EXHIBIT 2(f)
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is made and entered
into this 12th day of September, 1996, by and between MAYNARD OIL COMPANY, a
Delaware corporation, having its principal office at 8080 North Central
Expressway, Suite 660, Dallas, Texas 75206 ("SELLER") and ENRON OIL & GAS
COMPANY, a Delaware corporation, having its principal office at 1400 Smith
Street, Houston, Texas 77002 ("BUYER").
In consideration of the mutual promises contained herein, the benefits
to be derived by each party hereunder and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Seller agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 Purchase and Sale. Seller agrees to sell and convey and Buyer agrees
to purchase and pay for the interests (as defined in Section 1.02) owned by
Seller, subject to the terms and conditions of this Agreement.
1.02 Interests. All of the following shall herein be called the
"INTERESTS":
(a) All of Seller's right, title and interest in and to the leasehold
estate and mineral rights created by the leases described in Exhibit A
(the "LEASES") together with any and all interest of Seller in and to
such property and in and to any agreements, leases, rights-of-way,
easements, licenses and permits incident thereto;
(b) All of Seller's right, title and interest in and to the wells, and
production therefrom, located on the Leases or lands pooled therewith,
including but not limited to the wells described in Exhibit A together
with any and all buildings or other improvements constructed thereon
(collectively the "WELLS", together with any and all interest of Seller
in and to such property and in and to any agreements, including,
without limitation, gas purchase agreements, farmin and farmout
agreements, operating agreements and pooling agreements, leases,
rights-of-way, easements, licenses and permits incident thereto);
(c) All of Seller's right, title and interest in and to the real and
personal property, fixtures, improvements and buildings now or as of
the Effective Time (as defined in Section 1.03) located on the lands
burdened by the Leases or lands pooled therewith (the LANDS"), and all
contract rights, rights of substitution and subrogation in and to any
rights and actions of warranty which Seller has or may have with
respect to the Interests;
(d) All of the files, records and data related to the items described
in Subsections (a), (b) and (c) above, and all the seismic and
geophysical data of Seller appurtenant to or crossing the Leases, Wells
and Lands; and
(e) Any and all other assets of Seller appurtenant or related to or
used in connection with the Leases and Wells.
1.03 Effective Time. The purchase and sale of the Interests shall be
effective as of August 1, 1996, at 7:00 A.M., local time (herein called the
"EFFECTIVE TIME ) in the county in which the Lands are located.
ARTICLE II
PURCHASE PRICE
2.01 Purchase Price. The purchase price for the Interests shall be Nine
Hundred Eighty Nine Thousand Four Hundred Thirty Four DOLLARS ($989,434.00)
(herein called the "PRELIMINARY PURCHASE PRICE"), subject to adjustment as
set forth in Section 2.02 and Section 2.03 below.
2.02 Performance Deposit. On or before 4:00 o'clock p.m., local time,
September 13, 1996, Buyer shall tender to Bank One, Texas, N.A. ("ESCROW
AGENT", as provided for in Exhibit D hereto), by wire transfer, a
performance deposit in the amount of Ninety Eight Thousand Nine Hundred
Forty Three DOLLARS ($98,943.00). The performance deposit is received
solely to assure the performance of Buyer pursuant to the terms and
conditions hereof. The performance deposit will be returned to Buyer at
Closing, upon consummation of the transaction, or at Buyer's election, may
be credited to the Preliminary Purchase Price. No interest shall be paid or
credited to the performance deposit. If Buyer fails, refuses, or is unable
to close the sale in accordance with the terms herein, Seller, except as
otherwise herein specifically provided, may, at its option, retain the
performance deposit as agreed liquidated damages and not as a penalty. If
Seller, through no fault of Buyer, refuses to close the sale in accordance
with the terms herein, the performance deposit shall be returned to Buyer.
2.03 Adjustments to Purchase Price. The Preliminary Purchase Price shall
be adjusted as follows and the resulting amount shall be herein called the
"FINAL PURCHASE PRICE".
(a) The Preliminary Purchase Price shall be increased by the
following:
(1) The value of all merchantable, allowable oil attributable to
the Leases, in storage above the pipeline connection at the
Effective Time, and not previously sold by Seller, that is
credited to the Interests, such value to be the net price realized
by Seller;
(2) The amount of all reasonable expenditures, including, without
limitation, royalties, rentals and other charges, ad valorem,
property, production, excise, severance, windfall profit and other
taxes based upon or measured by proceeds therefrom but not
including income or gross receipts taxes, expenses billed under
applicable operating agreements and, as compensation to Seller for
its general and administrative expenses as operator of interests
operated by it, in lieu of any other overhead charges in
connection with such particular Interests:
(i) that amount attributable to the Interests under any
existing joint operating agreement, or
(ii) in the absence of a joint operating agreement with
respect thereto, the applicable rate recommended in the
1995 Ernst & Young, L.L.P. s Fixed Rate Overhead
Survey in connection with the operation of the
Interests from the Effective Time to the Closing Date
(as defined in Section 9.01), as well as any
expenditures approved by Buyer;
(3) An amount equal to all prepaid expenses attributable to the
interests that are paid by or on behalf of Seller prior to the
Closing Date and that are, in accordance with generally accepted
accounting principles, attributable to the period after the
Effective Time including, without limitation, prepaid insurance,
prepaid ad valorem, property, production, severance and similar
taxes (but not including income taxes) based upon or measured by
the ownership of property or the production of hydrocarbons or the
receipt of proceeds therefrom;
(4) An amount equal to seventy-five cents per mcf for a net
underproduced gas imbalance; and
(5) Any other amount agreed upon by Seller and Buyer.
(b) The Preliminary Purchase Price shall be decreased by the
following:
(1) An amount equal to all proceeds of production received by
Seller prior to the Closing Date that are attributable to the
Interests and that are, in accordance with generally accepted
accounting principles, attributable to the period of time from the
Effective Time to the Closing Date;
(2) An amount equal to all unpaid ad valorem, property,
production, severance and similar taxes and assessments (but not
including income or gross receipts taxes) based upon or measured
by the ownership of property or the production of hydrocarbons or
the receipt of proceeds therefrom accruing with respect to the
Interests prior to the Effective Time, which amount shall be
computed based upon such taxes assessed against the applicable
portion of the Interests for the current tax fiscal year, or if
the assessments for the current tax fiscal year are unavailable,
for the preceding such year;
(3) An amount equal to the sum of all Defect Adjustments and
Exclusion Adjustments (as those terms are defined in Section
7.03); and
(4) Any environmental adjustment pursuant to ARTICLE V.(e);
(5) An amount equal to seventy-five cents ($0.75) per mcf for a
net overproduced gas imbalance; and
(6) Any other amount agreed upon by Seller and Buyer.
2.04 Actual Figures. When available, actual figures will be used for
adjustments at Closing. To the extent actual figures are not available,
estimates will be used subject to final adjustments as provided in Section
10.01 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of Seller. Seller represents and
warrants to Buyer with respect to itself and, where applicable, with respect
to the Interests, that:
(a) Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation,
and has all requisite power and authority to own and lease the
properties and assets it currently owns and leases and to carry on its
business as such business is currently conducted. Seller is duly
licensed or qualified to transact business and is in good standing in
all jurisdictions where the character of the properties and assets now
owned or leased by it or the nature of the business now conducted by it
require it to be so licensed or qualified if the failure to qualify
might reasonably be expected to have a material adverse effect on the
business or financial prospects of Seller. Seller is also duly
licensed or qualified to do business and is in good standing in each
jurisdiction where the Interests are located;
(b) Seller has all requisite power and authority to execute and
deliver this agreement, to consummate the transactions contemplated
hereby, and to perform the terms and conditions hereof to be performed
by it. This Agreement constitutes, and each of the documents required
to be delivered by Seller hereunder, shall constitute Seller's legal,
valid and binding obligation, enforceable against Seller in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, or other laws relating to or affecting
generally the enforcement of creditors' rights and general principles
of equity, regardless of whether considered in proceeding in equity or
at law;
(c) This Agreement and its execution and delivery by Seller do not,
and the fulfillment and compliance by Seller with the terms and
conditions of this Agreement, and the consummation by Seller of the
transactions contemplated hereby, will not (i) require any filing,
consent, authorization, or approval under, any law or administrative
regulation or any judicial, administrative, or arbitration order,
aware, judgment, writ, injunction, or decrees applicable to or binding
upon Seller (assuming the receipt of all routine governmental consents
typically received after consummation of transactions of the nature
contemplated by this Agreement); and (ii) conflict with, result in a
breach of, constitute a default under (without regard to any
requirements of notice or the lapse of time), accelerate, or permit the
acceleration of the performance required by, any mortgage, indenture,
loan or credit agreement or other agreement or instrument evidencing
indebtedness for borrowed money to which such Seller is a party or by
which it is bound or to which any of the Interests are subject;
(d) As of the execution date hereof, there are no currently
outstanding and effective authorities for expenditure or third party
proposals for subsequent operations with respect to the Interests other
than as set forth in Exhibit B;
(e) As of the execution date hereof (i) no action, suit, or proceeding
is pending or, has been threatened against Seller before any court,
administrative agency, or arbitral tribunal, which involves or may
involve the Interests, the production of oil and gas therefrom, or the
use of and enjoyment thereof, or any operation or activity being
conducted therein or thereon or which challenges Seller's rights to
enter into this Agreement or materially adversely affects its ability
to perform its obligations under this Agreement; (ii) Seller has not
received written notice of nor been charged with any violation of, any
provision of any law or regulation relating to the Interests, and to
Seller's best knowledge, no third party has been charged with any
violation of any provision of any law or regulation relating to the
Interests;
(f) As of the execution date hereof Seller has not received written
notice that it is in default under (i) any applicable contract
affecting the Interests; (ii) any order, judgment, or decree of any
federal or state court or governmental authority relating to the
Interests; or (iii) any other agreement, contract, lease, license, or
other instrument;
(g) Exhibit A contains a complete list of the Interests wherein
Seller's interest is currently subject to reversionary interests or
non-consent operations. In each case, such Exhibit reflects the
interest of Seller before and after adjustment for such reversionary
interests or non-consent operations for each Well effected. Exhibit A-
1 reflects the remaining amount to be recouped, or account status as
appropriate, as of the date reflected thereon with respect to each such
well;
(h) As of the Effective Time, to the best of Seller s knowledge,
except as set forth in Exhibit A-1 hereto, there were no production
imbalances or transportation and processing imbalances affecting the
Interests;
(i) All of the written and electronic data (including, without
limitation, information relating to gathering, processing,
transportation and sale of hydrocarbons from the Interests and other
matters) at the time furnished or to be furnished by Seller to Buyer in
conjunction with Buyer's evaluation of the Interests was contained in
or derived from Seller's records kept in the ordinary course of
business; and no representation or warranty is made with respect to the
accuracy or correctness of any estimates, analysis, or projections or
any assumptions or other matters stated therein;
(j) No broker or finder is entitled to any brokerage or finder's fee,
or to any commission, based in any way on agreements, arrangements or
understandings made by or on behalf of Seller for which Buyer has any
liability or obligation (whether contingent or otherwise);
(k) Seller is not a foreign person, foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are
defined in the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder);
(l) From the Effective Time to the execution date hereof there
has not been: (i) any material adverse change in the condition of
the Interests, other than changes caused by the sale, production,
or disposition of production and changes resulting from reservoir
conditions other than fire, blowout, or act of God (provided that
any change or revision in existing laws, regulations, or
governmental policies applicable to the Interests or the sale,
production, or disposition of production therefrom and the
imposition of any new laws, regulations or governmental policies
with respect to the Interests or the sale, production, or
disposition of production therefrom shall be deemed not to be an
adverse change in the condition of the Interests), (ii) any sale,
lease, or other disposition of the Interests, (iii) any
condemnation or taking by eminent domain of any portion of any of
the Interests, or (iv) any contract or commitment to do any of the
foregoing;
(m) Seller or the Operator of any Interest has obtained or
applied for all governmental licenses, permits, certificates,
approvals, consents, authorizations and orders required for it to
own or lease the Interests and develop, construct, maintain, and
operate them, and to market the production therefrom, and no
proceeding is pending or threatened involving revocation of any
such licenses, permits, certificates, consents, authorizations or
orders, provided that this representation is limited to Seller's
best knowledge;
(n) There are no taxes due or tax liens on any of the Interests;
(o) To the best of Seller's knowledge, Seller is not a party to
any joint venture, partnership, limited liability company, farmin,
farmout, joint operating agreement, or other arrangement or
contract with respect to any of the Interests that is reported as
a partnership for federal or state income tax purposes;
(p) As of the execution date hereof all of the wells and all of
the equipment used in the drilling, completion and operation of
any such wells, or in the production, treatment, storage,
gathering and transportation of hydrocarbons from such wells, is
in good operating condition, ordinary wear and tear excepted,
provided that this representation is limited to Seller's best
knowledge with respect to such matters which are the
responsibility of the operator of any interest not operated by
seller;
(q) From the Effective Time to the execution date hereof, no
personal injuries or deaths have occurred in connection with any
of the Interests which should have been reported by Seller in
accident or incident reports in accordance with applicable law or
in accordance with Seller's usual operating procedures and
policies;
(r) To the best of Seller's knowledge, all royalties (including
without limitation royalties with respect to take-or-pay payments
or settlements), minimum royalties, rentals, shut-in gas payments
and other payments due with respect to the Interests have been
properly and timely paid in full, except for payments held in
suspense for title or other reasons that are customary in the
industry or which are being contested in an appropriate forum.
There are no amounts claimed to be due to Seller in respect of the
Interests that are being held in suspense because of a dispute as
to title to the Interests or for any other reason, and Seller is
entitled to be paid, and is being paid, with respect to production
from the Interests, its net revenue interest without indemnity or
guarantee other than those customarily found in division orders
and other similar agreements and documents;
(s) Except as detailed on Exhibit A-2, this Agreement and its
execution and delivery by Seller does not, and the fulfillment and
compliance by Seller with the terms and conditions of this
Agreement and the consummation by Seller of the transactions
contemplated hereby will not permit the exercise of or give rise
to (with the giving of any required notice) any preferential
purchase right, option or right of first refusal;
(t) To the best of Seller's knowledge, all of the wells in which
such Seller has an interest by virtue of its ownership of the
Leases have been (i) drilled and completed within the boundaries
of such Lease or within the limits otherwise permitted by
contract, pooling or unit agreement, and/or by law and (ii)
drilled and completed in compliance with all applicable laws,
rules and regulations; and
(u) Seller has reasonable surface access to each of the Interests
for purposes of oil and gas exploration, development and
production.
3.02 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller that:
(a) Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation,
and has all requisite power and authority to own and lease the
properties and assets it currently owns and leases and to carry on its
business as such business is currently conducted. Buyer is duly
licensed or qualified to transact business and is in good standing in
all jurisdictions where the character of the properties and assets now
owned or leased by it or the nature of the business now conducted by it
requires it to be so licensed or qualified if the failure to qualify
might reasonably be expected to have a material adverse effect on the
business or financial prospects of Buyer. Buyer is also duly licensed
or qualified to do business and is in good standing in each
jurisdiction where the Interests are located;
(b) Buyer has all requisite power and authority to execute and deliver
this Agreement, to consummate the transactions contemplated hereby, and
to perform the terms and conditions hereof to be performed by it. This
Agreement constitutes, and each of the documents required to be
delivered by Buyer hereunder, shall constitute Buyer's legal, valid,
and binding obligation, enforceable against Buyer in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, or other laws relating to or affecting generally the
enforcement of creditors' rights and general principles of equity,
regardless of whether considered in a proceeding in equity or at law;
(c) This Agreement and its execution and delivery by Buyer does not,
and the fulfillment of and compliance by Buyer with the terms and
conditions of this Agreement, and the consummation by Buyer of the
transactions contemplated hereby, will not (i) require any filing,
consent, authorization, or approval under, any law or administrative
regulation or any judicial, administrative, or arbitration order,
award, judgment, writ, injunction or decree applicable to or binding
upon Purchaser (assuming the receipt of all routine governmental
consents typically received after consummation of transactions of the
nature contemplated by this Agreement), (ii) conflict with, result in a
breach of, constitute a default under (without regard to any
requirements of notice or the lapse of time), accelerate, or permit the
acceleration of the performance required by, any mortgage, indenture,
loan or credit agreement or other agreement or instrument evidencing
indebtedness for borrowed money to which Buyer is a party or by which
it is bound;
(d) No broker or finder is entitled to any brokerage or finder's fee,
or to any commission, based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer for which Seller has any
liability or obligation (whether contingent or otherwise);
(e) Buyer is not a foreign person, foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder); and
(f) In making the acquisition of the Interests hereunder, Buyer is
acting in the conduct of its own business in the ordinary course. The
Interests are not being acquired for distribution or transfer in
violation of the securities laws of the United States or of any state
thereof.
ARTICLE IV
COVENANTS OF BUYER AND SELLER
4.01 Covenants of Seller. Seller covenants and agrees with Buyer that:
(a) After the execution of this Agreement, Seller will make available
to Buyer for examination at Seller's offices in Dallas, Texas, title
and other information relating to the Interests insofar as the same are
in Seller's possession and, subject to the consent and cooperation of
third parties, will cooperate with Buyer in Buyer's efforts to obtain,
at Buyer's expense, such additional information relating to the
Interests as Buyer may reasonably desire (to the extent that Seller may
do so without violating legal constraints or any obligation of
confidence or other contractual commitments of Seller to third
parties), including without limitation:
(1) Title opinions, title status reports and contracts or agreements
pertaining to the Interests;
(2) Copies of the leases, prior conveyances of Interests created
thereby, unitization, pooling and operating agreements, division
and transfer orders, mortgages, deeds of trust, security
agreements, financing statements, and other encumbrances not
discharged and affecting the title to or the value of the
Interests;
(3) Accounting and other records relating to the payment of rentals,
royalties, joint interest billings and other payments due under
the Leases or the Wells;
(4) Records relating to the payment of ad valorem, property,
production, severance, excise and similar taxes and assessments
based on or measured by the ownership of property or the
production of hydrocarbons or the receipt of proceeds therefrom on
the Interests;
(5) Ownership maps and surveys relating to the Interests;
(6) Copies of purchase, sale, processing and transportation agreements
relating to the production of gas from the Interests. Copies of
all gas balancing agreements and gas balancing statements;
(7) Copies of agreements, leases, permits, easements, licenses and
orders relating to the Interests;
(8) Production records relating to the Interests;
(9) Inventories of personal property and fixtures included in the
Interests; and
(10) Any and all other information contained in Seller's files that
relates to the Interests other than matters subject to attorney-
client or attorney work privilege or concerning Seller's economic
evaluation.
Seller shall permit Buyer to inspect and photocopy such information and
records at any reasonable time during the term of this Agreement. Seller
shall cooperate with Buyer in Buyer's efforts to obtain such additional
title information as Buyer may reasonably deem prudent.
(b) During the period from the date of this Agreement to the Date of
Closing, without the prior written consent of Buyer, Seller will not
(i) cause any of its portion of the Leases or other of the Interests to
be developed, maintained, or operated in a manner substantially
inconsistent with prior operations; (ii) abandon any material part of
any of its portion of the Interests; (iii) commence any material
operation of any of its portion of the Leases or the Interests
anticipated to cost Seller in excess of Fifteen Thousand Dollars
($15,000.00) per operation (except emergency operations, operations
required under presently existing contractual obligations, the on-going
commitments under the AFE's described in Exhibit B hereto, and
operations undertaken to avoid any penalty provisions of any applicable
agreement or order), or (iv) convey or dispose of any material part of
any of its portion of the Interests (other than oil, gas and other
liquid products produced from the Interests in the regular course of
business). Buyer acknowledges that Seller owns undivided interests in
certain of the Interests and Buyer agrees that the acts or omissions of
Seller's co-owners shall not constitute a violation of the provision of
this Section 4.01(b) nor shall any action required by a vote of co-
owners constitute such a violation so long as Seller has voted its
interest with Buyer's prior consent;
(c) Seller shall use all reasonable efforts to maintain its corporate
status from the date hereof until Closing and to assure that as of the
Closing Date it will not be under any corporate, legal or contractual
restriction that would prohibit or delay the timely consummation of
such transactions; and
(d) Seller shall promptly notify Buyer of any suit, action, claim,
threatened suit, action or claim, or other proceedings of the type
referred to in Section 3.01(e) or (f) that arises prior to the Closing
with respect to which Seller receives notice or otherwise obtains
knowledge following the execution of this Agreement.
4.02 Covenants of Buyer. Buyer covenants and agrees with Seller that:
(a) Buyer shall use all reasonable efforts to maintain its corporate
status and to assure that as of the Closing Date it will not be under
any corporate, legal or contractual restriction that would prohibit or
delay the timely consummation of such transactions;
(b) To the extent necessary to facilitate the consummation of the
transactions contemplated herein, Buyer agrees to enter into specific
agreements of assumption with respect to the obligations of Seller to
specific third parties or governmental authorities to the extent such
obligations are attributable to the Interests after the Effective Time.
Buyer also shall be obligated to obtain consents from all necessary
Federal authorities, including the Bureau of Indian Affairs, and State
authorities to the assignment of the Leases;
(c) For a period of ten (10) years after the Closing Date, Buyer shall
provide Seller with reasonable access to the Records so long as Buyer
is given reasonable notice prior to Seller's access; and
(d) Buyer represents that it has performed, or will perform prior to
Closing, sufficient review and due diligence with respect to the
Interests which includes reviewing well data, title and other files and
performing necessary evaluations, assessments, and other tasks involved
in evaluating the Interests, to satisfy its requirements, completely,
and enable it to make an informed decision to acquire the Interests
under the terms of this Agreement.
ARTICLE V
ASSUMPTION OF LIABILITIES
AND INDEMNITIES
As used in this ARTICLE V, and the paragraphs hereunder "CLAIMS" shall
include claims, demands, causes of action, liabilities, damages, penalties
and judgements of any kind or character and all costs and fees in connection
therewith.
(a) At the Closing, but effective as of the Effective Time, Buyer
shall (i) assume, and be responsible for and comply with all duties and
obligations of Seller, express or implied, with respect to the
Interests, including, without limitation, those arising under or by
virtue of the Seller's leases and contracts listed in Exhibit A, and
the permits, the applicable statutes or rules, regulations or orders of
any governmental authority (specifically including, without limitation,
any governmental request or requirement to plug, replug and/or abandon
any well of whatsoever type, status or classification, or to take any
clean-up, remediation or other action with respect to the Interests),
and (ii) except as otherwise provided herein, to defend, indemnify and
hold harmless Seller from any and all claims in connection therewith;
(b) Subject to the provisions of Paragraphs (c), (d) and (e) below
Seller shall defend, indemnify and hold harmless Buyer from any and all
claims, costs, expenses, liabilities or causes of action relating to or
arising out of Seller's ownership or operation of Seller's Interests
prior to the Effective Time and Buyer shall defend, indemnify and hold
harmless Seller from any and all claims, costs, expenses, liabilities
or causes of action relating to or arising out of Buyer's ownership and
operation of the Interests after the Effective Time. Each indemnified
party hereunder agrees that upon its discovery of facts giving rise to
a claim for indemnity under the provisions of this Agreement, including
receipt by it of any demand, assertion, claim, action or proceeding,
judicial or otherwise, by any third party (such third party actions
being referred to herein as a "THIRD PARTY CLAIM"), it will give prompt
notice thereof in writing to the indemnifying party together with a
statement of such information with respect to any of the foregoing as
it shall then have. Such notice shall include a formal demand for
indemnification under this Agreement. The indemnified party shall
afford the indemnifying party a reasonable opportunity to pay, settle,
or contest any Third Party Claim at its expense;
(c) Seller shall (i) be responsible for any and all claims, including
but not limited to claims for payment of royalties, arising out of the
production and sale of hydrocarbons by Seller from the Interests, and
the proper accounting and payment of expenses for the Interests,
insofar as such claims and payments relate to period of time prior to
the Effective Time, and (ii) defend, indemnify and hold harmless Buyer
from any and all of such claims and payments;
(d) Buyer shall (i) be responsible for any and all claims, including
but not limited to claims for payment of royalties, arising out of the
production and sale of hydrocarbons by Buyer from the Interests, and
the proper accounting and payment of expenses for the Interests,
insofar as such claims and payments relate to period of time beginning
at the Effective Time and thereafter, and (ii) defend, indemnify and
hold harmless Seller from any and all of such claims and payments; and
(e) After the execution of this Agreement, Buyer, at its option, and
its sole cost, risk and expense, may obtain an environmental audit of
the Interests at any time prior to September 20, 1996. Seller shall
provide the environmental auditors all information available to it
which they may reasonably request and shall grant said auditors
physical access to the Interests. For those Interests which are not
operated by Seller, Buyer shall obtain permission from the operator to
conduct such inspections. If the audit reveals any environmental
conditions which are not satisfactory to Buyer, Seller shall
immediately be provided a copy of the audit information and either
party shall have the option to terminate this Agreement as to the
affected Interest(s) with a deduction from the Preliminary Purchase
Price of the allocated value attributable to that Interest(s), without
liability, unless Seller affirms in writing that it will remediate such
conditions to the satisfaction of the Buyer prior to Closing. Buyer
shall defend and indemnify Seller from any and all liability, claims,
causes of action, injury to Buyer's employees, agents or contractors or
to Buyer's property and/or injury to Seller's property, employees,
agents or contracts which may arise out of Buyer's inspections, but
only to the extent of Buyer's negligence. If such deductions exceed
ten percent (10%) of the Preliminary Purchase Price and the parties are
unable to mutually agree to proceed with closing, then either party
shall have the right to terminate this Agreement without liability.
After Closing, Buyer shall be deemed to have fully inspected and accepted
the Interests "AS IS" in their then current physical and environmental
condition.
ARTICLE VI
DISCLAIMER OF WARRANTIES
Buyer acknowledges that in making the decision to enter into this Agreement
and consummate the transactions contemplated hereby, Buyer has relied only
upon its own independent investigation of the Lands. Accordingly, Buyer
acknowledges that Seller has not made and Seller hereby expressly disclaims
and negates any representation or warranty express or implied at common law,
by statute or otherwise relating to (i) condition of the Lands (including
but not limited to any implied or express warranty of merchantability or
fitness for a particular purpose or of conformity to models or samples of
materials) and (ii) any information, data or other materials (written or
oral) furnished to Buyer by or on behalf of Seller (including but not
limited to information, data or other materials regarding the existence or
extent of oil, gas or other mineral reserves, the recoverability of or the
cost of recovering such reserves, the value of such reserves, any producing
pricing assumption, present or past production rates, the environmental
condition of the Lands, including but not limited to the presence of
naturally occurring radioactive material ("NORM"), and the ability to sell
oil or gas production after Closing); provided, however, that the foregoing
disclaimer and negation of representations and warranties shall not affect
or impair the representations and warranties of Seller made in Section 3.01.
ARTICLE VII
TITLE MATTERS
7.01 Defensible Title.
(a) As used herein, the term "DEFENSIBLE TITLE" shall mean, as to each
of the Interests, such title which, subject to and except for the
Permitted Encumbrances (as defined hereinafter): (i) entitles Seller
to receive not less than the "NET REVENUE INTEREST" set forth in
Exhibit A of all oil, gas and associated liquid and gaseous
hydrocarbons produced, saved and marketed from the presently producing
formations in the presently producing wells bottomed in the Lands; and
(ii) obligates Seller to bear costs and expenses relating to the
maintenance, development and operation of those portions of the
presently producing wells bottomed in the Lands in an amount not
greater than the "WORKING INTEREST" set forth in Exhibit A;
(b) The term "PERMITTED ENCUMBRANCES", as used herein, shall mean:
(1) Lessor's royalties, overriding royalties, reversionary interests
and similar burdens provided that the net cumulative effect of
such burdens does not operate to reduce the Net Revenue Interest
of any interest to less than the Net Revenue Interest therefor set
forth in Exhibit A;
(2) Preferential rights to purchase and required third party consents
to assignments and similar agreements with respect to which, prior
to Closing; (i) waivers or consents are obtained from the
appropriate parties, (ii) the appropriate time period for
asserting such rights has expired without an exercise of such
rights, or (iii) with respect to consents, such consents which
need not be obtained prior to an assignment, or the failure to
obtain such consents will not have a material adverse effect on
the value of the Interests to Buyer;
(3) Liens for taxes or assessments not yet due or not yet delinquent,
or if delinquent, that are being contested in good faith in the
ordinary course of business;
(4) All rights to consent by, required notices to, filings with, or
other actions by governmental entities in connection with the sale
or conveyance of any of the Interests if the same are customarily
obtained subsequent to such sale or conveyance;
(5) Rights of reassignment;
(6) Easements, rights-of-way, servitudes, permits, surface leases and
other rights in respect of surface operations, pipelines, grazing,
logging, canals, ditches, reservoir or the like; conditions,
covenants or other restrictions; and easements for streets,
alleys, highways, pipelines, telephone lines, power lines,
railways and other easements and rights-of-way on, over or in
respect of any of the Interests;
(7) Such Title Defects or other defects as Buyer has waived pursuant
to the terms of this Agreement;
(8) Liens to be released at Closing;
(9) The terms and conditions of all leases, agreements, orders,
instruments, documents and other matters described in Exhibit A
hereto; and
(10) Rights reserved to or vested in any municipality or governmental,
statutory or public authority to control or regulate any of the
Interests in any manner, and all applicable laws, rules and orders
of governmental authority.
(c) The term "TITLE DEFECT" as used herein shall mean any encumbrance,
encroachment, irregularity, defect in or objection to Seller's title to
each Interest (expressly excluding Permitted Encumbrances), that alone
or in combination with other defects, renders Seller's title to that
Interest less than Defensible Title or which would adversely interfere
with the use, possession, ownership or value thereof, or any violation
of applicable laws, rules, regulations or orders of any governmental
agency having jurisdiction over the Interests which will likely result
in an impairment or loss of title to all or a portion of the Interests
or diminish the value thereof or likely will hinder or impede the
operation of such interest, or any matter constituting a breach of
Seller's representation and warranties as set forth in Section 3.01.
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 Interests shall not constitute a Title Defect: (i) if they have
not been filed pursuant to law, or (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.
7.02. Casualty Loss. If, prior to the Closing, all or any portion of the
Interests be destroyed by fire or other casualty, is taken in condemnation
or under the right of eminent domain or proceedings for such purpose are
pending or threatened, Buyer may elect (i) to treat the Interests affected
by such destruction, taking or pending or threatened taking as Defective
Interests in accordance with Section 7.03; or (ii) to purchase such
Interests notwithstanding any such destruction, taking or pending or
threatened taking (without reduction of the Preliminary Purchase Price
therefor), in which case, Seller shall, at the Closing, pay to Buyer all
sums paid to Seof the destruction or taking of such Interests to be assigned
to Buyer (including sums which are in the nature of compensation for any
lost or foregone income or production attributable to the time period
subsequent to the Effective Time) and shall assign, transfer and set over
unto Buyer all of the right, title and interest of Seller in and to any
unpaid claims, awards or other payments from third parties arising out of
the destruction, taking or pending or threatened taking as to such Interests
(including sums which are in the nature of compensation for any lost or
foregone income or production attributable to the time period subsequent to
the Effective Time). Seller agrees that, prior to Closing, it shall not
voluntarily compromise, settle or adjust any amounts payable by reason of
any destruction, taking or pending or threatened taking as to such of its
portion of the Interests to be assigned to Buyer without first obtaining the
written consent of Buyer.
7.03 Defect Adjustments.
(a) "DEFECTIVE INTEREST" shall mean that portion of the Interests (as
determined in accordance with Section 7.03(c)) affected by a Title
Defect or that Buyer is otherwise entitled under Sections 7.02 or 7.04
to treat as a Defective Interest, and of which Seller has been given
notice by Buyer prior to September 23, 1996, (the "DEFECT NOTICE
DATE"), except as provided hereinafter in this Section 7.03(a). Any
notice of any Defective Interest shall be in writing and shall include:
(i) a description of the Defective Interest, (ii) the specific basis
for the defect that Buyer believes causes such Interest to be a
Defective Interest, and (iii) the amount by which Buyer has determined
the value of the Defective Interest has been reduced and the
computations and information upon which Buyer's determination is based.
Buyer shall be deemed to have waived all Title Defects and any other
defect to any Interest of which Seller has not been given such notice
prior to the Defect Notice Date. If Seller (i) disagrees that a Defect
Adjustment or Exclusion Adjustment is warranted; (ii) disagrees that
the matter giving rise to such claims is uncured, or (iii) disagrees
with the amount of the related Defect Adjustment claimed by Buyer in
any notice given in accordance with this Section 7.03(a), then Seller,
at its option, may remove the defective property from the sale, attempt
to cure the defect at Seller's sole cost and expense, agree to a
mutually acceptable purchase price reduction or terminate this
Agreement without liability to Buyer except for return of the
Performance Deposit, without interest, provided that Seller may not
terminate this Agreement unless the aggregate value of Title Defects
exceeds twenty percent (20%) of the Preliminary Purchase Price;
(b) Defective Interests shall be excluded from the Interests to be
purchased by Buyer hereunder and the Preliminary Purchase Price shall
be reduced in accordance with Section 2.03 by an amount equal to the
value thereof, as agreed to between Buyer and Seller (which reduction
shall be called an "EXCLUSION ADJUSTMENT") unless (i) prior to the
Closing, the basis for treating an Interest as a Defective Interest has
been removed, (ii) Buyer agrees to waive the relevant Title Defect or
other defect and purchase the Defective Interest, notwithstanding the
defect, (iii) Seller agrees to indemnify, defend and hold Buyer
harmless and Buyer agrees to accept such indemnification against all
losses, costs, expenses and liabilities with respect to such Defective
Interest arising from the defect or basis for such Interest being
treated as a Defective Interest, or (iv) Buyer and Seller agree to an
amount by which the value of the Defective Interest has been reduced
and the Preliminary Purchase Price is reduced by such amount in
accordance with Section 2.03 (which reduction shall be called a "DEFECT
ADJUSTMENT"), in which event the Interest shall be included in the
Interests to be purchased by Buyer hereunder and, except in the case of
(iv), no adjustment shall be made to the Preliminary Purchase Price; or
(v) Buyer and Seller do not agree, on or before the Scheduled Closing
Date, as to the value of the Defective Interest that is to be excluded
from the Preliminary Purchase Price and none of Subsections (i) through
(iv) of Section 7.03(b) are applicable, in which event Buyer may
terminate this Agreement without further liability or obligation, by
giving written notice of termination on or before the Scheduled Closing
Date.
(c) The amount by which the Preliminary Purchase Price is to be
reduced in accordance with Section 7.03 as the result of any Interest
being treated as a Defective Interest shall be determined as follows:
(1) In the event that the cost of remedying any Title Defect exceeds
the amount allocated to the affected Interest as set forth in
Exhibit A, then such Interest shall be excluded from the
transaction contemplated hereby and the Preliminary Purchase Price
shall be reduced by the amount allocated to the Interest so
excluded as set forth in Exhibit A (which adjustment shall be
called an EXCLUSION ADJUSTMENT");
(2) In the event that the net revenue interest of Seller in any
Interest is less than that set forth in Exhibit A, that portion of
the Preliminary Purchase price allocated on Exhibit A-1 to such
particular Interest shall be reduced in the proportion that the
net revenue interest actually owned by Seller bears to that set
forth in Exhibit A;
(3) In the event that the working interest costs payable with respect
to a particular Interest is greater than the working interest set
forth in Exhibit A, the Preliminary Purchase Price allocated on
Exhibit A-1 to such particular Interest shall be reduced in the
proportion that the working interest percentage attributable to
such interest exceeds that set forth in Exhibit A;
(4) In the event that (i) the record title interest of Seller to any
Interest is burdened by any lien, encumbrance, mortgage, pledge,
or security interest, or (ii) ad valorem, property or other
similar taxes and assessments for any years prior to the Effective
Time have not been paid, the Preliminary Purchase Price of such
interest shall be reduced by the sum necessary to discharge and
obtain a full record release of such burden or to pay such taxes;
and
(5) In the event there exist other Title Defects which would
materially adversely affect or interfere with the use, possession,
ownership or value of any Interest, Buyer, at its option, may
either, (i) exclude the affected Interest from the transaction
contemplated hereby and the Preliminary Purchase Price shall be
reduced by the amount allocated to the affected Interest as set
forth in Exhibit A, or (ii) accept such Interest.
(d) In determining which portion of the Interests are Defective
Interests, it is the intent of the parties to include all portions of
the Interests affected by the defect or basis for such Interests being
treated as Defective Interests; and
(e) If the deductions in the Preliminary Purchase Price to be made
pursuant to this ARTICLE VII exceed twenty percent (20%) of the
Preliminary Purchase price, either party may terminate this agreement
at any time prior to Closing.
7.04 Identification of Additional Defective Interests.
(a) If, prior to the Closing, there has been non-compliance with the
laws, rules, regulations, ordinances or orders of any governmental
agency or authority having jurisdiction over the affected Interests,
resulting in risk of loss of the affected Interests or value thereof,
then Buyer may elect to treat such of the affected Interests as are
adversely affected by such noncompliance as Defective Interests by
giving Seller notice thereof in accordance with Section 7.03(a);
(b) If, prior to the Closing, any preferential right to purchase any
of the Interests is exercised, Buyer may elect to treat that portion of
the Interests affected by the exercise of such preferential right as
Defective Interests by giving Seller notice thereof in accordance with
Section 7.03(a);
(c) If any necessary third party consent to assignment of any of the
Interests is not obtained prior to the Closing, Buyer may elect to
treat that portion of the Interests subject to such consent requirement
as Defective Interests by giving Seller notice thereof in accordance
with Section 7.03(a). For purposes hereof "NECESSARY THIRD-PARTY
CONSENTS" shall not include:
(1) consents customarily obtained subsequent to such assignment
including without limitation any consent of the State or the
Bureau of Indian Affairs or other Federal agencies or governmental
offices;
(2) consents contractually permitted to be obtained subsequent to such
assignment; or
(3) consents that, if not obtained, will not affect the
transferability, without penalty, of, the operation of, or the
receipt of income from, the Interests subject thereto, or result
in termination of the interests subject thereto or a material
decrease in the value thereof.
(d) If, prior to the Closing, Buyer becomes aware of any suit, action
or other proceeding before any court or governmental agency that would
result in loss or impairment of Seller's title to any portion of the
Interests or a portion of the value thereof, Buyer may elect to treat
the portion of the Interests affected thereby as Defective Interests by
giving Seller notice thereof in accordance with Section 7.03(a); and
(e) If any inaccuracy in Exhibit A results in a loss of value of a
portion of the Interests, Buyer may elect to treat that portion of the
Interest subject to such reduction in value as Defective Interests by
giving Seller notice thereof in accordance with Section 7.03(a).
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Seller's Conditions. The obligations of Seller at the Closing are
subject, at the option of Seller, to the satisfaction, at or prior to the
Closing, of the following conditions:
(a) All representations and warranties of Buyer contained in this
Agreement shall be true, correct and not misleading in all material
respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Buyer shall have
performed and satisfied all agreements and covenants in all material
respects required by this Agreement to be performed and satisfied by
Buyer at or prior to the Closing;
(b) No suit or other proceeding shall be pending before any court or
governmental agency seeking to restrain, prohibit or declare illegal,
or seeking substantial damages in connection with, the purchase and
sale contemplated by this Agreement, except (i) matters with respect to
which Seller has been adequately indemnified by Buyer, or (ii) any suit
or proceeding affecting only a portion of the Interests, which portion
of the Interests could be treated as a Defective Interest in accordance
with Section 7.04(d);
(c) The aggregate sum of Defect Adjustments and Exclusion Adjustments
shall not exceed thirty percent (30%) of the Preliminary Purchase
Price; and
(d) All necessary and material permissions, approvals and consents
required which are obtainable prior to Closing shall be in full force
and effect.
8.02 Buyer's Conditions. The obligations of Buyer at the Closing are
subject, at the option of Buyer, to the satisfaction, at or prior to the
Closing, of the following conditions:
(a) All representations and warranties of Seller contained in this
Agreement shall be true, correct and not misleading in all material
respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Seller shall have
performed and satisfied all agreements and covenants in all material
respects required by this Agreement to be performed and satisfied by
Seller at or prior to the Closing;
(b) No suit or other proceeding shall be pending before any court or
governmental agency seeking to restrain, prohibit or declare illegal,
or seeking substantial damages in connection with, the purchase and
sale contemplated by this Agreement, except (i) matters with respect to
which Buyer has been adequately indemnified by Seller, or (ii) any suit
or proceeding affecting only a portion of the Interests, which portion
of the Interests could be treated as a Defective Interest in accordance
with Section 7.04(d);
(c) The aggregate sum of Defect Adjustments and Exclusion Adjustments
shall not exceed thirty percent (30%) of the Preliminary Purchase
Price;
(d) All necessary and material permissions, approvals and consents
required which are obtainable prior to Closing shall be in full force
and effect; and
(e) The provisions of ARTICLE V.(e) have been satisfied.
8.03 Satisfaction or Waiver. If Seller and Buyer proceed with the Closing
as specified in ARTICLE IX, all conditions of Closing shall be deemed to
have been satisfied or waived and neither of the parties shall have any
liability whatsoever to the other arising out of, resulting from, or
attributable to any such condition of Closing, irrespective of whether such
conditions of Closing were in fact satisfied or waived. Nothing contained
in this Section 8.03 shall be a waiver or release of any breach of a
representation or warranty contained in this Agreement.
ARTICLE IX
CLOSING
9.01 Date of Closing. Unless the parties hereto mutually agree otherwise
and subject to the conditions stated in this Agreement, the consummation of
the transactions contemplated hereby (herein called the "CLOSING") shall be
held on September 30, 1996, at 10:00 A.M. (the "SCHEDULED CLOSING DATE").
The date Closing actually occurs is herein called the "CLOSING DATE".
9.02 Place of Closing. The Closing shall be held at Seller's office in
Dallas, Texas, in accordance with the Closing Instructions to be mutually
given in writing by Seller and Buyer.
9.03 Closing Obligations. At the Closing the following events shall occur,
each being a condition concurrent to the others and each being deemed to
have occurred simultaneously with the others:
(a) Seller shall execute, acknowledge and deliver to Buyer assignment,
bill of sale and conveyance documents (in sufficient counterparts to
facilitate recording), in form and substance as set forth in Exhibit C
hereto, conveying its portion of the Interests (other than those
portions of the Interests excluded under Sections 7.03(b) and 7.04) to
Buyer.
(b) Seller and Buyer shall execute and deliver a settlement statement
(herein called the "PRELIMINARY SETTLEMENT STATEMENT") prepared by
Seller and furnished to Buyer no less than seven (7) days prior to the
Scheduled Closing Date) that shall set forth the Closing Amount (as
hereinafter defined) and each adjustment and the calculation of such
adjustments used to determine such amount. The term "CLOSING AMOUNT"
shall mean the Preliminary Purchase Price adjusted as provided in
Section 2.03, using for such adjustments the best information then
available. Seller and Buyer further agree that Seller shall be
entitled to receive all proceeds attributable to ownership of the
Interests prior to the Effective Time and Buyer shall be entitled to
receive all proceeds attributable to the Interests after the Effective
Time.
(c) Buyer shall deliver the Closing Amount in the form of immediately
available U.S. funds, by wire transfer in accordance with instructions
to be provided by Seller.
(d) Seller shall deliver to Buyer exclusive possession of its portion
of the Interests (other than Interests excluded under Section 7.03(b)
or Section 7.04)
(e) Seller and Buyer shall execute, acknowledge and deliver transfer
orders or letters in lieu thereof directing all purchasers of
production to make payment to Buyer of proceeds attributable to
production after the Effective Time from the Interests assigned to
Buyer under Section 9.03(a), but not theretofore paid to Seller.
ARTICLE X
OBLIGATIONS AFTER CLOSING
10.01 Post-Closing Adjustments. Within one hundred thirty (130) days after
the Closing, Seller shall prepare and deliver to Buyer, in accordance with
this Agreement and generally accepted accounting principles, a statement
(herein called the "POST CLOSING SETTLEMENT STATEMENT") setting forth each
adjustment or payment that was not included or correctly included in the
Preliminary Settlement Statement and showing the calculation of such
adjustments. Within thirty (30) days after receipt of the Post Closing
Settlement, Buyer shall deliver to Seller a written report containing any
changes that Buyer proposes to be made to the Post Closing Settlement
Statement. The parties shall undertake to agree with respect to the amounts
due pursuant to such Post Closing adjustment no later than one hundred sixty
(160) days after the Closing Date. The date upon which such agreement is
reached or upon which the Final Purchase Price is established, shall be
herein called the "SETTLEMENT DATE". In the event that (i) the Final
Purchase Price is more than the Closing Amount, Buyer shall pay to Seller,
in certified U.S. Funds, the amount of such difference (ii) the Final
Purchase Price is less than the Closing Amount, Seller shall pay to Buyer,
in certified U.S. funds, the amount of such difference. Payment by Buyer or
Seller shall be made within ten (10) days of the Final Settlement Date.
After the Settlement Date, additional proceeds received by or expenses paid
by either Buyer or Seller on behalf of the other shall be settled by
invoicing the other party for expenses paid or remitting to the other party
any proceeds received. The gas imbalances of the Interests shall be
considered final and neither party thereafter shall make claim upon the
other concerning same.
10.02 Files and Records. Seller shall have the right to make and retain
copies of the Records prior to delivery thereof to Buyer. Within thirty
(30) days after the Closing Date, Seller shall deliver to Buyer all original
files and Recoronveyed to Buyer.
10.03 Taxes and Recording Fees. Buyer shall pay all sales taxes occasioned
by the sale of the Interests, all ad valorem, property, production, excise,
severance, windfall profit and other taxes, except income taxes, based upon
or measured by the ownership of the property, the production of hydrocarbons
or the receipt of proceeds therefrom which apply to or arise from and after
the Effective Time together with all documentary, filing and recording fees
required in connection with the filing and recording of any assignments or
other documents recorded in connection with the sale of the Interests.
10.04 Further Assurances. After Closing, Seller and Buyer shall each
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such instruments, and shall each take such other action, as may
be necessary or advisable to carry out their respective obligations under
this Agreement and under any document, certificate or other instrument
delivered pursuant hereto.
10.05 Survival. The warranties or representations herein made by Seller
are conditions to the obligations of Buyer hereunder and no warranty or
representation herein made by Seller (other than those contained in 3.01(a),
(b), (c), (d), (e), (f), (i), (j), (k), (o) and (q) shall survive the
Closing. The agreements set forth in ARTICLE X and the matters set forth in
ARTICLES V and VI and Section 13.12 shall survive the Closing for a period
of one (1) year from the Closing Date.
ARTICLE XI
TERMINATION OF AGREEMENT
11.01 Termination. This Agreement and the transactions contemplated hereby
may be terminated in the following instances:
(a) By Seller if the conditions set forth in Section 8.01(a)
through 8.01(d) are not satisfied in all material respects or
waived as of the Scheduled Closing Date;
(b) By Buyer if the conditions set forth in Section 8.02(a)
through 8.02(e) are not satisfied in all material respects or
waived as of the Scheduled Closing Date;
(c) By Buyer pursuant to Section 7.03(b);
(d) Pursuant to Article V.(e); or
(e) At any time by the mutual written agreement of Buyer and
Seller.
11.02 Liabilities Upon Termination. If this Agreement is breached by
either party, nothing contained herein shall be construed to limit Seller's
or Buyer's legal or equitable remedies, including, without limitation,
damages for the breach or failure of any representation, warranty, covenant
or agreement contained herein (whether or not the non-defaulting party has
terminated the Agreement) or the right to enforce specific performance of
this Agreement; provided, however, that a party terminating this Agreement
shall have no right to specific performance thereof, and provided, further,
that neither party shall have a right to specific performance thereof if
this Agreement is terminated pursuant to Section 11.01 hereof.
ARTICLE XII
TAX-FREE EXCHANGE
12.0 Tax-Free Exchange. Seller has elected to effect a like-kind exchange
pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder, with respect to the Interests (a
"Like-Kind Exchange"). In order to effect a Like-Kind Exchange, Buyer shall
cooperate and do all acts as may be reasonably required or requested by
Seller with regard to effecting the Like-Kind Exchange, including, but not
limited to, executing an Exchange Escrow Agreement, a form of which is
attached hereto as Exhibit D, in accordance with Treasury Regulation Section
1.1031(k)-1(g)(3); provided, however, Buyer shall incur no expense in
connection with such Like-Kind Exchange and Buyer shall not be required to
take title to any property other than the Interests in connection with the
Like-Kind Exchange, and Buyer's possession of the Interests will not be
delayed by reason of any such Like-Kind Exchange.
ARTICLE XIII
MISCELLANEOUS
13.01 Exhibits and Schedules. Exhibits A through D are attached hereto and
incorporated herein by this reference.
13.02 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 the same, including, without limitation, legal and
accounting fees, costs and expenses.
13.03 Notices. All notices and communications required or permitted under
this Agreement shall be in writing, delivered to or sent by U. S. Mail or
Express Delivery, postage prepaid, or by facsimile transmission, addressed
as follows:
Maynard Oil Company
Attention Cassondra Foster
8080 North Central Expressway, Suite 660
Dallas, TX 75206
Phone: (214) 891-8461
Fax: (214) 891-8827
Enron Oil & Gas Company
Attention Lee McVay, Vice President and General Manager
20 North Broadway, Suite 800
Oklahoma City, OK 73102
Phone: (405) 239-7880
Fax: (405) 239-7858
Any party may, by written notice so delivered to the others, change the
address or individual to which delivery shall thereafter be made.
13.04 Amendments. Except as otherwise expressly provided herein, 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.
13.05 Assignment. Neither Seller nor Buyer shall assign all or any portion
of its rights or delegate all or any portion of its duties hereunder without
the prior written consent of the other to such assignment; provided,
however, that Buyer or Seller or both may assign all or part of this
Agreement to a qualified intermediary to facilitate a deferred like-kind
exchange for federal tax purposes. Subject to the foregoing, this Agreement
shall inure to the benefit of and be binding upon Seller, Buyer and their
respective successors and assigns.
13.06 Announcements. Seller and Buyer shall consult with each other with
regard to all press releases and other announcements issued at or prior to
the Closing concerning this Agreement or the transactions contemplated
hereby and, except as may be required by applicable laws or the applicable
rules, and regulations of any governmental agency or stock exchange, neither
Buyer nor Seller shall issue any such press release or other publicity
without the prior written consent of the other party.
13.07 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.
13.08 Counterparts. This Agreement, and any document or instrument entered
into, given or made pursuant to this Agreement or authorized hereby, and any
amendment or supplement thereto, may be executed in any number of
counterparts, and, when so executed, each of which shall be deemed an
original instrument, and shall have the same force and effect as though all
signatures appeared on a single document, and all of which together shall
constitute but one and the same instrument. Any signature page of this
Agreement or of such an amendment, supplement, document or instrument may be
detached from any counterpart thereof and attached to another counterpart
without impairing the legal effect of any signatures identical in form
thereto but having attached to it one or more additional signature pages.
13.09 References. References made in this Agreement, including the 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, corpate or other
entity.
13.10 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas, without regard to its
choice of law principles provided, however, that issues in connection with
title to the Interests shall be governed by the applicable laws of the State
of Oklahoma.
13.11 Entire Agreement. This Agreement (including the Exhibits hereto)
constitutes the entire understanding among the parties with respect to the
subject matter hereof, superseding all negotiations, prior discussions and
prior agreements and understandings relating to such subject matter.
13.12 Securities Laws. Buyer has advised Seller that the interests are not
being acquired for distribution or transfer in violation of the securities
laws of the United States or of any state thereof. Buyer hereby agrees to
protect, indemnify and hold harmless Seller from and against any and all
claims, costs (including, without limitation, court costs and reasonable
attorney's fees), expenses, damages and liabilities which arise under
applicable state or federal securities laws as a result of acts or omissions
of Buyer or its affiliates which are contrary to such laws and which are in
connection with the transactions contemplated hereby or the sale or other
disposition of the Interests by Buyer or its affiliates.
Seller hereby agrees to protect, indemnify and hold harmless Buyer from
and against any and all claims, costs (including, without limitation, court
costs and reasonable attorney's fees), expenses, damages and liabilities
which arise under applicable state or federal securities laws as a result of
acts or omissions of Seller or its affiliates which are contrary to such
laws and which are in connection with the transactions contemplated hereby.
Executed as of the date first above written.
SELLER
MAYNARD OIL COMPANY
By: /s/ Glenn R. Moore
---------------------------------
Glenn R. Moore
President
BUYER
ENRON OIL & GAS COMPANY
By: /s/ Leland J. McVay
---------------------------------
Leland J. McVay
Vice President
EXHIBIT A
Attached to and made a part of Purchase and Sale Agreement dated
September 12, 1996, by and between Maynard Oil Company, Seller,
and Enron Oil & Gas Company, as Buyer
ELLIS COUNTY, OKLAHOMA
PN 440502 (UT-407)
EHRLICH B NO. 1-18
EXPENSE INTEREST 0.2543316
REVENUE INTEREST 0.2225402
PN 440522
EHRLICH B 2-18
EXPENSE INTEREST 0.2543316
REVENUE INTEREST 0.2225402
Oil and Gas Lease dated March 4, 1952, by and between Wesley Ehrlich
and Wilma E. Ehrlich, as Lessor, and Henry Clay, as Lessee, recorded in
Volume 58, page 10 of the Records of Ellis County, Oklahoma, covering the
NE/4 of Section 18, Township 23 North, Range 25 West, Ellis County,
Oklahoma, LIMITED to rights from the surface to the base of the Morrow
formation. (LF-04901-00)
The hereinabove referenced lease is subject to Operating Agreement
dated March 29, 1961, by and between Amoco Production Company, as Operator,
and Phillips Petroleum Company, et al, as Non-Operators; Gas Purchase and
Sale Agreement dated December 19, 1985, by and between Shell Western E&P
Inc. and Maynard Oil Company; Gas Agreement amending various Gas Purchase
Contracts, dated February 5, 1990, by and between Northern Natural Gas
Company, a division of Enron Corp., successor in interest to Northern
Natural Gas Company, as Buyer, and Maynard Oil Company, as Seller;
Assignment, Conveyance and Bill of Sale effective December 1, 1985, by and
between Shell Western E&P Inc. and Maynard Oil Company recorded in Volume
459, page 381 of the Records of Ellis County, Oklahoma.
PN 440506 (UT-417)
IRVIN NO. 1-25
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0068359 (ORI)
0.0039063 (ROYALTY)
Oil and Gas Lease dated January 5, 1952, by and between Carrie L.
O'Hern, as Lessor, and C. V. Richardson, as Lessee, recorded in Volume 58,
page 282 of the Records of Ellis County, Oklahoma, INSOFAR AND ONLY INOSFAR
as said lease covers the NE/4 NE/4 of Section 25, Township 24 North, Range
25 West, Ellis County, Oklahoma, LIMITED to rights from the surface to the
base of the Morrow formation. (LF-04923-00)
The hereinabove referenced lease is subject to Agreement dated November
27, 1961, by and between Shell Oil Company to Pan American Petroleum
Corporation; Partial Assignment dated December 22, 1961, by and between
Shell Oil Company to Pan American Petroleum Corporation.
An undivided one-half (l/2) interest in the oil, gas and other
minerals in and under and that may be produced from the NE/4 NE/4 of Section
25, Township 24 North, Range 25 West, Ellis County, Oklahoma, LIMITED to
rights from the surface to the base of the Morrow formation, as conveyed in
that certain Mineral Deed dated March 13, 1957, by and between James B.
Franklin, as Grantor, and Shell Canadian Exploration Company, as Grantee,
recorded in Volume 92, page 362 of the Records of Ellis County, Oklahoma.
(LF-04923-AA-01)
The hereinabove referenced mineral deed is subject to Oil and Gas Lease
dated January 5, 1952, from Carrie L. O'Hern to C. V. Richardson; Purchase
and Sale Agreement dated December 19, 1985, by and between Shell Western E&P
Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of Sale
effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440602 (UT-435)
KATTERJOHN NO. 1-2 AKA SHATTUCK OP UNIT
EXPENSE INTEREST 0.1174122
REVENUE INTEREST 0.1011284
PN 440601N
KATHY NO. 1-14
BEFORE PAYOUT EXPENSE INTEREST 0.0000000
BEFORE PAYOUT REVENUE INTEREST 0.0000000
AFTER PAYOUT EXPENSE INTEREST 0.1174122
AFTER PAYOUT REVENUE INTEREST 0.1027357
Oil and Gas Lease dated November 25, 1955, by and between D. L.
Katterjohn, as Lessor, and E. J. Farris, as Lessee, recorded in Volume 78,
pages 27-28 of the Records of Ellis County, Oklahoma, covering Lots 1 and 2
and S/2 NE/4 of Section 2, Township 22 North, Range 26 West, together with
any rights, titles and interests acquired by Shell Western E&P Inc. in and
to the Pan Am Shattuck Operating Unit by virtue of that certain unrecorded
Operating Agreement dated November 5, 1958 by and between Pan American
Petroleum Company, as Operator, and Shell Oil Company, et al, as Non-
Operators. (LF-04929-00)
The hereinabove referenced lease is subject to Gas Purchase Contract
dated October 1, 1989, as amended, by and between Production Gathering
Company, as Buyer, and Maynard Oil Company, as Seller; Operating Agreement
dated November 5, 1958, as amended, by and between Pan American Petroleum
Corporation, as Operator, and Shell Oil Company, et al, as Non-Operators,
May 1, 1959; Purchase and Sale Agreement dated December 19, 1985, by and
between Shell Western E&P Inc. and Maynard Oil Company; Assignment,
Conveyance and Bill of Sale effective December 1, 1985, by and between Shell
Western E&P Inc. and Maynard Oil Company recorded in Volume 459, page 381 of
the Records of Ellis County, Oklahoma.
PN 440508 (UT-442)
LUANE NO. 1-28
EXPENSE INTEREST 0.0625000
REVENUE INTEREST 0.0546875
0.0078125 (ORI)
An undivided one-fourth (1/4) interest in the oil, gas and other
minerals in and under and that may be produced from the SW/4 of Section 28,
Township 24 North, Range 25 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Morrow formation, as conveyed in that
certain Mineral Deed dated March 13, 1957, by and between James B. Franklin,
as Grantor, and Shell Canadian Exploration Company, as Grantee, recorded in
Volume 92, page 367 of the Records of Ellis County, Oklahoma and
subsequently conveyed to Maynard Oil Company from Shell Western E&P Inc. by
instrument entitled "Assignment, Conveyance and Bill of Sale" effective
December 1, 1985, recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma. (LF-04893-AA)
The hereinabove referenced mineral deed is subject to Gas Purchase
Agreement dated October 1, 1989 by and between Production Gathering Company,
as Buyer, and Maynard Oil Company, as Seller; Operating Agreement dated
January 18, 1979, by and between Amoco Production Company, as Operator, and
Mattax Petroleum Corporation, et al, as Non-Operators; Purchase and Sale
Agreement dated December 19, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company; Assignment, Conveyance and Bill of Sale effective
December 1, 1985, by and between Shell Western E&P Inc. and Maynard Oil
Company recorded in Volume 459, page 381 of the Records of Ellis County,
Oklahoma.
PN 440509 (UT-446)
MASSEY UNIT NO. 1-22
EXPENSE INTEREST 0.0312500
REVENUE INTEREST 0.0273437
0.0039063 (ROYALTY)
An undivided one-fourth (1/4) interest in the oil, gas and other
minerals that may be produced from the N/2 NE/4 of Section 22, Township 24
North, Range 25 West, Ellis County, Oklahoma, LIMITED to rights from the
surface to the base of the Morrow formation, as conveyed in that certain
Mineral Deed dated March 30, 1957, by and between James B. Franklin, as
Grantor, and Shell Canadian Exploration Company, as Grantee, recorded in
Volume 91, page 181 of the Records of Ellis County, Oklahoma and
subsequently conveyed to Maynard Oil Company from Shell Western E&P Inc. by
instrument entitled "Assignment, Conveyance and Bill of Sale" effective
December 1, 1985, recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma. (LF-04895-AA)
The hereinabove referenced mineral deed is subject to Gas Purchase
Contract dated December 4, l980 between Michigan-Wisconsin Pipeline Company
(N/K/A ANR Pipeline Companies), as Buyer, and Shell Oil Company, as Seller;
Operating Agreement dated May 11, 1978, by and between Amoco Production
Company, as Operator, and Kenneth D. Kirkland, et al, as Non-Operators;
Purchase and Sale Agreement dated December 19, 1985, by and between Shell
Western E&P Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of
Sale effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440513 (UT-412)
PARKER NO. 9-47
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0078125 (ORI)
Oil and Gas Lease dated September 9, 1947, by and between Carrie Lee
O'Hern, as Lessor, and W. G. Mouser, as Lessee, recorded in Volume 36, page
364 of the Records of Ellis County, Oklahoma, covering S/2 S/2 of Section
29, Township 24 North, Range 25 West, Ellis County, Oklahoma, LIMITED to
rights from the surface to the base of the Morrow formation. (LF-04896-00-
01)
The hereinabove referenced lease is subject to Assignment dated March
14, 1958, from the Texas Company to Shell Oil Company; Oklahoma Corporation
Commission CD No. 44469, Order No. 122911 dated July 19, 1976; Purchase and
Sale Agreement dated December 19, 1985, by and between Shell Western E&P
Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of Sale
effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440516 (UT-403)
SELLS UNIT NO. 1-24 AND 2-24
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0078125 (ROYALTY)
An undivided one-fourth (1/4) interest in the oil, gas and other
minerals in and under and that may be produced from the W/2 W/2 of Section
24, Township 24 North, Range 25 West, Ellis County, Oklahoma, LIMITED to the
Morrow Common Source of Supply, and being the same lands as conveyed in that
certain Mineral Deed dated March 13, 1957, by and between James B. Franklin,
as Grantor, and Shell Canadian Exploration Company, as Grantee, recorded in
Volume 92, page 365 of the Records of Ellis County, Oklahoma, and
subsequently conveyed to Maynard Oil Company from Shell Western E&P Inc. by
instrument entitled "Assignment, Conveyance and Bill of Sale" effective
December 1, 1985, recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma. (LF-04918-AA-00)
The hereinabove referenced mineral interest is subject to Oil and Gas
Lease dated July 5, 1966, by and between Shell Oil Company, as Lessor, and
Tidewater Oil Company, as Lessee,; Purchase and Sale Agreement dated
December 19, 1985, by and between Shell Western E&P Inc. and Maynard Oil
Company; Assignment, Conveyance and Bill of Sale effective December 1, 1985,
by and between Shell Western E&P Inc. and Maynard Oil Company recorded in
Volume 459, page 381 of the Records of Ellis County, Oklahoma.
PN 440704 (UT-432)
SUTTER D NO. 1-21
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187500
PN 440704N
SUTTER D NO. 2-21
BEFORE PAYOUT EXPENSE INTEREST 0.0000000
BEFORE PAYOUT REVENUE INTEREST 0.0312500
AFTER PAYOUT EXPENSE INTEREST 0.1000000
AFTER PAYOUT REVENUE INTEREST 0.0875000
Oil and Gas Lease dated May 22, 1956, by and between L. T. Sutter and
Naomi Sutter, et al, as Lessors, and James B. Franklin, as Lessee, recorded
in Volume 81, page 314 of the Records of Ellis County, Oklahoma, covering
SW/4 of Section 21, Township 23 North, Range 23 West, Ellis County,
Oklahoma. (LF-04885-00)
The hereinabove referenced lease is subject to Operating Agreement
dated December 3, 1964, by and between Pan American Petroleum Corporation,
as Operator, and Shell Oil Company, et al, as Non-Operators; Oklahoma
Corporation Commission Cause C.D. No. 14981; Order No. 45804; Purchase and
Sale Agreement dated December 19, 1985, by and between Shell Western E&P
Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of Sale
effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma; Limited and Partial Assignment of Oil and Gas dated
October 27, 1995, effective July 6, 1994, from Maynard Oil Company, as
Assignor, to Amoco Production Company, as Assignee, recorded in _____, page
_____ of the Records of Ellis County, Oklahoma.
PN 440705 (UT-399)
SUTTER STATE NO. 1-17
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187500
PN 440705-N
SUTTER STATE NO. 2-17
BEFORE PAYOUT EXPENSE INTEREST 0.0000000
BEFORE PAYOUT REVENUE INTEREST 0.0000000
AFTER PAYOUT EXPENSE INTEREST 0.2500000
AFTER PAYOUT REVENUE INTEREST 0.2187500
Oil and Gas Lease dated July 28, 1964, by and between State of
Oklahoma bearing serial number 23-CS-10081, as Lessor, and Shell Oil
Company, as Lessee, recorded in Volume 145, page 629 of the Records of Ellis
County, Oklahoma, covering SW/4 NE/4, NW/4, NW/4 SE/4, N/2 SW/4 of Section
17, Township 22 North, Range 23 West, Ellis County, Oklahoma. (LF-04882-AA)
The hereinabove referenced lease is subject to Operating Agreement
dated July 20, 1965, by and between Gulf Oil Corporation, as Operator, and
Shell Oil Company, et al, as Non-Operators; Purchase and Sale Agreement
dated December 19, 1985, by and between Shell Western E&P Inc. and Maynard
Oil Company; Assignment, Conveyance and Bill of Sale effective December 1,
1985, by and between Shell Western E&P Inc. and Maynard Oil Company recorded
in Volume 459, page 381 of the Records of Ellis County, Oklahoma.
PN 439401
DAVID SWENN (UT-414)
EXPENSE INTEREST 0.0312500
REVENUE INTEREST 0.0273437
Oil and Gas Lease dated October 17, 1956, by and between L. J. Hamby,
et al, as Lessor, and James B. Franklin, as Lessee, recorded in Book 85,
page 535 of the Records of Ellis County, Oklahoma, INSOFAR AND ONLY INSOFAR
as said lease covers the 80.00 acres, more or less, being the S/2 SE/4 of
Section 10, Township 23 North, Range 26 West, LIMITED to rights from the
surface to the base of the Morrow formation, Ellis County, Oklahoma (LF-
04905-AA-02)
The hereinabove referenced lease is subject to Operating Agreement dated
June 13, 1960, by and between Texaco, Inc., as Operator, and Shell Oil
Company (predecessor in title to Maynard Oil Company), et al, as Non-
Operators.
PN 440518
WHITE NO. 1-21 1-C AND 1-T (UT-440)
EXPENSE INTEREST 0.1250000
REVENUE INTEREST 0.1093750
0.0156250 (ROYALTY)
An undivided one-fourth (1/4) interest in the oil, gas and other
minerals in and under and that may be produced from the E/2 of Section 21,
Township 24 North, Range 25 West, Ellis County, Oklahoma, as conveyed in
that certain Mineral Deed dated March 14, 1957, by and between James B.
Franklin, as Grantor, and Shell Canadian Exploration Company, as Grantee,
recorded in Volume 92, page 363 of the Records of Ellis County, Oklahoma,
LIMITED to rights from the surface to the base of the deepest producing
formation and subsequently conveyed to Maynard Oil Company from Shell
Western E&P Inc. by instrument entitled "Assignment, Conveyance and Bill of
Sale" effective December 1, 1985, recorded in Volume 459, page 381 of the
Records of Ellis County, Oklahoma. (LF-04892-AA)
The hereinabove referenced mineral deed is subject to Gas Purchase
Agreement dated October 1, 1989, Production Gathering Company, as Buyer, and
Maynard Oil Company, as Seller; Operating Agreement dated June 5, l980, by
and between Gibraltar Exploration, Ltd., as Operator and Shell Oil Company,
et al, as Non-Operators; Purchase and Sale Agreement dated December 19,
1985, by and between Shell Western E&P Inc. and Maynard Oil Company;
Assignment, Conveyance and Bill of Sale effective December 1, 1985, by and
between Shell Western E&P Inc. and Maynard Oil Company recorded in Volume
459, page 381 of the Records of Ellis County, Oklahoma.
STEPHENS COUNTY, OKLAHOMA
PN 438901 (UT-371)
ALLAMON NO. 15-A
EXPENSE INTEREST 0.2441400
REVENUE INTEREST 0.2136231
Oil and Gas Lease dated May 23, 1969, by and between Country Club Land
Co., as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 1027,
page 275 of the Records of Stephens County, Oklahoma. (LF-04705-AA)
Oil and Gas Lease dated May 23, 1969, by and between Helen Kuhn, et
al, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 1027,
page 273 of the Records of Stephens County, Oklahoma. (LF-04705-AB)
The hereinabove referenced leases cover the N/2 NE/4, N/2 SW/4
NE/4 and the SE/4 SW/4 NE/4 of Section 15, Township 1 North, Range
7 West, Stephens County, Oklahoma.
Oil and Gas Lease dated June 6, 1969, by and between Edward Clark, as
Lessor, and Shell Oil Company, as Lessee, recorded in Volume 1028, page 13
of the Records of Stephens County, Oklahoma, covering the NW/4 of Section
15, Township 1 North, Range 7 West, Stephens County, Oklahoma. (LF-04706-
AA)
Oil and Gas Lease dated May 2, 1969, by and between Frazier Pierce and
Zuby Pierce, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume
1025, page 235 of the Records of Stephens County, Oklahoma. (LF-04707-AA)
Oil and Gas Lease dated June 26, 1969, by and between Georgia Boyd, et
al, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 1030,
page 283 of the Records of Stephens County, Oklahoma. (LF-04707-AB)
The hereinabove referenced leases cover the SW/4 of Section 15,
Township 1 North, Range 7 West, Stephens County, Oklahoma.
The hereinabove referenced leases are subject to Farmout Agreement and
Assignment dated June 5, 1973, from Shell Oil Company to James R. Hazelwood;
Farmout Agreement and Assignment dated August 17, 1973, by and between James
R. Hazelwood and Tesoro Petroleum Corporation; Farmout Agreement and
Assignment dated December 6, 1976, from Shell Oil Company to Tesoro
Petroleum Corporation; Operating Agreement dated May 1, 1977, by and between
Tesoro Petroleum Corporation, as Operator, and Shell Oil Company, et al, as
Non-Operators, covering Section 15, Township 1 North, Range 7 West; Gas
Purchase Agreement by and between Tesoro Petroleum Corporation and Arkansas
Louisiana Gas Company and Gas Purchase Agreement dated May 7, 1978, by and
between Shell and Oklahoma Natural Gas Company; Purchase and Sale Agreement
dated December 3, 1984, by and between Shell Western E&P Inc. and Maynard
Oil Company; Assignment, Conveyance and Bill of Sale by and between Shell
Western E&P Inc. and Maynard Oil Company recorded in Volume 1585, page 704
of the Records of Stephens County, Oklahoma; Farmout Agreement dated
September 27, 1989, by and between Maynard Oil Company, as Farmor, and
Kaiser-Francis Oil Company, as Farmee; Corporation Commission Order No.
341238.
PN 438905 (UT-373)
BUMPASS NO. 1-22
EXPENSE INTEREST BEFORE PAYOUT 0.0000000
REVENUE INTEREST BEFORE PAYOUT 0.0151367
EXPENSE INTEREST AFTER PAYOUT 0.0302734
REVENUE INTEREST AFTER PAYOUT 0.0321655
Oil and Gas Lease dated October 16, 1969, by and between David Harris,
et al, as Lessor, and L. R. Snyder, as Lessee, recorded in Volume 1042, page
390 of the Records of Stephens County, Oklahoma, covering the E/2 NW/4, SW/4
NW/4, E/2 NW/4 NW/4, SW/4 NW/4 NW/4 and the NW/4 NW/4 SW/4 of Section 22,
Township 1 North, Range 7 West, Stephens County, Oklahoma. (LF-04708-00)
Oil and Gas Lease dated May 2, 1969, by and between Frances Louise
Jackson and Miles Jackson, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 1024, page 428 of the Records of Stephens County,
Oklahoma. (LF-04709-AA)
Oil and Gas Lease dated May 21, 1969, by and between L. W. Corbett,
Executor of the Joseph E. Hanson Estate, deceased, as Lessor, and Shell Oil
Company, as Lessee, recorded in Volume 1024, page 426 of the Records of
Stephens County, Oklahoma. (LF-04709-AB)
The hereinabove referenced leases cover the E/2 SW/4, SW/4 SW/4,
S/2 NW/4 SW/4 and the NE/4 NW/4 SW/4 of Section 22, Township 1
North, Range 7 West, LIMITED to rights from the surface to 12,590
feet below the surface and LIMITED to the borehole of the Bumpass
No. 1-22, Stephens County, Oklahoma.
The hereinabove referenced leases are subject to Farmout Agreement and
Assignment dated June 5, 1973, from Shell Oil Company to James R. Hazelwood;
Assignment dated July 1, 1974, from Shell Oil Company to James R. Hazelwood,
recorded in Volume 1171, page 141; Gas Purchase Contract dated May 1, 1974,
as amended, by and between Arkansas Louisiana Gas Company, as Buyer, and
Tesoro Petroleum Corporation, et al, as Seller; Gas Purchase Contract dated
February 8, 1978, as amended, by and between Oklahoma Natural Gas Company,
as Buyer, and Shell Oil Company, et al, as Seller; Assignment from L. R.
Snyder to Shell Oil Company, recorded in Volume 1042, page 391; Purchase and
Sale Agreement dated December 3, 1984, by and between Shell Western E&P Inc.
and Maynard Oil Company; Assignment, Conveyance and Bill of Sale effective
November 1, 1984, by and between Shell Western E&P Inc. and Maynard Oil
Company, recorded in Volume 1585, page 704 of the Records of Stephens
County, Oklahoma; Farmout Agreement dated September 27, 1989, by and between
Maynard Oil Company, as Farmor, and Kaiser-Francis Oil Company, as Farmee;
Corporation Commission Order No. 341238; Operating Agreement dated October
17, 1973, by and between Tesoro Petroleum Corporation, as Operator, and
Montgomery Exploration Company, et al, as Non-Operators; Oklahoma
Corporation Commission Order No. 100058 dated September 25, 1973; Farmout
Agreement and Assignment dated August 17, 1973, by and between James R.
Hazelwood and Tesoro Petroleum Corporation; Limited and Partial Assignment
of Oil and Gas Leases dated May 24, 1995, from Maynard Oil Company to Apache
Corporation, recorded in Volume _____, page _____ of the Records of Stephens
County, Oklahoma.
EXHIBIT A-1
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company as Seller, and Enron Oil & Gas
Company, as Buyer
PRELIMINARY PROJECTED
WELLBORE UNIT PURCHASE IMBALANCE PAYOUT
VALUE VALUE PRICE VOLUME DATE AMOUNT
440502 EHRLICH B 1-18 $21,588 $32,472 $54,060 10,059 N/APP N/APP
440522 EHRLICH B 2-18 $60,680 $22,892 $83,572 (3,046) N/APP N/APP
440506 IRVIN E 1-25 $1,961 $0 $1,961 0 N/APP N/APP
440601 KATHY 1-14 $0 $0 $0 0 N/APP N/APP
440602 KATTERJOHN 1-2 $13,837 $3,757 $17,594 13,593 N/APP N/APP
440508 LUANE 1-28 $8,679 $2,000 $10,679 2,699 N/APP N/APP
440509 MASSEY 1-22 $4,461 $37,528 $41,989 956 N/APP N/APP
440513 PARKER 9-47 $1,250 $0 $1,250 0 N/APP N/APP
440516 SELLS UNIT 1&2-24 $6,688 $0 $6,688 0 N/APP N/APP
440704 SUTTER D 1-21 $53,493 $8,000 $61,493 5,788 N/APP N/APP
440704 SUTTER D 2-21 $6,148 $0 $6,148 0 N/APP N/APP
440705 SUTTER ST 1-17 $55,590 $482,288 $537,878 (108) N/APP N/APP
440705 SUTTER ST 2-17 $0 $0 $0 0 06/95 $951,797
439401 DAVID SWENN $30,502 $26,226 $56,728 1 N/APP N/APP
440518 WHITE 1-21 1C&1T $10,261 $55,592 $65,853 (5,856) N/APP N/APP
438901 ALLAMON 15A $32,927 $9,816 $42,743 (5,860) KAISER- N/AVA
FRANCIS
438905 BUMPASS 1-22 $798 $0 $798 0 N/APP N/APP
TOTAL $308,863 $680,571 $989,434 18,226
EXHIBIT A-2
PREFERENTIAL RIGHTS TO PURCHASE
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company as Seller, and Enron Oil & Gas
Company, as Buyer
PRELIMINARY
WELLBORE UNIT PURCHASE
VALUE VALUE PRICE
440704 SUTTER D 1-21 $53,493 $8,000 $61,493
440704 SUTTER D 2-21 $6,148 $0 $6,148
440705 SUTTER ST 1-17 $55,590 $482,288 $537,878
440705 SUTER ST 2-17 $0 $0 $0
439401 DAVID SWENN $30,502 $26,226 $56,728
$145,733 $516,514 $662,247
EXHIBIT B
AUTHORIZATIONS FOR EXPENDITURE
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company as Seller, and Enron Oil & Gas
Company, as Buyer
SUTTER STATE 3-17
DRILL & COMPLETE LOWER MORROW TEST
$229,025 DRY HOLE COST
$437,025 COMPLETION COSTS
EXHIBIT C
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company, as Seller, and Enron Oil & Gas
Company, as Buyer.
ASSIGNMENT, BILL OF SALE AND CONVEYANCE
FROM MAYNARD OIL COMPANY TO ENRON OIL & GAS COMPANY,
EFFECTIVE AUGUST 1, 1996
THE STATE OF OKLAHOMA )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF )
THAT, the undersigned, MAYNARD OIL COMPANY, a Delaware
corporation, having its principal office at 8080 North Central Expressway,
Suite 660, Dallas, Texas 75206 (hereinafter called "ASSIGNOR"), for and in
consideration of Ten Dollars ($10.00) and other valuable consideration to it
in hand paid by ENRON OIL & GAS COMPANY, a Delaware corporation, having its
principal office at 1400 Smith Street, Houston, Texas 77002 (hereinafter
called "ASSIGNEE"), does hereby GRANT, BARGAIN, SELL, ASSIGN and CONVEY unto
Assignee, subject to the terms and conditions contained herein, the
following:
(a) All of Assignor's right, title and interest in and to the
leasehold estate and mineral rights created by the leases described in
Exhibit A, attached hereto and made a part together with any and all
interest of Assignor in and to such property and in and to any
agreements, leases, rights-of-way, easements, licenses and permits
incident thereto, INSOFAR AND ONLY INSOFAR as the said rights cover the
lands and depths described in Exhibit A;
(b) All of Assignor's right, title and interest in and to the wells,
and production therefrom, located on the Leases or lands pooled
therewith, including but not limited to the wells described in Exhibit
A together with any and all buildings or other improvements constructed
thereon , together with any and all interest of Assignor in and to such
property and in and to any agreements, including, without limitation,
gas purchase agreements, farmin and farmout agreements, operating
agreements and pooling agreements, leases, rights-of-way, easements,
licenses and permits incident thereto;
(c) All of Assignor's right, title and interest in and to the real and
personal property, fixtures, improvements and buildings located on the
lands burdened by the Leases or lands pooled therewith, and all
contract rights, rights of substitution and subrogation in and to any
rights and actions of warranty which Assignor has or may have.
This Conveyance, Assignment and Bill of Sale is executed and delivered
as part of the consummation of the transaction contemplated by that certain
Purchase and Sale Agreement between Assignor, as SELLER , and Assignee, as
BUYER , dated September 12, 1996, hereinafter referred to as "Sale
Agreement". The warranties, representations, indemnities and covenants
contained in the Sale Agreement shall survive the delivery of this
Assignment in accordance with the provisions of the Sale Agreement and the
delivery of this Assignment shall not affect, expand, diminish, or otherwise
impair any of the warranties, representations, indemnities or covenants made
in the Sale Agreement and the terms and conditions set forth therein;
provided, however, any third parties transacting with Assignee with respect
to any of the interests may rely on this Assignment as vesting Assignee with
all of Assignor's rights, titles and interests in the said leases and wells.
Assignor warrants to Assignee title to the leases as described in said
Sale Agreement against any claims and demands of all persons whomsoever
claim the same or any part thereof by, through and under Assignor, but not
otherwise.
This Conveyance, Assignment and Bill of Sale shall extend to, be
binding upon and inure to the benefit of Assignor and Assignee, their
respective successors and assigns and shall be deemed covenants running with
the herein described lands and leasehold estates.
Assignee expressly assumes, as of the Effective Date, all of Assignor's
obligations relating to the said leases, including, but not limited to, the
obligation of plugging and aband expense. From and After the Effective Date
hereof, Assignee shall be solely responsible for the balancing of or payment
for any gas imbalances which may exist.
This assignment shall be effective, for all purposes as of 7:00 o'clock
a.m. August 1, 1996.
This assignment is being executed in several counterparts, all of which
are identical, except that, to facilitate recordation, only that portion of
Exhibit A which contains specific descriptions of the leases located in the
recording jurisdiction in which the particular counterpart is to be recorded
are included, and other portions of Exhibit A are included by reference
only. All of such counterparts together shall constitute one and the same
instrument. Complete copies of the Assignment containing the entire Exhibit
A have been retained by Assignor and Assignee.
EXECUTED this 30th day of September 1996, but to be effective as stated
above.
MAYNARD OIL COMPANY
By: ___________________________
Glenn R. Moore
President
ENRON OIL & GAS COMPANY
By: ___________________________
Leland J. McVay
Vice President
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on September 30, 1996, by
Glenn R. Moore, President of Maynard Oil Company, a Delaware corporation, on
behalf of said corporation.
MY COMMISSION EXPIRES:
___________________________
Cassondra Foster, Notary
Public in and for the State
of Texas
THE STATE OF OKLAHOMA )
)
COUNTY OF OKLAHOMA )
This instrument was acknowledged before me on , 1996, by
Leland J. McVay, Vice President of Enron Oil & Gas Company, a Delaware
corporation, on behalf of said corporation.
MY COMMISSION EXPIRES:
___________________________
Notary Public in and for
the State of Oklahoma
EXHIBIT D
EXCHANGE ESCROW AGREEMENT
Attached to and made a part of Purchase and Sale Agreement dated
September 12, 1996, by and between Maynard Oil Company, as Seller, and
Enron Oil & Gas, Inc., as Buyer
This Agreement is dated the 12th day of September, 1996, BUT EFFECTIVE
September 13, 1996, between MAYNARD OIL COMPANY, a Delaware corporation,
having its principal office at 8080 North Central Expressway, Suite 660,
Dallas, Texas 75206 ("SELLER") and ENRON OIL & GAS, INC., a Delaware
corporation, having its principal office at 1400 Smith Street, Houston,
Texas 77002 ("BUYER") and BANK ONE TEXAS, N.A., a national banking
association, hereinafter referred to as "Escrow Agent".
W I T N E S S E T H
WHEREAS, Seller and Purchaser have entered into that certain Purchase
and Sale Agreement dated September 12, 1996 (the "CONTRACT ), for the sale
and purchase of certain properties more particularly described in the
Exhibit "A" attached ("SELLER'S PROPERTY").
WHEREAS, Purchaser has agreed to accommodate Seller in effecting a tax
deferred exchange under Section 1031 of the Internal Revenue Code of 1986
(the "CODE") by acquiring for the benefit of Seller and exchanging for
Seller's Property one or more like properties (collectively, "EXCHANGE
PROPERTY"), to be designated by Seller and thereafter acquired and
transferred to Seller;
WHEREAS, unless notified otherwise by Seller and Buyer jointly, Escrow
Agent may rely upon the date of this agreement, as set forth above, being
the date on which Seller's property was transferred to Buyer; and
WHEREAS, this Exchange Escrow Agreement is referred to as the
"AGREEMENT".
NOW THEREFORE, the parties agree as follows:
1. Creation of Escrow. Buyer agrees to deposit with and deliver to
Escrow Agent, the net closing proceeds of the Seller's Property, which net
closing proceeds shall consist of cash in the amount of Four Million Two
Hundred Seventy Seven Thousand One Hundred Thirty Eight Dollars
($4,277,138.00) plus or minus any adjustments allowed under ARTICLE II of
the Contract and less costs of closing, fees, taxes, and other reductions
contemplated by the Contract, said net closing proceeds being hereinafter
referred to as the "ESCROW FUND . Escrow Agent shall have no responsibility
to ascertain whether the funds deposited with it as the Escrow Funds are
equal to the net closing proceeds described in the immediately preceding
sentence. Each deposit to the Escrow Fund, whether initially made as
contemplated above, or made subsequently for whatever reason, shall be in
cash, and shall be accompanied by notice to Escrow Agent setting forth the
time and method of delivery of such cash, the amount thereof, and directions
to deposit such funds to the escrow account created hereunder. Escrow Agent
shall invest the Escrow Fund at the written request of the parties hereto.
Said request shall be by notice, which shall specify the type of investment
to be made, the maturity date, and the principal amount to be invested. The
Escrow Agent shall not be liable for losses on any investments made by it
pursuant to and in compliance with such instructions; and Escrow Agent shall
not be responsible or liable for any penalty or loss incurred as a result of
the settlement or liquidation of any such investment prior to this maturity
to enable Escrow Agent to make any disbursement required hereunder. The
Escrow Fund will remain uninvested until such notice of investment
instructions is received. All interest earned on the Escrow Fund shall be
added to and shall become a part of the Escrow Fund, subject to the same
restrictions on distribution as contained herein for the Escrow Fund. No
assignment, transfer, conveyance or hypothecation of any right, title or
interest in and to the subject matter of this Escrow shall be binding upon
Escrow Agent unless notice thereof shall be served upon Escrow Agent and all
fees, costs and expenses incident thereto shall have been paid and then only
upon Escrow Agent's assent thereto in writing. Escrow Agent shall be under
no duty or obligation to ascertain the identity, authority or rights of the
parties executing, delivering or purporting to execute or deliver these
instructions or any documents, paper, or payments deposited or called for
hereunder, and assumes no responsibility or liability for the validity or
sufficiency of these instructions or any documents, papers or payments
deposited or called for hereunder.
2. Interests in Escrow Fund. Buyer declares that the purpose of the
Escrow Fund is to secure to Seller ormance of Buyer's obligations under the
Contract. Under no circumstances shall the Escrow fund be disbursed, except
pursuant to the terms of this Agreement.
3. Escrow Fee; Costs. Seller shall pay to Escrow Agent upon
execution hereof fees as outlined on Exhibit "B" for services rendered by it
pursuant to the provisions of this Agreement, and will reimburse Escrow
Agent for its reasonable expenses, including attorney's fees, incurred in
connection with the performance of such services as such expenses are
incurred. Escrow Agent's expenses, including reasonable attorney's fees for
review, revision and approval of this Agreement shall be paid by Seller to
Escrow Agent upon execution of this Agreement. Notwithstanding anything to
the contrary contained in any other provision of this Agreement or any
instructions to the contrary from either Buyer or Seller, Escrow Agent shall
be entitled to retain from any disbursements requested hereunder any
outstanding fees and/or expense due to it hereunder. Escrow Agent shall be
entitled to consult with counsel as it deems necessary from time to time,
and reasonable fees therefore shall be an expense reimbursable to Escrow
Agent as provided hereunder. Escrow Agent is hereby granted a lien on the
Escrow Fund for all indebtedness that may become owing to Escrow Agent
pursuant to this Agreement, which may be enforced by Escrow Agent by
appropriate foreclosure proceedings.
4. Identification and Acquisition of Exchange Property. Seller shall
identify and negotiate the terms of acquisition of one or more Exchange
Property or Exchange Properties. Upon Notice to Escrow Agent from Seller as
to the need for monies in the Escrow Fund to acquire an Exchange Property,
which notice shall provide a description of the Exchange Property, the
general terms of its acquisition and instructions for the disbursement of
Escrow Funds to accomplish acquisition of the Exchange Property, the Escrow
Agent shall disburse funds in accordance wed that (i) such notice shall be
given to Escrow Agent at least three business days prior to any needed
disbursement; (ii) once disbursed, Escrow Agent shall have no further
responsibility with respect to such funds; and (iii) Escrow Agent shall
never have any responsibility to supply funds needed by Seller from its own
assets. The Escrow Agent may rely conclusively upon the information
contained in the notification.
5. Termination; Disbursement to Seller. This Agreement shall
terminate automatically, without notice to any party, as follows: (a) in
the event Seller fails to give notice to Escrow Agent that it has designated
Exchange Property by the forty-fifth (45th) day following the date of this
Agreement at the close of business of such day, or (b) otherwise, on the one
hundred eightieth (180th) day following the date of this Agreement provided,
that if Seller designates Exchange Property and all property so designated
has been successfully acquired and transferred to Seller prior to the one
hundred eightieth (180th) day following the date of this Agreement, then
Seller shall so notify Escrow Agent, and this Agreement shall instead
terminate on the day following Escrow Agent's receipt of such notice. Upon
termination of this Agreement, the Escrow Fund as then constituted shall
become the property of Seller and shall promptly be paid over and delivered
to Seller subject to Escrow Agent's right to offset and deduct all unpaid
fees of Escrow Agent and all reasonable expenses, including attorney's fees,
and authorized disbursements. Under no circumstances shall any party of the
Escrow Fund be disbursed to Seller except upon termination of this Agreement
pursuant to this paragraph. Seller shall have no right to receive, pledge,
borrow, or otherwise obtain the benefits of the Escrow Fund prior to
termination of this Agreement pursuant to this paragraph.
6. Security Interest of Seller. Buyer agrees the Escrow Fund is
hereby impressed with and made subject to a security interest in favor of
Seller securing Buyer's performance to obtain and transfer title to the
Exchange Property as set forth above.
7. Successor Escrow Agent. Escrow Agent may at any time resign
hereunder by giving notice of its resignation to Seller and Buyer at least
10 days prior to the date specified for such resignation to take effect. If
Escrow Agent has so resigned, Seller and Buyer shall appoint a successor
escrow agent within such notice period. Further, if Escrow Agent has not
previously given notice of resignation, Seller and Buyer may remove Escrow
Agent by mutually naming a successor hereunder to Escrow Agent, which shall
be done by s removal and appointment of the Successor Escrow Agent at least
ten (10) days prior to the date specified for such removal to take place.
Such Successor Escrow Agent, regardless of why appointed, shall have all the
duties and powers assumed and conferred in this Agreement upon Escrow Agent.
Upon the date on which the resignation or removal of Escrow Agent is
specified to take effect, the Escrow fund shall be delivered to the
Successor Escrow Agent so named by Seller and Buyer above in this paragraph,
whereupon all Escrow Agent's obligations hereunder shall cease. If no
Successor Escrow Agent is so designated by such effective date, all
obligations of Escrow Agent hereunder, nevertheless, shall cease and
terminate. Escrow Agent's sole responsibility thereafter shall be to keep
safely the Escrow Fund and to deliver the same to a person designated by
Seller and Buyer or in accordance with the directions of a final order or
judgment of a court of competent jurisdiction.
8. Escrow Agent Release. Escrow Agent shall have no liability under,
or duty to inquire into the terms and provisions of this Agreement or the
transaction between Seller and Buyer and it is agreed that its duties
hereunder are purely ministerial in nature, and Escrow Agent shall incur no
liability whatsoever except for its willful misconduct or gross negligence
so long as it has acted in good faith. Escrow Agent shall not be bound by
any modification, amendment, termination, cancellation, rescission or
revision of this Escrow Agreement unless the same shall be in writing and
signed by Seller and Buyer, and if its duties hereunder are affected
thereby, unless it shall have given prior written consent thereto. Escrow
Agent shall have no liability for the acts of any of its agents unless it
has been grossly negligent or engaged in willful misconduct in the selection
of such agent. Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth in this Agreement and may rely
upon and shall be protected in acting or refraining from acting on any
instrument in good faith believed by it to be genuine and to have been
signed or presented by the property party or parties. Escrow Agent shall
not be liable for any action taken or omitted by it in good faith and
believed by it to be authorized hereby, nor for any action taken or omitted
by it in accordance with the advice of its counsel. Escrow Agent may,
without further investigation, assume: (a) the accuracy and truth of any
written instrument, notice, certificate or opinion given to it and (b) the
authenticity of any signatures thereon.
9. Indemnity. In consideration of acceptance of this escrow by Escrow
Agent, Seller agrees for executors, personal representatives, successors and
assigns, to indemnify, defend, and hold Escrow Agent (in every capacity,
including its corporate capacity) harmless from and against any and all
claims, losses, damages, taxes, liabilities, and expene incurred by Escrow
Agent arising out of or in connection with its appointment, acceptance,
service or performance hereunder, including the legal costs and expenses of
defending itself against any Claims in connection with such expenses of
defending itself against any Claims in connection with such matters.
"CLAIMS" specifically includes Claims arising out of the alleged or actual
negligence of Escrow Agent, but this agreement to indemnify, defend and hold
harmless shall not extend to Claims which are determined to be the result of
gross negligence or willful misconduct of Escrow Agent in bad faith. This
agreement by Seller to indemnify, defend and hold harmless is not limited to
the amount of funds held in escrow hereunder, and shall survive both the
termination of the Agreement and any resignation or removal of Escrow Agent.
To further secure the performance of Seller under this agreement to
indemnify, defend and hold harmless, Seller and Buyer agree that Escrow
Agent shall have a first and prior lien upon all deposits made hereunder to
secure the performance of said agreement.
10. Interpleader. Should any controversy arise between the
undersigned with respect to this Agreement or with respect to the right to
receive the Escrow Fund, Escrow Agent shall have the right to institute a
bill of interpleader in any court of competent jurisdiction to determine the
rights of the parties. Should a bill of interpleader be instituted, or
should Escrow Agent become involved in litigation in any manner whatsoever
on account of this Agreement or the Escrow Fund, Seller and Buyer hereby
bind themselves, their successors and assigns, to pay Escrow Agent, in
addition to any charge made for acting as Escrow Agent hereunder and
expenses incurred in connection therewith, reasonable attorney's fees
incurred by Escrow Agent and any other disbursements, expenses, losses,
costs and damages in connection with or resulting from such litigation.
11. Notices. Any notice required or permitted hereunder, to be
effective, must be in writing and shall be deemed given, except as provided
in the penultimate sentence of this paragraph 11 when personally delivered
to any party or mailed, postage prepaid, registered or certified mail,
return receipt requested, to the following addresses:
If to Buyer: Enron Oil & Gas Company
Attention Mr. Robert W. Kelly, II
20 North Broadway, Suite 830
Oklahoma City, OK 73102
Phone: (405) 239-7800
Fax: (405) 239-7858
If to Seller: Maynard Oil Company
8080 North Central Expressway, Suite 660
Dallas, Texas 75206
Attention Cassondra Foster
Telephone: (214) 891-8461
Facsimile: (214) 891-8827
With Copy to: Maynard Oil Company
8080 North Central Expressway, Suite 660
Dallas, Texas 75206
Attention Kenneth Hatcher
Telephone: (214) 891-8471
Facsimile: (214) 891-8827
If to Escrow Agent: Bank One, Texas, N.A.
Attention Kay Lowrance
8111 Preston Road, 2nd Floor
Dallas, TX 75225
Telephone: (214) 360-3978
Facsimile: (214) 360-3980
Provided further, and in addition to the requirements set forth above, any
notice required or permitted to be given to Escrow Agent hereunder shall be
effective only when actually received in writing by Kay Lowrance, on behalf
of Escrow Agent, and not prior thereto. Any party may, by proper notice,
change its address for notice hereunder.
12. Amendment. This Agreement is irrevocable, and may not be amended,
modified or supplemented except by written instrument signed by Buyer and
Seller and approved in writing by Escrow Agent.
13. Successors and Assigns. This Agreement shall inure to the benefit
of the parties, their respective heirs, executors, personal representatives,
successors and assigns.
14. Counterparts. This Agreement may be executed in several
counterparts, and the several signed counterparts shall be deemed a single,
integrated instrument.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas. The venue for any action
arising hereunder or in connection herewith shall be in Dallas County,
Texas.
16. Time of Essence. Time is expressly declared to be of the essence
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement in
triplicate as of the day and year first above written.
SELLER
MAYNARD OIL COMPANY
By: _______________________________
Glenn R. Moore
President
BUYER
ENRON OIL & GAS, INC.
By: _______________________________
Leland J. McVay
Vice President
ESCROW AGENT
BANK ONE, TEXAS, N.A.
By: ______________________________
Kay Lowrence
Assistant Vice President