GENERAL CONVEYANCE
THIS GENERAL CONVEYANCE (this "Conveyance") executed by
ARCH PETROLEUM, INC., a Texas corporation, whose address is 777
Taylor Street, Suite II-A, Fort Worth, Texas 76102
(hereinafter called "Assignor"), to ODESSA EXPLORATION
INCORPORATION, whose address is 191 Professional Center, 6010
Highway 191, Suite 210, Odessa, Texas 79762, (hereinafter
called "Assignee"), dated effective at 7:00 a.m., Central
Daylight Time, on January 1, 1996 (said hour and day
hereinafter called the "Effective Time"). Capitalized
terms used but not otherwise defined herein shall have the
meanings set forth in that certain Asset Purchase Agreement
dated April 18, 1996 (the "Agreement"), by and between
Assignor, as "Seller", and Assignee, as "Buyer".
ARTICLE I
Conveyance of Assets
Assignor, for Ten and No/100 Dollars ($10.00) and
other good and valuable consideration in hand paid by
Assignee, the receipt and sufficiency of which consideration
are hereby acknowledged and confessed, by these presents does
hereby GRANT, BARGAIN, SELLER, CONVEY, ASSIGN, TRANSFER,
SET OVER AND DELIVER unto Assignee, effective as of the
Effective time, the following described assets and
properties (except to the extent constituting "Excluded
Assets" (hereinafter defined)) (collectively, the "Assets"):
(i) (a) The undivided interests specified in
Exhibit A hereto (the "Property Schedule") in, to or under the
Hydrocarbon Interests (hereinafter defined) specifically
described in the Property Schedule, and (b) all other interests
of Assignor in, to or under any Hydrocarbon Interests in, to
or under or derived from any lands covered by or subject to
any of the Hydrocarbon Interests described in the Property
Schedule, even though such interests of the Assignor may be
incorrectly described or referred to in, or a description
thereof may be omitted from, the Property Schedule
(collectively, the "Subject Interests");
(ii) All right, title, and interest of
Assignor in and to the lands covered by or subject to the
Subject Interests (the "Lands");
(iii) All right, title and interest of
Assignor in and to or derived from the following insofar as the
same are attributable to the Subject Interests: (a) all rights
with respect to the use and occupancy of the surface of and the
subsurface depths under the Lands; (b) all rights with respect
to any pooled, communitized or unitized acreage by virtue of
any Subject Interest being a part thereof; (c) all agreements
and contracts, easements, rights-of-way, servitudes and other
estates; (d) all real and personal property located upon the
Lands and used in connection with the exploration,
development or operation of the Subject Interests; and (e)
the Records;
(iv) All right, title and interest of
Assignor to any claims to the extent attributable to ownership,
use, construction, maintenance or operation of the Assets
subsequent to the Effective Time, including, without
limitation, past, present or future claims, whether or not
previously asserted by Assignor;
(v) Those separate identifiable
accounts (the "Royalty Accounts") which are expressly
identified and set forth in Schedule A-1 hereto in which
Assignor or any third party operator is holding as of the
Effective Time monies which (a) are owing to third party owners
of royalty, overriding royalty, working or other interests in
respect of past production of oil, gas or other hydrocarbons
attributable to the Assets or (b) may be subject to refund by
royalty owners or other third parties to purchasers of past
production of oil, gas or other hydrocarbons attributable
to the Assets; and
(vi) All (a) oil, gas and other hydrocarbons
produced from or attributable to the Subject Interests with
respect to all periods subsequent to the Effective time and
(b) proceeds from or of such oil, gas and other
hydrocarbons.
As used in this Conveyance, the term "Hydrocarbon
Interests" shall mean (a) leases affecting, relating to or
covering any oil, gas and other hydrocarbons and the leasehold
interests and estates in the nature of working or
operating interests under such leases, as well as overriding
royalties, net profits interests, production payments,
carried interests, rights of recoupment and other interests
in, under or relating to such leases, (b) fee
interests in oil, gas or other hydrocarbons, (c) royalty
interests in oil, gas or other hydrocarbons, (d) any other
interest in oil, gas or other hydrocarbons in place, (e) any
economic or contractual rights, options or interests in and to
any of the foregoing, including, without limitation, any
farmout or farmin agreement or production payment affecting
any interest or estate in oil, gas or other hydrocarbons,
and (f) any and all rights and interests attributable or
allocable thereto by virtue of any pooling, unitization,
communitzation, production sharing or similar agreement, order
or declaration.
There is excluded from this Conveyance and the Assets
and reserved unto Assignor the following described interests,
rights and properties (collectively, the "Excluded Assets"):
(i) Copies of all Records;
(ii) Except to the extent constituting the
Royalty Accounts, all deposits, cash, checks, funds and
accounts receivable attributable to Assignor's interest in the
Assets with respect to any period of time prior to the
Effective Time;
(iii) All (a) oil, gas and other hydrocarbons
produced from or attributable to the Subject Interests with
respect to all periods prior to the Effective Time, (b) oil, gas
and other hydrocarbons attributable to the Subject
Interests which, at the Effective Time, are in storage and are
above pipeline connections within processing plants, in
pipelines or otherwise held in inventory, and (c) proceeds
from or of such oil, gas and other hydrocarbons;
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(iv) Such assets as Assignor elects to exclude
from the Assets pursuant to the terms of the Agreement;
(v) All receivables and cash proceeds which
were expressly taken into account and for which credit was
given in the determination of Net Cash Flow pursuant to Section
3.3 of the Agreement, as adjusted pursuant to Section 3.4 of
the Agreement;
(vi) Claims of Assignor for refund of or loss
carry forwards with respect to (i) Taxes attributable to
any period prior to theEffective Time or (ii) any Taxes
attributable to the Excluded Assets;
(vii) All corporate, financial, tax and
legal records of Assignor; and (viii) All rights, interests,
assets and properties described in Exhibit B hereto.
TO HAVE AND TO HOLD the Assets unto Assignee, its
successors and assigns, forever; subject, however, to the
matters set forth herein.
ARTICLE II
Limitation of Warranties; Permitted Encumbrances
Section 2.1 Limitation of Warranties.
(a) Assignor does hereby bind itself, Assignor's
successors and assigns, to warrant and forever defend all
and singular Defensible Title (hereinafter defined) to the
Subject Interests, unto Assignee, its successors and assigns,
against every person whomsoever lawfully claiming or to claim
the same or any part thereof, by, through or under Assignor,
but not otherwise, subject, however, to the Permitted
Encumbrances (hereinafter defined). As used herein, the term
"Defensible Title" shall mean, respectively, as to the Subject
Interest or Subject Interests related to a particular
Property Subdivision, title to such Property Subdivision and
the Subject Interest or Subject Interests related to such
Property Subdivision, that: (i) entitles Assignor to receive not
less than the applicable Net Revenue Interest or Net Revenue
Interests specified for such Property Subdivision in the
Property Schedule; (ii) obligates Assignor to bear the costs
and expenses relating to the maintenance, development and
operation of such Property Subdivision in an amount not
greater than the applicable Working Interest or Working
Interests specified for such Property Subdivision in the
Property Schedule unless Assignor's Net Revenue Interest
therein is proportionately increased; and (iii) except
for Permitted Encumbrances, is free and clear of liens and
encumbrances. Recourse for breach of the foregoing special
warranty of title shall be limited to a return of the purchase
price allocated to the Subject Interest with respect to
which such warranty has been breached in accordance with
Section 6.2(b) of the Agreement, without interest thereon.
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(b) EXCEPT FOR THE SPECIAL WARRANTY OF TITLE SET
FORTH HEREIN, THE ASSETS ARE ASSIGNED TO ASSIGNEE "AS IS
AND WHERE IS" AND WITH ALL FAULTS AND WITHOUT WARRANTY OR
REPRESENTATION OF ANY KIND OR CHARACTER, EITHER EXPRESS OR
IMPLIED. ASSIGNOR FURTHER HEREBY (I) EXPRESSLY DISCLAIMS
AND NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, RELATING TO
(A) THE CONDITION OF THE ASSETS (INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS) OR (B) ANY INFRINGEMENT BY
ASSIGNOR OR ANY OF ITS AFFILIATES OF ANY PATENT OR
PROPRIETARY RIGHT OF ANY THIRD PARTY; AND (II) NEGATES ANY
RIGHTS OR ASSIGNEE UNDER STATUTES TO CLAIM DIMINUTION OF
CONSIDERATION AND ANY CLAIMS BY ASSIGNEE FOR DAMAGES BECAUSE OF
DEFECTS, WHETHER KNOWN OR UNKNOWN, IT BEING THE INTENTION OF
ASSIGNOR AND ASSIGNEE THAT THE ASSETS ARE ACCEPTED BY
ASSIGNEE IN THEIR PRESENT CONDITION AND STATE OF REPAIR.
(c) To the extent transferable, Assignee shall be
and is hereby subrogated to all covenants and warranties
of title by parties (other than Assignor) heretofore given or
made to Assignor or its predecessors in title in respect to any
of the Assets.
Section 2.2 Permitted Encumbrances. The Assets
are assigned and conveyed by Assignor and accepted by Assignee
expressly subject to the following (the "Permitted
Encumbrances"):
(a) all agreements, instruments,
documents, liens, encumbrances, and other matters which are
described in Schedule A-2;
(b) any (i) undetermined or inchoate
liens or charges constituting or securing the payment of
expenses which were incurred incidental to maintenance,
development, production or operation of the Assets or
for the purpose of developing, producing or processing oil,
gas or other hydrocarbons therefrom or therein and (ii)
materialman's, mechanics', repairman's, employees',
contractors', operators' or other similar liens,
security interests or charges for liquidated amounts arising
in the ordinary course of business incidental to construction,
maintenance, development, production or operation of the Assets
or the production or processing of oil, gas or other
hydrocarbons therefrom, that are not delinquent and that will
be paid in the ordinary course of business or, if delinquent,
that are being contested in good faith; (c) any liens for Taxes
not yet delinquent or, if delinquent, that are being contested
in good faith in the ordinary course of business;
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(d) any liens or security interest created by
Law or reserved in oil, gas and/or mineral leases for royalty,
bonus or rental or for compliance with the terms of the Subject
Interests;
(e) all Preference Rights and Transfer
Requirements;
(f) any easements, rights-of-way,
servitudes, permits, licenses, surface leases and other
rights with respect to surface operations to the extent such
matters do not interfere in any material respect with Assignee's
operation of the portion of the Assets burdened thereby;
(g) any prohibitions or restrictions
similar to those contained in Article VIII.D. of the A.A.P.L.
Form 610-1982 Model Form Operating Agreement and any
contribution obligations under provisions similar to
Article VII.B. of said Model Form Operating Agreement;
(h) all agreements and obligations relating to
imbalances with respect to the production, transportation or
processing of gas or calls or purchase options on oil or gas
production;
(i) all royalties, overriding
royalties, net profits interests, carried interests,
reversionary interests and other burdens to the extent that the
net cumulative effect of such burdens, as to a
particular Property Subdivision, does not operate to reduce
the Net Revenue Interest of Assignor in such Property
Subdivision as specified in the Property Schedule;
(j) all obligations by virtue of a prepayment,
advance payment or similar arrangement under any contract
for the sale of gas production, including by virtue of
"take-or-pay" or similar provisions, to deliver gas
produced from or attributable to the Subject Interests after
the Effective Time without then or thereafter being entitled
to receive full payment therefor;
(k) all liens, charges, encumbrances,
contracts, agreements, instruments, obligations, defects,
irregularities and other matters affecting any Asset which
individually or in the aggregate are not such as to
interfere materially with the operation, value or use of
such Asset;
(l) any encumbrance, title defect or other
matter (whether or not constituting a Title Defect) waived or
deemed waived by Assignee pursuant to Article VI of the
Agreement;
(m) rights reserved to or vested in any
Governmental Authority to control or regulate any of the wells
or units included in the Assets and all applicable laws, rules,
regulations and orders of such
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authorities so long as the same do not decrease
Assignor's Net Revenue Interest below the Net Revenue Interest
shown in the Property Schedule;
(n) the terms and conditions of all contracts
and agreements relating to the Subject Interests,
including, without limitation, exploration agreements, gas
sales contracts, processing agreements, farmins,
farmouts, operating agreements, and rights-of-way agreements to
the extent such terms and conditions do not decrease Assignor's
Net Revenue Interest below the Net Revenue Interest shown in
the Property Schedule; and
(o) conventional rights of reassignment
requiring notice to the holders of the rights prior to
surrendering or releasing a leasehold interest.
By Assignee's acceptance of this Conveyance, Assignee assumes
and agrees to keep and perform the obligations of Assignor under
the Permitted Encumbrances which accrue from and after the
Effective Time.
ARTICLE III
Miscellaneous
Section 3.1 Further Assurances. Assignor covenants
and agrees to execute and deliver to Assignee all such other
and additional instruments and other documents and will do
all such other acts and things as may be necessary to more
fully assure to Assignee or its successor or assigns all
of the respective properties, rights and interests herein
and hereby granted or intended so to be.
Section 3.2 Successors and Assigns. All of the
provisions hereof shall inure to the benefit of and be binding
upon Assignor and Assignee and their respective successors
and assigns. All references herein to either Assignor or
Assignee shall include their respective successors and assigns.
Section 3.3 Counterparts. This Assignment is being
executed in several original counterparts, all of which are
identical, except that, to facilitate recordations, there are
omitted from certain counterparts those property
descriptions in the Property Schedule which contain
descriptions of property located in recording jurisdictions
other than the jurisdiction in which the particular
counterpart is to be recorded. Each such counterpart hereof
shall be deemed to be an original instrument, but all such
counterparts shall constitute but one and the same assignment.
IN WITNESS WHEREOF, the Assignor and Assignee
have caused this Conveyance to be executed on the date of
their respective acknowledgments set forth below, to be
effective, however, as of the Effective Time.
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ASSIGNOR:
ARCH PETROLEUM, INC.
By: _____________________________________
Larry Kalas, President
ASSIGNEE:
ODESSA EXPLORATION INCORPORATED
By: _____________________________________
D. Kirk Edwards, President
STATE OF TEXAS )
) COUNTY OF HARRIS )
This instrument was acknowledged before me on April ___,
1996, by Larry Kalas, President of ARCH PETROLEUM, INC., a Texas
corporation, on behalf of said corporation.
-----------------------------------------
Notary Public in and for the State of Texas
My Commission Expires: ___________________
STATE OF TEXAS )
) COUNTY OF HARRIS )
This instrument was acknowledged before me on April
___, 1996, by D. Kirk Edwards, President of ODESSA
EXPLORATION INCORPORATED, a Delaware corporation, on behalf
of said corporation.
- -----------------------------------------
Notary Public in and for the State of Texas
My Commission Expires: ____________________
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