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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement") dated September 8, 1995
is between NATURAL GAS PROCESSING CO., a Wyoming corporation of P. O. Xxx 000,
Xxxxxxx, Xxxxxxx 00000 ("Seller") and KCS RESOURCES, INC., a Delaware
corporation of 0000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000.
R E C I T A L S
A. Seller is the owner of interests in the oil and gas leases
described in Exhibit A, the Xxxxx described in Exhibit B, the vehicles
described in Exhibit C, the miscellaneous equipment described in Exhibit D, the
rights of way, surface lease agreements, gathering systems, compressors and
compressor sites described in Exhibit E, the real property described in Exhibit
F and other assets and properties related to its exploration, production and
gathering businesses; and
B. Seller desires to sell to Buyer and Buyer desires to purchase
from Seller all of Seller's interests in the assets and properties which are
specifically described in Section 1 on the terms and conditions hereinafter
provided.
A G R E E M E N T
In consideration of the foregoing recitals and the terms, covenants
and conditions contained herein, it is agreed as follows:
1. Sale and Purchase of Assets.
(a) Properties to be Conveyed. Subject to the terms and
conditions of this Agreement, Seller shall sell and
convey and Buyer shall purchase and pay for all of
Seller's interests in the assets and properties
(other than the Excluded Properties, as hereinafter
defined) described in the exhibits
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referred to in Recital A and including those items
listed in clauses (i) through (vi) below (the
"Properties"). The Properties shall include without
limitation the following:
(i) Seller's rights, titles and interests,
including without limitation after-acquired
titles and reversionary and other similar
interests in and to all the oil, gas and
mineral interests of every nature in the
leasehold interests described on Exhibit A
attached hereto and in any other oil and gas
lease or mineral interest omitted from
Exhibit A, by error, or misdescribed therein,
it being the intention of Seller to exclude
no oil and gas lease or mineral interest
owned or claimed by Seller in the United
States of America (except Excluded
Properties) on the date of Closing (the
"Leases");
(ii) All of Seller's rights, titles and interests
in and to the xxxxx described on Exhibit B
attached hereto or omitted from Exhibit B by
error or misdescribed therein (the "Xxxxx")
and the lease and well equipment, spare parts
and inventory and facilities (and rights
thereto) located on the Leases or on land
pooled or unitized therewith and used or
useful in connection therewith, including
without limitation, tanks, tank batteries,
gas plants, disposal facilities, storage
facilities, field separators and liquid
extractors, compressors, pumps and related
materials and equipment (the "Equipment");
(iii) All of Seller's rights, titles and interests
in the vehicles, trailers and heavy equipment
described in Exhibit C, the miscellaneous
equipment used exclusively in Seller's
exploration, production and gathering
businesses, described in Exhibit D and any
miscellaneous nuts, bolts, fittings or hand
tools not listed in Eshibit D shall be
delivered to Buyer in the exercise of good
faith by Seller, the rights of way, surface
lease agreements, gathering systems, gas
processing plants, compressors and compressor
sites described in Exhibit E (the "Gathering
Systems") and the real estate described in
Exhibit F (the "Real Property");
(iv) All oil and condensate in storage, natural
gas, casinghead gas, petroleum, natural gas
liquids, products and other hydrocarbons and
minerals of every kind and description
produced in association therewith
("Hydrocarbons") that are owned by Seller and
are in any way attributable to the Leases and
that at the Effective Time (as hereinafter
defined) were severed from the ground but
were not
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theretofore sold and delivered to a third
party unaffiliated with the Seller;
(v) All of the following, regardless of whether
in hard copy form or electronically stored:
(A) abstracts, title opinions, title reports,
curative information, title policies, lease
and land files, well files, easement and
right-of-way files, surveys, analyses and
compilations (but only to the extent related
exclusively to the Properties),
correspondence, filings with regulatory
agencies, tax returns (other than income tax
returns), financial compilations (but only to
the extent related exclusively to the
Properties), other documents and instruments
that may in any way relate to the Properties;
(B) geophysical, geological, engineering,
exploration, production and other technical
data, magnetic field recordings, digital
processing tapes, field prints, summaries,
reports, maps, interpretations, studies and
other analyses that are in the possession of
Seller, or to which Seller has a right to
possession, and in any manner relates to the
Properties except for those items of
geological, geophysical or other data the
transfer of which is prohibited under the
terms of an agreement with a third party and
the release of such prohibition cannot be
obtained by Seller with reasonable efforts;
and (C) all other books, records and files
containing financial, title or other
information that are in the possession of
Seller and related exclusively to the
Properties (the "Data"); and
(vi) All of Seller's rights, titles and interests
in, to and under all agreements and
contractual rights which relate to the
Leases, Xxxxx, Equipment, Miscellaneous
Equipment, Gathering Systems, Real Property,
Crude Oil in Tanks, Pipeline Equipment or
Data (the "Agreements") including without
limitation all rights in, to and under
production purchase or sales contracts,
operating agreements, unitization agreements,
farmout agreements, farmin agreements, areas
of mutual interest, saltwater disposal
agreements, water injection agreements,
surface use agreements, gathering agreements,
rights-of-way, pooling agreements, pooling
designations, orders of governmental
authorities with jurisdiction attributable to
the Leases, Xxxxx or Equipment, or to
production, storage, treatment,
transportation, processing or sale or
disposal of oil, gas, other hydrocarbons,
minerals, or substances therefrom.
(b) Effective Time; Additions and Exclusions. The
purchase and sale of the Properties shall be
effective as of July 1, 1995, at 7:00 a.m. local time
where the Properties are located (the "Effective
Time"). The purchase
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and sale contemplated by this Agreement shall also
apply to replacements of Property and new property
acquired by Seller after the Effective Time of the
type described in clauses (a)(iii) above. Buyer
acknowledges that the inventory of the items
described on Exhibit D was conducted prior to the
Effective Time and that certain of such items may
have been put to use in the ordinary course of
Seller's business or lost. None of the used or lost
inventory described in Exhibit D shall be replaced by
Seller provided the value of any such item is less
than $1,000. The Parties acknowledge that Seller
will except and reserve from the purchase and sale
contemplated by this Agreement (i) all financial
information that does not relate exclusively to the
Properties, (ii) the assets related to Seller's
utility businesses and (iii) those certain pipelines,
easements, rights-of-way, lands, items of equipment
and facilities listed on Schedule V (all of the
foregoing being referred to herein as the "Excluded
Properties"). Seller will also except and reserve
from the purchase and sale contemplated by this
Agreement any assets not conveyed pursuant to clause
(a) above.
2. Purchase Price:
(a) Down Payment. Buyer agrees to provide a cash down
payment of $3,300,000 or before September 13, 1995,
5:00 p.m. MDT (the "Escrowed Payment"). This
contract shall be terminated, without liability on
the part of Seller or Buyer, if said Escrowed Payment
is not received on or before such date and time. The
Escrowed Payment will be deposited into escrow with
Norwest Bank Colorado N.A. pursuant to an Escrow
Agreement substantially in the form of Exhibit H
hereto and will be released to Seller at Closing or,
if the Closing does not occur, will be released in
accordance with the terms of Section 11 hereof.
(b) Closing Payment. Subject to fulfillment of the terms
and conditions of this Agreement, in full
consideration for the Properties, Buyer shall pay to
the Seller, at Closing, THIRTY-THREE MILLION DOLLARS
($33,000,000.00), including the Escrowed Payment
referred to above, which amount shall be subject to
offsets and adjustments as provided herein.
(c) Adjustment to Purchase Price. (i) The purchase price
shall be adjusted upward by the following:
(A) The amount of cost and expenses paid
by Seller attributable to operation
of the Properties in the ordinary
course of business (including all
employees' salary and benefit
expenses, reasonable general
administrative and overhead
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expenses, taxes (except income and
franchise taxes), assessments,
duties, rentals, royalties, lease
bonuses, fees, levies or other
governmental charges) with respect
to the period of time between the
Effective Time and the Closing; and
(B) The value of all oil and condensate
in storage ("Crude Oil in Tanks")
determined by reference to the
applicable previous month's average
contract price for such Crude Oil in
Tanks as determined at the Effective
Time and after appropriate deduction
for royalties, overriding royalties,
other burdens on production and
production taxes.
(ii) The purchase price shall be adjusted downward
by the following:
(A) Proceeds received by Seller or any
other person (except Buyer) that are
in any way attributable to the
Properties (including sales of Crude
Oil in Tanks) for the period of time
between the Effective Time and the
Closing;
(B) The aggregate Defect Amounts, as
determined pursuant to Section 3(c);
and
(C) Liabilities for accrued vacation
existing as of the Effective Time
with respect to those employees of
Seller who are offered and accept
employment with Buyer, as
contemplated by Section 17 hereof.
3. Title and Other Matters:
(a) General Access: Prior to the Closing, Seller will
provide Buyer, at the offices of Seller, during
normal business hours, access to all of Seller's
records relating to the Properties, and shall permit
Buyer, at Buyer's expense, to copy:
(1) All of the books (other than books that
relate in any way to Seller's utility
businesses), files, computer data files and
ad valorem, net proceeds, severance and
property tax and financial records directly
applicable to the Properties, contracts,
correspondence, maps, data, reports, plats,
and other documents of Seller pertaining to
the Properties; and
(2) All title opinions, supplemental title
opinions and title curative material of
Seller relating to the Properties; and
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(3) All other information possessed by Seller
with respect to the Properties as Buyer may
from time to time reasonably request. Seller
shall not be obligated to acquire any updated
abstracts, title opinions or other additional
title information but shall cooperate with
Buyer in endeavoring to obtain such
additional title or other information at
Buyer's expense. Any other provision of this
Agreement to the contrary notwithstanding,
Seller shall not provide Buyer with copies of
any records or data or access to any records
or data which consist in whole or in part of
information regarding Seller's utility
businesses and which Seller considers to be
proprietary or confidential to it.
In addition, Seller will provide Buyer with all
information and access to such records (including
accounting work papers) and individuals (including
Seller's independent public accountants) as may be
reasonably necessary to permit Buyer to conduct an
audit of the Properties sufficient to enable Buyer to
prepare, at Buyer's expense, audited and unaudited
financial statements with respect to the Properties
that will satisfy the requirements of Form 8-K under
the Securities Exchange Act of 1934, as amended, as
they apply to Buyer.
(b) Good and Marketable Title. As used herein, the term
"good and marketable title" shall mean:
(1) with respect to ownership of Leases
attributable to a Well, a record title that
(a) entitles Seller to receive, throughout
the life of a Well or Unit, at least the net
revenue interest for such Well shown in
Exhibit B; (b) obligate Seller to bear,
throughout the life of a Well (and the
plugging, abandonment and salvage thereof),
no greater working interest for such Well
than the working interest shown for such Well
in Exhibit B; and (c) is free and clear of
all liens and encumbrances except a mortgage
lien in favor of Norwest Bank Colorado N.A.
which will be released at Closing and liens
for taxes not delinquent, utility easements
and encumbrances or restrictions which do not
affect materially and adversely the value of
the Properties.
(2) with respect to ownership of Leases not
attributable to a Well, a record title that
is free from reasonable doubt as to all
matters of law and fact such that a
reasonably prudent person, engaged in the
ownership, development and operation of oil
and gas properties or assets (including
pipelines and gas plants), with knowledge of
all the facts and appreciation of their legal
significance, would be willing to accept
title to such Properties without a reduction
in the
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portion of the purchase price
allocated to such Property in the Schedule to
be prepared pursuant to Section 21 hereof.
(3) with respect to all of the Properties other
than the Leases and Xxxxx, good and valid
title that is free and clear of all liens and
encumbrances other than those described in
clause (1)(c) above.
(c) Defects and Adjustment of Purchase Price.
(1) The term "Title Defect", as used herein,
shall mean any material encumbrance, defect
in, or objection to Seller's title to the
Properties, which based upon petroleum
industry standards in the areas where the
Properties are located, alone or in
combination with other defects, would cause
Seller's title to any of the Properties to be
other than good and marketable title. Any
Title Defect for which Buyer does not deliver
notice to Seller by five (5) working days
before the Closing Date shall be deemed
waived.
(2) Any environmental degradation reported to
Seller pursuant to Section 10(b) shall
constitute an "Environmental Defect" and be
subject to the provisions of clauses (c)(4)
through (c)(9) below.
(3) Prior to the Closing, Seller shall bear or
assume all of the risk of any change in the
condition of the Properties and Seller shall
maintain, and make prompt payment of any
insurance premiums under any insurance
policies relating to the Properties from the
Effective Date until the Closing. Should any
of the Properties be subjected to a bona fide
threat of condemnation by an entity having
the power of eminent domain, be included in
whole or in part in a governmental plan or
proposal that might result in the taking of
all or part of the Properties, be taken by
eminent domain or condemnation or be
destroyed, lost or cease to produce because
of blowout, fire, storm or casing collapse,
Act of God or other casualty prior to the
Closing, such event shall constitute a
"Casualty Defect" and be subject to the
provisions of clauses (c)(4) through (c)(9)
below.
(4) If, on or before five (5) business days prior
to Closing, Buyer determines that one or more
Title Defects or Environmental Defects exist,
Buyer shall give notice to Seller of the
existence of said defects together with
sufficient details to inform Seller of the
nature and extent of each of the defects and
Buyer's estimate of the reduction in value of
the Properties by reason of each of such
defects. In addition, if Buyer becomes aware
of a Casualty Defect
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prior to Closing, Buyer shall furnish to
Seller in writing its estimate of the
reduction in value of the Properties by
reason of such Casualty Defect (the Title
Defects, Environmental Defects and Casualty
Defects being herein called "Defects" and the
reduction in value of the Properties
attributable to such Defects being herein
called "Defect Amount").
(5) In the event Seller receives notice of
Defects prior to Closing, then prior to or
contemporaneously with the Closing it shall
give written notice to Buyer with respect to
each Defect as to whether it agrees with the
existence of the Defect and the Defect Amount
ascribed thereto, and whether it intends to
cure such Defect prior to Closing. If Seller
fails to deliver a written response to a
notice of Defect prior to Closing or if
Seller fails to cure the Defect by the
Closing, then Seller shall be deemed to have
admitted the existence of the Defect and
accepted Buyer's estimate of the Defect
Amount.
(6) If, in response to Buyer's notice of Defect,
Seller elects to attempt to cure the Defect,
Seller shall have the period between receipt
of Buyer's notice and the Closing to effect
such cure to the reasonable satisfaction of
Buyer.
(7) If, at the time of Closing, the parties are
unable to resolve all disputes as to the
existence of Defects or the value of Defect
Amounts, the Closing shall proceed and the
disputed portion of the purchase price shall
be placed in an interest bearing escrow
account distributable to the parties by
mutual agreement or, in the absence of
agreement, then in accordance with the award
after arbitration as provided in clause
(c)(8) below.
(8) If the parties are unable to resolve all
disputes as to the existence of Defects or
reduction in value attributable to such
Defects within the thirty days after Closing,
then on the business day next following
thirty days after Closing, the remaining
disputes shall be submitted to binding
arbitration. Within fifteen days after
submission to arbitration, Seller and Buyer
agree to jointly select an arbitrator
experienced in the U.S. oil and gas business,
who shall be the sole arbitrator (the
"Arbitrator") to hear and decide all
remaining disputes regarding Defects and
Defect Amounts. The Arbitrator so chosen
shall be impartial and independent of all
parties to this Agreement and shall be
experienced and knowledgeable about the
subject matter (generally and not as to the
express facts concerning the Properties) of
the remaining disputes.
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If the parties are unable to agree upon the
designation of a person as Arbitrator, then
Seller or Buyer may in writing request the
managing partner of the law firm of Holland &
Xxxx in Denver, Colorado (or, if such
managing partner is unable or unwilling to so
act, the currently sitting presiding judge of
the United States District Court of the
District of Wyoming) to appoint the
Arbitrator and such Arbitrator shall hear all
matters submitted to arbitration under this
section.
(9) In the event the total of all Defect Amounts
(after agreement, admission or arbitration of
the existence and amount thereof) equals less
than $200,000.00, no adjustment of the
purchase price shall occur. In the event
such total exceeds $200,000.00 the purchase
price shall be reduced by the total of Defect
Amounts as finally agreed upon, admitted or
arbitrated.
4. Seller's Covenants and Representations. Seller covenants,
represents and warrants to Buyer that:
(a) The Seller is a corporation which is validly existing
and in good standing under the laws of its state of
formation, and has all requisite corporate power and
authority to own or lease its assets and properties
and carry on its business as such business is
conducted, to hold record title to the Properties, to
enter into this Agreement and the documents and
instruments contemplated hereby, and to perform its
obligations under this Agreement and the documents
and instruments contemplated hereby. Seller is duly
licensed or qualified to do business as a foreign
corporation, if applicable, and is in good standing
in all jurisdictions (other than North Dakota)
wherein the Properties lie or the nature of the
business conducted by it requires it to be so
licensed or qualified. Neither the execution and
delivery of this Agreement or the documents and
instruments contemplated hereby nor the consummation
of the transactions contemplated by this Agreement
and the documents and instruments contemplated hereby
will violate or be in conflict with, require any
consent, approval or notice under or result in
acceleration of performance required under (i)
Seller's charter or bylaws or any agreements or
instruments to which Seller is a party or by which
Seller or any of the Properties are bound, or (ii)
any judgment, decree, order, statute, ordinance,
rule, regulation or permit applicable to Seller or
any of the Properties, nor will such consummation
result in the creation or imposition of any lien or
encumbrance on the Properties or upon the oil, gas or
other minerals produced from the Properties.
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(b) Due Authorization and Execution; Enforceability.
This Agreement and all documents and instruments
required hereunder to be executed and delivered by
Seller have been duly authorized by Seller and
Seller's shareholders. This Agreement has been, and
such documents and instruments by the Closing will
have been, duly executed and delivered by Seller, and
this Agreement constitutes and such other documents
and instruments will constitute valid, legal and
binding obligations of Seller enforceable in
accordance with their terms.
(c) No Brokers Fees. Seller has incurred no liability,
contingent or otherwise, for broker's or finder's
fees in connection with this transaction for which
Buyer shall have any responsibility whatsoever.
(d) No Litigation or Audit. No suit, action,
investigation, arbitration or other alternative
dispute resolution proceeding, or other proceeding
(other than valuation or other royalty audits) is
pending or, to the best of Seller's knowledge,
threatened before any Tribe of Indians, court or
governmental agency, and to the best of Seller's
knowledge, no cause of action exists, that might
materially, adversely affect the Properties or
Seller's authority to convey the same, including,
without limitation, Seller's title thereto,
operations thereon, and the marketing of production
therefrom. No suit, action, investigation,
arbitration or other alternative dispute resolution
proceeding, or other proceeding is pending or, to the
best of Seller's knowledge, threatened before any
Tribe of Indians, court or governmental agency that
questions the validity of this Agreement.
(e) Gas Imbalances. Seller has no knowledge of any gas
imbalances in the Xxxxx other than as disclosed in
Schedule I. Buyer shall assume the benefit or
burden, as the case may be, of any gas imbalances in
the Xxxxx not disclosed on Schedule I.
(f) Taxes. All ad valorem, property, production, net
proceeds, severance, and similar taxes, assessments,
duties, fines or other governmental charges (together
with any interest thereon or any penalties, additions
to tax or additional amounts with respect thereto)
based on, measured by or imposed with respect to the
ownership or operation of the Properties or the
production of hydrocarbons or the receipt of proceeds
therefrom that have become due and payable with
respect to the Properties have been paid timely and,
to the best of Seller's knowledge, in the correct
amounts and all tax and information returns to tax
authorities required to be filed with respect to the
Properties have been timely and, to the best of
Seller's knowledge, properly filed. Except for the
federal income tax audit for Seller's fiscal year
ended June 30, 1993, there are no tax audits in
progress, scheduled, or threatened. Current
production taxes shall be
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prorated as of the Effective Time and incorporated
into the adjustments at Closing as stated in Section
7. As of the time of Closing, the Properties will
not be subject to any liens or encumbrances imposed
or arising out of non-payment of all or any portion
of any taxes, assessments, duties, fines or other
governmental charges of any kind (or any penalties or
interest with respect thereto) except for the lien
for ad valorem taxes created by state statute.
(g) Operating Costs. All operating costs and expenses
chargeable to the Properties under applicable
Operating Agreements, as of the Effective Time, have
been paid in full by Seller or arrangements have been
made for payment if the amounts thereof are unknown
or disputed. Seller shall be responsible for the
settlement of all joint billing audits which relate
to accounting periods prior to the Effective Time.
Buyer shall be responsible for the settlement of all
joint billing audits which relate to accounting
periods after the Effective Time.
(h) Compliance with Applicable Law. To the best of
Seller's knowledge, Seller in the conduct of its
business and with respect only to the period during
which Seller has owned any of the Properties is in
substantial compliance with all laws, statutes,
ordinances, decrees, requirements, orders, judgments,
rules and regulations of any governmental authority,
the failure to comply with which would materially
adversely affect the operation of or revenues
attributable to any of the Properties. Neither
Seller nor any of its businesses, operations, assets
or properties is subject to regulation under the
Interstate Commerce Act, as amended, nor does Seller
own or operate any common or contract carrier within
the meaning of the Interstate Commerce Act that is
subject to the jurisdiction of the Interstate
Commerce Commission or the Federal Energy Regulatory
Commission ("FERC").
(i) Title to Properties. Seller represents and warrants
title to all of the Properties as to claims made or
encumbrances created by, through and under Seller but
not otherwise.
(j) Contracts. (i) The contracts and agreements
identified by type below and further identified in
Exhibit I are agreed by the parties to be the only
contracts affecting the Properties which are material
to this sale and purchase, excepting only oil and gas
leases, unit agreements, pooling agreements, joint
operating agreements, division orders and transfer
orders. The excepted contracts have been made
available to Buyer's representatives heretofore and
Seller represents and warrants that none of such
files or contracts were unavailable or in any manner
removed from
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the normal storage locations to which Buyer's
representatives were given access.
The types of contracts which the parties agree are
material to this sale and purchase, other than the
excepted contracts, are the following:
(A) oil purchase and sale contracts
other than spot sale contracts or
contracts with 30-day cancellation
provisions;
(B) gas purchase and sale contracts
other than spot sale contracts or
contracts with 30-day cancellation
provisions;
(C) liquids purchase and sale contracts
other than spot contracts or
contracts with 30-day cancellation
provisions;
(D) contract pumping agreements;
(E) equipment lease agreements; and
(F) farmout agreements.
(ii) To the best of Seller's knowledge, all of the
contracts, those excepted as well as those
identified in Exhibit I are valid, binding
and enforceable by Seller and will be valid,
binding and enforceable by Buyer upon
assignment to Buyer. In the event assignment
of any contract requires consent of a third
party, Seller will endeavor to secure such
consents; failing in which Buyer may elect to
consider the failure a Title Defect or waive
the non-consent and in such event Seller
agrees to hold the contractual right or
rights in trust for Buyer to the extent
Seller lawfully may do so.
To the best of Seller's knowledge, it (A) is
not in breach or default due to any actions
or failure to perform, in any material
respect under any of the contracts referred
to in this section and (B) has neither
received nor given any notice of action to
terminate, cancel, rescind or procure
judicial reformation of any of said
contracts, and no such action has been
threatened.
(iii) With respect to the material Agreements that
are gas purchase and sales agreements:
(A) Payments for gas sold or transported
pursuant to each of such Agreements
are current (subject to adjustment
in
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accordance with their terms) within
thirty (30) days, except for items
being contested in good faith, and
in accordance with the prices or
rates set forth therein.
(B) Except for a presently ongoing
renegotiation with Montana Power
which will trigger renegotiation of
dependent gas purchase and sale
agreements relating to Montana gas
sales, no party under any of such
Agreements has communicated to
Seller (or to the best knowledge of
Seller, to the operator of any of
the Properties), directly or
indirectly, its intent to cancel,
terminate or renegotiate any of such
Agreements or otherwise to fail or
refuse to perform its obligations
under such Agreements whether such
failure or refusal was pursuant to
any force majeure, market-out or any
other provision contained in any of
such Agreements or otherwise.
(k) Current Commitments. Schedule II contains a true and
complete list as of the date of this Agreement of all
drilling or reworking Xxxxx and all executed,
approved or outstanding authorities for expenditure
("AFE's") and written commitments to drill or rework
any of the Xxxxx.
(l) Production Burdens, Taxes, Expenses and Revenues. To
the best of Seller's knowledge, all rentals,
royalties, shut-in royalties, overriding royalty
interests and other payments due under or with
respect to the Properties have been paid.
(m) Production Balances. None of the purchasers under
any production sales contracts is entitled, and
Seller is not obligated under such contracts to
permit any person to receive deliveries of petroleum
substances at any time after the Effective Time
without paying at such time the full contract price
therefor.
(n) Tax Partnerships. Except as disclosed on Schedule
III to this Agreement, none of the Properties are
subject to a tax partnership.
(o) Xxxxx. To the best of Seller's knowledge, all of the
Xxxxx have been drilled and completed within the
boundaries of the Leases or within the limit
otherwise permitted by contract, pooling or unit
agreement and by laws; and all drilling and
completion, and plugging and abandonment, of
previously plugged xxxxx and the Xxxxx and all
development and operations on the Properties have
been conducted in compliance with all applicable
laws, ordinances, rules, regulations and permits, and
judgments, orders and decrees of any governmental
authority. To the best
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of Seller's knowledge, none of the Xxxxx is subject
to penalty or allowable after the date hereof because
of any overproduction or other violation of
applicable laws, rules, regulations or permits or
judgments, orders or decrees of any governmental
authority which would prevent any of such Xxxxx from
being entitled to its full legal and regular
allowable from and after the date hereof as
prescribed by any governmental authority.
(p) Gathering Systems. The Gathering Systems and the
operation thereof are subject to rules, regulations
and orders of regulatory agencies or authorities
having jurisdiction over Seller's operations and
activities. Such rules, regulations or orders do not
presently cover gathering or processing charges.
Seller is not a party to or, to the best of its
knowledge, the subject of any regulatory action,
investigation or proceeding that concerns the
transportation of gas in any part of the Gathering
Systems.
(q) Employee Benefit Matters. Neither Seller nor any
Commonly Controlled Entity (as hereinafter defined)
maintains or contributes to any "employee pension
benefit plan", as such term is defined in Section
3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), which is covered by
Title I of ERISA. Seller and each Commonly
Controlled Entity has made, or caused to be made, all
contributions, if any, required to be made by Seller
or such Commonly Controlled Entity pursuant to law or
under the terms of all employee pension benefit
plans, profit sharing plans or other "employee
benefit plans" (as such latter term is defined in
Section 3(3) of ERISA) currently or previously
maintained by Seller or any Commonly Controlled
Entity or to which Seller or any Commonly Controlled
Entity contributes or has in the past contributed,
and there exists no condition or set of circumstances
that, with notice or lapse of time or both, would
constitute a default with respect to any such
contributions. No portion of the Properties is, or
by this transaction shall become, burdened by any
liability or contingent liability under any such
employee benefit plan, the Internal Revenue Code of
1986, as amended (the "Code"), ERISA or the
Multiemployer Pension Plan Amendments Act of 1980, as
amended ("MEPPA") and the purchase and sale
contemplated herein shall not cause any loss or
liability under any such employee benefit plan, the
Code, ERISA or MEPPA for Seller or Buyer. As used
herein the term "Commonly Controlled Entity" shall
mean any entity, whether or not incorporated, which
is deemed to be under common control (as defined in
Section 414 of the Code) with Seller.
(r) Credit for Production of Fuels from a Nonconventional
Source. Except for the Wiskey Butte Unit Xxxxx in
Sweetwater and Lincoln Counties, Wyoming, there are
no Xxxxx the production from which is eligible for
the credit provided by Section 29 of the Code (the
"Section 29 Xxxxx"). With
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respect to the Section 29 Xxxxx, the gas produced
from each Section 29 Well has been finally determined
by the applicable jurisdictional agency to be
"natural gas produced from a designated tight
formation" in accordance with 18 C.F.R. Section
274.205(e).
(s) Operation of Business. To the best of its knowledge,
since the Effective Time, Seller has (i) carried on
its business in a good and workmanlike manner in the
usual and ordinary course, and (ii) maintained all
insurance that was in effect as of the Effective Time
with respect to Seller's business and the Properties.
(t) Employment Matters. Seller is not a party to any
collective bargaining or union contract applicable to
any of its employees and, to Seller's knowledge,
there does not exist any current union organizational
effort with respect to such employees.
(u) Environmental Degradation. To the best of Seller's
knowledge, no environmental degradation exceeding
state or federal minimums existed prior to Seller's
acquisition of the Properties and none have occurred
in relation to the Properties during the period the
Properties have been owned by Seller.
5. Buyer's Representation. Buyer represents and warrants to
Seller that:
(a) Buyer is a corporation which is validly existing and
in good standing under the laws of its state of
formation, and has all requisite corporate power and
authority to own its assets and properties and carry
on its business as such business is conducted, to
hold record title to the Properties from and after
the Closing, to enter into this Agreement and the
documents and instruments contemplated hereby, and to
perform its obligations under this Agreement and the
documents and instruments contemplated hereby. By
the time of Closing, Buyer will be duly licensed or
qualified to do business as a foreign corporation, if
applicable, and will be in good standing in all
jurisdictions (other than North Dakota) wherein the
Properties lie or the nature of the business
conducted by it requires it to be so licensed or
qualified. Neither the execution and delivery of
this Agreement or the documents and instruments
contemplated hereby nor the consummation of the
transactions contemplated by this Agreement and the
documents and instruments contemplated hereby will
violate or be in conflict with, require any consent,
approval or notice under or result in acceleration of
performance required under (i) Buyer's charter or
by-laws or any agreements or instruments to which
Buyer is a party or by which Buyer is bound or (ii)
any judgment, decree, order, statute, ordinance,
rule, regulation or permit applicable to Buyer.
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(b) This Agreement and all documents and instruments
required hereunder to be executed and delivered by
Buyer have been duly authorized by Buyer's Board of
Directors. This Agreement has been, and such
documents and instruments by the Closing will have
been, duly executed and delivered by Buyer through
its duly constituted and authorized officers, and
this Agreement constitutes and such other documents
and instruments will constitute valid, legal and
binding obligations of Buyer enforceable in
accordance with their terms.
(c) Buyer has incurred no liability, contingent or
otherwise for broker's or finder's fees in connection
with this transaction for which Seller shall have any
responsibility whatsoever.
(d) Buyer will comply with all laws and governmental
regulations with respect to abandonment of xxxxx
and/or abandonment of the leasehold property
including, where applicable, the plugging of xxxxx,
the compliance with laws or rules regarding inactive
or unplugged xxxxx, including bonding requirements,
and surface work as specified in the Leases or
applicable law or regulation.
(e) Buyer's bonding coverage as of the Closing adequately
will cover all bonding requirements of applicable
conservation or regulatory agencies. Buyer shall
furnish Seller with copies of such bonds or
acceptance letters by the agencies prior to Closing.
6. Conditions to Closing. The obligations of each party to close
this sale and purchase is subject to the conditions precedent
that at Closing (i) all covenants and agreements of the other
party have been kept and performed in all material respects,
(ii) all representations and warranties of the other party are
true and correct in all material respects as of the date of
Closing as though made on the date of Closing, and (iii) each
of Seller and Buyer will have furnished the other with (A) a
certificate of their respective presidents or chief executive
officers, dated the Closing Date, to the effect that, to the
best of their knowledge and belief, the conditions described
in clauses (i) and (ii) have been satisfied and (B) copies,
certified by their respective secretaries, of all resolutions
of their respective boards of directors and Seller's
shareholders with respect to authorization and approval of the
transactions contemplated by this Agreement.
7. Preliminary Settlement and Closing. At least five (5) working
days prior to Closing, Seller shall prepare and furnish to
Buyer by telefax transmission a preliminary settlement
statement (the "Preliminary Settlement Statement") that shall
set forth all adjustments provided for herein, together with
the calculations of all such adjustments, effective as near to
the Closing Date as possible. The
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amount stated therein as the adjusted purchase price shall
constitute the aggregate payments to be made by Buyer both to
Seller and into escrow at the Closing.
Unless extended pursuant to Section 9(a) or otherwise by
mutual agreement, the Closing shall be held at 10:00 a.m. at
Seller's offices in Worland, Wyoming on September 29, 1995, or
at such other time and place as the parties may mutually agree
on in writing (the "Closing Date"). Regardless of when the
Closing shall occur, it shall be effective as of the Effective
Time. At the Closing, the following events shall occur, each
being a condition precedent to the others and each being
deemed to have occurred simultaneously with the others.
(a) Seller shall execute, acknowledge and deliver to
Buyer at the Closing an assignment or assignments in
a form substantially as set forth in Exhibit G
attached hereto conveying the Properties effective as
of the Effective Time to Buyer, together with any
conveyance forms required by applicable law as to
Indian, federal or state leases.
(b) Seller shall execute, acknowledge and deliver to
Buyer at the Closing, transfer orders or letters in
lieu prepared by Buyer directing all purchasers of
production to make payment to Buyer of proceeds
attributable to production from the Properties
effective with production occurring from and after
the Effective Time.
(c) Buyer shall take over operations of Seller's
interests in the Properties and Seller shall provide
Buyer with any change of operator forms required by
governmental rules or regulations.
(d) Buyer shall pay the adjusted purchase price (the
"Initial Closing Amount") to Seller as set forth in
the Preliminary Settlement Statement.
8. Effects of Closing.
(a) All oil, gas and hydrocarbons produced and sold or
otherwise disposed of prior to the Effective Time
(irrespective of whether payment for the same has
been made or received), which are attributable to
Seller's interest in the Properties, shall be and
remain the property of Seller. All oil, gas and
hydrocarbons produced and not sold or otherwise
disposed of after the Effective Time, which are
attributable to the Seller's interests in the
Properties, shall be the property of Buyer.
(b) All proceeds from sales of production, accounts
receivable, and other monies,income and benefits,
with respect to Seller's interest in the Properties,
which relate to the period prior to the Effective
Time shall belong to and be assumed by Seller, and
those which relate to the period
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commencing with the Effective Time shall belong to
and be paid over to Buyer.
(c) Ad valorem, net proceeds, property, severance,
conservation, and similar taxes assessed against
production for the Properties shall be prorated to
the Effective Time based on actual production, and
each party shall pay its prorated amount thereof. If
the amount of said tax for the current year has not
been determined, the proration shall be based upon
the estimated current assessed valuation and previous
year's mill levy.
(d) Except for Crude Oil in Tanks, all royalties,
accounts payable and other fees, costs and expenses
with respect to the Seller's interest in the
Properties which relate to the period prior to the
Effective Time shall be the obligation of and be paid
by Seller. Those royalties, accounts payable, fees,
costs and expenses which relate to the period
commencing with the Effective Time, including Crude
Oil in Tanks, shall be the obligation of and be paid
by Buyer. Suspense accounts containing undistributed
revenues shall be transferred to Buyer at the Closing
and Buyer shall indemnify Seller against any claims
made by third parties for the suspense account to the
extent of the fund.
(e) All liabilities for employees' accrued vacation
existing as of the Effective Time shall be retained
and, with respect to employees who are offered and
accept employment with Buyer as contemplated by
Section 17 hereof, paid by Seller to Buyer at
Closing. Such payment shall be made by adjustment of
the purchase price pursuant to Section 2(c).
9. Post-Closing Matters.
(a) On the Closing Date, the parties shall either close
or either party may upon delivery of at least five
(5) days prior notice to the other party, extend the
closing for any period of time not exceeding ten (10)
days. In the event this transaction is closed, then
as soon as practicable after the Closing Date, but in
no event later than 45 days thereafter, Seller shall
prepare and deliver to Buyer, in accordance with
generally accepted accounting principles, a final
settlement statement (the "Final Settlement
Statement") setting forth each adjustment or payment
that was not finally determined as of the Closing and
showing the calculation of such adjustments and the
resulting final Closing Amount (the "Final Closing
Amount"). As soon as practicable after receipt of
the Final Settlement Statement, but in no event later
than 15 days thereafter, Buyer shall deliver to
Seller a written report containing any changes that
Buyer proposes to make to the Final Settlement
Statement. The parties shall agree with respect to
the changes proposed by Buyer, if any, no later than
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fifteen (15) days after Seller receives from Buyer
the written report described above containing Buyer's
proposed changes. The date upon which such agreement
is reached or upon which the Final Closing Amount is
established, shall be herein called the "Settlement
Date". In the event that:
(1) The Final Closing Amount is more than the
Initial Closing Amount, Buyer shall pay to
Seller the amount of such difference; or
(2) The Final Closing Amount is less than the
Initial Closing Amount, Seller shall pay to
Buyer the amount of such difference, in
either event by wire transfer in immediately
available funds or, by cashier's check.
Payment by Buyer or Seller, as the case may
be, shall be within five (5) days of the
Settlement Date. Such payment shall
constitute final settlement of the
adjustments for revenues, expenses, and taxes
attributable to the Properties.
(b) If this transaction closes, Seller shall deliver to
Buyer on the Closing Date, possession of the
Properties and all files and records of Seller
relating to the Properties to the extent not
previously delivered. Seller may retain copies of
such files and records and shall have the right to
review and copy the originals thereof at Seller's
expense, during business hours upon reasonable
notice.
10. Other Covenants and Indemnification.
(a) Seller covenants and agrees with Buyer that from the
date hereof until the Closing Date, it shall (i)
carry on its business in a good and workmanlike
manner in the usual and ordinary course, and (ii)
maintain all insurance now in force with respect to
Seller's business and the Properties.
(b) Buyer has undertaken, or prior to the Closing will
undertake, an environmental assessment of such of the
Properties as it deems necessary. All environmental
degradations exceeding state or federal minimums of
which Buyer becomes aware shall be reported to Seller
as "Defects" and be subject to the provisions of
Section 3. Buyer's report to Seller shall include an
estimate of the reasonable cost of remediation of the
applicable Properties, and Seller shall have the
right to conduct such remediation prior to Closing.
After Closing, Buyer shall be solely responsible for
all past and future environmental degradation which
may have occurred or will occur with respect to such
portion of the Properties.
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(c) Buyer agrees to and shall indemnify and hold Seller,
its affiliates, and their respective officers,
directors, employees, and agents free and harmless
from all claims, demands, obligations and liabilities
(including attorney's fees) (collectively, "Costs")
relating to or arising from a breach of Buyer's
covenants, representations and warranties herein.
(d) Seller agrees to and shall indemnify and hold Buyer,
its affiliates, and their respective officers,
directors, employees and agents free and harmless
from all Costs relating to or arising from a breach
of Seller's covenants, representations and warranties
herein, including the environmental representation in
Section 4(u) hereof, irrespective of environmental
remediation by Buyer. The above indemnification is
personal to Buyer and its affiliates (and their
respective officers, directors, employees and agents)
and may not be assigned by them.
11. Termination of Agreement.
(a) Anything herein to the contrary notwithstanding, this
Agreement and the transactions contemplated hereby
may be terminated and abandoned as follows at any
time on or before the Closing Date:
(1) By mutual consent of Seller and Buyer;
(2) By Buyer if, at any time fifteen or more days
after the Closing Date, Seller has not
fulfilled the conditions to Closing set forth
in Section 6 to be fulfilled by it;
(3) By Seller if, at any time fifteen or more
days after the Closing Date, Buyer has not
fulfilled the conditions to Closing set forth
in Section 6 to be fulfilled by it; or
(4) By Seller or Buyer, if the Defect Amounts, as
determined pursuant to Section 3(c) exceed,
in the aggregate, $3,300,000.
(b) In the event of termination of this Agreement, each
party shall return all books, contracts, records,
reports, maps, files, papers and other property of
the other then in its possession, and each party
shall bear all legal and other expenses and costs
incurred by such party in connection with the
negotiation or implementation of this Agreement.
Notwithstanding the foregoing, Buyer acknowledges
that Seller would be damaged if any confidential
information relating to Seller or the Properties were
used or disclosed. Accordingly, in the event this
Agreement is terminated, Buyer and its respective
affiliates shall maintain the confidentiality of all
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nonpublic information relating to Seller or the
Properties and shall not make any use whatsoever of
such information.
(c) In the event this Agreement is terminated pursuant to
clause (a)(1) or (a)(4) above, the Escrowed Payment
will be returned to Buyer. In the event Buyer has
performed all of its obligations hereunder, and has
tendered performance of all conditions to Closing to
be performed by it, and the Seller fails to perform
this Agreement and Close, then Buyer may, at its
option and discretion, (i) insist upon specific
performance of this Agreement (in which event the
Escrowed Payment shall be retained in escrow and
released to Seller if this Agreement is specifically
performed) or (ii) terminate this Agreement pursuant
to clause (a)(2) above and pursue any other remedy,
legal or equitable, which it may have (in which event
the Escrowed Payment shall be returned to Buyer). In
the event Seller has performed all of its obligations
hereunder, and has tendered performance of all
conditions to closing to be performed by it, and the
Buyer fails to perform this Agreement and Close, then
Seller shall be entitled as its sole and exclusive
remedy to terminate this Agreement pursuant to clause
(a)(3) above and to require the Escrowed Payment be
paid over to Seller as liquidated damages.
12. Further Assurances. After the Closing, each of the parties
will execute, acknowledge and deliver to the other such other
further instruments, and take such other action, as may be
reasonably requested, in order to more effectively assure to
said party all of the respective Properties, rights, titles,
interests, estates, remedies, powers and privileges intended
to be assigned and delivered in consummation of the
transactions contemplated hereby.
13. Notices. All communications required or permitted under this
Agreement shall be in writing and any communications or
delivery hereunder shall be deemed to have been duly made if
actually delivered in hand or by telefax, addressed as
follows:
If to Seller:
Natural Gas Processing Company
P. O. Xxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxx, Vice President
Telefax: 000-000-0000
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If to Buyer:
KCS Resources, Inc.
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: X. X. Xxxxxx
Telefax: 000-000-0000
With a copy to:
Orloff, Lowenbach, Xxxxxxxxx & Xxxxxx, P.A.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
14. Incidental Expenses. Buyer shall pay the cost of all sales,
documentary, transfer and other taxes incident to the transfer
of the Properties. Each party shall pay its own income or
franchise taxes. Buyer shall pay all filing, recording and
registration fees for any assignment or conveyance delivered
hereunder. Each of Seller and of Buyer shall bear its own
respective expenses incurred in connection with the Closing of
this transaction including its own consultants' fees,
attorneys' fees, accountant's fees, and other similar costs
and expenses.
15. Xxxx-Xxxxx-Xxxxxx Act. The parties covenant and agree that,
prior to Closing, they shall prepare and submit, in a timely
manner, all necessary filings in connection with the
transactions contemplated by this Agreement under the HSR Act,
and the rules and regulations thereunder. The parties shall
request expedited treatment of such filings by the Federal
Trade Commission, shall promptly make any appropriate or
necessary subsequent or supplemental filings, and shall
furnish each other with copies of all such filings made under
the HSR Act at the same time as they are filed with the
government.
16. Entire Agreement. This instrument embodies the entire
agreement between the Parties and may be supplemented,
altered, amended, modified, or revoked by writing only, signed
by both parties. The headings herein are for convenience only
and shall have no significance in the interpretation hereof.
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17. Employment and Employee Rights.
(a) Buyer represents that it intends to offer employment
to all employees of Seller described in Schedule IV
who are employed on the Closing Date, provided such
employees desire to be employed by Buyer and provided
further that Buyer shall not be required to extend an
offer of employment to any of such employees that, in
the exercise of Buyer's reasonable discretion, do not
satisfy the conditions or meet the qualifications
Buyer applies with respect to its other employees
having comparable positions. All such employment
shall be at will and for no fixed period of time.
Buyer will provide to Seller a list of the employees
to whom it proposes to offer employment not less than
ten (10) days prior to Closing.
(b) Those employees of Seller who accept employment with
Buyer shall be eligible to participate in health
insurance, life insurance, vacation and other
benefits on the same basis as is provided to Buyer's
present employees giving credit for past service in
Seller's employ except that in the case of Buyer's
401K and profit sharing plan no credit shall be
accorded for past service.
(c) Buyer does not assume responsibility for termination
of (or any obligation under) any pension plan or any
other employee benefit plan maintained by Seller.
18. Non-Compete Clause. In consideration of the mutual promises
and agreements set forth herein and the payment of $100 to
Xxxxx X. Xxxxxxxx (which payment is to be made at the
Closing), Seller and its president, Xxxxx X. Xxxxxxxx, agree
that, except as permitted in advance in writing by Buyer,
neither of them will compete with Buyer in the exploration for
and production of oil and gas nor in the gathering or
processing thereof in an area embracing the Leases and the
Gathering Systems and two miles from the border of any Leases
or the Gathering Systems (the "AMI"). Notwithstanding the
foregoing, Seller and Xxxxx Xxxxxxxx shall be entitled to
construct and operate gathering lines connected to Seller's
utility operations. Any oil and gas lease, mineral interest,
gathering system or gas processing plant owned or hereafter
acquired by Seller or Xxxxx X. Xxxxxxxx within the AMI and not
connected to Seller's utility assets or operations shall be
deemed to have been acquired in trust for Buyer and shall be
assigned to Buyer upon written request following payment of
the consideration paid for such lease, mineral interest or
gathering system or gas processing plant and shall be subject
to a 2% overriding royalty in favor of Xxxxx X. Xxxxxxxx, as
described on Exhibits J and K hereto. The overriding royalty
relating to oil and gas leases shall be applicable only to the
extent that Buyer's net revenue interest in any lease shall
not be reduced by deduction of the overriding royalty to less
than 80%; provided, however, that no overriding royalty
assignment made by Buyer shall
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be included in its net revenue interest computation. It is
specifically agreed that any oil and gas lease, mineral
interest, gathering system or gas processing plant hereafter
acquired by Buyer within the AMI shall be burdened by the same
2% overriding royalty referred to above and Buyer shall assign
same to Xxxxx X. Xxxxxxxx within 30 days of acquisition of
such oil and gas lease, mineral interest, gathering system or
gas processing plant. It also is specifically acknowledged
and agreed that Xxxxx X. Xxxxxxxx has reached a tentative
agreement with Montana Power Company for acquisition of six
gathering systems in Montana, subject to due diligence. If
such acquisition is closed, the gathering systems so acquired
shall be transferred to Buyer on payment to Xx. Xxxxxxxx of
the total consideration paid and shall be subject to the 2%
overriding royalty referred to above. This clause shall have
no effect on royalties, overriding royalties, production
payments or leases or mineral interests acquired by
inheritance, sheriff's sale involving Seller or Xx. Xxxxxxxx
as mortgagee or deed in lieu of foreclosure. This clause
shall terminate in all respects (except the obligation to
assign and pay the overriding royalty interest) on or after
October 1, 1997, unless continued by mutual written consent.
19. Governing Law. This Agreement shall be governed by the law of
the State of Wyoming. The parties agree that if a controversy
or claim between or among them arises out of or in relation to
this Agreement and results in litigation, the courts of the
State of Wyoming or the courts of the United States of America
located in the State of Wyoming shall have jurisdiction to
hear and decide such matter.
20. Assignment: Successors. Neither party may assign this
Agreement without the prior written consent of the other
party; provided, however, that Buyer shall be entitled to
assign this Agreement to any company that is wholly- owned,
directly or indirectly, by Buyer or any parent of Buyer. This
Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective legal representatives,
successors, and permitted assigns, and no other person shall
have any right, benefit or obligation hereunder.
21. Exhibits; Schedules. All exhibits and schedules which are
referred to herein are hereby made a part hereof and
incorporated herein by reference. Seller and Buyer
acknowledge that Exhibits A, B, E and F include descriptions
of the Properties to be conveyed to Buyer but do not include
valuation information with respect thereto. Commencing as
soon as practicable after the date hereof, Buyer shall
endeavor to prepare a schedule to be attached to and form a
part of this Agreement, which schedule shall ascribe values to
the Properties in sufficient detail to permit adjustment of
the purchase price for any Defects. In accordance with the
guidelines set forth in Internal Revenue Service regulations
and revenue rulings, Seller and Buyer shall allocate the
purchase price (as adjusted) among the
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Properties in a manner that is consistent with the values to
be ascribed to the Properties in such schedule.
22. Bulk Sales. Seller and Buyer each agree to take all action as
may be necessary to comply with the provisions of the Bulk
Sales Law of any applicable jurisdiction.
23. Attorney's Fees. In the event of any litigation between
Seller and Buyer with respect to a breach or alleged breach of
this Agreement or seeking enforcement of this Agreement, the
defendant in such litigation shall be entitled to have its
reasonable attorney's fees included in any judgment or other
award if it is the prevailing party.
24. Knowledge. As used herein, the term "knowledge" shall refer
to the knowledge of the applicable party obtained after due
inquiry of its officers and directors.
25. Like Kind Exchange. Notwithstanding the foregoing provisions
of this Agreement, Seller shall have the right to elect to
consummate the transaction contemplated by this Agreement in
whole or in part as a tax-deferred exchange pursuant to
Section 1031 of the Internal Revenue Code of 1986, as amended.
In the event Seller so elects, Buyer shall deliver to the
Qualified Intermediary (as such term is defined in Treasury
Regulation and the Internal Revenue Code) designated in
writing by Seller, all the amount provided for in Section 2.a.
of this Agreement or such portion thereof as specified by
Seller. After delivery of the amount specified by Seller to
the Qualified Intermediary, Buyer shall have no further
obligation regarding the tax-deferred exchange except the
obligation to execute such tax-related statements or forms as
may be required or necessary in order to designate or qualify
the exchanges as tax-free transactions under applicable tax
statutes, rules or regulations; provided, however, Seller
shall bear all costs and expenses relating to the preparation
and filing of any such additional statements, forms and
filings.
26. Representations Survive. The representations and warranties
of the parties herein shall survive the Closing.
27. Counterpart Execution. This Agreement may be executed
simultaneously, in two or more counterparts, including telefax
counterparts, each of which shall be deemed to constitute an
original.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed the day and year first above written.
ATTEST: NATURAL GAS PROCESSING CO.
By: /s/ Xxxxxx Xxxxxx /s/ Xxxxx X. Xxxxxxxx
---------------------------------------- ----------------------------
Its Secretary/Treasurer President
---------------------------------------- ----------------------------
ATTEST: KCS RESOURCES, INC.
By: /s/ Xxxxxx Xxxxxx /s/ X. X. Xxxxxx
---------------------------------------- ----------------------------
Its Vice-President - Controller President
---------------------------------------- ----------------------------
The undersigned joins in the execution hereof for the purpose of agreeing to
the provisions of the non-competition provision herein.
/s/ XXXXX X. XXXXXXXX
-----------------------------
Xxxxx X. Xxxxxxxx
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