Exhibit 10(d)
PURCHASE AND SALE AGREEMENT
BETWEEN
APACHE CANYON GAS, L.L.C.
AS SELLER
AND
BARRETT RESOURCES CORPORATION
AS BUYER
DATED OCTOBER 13, 2000
EFFECTIVE OCTOBER 1, 2000
CONFIDENTIAL
TABLE OF CONTENTS
Page
RECITALS 1
ARTICLE 1 PURCHASE AND SALE 1
1.1 Purchase and Sale 1
1.2 Assets 1
1.3 Excluded Properties 3
1.4 Effective Time 4
ARTICLE 2 PURCHASE PRICE 4
2.1 Purchase Price 4
2.2 Deposit 5
2.3 Adjustments to Purchase Price 5
a. Upward Adjustments to the Purchase Price 5
b. Downward Adjustments to the Purchase Price 5
c. Preliminary Settlement Statement 6
d. Final Settlement Statement 6
2.4 Gas Price Adjustment to Purchase Price 6
a. General 6
b. Determination of Benchmark Price 7
c. Amount of Gas Price Adjustment to Purchase 7
Price
d. Payment of Purchase Price Adjustment 8
e. KLT Guaranty Agreement 8
2.5 Allocated Values 8
ARTICLE 3 DUE DILIGENCE REVIEW 8
3.1 Access to Records 8
3.2 No Representation or Warranty 9
ARTICLE 4 TITLE MATTERS 9
4.1 Defensible Title 9
4.2 Permitted Encumbrances 9
4.3 Title Defect 10
4.4 Adjustments for Title Defects 10
a. Notice of Title Defects 10
b. Defect Adjustments and Thresholds 11
4.5 Casualty Loss 12
a. Depletion and Depreciation of Personal 12
Property
b. Termination 12
c. Proceeds and Awards 12
4.6 Dispute Resolution 12
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ARTICLE 5 ENVIRONMENTAL MATTERS 13
5.1 Definitions 13
5.2 Spills and NORM 13
5.3 Environmental Assessment 14
5.4 Adjustments for Environmental Defects 14
a. Notice of Environmental Defects 14
b. Defect Adjustments 14
5.5 "As Is, Where Is" Purchase 15
5.6 Disposal of Materials, Substances and Wastes 15
5.7 Buyer's Indemnity 15
5.8 Seller's Indemnity 16
5.9 Dispute Resolution 17
5.10 Environmental Permits 17
ARTICLE 6 SELLER'S REPRESENTATIONS AND WARRANTIES 18
6.1 Organization and Standing 18
6.2 Power 18
6.3 Authorization and Enforceability 18
6.4 Liability for Brokers' Fees 18
6.5 No Bankruptcy 19
6.6 Litigation 19
6.7 Taxes 19
6.8 Tax Partnerships 19
6.9 Agreements 19
6.10 Prepayments 19
6.11 Hydrocarbon Sales Contracts 19
6.12 Hedging Arrangements 19
6.13 Preferential Rights to Purchase 19
6.14 Third-Party Consents 20
6.15 Leases 20
6.16 Surface Use Agreements 20
6.17 Restrictions on Production 20
6.18 Compliance With Laws 20
6.19 Operations 20
6.20 Environmental 20
6.21 Wells 20
6.22 Records 20
6.23 Liens and Encumbrances 20
6.24 Public Utility Holding Company 21
6.25 No Representation 21
ARTICLE 7 BUYER'S REPRESENTATIONS AND WARRANTIES 21
7.1 Organization and Standing 21
7.2 Power 21
7.3 Authorization and Enforceability 21
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7.4 Liability for Brokers' Fees 21
7.5 No Bankruptcy 21
7.6 Litigation 22
7.7 Purchase Price 22
7.8 Financial Statements 22
ARTICLE 8 KLT'S REPRESENTATIONS AND WARRANTIES 22
8.1 Organization and Standing 22
8.2 Power 22
8.3 Authorization and Enforceability 22
8.4 Financial Statements 22
ARTICLE 9 PRE-CLOSING OBLIGATIONS 23
9.1 Operations Prior to Closing 23
9.2 Legal Status 23
9.3 Notices of Claims 23
9.4 Compliance with Laws 23
9.5 Bonding; Insurance 23
9.6 Government Reviews and Filings 23
9.7 Data and Information 24
a. Confidentiality 24
b. Return of Information 24
c. Seller's Remedies 24
d. Confidentiality Agreement Superseded 24
ARTICLE 10 TAX MATTERS 25
10.1 Taxes 25
a. Apportionment of Ad Valorem and Property Taxes 25
b. Sales Taxes 25
c. Other Taxes 25
ARTICLE 11 CONDITIONS TO CLOSING 25
11.1 Buyer's Conditions 25
a. Representations and Warranties 25
b. Seller's Officer's Certificate 26
c. No Action 26
d. Title and Environmental Defects 26
e. Closing Documents 26
f. Consent to Assignment of the Material 26
Agreements
g. Hill Lease 26
h. KLT Guaranty 26
i. Wyoming Fuel and North Central Stock Sale and 26
Purchase Agreements
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11.2 Seller's Conditions 26
a. Representations and Warranties 27
b. Buyer's Officer's Certificate 27
c. No Action 27
d. Title and Environmental Defects 27
e. Closing Documents 27
ARTICLE 12 RIGHT OF TERMINATION AND ABANDONMENT 27
12.1 Termination 27
12.2 Liabilities Upon Termination 27
a. Buyer's Default 27
b. Seller's Default 28
c. Other Termination 28
ARTICLE 13 CLOSING 28
13.1 Date of Closing 28
13.2 Place of Closing 28
13.3 Closing Obligations 28
a. Assignment, Bill of Sale and Conveyance 28
b. Preliminary Settlement Statement 28
c. Purchase Price 29
d. Seller's Officer's Certificate 29
e. Buyer's Officer's Certificate 29
f. Letters-in-Lieu 29
g. Change of Operator 29
h. Possession 29
ARTICLE 14 POST-CLOSING OBLIGATIONS 29
14.1 Post-Closing Adjustments 29
14.2 Dispute Resolution 29
14.3 Records 30
14.4 Transfer Taxes and Recording Fees 30
14.5 Further Assurances 30
ARTICLE 15 ASSUMPTION AND RETENTION OF OBLIGATIONS AND 30
INDEMNIFICATION
15.1 Buyer's Assumption of Liabilities and Obligations 30
15.2 Seller's Retention of Liabilities and Obligations 30
15.3 Indemnification 31
a. Seller's Indemnification of Buyer 31
b. KLT Guaranty 31
c. Buyer's Indemnification of Seller 31
15.4 Procedure 31
a. Coverage 31
b. Claim Notice 31
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c. Information 32
d. Dispute 32
15.5 No Insurance; Subrogation 33
15.6 Reservation as to Non-Parties 33
ARTICLE 16 MISCELLANEOUS 33
16.1 Exhibits 33
16.2 Expenses 33
16.3 Notices 33
16.4 Amendments 34
16.5 Assignment 34
16.6 Reservation of Right to Qualify under Section 29 34
of the Code
16.7 Hart-Scott-Rodino Act 35
16.8 Announcements 35
16.9 Headings 35
16.10 Counterparts 35
16.11 References 35
16.12 Governing Law 35
16.13 Entire Agreement 35
16.14 Binding Effect 35
16.15 Survival 35
16.16 No Third-Party Beneficiaries 36
16.17 Limitation on Damages 36
16.18 Severability 36
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EXHIBITS
SECTION
EXHIBIT DESCRIPTION WHERE DEFINED
A-1 Fee Interests 1.2.a
A-2 Leases 1.2.a
A-3 Term Royalty Interest 1.2.a
B Wells and Allocated Values 1.2.b, 2.5
C Material Agreements 1.2.d
D Claims and Litigation 6.6
E Form of KLT's Guaranty Agreement 8.2
F Seller's Officer's Certificate 11.1.b
G Buyer's Officer's Certificate 11.2.b
H Form of Assignment, Bill of Sale and 13.3.a
Conveyance
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("AGREEMENT"), dated October
13, 2000, is by and between Apache Canyon Gas, L.L.C., a Delaware
limited liability company, whose address is 10740 Nall, Suite 230,
Overland Park, Kansas 66211 ("SELLER"), KLT Inc., a Missouri
corporation, whose address is 10740 Nall, Suite 230, Overland
Park, Kansas 66211 ("KLT") and Barrett Resources Corporation, a
Delaware corporation, whose address is 1550 Arapahoe Street, Tower
3, Suite 1000, Denver, Colorado 80202 ("BUYER").
RECITALS
A. Seller is the owner of certain real and personal
property interests in Las Animas County, Colorado (the "ASSETS").
B. Seller owns and desires to sell the Assets to Buyer
upon the terms and conditions set forth in this Agreement, and
Buyer desires to purchase the Assets upon the terms and conditions
set forth in this Agreement.
C. KLT joins in this Agreement to provide the
representations and warranties set forth in Sections 8.1 through
8.4 and guarantee the post-closing obligations undertaken by
Seller in Sections 2.4, 5.8 and 15.3.
AGREEMENT
In consideration of the mutual promises contained herein and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Seller and Buyer agree as
follows:
ARTICLE 1
PURCHASE AND SALE
1.1 PURCHASE AND SALE. Seller agrees to sell and convey to
Buyer, and Buyer agrees to purchase and receive from Seller, the
Assets defined below.
1.2 ASSETS. The Assets are all of Seller's right, title and
interest in and to the following real and personal property
interests located in Las Animas County, Colorado:
a. The lands described in EXHIBIT A-1, including all
surface interests and mineral interests (the "FEE INTERESTS"); the
oil and gas leases and all leasehold estates created thereby
(including working interests, overriding royalty interests,
royalty interests and all other interests therein, whether
described or not) described in EXHIBIT A-2 (the "LEASES"); the
term royalty interest described in Exhibit A-3 (the "TERM ROYALTY
INTEREST"); and all oil, gas, coalbed methane, and all other
hydrocarbons, whether liquid or gaseous, (the "HYDROCARBONS") in,
on or under or that may be produced from the lands covered by the
Fee
Interests, Leases and Term Royalty Interest (the "LANDS") after
the Effective Time, and all other minerals of whatever nature in,
on or under the Fee Interests, Leases and Lands.
b. The oil and gas wells located on the Fee Interests,
Leases and Lands, or lands pooled or unitized therewith which
include the oil and gas wells described in EXHIBIT B (the
"WELLS"), all injection and disposal wells on the Fee Interests,
Leases or Lands, and all personal property and equipment
associated with the Wells as of the Closing Date.
c. The rights, to the extent transferable, in and to
all existing and effective unitization and pooling agreements,
declarations, designations and orders, to the extent that they
relate to or affect any of the interests described in 1.2.a and
1.2.b or the post-Effective Time production of Hydrocarbons from
the Fee Interests, Leases and Lands.
d. The rights, to the extent transferable, in and to
Hydrocarbon sales, purchase, gathering, firm and interruptible
transportation and processing contracts, including (i) Firm
Transportation Service Agreement, designated Contract #33053000,
dated July 6, 1994 between Colorado Interstate Gas Company ("CIG")
and Meridian Oil Inc., as amended, and (ii) Firm Transportation
Service Agreement, designated Contract No. 33257000, dated May 1,
2000 between CIG and Seller ((i) and (ii) collectively referred to
as the "CIG CONTRACTS"); the agreements described on EXHIBIT C
(the "MATERIAL AGREEMENTS"); operating agreements, partnership
agreements, farmout agreements and all other contracts, agreements
and instruments appurtenant to or used in connection with the
ownership or operation of the Fee Interests, Leases and Lands.
e. All of the personal property, equipment, fixtures,
improvements, permits, licenses (including Federal Communication
Commission Radio Station License No. 200005R469137 issued May 11,
2000 and associated radio tower), approvals, servitudes, rights-of-
way, easements, surface use agreements, surface leases and other
surface rights (including, but not limited to, any wells, tanks,
injection facilities) to the extent that they are located on the
Assets or held by Seller in connection with the operation of the
Assets (specifically including, but not limited to, the WESTON
EASEMENT AND GATHERING LINE which is described on Exhibit A-4), as
of the Closing Date, and all contract rights related thereto, with
the exception of the Excluded Properties described in Section 1.3.
f. All gathering lines, compressors, dehydration,
metering and all other equipment or facilities related to the
gathering lines located on the Lands or used in connection with
the gathering, compression, dehydration or metering of
Hydrocarbons produced from the Lands, including, but not limited
to, such equipment and facilities located on the WESTON TRACT
described on Exhibit A-4.
g. All files, records, data and information relating
to the items described in Sections 1.2.a through 1.2.f maintained
by Seller (the "RECORDS"), including, without limitation, well,
lease and land files, abstracts, title opinions, all electronic
files, and seismic, geologic and other scientific data related to
the Fee Interests, Leases, Term Royalty Interest or Lands, but, as
to seismic, geologic or other scientific data, only to the extent
such data is
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not restricted from disclosure or transfer by confidentiality
agreements as of the Effective Time.
1.3 EXCLUDED PROPERTIES. All of Seller's right, title and
interest in the following (collectively, the "EXCLUDED
PROPERTIES") are excepted and excluded from this Agreement:
a. Seller's hedging, price risk management or similar
financial agreements, transactions or arrangements (the "HEDGING
CONTRACTS");
b. (i) all trade credits, gathering credits, accounts
receivable, notes receivable and other receivables attributable to
Seller's interest in the Assets with respect to any period of time
prior to the Effective Time, and (ii) all deposits, cash, checks
in process of collection, cash equivalents and funds attributable
to Seller's interest in the Assets with respect to any period of
time prior to the Effective Time;
c. all corporate, financial, tax and legal (other than
title) records of Seller, however, Buyer shall be entitled to
receive copies of any financial, tax or legal records which
directly relate to the Assets; PROVIDED, HOWEVER, that Buyer's
said entitlement shall not extend to any records whose disclosure
may expose Seller to any possible claim of breach of privilege or
confidentiality under any agreement or under federal or state
laws;
d. except as otherwise provided in this Agreement, all
claims and causes of action of Seller (i) arising from acts,
omissions or events, or damage to or destruction of property,
occurring prior to the Effective Time, or (ii) with respect to any
of the Excluded Properties;
e. with respect to all periods prior to the Effective
Time, and to the extent provided in Section 4.5 with respect to
periods on and after the Effective Time, all rights, titles,
claims and interests of Seller (i) under any policy or agreement
of insurance or indemnity, (ii) under any bond or (iii) to any
insurance or condemnation proceeds or awards;
f. except as provided in Section 2.3.d.i., all (i)
Hydrocarbons produced from or attributable to the Assets with
respect to all periods prior to the Effective Time, together with
all proceeds from or of such Hydrocarbons, and (ii) Hydrocarbons
which, at the Effective Time, are owned by Seller or to which
Seller has title and are in storage, or in pipelines;
g. Seller's share of any and all claims, as well as
Seller's claims, for refund of or loss carry forwards with respect
to (i) federal, state and local, sales and use, excise,
production, severance, gross receipts, payroll, withholding or
other taxes attributable to any period prior to the Effective
Time; (ii) ad valorem and property taxes measured by production
occurring prior to the Effective Time; and (iii) federal, state
and local income or franchise taxes, attributable to any period
prior to the Effective Time;
h. all amounts due or payable to Seller as adjustments
or refunds under any audit pertaining to periods prior to the
Effective Time;
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i. all amounts due or payable to Seller as adjustments
or refunds under any contracts or agreements respecting periods
prior to the Effective Time;
j. all amounts due or payable to Seller as adjustments
to insurance premiums with respect to any period prior to the
Effective Time;
k. all proceeds, benefits, income or revenues accruing
(and any security or other deposits made) with respect to (i) the
Assets prior to the Effective Time or (ii) any Excluded
Properties;
l. all vehicles such as trailers, automobiles,
tractors and trucks and personal property on such vehicles;
m. any logo, service mark, copyright, trade name or
trademark associated with Seller or any business of Seller;
n. all files, information and data expressly excluded
from the definition of "Records";
o. all supplies, equipment, pipe, tools, and all other
personal property located, as of the Closing Date, at the Apache
Canyon Yard located in the E 1/2 Section 35, T.33 S., R.67 W., 6th
P.M..;
p. Electric Service Agreement, WO#98-1490, with San
Isabell Electric Association, Inc.;
q. Line Extension Contract and Agreement for Permanent
Electric System, dated June 10, 1997, with San Isabell Electric
Association, Inc.;
r. Antenna site lease between Seller and Shenandoah
Energy Inc.;
s. DACCMaster System software license; and
t. Surface Use Agreement between Nancy Rosell and
Sally Hurtado, and Seller.
1.4 EFFECTIVE TIME. The purchase and sale of the Assets
shall be effective as of October 1, 2000, at 7:00 a.m. Mountain
Time (the "EFFECTIVE TIME").
ARTICLE 2
PURCHASE PRICE
2.1 PURCHASE PRICE. The Purchase Price for the Assets shall
be $52,900,000.00 (the "PURCHASE PRICE"). At Closing, Buyer shall
pay Seller the Purchase Price as adjusted as provided in Sections
2.2 and 2.3 below, by wire transfer of immediately available
funds. For purposes of this Agreement, the allocated value of
the Assets shall be as set forth in EXHIBIT B.
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2.2 DEPOSIT. Buyer will deposit, on or before October 13,
2000, $5,000,000 with Seller as a deposit (the "DEPOSIT"), to be
held by Seller and either (i) applied against the Purchase Price
(without interest) in the event the Closing is consummated, (ii)
returned to Buyer (without interest) if Seller refuses to close
after all conditions specified in Section 11.2 have been satisfied
or waived and Buyer certifies to Seller in writing that it is
ready, willing and able to perform under Section 13.3, or (iii)
retained by Seller if all conditions specified in Section 11.1
have been satisfied and Seller certifies to Buyer in writing that
Seller is ready, willing and able to perform under Section 13.3.
2.3 ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price shall
be adjusted as follows:
a. UPWARD ADJUSTMENTS TO THE PURCHASE PRICE. The
Purchase Price shall be adjusted upward by the amount of all
actual costs and expenses attributable to the Assets and incurred
with respect to an event or activity occurring subsequent to the
Effective Time and paid by Seller, including capital expenses,
lease rentals, lease maintenance costs, royalties, water disposal
charges, surface damages and/or rental expenses, Taxes (as that
term is defined in Article 10), drilling expenses, workover
expenses, geological, geophysical and other exploration
expenditures that are attributable to the maintenance and
operation of the Assets, but, as to overhead charges, limited to
those overhead charges incurred under the terms of the Contract
Operator Agreement between GeoMet Operating Company, Inc. and KLT
Gas Inc. dated December 19, 1999, effective May 1, 1999 (the
"PROPERTY EXPENSES"). The Purchase Price shall be adjusted upward
by the proceeds of production occurring before the Effective Time
and received by Buyer, net of royalties and taxes measured by
production, plus an amount equal to production from the Assets
that occurred before the Effective Time but, because such
production is in pipelines or in processing, had not been sold as
of the Effective Time, times the price for which production from
the Assets was sold immediately prior to the Effective Time. To
the extent that there are any pipeline imbalances, if the net of
such imbalances is an overdelivery imbalance (that is, at the
Effective Time, Seller has delivered more gas to the pipeline than
the pipeline has redelivered for Seller), the Purchase Price shall
be adjusted upward by the first-of-the month price of spot gas
delivered to pipelines for Colorado Interstate Gas Company (Rocky
Mountains) as reported in Inside F.E.R.C.'s GAS MARKET REPORT for
the month in which the Effective Time occurs times the net
overdelivery imbalance in MMbtus. In the event such publication
shall cease to be published, the parties shall select a comparable
publication.
b. DOWNWARD ADJUSTMENTS TO THE PURCHASE PRICE. The
Purchase Price shall be adjusted downward by the amount of all
Property Expenses that remain unpaid by Seller and that have been
paid by Buyer, that are incurred with respect to an event or
activity occurring prior to the Effective Time, and an amount
equal to the sum of all adjustments provided for in this Agreement
for Title Defects, Environmental Defects, and Casualty Losses (as
those terms are hereinafter defined). The Purchase Price shall be
adjusted downward by the proceeds of production occurring on or
after the Effective Time and received by Seller, net of royalties
and taxes measured by production. To the extent that there are
any pipeline imbalances, if the net of such imbalances is an
underdelivery imbalance (that is, at the Effective Time, Seller
has delivered less gas to the pipeline than the pipeline has
redelivered for Seller), the Purchase Price shall be adjusted
downward by the first-of-the-month price of
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spot gas delivered to pipelines for Colorado Interstate Gas
Company (Rocky Mountains) as reported in Inside F.E.R.C.'s GAS
MARKET REPORT for the month in which the Effective Time occurs
times the net underdelivery imbalance in MMbtus. In the event
such publication shall cease to be published, the parties shall
select a comparable publication.
c. PRELIMINARY SETTLEMENT STATEMENT. The Purchase
Price shall be adjusted at Closing pursuant to the "PRELIMINARY
SETTLEMENT STATEMENT" prepared by Seller and submitted to Buyer
three Business Days prior to the Closing Date for Seller's comment
and review. "BUSINESS DAY" means a day on which commercial
banks located in Denver, Colorado are open for business. The
Preliminary Settlement Statement shall set forth all Purchase
Price adjustments and associated calculations but only to the
extent the adjustments provided for in Sections 2.3.a. and 2.3.b.
are known at the time the Preliminary Settlement Statement is
prepared, with the resulting amount being called THE "CLOSING
AMOUNT."
d. FINAL SETTLEMENT STATEMENT. After Closing, the
Purchase Price shall be adjusted pursuant to a "FINAL SETTLEMENT
STATEMENT" prepared by Seller and delivered by Seller to Buyer on
or before 120 days following the Closing Date, setting forth each
adjustment or payment that was not finally determined as of the
Closing and showing the calculation of such adjustment and the
resulting Purchase Price. On or before 15 Business Days after
Buyer's receipt of Seller's proposed Final Settlement Statement,
Buyer shall deliver to Seller a "written report" containing
Buyer's proposed changes to the Final Settlement Statement. The
parties shall agree with respect to the changes proposed by Buyer
no later than 15 Business Days after receipt of Buyer's "written
report," and the date on which the Final Purchase Price is
established shall be called the "FINAL SETTLEMENT DATE." Any
payments due from one party to the other as a result of the Final
Settlement Statement shall be made within five days of the Final
Settlement Date.
i. In addition to the foregoing, the Final
Settlement Statement shall provide for the following: (x) the
Gross Revenues from sales of natural gas produced from the Assets
during the period from 7:00 a.m. on July 1, 2000 through 6:59 a.m.
on October 1, 2000 shall be reduced by all royalty payments and
other lease burdens in existence on July 1, 2000, and appearing of
record in Las Animas County, Colorado, or in the Records made
available to Buyer prior to the date of this Agreement, Taxes,
gathering charges, lease operating expenses, and capital
expenditures related to such production. "GROSS REVENUES" are the
actual proceeds from natural gas production from the Assets during
such period. (y) If the net amount from (x) exceeds $600,000, the
Purchase Price will be adjusted downward by the amount of such
excess.
2.4 GAS PRICE ADJUSTMENT TO PURCHASE PRICE.
a. GENERAL. In addition to the Purchase Price
adjustments described in Section 2.3, an additional adjustment to
the Purchase Price, in accordance with this Section 2.4, shall be
made as of January 1, 2003, based on the Benchmark Price
(hereinafter defined), as determined in accordance with this
Section 2.4. "BENCHMARK PRICE" shall mean the "fixed" natural gas
price, expressed in MMbtus, quoted by a Designated Market-Maker
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(hereinafter defined), acting in a commercially reasonable manner,
for a fixed/floating forward swap for a notional quantity of
10,000 MMbtu per day with monthly settlements and having a term of
5 years that such Designated Market-Maker would be willing to
enter into on January 1, 2003 with a creditworthy counterparty and
with a floating price based upon Inside F.E.R.C.'S GAS MARKET
REPORT for the first of the month delivered to pipeline index for
"Colorado Interstate Gas Company -- Rocky Mountains" (the
"RELEVANT INDEX"). If the Relevant Index no longer exists on
January 1, 2003, then such Index shall be replaced by an index
that, in the commercially reasonable opinion of the Designated
Market-Maker, most accurately reflects the fair market value of
natural gas delivered in the Rocky Mountain region during such 5-
year period. "DESIGNATED MARKET-MAKER" shall mean one of the
following entities (or the affiliate of such an entity, whose
primary business is in the making of markets for swaps and other
derivatives or like natural gas price risk management products):
Bank One, NA; J. Aron (Goldman Sachs); Enron Corporation; Bankers
Trust; and Bank of America.
b. DETERMINATION OF BENCHMARK PRICE. On the last
Business Day of 2002, between 2:15 p.m. and 3:00 p.m. Central
Standard Time, Buyer and Seller shall each obtain a written quote
(which shall indicate the time such quote was given on the face of
such writing) from a Designated Market-Maker that will serve as
the basis for the Benchmark Price. By not later than the end of
such Business Day, each party shall have transmitted a copy of the
written quote to the other party. The Benchmark Price shall then
be determined by taking the arithmetical average of the Buyer's
quote and the Seller's quote. If either party fails timely to
obtain such written quote, and/or to timely provide it to the
other party, then the Benchmark Price shall be determined solely
on the basis of the quote obtained by the party who timely (i)
obtained such quote and (ii) provided it to the other party. If
both parties fail to timely (i) obtain such quote and (ii) provide
such quote to the other party, then Buyer and Seller shall
endeavor to obtain such quote and provide such quote to the other
party on the first Business Day of 2003, until such quote has been
timely obtained and provided to the other party by at least one of
the parties.
c. AMOUNT OF GAS PRICE ADJUSTMENT TO PURCHASE PRICE.
The following chart sets forth (i) the amount of any post-closing
purchase price adjustment payable under this Section 2.4, (ii) the
party to whom such payment is to be made and (iii) the relevant
Benchmark Price to be used in determining the amount of such
payment, and the party to whom such payment shall be due:
BENCHMARK PRICE PARTY RECEIVING AMOUNT OF
(PER MMBTU) PAYMENT PAYMENT
(less than or Buyer $5 million
equal to) $2.56
(greater than) Seller $1 million
$2.56 but (equal
to or less than)
$2.66
(greater than) Seller $2 million
$2.66 but (equal
to or less than)
$2.77
(greater than) Seller $3 Million
$2.77 but (equal
to or less than)
$2.87
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BENCHMARK PRICE PARTY RECEIVING AMOUNT OF
(PER MMBTU) PAYMENT PAYMENT
(greater than) Seller $4 million
$2.87 but (less
than) $2.97
(equal to or Seller $5 million
greater than)
$2.97 but (less
than) $3.07
$3.07 or higher Seller $6 million
d. PAYMENT OF PURCHASE PRICE ADJUSTMENT. The purchase
price adjustment calculated in accordance with Section 2.4.c
above, shall be paid to the appropriate party, as determined in
accordance with Section 2.4.c, in immediately available funds by
not later than January 31, 2003. Past due payments shall bear
interest until paid at the lesser of (i) the Reference Rate
(defined below) or (ii) the highest rate permitted by applicable
law. "REFERENCE RATE" shall mean the rate announced by Bank One,
NA, as the rate it charges to its most favored commercial
customers. It is specifically understood and agreed that all
payments under this Section 2.4 shall be determined solely on the
basis of the Benchmark Price, without reference to any other
factors, including but not limited to any quantities of
Hydrocarbons that shall have been produced, or that may be
producible from, the Assets.
e. KLT GUARANTY AGREEMENT. KLT agrees to guarantee
any and all post-closing purchase price adjustments in favor of
Buyer payable under Section 2.4, and execute and deliver to Buyer
a Guaranty Agreement substantially in the form of Exhibit E.
2.5 ALLOCATED VALUES. Seller and Buyer agree to allocate
the Purchase Price among the Assets as set forth in EXHIBIT B
("ALLOCATED VALUES"). Seller and Buyer agree that the Allocated
Values have been made in accordance with the fair market value of
the Assets and shall apply for the purpose of Section 1060 of the
Internal Revenue Code of 1986 (as amended and together with any
regulations promulgated thereunder, the "CODE"). Seller and Buyer
agree (and each agrees to cause its affiliates) to report the
federal, state and local income and other tax consequences of the
transaction contemplated herein, and in particular to report the
information required under Section 1060(b) of the Code in a manner
consistent with the Allocated Values. Seller and Buyer further
agree (and each agrees to cause its affiliates) to not take any
tax position inconsistent with the Allocated Values in connection
with the examination of tax returns, refund claims or litigation,
investigations or other proceedings involving tax returns.
ARTICLE 3
DUE DILIGENCE REVIEW
3.1 ACCESS TO RECORDS. Prior to Closing and subject to
Section 9.7, Seller will disclose and make available to Buyer and
its representatives at Seller's office and at the offices of
Seller's representatives and during Seller's normal business
hours, all Records in Seller's possession or control relating to
the Assets for the purpose of permitting Buyer to perform its due
diligence review including, but not limited to, all well, lease,
unit and title files and title opinions. Seller agrees to
cooperate with Buyer in Buyer's efforts to obtain, at Buyer's sole
expense, such additional
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information relating to the Assets as Buyer may reasonably
request. Seller is not required to provide records or data which
Seller is prevented by contractual obligations with third parties
from disclosing.
3.2 NO REPRESENTATION OR WARRANTY. Except as to the
Material Agreements, Seller makes no representation or warranty as
to the accuracy or completeness of the Records. Buyer agrees that
any conclusions drawn from the Records shall be the result of its
own independent review and judgment and shall not be based on
interpretations or analysis in Seller's files.
ARTICLE 4
TITLE MATTERS
4.1 DEFENSIBLE TITLE. The term "DEFENSIBLE TITLE" means
such title of Seller in and to the Assets, as reflected in the
real property records of Las Animas County as of the Closing Date,
that, subject to and except for the Permitted Encumbrances: (i)
entitles Seller to receive not less than the net revenue interest
described on EXHIBIT B ("NRI"); (ii) obligates Seller to bear
costs and expenses relating to the Assets in an amount not greater
than the working interest described on EXHIBIT B ("WI"); and (iii)
is free and clear of material liens, taxes, encumbrances,
mortgages, claims and production payments and any defects that
would create a material impairment of use and enjoyment of or loss
of interest in the affected Asset.
4.2 PERMITTED ENCUMBRANCES. The term "PERMITTED
ENCUMBRANCES" shall mean:
a. lessors' royalties reflected in Seller's records.
b. all rights to consent by, required notices to,
filings with, or other actions by federal, state and local
governmental entities in connection with the operation of the
Assets if the same are customarily obtained subsequent to such
transfer of operations;
c. the provisions of all Material Agreements set out
in Exhibit C;
d. materialmen's, mechanics', repairmen's, employees',
contractors', operators' or other similar liens or charges arising
in the ordinary course of business incidental to construction,
maintenance or operation of the Assets (i) if they have not been
filed pursuant to law and the time for filing them has expired,
(ii) if filed, they have not yet become due and payable or payment
is being withheld as provided by law, or (iii) if their validity
is being contested in good faith by appropriate action;
e. rights reserved to or vested in any municipality or
governmental, statutory or public authority to control or regulate
any of the Assets; and all applicable laws, rules, regulations and
orders of general applicability in the area;
f. any (i) easements, rights-of-way, servitudes,
permits, surface leases and other rights in respect of surface
operations, pipelines, grazing, hunting, fishing, logging, canals,
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ditches, reservoirs, or the like, or (ii) easements for streets,
alleys, highways, pipelines, telephone lines, power lines,
railways and other similar rights-of-way, on, over, or in respect
of property owned or leased by Seller or over which Seller owns
rights-of-way, easements, permits, or licenses that are of record
in Las Animas County, Colorado or that are disclosed in Records
made available to Buyer prior to the date of this Agreement, to
the extent such matters, individually or in the aggregate, do not
interfere materially with oil and gas operations on the Assets;
g. all defects and irregularities affecting title to
the Assets which individually or in the aggregate do not operate
to reduce the net revenue interest, nor increase the working
interest (unless Seller's net revenue interest is increased
proportionately) of Seller in the Assets as reflected in Exhibit
"B" hereto or otherwise interfere materially with the operation,
value or use of the Assets; and
h. any encumbrance, title defect or matter (whether or
not constituting a Title Defect) waived or deemed waived by Buyer
pursuant to Section 4.4.a.
4.3 TITLE DEFECT. The term "TITLE DEFECT" means:
a. Any encumbrance, encroachment, irregularity,
defect in or objection to real property title, excluding Permitted
Encumbrances, that alone or in combination with other defects
renders title to an Asset less than Defensible Title;
b. Surface use restrictions which burden the Fee
Interests or contained in any Lease that would be unacceptable to
a prudent oil and gas operator, undertaking a coalbed methane or
any other oil and gas development project;
c. Rights of third parties (including, but not limited
to, rights of the owners of the surface estate or mineral estate
other than oil and gas in the Lands) which could interfere with
operations for the exploration, development and production of
Hydrocarbons within a time that would be acceptable to a prudent
operator;
d. Sales contracts or calls on production or options
to purchase production or similar rights with respect to the
Assets or the production therefrom with the exception of Material
Agreements; and
e. Gathering, compression, treating or transportation
agreements with respect to the Assets or the production therefrom
with the exception of Material Agreements.
4.4 ADJUSTMENTS FOR TITLE DEFECTS.
a. NOTICE OF TITLE DEFECTS. Buyer shall deliver to
Seller a written "NOTICE OF TITLE DEFECTS" on or before October
16, 2000, 5:00 p.m. Mountain Time. The Notice of Title Defects
shall (i) describe the Title Defect, (ii) describe the basis of
the Title Defect along with supporting documents reasonably
necessary for Seller to verify the existence of such
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Title Defect and (iii) describe Buyer's good faith estimate of the
reduction in the Assets' Allocated Value caused by the Title
Defect (the "DEFECT VALUE") and associated calculations and
documentation. Other than matters which are violative of Seller's
special warranty set out in EXHIBIT H, any matters not described
in a written Notice of Title Defect as provided above shall
conclusively be deemed to have been waived and accepted by Buyer,
and shall be deemed Permitted Encumbrances hereunder.
b. DEFECT ADJUSTMENTS AND THRESHOLDS. The parties
shall proceed as follows:
i. Seller shall have the option of attempting to
cure such Title Defects to the satisfaction of Buyer on or before
the Closing Date, which option shall be communicated to Buyer no
later than 5:00 p.m. Mountain Time on October 18, 2000;
ii. Seller may contest the Defect Value by so
notifying Buyer. If Buyer and Seller are unable to agree on the
Defect Value (agreement shall result in the "ACTUAL DEFECT
VALUE"), then Seller or Buyer may submit such Defect Value dispute
to a mutually agreeable, duly licensed, petroleum engineering,
geological, or accounting firm, in accordance with the expertise
required to determine the Actual Defect Value, which firm shall
determine the Actual Defect Value and such determination shall be
final and binding upon Seller and Buyer. The fees charged by said
firm for making a determination under this Section 4.4.b.ii.
shall be paid one-half by Buyer and one-half by Seller.
iii. If Seller does not elect to cure or is
unable to cure such Title Defects to the satisfaction of Buyer on
or before the Closing Date or such later date as is mutually
agreed to by the parties, Buyer shall have the option to either
accept assignment of the Asset affected by such Title Defect, and
the Purchase Price shall be adjusted downward by the Defect Value
or Actual Defect Value, as applicable, or to exclude such Asset
from this Agreement (collectively, the "EXCLUDED ASSETS"). If
Buyer elects to exclude such Assets, the Purchase Price shall be
adjusted downward by an amount equal to the Allocated Value of the
Excluded Assets;
iv. There shall be no reduction to the Purchase
Price under Section 4.4.b.iii unless Seller's share of a proposed
reduction as to any single incident exceeds $50,000.00; this shall
be determined on an incident by incident basis. In addition, if
Seller's share of the proposed reduction under Section 4.4.b.iii
as to any single incident exceeds $50,000.00, there shall be no
reduction to the Purchase Price until such time as the total of
these excess amounts (over $50,000.00) exceeds $500,000.00 (the
"TITLE THRESHOLD AMOUNT") but, in such event, the Purchase Price
reduction shall be inclusive of the Title Threshold Amount. For
the purposes of application of the foregoing thresholds, "single
incident" shall be applicable on a well by well basis.
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4.5 CASUALTY LOSS.
a. DEPLETION AND DEPRECIATION OF PERSONAL PROPERTY.
Buyer shall assume all risk of loss with respect to, and any
change in the condition of, the Assets from the Effective Time
until Closing for production of oil, gas and/or other hydrocarbons
through depletion (including the watering-out of any well,
collapsed casing or sand infiltration of any well) and the
depreciation of personal property due to ordinary wear and tear.
b. TERMINATION. If after the Effective Time and prior
to the Closing any part of the Assets shall be destroyed by fire
or other casualty or if any part of the Assets shall be taken in
condemnation or under the right of eminent domain or if
proceedings for such purposes shall be pending or threatened,
Buyer has the option to terminate this Agreement in its entirety.
Upon Buyer's termination of this Agreement under this Section
4.5.b., Buyer shall be entitled to a refund of the Deposit. If
not terminated by Buyer, this Agreement shall remain in full force
and effect notwithstanding any such destruction, taking or
proceeding or the threat thereof.
c. PROCEEDS AND AWARDS. In the event of any loss
described in Section 4.5.b., Seller shall either (i) at the
Closing pay to Buyer all sums paid to Seller by reason of such
destruction less any costs and expenses incurred by Seller in
collecting same, or (ii) commit, use, or apply such sums (less any
costs and expenses incurred by Seller in collecting same) to
repair, restore or replace such damaged or taken Assets. To the
extent the insurance proceeds, condemnation awards or other
payments are not committed, used or applied by Seller prior to the
Closing Date to repair, restore or replace such damaged or taken
Assets, Seller shall at the Closing pay to Buyer all sums paid to
Seller by reason of such destruction or taking, less any costs and
expenses incurred by Seller in collecting same. In addition and
to the extent such proceeds, awards or payments have not been
committed, used or applied by Seller in repair, restoration or
replacement as aforesaid, Seller shall assign, transfer and set
over unto Buyer, without recourse against Seller, all of the
right, title and interest of Seller in and to any claims against
third parties with respect to the event or circumstance causing
such loss and any unpaid insurance proceeds, condemnation awards
or other payments arising out of such destruction or taking, less
any costs and expenses incurred by Seller in collecting same. Any
such funds which have been committed by Seller for repair,
restoration or replacement as aforesaid shall be paid by Seller
for such purposes or, at Seller's option, delivered to Buyer upon
Seller's receipt from Buyer of adequate assurance and indemnity
from Buyer that Seller shall incur no liability or expense as a
result of such commitment. Notwithstanding anything to the
contrary in this Section 4.5, Seller shall not be obligated to
carry or maintain, and shall have no obligation or liability to
Buyer for its failure to carry or maintain, any insurance coverage
with respect to any of the Assets except as provided in Sections
9.1(iv) and 9.5.
4.6 DISPUTE RESOLUTION. The parties agree to resolve
disputes concerning the following matters pursuant to this Section
4.6: (i) the existence of a Title Defect, and (ii) the adequacy
of Title Defect curative materials submitted pursuant to Section
4.4.b (collectively, the "DISPUTED TITLE MATTERS"). The parties
agree to attempt to initially resolve all disputes through good-
faith
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negotiations. If the parties cannot resolve such disputes on or
before 20 Business Days after Closing, the Disputed Title Matters
shall be submitted to binding arbitration in accordance with the
procedures set forth in Section 15.4.d.
ARTICLE 5
ENVIRONMENTAL MATTERS
5.1 DEFINITIONS. For the purposes of the Agreement, the
following terms shall have the following meanings:
"ENVIRONMENTAL DEFECT" means a condition in, on or under
the Assets (including, without limitation, air, land, soil,
surface and subsurface strata, surface water, ground water, or
sediments) that causes an Asset to be in material violation of an
Environmental Law or a condition that can reasonably be expected
to give rise to costs or liability under applicable Environmental
Laws. NORM contaminated pipe, tubing and wellheads shall not be an
Environmental Defect. Notwithstanding any other provision of this
Agreement, any matter or condition related to Pit #3414 or to a
vent stack or wellbore listed on Exhibit B but which did not
commercially produce Hydrocarbons in 2000 prior to the Effective
Time, shall not be considered an Environmental Defect. The
foregoing exception does not apply to a vent stack or wellbore
that is not listed on Exhibit B.
"ENVIRONMENTAL LAW" means any statute, rule, regulation,
code or order, issued by any federal, state, or local governmental
entity in effect on or before the Effective Time (collectively,
"Laws") relating to the protection of the environment or the
release or disposal of waste materials.
"REMEDIATION" means actions taken to correct an
Environmental Defect and "REMEDIATION COSTS" means the actual, or
good faith estimates of the costs to conduct such remediation.
5.2 SPILLS AND NORM. Buyer acknowledges that in the past
there may have been spills of wastes, crude oil, produced water,
or other materials (including, without limitation, any toxic,
hazardous or extremely hazardous substances) onto the Lands. In
addition, some production equipment may contain asbestos and/or
Naturally Occurring Radioactive Material (hereinafter referred to
as "NORM"). In this regard Buyer expressly understands that NORM
may affix or attach itself to the inside of wells, materials and
equipment as scale or in other forms, that said wells, materials
and equipment located on the Lands or included in the Assets
described herein may contain NORM and that NORM-containing
material may have been buried or otherwise disposed of on the
Lands. Buyer also expressly understands that special procedures
may be required for the remediation, removal, transportation and
disposal of asbestos or NORM from the Assets and Lands where such
material may be found and that Buyer assumes all liability for or
in connection with the assessment, containment, removal,
remediation, transportation and disposal of any such materials, in
accordance with all past, present or future applicable laws,
rules, regulations and other requirements of any governmental or
judicial entities having jurisdiction and also with the terms and
conditions of all applicable leases and other contracts.
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5.3 ENVIRONMENTAL ASSESSMENT. Prior to Closing, Buyer may
conduct an on-site inspection, environmental assessment and
compliance audit of the Assets (an "ENVIRONMENTAL ASSESSMENT").
Seller shall provide Buyer with access to the Assets and to all
information in Seller's possession or control pertaining to the
environmental condition of the Assets, including, but not limited
to, status or any environmental reports, permits, records and
assessments in Seller's possession or control, and shall make
available to Buyer all past or present personnel who would
reasonably be expected to have knowledge or information regarding
the environmental status or condition of the Assets. Buyer shall
provide Seller prior written notice of any environmental
inspections and tests, including sampling activities, and Buyer
shall give Seller the opportunity to participate in all such
inspections and tests. Buyer shall provide Seller, at no cost to
Seller, all reports of environmental inspections and tests,
provided that all such reports shall be deemed to be confidential
between the parties and subject to Section 9.7. Buyer agrees to
release, indemnify, defend, and hold harmless Seller against all
Losses (as defined in Section 15.3) arising from or related to the
activities of Buyer, its employees, agents, contractors and other
representatives in connection with Buyer's Environmental
Assessment regardless of the negligence or strict liability of
Seller.
5.4 ADJUSTMENTS FOR ENVIRONMENTAL DEFECTS.
a. NOTICE OF ENVIRONMENTAL DEFECTS. Buyer shall
provide Seller with written notice of any Environmental Defect
which Buyer's Environmental Assessment reveals and will provide
evidence thereof. Such notice and evidence shall be given on or
before 5:00 p.m., Mountain Time, on October 16, 2000.
b. DEFECT ADJUSTMENTS. The parties shall proceed as
follows:
i. Upon receipt of a notice of Environmental
Defect, Seller may, at its sole election, either: (x) agree with
Buyer on an adjustment to the Purchase Price, which adjustment
shall reflect the cost to remediate such Environmental Defect; or
(y) in the event of the failure of the parties to come to
agreement under (x), remove the affected Asset(s) from the Assets
being conveyed and adjust the Purchase Price accordingly. In no
event will Seller have any obligation to remediate any
Environmental Defect unless Seller expressly agrees in writing to
do so.
ii. There shall be no reduction to the Purchase
Price under Section 5.4.b.i unless Seller's share of a proposed
reduction as to any single incident exceeds $50,000.00; this shall
be determined on an incident by incident basis. In addition, if
Seller's share of the proposed reduction under Section 5.4.b.i as
to any single incident exceeds $50,000.00, there shall be no
reduction to the Purchase Price until such time as the total of
these excess amounts (over $50,000.00) exceeds $500,000.00 (the
"ENVIRONMENTAL THRESHOLD AMOUNT") but, in such event, the Purchase
Price reduction shall be inclusive of the Environmental Threshold
Amount. For the purposes of application of the foregoing
thresholds, "single incident" shall be applicable on a well by
well basis.
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iii. If Seller and Buyer agree to an adjustment of
the Purchase Price, said adjustment shall be made only for the net
present value of the most cost effective means to achieve the
remediation required by applicable federal, state or local law or
other governmental or judicial directive and not for any other
cost. In addition, if Seller and Buyer agree to an adjustment of
the Purchase Price, Seller's indemnity in Section 5.8 shall not
apply to the Assets for which an adjustment is made and Buyer
agrees to accept all responsibility and liability for and
indemnify Seller against the then-existing and future
environmental condition of the Lands and Assets, including but not
limited to, all existing and prospective claims, causes of action,
fines, losses, costs and expenses, including, but not limited to,
costs to cleanup or remediate in accordance with and to the extent
required by applicable law or other directive. In the event
Seller and Buyer cannot agree on the cost to remediate any
Environmental Defect hereunder, the same shall be determined by a
mutually acceptable environmental engineering consulting firm.
5.5 "AS IS, WHERE IS" PURCHASE. Subject to Sections 5.4 and
5.8, Buyer shall acquire the Assets (including Assets for which a
notice was given under Section 5.4 above) in an "AS IS, WHERE IS"
condition and shall assume all risks that the Assets may contain
waste materials (whether toxic, hazardous, extremely hazardous or
otherwise) or other adverse physical conditions, including, but
not limited to, the presence of unknown abandoned oil and gas
wells, water wells, sumps, pits, pipelines or other waste or spill
sites which may not have been revealed by Buyer's investigation.
On and after the Effective Time, all responsibility and liability
related to all such conditions, whether known or unknown, fixed or
contingent, will be transferred from Seller to Buyer, except as
provided in Section 5.8.
5.6 DISPOSAL OF MATERIALS, SUBSTANCES AND WASTES. Buyer
shall properly handle, remove, transport and dispose of any
material, substance or waste (whether toxic, hazardous, extremely
hazardous or otherwise) from the Assets or Lands (including, but
not limited to, produced water, drilling fluids and other
associated wastes), whether present before or after the Effective
Time, in accordance with applicable local, state and federal laws
and regulations. To the extent that the Lands are not sold in fee
to Buyer, Buyer shall keep records of the types, amounts and
location of materials, substances and wastes which are
transported, handled, discharged, released or disposed onsite and
offsite. When and if any Lease is terminated, Buyer shall take
whatever additional testing, assessment, closure, reporting or
remedial action with respect to the Assets or Lands as is
necessary to meet any local, state or federal requirements
directed at protecting human health or the environment in effect
at that time.
5.7 BUYER'S INDEMNITY.
a. Subject to Section 5.8, Buyer shall indemnify, hold
harmless, release and defend Seller from and against all damages,
losses, claims, demands, causes of action, judgments and other
costs (including but not limited to any civil fines, penalties,
costs of assessment, clean-up, removal and remediation of
pollution or contamination, and expenses for the modification,
repair or replacement of facilities on the Lands) brought by any
and all persons and any agency or other body of federal, state or
local government, on account of any
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personal injury, illness or death, any damage to, destruction or
loss of property, and any contamination or pollution of natural
resources (including soil, air, surface water or groundwater) to
the extent any of the foregoing directly or indirectly is caused
by or otherwise involves any environmental condition of the Assets
or Lands, whether created or existing before, on or after the
Effective Time, including, but not limited to, the presence,
disposal or release of any material (whether hazardous, extremely
hazardous, toxic or otherwise) of any kind in, on or under the
Assets or the Lands.
b. Subject to Section 5.8, Buyer's indemnification
obligations shall extend to and include, but not be limited to (i)
the negligence or other fault of Seller, Buyer and third parties,
whether such negligence is active or passive, gross, joint, sole
or concurrent, (ii) Seller's or Buyer's strict liability, and
(iii) Seller's or Buyer's liabilities or obligations under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. Sections 9601 ET SEQ.), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section
6901 ET SEQ.), the Clean Water Act (33 U.S.C. Sections 466 ET
SEQ.), the Safe Drinking Water Act (14 U.S.C. Sections 1401-1450),
the Hazardous Materials Transportation Act (49 U.S.C. Sections
1801 ET SEQ.), the Toxic Substances Control Act (15 U.S.C.
Sections 2601-2629), the Clean Air Act (42 U.S.C. Section 7401 ET
SEQ.) as amended, the Clean Air Act Amendments of 1990 and all
state and local laws and any replacement or successor legislation
or regulation thereto. This indemnification shall be in addition
to any other indemnity provisions contained in this Agreement, and
it is expressly understood and agreed that any terms of this
article shall control over any conflicting or contradicting terms
or provisions contained in this Agreement.
5.8 SELLER'S INDEMNITY.
a. From the Closing Date through December 31, 2001,
Seller shall indemnify, hold harmless, release and defend Buyer
from and against all damages, losses, claims, demands, causes of
action, judgments and other costs (including but not limited to
any civil fines, penalties, costs of assessment, clean-up, removal
and remediation of pollution or contamination, and expenses for
the modification, repair or replacement of facilities on the
Lands) brought by any and all persons and any agency or other body
of federal, state or local government, on account of any personal
injury, illness or death, any damage to, destruction or loss of
property, and any contamination or pollution of natural resources
(including soil, air, surface water or groundwater) to the extent
any of the foregoing directly or indirectly is caused by or
otherwise involves an Environmental Defect which was created or
was in existence prior to the Effective Time and which constitutes
a violation of applicable Environmental Laws in effect as of the
Effective Time, including, but not limited to, the presence,
disposal or release of any material (whether hazardous, extremely
hazardous, toxic or otherwise) of any kind in, on or under the
Assets or the Lands. In addition, and without limiting the
foregoing, Seller's indemnity under this Section 5.8 shall include
any Environmental Defects discovered by Buyer on or before
December 31, 2001, provided Buyer shall provide Seller written
notice of any such Environmental Defect on or before 5:00 p.m.,
Mountain Time, on December 31, 2001.
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b. Seller's indemnification obligations shall extend
to and include, but not be limited to (i) the negligence or other
fault of Seller and third parties (other than Buyer), whether such
negligence is active or passive, gross, joint, sole or concurrent,
(ii) Seller's strict liability, and (iii) Seller's liabilities or
obligations under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C.
Sections 9601 ET SEQ.), the Resource Conservation and Recovery Act
of 1976 (42 U.S.C. Section 6901 ET SEQ.), the Clean Water Act (33
U.S.C. Sections 466 ET SEQ.), the Safe Drinking Water Act (14
U.S.C. Sections 1401-1450), the Hazardous Materials Transportation
Act (49 U.S.C. Sections 1801 ET SEQ.), the Toxic Substances
Control Act (15 U.S.C. Sections 2601-2629), the Clean Air Act (42
U.S.C. Section 7401 ET SEQ.) as amended, the Clean Air Act
Amendments of 1990 and all state and local laws, as in effect as
of the date of this Agreement. This indemnification shall be in
addition to any other indemnity provisions contained in this
Agreement, and it is expressly understood and agreed that any
terms of this article shall control over any conflicting or
contradicting terms or provisions contained in this Agreement.
c. Seller's indemnification shall not extend to
matters or conditions (i) for which an adjustment of the Purchase
Price was made pursuant to Section 5.4.b.i, or (ii) which were
disclosed to or known by Buyer on or before Buyer's execution of
this Agreement
d. There shall be no indemnification of Buyer by
Seller under Section 5.8 unless Buyer's share of any Loss (as
defined in Section 15.3) as to any single incident exceeds
$100,000.00; this shall be determined on an incident by incident
basis. In addition, if Buyer's share of any Loss under Section
5.8 as to any single incident exceeds $100,000.00, there shall be
no reduction to the Purchase Price until such time as the total of
these excess amounts (over $100,000.00) exceeds $1,000,000.00 (the
"INDEMNITY THRESHOLD AMOUNT") but, in such event, Seller's
indemnity shall be inclusive of the Indemnity Threshold Amount.
For the purposes of application of the foregoing thresholds,
"single incident" shall be applicable on a well by well basis.
5.9 DISPUTE RESOLUTION. The parties agree to attempt to
resolve disputes concerning Environmental Defects through good-
faith negotiations. If the parties cannot resolve such disputes
on or before 30 Business Days after Closing or, in the event that
notice of an Environmental Defect is given by Buyer to Seller
after Closing, 30 Business Days after Seller's receipt of such
notice, such disputes shall be submitted to binding arbitration in
accordance with the procedures set forth in Section 15.4.d.
5.10 ENVIRONMENTAL PERMITS. Notwithstanding any other
provision of this Agreement, Buyer and Seller agree as follows:
a. There are various permits and licenses required by
governmental agencies in connection with the operation of the
Assets.
b. With respect to all such licenses, permits and
similar items, the parties agree that
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i. those that can be assigned or transferred
without governmental approval will be so assigned or transferred
at Closing;
ii. those that can be assigned or transferred, but
only with governmental approval, will be requested to be assigned
or transferred at or shortly after Closing;
iii. as to those that cannot be assigned or
transferred, Buyer will commence its application for such
licenses, permits and similar items at or before Closing and
Seller will cooperate fully with Buyer in attempting to acquire
such items; and
iv. the lack of a necessary permit, license, or
similar item will not constitute an unfilled closing condition of
either party and will not constitute a breach of either party's
representations or warranties.
ARTICLE 6
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller makes the following representations and warranties:
6.1 ORGANIZATION AND STANDING. Seller is a limited
liability company duly organized and validly existing pursuant to
the laws of the State of Delaware, and is duly qualified to carry
on its business in the State of Colorado.
6.2 POWER. Seller has all requisite power and authority to
carry on its business as presently conducted and to enter into
this Agreement and convey the Assets. The execution and delivery
of this Agreement, consummation of the transactions contemplated
hereby, and the fulfillment of and compliance with the terms and
conditions hereof will not violate, or be in conflict with, any
material provision of the governing documents of Seller or any
material provision of any agreement or instrument to which Seller
is a party or by which Seller is bound, or any judgment, decree,
order, statute, rule or regulation applicable to Seller.
6.3 AUTHORIZATION AND ENFORCEABILITY. The execution,
delivery and performance of this Agreement and the transactions
contemplated hereby have been duly and validly authorized by all
requisite action on Seller's part. This Agreement constitutes
Seller's legal, valid and binding obligation, enforceable in
accordance with its terms, subject, however, to the effects of
bankruptcy, insolvency, reorganization, moratorium and similar
laws for the protection of creditors, as well as to general
principles of equity, regardless whether such enforceability is
considered in a proceeding in equity or at law.
6.4 LIABILITY FOR BROKERS' FEES. Seller has not incurred
any liability, contingent or otherwise, for brokers' or finders'
fees relating to the transactions contemplated by this Agreement
for which Buyer shall have any responsibility whatsoever.
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6.5 NO BANKRUPTCY. There are no bankruptcy proceedings
pending, being contemplated by, or to Seller's knowledge, based
upon reasonable inquiry and investigation, threatened against
Seller.
6.6 LITIGATION. Except as set forth in EXHIBIT D, Seller
has not received written notice of any pending proceeding, "Notice
of Violation," action, suit, claim or investigation before any
federal, state or other governmental court, agency or other
instrumentality involving the ownership, operation or
environmental condition of the Assets. Seller shall retain all
liability with respect to all litigation or claims listed on
EXHIBIT D and identified as "Retained Litigation." Except as set
forth in Exhibit D, there is no action, suit, proceeding, claim or
investigation by any person, entity, administrative agency or
governmental body pending or, to Seller's knowledge, threatened,
against Seller before any governmental authority that impedes or
is likely to impede Seller's ability to consummate the
transactions contemplated by this Agreement and to assume the
liabilities to be assumed by Seller under this Agreement.
6.7 TAXES. All taxes and assessments pertaining to the
Assets based on or measured by the ownership of property for all
taxable periods prior to the taxable period in which this
Agreement is executed have been properly paid. All income taxes
and obligations relating thereto that could result in a lien or
other claim against any of the Assets have been properly paid,
unless contested in good-faith by appropriate proceeding.
6.8 TAX PARTNERSHIPS. The Assets are not subject to any tax
partnership agreements requiring a partnership income tax return
to be filed under Subchapter K of Chapter 1 of Subtitle A of the
Code.
6.9 AGREEMENTS. All of the Material Agreements (excluding
Leases) pertaining to the Assets are listed on EXHIBIT C.
6.10 PREPAYMENTS. Except as set forth on EXHIBIT C, there
are no agreements involving any prepayments for production or any
agreements containing a "take or pay" clause or other provision
requiring the delivery of oil, gas or other minerals produced from
or allocated to any of the Assets at some future time without
receiving full payment therefor at the time of delivery.
6.11 HYDROCARBON SALES CONTRACTS. Except as set forth on
EXHIBIT C, there are no sales contracts or calls on production or
options to purchase production or similar rights with respect to
the Assets or to the production therefrom.
6.12 HEDGING ARRANGEMENTS. The Assets are not subject to any
gas sales, gathering or transportation contracts which include
provisions for hedging, price risk management or other such
financial arrangements or transactions, which will affect or
burden the Assets from and after the Closing Date.
6.13 PREFERENTIAL RIGHTS TO PURCHASE. There are no
preferential rights to purchase the Assets.
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6.14 THIRD-PARTY CONSENTS. With the exception of certain of
the Material Agreements, no third-party consents are required for
Seller's assignment and conveyance of the Assets to Buyer.
6.15 LEASES. For the period of Seller's ownership, all
royalty, rentals and other payments under the Leases have been
properly and timely paid.
6.16 SURFACE USE AGREEMENTS. For the period of Seller's
ownership, all rentals, fees and payments required pursuant to the
terms of all recorded and unrecorded surface use and surface
damage agreements relating to Seller's operation of the Assets
have been paid.
6.17 RESTRICTIONS ON PRODUCTION. To the best of Seller's
knowledge, no well is subject to restrictions on production after
the Effective Time because of any overproduction or violation of
applicable laws, rules, regulations, permits or judgments, orders
or decrees of any court or governmental body or agency which would
curtail production from such well.
6.18 COMPLIANCE WITH LAWS. With respect to the Assets, and
Seller's activities thereon, Seller has not received any notices
of material violations of applicable laws. There are no
proceedings, pending or threatened, challenging, or seeking
revocation or limitation of any permits, licenses, approvals and
consents from appropriate governmental bodies, authorities and
agencies necessary to conduct operations on the Assets in
compliance with all applicable laws, rules, regulations,
ordinances and orders. All plans, applications, reports,
certificates and other instruments filed with or furnished to any
governmental body, authority or agency do not (i) contain any
untrue statement of fact or (ii) omit any statement of fact
necessary to make the statements therein not misleading.
6.19 OPERATIONS. To the best of Seller's knowledge, the
Assets have been operated in material compliance with all
Environmental Laws.
6.20 ENVIRONMENTAL. Except for any Colorado Oil and Gas
Conservation Commission notice or correspondence relating to
mechanical integrity testing, plugging and abandonment of any vent
stack or wellbore listed on Exhibit B, Seller has not received
notice of a material violation of an Environmental Law with
respect to the Assets or Seller's activities thereon and Seller
has not used the Assets as a landfill or for waste disposal, other
than for such activities associated with normal oil field
operations conducted in material compliance with Environmental
Laws.
6.21 WELLS. Exhibit B is an accurate and complete
identification of all Wells located on or under the Lands.
6.22 RECORDS. To the best of Seller's knowledge, Seller has
made available to Buyer all Records required to be made available
pursuant to Section 3.1.
6.23 LIENS AND ENCUMBRANCES. Except for (i) the burdens and
obligations created by or arising under the Leases and (ii)
Permitted Encumbrances, there are no loan agreements, promissory
notes, pledges, mortgages, guaranties, liens and similar
liabilities (direct and indirect) which were secured by or
constitute a lien or encumbrance on the Assets.
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6.24 PUBLIC UTILITY HOLDING COMPANY. Seller is not a Public
Utility Holding Company as defined in the Public Utility Holding
Company Act of 1935, and, to the knowledge of Seller, it is not a
partner with any party which is a Public Utility Holding Company.
6.25 NO REPRESENTATION. Seller makes no representations
or warranties except (i) as set out in Sections 6.1 through 6.24
above and (ii) Seller's special warranty of title to the Assets
by, through and under Seller. Seller makes no representation or
warranty that it owns minerals other than oil, gas, coalbed
methane and other hydrocarbons except certain coal interests as
set out in Exhibit A-1, and, except as set out in Exhibit A-1,
owns no surface estate but does own rights to use the surface
which rights arise through ownership of mineral or leasehold
interests and are not the subject of separate grants.
ARTICLE 7
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer makes the following representations and warranties:
7.1 ORGANIZATION AND STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware and is duly qualified to carry on its
business in the State of Colorado.
7.2 POWER. Buyer has all requisite corporate power and
authority to carry on its business as presently conducted and to
enter into this Agreement and to acquire the Assets. The
execution and delivery of this Agreement, consummation of the
transactions contemplated hereby, and the fulfillment of and
compliance with the terms and conditions hereof will not violate,
or be in conflict with, any material provision of Buyer's articles
of incorporation or bylaws or any material provision of any
agreement or instrument to which Buyer is a party or by which
Buyer is bound, or, to its knowledge, any judgment, decree, order,
statute, rule or regulation applicable to it.
7.3 AUTHORIZATION AND ENFORCEABILITY. The execution,
delivery and performance of this Agreement and the transactions
contemplated hereby have been duly and validly authorized by all
requisite corporate action on Buyer's part. This Agreement
constitutes Buyer's legal, valid and binding obligation,
enforceable in accordance with its terms, subject, however, to the
effects of bankruptcy, insolvency, reorganization, moratorium and
similar laws for the protection of creditors, as well as to
general principles of equity, regardless whether such
enforceability is considered in a proceeding in equity or at law.
7.4 LIABILITY FOR BROKERS' FEES. Buyer has not incurred any
liability, contingent or otherwise, for brokers' or finders' fees
relating to the transactions contemplated by this Agreement for
which Seller shall have any responsibility whatsoever.
7.5 NO BANKRUPTCY. There are no bankruptcy proceedings
pending, being contemplated by, or to Buyer's knowledge, based
upon reasonable inquiry and investigation, threatened against
Buyer.
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7.6 LITIGATION. There is no action, suit, proceeding, claim
or investigation by any person, entity, administrative agency or
governmental body pending or, to Buyer's knowledge, threatened in
writing, against Buyer before any governmental authority that
impedes or is likely to impede Buyer's ability to consummate the
transactions contemplated by this Agreement and to assume the
liabilities to be assumed by Buyer under this Agreement.
7.7 PURCHASE PRICE. Buyer has arranged to have available by
the Closing sufficient funds to enable Buyer to pay in full the
Purchase Price, together with all costs and expenses relative
thereto, and otherwise to perform its obligations under this
Agreement.
7.8 FINANCIAL STATEMENTS. To the best of Buyer's knowledge,
all financial statements and information provided by Buyer to
Seller are accurate and complete in all material respects.
ARTICLE 8
KLT'S REPRESENTATIONS AND WARRANTIES
KLT makes the following representations and warranties:
8.1 ORGANIZATION AND STANDING. KLT is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Missouri.
8.2 POWER. KLT has all requisite corporate power and
authority to carry on its business as presently conducted and to
execute this Agreement for the purposes of providing a guarantee
of Seller's post-closing purchase price adjustment obligations
under Section 2.4, and Seller's indemnity obligations under
Sections 5.8 and 15.3 in form and substance similar to EXHIBIT E.
The execution and delivery of this Agreement, consummation of the
undertaking of liabilities and indemnities contemplated hereby,
and the fulfillment of and compliance with the terms and
conditions hereof will not violate, or be in conflict with, any
material provision of KLT's articles of incorporation or bylaws or
any material provision of any agreement or instrument to which KLT
is a party or by which KLT is bound, or, to its knowledge, any
judgment, decree, order, statute, rule or regulation applicable to
it.
8.3 AUTHORIZATION AND ENFORCEABILITY. The execution,
delivery and performance of this Agreement and the transactions
contemplated hereby have been duly and validly authorized by all
requisite corporate action on KLT's part. This Agreement
constitutes KLT's legal, valid and binding obligation, enforceable
in accordance with its terms, subject, however, to the effects of
bankruptcy, insolvency, reorganization, moratorium and similar
laws for the protection of creditors, as well as to general
principles of equity, regardless whether such enforceability is
considered in a proceeding in equity or at law.
8.4 FINANCIAL STATEMENTS. To the best of KLT's knowledge,
all financial statements and information respecting KLT provided
by KLT to Buyer are accurate and complete in all material
respects.
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ARTICLE 9
PRE-CLOSING OBLIGATIONS
As to the period of time from the execution hereof until
Closing, Seller and Buyer covenant and agree as follows:
9.1 OPERATIONS PRIOR TO CLOSING. Unless Seller obtains the
prior written consent of Buyer to act otherwise, Seller will use
good-faith efforts within the constraints of all applicable
agreements not to (i) abandon any part of the Assets, (ii) except
for capital expenditures which are deemed to be approved, approve
operations on the properties anticipated to cost the owner of the
Assets more than $50,000 collectively (excepting emergency
operations, operations required under presently existing
contractual obligations, and operations undertaken to avoid a
monetary penalty or forfeiture provision of any applicable
agreement or order), (iii) convey or dispose of any material part
of the Assets (other than replacement of equipment or sale of oil,
gas, and other liquid products produced from the Assets in the
regular course of business and for a term not to exceed one month)
or enter into any farmout, farmin or other similar contract
affecting the Assets (iv) let lapse any insurance now in force
with respect to the Assets, or (v) materially modify or terminate
any contract material to the operation of the Assets.
9.2 LEGAL STATUS. Buyer and Seller shall use all reasonable
efforts to maintain their respective legal statuses from the date
hereof until the Final Settlement Date and to assure that as of
the Closing Date they will not be under any material corporate,
legal or contractual restriction that would prohibit or delay the
timely consummation of the transactions contemplated hereby.
9.3 NOTICES OF CLAIMS. Seller shall promptly notify Buyer
and Buyer shall promptly notify Seller, if, between the date
hereof and the Closing Date, Seller or Buyer, as the case may be,
receives notice of any claim, suit, action or other proceeding of
the type referred to in Sections 6.6 and 7.6.
9.4 COMPLIANCE WITH LAWS. During the period from the date
of this Agreement to the Closing Date, Seller shall attempt in
good faith to comply in all material respects with all applicable
statutes, ordinances, rules, regulations and orders relating to
the ownership and operation of the Assets.
9.5 BONDING; INSURANCE. On or before Closing, Buyer shall
arrange to have in place, to be effective at Closing and relating
to the ownership of the Assets after the Closing (i) all necessary
state and local bonds and (ii) insurance as is reasonable and
customary in the industry. Upon the execution of this Agreement
Seller shall have Buyer added as an additional insured to all of
Seller's insurance policies applicable to the Assets.
9.6 GOVERNMENT REVIEWS AND FILINGS. Before and after the
Closing, Buyer and Seller shall cooperate to provide requested
information, make required filings with, prepare applications to
and conduct negotiations with each governmental agency as required
to consummate the transaction contemplated hereby. Each party
shall make any governmental filings occasioned by its ownership or
structure. Buyer shall make all filings after the Closing at its
expense with
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governmental agencies necessary to comply with laws and shall
indemnify and hold harmless Seller from and against all claims,
costs, expenses, liabilities and actions arising out of Buyer's
holding of title after the Closing and prior to the securing of
any necessary governmental approvals of the transfer.
9.7 DATA AND INFORMATION.
a. CONFIDENTIALITY. All data and information obtained
from Seller in connection with the transaction contemplated by
this Agreement whether before or after the execution of this
Agreement, including data and information generated by Buyer in
connection with this transaction (collectively, the "INFORMATION")
is deemed by the parties to be confidential and proprietary to
Seller. Buyer shall take reasonable steps to ensure that Buyer's
employees, consultants and agents comply with the provisions of
this Section 9.7. Until completion of the Closing, except as
required by law, Buyer and its officers, agents and
representatives will hold in strict confidence the terms of this
Agreement and all Information, except any Information which: (i)
at the time of Seller's disclosure to Buyer is in the public
domain; (ii) after Seller's disclosure to Buyer becomes part of
the public domain by publication or otherwise, except by Buyer's
breach of this commitment; (iii) Buyer can establish by competent
proof that Buyer was rightfully in its possession at the time of
Seller's disclosure to Buyer; (iv) Buyer rightfully receives from
third parties free of any obligation of confidence; (v) is
disclosed to Buyer's consultants, investors and lenders who
similarly agree to protect the confidentiality of such Information
and agree to use such Information only for their due diligence
evaluation of the Assets; or (vi) is developed independently by
Buyer, provided that the person or persons developing the
Information shall not have had access to the Information.
b. RETURN OF INFORMATION. If the transaction
contemplated by this Agreement does not close on or before the
date set forth in Section 13.1, Buyer shall (i) return to Seller
all copies of the Information received from Seller and all copies
of such information generated by Buyer in the possession of Buyer
obtained pursuant to any provision of this Agreement. The terms
of this Section 9.7.b shall survive termination of this Agreement.
c. SELLER'S REMEDIES. Buyer agrees that Seller will
not have an adequate remedy at law if Buyer violates any of the
terms of Section 9.7.a. In such event, Seller will have the
right, in addition to any other right they may have, to obtain
injunctive relief to restrain any breach or threatened breach of
the terms of Section 9.7.a or to obtain specific enforcement of
such terms.
d. CONFIDENTIALITY AGREEMENT SUPERSEDED. This
Agreement shall supersede the provisions of the Confidentiality
Agreement dated May 22, 2000 between Seller and Buyer concerning
the Assets.
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ARTICLE 10
TAX MATTERS
10.1 TAXES.
a. APPORTIONMENT OF AD VALOREM AND PROPERTY TAXES. A
downward adjustment to the Purchase Price in the amount of
$44,751.00 (the "PROPERTY TAX ADJUSTMENT") shall be made for
Seller's share of all ad valorem, or real property taxes and
personal property taxes, including interest and penalties (the
"PROPERTY TAXES"), attributable to the Assets with respect to the
tax assessment period ("TAX PERIOD") during which the Effective
Time occurs. The owner of record on the assessment date shall
file or cause to be filed all required reports and returns
incident to the Property Taxes and shall pay or cause to be paid
to the taxing authorities all Property Taxes relating to the Tax
Period during which the Effective Time occurs.
b. SALES TAXES. The Purchase Price excludes, and
Buyer shall be liable for, any Transfer Taxes (as defined below)
required to be paid in connection with the sale of the Assets
pursuant to this Agreement. To the extent required by applicable
law, Seller shall collect and remit any Transfer Taxes that are
required to be paid as a result of the transfer of the Assets by
Seller to the Buyer. If the transfer of the Assets pursuant to
this Agreement is exempt from any Transfer Taxes, Buyer shall, at
Closing, provide Seller with properly executed exemption
certificates or other documentation acceptable under applicable
law. "TRANSFER TAXES" means any sales, use, excise, stock, stamp,
document, filing, recording, registration, authorization and
similar taxes, fees and charges.
c. OTHER TAXES. With the exception of income and
franchise taxes, all other federal, state and local taxes
(including interest and penalties attributable thereto) on the
ownership or operations of the Assets which are imposed with
respect to periods or portions of periods prior to the Effective
Time shall be paid by Seller and all such taxes imposed with
respect to periods or portions of periods beginning on or after
the Effective Time shall be paid by Buyer.
ARTICLE 11
CONDITIONS TO CLOSING
11.1 BUYER'S CONDITIONS. The obligations of Buyer at Closing
are subject, at the option of Buyer, to the satisfaction on or
prior to the Closing of the following conditions precedent:
a. REPRESENTATIONS AND WARRANTIES. All of Seller's
and KLT's representations and warranties contained in Articles 6
and 8 of this Agreement shall be true in all material respects at
and as of the Closing in accordance with their terms as if such
representations and warranties were remade at and as of the
Closing, and Seller shall have performed and satisfied all
covenants and agreements required by this Agreement to be
performed and satisfied by Seller at or prior to the Closing in
all material respects;
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b. SELLER'S OFFICER'S CERTIFICATE. Buyer shall have
received a certificate from Seller in form and substance similar
to EXHIBIT F;
c. NO ACTION. No order shall have been entered by any
court or governmental agency having jurisdiction over the parties
or the subject matter of this Agreement that restrains or
prohibits the purchase and sale contemplated by this Agreement and
which remains in effect at the time of Closing, except any order
that affects or relates to only a portion of the Assets, which
portion of the Assets may, at the option of Buyer, be treated as
Excluded Assets for the purpose of reducing the Purchase Price
pursuant to Section 2.3; and
d. TITLE AND ENVIRONMENTAL DEFECTS. The aggregate
value of all Title Defects and Environmental Defects does not
exceed $2,500,000.00.
e. CLOSING DOCUMENTS. Seller shall have executed and
delivered the documents which are contemplated to be executed and
delivered by it pursuant to Section 13.3 hereof prior to or on the
Closing Date.
f. CONSENT TO ASSIGNMENT OF THE MATERIAL AGREEMENTS.
Seller shall have obtained the necessary consents to Seller's
assignment of the Material Agreements to Buyer, unless waived in
writing by Buyer.
g. HILL LEASE. A ratification and amendment to Oil
and Gas Lease dated September 6, 1989, a memorandum of which is
recorded in Book 872, Page 876, from H&H Minerals, Inc., B.F.
Hill, Individually, and as Trustee for Amy L. Hill and C & NM
Ranch to Meridian Oil Inc. (the "Hill Lease"), satisfactory to
Buyer shall have been obtained and recorded.
h. KLT GUARANTY. Buyer shall have received from KLT a
Guaranty Agreement, in form and substance similar to EXHIBIT E, at
Closing.
i. WYOMING FUEL AND NORTH CENTRAL STOCK SALE AND
PURCHASE AGREEMENTS. Seller shall have provided Buyer with
complete and fully executed copies of the following agreements:
(i) Stock Sale and Purchase Agreement dated April 4, 1991 among KN
Energy, Inc., Entech Inc., and Western Oil Corporation, respecting
the stock of Wyoming Fuel Company (the "WYOMING FUEL AGREEMENT"),
and (ii) Stock Sale and Purchase Agreement dated April 4, 1991
among KN Energy, Inc., Entech Inc., and Western Oil Corporation,
respecting the stock of North Central Energy Corporation (the
"NORTH CENTRAL AGREEMENT"); and Buyer shall have determined that
neither the Wyoming Fuel Agreement nor the North Central Agreement
materially affects the value of the transactions contemplated
under this Agreement.
11.2 SELLER'S CONDITIONS. The obligations of Seller at the
Closing are subject, at the option of Seller, to the satisfaction
at or prior to Closing of the following conditions precedent:
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a. REPRESENTATIONS AND WARRANTIES. All of Buyer's
representations and warranties contained in Article 7 of this
Agreement shall be true in all material respects at and as of the
Closing in accordance with their terms as if such representations
were remade at and as of the Closing and Buyer shall have
performed and satisfied all covenants and agreements required by
this Agreement to be performed and satisfied by Buyer at or prior
to the Closing in all material respects;
b. BUYER'S OFFICER'S CERTIFICATE. Seller shall have
received an officer's certificate from Buyer in form and substance
similar to EXHIBIT G;
c. NO ACTION. No order shall have been entered by any
court or governmental agency having jurisdiction over the parties
or the subject matter of this Agreement that restrains or
prohibits the purchase and sale contemplated by this Agreement and
which remains in effect at the time of Closing, except any order
that affects or relates to only a portion of the Assets, which
portion of the Assets could be treated as Excluded Assets for the
purpose of reducing the Purchase Price of the Assets pursuant to
Section 2.3; and
d. TITLE AND ENVIRONMENTAL DEFECTS. The aggregate
value of all Title Defects and Environmental Defects does not
exceed $2,500,000.00.
e. CLOSING DOCUMENTS. Buyer shall have executed and
delivered the documents which are contemplated to be executed and
delivered by it pursuant to Section 13.3 hereof prior to or on the
Closing Date.
ARTICLE 12
RIGHT OF TERMINATION AND ABANDONMENT
12.1 TERMINATION. This Agreement may be terminated in
accordance with the following provisions:
a. by Buyer if the conditions set forth in Section
11.1 are not satisfied, through no fault of Buyer, or waived by
Buyer in writing, as of the Closing Date or Buyer invokes Section
4.5.b.;
b. by Seller if the conditions set forth in Section
11.2 are not satisfied, through no fault of Seller, or waived by
Seller in writing, as of the Closing Date; or
c. by Buyer or Seller if, through no fault of the
party claiming termination, the Closing does not occur on or
before the date specified in Section 13.1.
12.2 LIABILITIES UPON TERMINATION.
a. BUYER'S DEFAULT. If the transactions contemplated
by this Agreement are not consummated on or before the date
specified in Section 13.1 by reason of Buyer's wrongful failure to
tender performance at Closing, and if Seller is not in material
default under the
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terms of this Agreement and is ready, willing and able to Close,
and Seller terminates this Agreement, the Deposit shall be
retained by Seller. Seller and Buyer agree that Seller's damages
in the event Buyer fails to close are difficult to measure and
both Seller and Buyer agree that the amount of the Deposit bears a
reasonable relationship to and is a reasonable estimation of such
damages. Seller and Buyer agree that Seller's sole remedy in the
event of Buyer's default is the retention of the Deposit.
b. SELLER'S DEFAULT. If the transactions contemplated
by this Agreement are not consummated on or before the date
specified in Section 13.1 by reason of Seller's wrongful failure
to tender performance at Closing and if Buyer is not in material
default under this Agreement and is ready, willing and able to
Close, and Buyer terminates this Agreement, Buyer shall be
entitled to a refund of the Deposit or to specific performance, at
Buyer's election, as Buyer's sole and exclusive remedies.
c. OTHER TERMINATION. If Seller and Buyer agree to
terminate this Agreement, each party shall release the other party
from any and all liability for termination of this Agreement.
Upon any such termination, Buyer shall be entitled to a refund of
the Deposit.
ARTICLE 13
CLOSING
13.1 DATE OF CLOSING. Unless otherwise agreed to in writing
and subject to the conditions stated in this Agreement,
consummation of the transactions contemplated hereby (the
"CLOSING") shall be held on October 23, 2000. The date the
Closing actually occurs is called the "CLOSING DATE."
13.2 PLACE OF CLOSING. The Closing shall be held on the
Closing Date at Seller's offices in Overland Park, Kansas at 10:00
a.m. or at such other time and place as Seller and Buyer may agree
in writing.
13.3 CLOSING OBLIGATIONS. At 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. ASSIGNMENT, BILL OF SALE AND CONVEYANCE. Seller
and Buyer shall execute, acknowledge and deliver to Buyer an
Assignment, Bill of Sale and Conveyance of the Assets to Buyer
effective as of the Effective Time (in sufficient counterparts to
facilitate filing and recording) substantially in the form of
EXHIBIT H conveying the Assets with a special warranty of title
by, through and under Seller but not otherwise, and with no
warranties, express or implied, as to the personal property,
fixtures or condition of the Assets, which are conveyed "as is,
where is";
b. PRELIMINARY SETTLEMENT STATEMENT. Buyer and Seller
shall execute and deliver the Preliminary Settlement Statement;
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c. PURCHASE PRICE. Buyer shall deliver to Seller the
Closing Amount by wire transfer in immediately available funds, or
by such other method as may be agreed to in writing by the parties
hereto;
d. SELLER'S OFFICER'S CERTIFICATE. Seller shall
deliver to Buyer Seller's Officer's Certificate referred to in
Section 11.1.b;
e. BUYER'S OFFICER'S CERTIFICATE. Buyer shall deliver
to Seller Buyer's Officer's Certificate referred to in Section
11.2.b;
f. LETTERS-IN-LIEU. Seller shall deliver letters-in-
lieu of transfer orders directing the payment of all proceeds of
production attributable to the Assets to Buyer from and after the
Effective Time;
g. CHANGE OF OPERATOR. Seller and Buyer shall execute
all required change of operator forms and notices;
h. POSSESSION. Seller shall deliver to Buyer
possession of the Assets.
ARTICLE 14
POST-CLOSING OBLIGATIONS
14.1 POST-CLOSING ADJUSTMENTS. As soon as practicable after
the Closing, but on or before 120 days after Closing, Seller shall
prepare and deliver to Buyer the 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 adjustment and the resulting final
purchase price (the "FINAL PURCHASE PRICE"). As soon as
practicable after receipt of Seller's proposed Final Settlement
Statement, but on or before 30 days after receipt of Seller's
proposed Final Settlement Statement, Buyer shall deliver to Seller
a written report containing any changes that Buyer proposes to
make to the Final Settlement Statement. Buyer's failure to
deliver to Seller a written report detailing changes to the
proposed Final Settlement Statement by that date shall be deemed
an acceptance by Buyer of the Final Settlement Statement as
submitted by Seller. The parties shall agree with respect to the
changes proposed by Buyer, if any, no later than 30 days after
receipt by Seller of Buyer's comments to the proposed Final
Settlement Statement. The date upon which such agreement is
reached or upon which the Final Purchase Price is established for
a transaction shall be herein called the "FINAL SETTLEMENT DATE."
If (1) the Final Purchase Price is more than the Closing Amount,
Buyer shall pay Seller the amount of such difference, or (2) the
Final Purchase Price is less than the Closing Amount, Seller shall
pay to Buyer the amount of such difference, in either event by
wire transfer in immediately available funds or, if the amount of
such difference is less than $50,000, by check. Any such payment
shall be within five days of the Final Settlement Date.
14.2 DISPUTE RESOLUTION. If the parties are unable to
resolve a dispute as to the Final Purchase Price by 30 days after
Seller's receipt of Buyer's comments to the proposed Final
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Settlement Statement, the parties shall submit the dispute to
arbitration in accordance with the procedures set forth in Section
15.4.d.
14.3 RECORDS. Within three Business Days following the
Closing Date, Seller shall make the Records available for pick up
by Buyer. Seller may retain copies of the Records. Buyer agrees
not to destroy or otherwise dispose of the Records for a period of
six years after the Closing without giving Seller reasonable
notice and an opportunity to copy said Records.
14.4 TRANSFER TAXES AND RECORDING FEES. Buyer shall pay all
Transfer Taxes occasioned by the sale or transfer of the Assets
and all licensing and recording fees required in connection with
the processing, filing, licensing or recording of any assignments,
titles or bills of sale.
14.5 FURTHER ASSURANCES. From time to time after Closing,
Buyer and Seller shall each execute, acknowledge and deliver to
the other such further instruments and take such other action as
may be reasonably requested in order more effectively to assure to
the other the full beneficial use and enjoyment of the Assets and
otherwise to accomplish the purposes of the transactions
contemplated by this Agreement.
ARTICLE 15
ASSUMPTION AND RETENTION OF OBLIGATIONS
AND INDEMNIFICATION
15.1 BUYER'S ASSUMPTION OF LIABILITIES AND OBLIGATIONS. Upon
Closing and except as otherwise provided in this Agreement, Buyer
shall assume and pay, perform, fulfill and discharge all duties,
claims, costs, expenses, liabilities and obligations accruing or
relating to (i) the owning, operating or maintaining of the Assets
or the producing, transporting and marketing of Hydrocarbons from
the Assets including without limitation, environmental obligations
and liabilities, offsite liabilities associated with the Assets,
the obligation to plug and abandon all Wells and reclaim all Well
sites and all obligations arising under agreements covering or
relating to the Assets (the "LIABILITIES") to the extent such
Liabilities relate to periods on or after the Effective Time, (ii)
Liabilities relating to periods before the Effective Time (the
"PRE-EFFECTIVE TIME LIABILITIES") to the extent only that Seller
does not receive written notice by Buyer or a third party of such
Liabilities on or before 5:00 p.m., Mountain Time, on December 31,
2001 or such liability is assumed by Buyer in 15.1(iii), (iii) the
obligation to plug and abandon all Wells and vent stacks
identified on Exhibit B, (iv) the environmental condition of the
Assets but limited to the extent Seller retains liabilities or
obligations therefor under Section 5.8, and (v) liabilities for
claims made on or after October 2, 2003 for unpaid, incorrectly
paid or incorrectly calculated Pre-Effective Time royalties under
the terms of the Leases (collectively, the "BUYER'S
LIABILITIES").
15.2 SELLER'S RETENTION OF LIABILITIES AND OBLIGATIONS.
Seller retains all duties, claims, costs, expenses, liabilities
and obligations accruing or relating to: (i) the Excluded
Properties and the Excluded Assets, (ii) the environmental
condition of the properties or violation of Environmental Laws but
only as provided in Section 5.8, for which Seller's liability
shall expire December 31, 2001, and (iii) the Pre-Effective Time
Liabilities which are not assumed by Buyer in 15.1(iii), as
limited in Section 5.8 with respect to the environmental condition
of the Assets, and to the extent
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only that Seller receives written notice by Buyer or a third party
of such Pre-Effective Time Liabilities on or before 5:00 p.m.,
Mountain Time, on December 31, 2001, (v) liabilities for claims
made on or before October 1, 2003 for unpaid, incorrectly paid or
incorrectly calculated Pre-Effective Time royalties under the
terms of the Leases (the "SELLER'S LIABILITIES").
15.3 INDEMNIFICATION. "LOSSES" shall mean any actual losses,
costs, expenses (including court costs, reasonable fees and
expenses of attorneys, technical experts and expert witnesses and
the cost of investigation), liabilities, damages, demands, suits,
claims, and sanctions of every kind and character (including civil
fines) arising from, related to or reasonably incident to matters
indemnified against; excluding however any special, consequential,
punitive or exemplary damages, diminution of value of an Asset,
loss of profits incurred by a party hereto or Loss incurred as a
result of the indemnified party indemnifying a third party.
After the Closing, Buyer and Seller shall indemnify each
other as follows:
a. SELLER'S INDEMNIFICATION OF BUYER. Seller assumes
all risk, liability, obligation and Losses in connection with, and
shall defend, indemnify, and save and hold harmless Buyer, its
officers, directors, employees and agents, from and against all
Losses which arise from or in connection with (i) Seller's
Liabilities, subject to Section 5.8, (ii) any breach of any
representation or warranty made by Seller which survives the
Closing, (iii) any breach by Seller of their special warranty of
title for the Assets contained in any conveyance, (iv) any matter
for which Seller has agreed to indemnify Buyer under Section 5.8
of this Agreement, and (v) any breach by Seller of this Agreement
(but limited by Section 12.2b.).
b. KLT GUARANTY. KLT shall provide the guaranty in
the form of Exhibit E.
c. BUYER'S INDEMNIFICATION OF SELLER. Buyer assumes
all risk, liability, obligation and Losses in connection with, and
shall defend, indemnify, and save and hold harmless Seller,
Seller's partners, employees and agents, from and against all
Losses which arise from or in connection with (i) Buyer's
Liabilities, (ii) any breach of any representation or warranty
made by Buyer, and (iii) any matter for which Buyer has agreed to
indemnify Seller under this Agreement.
15.4 PROCEDURE. The indemnifications contained in Section
15.3 shall be implemented as follows:
a. COVERAGE. Such indemnity shall extend to all
Losses suffered or incurred by the indemnified party.
b. CLAIM NOTICE. The party seeking indemnification
under the terms of this Agreement ("INDEMNIFIED PARTY") shall
submit a written "CLAIM NOTICE" to the other party ("INDEMNIFYING
PARTY") which, to be effective, must state: (i) the amount of
each payment claimed by an Indemnified Party to be owing, (ii) the
basis for such claim, with supporting documentation, and (iii) a
list identifying to the extent reasonably possible each separate
item of Loss for which payment is so claimed. The amount claimed
shall be paid by the
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Indemnifying Party to the extent required herein within 30 days
after receipt of the Claim Notice, or after the amount of such
payment has been finally established, whichever last occurs.
c. INFORMATION. Within 20 days after the Indemnified
Party receives notice of a claim or legal action that may result
in a Loss for which indemnification may be sought under this
Article 15 ("CLAIM"), the Indemnified Party shall give written
notice of such Claim to the Indemnifying Party. If the
Indemnifying Party or its counsel so requests, the Indemnified
Party shall furnish the Indemnifying Party with copies of all
pleadings and other information with respect to such Claim. At
the election of the Indemnifying Party made within 60 days after
receipt of such notice, the Indemnified Party shall permit the
Indemnifying Party to assume control of such Claim (to the extent
only that such Claim, legal action or other matter relates to a
Loss for which the Indemnifying Party is liable), including the
determination of all appropriate actions, the negotiation of
settlements on behalf of the Indemnified Party, and the conduct of
litigation through attorneys of the Indemnifying Party's choice;
provided, however, that no such settlement can result in any
liability or cost to the Indemnified Party for which it is
entitled to be indemnified hereunder without its consent. If the
Indemnifying Party elects to assume control, (i) any expense
incurred by the Indemnified Party thereafter for investigation or
defense of the matter shall be borne by the Indemnified Party, and
(ii) the Indemnified Party shall give all reasonable information
and assistance, other than pecuniary, that the Indemnifying Party
shall deem necessary to the proper defense of such Claim, legal
action, or other matter. In the absence of such an election, the
Indemnified Party will use its best efforts to defend, at the
Indemnifying Party's expense, any claim, legal action or other
matter to which such other party's indemnification under this
Article 15 applies until the Indemnifying Party assumes such
defense, and, if the Indemnifying Party fails to assume such
defense within the time period provided above, settle the same in
the Indemnified Party's reasonable discretion at the Indemnifying
Party's expense. If such a Claim requires immediate action, both
the Indemnified Party and the Indemnifying Party will cooperate in
good faith to take appropriate action so as not to jeopardize
defense of such Claim or either party's position with respect to
such Claim.
d. DISPUTE. Other than with respect to a Claim based
on an issue for which another method of dispute resolution is
provided in this Agreement, if the existence of a valid Claim or
amount to be paid by an Indemnifying Party is in dispute, the
parties agree to submit determination of the existence of a valid
Claim or the amount to be paid pursuant to the Claim Notice to
binding arbitration in Colorado, such arbitration to be conducted
as follows: The arbitration proceeding shall be governed by
Colorado law and shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), with discovery to be conducted in accordance
with the Federal Rules of Civil Procedure, and with any disputes
over the scope of discovery to be determined by the arbitrators.
The arbitration shall be before a three person panel of neutral
arbitrators, consisting of one person from each of the following
categories: (1) an attorney who has practiced in the area of oil
and gas law for at least ten years; (2) a retired judge at the
Colorado or United States District Court or Appellate Court level;
and (3) a person with at least ten years of oil and gas industry
experience as a petroleum engineer. The AAA shall
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submit a list of persons meeting the criteria outlined above for
each category of arbitrator, and the parties shall select one
person from each category in the manner established by the AAA.
If the parties cannot agree, AAA shall select the arbitrator(s) on
which the parties cannot agree. The arbitrators will have not
authority to award punitive damages or any other damages not
measured by the prevailing party's actual damages, and may not, in
any event, make any ruling, finding or award that does not conform
to the terms and conditions of the Agreement. The arbitrators
shall conduct a hearing no later than 30 days after submission of
the matter to arbitration. At the hearing, the parties shall
present such evidence and witnesses as they may choose, with or
without counsel. Adherence to formal rules of evidence shall not
be required but the arbitration panel shall consider any evidence
and testimony that it determines to be relevant, in accordance
with procedures that it determines to be appropriate. Any award
entered in the arbitration shall be made in writing and any
payment due pursuant to the arbitration shall be made within 15
days of the arbitrators' award. The award of the arbitrators need
not be accompanied by a reasoned opinion. The arbitrator shall
award to the prevailing party, if any, as determined by the
arbitrator, all of its costs and fees. "Costs and fees" means all
reasonable pre-award expenses of an arbitration, including the
arbitrators' fees, administrative fees, travel expenses, out-of-
pocket expenses such as copying, telephone, court costs, witness
fees, and attorneys fees. The award may be filed in a court of
competent jurisdiction and may be enforced by any party as a final
judgment of such court.
15.5 NO INSURANCE; SUBROGATION. The indemnifications
provided in this Article 15 shall not be construed as a form of
insurance. Buyer and Seller hereby waive for themselves, their
successors or assigns, including, without limitation, any
insurers, any rights to subrogation for Losses for which each of
them is respectively liable or against which each respectively
indemnifies the other, and, if required by applicable policies,
Buyer and Seller shall obtain waiver of such subrogation from
their respective insurers.
15.6 RESERVATION AS TO NON-PARTIES. Nothing herein is
intended to limit or otherwise waive any recourse Buyer or Seller
may have against any non-party for any obligations or liabilities
that may be incurred with respect to the Assets.
ARTICLE 16
MISCELLANEOUS
16.1 EXHIBITS. The Exhibits referred to in this Agreement
are hereby incorporated in this Agreement by reference and
constitute a part of this Agreement.
16.2 EXPENSES. Except as otherwise specifically provided,
all fees, costs and expenses incurred by Buyer or Seller in
negotiating this Agreement or in consummating the transactions
contemplated by this Agreement shall be paid by the party
incurring same, including, without limitation, legal and
accounting fees, costs and expenses.
16.3 NOTICES. All notices and communications required or
permitted under this Agreement shall be in writing and addressed
as follows:
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If to Seller: with a copy post-closing to:
Apache Canyon Gas, L.L.C. KLT Inc.
10740 Nall, Suite 230 10740 Nall, Suite 230
Overland Park, KS 66211 Overland Park, KS 66211
Telephone: (913) 967-4304 Telephone: (913) 967-4304
Facsimile: (913) 967-4340 Facsimile: (913) 967-4340
Attn: Mark G. English Attn: Mark G. English
If to Buyer:
Barrett Resources Corporation
1550 Arapahoe Street, Suite 1000
Denver, Colorado 80202
Telephone: (303) 572-3900
Facsimile: (303) 629-8255
Attn: Eugene A. Lang, Jr.
Any communication or delivery hereunder shall be deemed to have
been duly made and the receiving party charged with notice (i) if
personally delivered, when received, (ii) if faxed, when received
if receipt is confirmed, (iii) if mailed, certified mail, return
receipt requested, on the date set forth on the return receipt or
(iv) if sent by overnight courier, one day after sending. Any
party may, by written notice so delivered to the other parties,
change the address or individual to which delivery shall
thereafter be made.
16.4 AMENDMENTS. Except for waivers specifically provided
for in this Agreement, this Agreement may not be amended nor any
rights hereunder waived except by an instrument in writing signed
by the party to be charged with such amendment or waiver and
delivered by such party to the party claiming the benefit of such
amendment or waiver.
16.5 ASSIGNMENT. Prior to Closing, neither Seller nor Buyer
shall assign all or any portion of its respective rights or
delegate all or any portion of its respective duties hereunder
without the prior written consent of the other party; provided,
however, Seller reserves the right to exchange the Assets for
property of like kind and qualifying use within the meaning of
Section 1031 of the Internal Revenue Code of 1986 and the
regulations promulgated thereunder. Seller expressly reserves the
right to assign its rights, but not its obligations, hereunder to
a "qualified intermediary" as provided in Section 1.103(k)-1(g)(4)
of the U.S. Treasury Regulations on or before the Closing Date.
Buyer agrees to take all actions reasonably required of it,
including, but not limited to, executing and delivering documents,
to permit Seller to effect the exchange described in this Section.
16.6 RESERVATION OF RIGHT TO QUALIFY UNDER SECTION 29 OF THE
CODE. Seller hereby retains, and Buyer consents thereto, the
right to seek qualification of certain of the Assets under Section
29 of the Internal Revenue Code of 1986, as amended, as gas
produced from coal seams under Section 503 of the Natural Gas
Policy Act of 1978 (and including any successor or similar state
or federal legislation) before the Federal Energy Regulatory
Commission, or its successor agency. This reservation is not
intended to reserve any rights to claim Section 29 credits with
respect
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to production occurring after the Effective Time, but rather is to
assure Seller's right to such credits prior to the Effective Time.
Buyer agrees to cooperate fully with Seller and to permit access
to Buyer's records at all reasonable times to permit Seller to
complete this qualification process.
16.7 HART-SCOTT-RODINO ACT. Seller and Buyer agree that no
Hart-Scott-Rodino Act filing is necessary with respect to the
transaction contemplated by this Agreement.
16.8 ANNOUNCEMENTS. Buyer and Seller agree that prior to
making any press releases and other public announcements
concerning this Agreement and the transaction contemplated
thereby, the party desiring to make such public announcement shall
consult with the other party and exercise its best efforts to
agree upon the text of any public announcement to be made solely
by Buyer or Seller. Seller agrees that the inclusion in Buyer's
public announcement of the Purchase Price and estimated reserves
attributable to the Assets is not objectionable.
16.9 HEADINGS. The headings of the Articles and Sections of
this Agreement are for guidance and convenience of reference only
and shall not limit or otherwise affect any of the terms or
provisions of this Agreement.
16.10 COUNTERPARTS. This Agreement may be executed by
Buyer, Seller, and KLT in any number of counterparts, each of
which shall be deemed an original instrument, but all of which
together shall constitute one and the same instrument. Execution
can be evidenced by fax signatures with original signature pages
to follow in due course.
16.11 REFERENCES. References made in this Agreement,
including use of a pronoun, shall be deemed to include, where
applicable, masculine, feminine, singular or plural, individuals,
partnerships or corporations. As used in this Agreement, "person"
shall mean any natural person, corporation, partnership, court,
agency, government, board, commission, trust, estate or other
entity or authority.
16.12 GOVERNING LAW. This Agreement and the transactions
contemplated hereby and any arbitration or dispute resolution
conducted pursuant hereto shall be construed in accordance with,
and governed by, the laws of the State of Colorado and the parties
hereby subject themselves to the sole and exclusive jurisdiction
of the Federal or State courts of Colorado for resolution of any
dispute related to this Agreement.
16.13 ENTIRE AGREEMENT. This Agreement constitutes the
entire understanding among the parties, their respective partners,
shareholders, officers, directors and employees with respect to
the subject matter hereof, superseding all negotiations, prior
discussions, preliminary term sheets and prior agreements,
notwithstanding language to the contrary therein.
16.14 BINDING EFFECT. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto, and
their respective successors and assigns.
16.15 SURVIVAL. The following shall survive the
Closing: (i) all post-closing obligations and indemnities of
Seller and Buyer, (ii) Seller's representations and warranties
under Sections 6.1
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through 6.18 and 6.20 through 6.24, Buyer's representations and
warranties in Article 7, and (iii) KLT's representations and
warranties in Article 8.
16.16 NO THIRD-PARTY BENEFICIARIES. This Agreement is
intended only to benefit the parties hereto and their respective
permitted successors and assigns.
16.17 LIMITATION ON DAMAGES. Consistent with Articles 12
and 15, the parties hereto expressly waive any and all rights to
consequential, special, incidental, punitive or exemplary damages,
or loss of profits resulting from breach of this Agreement.
16.18 SEVERABILITY. It is the intent of the parties that
the provisions contained in this Agreement shall be severable.
Should any provisions, in whole or in part, be held invalid as a
matter of law, such holding shall not affect the other portions of
this Agreement, and such portions that are not invalid shall be
given effect without the invalid portion.
SELLER:
KLT INC. APACHE CANYON GAS, L.L.C.
(Executed solely for the purposes
of Sections 2.4, 5.8, 8.1 through By: /s/Bruce B. Selkirk
8.4, and 15.3) Bruce B. Selkirk, III
Vice President of Apache
By: /s/Gregory J. Orman Canyon Gas, L.L.C. and
Gregory J. Orman Vice President of KLT Gas
President and Chief Inc., Sole Member of
Executive Officer Apache Canyon Gas, L.L.C.
BUYER:
BARRETT RESOURCES CORPORATION
By: /s/Eugene A. Lang, Jr.
Eugene A. Lang, Jr.
Executive Vice President
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ACKNOWLEDGMENTS
STATE OF MISSOURI )
) ss.
COUNTY OF CLAY )
The foregoing instrument was acknowledged before me this 13th
day of October, 2000, by Bruce B. Selkirk, III, as Vice President
of Apache Canyon, L.L.C., a Delaware limited liability company, on
behalf of the limited liability company, and as Vice President of
KLT Gas Inc., a Missouri corporation, on behalf of the
corporation.
Witness my hand and official seal.
My commission expires: June 12, 2004
/s/Vickie L. Flores
Notary Public
(notary stamp)
VICKIE L. FLORES
Notary Public - State of Missouri
County of Clay
My Commission Expires Jun 12, 2004
STATE OF MISSOURI )
) ss.
COUNTY OF CLAY )
The foregoing instrument was acknowledged before me this 13th
day of October, 2000 by Gregory J. Orman, as President and Chief
Executive Officer of KLT Inc., a Missouri corporation, on behalf
of the corporation.
Witness my hand and official seal.
My commission expires: June 12, 2004
/s/Vickie L. Flores
Notary Public
(notary stamp)
VICKIE L. FLORES
Notary Public - State of Missouri
County of Clay
My Commission Expires Jun 12, 2004
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STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 13th
day of October, 2000 by Eugene A. Lang, Jr., as Executive Vice
President of Barrett Resources Corporation, a Delaware
corporation, on behalf of the corporation.
Witness my hand and official seal.
My commission expires: May 28, 2004
/s/Linda C. Beddo
Notary Public
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