PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (this "Agreement") dated as of the
15th day of December, 1999, is between WHITING PARK PRODUCTION PARTNERSHIP,
LTD., a Texas limited partnership ("Seller"), whose address is 1700 Broadway,
Suite 2300, Denver, Colorado 80290 and CASTLE EXPLORATION COMPANY, INC., a
Pennsylvania corporation ("Buyer"), whose address is One Radnor Corporate
Center, Suite 250, 100 Matsonford Road, Radnor, Pennsylvania 19087. Seller and
Buyer are referred to herein individually as a "Party" and collectively as the
"Parties."
In consideration of the mutual promises contained herein, the benefits
to be derived by each Party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller
agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, Seller agrees to sell and convey and Buyer agrees to purchase and pay
for all of Seller's right, title and interest in and to the Interests.
1.2 Interests. All of the following shall be referred to in this
Agreement collectively as the "Interests" and individually as an "Interest":
(a) The oil, gas and mineral leases described on Exhibit "A"
attached hereto (collectively, the "Leases"), including, without limitation,
working interests, overriding royalty interests, royalty interests and any other
interests of a similar nature affecting the lands covered by the Leases
(collectively, the "Lands").
(b) The oil and gas wells described on Exhibit "A" (individually, a
"Well," and collectively, the "Wells"), together with all oil, natural gas,
casinghead gas, drip gasoline, natural gas liquids, condensate and other
minerals produced from such Wells.
(c) All unitization, communitization, pooling, agreements, working
interest units created by operating agreements, partnership agreements and
orders covering the Leases and Lands, or any portion thereof, and the units and
pooled or communitized areas created thereby (collectively, the "Units").
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(d) The tangible personal property, tools, machinery,
materials, pipelines, plants, gathering systems, equipment, platforms and
facilities, fixtures and improvements, which are incident or attributable to or
underlie the Leases, Lands, Wells or Units or with the production, treatment,
sale or disposal of hydrocarbons or water produced therefrom or attributable
thereto, (collectively, the "Equipment").
(e) The licenses, permits, contracts, agreements and other
instruments owned by Seller (other than bonds posted by Seller) which concern
and relate to any of the Leases, Lands, Wells, Units and/or Equipment, INSOFAR
AND ONLY INSOFAR as same concern or relate to the Leases, Lands, Wells, Units
and/or Equipment, or the operation thereof; including, without limitation, oil,
gas and condensate purchase and sale contracts; permits; rights-of-way;
easements; licenses; servitudes; estates; surface leases; farmin and farmout
agreements; division orders and transfer orders; bottomhole agreements; dry hole
agreements; area-of-mutual interest agreements; salt water disposal agreements;
acreage contribution agreements; operating agreements; balancing agreements and
unit agreements; pooling agreements; pooling orders; communitization agreements;
processing, gathering, compression and transportation agreements; facilities or
equipment leases relating thereto or used or held for use in connection with the
ownership or operation thereof or with the production, treatment, sale or
disposal of hydrocarbons; and all other contracts and agreements related to the
Leases, Lands, Wells and/or Equipment.
(f) Subject to Section 1.3 below, originals or copies of all
computer tapes and discs, files, records, information or data relating to the
Interests in the possession of Seller, including, without limitation, title
records (including abstracts of title, title opinions, certificate of title and
title curative documents), accounting records and files, contracts,
correspondence, production records, electric logs, core data, pressure data,
decline curves, graphical production curves, drilling reports, well completion
reports, drill stem test charts and reports, regulatory reports, and all related
materials, INSOFAR AND ONLY INSOFAR as the foregoing items constitute materials
that may be lawfully conveyed to Buyer (i.e., the materials are not subject to a
proprietary agreement precluding their transfer to Buyer), and, to the extent
transferable, all other contract rights, intangible rights (excluding Seller's
trademarks and service marks), inchoate rights, choses in action, rights under
warranties made by prior owners, manufacturers, vendors or other third parties,
and rights accruing under applicable statutes of limitation or prescription,
attributable to the Interests.
(g) All payments, and all rights to receive payments, with
respect to the ownership of the production of hydrocarbons from or the conduct
of operations on the Interests accruing after the Effective Time.
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1.3 Reserved Interests. Notwithstanding any provision of this Agreement
to the contrary, Seller reserves and retains (i) Seller's corporate, financial,
tax and legal records and its other business records; (ii) cash, bank accounts,
letters of credit, travel letter accounts and prepaid insurance; (iii) the
management information systems and other intellectual property rights of Seller
used by Seller in the management and administration of its business; (iv) all
claims that Seller may have under any policy of insurance, indemnity or bond
maintained by Seller other than claims relating to property damage or casualty
loss affecting the Interests occurring between the Effective Time and Closing
(which claims shall be included in the Interests); (v) all accounts receivable,
trade credits or notes receivable accrued before the Effective Time; (vi) any
files or records that Seller is contractually or otherwise obligated not to
disclose to Buyer; (vii) all claims and causes of action arising from acts,
omissions or events, or damage or destruction of property occurring prior to the
Effective Time; (viii) engineering studies or reserve reports relating to the
Interests; (ix) all interests and rights not included in the definition of the
Interests (the "Reserved Interests").
1.4 Effective Time. The purchase and sale of the Interests shall be
effective as of July 1, 1999, at 7:00 a.m., local time (herein called the
"Effective Time").
1.5 Ownership of the Interests. Subject to Section 13.1 and the other
provisions of this Agreement, should Closing occur, Seller shall be entitled to
all of the rights of ownership (including, without limitation, the right to all
production, proceeds of production and other proceeds), and shall be subject to
the duties and obligations of such ownership attributable to the Interests for
the period of time prior to the Effective Time and Buyer shall be entitled to
all of the rights of ownership (including, without limitation, the right to all
production, proceeds of production and other proceeds) and shall be subject to
the duties and obligation of such ownership attributable to the Interests for
the period of time from and after the Effective Time. All expenses and costs,
including, without limitation, all ad valorem, property, production, severance,
and similar taxes and assessments based upon or measured by the ownership of the
Interests, the production of hydrocarbons, or the receipt of proceeds therefrom)
attributable to the Interests, shall be: (i) paid by or allocated to Seller if
incurred or accruing with respect to operations conducted prior to the Effective
Time; or (ii) paid by or allocated to Buyer if incurred or accruing with respect
to operations conducted after the Effective Time. All hydrocarbons in storage
facilities above or upstream from the pipeline connection to each storage
facility, or downstream of delivery point sales meters on gas pipelines, as of
the Effective Time, shall belong to Seller. All of the hydrocarbons placed in
such storage facilities or upstream of the aforesaid meters on pipelines after
the Effective Time shall belong to Buyer and shall become a part of the
Interests. In order to accomplish the foregoing allocation of production, the
parties shall rely upon the records maintained by the operator of the relevant
Interest, unless such records are demonstrated to be inaccurate.
1.6 Risk of Loss. Buyer shall assume all risk of loss with respect to
the Interests from and after the Effective Time to Closing.
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ARTICLE 2
PURCHASE PRICE
2.1 Purchase Price. The purchase price for the Interests shall be One
Million Two Hundred Fifty-Three Thousand Dollars ($1,253,000), herein called the
"Purchase Price." At Closing, the Purchase Price shall be adjusted as set forth
in Section 2.2 below.
2.2 Earnest Money Deposit. Following its execution of this Agreement,
Buyer shall deposit with Seller, by wire transfer or other immediately available
funds, 10% of the Purchase Price or One Hundred Twenty-Five Thousand Three
Hundred Dollars ($125,300) as an earnest money deposit (the "Earnest Money
Deposit") to assure Buyer's performance of its obligations under this Agreement.
If Closing occurs, the Earnest Money Deposit will be applied to the Adjusted
Purchase Price. If Closing fails to occur, the Earnest Money Deposit shall be
handled in accordance with Section 12.2 hereof.
2.3 Adjustments to Purchase Price. At Closing, the Purchase Price shall
be adjusted as follows and the resulting amount shall be referred to herein as
the "Adjusted Purchase Price":
(a) The Purchase Price shall be adjusted upward by the following:
i. The amount of all actual operating or capital
expenditures or prepaid expenses attributable to the Interests
incurred by or on behalf of Seller in connection with the operation
of the Interests and which are, according to generally accepted
accounting principles, attributable to the period of time between
the Effective Time and the Closing Date. Such expenditures and
expenses shall include, without limitation, royalties, rentals and
other charges; ad valorem, property, excise, and any other taxes
based upon or measured by the ownership of the Interests, the
production of hydrocarbons or the receipt of proceeds therefrom;
and expenses payable to a third person under applicable joint
operating agreements, including, without limitation, overhead
charges at normal company overhead labor rates of approximately
$5,000 per month and royalty disbursement fees payable to operator,
or similar payments to third party operators, or, in the absence of
any joint operating agreement, those items customarily billed under
such an agreement.
ii. The value, less taxes (other than taxes on net income), of
all hydrocarbons in storage facilities above or upstream from the
pipeline connection in each storage facility, or downstream of
delivery point, sales meters on gas pipelines, as of the Effective
Time, at the prevailing market value at the time of sale in the
area, adjusted for grade and gravity.
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iii. Any other amounts agreed upon by Seller and
Buyer.
(b) The Purchase Price shall be adjusted downward by the
following:
i. The Earned Money Deposit;
ii. Reductions due to Title Failures as provided
in Sections 10.7.
iii. For uncured Title Defects and Contested
Defects pursuant to Section 10.8
iv. Reductions due to Environmental Defects as
provided in Section 11.3.
v. The gross proceeds earned by Seller, net of
applicable severance and production taxes
and compression charges, and derived from
the sale of hydrocarbons attributable to the
Interests to the extent owned by Buyer
between the Effective Time and the Closing
Date, pursuant to the provisions of Section
1.5 above.
vi. An amount equal to all unpaid ad valorem,
property, production, severance and similar
taxes and assessments (but not including
income taxes) based upon or measured by the
ownership of the Interests, the production
of hydrocarbons, or the receipt of proceeds
therefrom, which taxes or assessments become
due and payable or accrue (but have not yet
become due and payable) with respect to the
Interests prior to the Effective Time, which
amount shall, where possible, be computed
based upon the tax rate and values
applicable to the tax period in question;
otherwise, the amount of the adjustment
under this paragraph shall be computed based
upon such taxes assessed against the
applicable portion of the Interests for the
immediately preceding tax period just ended.
vii. Any other amounts agreed upon by Seller and
Buyer.
(c) Seller shall pay all capital expenditures and
expenses accruing prior to the Closing Date
referenced in Section 2.3(a)(i) above and shall
collect and receive all proceeds accruing prior to
the Closing Date referenced in Section 2.3(b)(v)
above. Seller shall be responsible for accounting for
all revenues earned and expenses incurred through
December 31, 1999.
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2.4 Purchase Price Allocation. The Purchase Price shall be allocated
among the Interests as set forth in Exhibit "B" attached hereto (the "Allocated
Values").
2.5 Preliminary Settlement Statement. Seller shall prepare and deliver
to Buyer at least five (5) "Business Days" (which term shall mean any day except
a Saturday, Sunday or other day on which commercial banks in Denver, Colorado
are required or authorized by law to be closed) prior to the Closing Date,
Seller's estimate of the Adjusted Purchase Price to be paid at Closing, together
with a statement setting forth Seller's estimate of the amount of each
adjustment to the Purchase Price to be made pursuant to Section 2.2 (the
"Preliminary Settlement Statement"). The parties shall negotiate in good faith
and attempt to agree on such estimated adjustments prior to Closing. In the
event any estimated adjustment amounts are not agreed upon prior to Closing, the
Adjusted Purchase Price for purposes of Closing shall be calculated based on
Seller's and Buyer's agreed upon estimated adjustments and Seller's good faith
estimation of any disputed amounts, which estimate shall be subject to
adjustment in the Final Settlement Statement pursuant to Section 9.1.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller. Seller represents and
warrants to Buyer the following:
(a) Seller is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Texas. Seller is
duly qualified to carry on its business in the State or States in which the
Interests are located and in each State where failure to so qualify would have a
material adverse effect upon its business or the Interests.
(b) Seller has all requisite power and authority to carry on its
business as presently conducted and to enter into this Agreement and to perform
its obligations hereunder.
(c) The execution, delivery and performance of this Agreement and
the transactions contemplated herein have been duly and validly authorized.
(d) This Agreement has been duly executed and delivered on behalf
of Seller, and all documents and instruments required hereunder to be executed
and delivered by Seller at or prior to Closing shall have been duly executed and
delivered. This Agreement does, and such documents and instruments shall,
constitute legal, valid and binding obligations of Seller enforceable in
accordance with their terms.
(e) Seller has incurred no liability, contingent or otherwise, for
broker's or finder's fees or commissions relating to the transactions
contemplated by this Agreement for which Buyer shall have any responsibility
whatsoever.
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(f) There are no outstanding authorizations for expenditures
("AFEs") that (i) require the drilling of wells or other material development
operations in order to earn or to continue to hold all or any portion of the
Interests, or (ii) obligate Seller to make payments of any amounts in connection
with drilling of wells or other material capital expenditures affecting the
Interests.
(g) Seller is not obligated to deliver hydrocarbons produced
from the Interests at some future time without then or thereafter receiving full
payment for the production attributable to Seller's ownership in and to the
Interests by virtue of: (i) a prepayment arrangement under any contract for the
sale of hydrocarbons and containing a "take or pay," or similar provisions, (ii)
a production payment, or (iii) any other arrangement.
(h) Except for those taxes and assessments for which a
Purchase Price adjustment is made under Section 2.3(b)(v), during the period of
Seller's ownership of the Interests, Seller has properly paid all 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 that have become due and
payable before the Effective Time.
(i) No suit, action, claim, or other proceeding is pending or,
to the best of Seller's knowledge, threatened before any court, arbitration
panel or governmental agency which relates to the Interests and which might
result in a material loss of Seller's title to any portion of the Interests, or
a material diminution of the value of any of the Interests, or that might
materially hinder or impede the operation of the Leases.
(j) As used in this Agreement, the term, "Existing Documents"
shall mean all of the oil, gas and other mineral leases, assignments or other
instruments or agreements that comprise the Interests, and all contractually
binding arrangements to which the Interests may be subject and which will be
binding on the Interests or Buyer after Closing (including, without limitation,
oil, gas and other mineral leases, overriding royalty assignments, farm-out and
farm- in agreements, option agreements, forced pooling orders, assignments of
production payments, partnership agreements, unit agreements, unit operating
agreements, joint operating agreements, balancing agreements, unit operating
agreements, production contracts, processing contracts, gas sales contracts,
marketing and transportation contracts and division orders). To the best of
Seller's knowledge, (i) all Existing Documents are in full force and effect and
are the valid and legally binding obligations of the parties thereto and are
enforceable in accordance with their respective terms (subject to the effects of
bankruptcy, insolvency, reorganization, moratorium and similar laws); (ii)
Seller is not in material breach or default with respect to any of its
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obligations pursuant to any such Existing Documents; and (iii) all payments
(including, without limitation, royalties, delay rentals, shut-in royalties and
valid calls under unit or operating agreements) due thereunder have been timely
paid and Seller has received no notice of default under any of the Existing
Documents.
(k) To the best of Seller's knowledge, all of the Equipment
Seller operates has been maintained in a state of repair so as to be adequate
for normal operations.
(l) To the best of Seller's knowledge, all of the Wells that
have been drilled and completed have been so drilled and completed within the
boundaries and limits permitted by contract, pooling or unit agreement, and by
law; and all drilling, completion, and other operations on or affecting the
Leases have been conducted in compliance with all applicable laws, ordinances,
rules, regulations and permits, and judgments, orders and decrees of any court
or governmental body or agency. No Well is subject to penalties or allowables
after the date hereof because of any over-production or any other violation of
applicable laws, rules, regulations or permits or judgments, orders of decrees
of any court or governmental body or agency.
(m) Except as set forth on Exhibit "C" attached hereto:
(i) Seller's operations and activities with
respect to the Interests comply in all
respects with all applicable governmental
laws, including, without limitation, health
and safety statutes and regulations and all
Environmental Laws, including any provisions
requiring notice to government agencies
under Environmental Laws.
(ii) There is no civil, criminal or
administrative action, suit, demand, claim,
hearing, notice of violation, investigation,
proceeding, notice or demand letter
("Environmental Proceeding") known to Seller
pending or, to the best of Seller's
knowledge, threatened against Seller or any
of the Interests relating in any way to the
Environmental Laws.
(iii) Neither Seller nor, to the best of Seller's
knowledge, any other person has released,
placed, stored, buried or dumped any
Hazardous Substances, Oil, Pollutants or
Contaminants or any other wastes on,
beneath, or adjacent to the Leases, except
for inventories of such substances to be
used in the ordinary course of business of
Seller (which inventories and wastes, if
any, were and are stored or disposed of in
accordance with applicable laws and
regulations).
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(iv) To the best of Seller's knowledge, Seller
has not received any notice or order from
any governmental or other public agency
advising it that Seller is responsible for
or potentially responsible for Cleanup or
paying for the cost of Cleanup of any
Hazardous Substances, Oils, Pollutants, or
Contaminants or any other waste or substance
affecting the Interests. Seller is not aware
of any facts which might reasonably give
rise to any such notice or order.
(v) The term "Cleanup" shall mean all actions
required to: (1) cleanup, remove, treat or
remediate Hazardous Substances, Oils,
Pollutants or Contaminants; (2) prevent the
Release of Hazardous Substances, Oils,
Pollutants or Contaminants so that they do
not migrate, endanger or threaten to
endanger public health or welfare or the
environment; (3) perform pre-remedial
studies and investigations and post-remedial
monitoring and care; or (4) respond to any
government requests for information or
documents in any way relating to cleanup,
removal, treatment or remediation or
potential cleanup, removal, treatment or
remediation of Hazardous Substances, Oils,
Pollutants or Contaminants in the indoor or
outdoor environment.
(vi) The term "Environmental Laws" shall mean all
foreign, Federal, state and local laws,
regulations, rules and ordinances relating
to polluting or protection of the
environment, including, without limitation,
laws relating to Releases or threatened
Releases of Hazardous Substances, Oil,
Pollutants or Contaminants into the indoor
or outdoor environment (including, without
limitation, ambient air, surface water,
groundwater, land, surface and subsurface
strata) or otherwise relating to the
manufacture, processing, distribution, use,
treatment, storage, Release, transport or
handling of Hazardous Substances, Oil,
Pollutants or Contaminants, and all laws and
regulations with regard to record keeping,
notification, disclosure and reporting
requirements respecting Hazardous
Substances, Oils, Pollutants or
Contaminants.
(vii) The term "Hazardous Substances, Oils,
Pollutants or Contaminants" shall mean all
substances defined as such in the National
Oil and Hazardous Substances Pollution
Contingency Plan, or defined as such by, or
regulated as such under, any Environmental
Law.
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(viii) The term "Release" or "Releases" means any
release, spill, emission, discharge,
leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor
environmental (including, without
limitation, ambient air, surface water,
groundwater, and surface or subsurface
strata) or into or out of any property,
including the movement of Hazardous
Substances, Oils, Pollutants or Contaminants
through or in the air, soil, surface water,
groundwater or property.
3.2 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller the following:
(a) Buyer is a corporation, duly organized, validly existing
and in good standing under the laws of the State of Pennsylvania. Buyer is or
will be prior to Closing duly qualified to conduct business in the State or
States in which the Interests are located.
(b) Buyer has all requisite power and authority to carry on
its business as presently conducted, to enter into this Agreement, and to
purchase the Interests on the terms described in this Agreement and perform its
other obligations under this Agreement.
(c) The execution, delivery and performance of this Agreement
and the transactions contemplated hereby have been duly and validly authorized.
(d) This Agreement has been duly executed and delivered by or
on behalf of Buyer; all documents and instruments required hereunder to be
executed and delivered by Buyer at or prior to Closing shall have been duly
executed and delivered; and this Agreement does, and such documents and
instruments shall, constitute legal, valid and binding obligations of Buyer
enforceable in accordance with their terms.
(e) Buyer has incurred no liability, contingent or otherwise,
for broker's or finder's fees or commissions relating to the transactions
contemplated by this Agreement for which Seller shall have any responsibility
whatsoever.
(f) Prior to Closing, Buyer will have inspected the Interests,
the public records and Seller's files for all purposes, including, but not
limited to, detecting the presence and concentration of naturally-occurring
radioactive materials and satisfying itself as to the physical condition and
environmental condition of the Interests, both surface and subsurface. In
entering into this Agreement, Buyer has relied solely on the express
representations and covenants of Seller in this Agreement, its independent
investigation of, and judgment with respect to, the Interests and the advice of
its own legal, tax, economic, environmental, engineering, geological and
geophysical advisors, and not on any comments or statements of any
representatives of, or consultants or advisors engaged by Seller.
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(g) At Closing, Buyer will meet the bonding and other
requirements required by all governmental authorities in respect to the
Interests (and Seller agrees to provide Buyer, prior to Closing, with a list of
such requirements) and, after Closing, Buyer anticipates that it will continue
to be able to meet such bonding requirements. Buyer is, and after the Closing is
expected to continue to be, otherwise qualified to own the Interests. The
consummation of the transactions contemplated hereby will not cause Buyer to be
disqualified to be an owner of oil, gas, and mineral leases or to exceed any
acreage limitation imposed by law, statute, rule or regulation. Buyer is not
aware of any fact that could reasonably be expected to cause the appropriate
governmental authorities to fail to unconditionally approve the assignment of
the Interests to Buyer. Seller will cooperate and will assist Buyer relating to
the preparation and presentation of documents relating to changes in ownership
and/or operatorship of the Interests.
(h) Buyer is an experienced and knowledgeable investor and
operator in the oil and gas business. Buyer is acquiring the Interests for its
own account and not with a view to, or for offer of resale in connection with, a
distribution thereof, within the meaning of the Securities Act of 1933, as
amended, or any other rules, regulations, and laws pertaining to the
distribution of securities.
(i) Buyer has arranged or will have arranged to have available
by the Closing Date sufficient funds to enable the payment to Seller, by wire
transfer, of the Adjusted Purchase Price in accordance with Section 2.3 and to
otherwise perform Buyer's obligations under this Agreement.
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ARTICLE 4
CERTAIN AGREEMENTS OF SELLER
4.1 Agreements Between Execution of Agreement and Closing. During the
period between the execution of this Agreement and the Closing Date, Seller
shall not, without the prior written consent of Buyer, (i) sell, convey, assign,
transfer or encumber any of the Interests; (ii) make or agree to make any
expenditure in excess of $25,000.00, net to Seller's interest, except for
obligations under existing contracts, expenditures necessary to maintain the
Interests, or in the event of any emergency as to which Seller has notified
Buyer; (iii) sell oil, gas or other minerals from the Interests except sales
made in the ordinary course of business; (iv) enter into any agreement amending,
modifying or terminating any of the Leases; or (v) take any other action with
respect to any of the Interests that would cause a material diminution in the
value thereof or that would materially and adversely affect the use and
enjoyment thereof.
4.2 Access to Records. Following the execution of this Agreement by the
Parties, Seller shall afford to Buyer and its authorized representatives, during
normal business hours, reasonable access to well and land files, title, contract
and legal materials and operating data and information in Seller's possession or
to which it has access affecting the Interests.
4.3 Notification of Additional Proceedings. Seller shall promptly
notify Buyer of any new suits, actions, claims or other proceedings threatened
or pending before, or required to be filed with, any court, arbitrator or
governmental agency which relate to the Interests.
4.4 Consents. Seller shall use its best efforts to obtain any consents
necessary to transfer the Interests to Buyer.
ARTICLE 5
CERTAIN AGREEMENTS OF BUYER
5.1 Cooperation. Buyer shall cooperate with Seller to assist Seller in
carrying out the agreements of Seller hereunder.
5.2 Letters-of-Credit. Buyer will obtain letters-of-credit to replace
those posted by Seller with respect to the Interests.
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ARTICLE 6
BUYER'S CONDITIONS TO CLOSING
The obligations of Buyer to consummate the transactions provided for
herein are subject, at the option of Buyer, to the fulfillment on or prior to
Closing of each of the following conditions:
6.1 Representations. The representations and warranties by Seller set
forth in Section 3.1 above shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date.
6.2 Changes. There shall have been no material adverse change in the
physical condition of the Interests, except depletion through normal production
within authorized allowable and rates of production, depreciation of equipment
through ordinary wear and tear, and other transactions permitted under this
Agreement or approved in writing by Buyer.
6.3 Performance. Seller shall have timely performed and complied with
all agreements and covenants required by this Agreement.
6.4 No Legal Proceedings. No suit, action or other proceeding shall be
pending or threatened before any court, arbitration panel 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, or
which might result in a material loss of any portion of the Interests, a
material diminution in the value of any of the Interests, or materially
interfere with the use or enjoyment of the Interests, except (i) matters that
are disclosed on Exhibit "D" or (ii) any suit or proceeding affecting only a
portion of the Interests, which portion could be treated as subject to a Title
Defect in accordance with Article 10.
6.5 Existing Documents. Buyer must be reasonably satisfied with the
terms and conditions of the Existing Documents.
ARTICLE 7
SELLER'S CONDITIONS TO CLOSING
The obligations of Seller to consummate the transactions provided for
herein are subject, at the option of Seller, to the fulfillment on or prior to
Closing of each of the following conditions:
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7.1 Representations. The representations and warranties by Buyer set
forth in Section 3.2 above shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date.
7.2 Performance. Buyer shall have timely performed and complied in all
material respects with all agreements and covenants required by this Agreement.
7.3 No Legal Proceedings. 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 sale
contemplated by this Agreement, except (i) matters with respect to which Seller
has been adequately indemnified by Buyer or (ii) any suit or other proceeding
affecting only a portion of the Interests, which portion could be treated as
subject to a Title Defect in accordance with Article 10.
7.4 Letters-of-Credit. Buyer will have obtained the letters-of-credit
to referred to in Section 5.2.
ARTICLE 8
CLOSING
8.1 Date of Closing. Subject to the conditions stated in this
Agreement, the purchase and sale of the Interests pursuant to this Agreement
(the "Closing") shall occur on or before December 28, 1999, at 10:00 a.m.,
Mountain Time, or on such other date and time as Buyer and Seller may agree (the
"Closing Date"). Notwithstanding such Closing, Seller shall continue to perform
the accounting services referred to in Section 2.3(c) through December 31, 1999.
8.2 Place of Closing. The Closing shall be held at the offices of
Seller as set forth hereinabove; provided, however, the Parties may agree to
close via facsimile or overnight mail.
8.3 Closing Obligations. At the Closing, the following documents shall
be delivered and the following events shall occur, each event being a condition
precedent to the others and each being deemed to have occurred simultaneously
with the others:
(i) Seller shall execute and deliver: (1) an Assignment,
Bill of Sale and Conveyance in the form attached
hereto as Exhibit "D" (the "Assignment") (in
sufficient counterparts to facilitate recording)
conveying the Interests, subject to the Permitted
Encumbrances; (2) such other instruments as may
be required to convey the Interests to Buyer and
otherwise effectuate the transactions contemplated by
this Agreement.
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(ii) Seller and Buyer shall execute and deliver the
Preliminary Settlement Statement.
(iii) Buyer shall deliver to Seller or to Seller's account
(at such place as may be designated by Seller in a
written notice, such notice to be delivered to Buyer
not less than two (2) Business Days prior to Closing)
by direct bank or wire transfer the Adjusted Purchase
Price.
(iv) Seller shall deliver on forms supplied by Buyer
transfer orders or letters in lieu thereof, directing
the operator or purchaser to make payment of proceeds
attributable to production from the Interests after
the Effective Time to Buyer.
8.4 Records. In addition to the obligations set forth under Sections
4.2 and 8.3 above, within thirty (30) days after Closing, Seller shall deliver
to Buyer all original well and land files in its possession or to which it has
access. Buyer shall be entitled to all original records affecting the Interests
assigned to Buyer pursuant to the terms of this Agreement. Seller shall be
entitled to keep a copy of such records for its files. Buyer agrees to preserve
and maintain such records for at least five (5) years after the Closing Date and
to provide Seller access to such records during normal business hours during
such period.
ARTICLE 9
POST-CLOSING MATTERS
9.1 Final Settlement Statement. As soon as practicable after the
Closing, but in no event later than ninety (90) days after Closing, Seller shall
prepare and deliver to Buyer, in accordance with this Agreement and generally
accepted accounting principles, a statement ("Final Settlement Statement")
setting forth each adjustment (other than adjustments for Title Defects) finally
determined as of Closing and showing the calculation of such adjustments. Within
thirty (30) days after receipt of the Final Settlement Statement, Buyer shall
deliver to Seller a written report containing any changes that Buyer proposes be
made in good faith to resolve any questions with respect to the amounts due
pursuant to such Final Settlement Statement no later than one hundred twenty
(120) days after the Closing.
9.2 Unpaid Third Party Funds. At such time as Buyer and Seller agree on
a Final Settlement Statement, Seller will transfer to Buyer all funds held by
Seller in suspense for a third party owner of royalty, overriding royalty,
working interests, mineral interest or other similar interests, attributable to
the Interests, and will deliver all records in Seller's possession, including a
schedule of such funds listing the owners thereof, which may be useful to
determine proper disbursement. Buyer shall thereafter be responsible for
determining the proper payment of such
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amounts and shall indemnify and hold harmless Seller from and against any and
all cost, loss or expense of whatever kind, including attorneys' fees, arising
from or in connection with the claim or any person, up to the amount listed on
the schedule provided by Seller with respect thereto, with respect to the funds
transferred to Buyer pursuant to this Section 9.2. Seller shall be responsible
for amounts in excess of the amounts listed.
9.3 Further Assurances. After Closing, Seller, and Buyer shall execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered such
instruments and take such other action as may be necessary or advisable to carry
out their obligations under this Agreement and under any Exhibit, document,
certificate or other instrument delivered pursuant hereto.
9.4 Survival. All representations and warranties set forth in this
Agreement in Sections 3.1 (a) - (h) and 3.2 (a) - (e) shall survive the Closing,
but no other representations and warranties shall survive the Closing.
9.5 Substitute of Letters-of Credit. If the beneficiaries of the posted
letters-of-credit referred to in Section 5.2 withhold their consent to accept
the letters-of-credit obtained by Buyer in replacement for such posted
letters-of-credit, Buyer instead will obtain letters-of-credit in favor of
Seller to support such posted letters-of-credit.
ARTICLE 10
TITLE MATTERS
10.1 Access to Title and Other Documents.
(a) After the date hereof, Seller will make available to Buyer
and to its representatives (such representatives to include employees,
consultants, independent contractors, attorneys and other advisors of Buyer) for
Buyer's copying and/or inspection (at Buyer's cost and expense), at Seller's
offices during normal business hours the following documents in Seller's
possession or under its control:
(i) All abstracts of title, title opinions, title
curative materials, ownership reports, division
orders, bills of sale, other documents evidencing
transfers of title, tax receipts, and licenses and
registrations pertaining to the Interests.
(ii) All of the lease records, lease files, leases,
conveyances and assignments of interest in the
Leases; unitization, unit, pooling and operating
agreements; division orders; contracts; transfer
orders; orders of the applicable regulatory
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authorities or administrative agencies; mortgages,
deeds of trust, security agreements, and financing
statements; and all other contracts, agreements and
documents affecting the Interests.
(iii) Instruments and documents concerning proper payment
of all general and special assessments, ad valorem
and property taxes, and production, severance and
similar taxes and assessments based on or measured by
the ownership of the Interests, the production of
hydrocarbons, or the receipt of proceeds therefrom
for 1999 and years prior for which the applicable
statute of limitations has not expired.
(iv) All geological maps, geophysical surveys, ownership
maps, seismic surveys, logs, core studies, and
surveys relating to the Interests.
(v) All production records; transportation agreements;
contracts concerning the purchase of gas, oil,
casinghead gas, distillate, gas condensate or other
hydrocarbons; processing agreements; all
correspondence relating to the Interests; and data
sheets relating to the Interests and to bonuses,
rentals and royalties payable with respect thereto.
(vi) All agreements relating to the purchase, sale,
processing, and transportation of production from
the Wells.
(vii) All bonds, leases, permits, easements, licenses,
orders, saltwater disposal agreements, agreements
with pumpers and other agreements in any way relating
to the Interests or the operation thereof.
Reliance on such information shall be at the sole risk of the Buyer, and Seller
makes no guaranty or representation as to the accuracy or completeness of such
data, except as otherwise provided in this Agreement.
Seller shall authorize Buyer and its representatives to
consult with attorneys, abstract companies and other consultants or independent
contractors of Seller (whether utilized in the past or present) concerning title
related matters. Reliance on such information of such third parties shall be at
the sole risk of the Buyer, and Seller makes no guaranty or representation as to
the accuracy or completeness of such data.
10.2 No Warranty or Representation. At the Closing, Seller shall convey
to Buyer all the Interests. Such conveyance shall be subject to the Permitted
Encumbrances and WITHOUT ANY WARRANTY OF TITLE, EITHER EXPRESS OR IMPLIED, AND
WHETHER BY COMMON LAW, STATUTE OR OTHERWISE, except for the warranty of
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title as to persons claiming by, through and under Seller contained in the
Assignment. Without limiting Buyer's right to reduce the Purchase Price in the
manner provided in this Article 10, Seller makes no warranty or representation,
express or implied, with respect to the accuracy or completeness of any
information. Records or data now, heretofore, or hereafter made available to
Buyer in connection with this Agreement, including, without limitation, any
description of the Interests, pricing assumptions, potential for production of
hydrocarbons from the Interests, or any other matters contained in any material
furnished by Seller to Buyer or its officers, directors, employees, agents,
advisors or representatives.
10.3 Disclaimer. ALL PERSONAL PROPERTY, MACHINERY, FIXTURES, EQUIPMENT
AND MATERIALS CONVEYED HEREBY ARE SOLD AND ASSIGNED AND ACCEPTED BY BUYER IN
THEIR "WHERE IS, AS IS" CONDITION, WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED OR
STATUTORY, OF MARKETABILITY, QUALITY, CONDITION, MERCHANTABILITY AND/OR FITNESS
FOR A PARTICULAR PURPOSE OR USE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED.
10.4 Permitted Encumbrances. As used in this Agreement, the term
"Permitted Encumbrances" shall mean the following, provided that the same shall
not operate to reduce the net revenue interest or increase the gross working
interest of an Interest beyond that shown on Exhibit "A":
(a) Lessors' royalties, non-participating royalties, overriding
royalties, division orders, reversionary interests, and similar burdens.
(b) 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) arrangements acceptable to Buyer can be made
by Buyer and Seller to allow Buyer to receive substantially the same economic
benefits as if all such waivers and consents to assign have been obtained.
(c) Liens for taxes or assessments not yet due or delinquent or,
if delinquent, that are being contested in good faith in the normal course of
business.
(d) All rights to consent by, required notices to, filing with, or
other actions by governmental entities in connection with the sale or conveyance
of oil and gas leases or interests therein, if the same are customarily obtained
subsequent to such sale or conveyance and neither Seller nor Buyer has no reason
to believe they cannot be obtained.
(e) Such Title Defects as Buyer may have waived in writing.
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(f) Rights reserved to or vested in any governmental
authority.
(g) Rights of a common owner of any Interest in rights-of-way
or easements currently held by Seller and such common owner as tenants in common
or through common ownership.
(h) Easements, conditions, covenants, restrictions,
servitudes, permits, rights-of-way, surface leases and other rights in the
Interests for the purpose of surface operations, roads, alleys, highways,
railways, pipelines, transmission lines, transportation lines, distribution
lines, power lines, telephone lines, and removal of timber, grazing, logging
operations, canals, ditches, reservoirs and other like purposes, or for the
joint or common use of real estate, rights-of-way, facilities and equipment
which do not materially impair the rights held by Buyer or the use and enjoyment
of the Interests.
(i) Defects, irregularities and deficiencies in title to any
rights-of-way, easements, surface lease or other rights which in the aggregate
do not materially impair the use of such right-of-way, easements, surface leases
or other rights for the purpose of which such rights will be held by Buyer.
(j) Zoning, planning and environmental laws and ordinances and
municipal regulations.
(k) Vendors, carriers, warehousemen, repairmen, mechanics,
workmen, materialmen, construction or other like liens arising by operation of
law in the ordinary course of business or incident to the construction or
improvement of any property in respect of obligations which are not yet due, or
which are being contested in good faith by appropriate proceedings by or on
behalf of Seller.
(l) Liens created under operating agreements in respect of
obligations that are not yet due or that are being contested in good faith by
appropriate proceedings by or on behalf of Seller.
(m) The terms and provisions of the Existing Documents.
10.5 Good and Defensible Title. For the purposes of this Article
10, the term "Good and Defensible Title" shall mean, with respect to each of the
Interests, that title of Seller which, subject to and except for Permitted
Encumbrances:
(a) Entitles Seller, throughout the duration of the relevant
Interest, to receive from such Interest (free and clear of all royalties,
overriding royalties, non-participating royalties, net profits interests, or
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other burdens on or measured by production of hydrocarbons) not less than the
interest shown as the net revenue interest on Exhibit "A" in all hydrocarbons
produced, saved and marketed from the Interest and of all hydrocarbons produced,
saved, and marketed from any unit of which the Interest is a part and which is
allocated to such Interest; all without reduction, suspension, or termination of
the Interest.
(b) Obligates Seller to bear the percentage of the costs and
expenses relating to the maintenance and development of, and operations relating
to, the Interest not greater than the gross working interest shown on Exhibit
"A" without increase throughout the duration of such Interest.
(c) Is free and clear of liens, encumbrances and defects.
(d) All irregularities of title that would not reasonably be
expected to result in claims that would materially and adversely affect Seller's
title to an Interest shall not be considered a Title Defect, including but not
limited to (i) defects in the chain of title consisting of failure to recite
marital status or the omission of succession or heirship proceedings; (ii)
defects or irregularities arising out of prior oil and gas leases which, on
their face, expired more than three (3) years prior to the Effective Time, and
which have not been released of record; (iii) defects or irregularities arising
out of acknowledgments, questions of identity, trusts or trustees, executors and
personal representatives, and the manner in which they executed documents or
were identified thereon; (iv) defects or irregularities arising out of mortgages
or deeds of trust which, by their terms, matured more than six (6) years prior
to the Effective Time but which remain unreleased of record; (v) defects or
irregularities arising out of the lack of survey of specific land or lease
description; (vi) defects or irregularities arising out of the lack of recorded
powers of attorneys from corporations, banks, trusts or personal representatives
to execute and deliver documents on their behalf or on behalf of others; (vii)
defects or irregularities cured by possession under applicable statutes of
limitation and statutes relating to prescription.
10.6 Notice of Title Defect. Except for Permitted Encumbrances, any
defect in title, lien, encumbrance, or defect that would cause Sellers title to
any Interest not to be Good and Defensible Title shall be a title defect ("Title
Defect"). Not later than five (5) days before the Closing Date (the "Warranty
Claim Date"), Buyer must notify Seller in writing of any matter that Buyer
considers to be a Title Defect ("Notice of Title Defect"), which notice shall
include, (i) a specific description of the matter Buyer asserts as a Title
Defect, (ii) a specific description of the Interest or the portion of the
Interest that is affected by the Title Defect, (iii) Buyer's calculation of the
amount ("Title Defect Amount") that the value of the Interest should be reduced
because of the Title Defect based on the Allocated Value shown on Exhibit "B,"
and (iv) appropriate supporting documentation.
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Notwithstanding anything to the contrary in this Agreement, the Buyer
shall be deemed to have waived any Title Defect which the Buyer has not
specifically asserted in its Notice of Title Defect presented before the
Warranty Claim Date.
10.7 Title Failure. Any item that Seller acknowledges is a Title Defect
but that Seller is unwilling to cure shall be deemed a title failure ("Title
Failure") and, subject to Section 10.9 below, the Purchase Price shall be
reduced for such Title Defect pursuant to Section 2.3 unless, in Seller's
reasonable judgment, it is unlikely that material losses, costs, expenses and
liabilities will be experienced with respect to such Title Defect and Seller
agrees to indemnify Buyer with respect thereto.
10.8 Defect Notice; Seller's Opportunity to Cure. To the extent that
Seller disputes that any item described in the Notice of Title Defect actually
constitutes a Title Defect or disputes the Title Defect Amount assigned by Buyer
to any such Title Defect ("Contested Defect"), Seller shall deliver to Buyer a
notice so stating ("Defect Notice"). Subject to the provisions of 10.9 below,
the portion of the Purchase Price attributable to Title Defects which Seller is
willing to cure but which are uncured at Closing, or which are not waived by
Buyer at Closing (including Contested Defects), shall be deposited into an
escrow account pursuant to an escrow agreement agreed to by the Parties and the
Assignment will be revised to delete all of that portion of the Interests
affected by such Title Defects (including Contested Defects). If Seller fails to
cure a Title Defect within ninety (90) days after Closing, it shall be deemed a
Title Failure and the funds attributable to such Title Defect shall be released
from escrow to Buyer.
10.9 Title Purchase Price Adjustments. Notwithstanding any provision
hereof to the contrary, there shall be no reduction in the Purchase Price for
Title Failures and no escrow for Title Defects or Contested Defects unless and
until the aggregate amount of such Title Defects (including Title Failures and
Contested Defects) exceeds four percent (4%) of the Purchase Price and only for
the amount in excess of such amount.
10.10 Termination Amount. Notwithstanding any provision hereof to the
contrary, in the event the aggregate adjustments for Title Defects pursuant to
this Article 10 and for Environmental Defects pursuant to Article 11 amount to
twenty percent (20%) or more of the Adjusted Purchase Price (the "Termination
Amount"), either Party shall have the option to terminate this Agreement,
without any liability, upon written notice to the other Party.
10.11 Preferential Rights and Consents to Assign. Some Interests may be
subject to existing preferential rights to purchase the Interests or consents
may be required in order to assign the Interests. Seller shall provide Buyer
with a list, and shall make a good faith effort to obtain waivers of, any
preferential rights and consents which Seller knows must be obtained prior to
Closing and are not ordinarily obtained after Closing. Buyer shall notify Seller
of any additional consent requirement or preferential right to purchase it
discovers prior to Closing. If a preferential right is exercised prior to
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Closing, the Purchase Price shall be adjusted downward in an amount equal to the
price paid to Seller for the Interest with respect to which the preferential
right has been exercised and such Interest shall be deleted from this Agreement.
In such case Seller shall be entitled to all proceeds paid by the third party
exercising its preferential right to purchase. As to any Interest with respect
to which a required consent to assignment has not been obtained prior to
Closing, Buyer may waive such requirements and accept an assignment covering
such Interest. If Buyer does not waive the requirement, the allocated value of
the Interest so affected shall be deposited into the escrow account referred to
in Section 10.8, with a corresponding adjustment made to the Purchase Price,
until the consent is obtained. If a third party preferential purchase right
burdening any Interest has not been exercised or waived by Closing, Buyer shall
pay for and accept an assignment covering such Interest and, if the preferential
right is exercised after Closing, Buyer shall be entitled to all proceeds paid
for such interest by the third party exercising such preferential purchase
right. Buyer shall be responsible for conveying title to the Interest affected
by said preferential right to the party exercising the same and shall indemnify
and hold Seller harmless from and against any claim or liability for Buyer's
failure to make such conveyance.
ARTICLE 11
ENVIRONMENTAL
11.1 Inspection; Indemnity. Buyer and its authorized representatives,
at Buyer's sole risk and expense, shall have the right to enter upon and inspect
the real and personal properties comprising the Interests, and to conduct such
well, environmental and other tests and assessments as Buyer shall deem
appropriate, subject to the approval of the operator in the case of non-operated
properties. Buyer shall repair any damages to the Interests resulting from its
inspection and shall defend and hold Seller harmless from and against any and
all losses, damages, claims, obligations, liabilities, expenses (including court
costs and attorneys' fees) or causes of action directly resulting from Buyer's
inspection of the Interests.
11.2 Environmental Assessment. As part of its inspection of the
Interests, Buyer and its authorized representatives shall have the right to
conduct soil and water tests and borings, and generally to conduct such tests,
examinations, investigations and studies as may be necessary or appropriate in
Buyer's sole judgment to make an environmental assessment of the Interests.
Buyer shall keep any data or information acquired through such examination and
the results of all analyses of such data and information strictly confidential
and shall not disclose the same to any person or agency without the prior
written approval of Seller unless such disclosure is required by law. Buyer
shall take all steps necessary to ensure that Buyer's authorized representatives
comply with the provisions of this Article 11. If Buyer has discovered in its
environmental assessment circumstances which require remediation, control or
other response under environmental laws, rules or regulations then in effect (an
"Environmental Defect"), Buyer shall notify Seller of such circumstances as soon
as practicable, but in no event less than ten (10) days prior to Closing.
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11.3 Environmental Defects If Buyer properly notifies Seller of an
Environmental Defect related to an Interest, Buyer may (i) waive the
Environmental Defect and Close, or (ii) request Seller to cure the Environmental
Defect. If Buyer asks Seller to cure an Environmental Defect, and if the
aggregate amount of all such Environmental Defects exceeds four percent (4%) of
the Purchase Price, Seller has the option (i) to cure the Environmental Defect,
or (ii) to exclude the Interest affected by the Environmental Defect from this
Agreement. If Seller elects to cure the Environmental Defect, but the cure has
not been completed by Closing, the Interest affected by the Environmental Defect
shall not be conveyed to Buyer at Closing, the Purchase Price shall be reduced
by the amount allocated to such Interest and such amount shall be deposited into
the escrow account referred to in Section 10.7. If the Environmental Defect is
cured within ninety (90) days after Closing, within five (5) days after the
Environmental Defect is cured, Seller will convey to Buyer the Interest affected
by the Environmental Defect and the applicable amount shall be released from
escrow to Seller. If Seller elects to exclude the Interest affected by the
Environmental Defect from this Agreement, subject to Section 11.4 below, the
Purchase Price will be reduced by the allocated value of the Interest affected.
11.4 Environmental Purchase Price Adjustment. Notwithstanding any
provision hereof to the contrary, there shall be no reduction in the Purchase
Price for uncured Environmental Defects unless, and only to the extent that, the
aggregate amount of such uncured Environmental Defects exceeds four percent (4%)
of the Purchase Price and then only for the amount in excess of such amount.
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ARTICLE 12
TERMINATION, DEFAULT AND REMEDIES
12.1 Right of Termination. The Agreement and the transactions
contemplated herein may be terminated at any time at or prior to Closing:
(i) By Seller, at Seller's option, in the event any of the
conditions set forth in Article 7 have not been satisfied as
provided therein.
(ii) By Buyer, at Buyer's option, in the event any of the
conditions set forth in Article 6 have not been satisfied as
provided therein.
(iii) By either Party in the event that the adjustments to the
Purchase Price exceed the Termination Amount, as provided for
in Section 10.10.
(iv) At any time by the mutual written agreement of the Parties.
12.2 Effect of Termination. In the event of the termination of this
Agreement by Seller pursuant to Section 12.1 (i) hereof due to Buyer's failure
to meet a condition of Closing, Seller may terminate this Agreement and retain
the Earnest Money Deposit and any accrued interest thereon as its sole remedy.
In the event Buyer terminates this Agreement pursuant to Section 12.1 (ii)
hereof due to Seller's failure to meet a condition of Closing, Buyer may pursue
its rights and remedies against Seller for Seller's breach of this Agreement and
receive back the Earnest Money Deposit, with accrued interest. In the event of
the termination of this Agreement pursuant to either Section 12.1 (iii) or (iv)
hereof, the termination shall be without penalty and the Parties shall have no
further obligations to, nor rights against, one another, except that Seller
shall return the Earnest Money Deposit to Buyer, with accrued interest.
12.3 Dispute Resolution. If the Parties disagree as to the cause for
termination, they will first attempt to resolve such disagreement through a
meeting, to be held within ten (10) days of such termination, of senior
executives of each party, and if such meeting fails to resolve the matter,
through a neutral arbitrator appointed by such executives within thirty (30)
days of the date of such meeting.
12.4 Return of Documentation. Upon termination of this Agreement, Buyer
shall return to Seller all title, geological data, reports, contracts, and maps
and other information furnished by Seller to Buyer and all copies thereof.
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ARTICLE 13
ASSUMPTION OF OBLIGATIONS
13.1 Assumption of Obligations. At Closing, Buyer shall assume (a) the
obligation to (i) plug and abandon or remove and dispose of all Wells (whether
then producing or temporarily or permanently abandoned), platforms, structures,
flow lines, pipelines, and the other equipment now or hereafter located on the
Interests; (ii) cap and bury all flow lines and (iii) dispose of other pipelines
now or hereafter located on the Interests, and all other pollutants, wastes,
contaminants, or hazardous, extremely hazardous, or toxic materials, substances,
chemicals or wastes now or hereafter located on the Interests; (b) all
obligations and liabilities arising from or in connection with any gas
production, pipeline, storage, processing or other imbalance attributable to
substances produced from the Interests on or after the Effective Time; and (c)
all other costs, obligations and liabilities that relate to the Interests and,
in each case, arise from or relate to events occurring on or after the Effective
Time. All such plugging, replugging, abandonment, removal, disposal, and
restoration operations shall be in compliance with applicable laws and
regulations and contracts, and shall be conducted in a good and workmanlike
manner.
ARTICLE 14
MISCELLANEOUS
14.1 Fees and Taxes. Except as otherwise specifically provided, all
fees, costs and expense 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. All required documentary, filing
and recording fees for the assignments, conveyance or other instruments required
to convey title to the Interests to Buyer shall be borne by Buyer. In addition,
the liability for any sales, use, transfer or similar tax associated with the
sale and/or transfer of the Interests shall be the liability of, and for the
account of, the Buyer and such liability shall not be subject to proration as
provided in Section 2.3.
14.2 Notices. All notices and communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly
made when actually delivered, including delivery by courier, facsimile,
telecopy, or other electronic medium, or if mailed by registered to certified
mail, postage prepaid, addressed as follows:
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SELLER:
WHITING PARK PRODUCTION PARTNERSHIP, LTD.
c/o WHITING PROGRAMS, INC., General Partner
1700 Broadway, Suite 2300
Denver, Colorado 80290
Attn: John R. Hazlett
Vice President-Acquisitions/Land
Telephone: (303) 837-4230
Facsimile: (303) 837-4244
BUYER:
CASTLE EXPLORATION COMPANY, INC.
One Radnor Corporate Center, Suite 250
100 Matsonford Road
Radnor, Pennsylvania 19087
Attn: Richard E. Staedtler
Chief Financial Officer
Telephone: (610) 995-9400
Facsimile: (610) 995-0409
Either Party may, by written notice so delivered to the other, change the
address to which delivery shall thereafter be made.
14.3 Amendments. This Agreement may not be amended except by an
instrument in writing signed by Buyer and Seller.
14.4 Preparation of Agreement. Both Seller and Buyer and their
respective counsel participated in the preparation of this Agreement. In the
event of any ambiguity in this Agreement, no presumption shall arise based on
the identity of the draftsman of this Agreement.
14.5 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.
14.6 Counterparts. This Agreement may be executed by Buyer and Seller
in any number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute but one and the same
instrument.
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14.7 References. References made in this Agreement, including use of a
pronoun, shall be deemed to include, where applicable, masculine, feminine,
singular or plural, individuals or corporations. As used in this Agreement,
"person" shall mean any natural person, corporation, partnership, trust, estate
or other entity.
14.8 Governing Law. This Agreement and the transactions contemplated
hereby shall be construed in accordance with, and governed by, the laws of the
State of Colorado without giving effect to the conflicts of law rules thereof.
Any disputes concerning this Agreement or the subject matter hereof shall be
brought in a court of competent jurisdiction of the State of Colorado.
14.9 Entire Agreement. This Agreement (including the Exhibits hereto)
constitutes the entire understanding between the Parties with respect to the
subject matter hereof, superseding all negotiations, prior discussions and prior
agreements and understanding relating to such subject matter.
14.10 Assignment; Parties in Interest. Neither Party shall assign this
Agreement without the other Party's prior written consent; provided, however,
that this requirement shall not apply to a subsidiary or other affiliate of the
assigning Party so long as the assigning Party remains responsible for its
assignee's obligations hereunder. Subject to the foregoing, this Agreement shall
be binding upon, and shall inure to the benefit of, the Parties and their
respective successors and assigns.
14.11 Further Cooperation. After the Closing, Buyer and Seller shall
execute and deliver, or shall caused to be executed and delivered from time to
time, such further instruments of conveyance and transfer and shall take such
other action as any Party may reasonably request to convey and deliver the
Interests to Buyer, to accomplish the orderly transfer of the Interests to
Buyer, or to otherwise effectuate the transactions contemplated by this
Agreement. If either Party hereto receives monies belonging to the other, such
amount shall immediately be paid over to the proper Party. If an invoice or
other evidence of an obligation is received by a Party, which is partially an
obligation of both Seller and Buyer, then the Parties shall consult with each
other and each shall promptly pay its portion of such obligation to the obligee.
14.12. Press Release. Neither Party shall make any press release or
other announcement in connection with the execution of this Agreement or the
Closing without first consulting with the other Party. Following such
consultation and good faith attempt to make reasonable accommodations, either
Party may make any announcement or press release that it believes is either
required by applicable law or the rules of any stock exchange, or is advisable
in connection with such Party's obligation to provide public disclosure
regarding its activities. This provision shall not apply to any filing with any
governmental body or stock exchange required by law, rule or regulation.
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14.13 Subrogation. Buyer shall be subrogated to all rights, actions and
warranties that Seller may have with respect to Seller's
predecessors-in-interest as to the Interests.
EXECUTED as of the date first above stated, but made effective as of
the Effective Time.
SELLER:
WHITING PARK PRODUCTION
PARTNERSHIP, LTD.
By Whiting Programs, Inc., General Partner
By /s/ John R. Hazlett
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John R. Hazlett, Vice President
BUYER:
CASTLE EXPLORATION COMPANY, INC.
By: /s/ Richard E. Staedler
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Richard E. Staedler
Chief Financial Officer
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