EXHIBIT 10.7
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (this "Agreement"), dated as of
April 12, 1996, is by and between Medallion Production Company, a Delaware
corporation ("Medallion"), and InterCoast Global Management, Inc., a Delaware
corporation ("InterCoast").
In consideration of the promises hereinafter set forth and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, InterCoast and Medallion agree as follows:
1. Purchase and Sale. Subject to the terms and conditions herein set
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forth, upon the Closing (as hereinafter defined) Medallion shall sell to
InterCoast and InterCoast shall purchase from Medallion the Subject Properties
(as hereinafter defined).
2. Consideration. At the Closing InterCoast agrees to (i) pay to
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Medallion in cash or cash equivalent the sum of $5,615,000, and (ii) execute and
deliver to Medallion a promissory note in the form attached hereto as Exhibit A
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in the original principal amount of $2,315,000. As further consideration
hereunder, Medallion shall except and reserve unto itself a production payment
(the "Production Payment") payable out of production from the Subject Properties
pursuant to the terms of the Assignment and Agreement (the "Assignment and
Agreement") in the form attached hereto as Exhibit B.
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3. Effective Date of Sale. The effective date for the purchase and sale
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hereunder shall be April 12, 1996, at 7:00 a.m., Texas time (the "Effective
Date"). All operating and other costs, expenses and charges attributable to the
Subject Properties and incurred prior to the Effective Date shall be the
responsibility and obligation of Medallion and Medallion shall be entitled to
all of the proceeds from the sale of production attributable to the Subject
Properties accrued prior to the Effective Date. All operating and other costs,
expenses and charges attributable to the Subject Properties and incurred at or
after the Effective Date shall be the responsibility and obligation of
InterCoast and, subject to the terms of the Assignment and Agreement, InterCoast
shall be entitled to all of the proceeds from the sale of production
attributable to the Subject Properties accrued at or after the Effective Date.
Ad valorem taxes, prepaid utility charges and prepaid rentals and other prepaid
expenses relating to the Subject Properties shall be prorated to the Effective
Date. At the Closing the parties hereto shall account to and reimburse or pay
each other for their respective shares of such costs, expenses, charges and
proceeds to the extent the same may reasonably be estimated. It is recognized
that the exact amounts of all of these sums may not be available to the parties
at the Closing, in which event a determination of such reimbursements, payments
and other accounting adjustments required by this Agreement shall be made as
soon as possible and in any event within 120 days after the Closing, and at that
time such sums as may be found due by such determination shall be paid by the
party owing the same to the other party.
4. Closing. The closing (the "Closing") of the transactions provided for
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in this Agreement shall take place at 11:00 a.m. at the offices of Akin, Gump,
Strauss, Hauer & Feld, L.L.P., 1900 Pennzoil Place - South Tower, 711 Louisiana
Street, Houston, Texas, unless a different date, time or place shall be agreed
upon in writing in advance by the parties.
5. Subject Properties. "Subject Properties" means all of Medallion's
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right, title and interest in and to the leases described on Exhibit C (the
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"Leases") insofar and only insofar as the Leases cover oil and gas capable of
being produced from the Canyon Sand formation under the lands covered by the
Leases, and insofar and only insofar as said oil and gas can be produced from
the wells described on Exhibit C (the "Wells"), including such of Medallion's
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leasehold or operating rights as may be required to operate the Wells and to
produce and market such oil and gas, together with all of Medallion's right,
title and interest in and to (i) agreements insofar as the same relate to or are
appurtenant to such limited leasehold or operating rights and (ii) all personal
property and equipment relating to the Wells up to and including the separator
(or where there is no separator, up to and including the metering equipment) and
other such surface equipment and flowlines appurtenant thereto (but specifically
excluding any equipment downstream of the separator, or where there is no
separator, downstream of the metering equipment). There is specifically
excluded and reserved from the Subject Properties (i) all of the other right,
title and interest of Medallion in and to the Leases and in and to oil and gas
under or allocated to the Leases to the extent the same is produced and
developed from other formations in the same Well or from other or the same
formation(s) in other existing or future wellbores and (ii) the concurrent right
to utilize the personal property, equipment and flowlines relating to the Wells
to the extent necessary for Medallion to operate the portion of the Leases which
it has retained hereunder.
6. Title Matters. Medallion shall transfer title to the Subject
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Properties to InterCoast at Closing pursuant to the terms of the Assignment and
Agreement.
7. Review of Documents. Subsequent to the execution of this Agreement by
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both parties, InterCoast and its representatives shall be entitled to examine
and copy Medallion's records with respect to the Subject Properties, including
but not limited to all lease files, gas contracts, operating agreements, deeds
and documents of title, all other property records, all geological, geophysical
and other records, and all other contracts, agreements and documents relating to
the Subject Properties.
8. Covenants of Medallion. Medallion hereby covenants that:
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A. So long as Medallion shall remain as manager of the Subject
Properties or otherwise controls the marketing of production from the Subject
Properties, all non-liquid production from the Wells will be sold to persons who
are not related to InterCoast (within the meaning of Section 29(d)(7) of the
Internal Revenue Code of 1986, as amended (the "Code")).
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B. So long as Medallion shall remain as manager of the Subject
Properties or otherwise controls the marketing of production from the Subject
Properties, no non-liquid production from the Wells will be sold under any
contract for sale at a price that is either unlawful or determined with regard
to Section 107 of the Natural Gas Policy Act of 1978, as amended (the "NGPA"),
or Subtitle B of Title I of the NGPA, within the meaning of Section 29(e)(1) of
the Code.
9. Subrogation of Rights. The parties acknowledge that the Subject
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Properties were acquired by Medallion pursuant to the Purchase and Sale
Agreement (the "Enron Agreement") dated March 30, 1996, between Enron Oil & Gas
Company, Enron Oil & Gas Marketing, Inc. and Medallion, as amended. Pursuant to
the Assignment and Agreement to be delivered hereunder, InterCoast shall be
entitled to full substitution and subrogation as to the covenants, warranties,
agreements and indemnities heretofore given or made in respect of all or any
part of the interests in the Subject Properties being assigned, including,
without limitation, all such covenants, warranties, agreements and indemnities
made by the sellers under the Enron Agreement and any assignment delivered
pursuant thereto.
10. Preferential Rights. The parties acknowledge that certain of the
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Subject Properties are subject to preferential rights to purchase. In the event
any holder of such rights exercises its rights to purchase a portion of the
Subject Properties, the following shall occur: (i) InterCoast shall execute
appropriate assignments quit-claiming its interest in the affected Subject
Properties to the party exercising such preferential rights to purchase, and
(ii) the amount of cash consideration and the principal amount of the promissory
note delivered pursuant to paragraph 2 hereof shall be reduced by the cash
consideration paid by the exercising party and the principal amount of the
promissory note delivered by the exercising party. The parties agree to execute
and exchange such documents, and refund such monies, as are necessary to
effectuate the foregoing.
11. Fees and Expenses. InterCoast shall pay all sales and transfer taxes
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and recording fees. No commission or brokerage fee will be paid by either party
in connection with this Agreement, and each party represents and warrants to the
other that it has not incurred any such obligations.
12. Repurchase. Medallion shall have the right to repurchase the Subject
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Properties pursuant to the provisions of the Assignment and Agreement.
13. Further Assurances. It is intended herein for InterCoast to acquire
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all of Medallion's interest in the Subject Properties, subject to the Production
Payment. At Closing and thereafter as may be required, Medallion and InterCoast
shall timely execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such instruments (including corrective instruments)
and take such other action as reasonably may be necessary or advisable to
evidence and effectuate the transfer of titles hereunder, and to carry out their
respective obligations under this Agreement and under any instrument delivered
pursuant thereto.
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14. Investment Representation. InterCoast represents and warrants that
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(i) InterCoast is acquiring the Subject Properties solely for its own account,
for investment purposes only and not with a view to, or for resale in connection
with, any distribution thereof; (ii) InterCoast is aware and acknowledges being
informed that the Subject Properties have not been registered under any
applicable federal or state securities laws by reason of exemption thereunder
and must be held indefinitely unless they are subsequently registered under said
laws or an exemption from such registration is available, and they are disposed
of pursuant to such exemption; (iii) InterCoast is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended; (iv) InterCoast understands that the oil and gas business is highly
speculative and Medallion makes no representations to InterCoast as to the
success or financial gain which may result from InterCoast's acquisition of the
Subject Properties; (v) InterCoast, either alone or with InterCoast's advisors,
has sufficient knowledge and experience in business, financial matters to
evaluate the merits and risks of an investment in the Subject Properties; (vi)
InterCoast's financial situation enables it to bear the economic risks of the
purchase of the Subject Properties for an indefinite period of time, which risks
may include the loss by InterCoast of its entire investment in the Subject
Properties; and (vii) InterCoast has satisfied itself as to the qualification of
the transactions contemplated by this Agreement to generate tax credits pursuant
to Section 29 of the Code which accrue to the benefit of InterCoast and
InterCoast's ability to utilize such tax credits.
15. Notices. All notices, statements, payments and communications between
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the parties hereto shall be deemed to have been sufficiently given and delivered
only when actually received by the party to whom directed or when delivered to
the following address:
If to Medallion:
Medallion Production Company
Attention: W. E. Warnock, Jr.
7130 South Lewis Avenue, Suite 700
Tulsa, Oklahoma 74136
If to InterCoast:
InterCoast Global Management, Inc.
Attention: President
666 Grand Avenue, 26th Floor
Des Moines, Iowa 50309
Any party or the successors or assigns of the interest or rights of any party
hereunder may change its address or designate a new or different address or
addresses for the purposes hereof by similar notice given or directed to all
parties interested hereunder at the same time.
16. Amendments. This Agreement may not be amended nor any rights
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hereunder be waived except by an instrument in writing signed by the party to be
charged with such amendment or waiver.
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17. Successors and Assigns. This Agreement shall be binding upon and
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shall inure to the benefit of the parties hereto and their respective successors
and assigns.
18. Governing Law. This Agreement and the transactions contemplated
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hereby shall be construed in accordance with, and governed by, the laws of the
State of Texas.
19. Texas Deceptive Trade Practices Act Waiver. InterCoast represents and
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warrants to Medallion that InterCoast: (a) is acquiring the Subject Properties
for commercial or business use, (b) has assets of $25,000,000 or more or is
owned or controlled by a corporation or entity with assets of $25,000,000 or
more, and (c) has knowledge and experience in financial and business matters
that enable it to evaluate the merits and risks of the transactions contemplated
by this Agreement and is not in a significantly disparate bargaining position
with respect to Medallion. MOREOVER, INTERCOAST HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY AND ALL RIGHTS OR REMEDIES THAT IT MAY HAVE UNDER THE
DECEPTIVE TRADE PRACTICES -- CONSUMER PROTECTION ACT OF THE STATE OF TEXAS,
BUSINESS AND COMMERCE CODE SECTIONS 17.41 THROUGH SECTION 17.63 (OTHER THAN
SECTION 17.555).
EXECUTED as of the date first above written.
MEDALLION PRODUCTION COMPANY
By: \s\ Brian L. Cantrell
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Name: Brian L. Cantrell
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Title: Vice President - Finance
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INTERCOAST GLOBAL MANAGEMENT, INC.
By: \s\ Donald C. Heppermann
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Name: Donald C. Heppermann
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Title: Chairman of the Board
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EXHIBIT A
TO PURCHASE AND SALE AGREEMENT
PROMISSORY NOTE
$2,315,000 Tulsa, Oklahoma
April 12, 1996
FOR VALUE RECEIVED, the undersigned, INTERCOAST GLOBAL MANAGEMENT, INC., a
Delaware corporation, promises to pay to the order of MEDALLION PRODUCTION
COMPANY, a Delaware corporation, at Tulsa, Oklahoma, or at such other place as
the legal holder hereof may designate in writing, the principal sum of Two
Million Three Hundred Fifteen Thousand Dollars ($2,315,000) in legal U.S.
tender, with interest thereon from the date hereof at the Applicable Rate (as
hereinafter defined) and in monthly installments as hereinafter provided:
(1) Interest in the amount of $9,418.56 (representing interest from
the date hereof through April 30, 1996) shall be due and payable as of the
date hereof.
(2) Commencing June 1, 1996, and on the first day of each calendar
month thereafter through and including May 1, 2000 (the "Full Amortization
Date"), the unpaid principal balance of this Note, plus accrued interest
thereon, shall be due and payable in 48 consecutive monthly installments.
Beginning with the June 1, 1996 installment and continuing to and including
the installment due on the first Change Date (as hereinafter defined), the
monthly installments shall be in an amount which would be sufficient to
repay in full the original principal balance hereof, together with interest
at the Applicable Rate, in 48 substantially equal monthly payments (i.e.,
the payments shall be set based on a 48-month amortization). If the rate
of interest is adjusted on any Change Date, the amount of the monthly
installments of principal and interest will change, effective with the
first monthly installment due after the Change Date. Changes in the
monthly installments will be made such that the monthly installments will
always be sufficient to repay the unpaid balance as of the applicable
Change Date in full on the Full Amortization Date, at the new rate of
interest, in substantially equal installments. Any amount due hereunder
remaining unpaid as of the Full Amortized Date shall be due and payable on
the Full Amortization Date.
The "Applicable Rate," as herein used, shall be a variable rate of
interest, and shall initially be equal to the WSJ Prime Rate (as hereinafter
defined) published on the original date of this Note. The Applicable Rate shall
be adjusted on each Change Date to the WSJ Prime Rate published on such Change
Date. In the event a Change Date occurs on a day that the WSJ (as hereinafter
defined) is not published, the Applicable Rate shall be adjusted to the WSJ
Prime
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Rate published in the most recent previously published edition of the WSJ. The
Applicable Rate in effect at any given time shall remain in effect without
change until the next Change Date.
The "Change Dates," as herein used, shall be the first day of August, 1996,
and the first day of each November, February, May and August thereafter during
the term hereof.
The "WSJ Prime Rate," as herein used, means that annual rate of interest
from time to time published in the daily issues of The Wall Street Journal (the
"WSJ") as the Prime Rate under the column presently headed "Money Rates" as that
base rate of interest for corporate loans currently being charged by certain of
the largest commercial banks in the United States of America. If the WSJ should
cease to publish an annual rate of interest as the Prime Rate, the WSJ Prime
Rate for purposes of this Note shall be that variable annual rate of interest
readily ascertainable from reported or published sources established by others
independent of the holder hereof which the holder hereof shall in good faith
determine to be the principal equivalent of that rate of interest formerly
published in the WSJ as the Prime Rate.
Each of the payments referred to above shall be applied first to the
payment of interest then accrued and due on the unpaid principal balance
evidenced by this Note and the remainder thereof shall be applied to the
reduction of the principal balance.
The undersigned may voluntarily prepay all or a portion of the principal
indebtedness hereunder, at any time, without premium or penalty.
If any payment shall become due upon a Saturday or Sunday or other day on
which a majority of commercial banks in Des Moines, Iowa, are closed by reason
of a holiday, such payment shall be due upon the next ensuing banking day.
All sums not paid when due hereunder shall bear interest from the due date
until paid at the WSJ Prime Rate plus six percent (6%) per annum.
If all or any portion of the indebtedness hereby evidenced is not paid when
due, and such failure to pay continues for a period in excess of ten days
following notice by the holder to the undersigned of such failure to pay, or in
the event of the dissolution, insolvency, bankruptcy or receivership of the
undersigned, the holder may, without further notice or demand, declare this
indebtedness to be immediately due and payable.
The undersigned agrees that if, and as often as, this Note is placed in the
hands of an attorney for collection or to defend or enforce any of the holder's
rights hereunder or under any instruments securing payment of this Note, the
undersigned will pay to the holder its reasonable attorney's fees and all court
costs and other expenses incurred in connection therewith.
The makers, endorsers, sureties, guarantors and all other persons who may
become liable for all or any part of this obligation severally waive presentment
for payment, protest and notice of nonpayment. Said parties consent to any
extension of time (whether one or more) of payment hereof, release of all or any
part of the security for the payment hereof and the release of any
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party liable for payment of this obligation. Any such extension of time or
release may be made at any time and from time to time without notice to any such
party and without discharging said party's liability hereunder.
This Note is to be construed according to the laws of the State of Iowa.
INTERCOAST GLOBAL MANAGEMENT, INC.
By:
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Name:
--------------------------------------
Title:
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EXHIBIT B
TO PURCHASE AND SALE AGREEMENT
ASSIGNMENT AND AGREEMENT
THIS ASSIGNMENT AND AGREEMENT (this "Assignment and Agreement") is executed
on this 12th day of April, 1996, and consists of Part I, being an Assignment of
the Subject Properties from Medallion Production Company, a Delaware corporation
(hereinafter called "Assignor"), to InterCoast Global Management, Inc., a
Delaware corporation (hereinafter called "Assignee"); Part II, being a retention
of a Production Payment by Assignor; and Part III, which sets out certain
agreements between Assignor and Assignee.
For purposes of all Parts of this Assignment and Agreement, except as
otherwise expressly provided or the context otherwise requires, the terms
defined below have the meanings herein assigned to them and the capitalized
terms defined in the opening paragraph of this Assignment and Agreement and
subsequent paragraphs by inclusion in quotation marks and parenthesis have the
meanings so ascribed to them:
"Costs" shall mean, on a cash accounting basis, the sum of:
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(a) The following costs actually paid by or on behalf of Assignee, its
successors and assigns, during any month insofar as they are attributable
to the Subject Properties:
(i) all costs and expenses (subject to the limits on capital
costs set forth in subparagraph (iii) immediately below) paid by or on
behalf of Assignee pursuant to applicable agreements covering the
Subject Properties or otherwise for and in connection with the
ownership, operating and maintenance of the Subject Properties
(including, without limitation, any compensation payable under any
management or operating agreement and any costs incurred in connection
with the defense of any claims arising out of the operation of the
Subject Properties) and the lifting, handling, gathering, producing,
treating, storing, marketing, and transporting of production from the
Subject Properties, and the disposal of produced water therefrom; and
(ii) all federal, state and local taxes (except mortgage,
franchise and income taxes), whether existing on the Effective Date or
enacted in the future, paid on account of the Subject Properties,
including without limitation production, occupation, excise,
severance, ad valorem or other production related taxes, and any other
taxes (except taxes on income or franchise taxes) imposed on natural
gas reserves, attributable to the Subject Properties or the ownership
or sale of production therefrom; and
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(iii) any capital costs reasonably necessary to maintain the
Subject Properties as presently operated; provided, however, that
capital costs incurred for the purpose of developing or enhancing the
Subject Properties shall not be included in this definition of Costs
and shall not be a permitted deduction from the Production Payment;
and
(b) Excess Costs for the preceding month (including the Excess Costs
carried forward from any preceding month subsequent to the Effective Date).
"Effective Date" shall mean April 12, 1996, at 7:00 a.m., Texas time.
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"Excess Costs" for each month shall mean the excess, if any, of Costs over
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Revenue.
"Excess Revenue" for each month shall mean the excess, if any, of Revenue
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over Costs to the extent such amount exceeds the amount of Production Proceeds
for such month.
"Monthly Production Payment Amount" shall mean the amount payable each
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month under the Production Payment reserved by Assignor under this Assignment
and Agreement, with the amount to be payable each month to be equal to the Net
Proceeds for the immediately preceding month.
"Net Proceeds" shall mean for any month the lesser of (i) the excess, if
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any, of Revenue over Costs for such month, or (ii) the amount of Production
Proceeds for such month.
"Production Payment" shall mean the production payment payable with respect
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to the Subject Properties excepted and reserved by Assignor in Part II of this
Assignment and Agreement.
"Purchase Agreement" shall mean that certain Purchase and Sale Agreement
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dated as of April 12, 1996, by and between Assignor and Assignee.
"Required Volumes" shall mean that volume of gas produced from the Wells
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equal to 24,013 MMcf (which amount is 79.01% of the estimated proved developed
reserves attributable to the Subject Properties as of the original date of this
Assignment and Agreement).
"Revenue" shall mean, on a cash accounting basis, (i) the revenue
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attributable to the sale of production from the Subject Properties actually
received during any month by or on behalf of Assignee, its successors or
assigns, net of any royalty, overriding royalty, production payment or other
burdens on production which are borne by the Subject Properties and which were
created before the Effective Date ("Production Proceeds"), (ii) any other
proceeds attributable to the Subject Properties actually received during any
month by or on behalf of Assignee, its successors or assigns, net of any
royalty, overriding royalty, production payment or other burdens on production
which are borne by the Subject Properties and which were created before the
Effective Date, and (iii) Excess Revenue for the preceding month (including the
Excess Revenue carried forward from any preceding month subsequent to the
Effective Date).
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"Subject Properties" shall mean all of Assignor's right, title and interest
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(immediately prior to the Assignment in Part I hereof) in and to the leases
described on Exhibit A (the "Leases") insofar and only insofar as the Leases
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cover oil and gas capable of being produced from the Canyon Sand formation under
the lands covered by the Leases, and insofar and only insofar as said oil and
gas can be produced from the wells described on Exhibit A (the "Wells"),
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including such of Assignor's leasehold or operating rights as may be required to
operate the Wells and to produce and market such oil and gas, together with all
of Assignor's right, title and interest in and to (i) agreements insofar as the
same relate to or are appurtenant to such limited leasehold or operating rights
and (ii) all personal property and equipment relating to the Wells up to and
including the separator (or where there is no separator, up to and including the
metering equipment) and other such surface equipment and flowlines appurtenant
thereto (but specifically excluding any equipment downstream of the separator,
or where there is no separator, downstream of the metering equipment). There is
specifically excluded and reserved from the Subject Properties (i) all of the
other right, title and interest of Assignor in and to the Leases and in and to
the oil and gas under or allocated to the Leases to the extent the same is
produced and developed from other formations in the same Well or from other or
the same formation(s) in other existing or future wellbores, and (ii) the
concurrent right to utilize the personal property, equipment and flowlines
relating to the Wells to the extent necessary for Assignor to operate the
portion of the Leases which it has retained hereunder.
"Termination Date" shall mean the day on which the volume of gas produced
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from the Subject Properties subsequent to the Effective Date equals or exceeds
the Required Volumes.
PART I
ASSIGNMENT OF SUBJECT PROPERTIES
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1. Assignment. For Ten Dollars ($10.00) and other good and valuable
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consideration, the receipt and sufficiency of which are hereby acknowledged,
Assignor hereby transfers, grants, conveys and assigns to Assignee, its
successors and assigns, effective as of the Effective Date, the Subject
Properties, subject to the exception and reservation of the Production Payment.
2. Retained Production Payment. Assignor specifically excepts and
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reserves from this Assignment and Agreement, and reserves and retains unto
itself, its successors and assigns, the Production Payment.
3. Further Assurances. Assignor and Assignee agree to execute and
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deliver such other and further instruments and to do and perform such other and
further acts as may be necessary or desirable to carry out more effectively the
intents and purposes of this Assignment and Agreement.
4. Substitution and Subrogation. This Assignment and Agreement is made
----------------------------
with full substitution and subrogation of Assignee, its successors and assigns
in and to all covenants, warranties, agreements and indemnities heretofore given
or made in respect of all or any of the Subject Properties, and Assignor hereby
assigns and conveys to Assignee all such covenants, warranties, agreements and
indemnities and all of Assignor's rights thereunder, insofar as the
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same applies or relates to the interests in the Subject Properties being
assigned, including, without limitation, all such covenants, warranties,
agreements and indemnities made by the sellers pursuant to (i) the Purchase and
Sale Agreement dated March 30, 1996, between Enron Oil & Gas Company, Enron Oil
& Gas Marketing Inc. and Assignor, as amended (the "Enron Agreement"), and (ii)
the Assignment and Bill of Sale dated April 12, 1996, from Enron Oil & Gas
Company to Assignor which is recorded in Book _____ at Page _____ of the records
of the County Clerk of Sutton County, Texas (the "Enron Assignment").
5. Warranties. This Assignment and Agreement is made subject to the
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exceptions, reservations, covenants, and conditions hereinafter set forth:
(a) As used herein, the term "Defensible Title" shall have the meaning
given such term in Exhibit B attached hereto and made a part hereof.
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Assignor hereby warrants and agrees forever to defend Defensible Title to
each of the Subject Properties against any and all persons claiming or
attempting to claim the whole or any part thereof, by, through or under
Assignor, but not otherwise, except for claims under any provision of an
operating or similar agreement prohibiting assignment or requiring consent.
(b) This Assignment and Agreement is expressly subject to the Enron
Assignment, and Assignee hereby assumes the obligations of the assignee
thereunder to the extent applicable to the Subject Properties and to the
extent required pursuant to the Enron Assignment.
(c) Except as expressly provided herein or in the Purchase Agreement,
this Assignment and Agreement IS MADE AND ACCEPTED WITHOUT COVENANTS,
REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, RELATING TO
THE CONDITION OR MERCHANTABILITY OF THE SUBJECT PROPERTIES, THE FITNESS OF
THE SUBJECT PROPERTIES FOR A PARTICULAR PURPOSE OR PURPOSES, OR TITLE TO
THE SUBJECT PROPERTIES. EXCEPT AS EXPRESSLY PROVIDED HEREIN OR IN THE
PURCHASE AGREEMENT OR IN THE ENRON AGREEMENT, ASSIGNEE HAS INSPECTED THE
SUBJECT PROPERTIES AND ACCEPTS THE SAME "AS IS, WHERE IS AND WITH ALL
FAULTS." Without limiting the generality of the foregoing, any
representations, warranties or covenants implied by law by virtue of the
use in this Assignment and Agreement of the terms "grant", "bargain",
"sell", "convey" and "assign" (including, without limitation, any
representation, warranty or covenant under Section 5.023 of the Texas
Property Code), are hereby expressly waived, disclaimed and negated.
6. Successors and Assigns. This Assignment and Agreement shall bind and
----------------------
inure to the benefit of Assignor and Assignee and their respective successors
and assigns.
7. Purchase Agreement. This Assignment and Agreement is specifically
------------------
made subject to the terms and provisions of the Purchase Agreement.
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TO HAVE AND TO HOLD the Subject Properties unto Assignee, its successors
and assigns forever.
PART II
RESERVATION OF PRODUCTION PAYMENT
---------------------------------
Assignor hereby excepts from the Assignment in Part I hereof and reserves
unto Assignor, its successor and assigns, the Production Payment hereinafter
described and set forth. The Production Payment shall be a nonoperating
interest retained in a sale transaction as described in Section 636 of the
Internal Revenue Code of 1986, as amended (the "Code"). The Production Payment
shall be calculated and payable as follows:
1. Amount of the Production Payment. Commencing with the month
--------------------------------
immediately following the first month subsequent to the Effective Date in which
Net Proceeds are received from the sale of production from the Subject
Properties, Assignee shall, on or before the fifteenth (15th) day of each month,
pay or cause to be paid to Assignor the Monthly Production Payment Amount for
the immediately preceding month.
2. Term of the Production Payment. The Production Payment shall be fully
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discharged and shall terminate on the Termination Date.
3. Non-Liability of Assignee. Assignor shall look solely to Net Proceeds
-------------------------
for satisfaction and discharge of the Production Payment, and Assignee shall not
be personally liable for the payment and discharge thereof.
4. Assignment by Assignee. Assignee shall have the right to assign,
----------------------
sell, transfer, convey, mortgage or pledge the Subject Properties or any rights
under this Assignment and Agreement, or any part thereof, subject to the
Production Payment and the terms and provisions of this Assignment and
Agreement. However, no such action will affect the method of computing Net
Proceeds.
5. Assignment by Assignor. Assignor shall have the right to assign,
----------------------
sell, transfer, convey, mortgage or pledge the Production Payment, in whole or
in part, at any time. However, no such action will affect the method of
computing Net Proceeds.
6. Assignment of Production. To secure the obligations of Assignee
------------------------
pursuant to the Production Payment, Assignee does hereby assign, transfer and
convey to Assignor, its successors and assigns, as of the Effective Date, all of
the production from the Subject Properties and all revenues and proceeds
attributable thereto until the occurrence of the Termination Date.
PART III
ADDITIONAL AGREEMENTS OF ASSIGNOR AND ASSIGNEE
----------------------------------------------
1. Designation of Assignor as Manager. Assignee hereby designates
----------------------------------
Assignor as Manager of the Subject Properties pursuant to the terms and
provisions of the Management
-5-
Agreement attached hereto as Exhibit C, and Assignor agrees to act as Manager of
---------
the Subject Properties in accordance with the terms of the Management Agreement.
2. Option to Purchase. Assignor shall have the right and option (the
------------------
"Option") to purchase all or any portion of Assignee's interest in the Subject
Properties according to the following terms and conditions:
(a) The period during which Assignor shall be entitled to exercise the
Option shall commence on the Effective Date, and shall end on the date 120
days after the Termination Date. The Option may be exercised one or more
times for all or any portion of Assignee's interest in the Subject
Properties during said option period.
(b) Assignor shall notify Assignee of its election to exercise the
Option by giving written notice to Assignee (the "Option Notice"). The
Option Notice shall specify the portion of Assignee's interest in the
Subject Properties covered by such exercise of the Option.
(c) The effective date of a purchase of all or any portion of
Assignee's interest in the Subject Properties pursuant to the Option (the
"Option Effective Date") shall be the first day of the month following the
date Assignee receives the Option Notice.
(d) The purchase price (the "Option Price") for Assignee's interest in
the Subject Properties, or any portion thereof, shall be the appraised
current fair market value of Assignee's interest in the Subject Properties
in question as of the Option Effective Date. Unless Assignor and Assignee
agree otherwise, the appraised current fair market value of Assignee's
interest in the Subject Properties in question shall be the then present
value as of the Option Effective Date of the future net revenue estimated
to be received therefrom (including the value of any tax credits under
Section 29 of the Code), determined in accordance with generally accepted
engineering principles in effect at the time, by Netherland, Sewell &
Associates, Inc. or the successor thereof or some other nationally
recognized petroleum engineering firm agreed upon by Assignor and Assignee.
The price of natural gas used in the forecast shall be based on an average
gas price for the most recent 12-month period, as quoted in the then most
recent monthly publication of Inside FERC's Gas Market Report for the
appropriate index (or a mutually agreeable substitute index if such index
is no longer published) escalated at 3% annually, less an unescalated
average gathering and transportation cost from wellhead to the mainline for
the most recent 12-month period, multiplied by a BTU factor appropriate to
the affected properties; and the costs used in the forecast shall be the
average of the monthly costs attributable to the Subject Properties in
question during the most recent 12-month period preceding the Option
Effective Date escalated at 3% annually. The discount rate to be applied
shall be (i) the WSJ Prime Rate (as hereinafter defined) plus 8% per annum
in the case of the production stream, and (ii) the WSJ Prime Rate plus 4%
per annum in the case of tax credits receivable pursuant to Section 29 of
the Code.
-6-
(e) The closing of Assignor's purchase of Assignee's interest in the
Subject Properties pursuant to the Option shall occur at Assignor's office
within 30 days of the determination of the Option Price as hereinabove set
forth, but shall be effective as of the Option Effective Date.
(f) Upon any exercise of the Option by Assignor prior to the
Termination Date, the Required Volumes shall be reduced by the amount equal
to the difference between (i) the amount of the Required Volumes
attributable as of the original date of this Assignment and Agreement to
the portion of the Subject Properties to be purchased pursuant to such
exercise of the Option, and (ii) the amount of production actually produced
from such portion of the Subject Properties during the period from the
Effective Date until the Option Effective Date; provided that the Required
Volumes shall not be reduced by an amount more than the amount of the
Required Volumes originally attributable to such portion of the Subject
Properties.
(g) The "WSJ Prime Rate," as herein used, means that annual rate of
interest from time to time published in the daily issues of The Wall Street
Journal (the "WSJ") as the Prime Rate under the column presently headed
"Money Rates" as that base rate of interest for corporate loans currently
being charged by certain of the largest commercial banks in the United
States of America. Each change in the WSJ Prime Rate after the date hereof
shall be effective as of the date first published in the WSJ and if the WSJ
should cease to publish an annual rate of interest as the Prime Rate, the
WSJ Prime Rate for purposes hereof shall be that variable annual interest
readily ascertainable from reported or published sources established by
others independent of Assignor which Assignor shall in good faith determine
to be the practical equivalent of that rate of interest formerly published
in the WSJ as the Prime Rate.
3. Omission of Certain Exhibits. For ease of recording, there may be
----------------------------
omitted from this Assignment and Agreement Exhibit C hereto at such time as this
---------
Assignment and Agreement is filed of record.
4. Successors and Assigns. This Assignment and Agreement and each
----------------------
provision hereof shall be binding upon and shall inure to the benefit of the
parties, their respective successors in title, and assigns. All of the
covenants and agreements herein contained shall be deemed to be covenants
running with the land and the Leases. All references to a party shall include
its respective successors and assigns.
5. Counterpart Execution. This Assignment and Agreement may be executed
---------------------
in multiple counterparts, each of which for all purposes shall be deemed to be
an original.
6. Notices. All notices, statements, payments and communications between
-------
the parties hereto shall be in writing and shall be deemed to have been
sufficiently given and delivered only when actually received by the party to
whom directed or when delivered to the following address:
-7-
If to Assignor:
Medallion Production Company
Attention: W. E. Warnock, Jr.
7130 South Lewis Avenue, Suite 700
Tulsa, Oklahoma 74136
If to Assignee:
InterCoast Global Management, Inc.
Attention: President
666 Grand Avenue, 26th Floor
Des Moines, Iowa 50309
Any party or the successors or assigns of the interest or rights of any party
hereunder may change its address or designate a new or different address or
addresses for the purposes hereof by similar notice given or directed to all
parties interested hereunder at the same time.
7. Governing Law. This Assignment and Agreement and the transactions
-------------
contemplated hereby shall be construed in accordance with, and governed by, the
laws of the State of Texas.
MEDALLION PRODUCTION COMPANY
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
INTERCOAST GLOBAL MANAGEMENT, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
-8-
STATE OF __________ )
)
COUNTY OF __________)
This instrument was acknowledged before me on the _____ day of April, 1996,
by __________________________ as _________________ of Medallion Production
Company, a Delaware corporation, on behalf of said corporation.
_____________________________
Notary Public in and for the
State of __________
My Commission Expires:
_____________________________
STATE OF __________ )
)
COUNTY OF __________)
This instrument was acknowledged before me on the _____ day of April, 1996,
by __________________________ as _________________ of InterCoast Global
Management, Inc., a Delaware corporation, on behalf of said corporation.
____________________________
Notary Public in and for the
State of __________
My Commission Expires:
_____________________________
-9-
EXHIBIT B
TO ASSIGNMENT AND AGREEMENT
As used in the Assignment and Agreement to which this Exhibit B is
---------
attached, the following terms have the meanings set forth below:
"Defensible Title" shall mean with respect to a well listed on Exhibit
-------
A, such record title, as will entitle Assignee to receive a percentage of
-
the hydrocarbons produced and saved from such well (subject to any depth
restrictions noted in Exhibit A other than depth restrictions that would
---------
have the effect of excluding intervals that are open for production as of
the Effective Date), after deducting all applicable Production Burdens (as
hereinafter defined), that is not less than the Net Revenue Interest (as
hereinafter defined) shown for such well on Exhibit A throughout the
---------
productive life of such well, and will obligate Assignee to bear and pay a
portion of the costs and expenses of operating the well that is no greater
than the Working Interest (as hereinafter defined) shown for such well on
Exhibit A throughout the productive life of such well and is free and clear
---------
of Material Title Deficiencies (as hereinafter defined).
"Material Title Deficiency" means a material deficiency in one or more
of the following respects: (i) Assignor's title is subject to an
outstanding mortgage, deed of trust, lien, encumbrance, contractual burden
(other than Production Burdens that do not have the effect of reducing
Assignor's Net Revenue Interest below that reflected on Exhibit A), adverse
---------
claim or defect which substantially and adversely affects the value or
operation of the well in question; (ii) Assignor's rights and interests are
subject to being reduced by virtue of the exercise by a third party of a
reversionary, back-in or other similar right not reflected in Exhibit A; or
---------
(iii) Assignor is in default under some material provision of a lease,
farmout or other agreement or right of way, easement, permit or license
affecting the well in question.
"Net Revenue Interest" means in respect of any lease, well or unit,
the interest (expressed as a percentage) in and to oil and gas produced
from or allocated to such lease, well or unit after deducting all
applicable Production Burdens.
"Production Burdens" means all royalty interests, overriding royalty
interests, production payments, net profits interests or other similar
interests that constitute a burden on, are measured by or are payable out
of the production of hydrocarbons or the proceeds realized from the sale or
other disposition thereof.
"Working Interest" means, in respect of any lease, well or unit, the
interest (expressed as a percentage) in such lease, well or unit before
giving effect to any applicable Production Burdens, and the percentage of
all costs and expenses required to be borne that are associated with the
exploration, development and operation of such lease, well or unit.
EXHIBIT C
TO ASSIGNMENT AND AGREEMENT
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("Agreement") is made and entered into as of the
12th day of April, 1996, by and between InterCoast Global Management, Inc.
("InterCoast") and Medallion Production Company ("Medallion").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, InterCoast holds certain oil and gas interests situated in Sutton
County, Texas, under the terms of an Assignment and Agreement of even date
herewith between InterCoast and Medallion (the "Assignment and Agreement"); and
WHEREAS, InterCoast desires to engage Medallion to manage the oil and gas
interests owned by it; and
WHEREAS, Medallion desires to manage such oil and gas interests of
InterCoast; and
WHEREAS, terms not otherwise defined herein shall have the meanings
assigned to those terms in the Assignment and Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Subject Wells. InterCoast represents and acknowledges that it
-----------------
holds certain oil and gas leasehold interests in the group of wells (the
"Subject Wells") set forth on Exhibit A hereto.
---------
2. Appointment of Manager. Medallion is hereby employed and designated as
----------------------
the manager of the Subject Wells on behalf of InterCoast, and, in such capacity,
shall be the general manager of and shall conduct, direct and have full control
of all matters pertaining to the Subject Wells as permitted and required by this
Agreement, subject to the rights of InterCoast as owner. Medallion shall be the
sole manager of the Subject Wells, and the enumeration of the particular or
specific powers in this Agreement shall not be considered as in any way limiting
or abridging the general power or discretion intended to be conferred on or
reserved to the manager to authorize it to do any and all things proper,
necessary or expedient, in its discretion, to carry out the purposes of this
Agreement. Medallion shall be the operator of record of the Subject Wells for
Texas Railroad Commission purposes to the extent practicable.
3. Operating Agreements. The parties recognize that certain of the
--------------------
Subject Wells are subject to existing operating agreements (the "Existing
Operating Agreements") which govern
-1-
the rights and obligations of the various working interest owners in the Subject
Wells. With respect to the Subject Wells which are subject to Existing
Operating Agreements, Medallion will manage the operation of said wells on
behalf of InterCoast pursuant to the terms of the Existing Operating Agreements.
With respect to the Subject Wells which are not subject to Existing Operating
Agreements, Medallion will operate such wells pursuant to the terms of the
operating agreement attached hereto as Exhibit B (the "Attached Operating
---------
Agreement"; collectively, with the Existing Operating Agreements, the "JOAs").
The Attached Operating Agreement shall terminate with respect to a Subject Well
when Medallion ceases to manage the operations of said Subject Well. In the
event of any conflict between the terms of the JOAs and this Agreement, the
terms of this Agreement will control.
4. Duties of Manager. Medallion shall devote sufficient time to the
-----------------
duties and responsibilities required for the prudent management of the Subject
Wells; and will at all times faithfully, industriously, and to the best of its
ability, experience and talents, perform all such duties and responsibilities in
a good and workmanlike manner. Management duties shall include, without
limitation, the following services:
(a) Performing accounting and billing functions; and receiving,
distributing and reporting income on a monthly basis.
(b) Supervising the field superintendent who provides the first line
of supervision for all field personnel required in the operation and
production of the Subject Wells, and otherwise performing for InterCoast
the duties and obligations of InterCoast under the JOAs.
(c) Preparing and/or responding to AFE's relating to the Subject Wells
(subject to paragraph 4(d) below), and preparing, reviewing and responding
to correspondence relating to the Subject Wells.
(d) Approving expenditures relating to Subject Wells, for the interest
of InterCoast, up to a maximum limit of $50,000 for any single expenditure.
Medallion agrees that it will not approve or incur expenditures in amounts
in excess of the aforesaid amount without the prior written approval of
InterCoast; provided, in case of explosion, fire, flood, blowout or other
sudden emergency, Medallion may take such steps and incur such expenses as
in its opinion are required to deal with the emergency and to safeguard
life and property, and shall report the emergency to InterCoast as promptly
as possible.
(e) Overseeing and supervising on behalf of InterCoast the overall
operation of the Subject Wells.
(f) Medallion shall submit to InterCoast as promptly as is practicable
after the end of each calendar month a statement setting out the costs and
expenses incurred during such month for the Subject Wells.
-2-
Medallion's management duties shall not include any duty to market production
from the Subject Wells. InterCoast shall have the right, pursuant to the JOAs,
to take such production in kind. In the event Medallion or one of its
affiliates undertakes to market such production, InterCoast shall pay an
appropriate marketing fee in connection therewith.
5. Management of the Subject Wells; Payment of Costs.
-------------------------------------------------
(a) So long as Medallion shall remain manager of the Subject Wells,
Medallion shall:
(i) Cause the Subject Wells to be maintained and operated for the
production of hydrocarbons in a good and workmanlike manner, as would
a prudent operator (and without regard to the existence of the
Production Payment), all in accordance with generally accepted
standards and all applicable federal, state and local laws, rules and
regulations.
(ii) Cause the Subject Wells to be developed, operated and
maintained in all material respects in compliance with all applicable
laws, rules and regulations and in compliance with the agreements
governing the same.
(b) So long as the Production Payment shall remain in force and
effect:
(i) Medallion shall pay on behalf of InterCoast, or cause to be
paid on behalf of InterCoast, promptly as and when due and payable,
all rentals and royalties payable with respect to the production of
hydrocarbons from the Subject Wells and all Costs incurred in or
arising from the operation or development of the Subject Wells or the
production, treating, gathering, marketing or transporting of
hydrocarbons from the Subject Wells.
(ii) If Excess Costs should exist with respect to any month,
Medallion shall not be obligated to advance such Excess Costs, and
InterCoast shall, upon notice from Medallion, remit to Medallion the
funds necessary to pay the Excess Costs within a time frame to avoid
any defaults or delinquencies. If Medallion elects in its discretion
to advance any Excess Costs, InterCoast agrees to reimburse Medallion
for such Excess Costs on or before the fifteenth (15th) day of the
month following the month in which such Excess Costs were incurred.
(iii) Medallion shall maintain true and correct books and
records sufficient to determine the amounts payable under the terms of
the Production Payment. Such books and records shall be open for
inspection by InterCoast upon reasonable notice at Medallion's office
during normal business hours. Within thirty (30) days following June
30 and December 31 of each year during the term of the Production
Payment, Medallion shall deliver to InterCoast a statement showing in
reasonable detail for the immediately preceding six (6) month time
period (a) the computation of Net Proceeds; (b) the volumes of gas
-3-
produced and sold from the Subject Properties; and (c) the outstanding
volumes of gas reserves to be produced under the Production Payment as
of the end of such six (6) month time period.
6. Compensation. For providing the management services under this
------------
Agreement, Medallion shall be entitled to compensation for overhead costs as
provided for under the JOAs applicable to the Subject Wells.
7. Exculpation. Neither Medallion nor any parent, subsidiary, affiliate,
-----------
officer or employee of any of them shall be liable to InterCoast for any losses
sustained or liabilities incurred as a result of any act or omission of
Medallion or any agent or employee of it except as may result from bad faith,
gross negligence, willful misconduct or material breach of this Agreement by
Medallion.
8. Accounting and Disbursements. Medallion will maintain general
----------------------------
accounting records relating to operation of the Subject Wells and the accounting
for the Production Payment in accordance with its terms. Medallion shall
collect funds generated by the Subject Wells directly from the purchasers of
production and shall timely pay and discharge all costs and expenses incurred in
the operation of the Subject Wells pursuant to this Agreement. All records
maintained by Medallion pursuant to the provisions of this Paragraph 8 shall be
made available for inspection and copying by InterCoast, upon request by
InterCoast, at Medallion's offices during normal business hours.
9. Term. The term of this Agreement shall be concurrent with the term of
----
the Production Payment. Notwithstanding the foregoing, this Agreement may be
earlier terminated by InterCoast upon delivery to Medallion of prior written
notice to Medallion if Medallion should fail to perform or observe any material
covenant, agreement or obligation under this Agreement or under the Assignment
and Agreement and such failure shall continue unremedied for twenty (20) days
after delivery to Medallion by InterCoast of written notice thereof specifying
such failure in detail, unless within such twenty (20) days Medallion has begun
to cure such noncompliance in a manner reasonably satisfactory to InterCoast and
Medallion continues to diligently pursue such curative actions until such
failure is remedied to the reasonable satisfaction of InterCoast. In addition
to and notwithstanding the foregoing, this Agreement may be terminated at any
time by InterCoast for any reason upon no less than 30 days' notice to
Medallion. In any event this Agreement shall automatically terminate upon the
Termination Date of the Production Payment, as provided for in the Assignment
and Agreement.
10. No Partnership. This Agreement is not intended to create, and shall
--------------
not be construed to create, a relationship of partnership, mining partnership,
joint venture or an association for profit between the parties hereto.
11. Force Majeure. If any party is rendered unable, wholly or in part, by
-------------
force majeure to carry out its obligations under this Agreement, other than the
obligation to make money payments, that party shall give to the other party
prompt written notice of the force majeure with reasonably full particulars
concerning it; thereupon, the obligations of the party
-4-
giving the notice, so far as they are affected by the force majeure, shall be
suspended during the continuance of the force majeure. The affected party shall
use all reasonable diligence to remove the force majeure situation as quickly as
practicable. The term "force majeure" shall mean act of God, strike, lockout or
other industrial disturbance, act of the public enemy, war, blockade, public
riot, lightning, fire, storm, flood, explosion, governmental action,
governmental delay, restraint or inaction, unavailability of equipment, and any
other cause, whether of kinds specifically enumerated above or otherwise, which
is not reasonably within the control of the party claiming suspension. Nothing
herein shall require the settlement of labor difficulties by any party contrary
to its wishes.
12. Independent Contractor. In all things hereunder, Medallion shall be
----------------------
an independent contractor not subject to the control or direction of InterCoast
except as specifically provided by the terms of this Agreement.
13. Power of Attorney. InterCoast hereby designates and appoints
-----------------
Medallion as its attorney-in-fact for the limited purpose of executing on behalf
of InterCoast the following instruments and documents and all instruments and
documents related thereto: (i) division orders, transfer orders and other
instruments necessary to cause purchasers of production to pay revenues directly
to Medallion as contemplated hereby and by the Assignment and Agreement; (ii)
gas purchase agreements, transportation agreements and amendments thereto; (iii)
pooling, unitization and communitization agreements of whatever kind and nature
affecting the Subject Properties; (iv) amendments to existing leases relating to
the Subject Properties; (v) filings required by regulatory agencies relating to
operations in connection with the Subject Properties, including without
limitation all filings required by the Railroad Commission of the State of Texas
and the Federal Energy Regulatory Commission; (vi) elections under operating
agreements; and (vii) all other matters relating to the operation and management
of the Subject Properties; provided, however, that Medallion shall not be
authorized pursuant to said power-of-attorney to sell or otherwise transfer
title to the Subject Properties, except that Medallion shall be authorized to
execute releases of leases. This power-of-attorney is made with full power of
substitution, is a power coupled with an interest, and is irrevocable, except
that this power-of-attorney shall terminate upon termination of this Agreement.
InterCoast shall, upon Medallion's request, execute and acknowledge a separate
instrument evidencing the provisions of this Paragraph 13.
14. Assignment and Binding Effect. This Agreement shall be binding upon
-----------------------------
the parties hereto, their successors and assigns, except that this Agreement
shall not be assigned by either party without the consent of the other party.
15. Notices. Notices authorized or required hereunder shall be given by
-------
governmental mail, telegram or other telegraphic means, postage or charges
prepaid, or confirmed telecopy, addressed to the party to whom the notice is
given at its address set out in the Assignment and Agreement. All notices are
deemed given when received. Each party may change its address by giving written
notice to the other.
16. Governing Law. This Agreement and the transactions contemplated
-------------
hereby shall be construed in accordance with, and governed by, the laws of the
State of Texas.
-5-
17. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall be in force when one or more counterparts have been signed by each of the
parties.
INTERCOAST GLOBAL MANAGEMENT, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
MEDALLION PRODUCTION COMPANY
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
-6-
The following schedules have been omitted, and the Registrant agrees to
furnish supplementally a copy of any such omitted schedule to the Securities and
Exchange Commission upon its request:
Exhibit to Purchase and Sale Agreement
C Oil and Gas Leases and Wells
Exhibit to Exhibit B to Purchase and Sale Agreement
A Oil and Gas Leases and Wells
Exhibits to Exhibit C to Purchase and Sale Agreement
A Wells
B Form of Operating Agreement