect" as used in this
Section shall mean any of the following:
(i) NRI OR WI VARIANCES. The ownership of
the Properties by the Programs varies from the information on the xxxxx
or units supplied to Purchaser by Xxxxx Oil (the "Xxxxx Well
Information") , in that it (A) entitles Purchaser to receive a decimal
share of the oil, gas and other hydrocarbons produced from, or
allocated to, such well or unit which is less than the decimal share
set forth on the Xxxxx Well Information or (B) causes Purchaser to be
obligated to bear a decimal share of the costof operation of such well
or unit greater than the decimal share set forth on the Xxxxx
Well Information (without at least a proportionate increase in the
share of production to which Purchaser is entitled to receive from
such well or unit).
(ii) LIENS. Ownership of any oil and gas
property included in the Properties is subject to a lien other than
(A) a lien for taxes which are not yet delinquent, (B) a mechanic's or
materialmen's (or other similar lien), or a lien under an operating
agreement or similar agreement, to the extent the same relates to
expenses incurred which are not yet delinquent, or (C) liens which
will be released at Closing.
(iii) PREFERENTIAL RIGHTS. Any property
included in the Properties is subject to a preferential right to
purchase ("Preferential Right"), unless a waiver of such Preferential
Right has been obtained with respect to Purchaser's acquisition of the
Program Interests.
(iv) IMPERFECTIONS IN TITLE. Any property
included in the Properties is subject to an imperfection in title
which, if asserted, would cause a Defect, as defined in subparagraph
(i) above, to exist, and such imperfection in title is not such as
would normally be waived by persons engaged in the oil and gas
business when purchasing producing properties.
(v) ENVIRONMENTAL MATTERS. Any property
included in the Properties has been cited for a violation, or is
identified by Purchaser as being in violation of Applicable
Environmental Laws in any material respect. Applicable Environmental
Laws shall mean all federal, state and local laws, rules, orders or
regulations pertaining to health or the environment, including those
relating to waste materials and/or hazardous substances.
6. FILES AND RECORDS OF SELLER. Prior to Closing, upon request by
Purchaser, Seller will make available for examination by Purchaser all
files, instruments, and documents pertinent to the Interests that are
in the possession of Seller including, without limitation, the monthly
statement of payment report provided to Seller by Xxxxx Oil. Purchaser
will be permitted to make copies of all pertinent instruments or
documents.
7. CLOSING.
(a) CLOSING DATE. The transactions contemplated herein shall
take place at the offices of the Escrow Agent on or before November 30,
1999 (the "CLOSING DATE" or the "CLOSING"). The effective date of the
transfer of the Purchased Interests from Seller to Purchaser shall be
January 1, 1999 (the "EFFECTIVE DATE").
(b) ESTABLISHMENT OF ESCROW; APPOINTMENT OF ESCROW AGENT. The
parties hereby appoint the law firm of Xxxxxx & Xxxxxx, L.L.P. as
"Escrow Agent", which firm shall also act as Escrow Agent in the
transactions with other Program Participants. The duties and
responsibilities of the Escrow Agent shall be as set forth
in the Escrow Agreement attached as Exhibit "C". In accordance with the
Escrow Agreement, the parties hereto agree to the following procedure:
(i) Within ten (10) days after the execution
of this Agreement Seller shall deliver to Escrow Agent the Escrow
Agreement executed by Seller and executed Interest Conveyance
Document(s) in the form(s) attached hereto as Exhibit "D".
(ii) Five (5) days prior to the Closing
Date, Purchaser shall deliver to Escrow Agent a statement prepared by
Purchaser, which statement shall be subjected to procedures to be
preformed by Xxxxxx Xxxxxxxx L.L.P. (the "Accountants") as specified
by Purchaser, which sets forth the adjustment to the Base Purchase
Price necessary to confirm or adjust the Purchase Price and a
confirmation of the allocation of consideration among Program
Participants accordance with the provisions of Section 9.
(iii) Five (5) days prior to the Closing
Date, Purchaser shall cause to be delivered to Escrow Agent a letter
from the Transfer Agent setting out the Purchaser Stock to be issued
to the Program Participants that are selling part or all of their
respective Program Interests for Purchaser Stock.
(iv) Upon receipt of a certificate from
Purchaser that all conditions to Closing have been satisfied, and the
receipt of a wire transfer in the amount of the Purchase Price, Escrow
Agent shall release to Purchaser the Interest Conveyance Document(s).
8. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS WITH RESPECT TO
CLOSING. The obligations of Purchaser under this Agreement are subject
to the fulfillment, on or prior to the Closing Date, of all of the
following conditions, any or all of which may be waived in writing by
Purchaser in its sole discretion:
(a) REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by Seller contained in this Agreement hereof shall be
true and correct in all material respects on and as of the Closing Date
as though such representations and warranties
were made on and as of such date.
(b) PERFORMANCE. Seller shall have performed and complied in
all material respects with all agreements, obligations, covenants and
conditions required herein to be performed or complied with by Sellers
on or prior to the Closing Date and shall have delivered to the Escrow
Agent the Interest Conveyance Document(s).
(c) ABSENCE OF PROCEEDINGS. No action or proceeding shall have
been instituted or threatened and no claim or demand shall have been
made against Seller or Purchaser before any court or other governmental
body, seeking to restrain or prohibit or to obtain substantial damages
with respect to the consummation of the transactions contemplated
hereby, or which might materially and adversely affect the Purchased
Interests which in the reasonably exercised opinion of Purchaser make
it inadvisable to consummate such transactions.
(d) DUE DILIGENCE REVIEW. Purchaser shall have completed its
due diligence review as set forth in Section 5, and the results of such
review shall be satisfactory to Purchaser, in its sole discretion.
(e) CLOSING OF XXXXX EXCHANGE AGREEMENT. Purchaser shall be
satisfied that the transactions contemplated in the Xxxxx Exchange
Agreement will close immediately subsequent to the Closing.
(f) DELIVERY OF INTEREST CONVEYANCE DOCUMENTS BY
PROGRAM PARTICIPANTS. Purchaser shall be satisfied that a sufficient
number of Program Participants have delivered Interest Conveyance
Documents to the Escrow Agent which after completion of the
transactions with the Program Participants, are sufficient to transfer
to Purchaser beneficial or actual ownership of substantially all of the
Properties, other than those owned by Xxxxx Oil.
9. ADJUSTMENTS TO BASE PURCHASE PRICE.
(a) ADJUSTMENTS FOR REVENUES AND EXPENSES. The Base Purchase
Price will be decreased in an amount equal to all distributions to
Seller which have been made from the Programs which relate to income
earned and capital transactions after the Effective Date. Purchaser
shall make the initial determination of the appropriate adjustment to
be made under this Section, with Purchaser's determination to be
subjected to procedures to be performed by the Accountants as specified
by the Purchaser. Such determination after review shall be conclusive
on all parties.
(b) ADDITIONAL PRICE ADJUSTMENT. The Purchase Price
as adjusted pursuant to Section 9 (a) above shall be increased by an
amount equal to eight percent (8%) per annum computed on the Purchase
Price from the Effective Date to the Closing Date.
(c) ALLOCATION OF CONSIDERATION AMONG PROGRAM
PARTICIPANTS. Purchaser shall make the initial determination of the
allocation of the total consideration to be paid among the Program
Participants, with such determination to be subjected to procedures to
be performed by the Accountants as specified by Purchaser.
10. SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION.
(a) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
the terms, covenants, conditions, warranties and representations of
this Agreement and in any closing certificate delivered pursuant to
this Agreement on the part of Purchaser or Seller shall survive the
Closing.
(b) INDEMNIFICATION OF PURCHASER. Seller agrees to indemnify,
defend and hold Purchaser harmless from, against and with respect to
any claim, deficiency, assessment, liability, loss, cost, damage, or
expense (including, without limitation, reasonable fees and expenses
of counsel and independent accountants) that Purchaser may suffer by
reason of Seller's breach of, or noncompliance with, any provision or
covenant herein contained or the inaccuracy of any warranty or
representation made by Seller in this Agreement. Seller agrees to
indemnify, defend and hold Purchaser harmless from all actions, suits,
proceedings, demands, assessments, judgments, costs and expenses,
including reasonable attorneys' fees and disbursements, incident to
the matters discussed in this paragraph. Seller's obligation to
indemnify Purchaser shall be reduced by (i) insurance proceeds that
Purchaser shall receive in connection with
such claim, and (ii) any amounts that Purchaser may recover from third
parties in connection with such claim.
(c) INDEMNIFICATION OF SELLER. Purchaser agrees to indemnify,
defend and hold harmless Seller from, against and with respect to any
claim, deficiency, assessment, liability, loss, cost, damage or expense
(including, without limitation, reasonable fees and expenses of counsel
and independent accountants) that Seller may suffer by reason of
Purchaser's breach of, or noncompliance with, any provision or covenant
herein contained or the inaccuracy of any warranty or representation
made by Purchaser in this Agreement.
12. MISCELLANEOUS.
(a) SIMULTANEOUS EXECUTION. All proceedings to be taken and
all documents to be executed and delivered by the parties hereto at the
Closing shall be deemed taken and executed simultaneously, and no
proceeding shall be deemed taken nor any documents executed or
delivered until all have been taken, executed and delivered.
(b) NOTICES. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall
be deemed effective if either delivered personally (and receipted for)
or deposited in the United States mail as certified mail, postage
prepaid, addressed as follows:
If to Seller:
If to Purchaser:
Middle Bay Oil Company, Inc.
c/o 3TEC Energy Company, L.L.C.
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
With a copy to:
Xxxxxx Xxxxxxx Law Firm L.L.C.
2000 Epic Center
000 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxx
Any party may change the address to which notices intended for it shall
be sent by a notice to the other party given in the manner specified in
this paragraph.
(d) EXPENSES. Except as otherwise expressly provided herein,
all costs and expenses incurred by any party in negotiating this
Agreement or in consummating the transactions contemplated hereby shall
be paid by the party incurring such expenses.
(e) ENTIRE AGREEMENT. This Agreement (including the exhibits
hereto) embodies the entire agreement between the parties concerning
the subject matter hereof and replaces and supersedes any prior and
contemporaneous negotiations, agreements or understandings between the
parties hereto.
(f) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute but one and the same instrument.
(g) BINDING EFFECT. This Agreement shall inure only to the
benefit of Seller and Purchaser, and nothing contained in this
Agreement, express or implied, is intended to confer upon any other
person or entity any benefits, rights or remedies. This Agreement shall
be binding upon Seller and Purchaser and, except as otherwise
prohibited, their respective heirs, devisees, legal and personal
representatives, successors and assigns.
(h) HEADINGS. The headings of paragraphs herein are for
convenience of reference only, do not constitute a part of this
Agreement, and shall not be deemed to
limit or alter any of the provisions hereof.
(i) AMENDMENTS. Except as otherwise expressly provided herein,
this Agreement may be amended only by an instrument executed by
Purchaser and Seller.
(j) WAIVER. No waiver of any term, provision or condition of
this Agreement, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such term, provision
or condition or as a waiver of any other
term, provision or condition of this Agreement.
(k) GOVERNING LAW. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of
Texas.
(l) EXHIBITS. All exhibits referenced in this Agreement are
hereby incorporated herein by reference.
(m) SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement shall for any reason be
judicially declared to be invalid, illegal, unenforceable or void in
any respect, such declaration shall not have the effect of invalidating
or voiding the remainder of this Agreement, and the parties hereto
agree that the part or parts of this Agreement so held to be invalid,
illegal, unenforceable or void will be deemed to have been stricken
herefrom and the remainder will have the same force and effectiveness
as if such part had never been included herein.
(n) FURTHER ASSURANCES. The parties hereto each agree to
execute such other instruments, documents or agreements as may be
reasonably necessary or desirable for the implementation of this
Agreement and the consummation of the transactions contemplated hereby.
Seller agrees that it shall execute and deliver from time to time, such
further instruments, notices, division orders, transfer orders and
other documents, and do such other and further acts and things as may
be reasonably necessary to more fully and effectively grant, convey and
assign the Purchased Interest to Purchaser.
(o) SIGNATURE BY FACSIMILE. The parties hereto agree that
signatures by facsimile shall be acceptable and binding upon the
parties hereto.
(p) GAS IMBALANCES, MAKEUP OBLIGATIONS. Without limitation
on any other provision of this Agreement, it is expressly understood
and agreed that upon the occurrence of Closing, but effective as of
the Effective Date, Purchaser shall succeed to and assume the position
of Seller with respect to all gas imbalances and make-up obligations
related to the Purchased Interest. As a result of such succession,
Purchaser shall (i) be entitled to receive any and all benefits which
Seller would have been entitled to receive by virtue of such position,
and (ii) be obligated to suffer any detriments which Seller would have
been obligated to suffer by virtue of such position.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date first above written.
SELLER
By:______________________________
Name:____________________________
Title:___________________________
PURCHASER
MIDDLE BAY OIL COMPANY, INC.
By:..........................................
Name: Xxxxx X. Xxxxxx
Title: President
EXHIBIT A
Attached to and made a part of that certain Purchase Agreement
dated .................................., 1999 by and between
______________, and Middle Bay Oil Company, Inc.
Exhibit B
Purchase Price
Amount Elected in Cash
Amount Elected in Stock
Number of Shares
