Exhibit 10.5
PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into effective as of October 1, 1999 by and among Patrick Energy Corp., (the
"Purchaser") and Continental Resources, Inc. and Continental Gas, Inc.;
Oklahoma Companies (hereinafter collectively referred to as "Sellers" or
"Companies").
W I T N E S S E T H:
WHEREAS, the Sellers are engaged in the oil and gas business;
WHEREAS, Sellers desire to sell and Purchaser desires to purchase assets
of Sellers upon the terms and subject to the conditions set forth herein; and
WHEREAS, Sellers understand that Purchaser is acquiring (among other
assets and without limitations) coalbed methane gas;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations and warranties set forth herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be bound hereby, agree as
follows:
SECTION 1. SALE AND PURCHASE OF ASSETS
1.1 Sale and Purchase.
1.1.1. Sale and Purchase of Assets.
Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing (as defined in Section 11.1 hereof), but effective
as of the Effective Date (as defined in Section 1.3 hereof), Sellers shall
sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall
purchase, take possession and acquire assets from Sellers (collectively the
"Assets") including:
(a) The oil, gas and mineral leases set forth on the schedules
attached hereto and collectively referred to as "Schedule 1.1.1" (and in and
to any ratifications and amendments to such leases, whether or not such
ratifications or amendments are set forth on Schedule 1.1.1 hereto), insofar
as such leases cover and affect the lands and depths described on Schedule
1.1.1 hereto, the foregoing to be conveyed to Purchaser with full warranty of
title, by, through and under Sellers, but not otherwise;
(b) All other right, title and interest (of every kind or character,
whether legal or equitable, and whether vested or contingent) in and to the
oil, gas and other minerals in and under or that may be produced from the
lands described in Schedule 1.1.1 hereto (including, without limitation,
interests in oil, gas and mineral leases, licenses, permits and similar
arrangements, overriding royalty interest, reversionary interest, back-in
interest, production payments, net profits interests, fee mineral interests,
fee royalty interests and other interests in such oil, gas and other minerals),
even though Sellers' interests in such oil, gas and other minerals may be
incorrectly described on Schedule 1.1.1 hereto;
(c) All oil, gas and mineral unitization, pooling and
communitization agreements, declarations and orders (including, without
limitation, all units formed under orders, rules, regulations or other
official acts of any federal, state or other authority having jurisdiction,
voluntary unitization agreements, designations and declarations) relating to
the properties described in clauses (a) and (b) properties described in
clauses (a) and (b) above (the properties, rights and interests described in
clauses (a), (b) and (c) and the same properties, rights and interests in the
assets are sometimes hereinafter referred to as the "Oil and Gas Properties");
(d) All materials, supplies, machinery, equipment, improvements
and other personal property and fixtures (including, without limitation,
leased compressors, all wells, well head equipment, pumps, pumping units,
platforms, flow lines, tanks, buildings, injection facilities, salt water
disposal facilities, compression facilities, gathering systems, salt water
disposal wells, water wells, line well facilities, sulfur recovery facilities,
compressors, compressor stations, dehydration facilities, treating facilities,
values, meters, separator tanks, tank batteries, tools, leased equipment,
office equipment, and other fixtures and equipment located on the Oil and Gas
Properties and used in connection with he exploration, development, operation
or maintenance thereof);
(e) To the extent transferable, all production sales contracts,
operating agreements, equipment, real estate and other leases, licenses,
permits, security agreements, joint venture agreements, unit agreements,
pooling agreements, areas of mutual interest, farm-out agreements, farm-in
agreements, (salt water disposal agreements, water injection agreements, line
well injection agreements, if any, but Sellers believe there are none), road
use agreements, gas balancing agreements, gas processing agreements, gas
contracts, supplier contracts, service contracts, (construction agreements,
storage or warehouse agreements, if any, but Sellers believe there are none),
and other agreements and contracts which relate to the Oil and Gas Properties,
to the extent, and only to the extent, such rights, titles and interests are
attributable tot he Oil and Gas Properties and all other contracts and other
agreements relating to the Assets (the "Contracts");
(f) All seismic, geological and geophysical data, of every kind
or nature, wherever located, relating to the Oil and Gas Properties
transferred to Purchaser;
(g) To the extent transferable, all surface use agreements,
easements, rights of way, licenses, authorizations, permits and similar rights
and interests applicable to any of the Oil and Gas Properties transferred to
Purchaser;
(h) To the extent transferable, all franchises, approvals,
permits, licenses, qualifications, orders, registrations, certificates,
variances and similar rights obtained from governmental and regulatory
authorities and any pending applications therefor related to the Assets
transferred to Purchaser; and
(i) Copies of all books, records, ledgers, files, data,
documents, correspondence, lists, plats, materials, studies, reports and other
printed and written materials related to the Assets transferred to Purchaser
will be provided as required by paragraph 17.4 of this Agreement.
1.2 Liabilities. Purchaser shall not assume any liability of
Sellers or the Companies, by way of explanation and not Limitation, the
Purchaser does not assume any of the following (collectively, the
"Liabilities"):
(a) Royalties, taxes and trade and accounts payable related to the
Assets due and payable or incurred before the Effective Date to the extent not
previously paid by Sellers;
(b) All severance obligations of Sellers with respect to all
employees of Sellers who become employees of Purchaser, if any.
1.3 Effective Date. The "Effective Date" of the sale and
purchase of the Assets provided for in this Agreement is October 1, 1999,
notwithstanding the Closing Date.
SECTION 2. PURCHASE PRICE
2.1 Purchase Price. In payment and consideration for the sale
of the Assets by Sellers to Purchaser, at the Closing, upon the terms and
subject to the conditions and reductions set forth in this Agreement,
Purchaser shall pay to Sellers a purchase price of Five Million Eight Hundred
Thousand Dollars ($5,800,000) (the "Base Purchase Price") subject to the
following adjustments (as so adjusted, the "Purchase Price"):
(a) Less an amount equal to the value of all Oil and Gas
Properties as to which third parties exercise Preferential Rights or as to
which Consents are not obtained, in each case such term is defined in, and in
accordance with the provisions of, Section 5.3 hereof;
(b) Plus or less, as appropriate, an amount equal to the value of
all Title Defects (as defined in Section 8.1 hereof) in accordance with the
provisions of Section 8.1 hereof;
(c) Less an amount equal to the reduction in value of all Assets
subject to Casualty Defects (as defined in Section 8.4 hereof) that exist at
the Closing in accordance with the provisions of Section 8.4 hereof;
(d) Plus or less, as appropriate, an amount equal to the value of
all gas imbalances in accordance with the provisions of Section 8.5 hereof;
and
(e) Less the amount, if any, of all prepayments, take-or-pay
payments or similar payments (out of any royalties and of any production,
severance or sales taxes not reimbursed to Sellers by the purchaser of
production) received by Sellers that are attributable to oil or gas from the
Oil and Gas Properties that is obligated to be delivered after the Effective
Date without the owner of the Oil and Gas Properties receiving fill payment
therefor.
2.2 Payment of Purchase Price. The Base Purchase Price, as
adjusted, shall be paid by Purchaser to Sellers at the Closing by wire
transfer of immediately available funds to an account designated by Sellers.
2.3 Allocation of Purchase Price. The Purchase Price shall be
allocated by Purchaser for all purposes (including financial reporting and tax
purposes) among the Assets and as set forth on Schedule 2.3 hereto. Sellers
and Purchaser each hereby covenant and agree that they will not take a
position on any income tax return, before any governmental authority charged
with the collection of any income tax, or in any judicial proceeding that is
in any way inconsistent with the terms of this Section 2.3.
2.4 Post-Closing Adjustment. Within five business days after
the final determination of the adjustments to the Purchase Price in accordance
with Section 14 hereof, Purchaser shall pay to Sellers, or Sellers shall pay
to Purchaser, as appropriate, the amount of the post-Closing adjustments to
the Base Purchase Price. Any such payments shall be made by wire transfer of
immediately available funds to an account designated by the payee thereof.
2.5 Deposit. Contemporaneously with the execution of this
Agreement, Purchaser paid to Sellers an amount equal to twenty-five thousand
dollars ($25,000.00) (the "Deposit"). If the sale and purchase of the Assets
contemplated hereby is consummated in accordance with the terms hereof, then
the Deposit, without any interest thereon, shall be applied to the Purchase
Price to be paid by Purchaser to Sellers at the Closing. If this Agreement is
terminated in accordance with the provisions of Section 15.1 (a) - (e) hereof
and neither Purchaser nor Sellers has breached or defaulted under any
provision of this Agreement, then the Deposit, without interest thereon, shall
be returned to Purchaser. If this Agreement is terminated due to a breach or
default by Sellers of any provision of this Agreement which occurred in the
absence of a breach or default by Sellers of any provision of this Agreement
which occurred in the absence of a breach or default of any provision of this
Agreement by Purchaser, or pursuant to Section 15.1 (f), then the Deposit,
together with any interest earned thereon, shall be returned to Purchaser. If
this Agreement is terminated by Purchaser and Sellers are not in breach or
default under any provision of this Agreement, and Purchaser's termination is
not made pursuant to Section 15.1 (a)-(f), then the Deposit, together with any
interest earned thereon, shall be retained by Sellers.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant to Purchaser as follows:
3.1 Organization. Sellers are corporations duly organized,
validly existing and in good standing under the laws of the State of Oklahoma.
3.2 Power and Authority. Sellers have the full corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder, and the execution and delivery of this Agreement by
Sellers and the performance by Sellers of its obligations hereunder have been
duly authorized by all necessary corporate action of Sellers.
3.3 Enforceability. This Agreement has been duly executed and
delivered on behalf of Sellers and the transaction contemplated hereby will
constitute the valid and binding obligation of Sellers, enforceable against
Sellers in accordance with its terms, except as such enforceability may be
limited by (a) any applicable bankruptcy, insolvency, reorganization,
receivership, moratorium, fraudulent transfer and conveyance laws and other
similar laws of general application relating to or affecting the rights and
remedies of creditors, or (b) general principals of equity, whether applied by
a court of law or equity.
3.4 No Conflict. Neither the execution and delivery of this
Agreement by Sellers nor the performance by Sellers of its obligations
hereunder will violate, result in the breach of any provision of, or
constitute a default under (a) the Articles of Incorporation or By-laws of
Sellers, (b) any agreement or instrument to which Sellers are a party or by
which it or the Assets is bound, (c) any judgment, order, decree or writ to
which Sellers are a party or by which Sellers or the Assets are bound, or (d)
any law, rule or regulation applicable to Sellers or the Assets, except for
any violation, breach or default that will not have a material adverse effect
on the Assets.
3.5 Brokers. Sellers have incurred no obligation or liability,
contingent or otherwise, for brokers' or finders' fees in connection with this
Agreement in respect of which Purchaser may have any obligation or liability,
and any such obligation or liability that might exist shall be the sole
obligation of Sellers.
3.6 Litigation and Claims. Except as set forth on Schedule 3.6
hereto, there are no claims, actions, suits or proceedings pending against
Sellers, or any of the Assets which, if adversely determined, would reasonably
be expected to either have a material adverse effect on the ability of Sellers
to execute, deliver or perform its obligations under this Agreement or to have
a material adverse effect on the Assets.
3.7 Contracts. Each Contract included within the Assets is a
valid and binding obligation of Sellers and each other party thereto,
enforceable against Sellers and each other party thereto in accordance with
its terms, except as such enforceability may be limited by (a) the course of
conduct of the parties to the Contracts, (b) any applicable bankruptcy,
insolvency, reorganization, receivership, moratorium, fraudulent transfer and
conveyance laws and other similar laws of general application relating to or
affecting the rights and remedies of creditors, or (c) general principles of
equity, whether applied by a court of law or equity. Neither Sellers nor any
other party is in breach of, or default under, any provision of any Contract,
which breach or default could be reasonably expected to have an adverse effect
on the Assets.
3.8 Permits and Licenses. Sellers have complied in all material
respects with the provisions and requirements of all orders, regulations and
rules issued or promulgated by governmental authorities having jurisdiction
with respect to the Assets and possesses all governmental permits and other
licenses necessary for Sellers' current operation of the Assets, other than
permits and licenses (a) required for the sale and transfer of the Assets to
Purchaser of (b) the failure of which to possess would bot have an adverse
effect on the Assets.
3.9 Environmental Matters. Except as set forth on Schedule 3.9
hereto, to the best of Sellers' knowledge (a) the Assets being sold to
Purchaser are in compliance with all laws, rules and regulations pertaining to
the control of hazardous substances or of pollutants or the protection of the
environment ("Environmental Laws"), (b) neither Sellers nor the Companies have
any liability for remediation actions (including removal, response, clean-up,
investigating and monitoring of contaminants and pollutants) resulting from
any release, discharge, placement, migration or movement of contaminants or
pollutants into the environment from any of the Assets, and (c) there are no
claims, action, suits or proceedings, judgements, orders, writs or injunctions
of any court or governmental authority pending or presently in effect of, to
the knowledge of Sellers, overtly threatened against Sellers or the Companies
relating to Environmental Laws, which, in any case, would reasonably be
expected to have (i) an adverse effect on the ability of Sellers to execute,
deliver or perform its obligations under the Agreement or (ii) an adverse
effect on the Assets.
3.10 Title to the Purchased Assets. Sellers have title to all the
Assets; Sellers shall convey to Purchaser the Assets with warranty of title,
by, through and under Sellers; and at the Closing Date, such Assets shall be
free and clear of all mortgages, pledges, liens, security interests, leases,
conditional sale or other title retention agreements, encumbrances, rights or
other changes of any kind or character, except as otherwise set forth on
Schedule 3.10 hereto, including leased Assets, also reflected on Schedule
3.10. To the best of Sellers' knowledge, the names of the Companies defined
herein, are the only names under which Purchaser needs to search the public
records to determine the existence of validly perfected liens or security
interests in or to the Assets. Upon the transfer of the Assets by Sellers to
Purchaser at the Closing, Purchaser will receive all the Assets free and clear
of all pledges, liens, security interests, leases, conditional sale or other
title retention agreements, encumbrances or other charges of any kind.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers as follows:
4.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan.
4.2 Power and Authority. Purchaser has the full corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement by
Purchaser and the performance by Purchaser of its obligations hereunder have
been duly authorized by the Board of Directors of Purchaser and by all other
necessary corporate action of Purchaser.
4.3 Enforceability. This Agreement has been duly executed and
delivered on behalf of Purchaser and constitutes the valid and binding
obligation of Purchaser, enforecable against Purchaser in accordance with its
terms, except as such enforceability may be limited by (a) any applicable
bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent
transfer and conveyance laws and other similar laws of general application
relating to or affecting the rights and remedies of creditors, or (b) general
principals of equity, whether applied by a court of law or equity.
4.4 No Conflicts. Neither the execution and delivery of this
Agreement by Purchaser nor the performance by Purchaser of its obligations
hereunder will violate, result in the breach of any provision of, or
constitute a default under (a) the Certificate of Incorporation, By-laws or
other charter or organizational documents of Purchaser, (b) any agreement or
instrument to which Purchaser is a party or by which it or its assets is
bound, (c) any judgment, order, decree or writ to which Purchaser is a party
or by which Purchaser or its assets is bound, or (d) any law, rule or
regulation applicable to Purchaser or its assets.
SECTION 5. COVENANTS OF SELLERS
5.1 (a) Access. Until the Closing Date (the "Due Diligence
Period"), Sellers shall make available to Purchaser and its officers,
employees, agents and representatives, at any reasonable time upon adequate
notice to Sellers, access to the Assets and Sellers' full and accurate books,
records, documents, data and other information relating to the Assets
including, but not limited to Purchaser's right to investigate and audit all
of the pertinent technical, geological, geophysical engineering, reserves,
revenue, costs operations, land, legal title, environmental, marketing,
accounting, contracts, and dedication agreements, revenue studies, enhanced
oil recovery studies, drilling plans, pipeline specifications, test data,
operating costs, production, plugging liabilities, field facilities, lease and
right of way documents, permits, title opinions and other information
Purchaser may request ("Sellers Data");
(b) Purchaser's Right to Terminate. The Purchaser shall
have the absolute right to terminate this Agreement by delivering written
notice to Sellers of such termination on or before 6:00 p.m. on the last day
of the Due Diligence Period if, alone or in the aggregate, (i)-(iv), below,
exceed ten percent (10%) of the Base Purchase Price (i) the Assets are subject
to substantial defects in title, liens or encumbrances (which will not be
released prior to Closing), or (ii) if an independent third party has
exercised or exercises an interest in the Assets, or (iii) in the event
Purchaser becomes aware of any circumstance or set of circumstances involving
a material adverse change in the Assets occurring during the Due Diligence
Period (and Purchaser shall use reasonable business efforts to inform Sellers
as soon as Purchaser becomes aware of any such circumstance or set of
circumstances), or (iv) the Assets are subject to a Casualty Defect. Upon
termination of this Agreement under this paragraph each party hereto shall be
released from all liabilities and obligations under this Agreement and Sellers
shall return the Deposit to Purchaser.
5.2 Operations. From the date of this Agreement until the Closing
Date, Sellers shall, except as otherwise contemplated by this Agreement:
(a) Conduct its Business and operate (or, if not the operator,
use its best efforts to cause the operation of ) the Assets in the ordinary
course of business consistent with past practices;
(b) Use its best efforts to maintain and keep the Assets in
their present working order, ordinary wear and tear excepted, and keep them
supplied with all necessary repairs, renewals and improvements;
(c) Perform all its obligations in conformity in all respect
with all oil, gas and mineral leases and other material agreements and
Contracts included in the Assets;
(d) Operate the Assets in conformity with all applicable laws,
regulations and orders of governmental authorities having jurisdiction over
Sellers or the Assets;
(e) Not sell, lease (as lessor), transfer, license (as
licensor), or otherwise dispose of any of the Assets, except for the sale of
inventory or monthly production (not future production) in the ordinary course
of business and for any other disposition of a non-material portion of the
Assets;
(f) Not release, terminate, permit to terminate, modify or
reduce its rights under any oil, gas or mineral lease or other material
agreement or contract forming a part of the Assets, or modify or enter into
any new production, sales or marketing contracts relating to the Assets, which
in any case has an adverse effect on the Assets; and
(g) Pay and discharge all taxes and expenses (including,
without limitation, all bills for labor, materials and supplies used or
furnished for use in connection with the Assets and all severance, production,
windfall project and all similar taxes) and liabilities relating to Sellers'
operation of the Assets.
5.3 Preferential Rights and Consents. Sellers do not believe that
the Oil and Gas Properties are, but if, certain of the Oil and Gas Properties
are or may be subject to (a) preferential purchase rights, rights of first
refusal and similar option rights in third parties to purchase all or part of
certain of the Oil and Gas Properties (collectively, "Preferential Rights"),
or (b) lessors' approvals or other consents to transfer any part of the Oil
and Gas Properties (other than governmental approvals routinely acquired after
a transfer) including the non-transferability requirement of any license,
permits, right-of-way, pipeline franchise or easement, or a requirement of
renegotiation upon transfer of ownership (collectively, "Consents"), Sellers
shall request, from each party shown on Sellers' records as holding
Preferential Rights or as required to give Consents, and in accordance with
the documents creating such rights, waivers of the Preferential Rights and
Consents. If a party from whom a waiver of a Preferential Right is requested
refuses to give such waiver, Sellers shall tender (at a price determined by
the documents creating the Preferential Rights) the Oil and Gas Properties
affected by such unwaived Preferential Right and if, and to the extent that,
such Preferential Right is exercised by the holder thereof, and such interest
in the Oil and Gas Property is actually sold pursuant to such right, such
interest in the Oil and Gas Properties shall be excluded from the sale and
purchase of Assets contemplated hereby and the Purchase Price shall be reduced
by the amount allocated to such Oil and Gas Property as set forth in Schedule
2.3 hereto, or if not so set forth, by the amount so determined by mutual
agreement of the parties hereto. All Oil and Gas Properties for which a
Preferential Right has not been asserted prior to the Closing by the holder of
such right shall be sold to Purchaser at the Closing pursuant to the
provisions of this Agreement. Except that the Purchaser at its option shall
exclude such Preferential Right properties if no written consent is given and
reduce the Purchase Price dollar-for-dollar by the amount set forth on
Schedule 2.3 hereto, or if not so set forth, by the amount so determined by
mutual agreement of the parties hereto. If any holder of Preferential Rights
notifies Sellers subsequent to the Closing that it intends to assert its
Preferential Rights, Sellers shall give notice thereof t Purchaser, whereupon
Purchaser shall satisfy such Preferential Rights and all other obligations of
Sellers to such holder. Sellers shall have no obligation hereunder other than
to request waivers of Preferential Rights and to request Consents (including,
without limitation, Sellers shall have no obligation to assure that such
waivers of Preferential Rights or Consents are obtained).
If the Sellers sell any of their interest in the Assets, subject to any
Preferential Rights and Consents Sellers shall provide Purchaser, in writing
the name of the purchaser of such Assets and the purchase price thereof within
ten (10) days of the third parties notice to Sellers.
5.4 Operating Agreement. With the exception of the Wil E. Coyote
#1-26 and the Wil E. Coyote #2-26 wells, Sellers own the controlling working
interest in the Assets subject to operating agreements, and agree to transfer
operations to Purchaser subject to the Model 82 operating agreement
controlling such Assets, or such other documents or regulatory orders
controlling the Assets.
SECTION 6. COVENANTS OF PURCHASER
6.1 Confidentiality. Purchaser shall cause the Sellers Data
furnished or made available to Purchaser and its officers, employees, agents
and representatives in connection with this Agreement or in connection with
Purchaser's investigation of the Assets to be maintained strictly confidential
and not be used for any purpose other than in connection with this Agreement
and Purchaser's investigation of the Assets until the earlier to occur of:
(a) the Closing, (b) such time as the Sellers Data in question is disclosed to
Purchaser by a third party that is not obligated to Sellers to maintain such
information in confidence, or (c) such time as the Sellers Data in question
becomes generally available to the oil and gas industry other than through a
breach of confidentiality obligation to Sellers from Purchaser.
6.2 Return of Sellers Data. Purchaser agrees that if this
Agreement is terminated for any reason whatsoever prior to the Closing,
Purchaser shall return to Sellers all Sellers Data, workpapers, information
and other materials (including copies, extracts thereof) furnished by Sellers
to Purchaser or its officers, employees, agents and representatives in
connection with this Agreement without retaining any copies thereof.
SECTION 7. COVENANTS OF SELLERS AND PURCHASER
7.1 Performance of Obligations. Upon the terms and subject to the
conditions set forth in this Agreement, Sellers and Purchaser shall each use
its best efforts to take, or cause to be taken, as promptly as practicable,
all such actions and cause to be done all of the things necessary or
appropriate to carry out its obligations under this Agreement and to
consummate and make effective the transactions contemplated hereby, including,
without limitation, fulfilling all conditions to this Agreement.
7.2 Public Statements. Prior to the Closing, Sellers and
Purchaser shall consult with each other prior to issuing any press release or
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby, and shall not issue any such press release
or make any such public statement prior to such consultation or if either
objects thereto, unless the same is required by applicable law based on the
advice of legal counsel.
7.3 Notification of Certain Matters. Sellers and Purchaser shall
each give prompt oral and written notice to the other of (a) the occurrence,
or failure to occur, of any event the occurrence or failure of which would be
reasonably likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at any time from
the date hereof to and on the Closing Date, and (b) any material failure on
its part to comply with or satisfy any material covenant, condition or
agreement to be complied with or satisfied by it hereunder.
7.4 Governmental Notification and Approvals. Sellers and
Purchaser shall promptly prepare and file any documents required by law to be
filed with any governmental or regulatory authority in order to permit the
consummation of the transactions contemplated hereby.
7.5 Consents. Sellers and Purchaser shall use their best efforts
to obtain all consents, authorizations, permits, licenses, orders, approvals
and declarations of, and make all filings and registrations with, and give all
required notices to, any governmental or regulatory authority or third party
necessary to consummate the purchase and sale of the Assets contemplated
hereby, including, but not limited to, the waiver or release of all mortgages
and other liens on the Assets.
SECTION 8. TITLE DEFECTS, CASUALTY LOSSES AND GAS IMBALANCES
8.1 Definition of Title Defect. As used in this Agreement, the
term "Title Defect" shall mean the following:
(a) Sellers' ownership of an Oil and Gas Property is such that,
with respect to a well or lease listed on Schedule 1.1.1 hereto, it clearly
(i) entitles Sellers to receive a decimal share of the oil, gas and other
hydrocarbons produced from, or allocated to, such well or lease which is less
than the decimal share set forth on Schedule 1.1.1 hereto in connection with
such well or lease in the column headed "Net Revenue Interest" (or words of
similar import), or (ii) causes Sellers to be obligated to bear a decimal
share of the cost of operation of such well or lease greater than the decimal
share set forth on Schedule 1.1.1 hereto in connection with such well or lease
in the column headed "Working Interest" (or words of similar import) without a
corresponding increase in Net Revenue Interest; or
(b) Sellers' ownership of an Asset is subject to a lien, charge
or encumbrance other than (i) a lien, charge or encumbrance set forth on
Schedule 1.1.1 hereto, (ii) materialmen's, mechanic's, repairmen's,
employee's, contractor's, operator's, tax or any similar liens and charges
arising in the ordinary course of business for obligations that are not
delinquent or that will be paid and discharged by Sellers or, if delinquent,
that are being contested in good faith by appropriate action; (iii) lessors'
royalties, overriding royalties, reversionary interests and similar burdens if
the net cumulative effect of the burdens does not operate to reduce
substantially the interests of Sellers with respect to all oil and gas
produced from any well listed on Schedule 1.1.1 hereto below the Net Revenue
Interests for such well set forth on Schedule 1.1.1 hereto; (iv) division
orders and sales contracts terminable without penalty upon no more than 120
days notice to the Purchaser; (v) Preferential Rights and required Consents
and similar agreements with respect to which waivers or consents are obtained
from the appropriate parties or the appropriate time period concerning any
Preferential Right has expired without an exercise of the Preferential Right;
(vi) rights to consent by, required notices to, filings with, or other actions
by governmental entities in connection with the sale or conveyance of oil and
gas leases or interests therein if they are customarily obtained subsequent to
the sale or conveyance; (vii) conventional rights of reassignment requiring
notice to the holders of the rights; (viii) easements, rights-of-way,
servitude, permits, surface leases, and other rights in respect of surface
operations; (ix) all other liens, charges, encumbrances, contracts,
agreements, instruments, obligations, defects and irregularities affecting the
leases or the wells which individually or in the aggregate are not such as to
interfere substantially with the operation, value or use of any of the leases
or wells located thereon listed on Schedule 1.1.1 hereto, do not substantially
prevent Purchaser from receiving the proceeds of the production from any of
the leases or wells listed on Schedule 1.1.1 hereto, do not substantially
reduce the interest of Sellers with respect to all oil and gas produced from
any lease or well listed in Schedule 1.1.1 below "Net Revenue Interest" set
forth in Schedule 1.1.1 hereto for such lease or well and do not substantially
increase the portion of the costs and expenses related to the lease or well
listed on Schedule 8.1 hereto that Sellers is obligated to pay above the
"Working Interest" set forth on Schedule 1.1.1 hereto for such lease or well
without a corresponding increase in the Net Revenue Interest for such lease or
well; (x) rights reserved to or vested in any governmental, statutory or
public authority to control or regulate any of the Assets in any manner, and
all applicable laws, rules and orders of governmental authority; (xi) any
Title Defects as Purchaser may have expressly waived in writing or which are
deemed to have been waived and (xii) the terms and conditions of all leases,
agreements, orders, instruments and documents expressly described in or
referred to in Schedule 1.1.1 hereto and the production imbalances listed in
Schedule 1.1.1 hereto; or
(c) An Asset that has been cited in writing by any
governmental or regulatory authority for a violation of any applicable
Environmental Laws.
8.2 Notice of Title Defects Purchaser may, to the extent it
deems appropriate, conduct such title examination or investigation, or such
other examinations and investigations, as it may choose to conduct with
respect to the Assets. Should, as a result of any such examination or
investigation or otherwise, matters come to Purchaser's attention which would
constitute Title Defects that Purchaser is unwilling to waive, Purchaser shall
notify Sellers in writing of the existence of such Title Defects promptly
after discovering such Title Defects, but in no event later than ten business
days prior to the Closing Date.
8.3 Remedies for Title Defects. In the event that Purchaser
timely notifies Sellers of any Title Defect in accordance with the provisions
of Section 8.2 hereof, then Sellers shall have the right, but not the
obligation, to attempt to cure, prior to the Closing, such asserted Title
Defect, and shall also have the right (which may be exercised at any time
before the Closing Date) to postpone the Closing by designating a new Closing
Date not later than 30 days after the Closing Date set forth in Section 11.1
hereof if Sellers desire additional time to attempt to cure (including
determining if it will attempt to cure) one or more asserted Title Defects.
With respect to any Title Defect that Sellers elect not to cure or that
Sellers fail to cure within 30 days after receiving notice of the Title
Defect, the Purchase Price shall be adjusted in accordance with the following
guidelines:
(a) If the Title Defect is based upon Purchaser's notice that
Sellers own a lesser Net Revenue Interest than that shown on Schedule 1.1.1
hereto, then the portion of the Purchase Price allocated on Schedule 2.3
hereto to the affected Asset shall be reduced in the same proportions that the
actual Net Revenue Interest bears to the Net Revenue Interest shown on
Schedule 2.3 hereto for such Assets dollar for dollar.
(b) If the Title Defect cannot be accommodated pursuant to
clause (a) above and the parties cannot otherwise agree upon appropriate
adjustment to the Purchase Price or Sellers cannot or do not cure the Title
Defect to the reasonable satisfaction of Purchaser prior to the Closing for
the Asset affected by the Title Defect such Asset shall be excluded from the
Assets sold and purchased at the Closing, and the Purchase Price shall be
reduced by an amount allocated to the affected Asset on Schedule 2.3.
(c) Purchaser may only adjust the Purchase Price for Title
Defects at the Closing if the cumulative amount of such Title Defects equals
or exceeds one--quarter of one percent (1/4 of 1%) of the Base Purchase Price.
Such percentage is a threshold, and when exceeded adjustments to the Purchase
Price shall be made in the amount of the Title Defects.
(d) If the Purchase Price is adjusted at the Closing as a result
of an Asset affected by a Title Defect being excluded from the Assets sold and
purchased at the Closing, and if Sellers can demonstrate to Purchaser's
reasonable satisfaction that the Title Defect has been cured within 90 days
after the Closing Date, then Purchaser shall be obligated to purchase such
Asset and to pay to Sellers the amount of the adjustment to the Purchase Price
as a result of the exclusion of the Asset from the sale and purchase at the
Closing, without interest, within 30 business days from the date the parties
agree the Title Defect has been cured.
8.4 Casualty Loss. If, prior to the Closing, any of the Assets
are damaged or destroyed by fire, storms, floods, washouts, lightening,
earthquakes, or other casualty resulting from acts of god or sabotage,
insurrections, civil disturbance, riots, or vandalism ("Casualty Defects") in
an amount exceeding one percent (1%) of the Base Purchase Price, Sellers shall
notify Purchaser promptly after Sellers learn of such event. Sellers shall
have the right, but not the obligation, to cure any such Casualty Defect by
repairing such damage or, in the case of personal property or fixtures,
replacing the Assets affected thereby with equivalent items, no later than the
Closing Date. If any uncured Casualty Defect exists at the Closing, Purchaser
shall proceed to purchase the Assets affected thereby, and the Purchase Price
shall be reduced by the aggregate reduction in the value of the Assets on
account of such Casualty Defects, as determined by mutual agreement of the
parties. If the parties fail for any reason to agree prior to the Closing on
the amount of any Purchase Price adjustment on account of any Casualty Defect,
Purchaser shall exclude any Asset affected by a Casualty Defect from the
Assets to be purchased and sold at the Closing, and the affected Asset shall
be treated as if it had a Title Defect and the procedure provided in Section
8.3 hereof shall be applicable thereto.
8.5 Gas Imbalances. Purchaser and Sellers agree that the
Purchase Price shall be adjusted at the Closing to account for gas imbalances
affecting the Assets. If the total amount of overproduced gas exceeds the
total amount of underproduced gas, then the Purchase Price shall be reduced by
the product of (i) an amount (in MCF) equal to (A) the total amount of
overproduced gas related to the Assets as of the Effective Date, less (B) the
total amount of total underproduced gas related to the Assets as of the
Effective Date, as set forth on Schedule 8.5 hereto, multiplied by (ii)
$2.00 per MCF. The Purchase Price may be adjusted at the Closing for gas
imbalances only if, and only to the extent that, the aggregate amount of such
gas imbalances exceeds 10,000 MCF.
SECTION 9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS
The obligations of Sellers to sell and deliver the Assets to Purchaser
and to perform its other obligations hereunder are subject to the fulfillment
(or waiver in writing by Sellers) at or prior to the Closing of each of the
following conditions:
9.1 Representations and Warranties. Each and every representation
and warranty of Purchaser set forth in this Agreement shall be true and
correct in all material respects as of the date when made and as of the
Closing, except for changes in the ordinary course of business consistent with
past practices and except to the extent contemplated by this Agreement.
9.2 Performance. Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements, obligations
and conditions under this Agreement which are to be performed, satisfied or
complied with by Purchaser at or prior to the Closing.
9.3 Pending Matters. No action, suit or other proceeding shall
be pending or overtly threatened against Sellers or Purchaser by or before any
court or governmental authority which seeks to restrain, enjoin or otherwise
prohibit the consummation of the transactions contemplated by this Agreement.
9.4 Deliveries at Closing. Purchaser shall have delivered to
Sellers at the Closing the Purchase Price as adjusted and each of the
certificates, instruments, documents and writings required hereunder.
SECTION 10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER
The obligations of Purchaser to purchase and acquire the Assets from
Sellers and to perform its other obligations hereunder are subject to the
fulfillment (or waiver in writing by Purchaser) at or prior to the Closing of
each of the following conditions:
10.1 Representations and Warranties. Each and every
representation and warranty of Sellers wherever they might appear in this
Agreement shall be true and correct in all material respects as of the date
when made and as of the Closing, except for changes in the ordinary course of
business.
10.2 Performance. Sellers shall have performed, satisfied and
complied in all respects with all covenants, agreements, obligations and
conditions under this Agreement which are to be performed, satisfied or
complied with by Sellers at or prior to the Closing.
10.3 Pending Matters. No action, suit or other proceeding shall
be pending or overtly threatened against Sellers or Purchaser by or before any
court or governmental authority which seeks to restrain, enjoin or otherwise
prohibit the consummation of the transactions contemplated by this Agreement.
10.4 Deliveries at Closing. Sellers shall have delivered to
Purchaser at the Closing the Assets and each of the certificates, instruments,
documents, and writings required hereunder, and an executed bill of sale or
warranty deed.
SECTION 11. CLOSING
11.1 Time and Place. The consummation of the sale and purchase of
the Assets contemplated hereby (the "Closing") shall take place at the offices
of Patrick Energy Corp., at 5:00 p.m. Central time, on the later of (a)
January 18, 2000 or (b) such other time, date or place as the parties shall
mutually agree but no later April 5, 2000. The date and time of the Closing
is sometimes herein referred to as the "Closing Date."
11.2 Deliveries by Sellers. At the Closing, Sellers shall deliver
to Purchaser the following:
(a) Possession of the Assets;
(b) Duly executed deeds, bills of sale, assignments and such
other instruments of sale, assignment and transfer in order to vest in
Purchaser all of Sellers' right, title and interest in and to the Assets; the
Assets shall be conveyed by Sellers to Purchaser by assignment and conveyance
in the form set forth in Exhibit A, attached hereto and incorporated herein by
reference; the rights-of-way and easement shall be conveyed by Sellers to
purchaser by an assignment and conveyance in the form set forth in Exhibit B,
attached hereto and incorporated herein by reference; the existing gas
purchase contract rights shall be assigned by Sellers to Purchaser utilizing
the form set forth in Exhibit C attached hereto and incorporated herein
reference;
(c) To the extent then available, duly executed transfer orders,
letters in lieu of transfer orders or similar documentation in form mutually
acceptable to Purchaser and Sellers to direct that all distribution of
production from the Oil and Gas Properties be made for the benefit of
Purchaser;
(d) To the extent then available and at Purchaser's option, duly
executed change of operator forms on all wells (active or inactive) operated
by Sellers, as required by the applicable state regulatory body, to effect a
change of operator for the Oil and Gas Properties to the extent any applicable
operating agreement authorizes such a change of operator; and
(e) A Certificate of Good Standing issued by the Secretary of
State of Oklahoma confirming that the Companies are duly incorporated, validly
existing and in Good Standing;
(f) All other items required to be delivered by Sellers to
Purchaser pursuant to any provision of this Agreement; and
(g) The existing Operating Agreements.
11.3 Deliveries by Purchaser At the Closing, Purchaser shall
deliver to Sellers the following:
(a) By wire transfer of immediately available funds to an
account designated by Sellers, an amount equal to (i) the Base Purchase Price
as adjusted, less (ii) the Deposit;
(b) Evidence of any appropriate bond, surety letters or letters
of credit as may be required by any federal or state governmental or
regulatory authority dealing with plugging of any dry or inactive wells
including any Assets;
(c) Duly executed forms as Sellers may reasonably require for
Purchaser to succeed Sellers with respect to the Assets under the rules and
regulations of applicable authorities and for Purchaser to assume any plugging
liabilities with respect to Sellers with respect to the wells located on the
Assets or in units in which the Assets participate if applicable; and
(d) All other items required to be delivered by Purchaser to
Sellers pursuant to any provision of this Agreement.
11.4 Effectiveness of Closing No action to be taken or delivery
to be made at the Closing shall be effective until all the actions to be taken
and delivery to be made at the Closing complete.
SECTION 12. FURTHER ASSURANCES
At any time and from time to time after the Closing, Sellers and
Purchaser shall execute, acknowledge and deliver all such further conveyances,
deeds, assignments, consents, permits, transfer orders, notices, assumptions
and releases, and such other documents and instruments, and shall take such
further actions, as (i) Purchaser reasonably requests and at its expense, in
order to more fully and effectively vest in Purchaser and its successors and
assigns all of Sellers' right, title and interest in and to the Assets.
SECTION 13. Intentionally Left Blank
SECTION 14. POST-CLOSING ADJUSTMENTS AND OTHER FINANCIAL MATTERS
14.1 Calculation of Adjustment to Purchase Price. Within 90 days
after the Closing, Sellers shall prepare, in accordance with the provisions of
this Agreement, and deliver to Purchaser a statement (the "Closing Statement")
setting forth each adjustment to the Purchase Price required under Sections
8.3(f) or 14.3 hereof hereunder, and showing the calculation of such
adjustments. Within 30 days of receipt of the Closing Statement, Purchaser
shall deliver to Sellers a written report ("Purchaser Report") containing all
changes with explanations therefor that Purchaser proposes to be made in the
Closing Statement, it being agreed that Purchaser's failure to deliver the
Purchaser Report to Sellers within such time period shall constitute
acceptance by Purchaser of the adjustments set forth in the Closing Statement
as prepared by Sellers. In the event of timely delivery within 30 days by
Purchaser to Sellers of the Purchaser Report no additional changes to the
Closing Statement provided by Sellers shall be considered by the parties. The
parties hereto shall use their best efforts to reach agreement on the final
Closing Statement within 30 days after the Sellers' receipt of the Purchaser
Report. If a written agreement determining the final adjustments to the
Purchase Price has not been reached within 30 days after Sellers' receipt of
the Purchaser Report, then either party may, by notice to the other, submit
for determination to a big five accounting firm selected by drawing straws,
and if such firm has worked with a party before they shall be excluded (the
"Arbitrator") the adjustments, if any, to be made to the Purchase Price in
accordance with the provisions of this Agreement. Any such determination made
by the Arbitrator shall be conclusive and binding on the parties. Nothing
herein shall be construed to (a) authorize or permit the Arbitrator to
determine any question or matter under or in connection with this Agreement,
except that the determination of what adjustments, if any, must be made in the
Purchase Price in accordance with the provisions of this Agreement, or (b)
require the Arbitrator to follow the rules and procedures of the American
Arbitration Association. The cost of any determination made by the Arbitrator
pursuant to this Section 14.1 shall be borne equally by the Purchaser and
Sellers. Within five business days after the final determination of the
adjustments to the Purchase Price by the Arbitrator or by mutual agreement, an
adjusting payment shall be made by Sellers to Purchaser or by Purchaser to
Sellers, as appropriate, in cash equal to the sum of the adjustments to the
Purchase Price.
14.2 Suspended Funds. With respect to any wells for which
operations are to be transferred to Purchaser the Sellers shall have the
responsibility for making distribution of production proceeds from the wells.
Sellers shall provide the Purchaser a listing showing all proceeds from
production attributable to the leasehold interest related to wells described
in Schedule 1.1.1 hereto which are currently held in suspense. As to those
wells, Sellers shall be responsible for proper distribution of all such
suspended proceeds to the parties lawfully entitled to them, and hereby agrees
to indemnify, defend and hold harmless Purchaser from and against any and all
Claim, liabilities, losses, costs and expenses (including without limitation
courts costs and reasonable attorney's fees) arising out of or relating to
those suspended proceeds prior to the Closing.
14.3 Receipts and Credits Subject to the terms hereof, all monies,
proceeds, receipts, credits and income attributable to the Assets for all
periods of time subsequent to the Effective Date shall be the sole property
and entitlement of Purchaser, and, to the extent received by Sellers, Sellers
shall fully disclose, account for and transmit the same to Purchaser promptly
after the Closing. All monies, proceeds, receipts and income attributable to
the Assets for all periods of time prior to the Effective Date shall be the
sole property and entitlement of Sellers and, to the extent received by
Purchaser, Purchaser shall fully disclose, account for and transmit same to
Sellers promptly. All costs, expenses, disbursements, and obligations
attributable to the Assets for periods of time prior to the Effective Date,
regardless of when due or payable, shall be a sole obligation of Sellers, and
Sellers shall promptly pay, or if paid by Purchaser, Sellers shall promptly
reimburse Purchaser for and hold Purchaser harmless from and against the same.
All costs, expenses, disbursements, obligations and liabilities attributable
to the Assets for all periods of time subsequent to the Effective Date,
regardless of when due or payable, shall be the sole obligation of the
Purchaser, and the Purchaser shall promptly pay, or if paid by Sellers,
promptly reimburse Sellers for and hold Sellers harmless from and against the
same. Sellers shall be entitled to a credit for and reimbursement in an
amount equal to any amount received by Purchaser after Closing for any
delivery or performance by Sellers prior to the Effective Date. Any
uncollected oil and gas receivables attributable to the Assets after the
Effective Date shall be assigned to Purchaser.
SECTION 15. TERMINATION
15.1 Events of Termination This Agreement may be terminated at any
time prior to the Closing:
(a) By mutual written agreement of Sellers and Purchaser;
(b) By either Sellers or Purchaser if the Closing shall not have
occurred by April 5, 2000, or such later date as mutually agreed in writing;
provided, however, that the right to terminate this Agreement under this
Section 15.1 shall not be available to any party whose breach of, or default
under, or intentional failure to fulfill its obligations under, any portion of
this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date;
(c) By Sellers if on the Closing Date any of the conditions
specified in Section 9 hereof have not been satisfied or waived or if
Purchaser shall have failed to perform, satisfy or comply with any of its
obligations, agreements or covenants to be performed, satisfied or complied
with at or prior to the Closing;
(d) By Purchaser if on the Closing Date any of the conditions
specified in Section 10 hereof have not been satisfied or waived or if Sellers
shall have failed to perform, satisfy or comply with any of its obligations,
agreements or covenants to be performed, satisfied or complied with at or
prior to the Closing;
(e) By either Sellers or Purchaser if any court of
competent jurisdiction or other governmental or regulatory authority shall
have issued, enacted, entered, promulgated or enforced any final and non-
appealable order, judgment, decree, injunction, ruling or other action
restraining, enjoining or otherwise prohibiting the purchase and sale of the
Assets contemplated hereby; or
(f) By Purchaser pursuant to Section 5.1(b).
15.2 Effect of Termination. In the event this Agreement is
terminated pursuant to Section 15.1 hereof, this Agreement shall become void
and have no further force or effect (except for the provisions of Section 2.5,
6, 17, 18.10, 18.17 and 18.18 hereof which shall survive such termination and
continue in full force and effect), without any liability on the party of any
party hereto; provided, however, that if either party hereto is in breach of
or material default under its obligations set forth in this Agreement at the
time this Agreement is so terminated, such defaulting party shall continue to
be liable to the other party for damages (but in no event for specific
performance and subject to Section 18.17 hereto) in respect of such breach or
default, and such liability shall not be affected by such termination.
SECTION 16. TAXES
16.1 Apportionment of Ad Valorem and Property Taxes All ad valorem
taxes, real property taxes, personal property taxes and similar obligations
(excluding income taxes) ("Property Taxes") with respect tot eh Assets for the
tax period in which the Effective Date occurs shall be apportioned as of the
Effective Date between Sellers and Purchaser. The owner of record as of 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 on which
the Effective Date occurs. If Sellers are the owners of record on the
assessment date, Purchaser shall pay to Sellers Purchaser's pro rata portion
of Property Taxes within 30 days after receipt of Sellers' invoice therefor.
If Purchaser is the owner of record as of the assessment date then Sellers
shall pay to Purchaser Sellers pro rata portion of Property Taxes within 30
days after receipt of Purchaser's invoice therefor. The party paying such
taxes shall supply the other party with copies of the filed reports and proof
of payment promptly after filing and paying the same. Notwithstanding the
foregoing Sellers shall be responsible for all Property Taxes on Assets
purchased by Purchaser through its ownership of the Assets and Oil and Gas
Properties due or incurred prior to the Effective Date.
16.2 Sales Taxes. The Purchase Price provided for hereunder excludes
any sales taxes or other taxes required to be paid in connection with the
purchase and sale of Assets pursuant to this Agreement. Purchaser shall be
liable for all sale and use taxes, conveyance, transfer and recording fees and
real estate transfer stamps or other taxes that may be imposed on any transfer
of property pursuant to this Agreement. Purchaser shall indemnify and hold
Sellers harmless with respect to, and promptly reimburse Sellers for, the
payment of any of these taxes including any interest or penalties assessed
thereon.
16.3 Other Taxes. All taxes (other than income taxes) which are
imposed on or with respect to the production of oil, natural gas or other
hydrocarbons or minerals or the receipt of proceeds therefrom (including but
not limited to severance, production and excise taxes) shall be apportioned
between the parties based upon the respective shares of production taken by
the parties. All such taxes which have accrued prior to the Effective Date
have been or will be properly paid or withheld by Sellers and all statements,
returns and documents pertinent thereto have been or will be properly filed.
Purchaser shall be responsible for paying or withholding or causing to be paid
or withheld all such taxes which have accrued after the Effective Date and for
tiling all statements, returns and documents incident thereto.
16.4 Cooperation. Each party to this Agreement shall provide the
other party with reasonable access to all relevant documents, data and other
information which may be required by the other party for the purpose of
preparing tax returns and responding to any audit by any taxing jurisdiction.
Each party to this Agreement shall cooperate with all reasonable requests of
the other party made in connection with contesting the imposition of taxes.
SECTION 17. DOCUMENT RETENTION
17.1 Inspection. As used in this Section 17, "Documents" means all
files, documents, books and records delivered to Purchaser by Sellers pursuant
to the provisions of this Agreement, including, but not limited to:
financial and tax accounting records; land, title and division of interest
files; contracts; engineering and well files; and books and records related to
the operation of the Assets. Subject to the provisions of Section 17.2
hereof, Purchaser agrees that the Documents shall be open for inspection by
the officers, employees and representatives of Sellers at reasonable times and
upon reasonable notice during regular business hours for a period of three
years following the Closing Date (or for such longer period as may be required
by law or governmental regulation), and that Sellers may during such period at
its expense make such copies thereof as it may reasonably request. Sellers
agree that such Documents as shall be retained by Sellers and that are related
to the Assets and the Companies, the conduct of Business or the operation of
the Assets and the Companies shall be open for inspection by the officers,
employee and representatives of Purchaser at reasonable times and upon
reasonable notice during regular business hours for a period of three years
following the Closing Date and that Purchaser may during such period at its
expense make such copies thereof as it may reasonable request. It is
understood and agreed for purposes of this Agreement that Sellers and
Purchaser may maintain and preserve such Documents by way of microfilm or
microfiche.
17.2 Destruction. Without limitation the generality of the
foregoing, for a period of three years after the Closing Date (or for such
longer period as may be required by law or governmental regulation), Purchaser
shall not destroy or give up possession of any original or final copy of the
Documents without first offering Sellers the opportunity, at Sellers' expense
(without any payment to Purchaser), to obtain such original or final copy or a
copy thereof. After the conclusion of such period, Purchaser shall offer to
deliver to Sellers, at Sellers' expense (without any payment to Purchaser),
the Documents prior to destroying the same.
17.3 Access. Sellers and Purchaser each shall use its best efforts
to afford the other access to (i), in the case of Sellers, employees of
Sellers who remain employees of Sellers following the date of Closing but are
familiar with the operation of the Assets and (ii), in the case of Purchaser,
employees of Purchaser which Sellers shall reasonably request for its proper
corporate purposes, including without limitation, the defense of legal
proceedings. Such access may include interviews or attendance to depositions
or legal proceedings; provide, however, that in any event all out of pocket
expenses (including wages and salaries) reasonably incurred by any party in
connection with this Section 17.3 shall be paid or promptly reimbursed by the
party requesting such services.
17.4 Delivery of Files. As soon as reasonably practicable, but no
later than 30 days after the Closing Date, Sellers shall deliver to Purchaser
copies of all files, books, records, documents, data and other information
included in the Assets, insofar as they relate to the Assets. After the
Closing, prior to such date, Sellers shall make good faith efforts to provide
any copies of such files, books, records, documents, data or information
specifically requested by Purchaser in writing. All copying and other out-of-
pocket costs incurred in connection with delivery of such files and records
hereunder shall be borne equally by Purchaser and Sellers.
SECTION 18. GENERAL PROVISIONS
18.1 Governing Law. This Agreement and all instruments executed in
accordance herewith shall be governed by and construed in accordance with the
internal laws of the State of Oklahoma, without regard to conflict of laws
provisions that would otherwise require the application of the laws of any
other jurisdiction.
18.2 Entire Agreement. This Agreement, including all Schedules
hereto, together with any confidentiality agreement, if any, relating to the
Assets hereafter or previously executed by Purchaser, constitute the entire
agreement and understanding of the parties with respect to the transactions
contemplated hereby and supersede all prior agreements, understandings,
negotiations, discussions, representations and warranties, whether oral or
written, between the parties.
18.3 Waiver. The obligations of any party hereto may be waived only
with the written consent of the party giving the waiver. Any waiver of a
breach or violation of or default under any provision of this Agreement shall
not operate as a waiver of any other breach or violation of or default under
that provision or of any other provision of this Agreement. Failure of any
party to insist on strict adherence of or compliance with any provision of
this Agreement on any one or more occasions shall not be considered a
continuing waiver or deprive the party of the right to insist upon strict
adherence or compliance with that provision in the future or with any other
provision of this Agreement.
18.4 Severability. If any term or other provision of this Agreement
is deemed or held to be invalid, illegal or unenforceable in any situation,
such illegality, invalidity or unenforceability shall not affect or impair the
legality, validity or enforceability of that provision in any other situation
or any other provision of this Agreement in any situation, and all of the
provisions of this Agreement shall nevertheless remain in full force and
effect and this Agreement shall be construed as if such a illegal, invalid, or
inenforceable provision were omitted.
18.5 Notices. All notices and other communications required or
permitted to be given under this Agreement shall be deemed to have been duly
given if in writing and if delivered personally, or by facsimile transmission
(upon confirmation of receipt), or on the first business day following the
date of dispatch if delivered by a nationally recognized next-day courier
service, or on the third business day after being sent by registered or
certified mail, return receipt request, postage pre-paid, to the parties at
the following addresses:
If to Sellers:
Continental Resources, Inc.
P.O. Box 1032
Enid, Oklahoma 73702
Attention: Tom Luttrell
Facsimile: (580) 548-5182
and to
Continental Gas, Inc.
P.O. Box 5103
Enid, Oklahoma 73702
Attention:
Facsimile: (580) 548-5188
If to Purchaser:
Patrick Energy Corp.
6120 S. Yale, Suite 810
Tulsa, Oklahoma 74136
Attention: Mark A. Patrick
Facsimile: (918) 491-6680
and to
Chester, Willcox, and Saxbe
17 South High Street, Suite 900
Columbus, Ohio 73215
Attention: J. Richard Emens
Facsimile: (614) 221-4012
Any party hereto may send any notice or any other communication to the
intended recipient using any other means, but no such notice or other such
communication shall be deemed to have been duly given until it is received by
the recipient. Any party may change its designated address by giving written
notice thereof to the other party hereto in the manner herein above provided.
18.6 Amendments. This Agreement may be amended, modified,
supplemented or restated only by an instrument in writing signed by all
parties hereto which specifically states that it amends this Agreement.
18.7 Headings. The headings set forth in this Agreement are intended
for convenience of reference only and shall not in any way be considered a
part of or affect the meaning or interpretation of any provision of this
Agreement.
18.8 Assignment. Neither party hereto shall assign this Agreement or
any of its rights or obligations hereunder without the prior written consent
of the other party hereto, and any such assignment made without such consent
shall be void (except as to an affiliate owned fifty percent (50%) or more by
the assigning party).
18.9 Successors and Assigns. This Agreement shall inure to the
benefit and be binding upon the parties hereto and their respective heirs,
successors and permitted assigns.
18.10 Expenses. Except as otherwise provided herein, each party
shall be solely responsible for all expenses incurred by it in connection with
the negotiation, preparation and execution of this Agreement and the purchase
and sale of Assets and the other transactions contemplated hereby, including,
but not limited to, all fees and expenses of its own agents, representatives,
counsel and accountants.
18.11 No Third Party Beneficiaries. Nothing in this Agreement,
express or implied, is intended or shall be construed to provide, create or
confer upon any person or entity other than the parties hereto and their
respective successors and permitted assigns any right, benefit, or remedies.
18.12 Pronouns. The number and gender of each pronoun used in this
Agreement and the term "person" or "persons" or the like shall be construed to
mean both the number and gender of the individual, corporation, partnership,
firm, trust, agency or other entity as the context, circumstance or its
antecedent may require. The terms "herein", "hereof", "hereto" and the like
refer to this Agreement as a whole.
18.13 Schedules. The Schedules attached to this Agreement are
incorporated into and made a part of this Agreement as if they were fully set
forth herein.
18.14 Counterparts. This Agreement may be executed in one or more
counterparts (including counterparts executed by one party), each of which
shall be deemed an original, but all of which together shall constitute one
and the same agreement.
18.15 Construction of Ambiguity. Sellers and Purchaser have
participated jointly in the negotiation and drafting of this Agreement. In
the event any ambiguity or question of intent or interpretation arises with
respect to any provisions of this Agreement, including any Schedules hereto,
this Agreement shall be construed as if drafted jointly by Sellers and
Purchaser and no presumption or burden of proof shall arise favoring or
disfavoring either party hereto by virtue of the authorship of any of the
provisions of this Agreement.
18.16 Consequential Damages. Except as provided elsewhere in this
Agreement, Sellers and Purchaser hereby covenant and agree that the recovery
by either party hereto of any damages suffered or incurred by it as a result
of any breach by the other party of any provision of this Agreement shall be
limited to the actual damages suffered or incurred by the non-breaching party
as a result of the breach by the breaching party, and in no event shall the
breaching party be liable to the non-breaching party for any indirect,
consequential, special, exemplary or punitive damages suffered or incurred by
the non-breaching party as a result of the breach by the breaching party.
18.17 Joint Venture, Partnership and Agency. Nothing contained
in this Agreement shall be deemed to create a joint venture, partnership, tax
partnership or agency relationship between the parties of any kind.
18.18 Time. Time is of the essence in connection with the Closing of
the sale and purchase of the Assets hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be executed and delivered by their respective duly authorized
officers or representatives effective as of the Effective Date.
SELLERS PURCHASER
Continental Resources, Inc. Patrick Energy Corp.
HAROLD HAMM MARK PATRICK
By: Harold Hamm By: Mark Patrick
Its: President Its: Officer - Owner
Continental Gas, Inc.
RANDY MOEDER
By: Randy Moeder
Its: President