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EXHIBIT 2.0
AGREEMENT FOR PURCHASE AND SALE
dated as of April 16, 1996
by and between
AMERADA HESS CORPORATION
as Seller
and
DLB OIL & GAS, INC.
as Buyer
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TABLE OF CONTENTS
ARTICLE PAGE
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ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DEFINITIONS
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SALE AND PURCHASE
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PURCHASE PRICE AND PAYMENT
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SELLER'S REPRESENTATIONS
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
BUYER'S REPRESENTATIONS
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ACCESS TO INFORMATION AND INSPECTION
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
TITLE
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
PREFERENTIAL PURCHASE RIGHTS AND CONSENTS
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
COVENANTS OF SELLER
ARTICLE X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
CLOSING CONDITIONS
ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
CLOSING
ARTICLE XII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
EFFECT OF CLOSING
ARTICLE XIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SETTLEMENT OF PRORATIONS
ARTICLE XIV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ENVIRONMENTAL
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ARTICLE XV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
CASUALTY LOSS AND CONDEMNATION
ARTICLE XVI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
DEFAULT AND REMEDIES
ARTICLE XVII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
MISCELLANEOUS
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EXHIBITS
A - Net Revenue and Working Interests in Subject Interests
A-1 - Seller's Subject Interests
A-2 - Equipment Inventory
B - Purchase Price Allocation
C - Preferential Rights and Consents
D - Production Payments and Certain Agreements
E - Litigation and Other Liabilities
F - Assignment, Bill of Sale and Conveyance
G - Advance Payments and Prepayments
H - Overproduction and Underproduction
I - Excluded Assets
J - Oil and Gas Purchase and Processing Agreements
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AGREEMENT FOR PURCHASE AND SALE
THIS AGREEMENT dated as of the 16th day of April, 1996, between
Amerada Hess Corporation, a Delaware corporation (hereinafter referred to as
"Seller"), and DLB Oil & Gas, Inc., an Oklahoma corporation (herein referred to
as "Buyer").
WITNESSETH:
WHEREAS, Seller owns certain oil and gas leasehold interests and
related equipment situated in certain areas of the United States of America;
and
WHEREAS, Seller desires to sell and Buyer desires to acquire these
interests and related assets on the terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
The following terms, as used herein, shall have the following
meanings:
1.1 "Agor Litigation" shall be as defined in Section 17.5.
1.2 "Agreement" shall mean this Agreement for Purchase and Sale
between Seller and Buyer.
1.3 "Assets" shall mean the following described assets and
properties (except to the extent constituting Excluded Assets):
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(a) the Subject Interests;
(b) the Lands;
(c) the Incidental Rights;
(d) the Claims;
(e) the Royalty Accounts; and
(f) all Hydrocarbons produced from or attributable to the
Subject Interests with respect to all periods subsequent to the Effective Time,
together with all proceeds from or of such Hydrocarbons.
1.4 "Assumed Obligations" shall mean (i) all liabilities and
obligations of Seller with respect only to the administration and payment of
monies from the Royalty Accounts, except as indemnified by Seller in Section
17.5, and the Claims, (ii) all liabilities and obligations of Seller arising or
accruing under or with respect to the Assets from and after the Effective Time,
(iii) all liabilities and obligations of Seller, whether accrued or not, with
respect to plugging and abandoning any wells, removing platforms and facilities
and the restoration of the surface relating to operations pertaining to the
Assets, (iv) all liabilities and obligations of Seller arising from and after
the Effective Time with respect to the matters disclosed in Exhibits "D", "F"
and "G" attached hereto, (v) a pro-rata share of Property Taxes with respect to
the Assets for the Tax Period in which Closing occurs and all Transfer Taxes,
(vi) all liabilities and obligations of Seller arising or accruing under or
with respect to the Oil and Gas Purchase and Processing Agreements from and
after the Effective Time, (vii) all liabilities and obligations under the Basic
Documents from and after the Effective Time except to the extent that a
particular obligation is otherwise expressly retained by Seller hereunder, and
(viii) all other liabilities and obligations assumed by Buyer under this
Agreement, including but not limited to liabilities and obligations assumed by
Buyer under Article XIV.
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1.5 "Basic Documents" shall mean all material contracts,
agreements, and other legally binding rights and obligations to which the
Assets may be subject, or that may relate to the Assets including, without
limitation, leases, assignments in the chain of title, overriding royalty
assignments, farmout and farmin agreements, option agreements, pooling and
unitization agreements, operating agreements, production sales and marketing
agreements, processing agreements, transportation agreements, production
purchasing agreements, permits, licenses and orders.
1.6 "Buyer's Credits" shall be as defined in Section 3.2.
1.7 "Claims" shall mean all obligations and benefits with respect
to gas production, pipeline, transportation or processing imbalances which are
to be assumed or received by Buyer pursuant to this Agreement.
1.8 "Closing" shall be as defined in Section 11.1.
1.9 "Closing Date" shall be as defined in Section 11.1.
1.10 "Defensible Title" shall mean such title to a Subject Interest
that, subject to and except for Permitted Encumbrances, (a) entitles Seller to
receive not less than the net revenue interest of Seller for the well or unit
as set forth in Exhibit "A" of all Hydrocarbons produced, saved and marketed
from or attributable to such well or unit and (b) obligates Seller to bear the
costs and expenses relating to the maintenance, development and operation of
such well or unit in an amount not greater than the working interest of Seller
for such well or unit as set forth in Exhibit "A" (unless Seller's net revenue
interest therein is proportionately increased) it being understood that the
existence of Permitted Encumbrances affecting any Asset shall not form the
basis for a claim that Seller does not have Defensible Title to such Asset.
1.11 "Deposit" shall be as defined in Section 3.1.
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1.12 "Effective Time" shall mean 7:00 a.m., Central Standard Time
on January 1, 1996; however, with respect to Assets not located in the Central
Standard Time Zone, the Effective Time shall mean 7:00 a.m., local time, said
time to be determined for each locality in which the Assets are located in
accordance with the time generally observed in said locality.
1.13 "Excluded Assets" shall mean the following:
(a) all rights, interests, assets and properties of
Seller which are expressly excluded from this sale under other provisions of
this Agreement or which are set forth in Exhibit "I";
(b) (i) except to the extent constituting or attributable
to Claims, all trade credits, accounts receivable, notes receivable and other
receivables attributable to Seller's interest in the Assets with respect to any
period of time prior to the Effective Time, and (ii) except to the extent
constituting the Royalty Accounts, all deposits, cash, checks in process of
collection, cash equivalents and funds attributable to Seller's interest in the
Assets with respect to any period of time prior to the Effective Time;
(c) Subject to Section 9.1(h), all corporate, financial,
tax and legal (other than title) records of Seller;
(d) except to the extent constituting Claims and except
as otherwise provided in this Agreement, all claims and causes of action of
Seller (i) arising from acts, omissions or events, or damage to or destruction
of property, occurring prior to the Effective Time, or (ii) with respect to any
of the Excluded Assets;
(e) except as otherwise provided in clause (vi) of the
definition of Incidental Rights or in Article XV hereof, all rights, titles,
claims and interests of Seller (i) under any policy or agreement of insurance
or indemnity, (ii) under any bond or (iii) to any insurance or condemnation
proceeds or awards;
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(f) all (i) Hydrocarbons produced from or attributable to
the Assets with respect to all periods prior to the Effective Time, together
with all proceeds from or of such Hydrocarbons, and (ii) Hydrocarbons which, at
the Effective Time, are owned by Seller or to which Seller has title and are in
storage, within processing plants, or in pipelines;
(g) Seller's share of any and all claims, as well as
Seller's claims, for refund of or loss carry forwards with respect to (i)
federal, state and local, sales and use, ad valorem, property, excise,
production, severance, gross receipts, payroll, withholding or other taxes
attributable to any period prior to the Effective Time; (ii) federal, state and
local income or franchise taxes; or (iii) any taxes attributable to the
Excluded Assets;
(h) all amounts due or payable to Seller as adjustments
or refunds under any audit pertaining to periods prior to the Effective Time;
(i) all amounts due or payable to Seller as adjustments
or refunds under any contracts or agreements respecting periods prior to the
Effective Time, other than Claims;
(j) all amounts due or payable to Seller as adjustments
to insurance premiums related to the Assets with respect to any period prior to
the Effective Time;
(k) except to the extent included in the Claims, all
proceeds, benefits, income or revenues accruing (and any security or other
deposits made) with respect to (i) the Assets prior to the Effective Time or
(ii) any Excluded Assets;
(l) any logo, service mark, copyright, trade name or
trademark associated with Seller or any business of Seller; and
(m) all files, information and data expressly excluded
from the definition of Incidental Rights.
1.14 "GAAP" shall mean generally accepted accounting principles,
consistently applied.
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1.15 "Hart-Scott-Rodino Act" shall be as defined in Section 17.2.
1.16 "Hydrocarbons" shall mean crude oil, natural gas, casinghead
gas, condensate, sulphur, natural gas liquids and other liquid or gaseous
hydrocarbons (including CO2), and shall also refer to all other minerals of
every kind and character which may be covered by or included in the Subject
Interests.
1.17 "Incidental Rights" shall mean all right, title and interest
of Seller in and to or derived from the following insofar as the same directly
relate to the Subject Interests: (i) all unitization, communitization and
pooling designations, declarations, agreements and orders covering Hydrocarbons
in or under the Lands or any portion thereof and the units and pooled or
communitized areas created thereby; (ii) all easements, rights-of-way, surface
leases, permits, licenses, servitudes or other interests; (iii) all equipment
and other personal property, fixtures and improvements situated upon the Lands
and used or held for use in connection with the exploration, development or
operation of the Subject Interests or Lands or the production, treatment,
storage, compression, processing or transportation of Hydrocarbons from or in
the Subject Interests or Lands, including without limitation, the equipment and
other personal property used or held for use on Seller-operated properties and
described on Exhibit "A-2" attached hereto and made a part hereof, unless such
equipment has been disposed of or abandoned by Seller in the ordinary course of
business; (iv) all Hydrocarbon sales, purchase, exchange and processing
contracts and agreements, farmout or farmin agreements, joint operating
agreements and all other contracts and agreements insofar as the same affect or
relate to the Subject Interests or Lands or any part thereof; (v) all lease
files, land files, well files, gas and oil sales contract files, gas processing
files, division order files, abstracts, title opinions, and all other books,
files and records, information and data (including copies of engineering,
geological and geophysical data to the extent same may be transferred, but
subject in all events to any and all consents concerning ownership and
transfer), and all rights thereto, of Seller insofar as the same are directly
related to and necessary to the realization of value by Buyer of any of the
Subject Interests or Lands and to the extent the transfer thereof is not
prohibited by existing contractual obligations with third parties; and (vi) to
the extent transferable and subject to Article XV hereof, all interest of
Seller in and to all claims and causes of action which Seller
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may have against insurance companies and others by reason of injury or damage
to or destruction or loss of all or any part of the Assets by reason of events
occurring subsequent to the Effective Time.
1.18 "Lands" shall mean, except to the extent constituting Excluded
Assets, each and every kind and character of right, title, claim or interest
which Seller has in and to the lands covered by the Subject Interests.
1.19 "Oil and Gas Purchase and Processing Agreements" shall mean
all existing contracts and agreements set forth on Exhibit "J".
1.20 "Permitted Encumbrances" shall mean any of the following
matters:
(a) the terms, conditions, restrictions, exceptions,
reservations, limitations and other matters contained in the agreements,
instruments and documents which create or reserve to Seller its interests in
any of the Assets provided they do not operate to reduce the net revenue
interest, nor increase the working interest (unless Seller's net revenue
interest therein is proportionately increased) of Seller in the Subject
Interests as reflected in Exhibit "A" hereto;
(b) any (i) undetermined or inchoate liens or charges
constituting or securing the payment of expenses which were incurred incidental
to maintenance, development, production, or operation of the Assets or for the
purpose of developing, producing or processing Hydrocarbons therefrom or
therein and (ii) materialman's, mechanics', repairman's, employees',
contractors', operators' or other similar liens or charges for liquidated
amounts arising in the ordinary course of business (x) which Seller has agreed
to assume or pay pursuant to the terms hereof, (y) for which Seller is
responsible for paying or releasing at Closing or (z) for which Buyer has
agreed to assume or pay pursuant to the terms hereof;
(c) any inchoate liens for taxes, tax assessments not yet
delinquent, or tax assessments that are being contested in good faith, and
other assessments not yet delinquent, or if delinquent, that are being
contested in good faith;
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(d) any liens or security interests created by law or
reserved in oil and gas leases for royalty, bonus or rental or for compliance
with the terms of the Subject Interests;
(e) any obligations or duties affecting the Assets to any
municipality or public authority with respect to any franchise, grant, license
or permit, and all applicable laws, rules and orders of governmental authority;
(f) any (i) easements, rights-of-way, servitudes,
permits, surface leases and other rights in respect of surface operations,
pipelines, grazing, hunting, fishing, logging, canals, ditches, reservoirs, or
the like, or (ii) easements for streets, alleys, highways, pipelines, telephone
lines, power lines, railways and other similar rights-of-way, on, over, or in
respect of property owned or leased by Seller or over which Seller owns
rights-of-way, easements, permits, or licenses, to the extent such matters,
individually or in the aggregate, do not interfere materially with oil and gas
operations currently conducted on the Subject Interests;
(g) all lessors' royalties, overriding royalties, net
profits interests, carried interests, reversionary interests and other burdens
to the extent that the net cumulative effect of such burdens does not operate
to reduce the net revenue interest of Seller in any of the Subject Interests to
below the applicable net revenue interest set forth in Exhibit "A" hereto;
(h) all defects and irregularities affecting title to the
Subject Interests which individually or in the aggregate do not operate to
reduce the net revenue interest, nor increase the working interest (unless
Seller's net revenue interest is increased proportionately) of Seller in the
Subject Interests as reflected in Exhibit "A" hereto or otherwise interfere
materially with the operation, value or use of the Subject Interests;
(i) preferential rights to purchase and required third
party consents to assignments and similar agreements with respect to which
waivers or consents are obtained from the appropriate parties with respect to
the sale contemplated hereunder or the appropriate time period for asserting
such rights has expired without an exercise of such rights with respect to such
sale;
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(j) all rights to consent by, required notices to,
filings with, or other actions by governmental entities in connection with the
sale or conveyance of oil and gas leases or interests therein if the same are
customarily obtained contemporaneously with or subsequent to such sale or
conveyance;
(k) (i) production sales contracts, division orders,
contracts for sale, purchase, exchange, refining, or processing of
Hydrocarbons, unitization and pooling designations, declarations, orders and
agreements, operating agreements, agreements of development, area of mutual
interest agreements, gas balancing or deferred production agreements,
processing agreements, plant agreements, pipeline, gathering and transportation
agreements, injection, repressuring and recycling agreements, carbon dioxide
purchase or sale agreements, salt water or other disposal agreements, seismic
or geophysical permits or agreements, and other agreements which are customary
in the oil, gas, sulphur and other mineral exploration, development or
extraction business or in the business of processing of gas and gas condensate
production for the extraction of products therefrom, and (ii) contracts and
agreements with affiliates of Seller of the kind enumerated in subclause (i) of
this clause (k) that have been disclosed to Buyer in Exhibit "J" hereto;
(l) any encumbrance, title defect or matter (whether or
not constituting a Title Defect) waived or deemed waived by Buyer pursuant to
Article VII hereof;
(m) any agreement, contract, lease, instrument, permit,
amendment or extension entered into by Seller in accordance with Article IX
hereof; and
(n) the Oil and Gas Purchase and Processing Agreements.
1.21 "Property Taxes" shall be as defined in Section 12.2.
1.22 "Purchase Price" shall be as defined in Section 3.1.
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1.23 "Royalty Accounts" shall mean those separately identifiable
accounts of Seller or any third party operator in which Seller or any third
party operator is holding as of the Effective Time monies which (i) are owing
to third party owners of royalty, overriding royalty, working or other
interests in respect of past production of Hydrocarbons attributable to the
Assets or (ii) may be subject to refund by royalty owners or other third
parties to purchasers of past production of Hydrocarbons attributable to the
Assets.
1.24 "Seller's Credits" shall be as defined in Section 3.2.
1.25 "Subject Interests" shall mean, except to the extent
constituting Excluded Assets, any and all interests owned by Seller and set
forth in Exhibit "A-1" or which Seller is now entitled to receive by reason of
any existing participation, joint venture, farm-in or other agreement, in and
to the oil, gas and/or mineral leases, permits, licenses, concessions,
leasehold estates, fee, royalty and overriding royalty interests described in
Exhibit "A-1" attached hereto.
1.26 "Tax Period" shall be as defined in Section 12.2.
1.27 "Title Defect" shall be as defined in Section 7.3.
1.28 "Transfer Taxes" shall be as defined in Section 12.2.
ARTICLE II.
SALE AND PURCHASE
Subject to the terms and conditions of this Agreement and the
Permitted Encumbrances, Seller agrees to sell and convey to Buyer and Buyer
agrees to purchase and pay for the Assets.
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ARTICLE III.
PURCHASE PRICE AND PAYMENT
3.1 Purchase Price. The total consideration for the sale and
conveyance of the Assets to Buyer is Buyer's payment of Thirty Five Million
Twenty Eight Thousand Dollars U.S. ($U.S. 35,028,000) (the "Purchase Price"),
plus an amount equal to simple interest thereon from the Effective Time until
the Closing Date calculated at the prime rate of interest of Citibank, N.A.
prevailing at the Effective Time; provided, however, interest shall not accrue
on the Purchase Price where Closing is delayed as a result of a suit, action or
proceeding seeking to restrain Buyer or Seller, prohibit Closing, or seeking
damages from Buyer or Seller, as a result of the transactions contemplated by
this Agreement. The Purchase Price, together with such interest and subject to
such adjustments, if any, as are expressly provided for elsewhere in this
Agreement, shall be paid by Buyer to Seller at Closing by means of a completed
Federal Funds transfer to Seller's account in Chase Manhattan Bank, New York,
New York, ABA No. 021000021, Amerada Hess Corporation Account Number
910-2-475200. Contemporaneously with the execution hereof, Buyer has deposited
the sum of Seven Million Dollars U.S. ($U.S. 7,000,000) with Seller as a
deposit hereunder (the "Deposit"), to be held by Seller and, upon Closing, the
amount thereof, with interest accruing thereon from date of deposit until the
Closing Date at the rate set forth above, shall be credited toward the Purchase
Price.
3.2 Purchase Price Credits.
(a) With respect to the period commencing at the
Effective Time and ending at 7:00 a.m. (local time for each Asset) on the
Closing Date, the parties shall calculate the revenues from production and
other operating sources (excluding interest income), from or attributable to
the Assets for such period received by Seller as of the Closing Date ("Buyer's
Credits") and shall calculate all exploration, production, development,
operating, overhead, general and administrative and other costs paid or
incurred by Seller with respect to the Assets for such period charged under
applicable operating agreements, or if no operating agreement is applicable,
then under the most recent COPAS Accounting Procedure Joint Operations
("Seller's
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Credits"), excluding interest expense not paid in connection with matters
identified in Exhibit "D" and all non-cash charges attributable to depletion,
depreciation, bad debt losses, lease abandonment, etc.; provided that with
respect to any properties operated by Seller, the Seller's Credits with respect
to the Subject Interests in such properties shall also include (i) the overhead
charges payable to Seller on account of such Subject Interests under existing
operating agreements or (ii) if no overhead charge is applicable to a Subject
Interest under an existing operating agreement, an overhead charge to such
Subject Interest equal to the Average Drilling and Producing Well Rates in the
area as indicated in the most recent Survey of Combined Fixed Rate Overhead
Charges for Oil and Gas Producers conducted by Ernst & Young or the prevailing
rate in the area if the foregoing survey is not available and provided further
that with respect to any properties not operated by Seller or any affiliate of
Seller, the Seller's Credits with respect to the Subject Interests in such
properties shall also include an overhead charge equal to twenty-five percent
(25%) (proportionately reduced to the Subject Interests) of the Average
Drilling and Producing Well Rates in the area as indicated in the most recent
Survey of Combined Fixed Rate Overhead Charges for Oil and Gas Producers
conducted by Ernst & Young or the prevailing rate in the area if the foregoing
survey is not available; provided, however, this clause shall not apply to
Subject Interests not operated by Seller or its affiliates where Seller's
working interest in the Subject Interests is less than ten percent (10%). Only
items of revenue, cost and expense attributable to the Assets shall be included
in the foregoing calculations. Amounts constituting the Buyer's Credits shall
be retained by Seller. If Seller's Credits exceed Buyer's Credits, the
difference shall be due Seller by Buyer with simple interest thereon calculated
at the then generally prevailing prime rate of interest of Citibank, N.A. on
such net amounts as provided below. If Buyer's Credits exceed Seller's
Credits, the difference shall be due Buyer by Seller with simple interest
thereon calculated at the then generally prevailing prime rate of interest of
Citibank, N.A. on such net amounts as provided below. Prior to Closing, Seller
shall furnish Buyer with an estimated accounting showing the estimated amount
of Seller's Credits and the estimated amount of Buyer's Credits, subject to
being finally adjusted as hereinafter provided. For purposes of calculating
the accrual of interest on such net amounts, the difference between Buyer's
Credits and Seller's Credits shall be calculated for each calendar month (or
portion thereof) from the Effective Time to Closing Date and interest shall
accrue on such differences at the rate set forth above from the first day of
the following calendar
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month. An estimated credit due Seller shall increase the Purchase Price paid
at Closing by that amount and an estimated credit due Buyer shall reduce the
Purchase Price paid at Closing by that amount (together with interest as
provided above). The amount of the final credit, as adjusted, shall be paid in
cash on final adjustment by the party owing it together with interest in such
amount at the rate provided above from the Closing Date to the date of payment.
Promptly after the Closing Date (but not later than one hundred twenty (120)
days thereafter), Seller shall furnish Buyer with a final accounting showing in
reasonable detail the calculation of Buyer's Credits and Seller's Credits. If
within thirty (30) days following the furnishing of such estimated accounting
the parties are unable to agree as to whether an item of income or expense
belongs in the period before or after the Effective Time, or is properly
included in Seller's Credits or Buyer's Credits, or as to any other accounting
matters, then such item or matter may be submitted for determination, in
accordance with Section 13.2 hereof, by an accounting firm of national repute
(other than Ernst & Young LLP, or any accounting firm which has been engaged by
Buyer or Seller within three (3) years prior to this Agreement) to be mutually
agreed upon by Buyer and Seller. Final settlement shall be made within ten (10)
business days following agreement by the Buyer and Seller or final
determination by said accounting firm (which final determination shall be
binding upon Buyer and Seller).
(b) Seller and Buyer or representatives of each shall
determine the amount of the Hydrocarbons existing in storage tanks, gathering
lines, pipelines, gasoline plants, and other facilities as of the Effective
Time using the point or points of delivery to Seller's purchasers as a zero
reference point. Seller shall receive a credit in the final adjustment of the
Purchase Price as provided for in paragraph (a) above equal to an amount
calculated by multiplying the volume of such Hydrocarbons by (i) in the case of
oil, the posted price in the field, as of the Effective Time (or if none, a
mutually acceptable price) or (ii) in the case of gas, the prevailing spot
market price in the vicinity, as of the Effective Time.
3.3 Purchase Price Allocations.
Seller and Buyer mutually agree to allocate the Purchase Price
among the Assets as set forth in Exhibit "B" attached hereto. Seller and Buyer
agree that said allocation as set
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forth in Exhibit "B" is the proper allocation of the Purchase Price in
accordance with the fair market value of the Assets, and that said allocation
of the Purchase Price of the Assets as set forth in Exhibit "B" shall apply for
purposes of Sections 755 and 1060 of the Internal Revenue Code of 1986 (as
amended and together with any regulations promulgated thereunder, the "Code").
Seller and Buyer agree (and each agrees to cause its affiliates) to report the
federal, state and local income and other tax consequences of the transactions
contemplated herein, and in particular to report the information required under
Section 1060(b) of the Code (and any regulations promulgated thereunder), in a
manner consistent with such allocation. Seller and Buyer further agree (and
each agrees to cause its affiliates) to not take any tax position inconsistent
with such allocation in connection with the examination of any of their tax
returns, refund claims or litigation, investigations or other proceedings
involving any of their tax returns. Seller and Buyer each further agree that
they will not take any position inconsistent with this allocation in preparing
tax returns or reports to government authorities or otherwise.
Buyer and Seller each agree to furnish the other a copy of IRS
Form 8594 (Asset Acquisition Statement under Section 1060 of the Code) as filed
with the Internal Revenue Service by such party or any affiliate thereof,
pursuant to Sections 755 and 1060 of the Code, as a result of the consummation
of the transactions contemplated hereby, within thirty (30) days of the filing
of such form with the Internal Revenue Service.
ARTICLE IV.
SELLER'S REPRESENTATIONS
4.1 Seller's Representations. Seller represents to Buyer as of
the date hereof that:
(a) Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
authorized to do business in the State of Oklahoma;
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(b) Seller has all requisite power and authority to carry
on its business as presently conducted, to enter into this Agreement and the
other documents and agreements contemplated hereby, and to perform its
obligations under this Agreement and the other documents and agreements
contemplated hereby. Subject to Sections 8.1, 8.2, 17.1 and 17.2, the
consummation of the transactions contemplated by this Agreement will not
violate, nor be in conflict with, any provision of Seller's charter, by-laws or
governing documents or any material agreement or instrument to which it is a
party or by which it is bound, or any judgment, decree, order, statute, rule or
regulation applicable to Seller;
(c) The execution, delivery and performance of this
Agreement and the transactions contemplated hereunder have been duly and
validly authorized by all requisite corporate action on the part of Seller;
(d) This Agreement constitutes, and all documents and
instruments required hereunder to be executed and delivered by Seller at
Closing will constitute, legal, valid, binding and effective obligations of
Seller enforceable against Seller in accordance with their respective terms,
subject to applicable bankruptcy and other similar laws of general application
with respect to creditors;
(e) There are no bankruptcy, reorganization or
arrangement proceedings pending, being contemplated by, or to the actual
knowledge of the officers of Seller, threatened against Seller;
(f) No broker or finder other than Goldman, Sachs & Co.
has acted for or on behalf of Seller in connection with this Agreement or the
transactions contemplated by this Agreement, and no broker or finder other than
Goldman, Sachs & Co. is entitled to any brokerage or finder's fee or commission
in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Seller;
(g) Except as shown on Exhibit "E" hereto, there is no
demand or suit, action or other proceeding pending in which Seller has been
served with process, or to Seller's
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knowledge threatened, before any court or governmental agency which if
adversely decided could reasonably be expected to result in a material
impairment or loss of title to any material part of the Assets taken as a whole
or the value thereof taken as a whole or which might materially hinder or
impede the operation of the Assets taken as a whole;
(h) Except as shown on Exhibit "E" and as may be referred
to in Article XIV, Seller, to its knowledge, has not violated, and to Seller's
knowledge there are no alleged violations by Seller of any terms and conditions
of any licenses, permits, contracts or agreements relating to the Assets, or
any applicable rules, regulations or orders of any governmental agency, or any
court having jurisdiction over the Assets which would affect in any material
respect the value of the Assets taken as a whole;
(i) Seller is a United States person within the meaning
of Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended;
(j) Except for Permitted Encumbrances, Seller will
forever warrant and defend title to the Assets free and clear of any lien,
charge, encumbrance or claim arising by, through or under Seller, but not
otherwise;
(k) The Subject Interests are not subject to any
agreements or documents which restrict or prohibit Seller from disclosing to
Buyer information which is material to Buyer's review, inspection, ownership
and operation of the Assets; and
(l) To Seller's knowledge, neither the operator of the
Assets nor Seller is in violation of any applicable environmental law,
regulation or ordinance in effect as of the date of this Agreement, which
violation would have a material adverse effect upon the Assets or the continued
operation thereof, and no notice has been received by Seller alleging any such
violation.
For purposes of Sections 4.1(g) and 4.1(h), "materiality"
shall mean an impairment or loss of title, diminution in value or violation of
a governmental rule, regulation
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or order resulting in loss or damage to any part of the Assets in an amount
exceeding Two Hundred Thousand Dollars ($200,000.00).
ARTICLE V.
BUYER'S REPRESENTATIONS
5.1 Buyer's Representations. Buyer represents to Seller as of the
date hereof that:
(a) It is a corporation duly organized, validly existing
and in good standing under the laws of the State of Oklahoma, and Buyer is or
prior to Closing will be duly qualified pursuant to any and all applicable
laws, statutes and regulations to own and operate the Assets;
(b) It has all requisite power and authority to carry on
its business as presently conducted, to enter into this Agreement and the other
documents and agreements contemplated hereby, to purchase the Assets on the
terms described in this Agreement, and to perform its other obligations under
this Agreement and the other documents and agreements contemplated hereby.
Subject to Sections 17.1, and 17.2, the consummation of the transactions
contemplated by this Agreement will not violate, nor be in conflict with, any
provision of Buyer's charter, by-laws or governing documents, or any material
agreement or instrument to which Buyer is a party or by which it is bound, or
any judgment, decree, order, statute, rule or regulation applicable to Buyer;
(c) The execution, delivery and performance of this
Agreement and the transactions contemplated hereunder have been duly and
validly authorized by all requisite corporate action on the part of Buyer;
(d) This Agreement constitutes, and all documents and
instruments required hereunder to be executed and delivered by Buyer at Closing
will constitute, legal, valid, binding and effective obligations of Buyer
enforceable against Buyer in accordance with their respective
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terms, subject to bankruptcy and other similar laws of general application with
respect to creditors;
(e) There are no bankruptcy, reorganization or
arrangement proceedings pending, being contemplated by, or to the actual
knowledge of the officers of Buyer, threatened against Buyer;
(f) No broker or finder has acted for or on behalf of
Buyer in connection with this Agreement or the transactions contemplated by
this Agreement, and no broker or finder is entitled to any brokerage or
finder's fee or commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of Buyer;
(g) Buyer is now or prior to Closing will be, and after
Closing shall continue to be, qualified to own Federal and State oil, gas and
mineral leases in all jurisdictions where any such Subject Interests are
located, and the consummation of the transactions contemplated hereby will not
cause Buyer to be disqualified as such an owner or to exceed any acreage
limitation imposed by any law, statute, rule or regulation;
(h) Buyer is directly engaged in the business of
exploration and production of oil, gas or other valuable minerals and derives
at least $5,000,000 of annual gross income from such business. Prior to
entering into this Agreement, Buyer was advised by and has relied solely on its
own legal, tax and other professional counsel concerning this Agreement, the
Assets and the value thereof. Buyer is acquiring the Assets for its own
account and not for distribution or resale in any manner that would violate any
state or federal securities law, rule, regulation or order; and
(i) Buyer has arranged to have available by the Closing
Date sufficient funds to enable the Buyer to pay in full the Purchase Price,
together with all costs and expenses relative thereto, and otherwise to perform
its obligations under this Agreement.
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ARTICLE VI.
ACCESS TO INFORMATION AND INSPECTION
6.1 Title Files. Promptly after the execution of this Agreement
and until the Closing Date, Seller shall permit Buyer and its representatives
at reasonable times during normal business hours to examine and copy at Buyer's
expense, in Seller's offices, all abstracts of title, title opinions, title
files, ownership maps, lease files, assignments, division orders, check
vouchers, payout statements, printouts of electronic data and agreements
pertaining to the Assets insofar as the same may now be in existence and in the
possession of Seller.
6.2 Other Files. Prior to Closing, Seller shall make available to
Buyer for inspection by Buyer at reasonable times during normal business hours
at their actual location, all geological, geophysical, production and
engineering books, records and data in possession of Seller, except such
records or data which Seller is prevented by contractual obligations with third
parties from disclosing.
6.3 Confidentiality Agreement. All such information made
available to Buyer shall be maintained confidential by Buyer as provided in
that certain Confidentiality Agreement dated January 4, 1996, between Seller
and Buyer, the terms of which are incorporated herein by reference and made a
part of this Agreement. Buyer shall further take whatever reasonable steps may
be necessary to ensure that Buyer's employees, consultants and agents comply
with the provisions of this Article VI and the provisions of said
Confidentiality Agreement.
6.4 Inspections. Promptly after the execution of this Agreement
and for a period not to exceed forty-five (45) days thereafter, Seller, subject
to third party operator approval, shall permit Buyer and its representatives at
reasonable times and at their sole risk, cost and expense, to conduct
reasonable inspections of the Assets; provided, however, Buyer shall repair any
damage to the Assets resulting from such inspections and Buyer does hereby
indemnify and hold harmless Seller from and against any and all losses, costs,
damages, obligations, claims, liabilities, expenses or causes of action arising
from Buyer's inspection of the Assets, including,
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without limitation, claims for personal injuries, property damage and
reasonable attorney's fees and further including claims arising in whole or
part from Seller's negligence.
ARTICLE VII.
TITLE
7.1 No Warranty or Representation. Except as specifically
provided for herein, Seller shall convey Seller's interests in and to the
Assets to Buyer subject to the Permitted Encumbrances and without any warranty
of title, express or implied, except for the special warranty, as provided in
the form of Assignment, Bill of Sale and Conveyance attached as Exhibit "F"
hereto. Seller makes no warranty or representation, express or implied, with
respect to the accuracy or completeness of the information, records and data
now, heretofore or hereafter made available to Buyer in connection with this
Agreement (including, without limitation, any description of the Assets,
pricing assumptions, potential for production of Hydrocarbons from the Subject
Interests or any other matters contained in any other material furnished to
Buyer by Seller or by Seller's agents or representatives).
7.2 Buyer's Title Review.
(a) Immediately upon execution by both parties hereto of
this Agreement Buyer may at Buyer's sole cost and expense commence and
diligently pursue such examination of title to the Subject Interests as Buyer
desires. Seller shall fully cooperate with Buyer and shall make available to
Buyer at Seller's offices in Houston, Texas, all documents, records and
material in Seller's possession (except to the extent disclosure of same is
prohibited pursuant to agreements with third parties) and all assistance
reasonably necessary to assist Buyer in determining the validity of Seller's
title in and to the Subject Interests. In no event, however, does Seller
warrant or represent the sufficiency, completeness or accuracy of such
documents, records and materials, and Buyer's reliance thereon shall be at
Buyer's sole risk and expense. In the event more than one property is being
conveyed hereunder, Buyer will review title on a
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property by property basis commencing with the property being deemed to have
the greatest value and then in descending order of value as set forth on
Exhibit "B". Immediately upon completion of Buyer's title review of each
property, Buyer shall notify Seller of any Title Defects associated with such
property in accordance with Section 7.3 below. Buyer will conclude Buyer's
title review and give notice to Seller of all asserted Title Defects not later
than forty-five (45) days subsequent to the execution of this Agreement. To be
effective, Buyer's written notice of a Title Defect must include (i) a brief
description of the matter constituting the asserted Title Defect and (ii)
supporting documents reasonably necessary for Seller (or a title attorney or
examiner hired by Seller) to verify the existence of such asserted Title
Defect. Any matters not described in a written notice of Title Defect within
said forty-five (45) day period shall conclusively be deemed to have been
waived and accepted by Buyer, and shall be deemed Permitted Encumbrances
hereunder.
(b) Upon receipt of the notice set forth under Section
7.2(a) Seller shall have the right, but not the obligation, until the Closing
Date to cure all or any portion of asserted Title Defects, such curative costs
to be borne solely by Seller, provided, however that if the value, as
calculated pursuant to Section 3.3, of the Assets affected by asserted Title
Defects equals or exceeds five percent (5%) of the Purchase Price, then Seller
may, at its option and in its sole discretion exercised by the giving of
written notice to Buyer within ten (10) days of receipt of Buyer's final notice
of asserted Title Defects elect to terminate this Agreement in which event
Seller and Buyer shall be under no obligation to each other with regard to the
purchase and sale of any of the Assets or Subject Interests, such termination
to be without liability to either party. Upon termination pursuant to this
Section 7.2(b), Seller shall return the Deposit to Buyer together with all
interest accrued thereon. Failure of Seller to give notice of an election to
terminate this Agreement shall be deemed an election not to terminate this
Agreement and to adopt the procedures and remedies concerning asserted Title
Defects set forth herein. If Buyer elects to waive or is deemed to have waived
any asserted or unasserted Title Defects, such waived or unasserted Title
Defects shall be deemed Permitted Encumbrances hereunder. If Seller within the
time provided above is unable, elects not or refuses to cure such asserted
Title Defects, Buyer may, by written notice delivered to Seller within ten (10)
days after the expiration of Seller's right to cure asserted Title Defects, and
as Buyer's sole and exclusive
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remedy, elect to reduce the Purchase Price by an amount attributable to the
reserves to which title has failed as mutually agreed upon by the parties and
based upon the allocations made pursuant to Section 3.3., whereupon the
interest covered by such Title Defect shall be deemed to be an Excluded Asset
for the purposes of this Agreement; provided however, the Purchase Price shall
not be reduced unless the amount attributable to the reserves to which title
has failed exceeds Two Hundred Thousand Dollars U.S. ($U.S. 200,000). Failure
by Buyer to timely assert a claim for an adjustment to the Purchase Price shall
be deemed an election by Buyer to waive such claim and retain the interest
covered by the asserted but uncured Title Defect and such uncured Title Defect
shall thereupon be deemed a Permitted Encumbrance. In the event Buyer and
Seller are unable to agree upon the amount of the downward adjustment of the
Purchase Price attributable to a Title Defect for the purposes of the
foregoing, then the same shall be submitted for determination to an independent
engineering firm of national repute (other than DeGolyer and MacNaughton or an
engineering firm engaged by Buyer or Seller within three (3) years prior to the
date of this Agreement) to be mutually agreed upon by Buyer and Seller. The
determination of such independent engineering firm shall be final.
(c) Notwithstanding anything in this Agreement to the
contrary, Buyer shall not be deemed to have waived any defect of title arising
by, through or under Seller, but not otherwise. Buyer shall in no event be
deemed to have waived its special warranty of title set forth in Section 4.1(j)
and in the Assignment, Bill of Sale and Conveyance.
7.3 Title Defects. For the purposes of this Agreement, a portion
of the Subject Interests shall be deemed to have a "Title Defect" if any one or
more of the following statements is untrue in any material respect with respect
to such portion of the Subject Interests as of the Effective Time:
(i) Seller has Defensible Title thereto.
(ii) All royalties, rentals, Pugh clause payments, shut-in
gas payments and other payments due with respect to such portion of the Subject
Interests have been properly and timely paid, except for payments held in
suspense for title or other reasons which are customary
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in the industry and which will not result in grounds for cancellation of
Seller's rights in such portion of the Subject Interests.
(iii) Except as set forth in any of the Exhibits hereto,
Seller is not in default under the material terms of any leases, farmout
agreements or other contracts or agreements respecting such portion of the
Subject Interests which could (1) materially interfere with the operation,
value or use thereof, (2) materially prevent Seller from receiving the proceeds
of production attributable to Seller's interest therein, or (3) result in
cancellation of Seller's interest therein.
(iv) There is no lien, charge, encumbrance, defect or
objection (other than a Permitted Encumbrance) against, in or to Seller's title
thereto or right or interest therein, and no fact or circumstance relative
thereto exists of such significance that a reasonable and prudent person
engaged in the business of the ownership, development and operation of oil and
gas properties with knowledge of all the facts and appreciation of their legal
significance would be unwilling to accept and pay for the Subject Interest or
portion thereof which is affected thereby.
Notwithstanding the foregoing, loss of any Subject Interest or portion
thereof following the Effective Time due to (i) any election or decision made
by Seller in accordance with Article IX or (ii) expiration of the primary or
secondary term of a lease shall not constitute a Title Defect as long as Seller
shall not have breached the provisions of Article IX. Subject to Section 17.1
below, the failure of any governmental office to approve or consent to any
assignment or other conveyance of a Subject Interest filed with such office
shall not constitute a Title Defect; provided that such office has not
expressly and specifically refused to grant such consent or approval as a
result of the existence of a Title Defect.
7.4 Title Indemnification. Notwithstanding any other provisions
of this Article VII, Seller shall have the option to execute and deliver to
Buyer a title indemnity whereby Seller shall keep Buyer indemnified from and
against any and all liability, loss, costs (including legal costs), suits,
judgments, causes of action, claims or damages arising or incurred in
connection with any uncured Title Defects, to the extent the same relate to
acts, omissions or other matters occurring
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prior to the Effective Time. The title indemnity shall be limited to the
amount determined in accordance with this Article VII with respect to the
particular Asset for which the indemnity is given and no claim for
indemnification of Buyer shall be made or be enforceable, whether by legal
proceedings or otherwise, unless written notice of the claim, setting out
reasonable details thereof is given by Buyer to Seller on or before January 1,
2001. If Seller provides such a title indemnity, the relevant uncured Title
Defects shall be deemed to be cured and removed for the purposes of this
Agreement.
ARTICLE VIII.
PREFERENTIAL PURCHASE RIGHTS AND CONSENTS
8.1 Purchase Rights. To Seller's knowledge, all agreements
affecting the Assets containing consent to assignment obligations and
preferential right to purchase provisions that must be complied with prior to
the assignment of the Assets to Buyer are set forth in Exhibit "C" hereto
(except such agreements with respect to which all necessary consents to
assignment or waivers of preferential purchase rights have already been
obtained by Seller). The existence of an unwaived preferential purchase right
shall not be deemed a Title Defect. Seller shall send such notices and other
documents as may be required in order to trigger preferential purchase rights
which have been identified prior to Closing, or Seller may, in lieu thereof,
obtain, or attempt to obtain, a waiver of the exercise of any preferential
purchase rights. If a third party who has been offered an interest in a
Subject Interest pursuant to a preferential right to purchase, elects prior to
Closing to purchase all or part of such Subject Interest pursuant to the
aforesaid offer and Seller receives written notice of such election prior to
the Closing Date, the interest or part thereof so affected will be eliminated
from the Assets and the Purchase Price reduced by the portion of the Purchase
Price allocated to such interest or part thereof under Section 3.3 hereof.
Otherwise the interest offered as aforesaid shall be conveyed to Buyer at
Closing subject to the preferential rights (if any of them remain) of such
third party. If a third party elects to purchase all or a part of an interest
in a Subject Interest subject to a preferential right to purchase and Closing
has already occurred (and payment of the Purchase Price made to Seller)
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with respect to such interest, Buyer shall be obligated to convey said interest
to such third party and shall be entitled to the consideration for the sale of
such interest or part thereof.
8.2 Consents. Seller shall use reasonable efforts, but without
any obligation to incur any cost or expense in connection therewith, to obtain
all consents to assignment prior to the Closing. If a lessor or other third
party who has the right to consent to the assignment of a Subject Interest (or
portion thereof) refuses such consent prior to Closing, the interest or part
thereof so affected will be eliminated from the Assets and the Purchase Price
reduced by the portion of the Purchase Price allocated to such interest or part
thereof under Section 3.3 hereof. If a request for a consent to assign is
outstanding as of Closing, such circumstance shall constitute a Title Defect.
ARTICLE IX.
COVENANTS OF SELLER
9.1 Covenants of Seller Pending Closing. From and after the date
of execution of this Agreement and until the Closing, except as otherwise
consented to by Buyer in writing and subject to Section 9.2 below and the terms
of applicable operating and other agreements, Seller shall:
(a) Subject to Seller's right to obtain Seller's Credits
pursuant to Section 3.2, continue to operate the Assets owned by it for the
account of Buyer in a manner consistent with past practices;
(b) Maintain in full force and effect all policies of
insurance covering the Assets now maintained by Seller;
(c) Use reasonable efforts to preserve in full force and
effect all material leases, operating agreements, easements, rights-of-way,
permits, licenses, contracts and other
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material agreements included in the Incidental Rights which relate to the
Assets in which it owns an interest and perform all material obligations of
Seller in or under any such agreement relating to such Assets;
(d) Use Seller's reasonable efforts to maintain its
relationships with suppliers, customers and others having material business
relations with Seller with respect to the Assets so that they will be preserved
for Buyer on and after the Closing Date;
(e) Not enter into any agreement or arrangement granting
any preferential right to purchase any of the Assets or requiring the consent
of any person to the transfer and assignment of any of the Assets hereunder,
except in connection with the performance by Seller of an obligation or
agreement existing on the date hereof or pursuant to this Agreement;
(f) Not dedicate, sell, farm out, encumber or dispose of
any Assets without Buyer's written consent except (i) sales of oil and gas
production in the ordinary course of business and (ii) as to a portion of the
Assets that do not, in the aggregate, constitute a material portion of the
Assets;
(g) Maintain all material equipment included in the
Assets in accordance with customary industry operating practices and
procedures; and
(h) Provide Buyer copies of any financial, tax (subject
to Section 12.2(d) of this Agreement) or legal records which directly relate to
the Subject Interests, including, without limitation, information for a period
of three (3) years prior to the Effective Time to the extent required by Buyer
in connection with required filings with the Securities and Exchange
Commission; provided, however, that Buyer's said entitlement shall not extend
to any records whose disclosure may expose Seller to any possible claim of
breach of privilege or confidentiality under any agreement or under federal or
state laws.
Notwithstanding the other provisions of this Article IX, (i) Seller
may take any action with respect to the Assets if reasonably necessary under
emergency circumstances and provided
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Buyer is notified as soon thereafter as reasonably practical, (ii) Seller shall
have no liability to Buyer for the incorrect payment of delay rentals,
royalties, shut-in royalties or similar payments or for any failure to pay any
such payments through mistake or oversight (including Seller's negligence), and
(iii) Seller's non-willful failure to comply with any of the requirements of
this Article IX shall not be deemed a default by Seller hereunder, serve as a
basis for a claim by Buyer for damages, afford Buyer the right to make a claim
for damages or permit Buyer not to close this sale if such failure does not
have a material adverse effect on the value of the Assets taken as a whole.
For purposes of this subparagraph (iii), "a material adverse effect on the
value of the Assets taken as a whole" shall have occurred where the aggregate
dollar value of the damages attributable to such failure by Seller exceeds Two
Hundred Thousand Dollars ($200,000.00). Any consent requested of Buyer with
respect to the matters covered by this Article IX shall not be unreasonably
withheld or action with respect thereto unduly delayed.
9.2 Limitations on Seller's Covenants Pending Closing.
(a) To the extent Seller is not the operator of any of
the Assets, the obligations of Seller in Section 9.1 above, which have
reference to operations or activities which normally or pursuant to existing
contracts are carried out or performed by the operator, shall be construed to
require only that Seller use reasonable efforts (without being obligated to
incur any expense or institute any cause of action) to cause the operator of
such Assets to take such actions or render such performance within the
constraints of the applicable operating agreements and other applicable
agreements.
(b) Notwithstanding anything to the contrary in this
Article IX, should Seller not wish to pay any lease rental or other payment or
participate in any reworking, deepening, drilling, completion, equipping or
other operation on or with respect to any well or other Asset which may
otherwise be required by Section 9.1 above, Seller shall use reasonable efforts
to give Buyer written or oral notice (to be followed by written notice) thereof
as soon as reasonably practicable after Seller receives written notice thereof
from the operator of such property (or if Seller is the operator, after Seller
gives written notice thereof to the non-operators of such property); and Seller
shall not be obligated to make any such payment or to elect to participate
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in any such operation which Seller does not wish to make or participate in
unless Seller receives from Buyer, within a reasonable time prior to the date
when such payment or election is required to be made by Seller, (i) the written
election and agreement of Buyer to require Seller to take such action and to
indemnify Seller therefrom and (ii) all funds necessary for such action.
Notwithstanding the foregoing, Seller shall not be obligated to pay any lease
rental or other payment or to elect to participate in any operation if the
third party operator of the property involved recommends that such action not
be taken. If Buyer advances any funds pursuant to this Section 9.2(b) and the
Assets to which such payments relate are not conveyed to Buyer at Closing, and
Seller does not reimburse Buyer for all advances made by Buyer with respect to
such Assets pursuant to this Section 9.2(b) within thirty (30) days after this
Agreement terminates with respect to such Assets, then (i) Buyer shall own and
be entitled to any right of Seller that would have lapsed but for such payment,
and (ii) in the case of operations, Buyer shall be entitled to receive the
penalty which Seller, as nonconsenting party, would have suffered under the
applicable operating agreement with respect to such operations as if Buyer were
a consenting party thereunder.
ARTICLE X.
CLOSING CONDITIONS
10.1 Seller's Closing Conditions. The obligations of Seller under
this Agreement are subject, at the option of Seller, to the satisfaction at or
prior to the Closing of the following conditions:
(a) All representations and warranties of Buyer contained
in this Agreement shall be true in all material respects at and as of the
Closing as if such representations and warranties were made at and as of the
Closing, and Buyer shall have performed and satisfied all agreements required
by this Agreement to be performed and satisfied by Buyer at or prior to the
Closing;
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(b) Seller shall have received a certificate dated as of
the Closing, executed by a duly authorized officer of Buyer, to the effect that
to such officer's knowledge the statements made under Article V above are true
at and as of the Closing;
(c) Except for approvals covered by Section 17.1 hereof,
all necessary consents of and filings with the Federal Trade Commission and any
other state or federal governmental authority or agency relating to the
consummation of the transactions contemplated by this Agreement shall have been
obtained, accomplished or waived, and the applicable waiting periods prescribed
in connection with the Hart-Scott-Rodino Act shall have elapsed or terminated
(by early termination or otherwise) since the dates of the filings by the
parties with respect thereto; and
(d) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by Seller) shall be pending or
threatened before any court or governmental agency seeking to restrain Seller
or prohibit the Closing or seeking damages against Seller as a result of the
consummation of this Agreement.
10.2 Buyer's Closing Conditions. The obligations of Buyer under
this Agreement are subject, at the option of Buyer, to the satisfaction at or
prior to the Closing of the following conditions:
(a) All representations and warranties of Seller
contained in this Agreement shall be true in all material respects at and as of
the Closing as if such representations and warranties were made at and as of
the Closing, and Seller shall have performed and satisfied all agreements
required by this Agreement to be performed and satisfied by Seller at or prior
to the Closing;
(b) Buyer shall have received a certificate dated as of
the Closing, executed by a duly authorized officer of Seller, to the effect
that to such officer's knowledge the statements made under Article IV above by
Seller are true at and as of the Closing;
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(c) Except for approvals covered by Section 17.1 hereof,
all necessary consents and filings with the Federal Trade Commission and any
other state or federal governmental authority or agency relating to the
consummation of the transactions contemplated by this Agreement shall have been
obtained, accomplished or waived, and the applicable waiting periods prescribed
in connection with the Hart-Scott-Rodino Act shall have elapsed or terminated
(by early termination or otherwise) since the dates of the filings by the
parties with respect thereto; and
(d) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by Buyer) shall be pending or
threatened before any court or governmental agency seeking to restrain Buyer or
prohibit the Closing or seeking damages against Buyer as a result of the
consummation of this Agreement.
ARTICLE XI.
CLOSING
11.1 Closing. The closing of this transaction (the "Closing")
shall be held at 10:00 a.m., Central Standard Time, at the offices of Seller at
One Allen Center, 500 Dallas Street, Houston, Texas, on June 14, 1996, or at
such other date or place as the parties may agree in writing (herein called
"Closing Date"). Regardless of when the Closing shall occur, Closing shall be
effective with respect to each Asset as of the Effective Time.
11.2 Seller's Closing Obligations. At Closing (except Seller shall
have a reasonable period after the Closing for items d, e, f and g), Seller
shall deliver to Buyer the following:
(a) The Assignments, Bills of Sale and Conveyances
substantially in the form attached hereto as Exhibit "F" and such other
documents (including separate Bills of Sale, if necessary, with respect to the
Incidental Rights), as may be reasonably necessary to convey all Seller's
interest in the Assets to Buyer in accordance with the provisions hereof;
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(b) The certificate of Seller referred to in Section
10.2(b) hereof;
(c) Evidence of Seller's compliance with the
Hart-Scott-Rodino Act (if necessary);
(d) Transfer or division orders, or letters-in-lieu
thereof, to be effective at the Effective Time in the form required by the
purchasers of the Hydrocarbons from the producing properties, provided that if
any purchasers prepare the same, the execution and delivery thereof may be
deferred until they are prepared, and any forms required by any governmental
agency having jurisdiction over the Assets;
(e) All title opinions, abstracts of title, lease
records, data sheets, status and other reports pertaining to the Subject
Interests heretofore received by Seller or to which Seller has access;
(f) All of the Basic Documents, and the files pertaining
thereto, and all other contracts, documents and files affecting title to the
Subject Interests to which Seller has access; and
(g) All lease files, land files, well files, gas and oil
sales contract files, gas processing files, division order files, abstracts,
title opinions, and all other books, files and records information and data,
including electronic data, pertaining to the Assets except insofar as Seller is
prevented from transferring same by contractual obligations to third parties or
applicable law.
11.3 Buyer's Closing Obligations. At Closing, Buyer shall deliver
to Seller the following:
(a) The Purchase Price (together with interest as
provided in Section 3.1 and subject to such adjustments, if any, as are
expressly provided for in this Agreement), less the Deposit and interest
accrued thereon, in immediately available funds to Seller as provided in
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Section 3.1 hereof (or to such other account within the continental United
States of America designated by Seller to Buyer at least five (5) days prior to
the Closing Date);
(b) The certificate of Buyer referred to in Section
10.1(b) hereof; and
(c) Evidence of Buyer's compliance with the
Hart-Scott-Rodino Act (if necessary).
ARTICLE XII.
EFFECT OF CLOSING
12.1 Revenues. To the extent not included in the reimbursements
under Section 3.2 hereof, all proceeds, accounts receivable, notes receivable,
revenues, monies and other items included in or attributable to the Excluded
Assets and all other Excluded Assets shall belong to and be paid over to Seller
and all other proceeds, accounts receivable, notes receivable, revenues, monies
and other items relating to the period of time after the Effective Time and
included in or attributable to the Assets shall belong to and be paid over to
Buyer.
12.2 Taxes.
(a) APPORTIONMENT OF AD VALOREM AND PROPERTY TAXES. All ad
valorem, real property taxes and personal property taxes, including interest
and penalties attributable thereto (hereinafter "Property Taxes"), attributable
to the Assets with respect to the tax assessment period ("Tax Period") during
which the Effective Time occurs shall be apportioned as of the Effective Time
between Seller and Buyer, with Seller paying a fraction thereof based upon the
number of days in the Tax Period prior to the Effective Time and Buyer paying
the balance thereof. The owner of record on the assessment date shall file or
cause to be filed all required reports and returns incident to the Property
Taxes and shall pay or cause to be paid to the taxing authorities all Property
Taxes relating to the Tax Period during which the Effective
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Time occurs. If Seller is the owner of record on the asseessment date, then
Buyer shall pay to Seller Buyer's pro rata portion of Property Taxes within
thirty (30) days after receipt of Seller's invoice therefor, except to the
extent taken into account as an adjustment to the Purchase Price pursuant to
Section 3.2. If Buyer is the owner of record as of the assessment date then
Seller shall pay to Buyer Seller's pro rata portion of Property Taxes within
thirty (30) days after receipt of Buyer's invoice therefor, except to the
extent taken into account as an adjustment to the Purchase Price pursuant to
Section 3.2.
(b) SALES TAXES. The Purchase Price provided for
hereunder excludes, and Buyer shall be liable for, any Transfer Taxes (as
defined below) required to be paid in connection with the sale of the Assets
pursuant to this Agreement. To the extent required by applicable law, Seller
shall collect and remit any Transfer Taxes that are required to be paid as a
result of the transfer of the Assets by Seller to the Buyer. If the transfer
of the Assets pursuant to this Agreement is exempt from any Transfer Taxes,
Buyer shall, at Closing, provide Seller with properly executed exemption
certificates or other documentation acceptable under applicable law. As used
here, the term "Transfer Taxes" shall mean any sales, use, excise, stock,
stamp, document, filing, recording, registration, authorization and similar
taxes, fees and charges.
(c) OTHER TAXES. With the exception of income and
franchise taxes, all other federal, state and local taxes (including interest
and penalties attributable thereto) on the ownership or operations of the
Assets which are imposed with respect to periods or portions of periods prior
to the Effective Time shall be paid by Seller and all such taxes imposed with
respect to periods or portions of periods beginning on or after the Effective
Time shall be paid by Buyer.
(d) COOPERATION. After the Closing, each party to this
Agreement shall provide the other party with reasonable access to all relevant
documents, data and other information (other than that which is subject to any
attorney-client privilege) which may be required by the other party for the
purpose of preparing tax returns, filing refund claims and responding to any
audit by any taxing jurisdiction. Each party to this Agreement shall cooperate
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with all reasonable requests of the other party made in connection with
contesting the imposition of taxes. Notwithstanding anything to the contrary
in this Agreement, neither party to this Agreement shall be required at any
time to disclose to the other party any Tax Return or other confidential tax
information. Except where disclosure is required by applicable law or judicial
order, any information obtained by a party pursuant to this Section 12.2(d)
shall be kept confidential by such party, except to the extent disclosure is
required in connection with the filing of any Tax Returns or claims for refund
or in connection with the conduct of an audit, or other proceedings in response
to an audit, by a taxing jurisdiction.
12.3 Expenses. To the extent not included in the reimbursements
under Section 3.2 hereof or in the Assumed Obligations, all accounts payable
and other costs and expenses (other than taxes described in Section 12.2) with
respect to the Seller's interest in the Assets which are attributable under
GAAP to the period prior to the Effective Time shall be the obligation of and
be paid by Seller, and those which are attributable under GAAP to the period
commencing with the Effective Time, as well as all Assumed Obligations, shall
be the obligation of and be paid by Buyer.
12.4 Shared Obligations. If monies are received by any party
hereto which, under the terms of this Article XII, belong to another party, the
same shall immediately be paid over to the proper party. If an invoice or
other evidence of an obligation is received which under the terms of this
Article XII is partially the obligation of Seller and partially the obligation
of Buyer, then the parties shall consult each other and each shall promptly pay
its portion of such obligation to the obligee, provided that if either party
hereto shall fail promptly to pay its portion of such obligation to the
obligee, the other party hereto shall have the right (but not the obligation)
to pay such portion of such obligation, whereupon the defaulting party shall
promptly reimburse such other party for the defaulting party's portion so paid,
plus interest on said amounts until reimbursed, at the rate applicable under
Article III above.
12.5 Seller Operated Properties. It is expressly understood and
agreed that Seller shall not be obligated to continue operating any of the
Assets following the Closing and Buyer hereby assumes full responsibility for
operating (or causing the operation of) all Assets following the
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Closing. Without implying any obligation on Seller's part to continue
operating any Assets after the Closing, if Seller continues to operate any
Assets following the Closing at the request of Buyer or any third party working
interest owner, due to constraints of applicable operating agreements, failure
of a successor operator to take over operations or other reasonable cause, such
continued operation by Seller shall be for the account of Buyer, at the sole
risk, cost and expense of Buyer and, as part of the Assumed Obligations, Buyer
hereby releases and indemnifies Seller from all claims, losses, damages, costs,
expenses, causes of action and judgments of any kind or character (INCLUDING
SELLER'S NEGLIGENCE) with respect to such continued operations by Seller. In
connection with any such continued operation of the Assets by Seller, Seller
shall be reimbursed by Buyer for all costs and expenses incurred by Seller with
respect thereto, including a charge for overhead in the same manner as provided
in the calculation of Seller's Credits for the period prior to the Closing. In
the event that Seller continues operating any Assets after Closing pursuant to
this Section 12.5, Buyer and Seller shall enter into a mutually agreed upon
nominee agreement which will contain the release, indemnification and
reimbursement provisions set forth in this Section 12.5 and will further
provide that, with respect to any Assets affected thereby, Seller shall act as
Buyer's nominee but shall be authorized to act only upon and in accordance with
Buyer's specific written instructions and Seller shall have no authority,
responsibility or discretion to perform any tasks or functions with respect to
such Assets other than those which are purely administrative or ministerial in
nature, unless otherwise specifically requested and authorized by Buyer in
writing.
12.6 Royalty Accounts. Seller shall fund and pay over to Buyer at
Closing the Royalty Accounts existing with respect to Seller-operated Subject
Interests or any other Subject Interests as to which Seller is responsible for
the disbursement of the sales proceeds of Hydrocarbon production to the persons
entitled thereto. At Closing, Buyer assumes the obligation to correctly,
properly and timely disburse to the persons entitled thereto all monies
comprising the Royalty Accounts.
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ARTICLE XIII.
SETTLEMENT OF PRORATIONS
13.1 Accounting. At least five (5) business days prior to Closing,
Seller shall furnish Buyer with an estimated accounting showing in reasonable
detail the prorating of any amounts described in and subject to Article XII of
this Agreement. If pursuant to such estimated accounting either Seller or
Buyer shall owe any obligation to the other which is not included in the
reimbursements under Section 3.2, then the Purchase Price paid at Closing shall
be further adjusted to reflect such charges and credits which are necessary to
accomplish such adjustment. Promptly after the Closing Date (but not later
than one hundred twenty (120) days thereafter), Seller shall furnish Buyer with
a final accounting showing in reasonable detail the prorating of any amounts
described in and subject to Article XII hereof.
13.2 Settlement of Disputes. If within thirty (30) days after
Seller furnishes such final accounting to Buyer, Buyer and Seller are unable to
agree on such final accounting or the adjustments provided for in Section 3.2
hereof, then either Seller or Buyer may submit such proration or allocation
dispute to an accounting firm of national repute (other than Ernst & Young, LLP
or any accounting firm engaged by Buyer or Seller within three (3) years prior
to the date of this Agreement) to be mutually agreed upon by Buyer and Seller.
The determination made as to such proration or allocation by such accounting
firm shall be final and binding upon Seller and Buyer. Final settlement shall
be made within ten (10) business days following agreement by the Buyer and
Seller or final determination by said accounting firm. All determinations and
adjustments with respect to allocating items to the periods before or after the
Effective Time shall be in accordance with GAAP. The fees charged by said
accounting firm for making determinations under Section 3.2 or this Section
13.2 shall be paid one-half (1/2) by Buyer and one-half (1/2) by Seller.
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ARTICLE XIV.
ENVIRONMENTAL
14.1 Availability of Data to Buyer: The Assets which are the
subject of this Agreement have been utilized by Seller for the purposes of
exploration, development and production of oil and gas, for related oilfield
operations and possibly for the storage and disposal of waste materials or
hazardous substances. Seller shall make available to Buyer, during the
environmental assessment period described in Section 14.3 below, Seller's
historical files regarding the foregoing operations, to the extent available
and to the extent Seller is authorized to disclose same (excepting documents
subject to confidentiality restrictions or legal privilege, and also excepting
any proprietary interpretative data).
14.2 Spills and NORM: Buyer acknowledges that in the past there
may have been spills of wastes, crude oil, produced water, or other materials
(including, without limitation, any toxic, hazardous or extremely hazardous
substances) onto the Lands. In addition, some production equipment may contain
asbestos and/or Naturally Occurring Radioactive Material (hereinafter referred
to as "NORM"). In this regard Buyer expressly understands that NORM may affix
or attach itself to the inside of wells, materials and equipment as scale or in
other forms, that said wells, materials and equipment located on the Lands or
included in the Assets described herein may contain NORM and that NORM-
containing material may have been buried or otherwise disposed of on the Lands.
Buyer also expressly understands that special procedures may be required for
the remediation, removal, transportation and disposal of asbestos, NORM or
other materials from the Assets and Lands where such material may be found and
that Buyer assumes all liability for or in connection with the assessment,
containment, removal, remediation, transportation and disposal of any such
materials, in accordance with all past, present or future applicable laws,
rules, regulations and other requirements of any governmental or judicial
entities having jurisdiction and also with the terms and conditions of all
applicable leases and other contracts. Subject in all respects to Buyer's
obligation to indemnify Seller pursuant to Sections 14.4 and 14.6 of this
Agreement, nothing in this Section 14.2 shall be deemed to be an admission by
Buyer or Seller in favor of a person or entity not a party to this
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Agreement or a governmental agency as to the actual existence of NORM, asbestos
or similar materials on the Lands.
14.3 Access to Conduct Assessment: Buyer shall have the right for
a period of up to forty-five (45) days after execution of this Agreement by
both parties, but ending five days prior to Closing, to conduct an
environmental assessment of the Assets, at its own risk and expense.
Seller will provide Buyer (and its representatives) with
reasonable access to the Assets operated by Seller to conduct the environmental
assessment. Seller will use reasonable endeavors to assist Buyer in gaining
access to Assets not operated by Seller. Buyer shall provide Seller three days
written notice of a desired date(s) for such assessment, the proposed
locations, and the anticipated scope of any testing or other activities.
Seller shall have the right to be present during any assessment and, if any
testing is conducted, Seller may require splitting of all samples. Buyer shall
provide Seller copies of all reports, results, data and analyses in connection
therewith, within three days of Buyer's receipt of same.
BUYER AGREES TO RELEASE, INDEMNIFY, DEFEND AND HOLD SELLER
HARMLESS FROM ANY CLAIM, CAUSE OF ACTION, JUDGMENT, LIABILITY, LOSS, DAMAGE OR
OTHER COST WHATSOEVER BROUGHT BY OR IN FAVOR OF ANY PERSON FOR INJURY, ILLNESS
OR DEATH, DAMAGE TO OR LOSS OF PROPERTY, FOR DAMAGE OR HARM TO THE ENVIRONMENT
OR FOR ANY OTHER MATTER CAUSED BY BUYER'S ACCESS TO THE LANDS OR THE
ENVIRONMENTAL ASSESSMENT OR TESTING THEREOF.
14.4 "As Is, Where Is" Purchase: Buyer shall acquire the Assets
(including Assets for which a notice was given under Section 14.4 above) in an
"AS IS, WHERE IS" condition and shall assume all risks that the Assets may
contain waste materials (whether toxic, hazardous, extremely hazardous or
otherwise) or other adverse physical conditions, including, but not limited to,
the presence of unknown abandoned oil and gas wells, water wells, sumps, pits,
pipelines or other waste or spill sites which may not have been revealed by
Buyer's investigation. Except as may be specifically provided for in Section
14.7 hereof, on and after
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the Effective Time, all responsibility and liability related to all such
conditions, whether known or unknown, fixed or contingent, will be transferred
from Seller to Buyer.
14.5 Disposal of Materials, Substances and Wastes: From and after
the Closing Date, Buyer shall properly handle, remove, transport and dispose of
any material, substance or waste (whether toxic, hazardous, extremely hazardous
or otherwise) from the Assets or Lands (including, but not limited to, produced
water, drilling fluids and other associated wastes), whether present before or
after the Effective Time, in accordance with applicable local, state and
federal laws and regulations. To the extent that the Lands are not sold in fee
to Buyer, Buyer shall keep records of the types, amounts and location of
materials, substances and wastes which are transported, handled, discharged,
released or disposed onsite and offsite. When and if any lease, an interest in
which has been assigned pursuant to this Agreement, is terminated, Buyer shall
take whatever additional testing, assessment, closure, reporting or remedial
action with respect to the Assets or Lands as is necessary to meet any local,
state or federal requirements directed at protecting human health or the
environment in effect at that time, and any other action as necessary to
restore the Lands or Assets to their original condition.
14.6 BUYER'S INDEMNITY: (a) SUBJECT TO SECTION 14.7, BUYER SHALL
INDEMNIFY, HOLD HARMLESS, RELEASE AND DEFEND SELLER FROM AND AGAINST ALL
DAMAGES, LOSSES, CLAIMS, DEMANDS, CAUSES OF ACTION, JUDGMENTS AND OTHER COSTS
(INCLUDING BUT NOT LIMITED TO ANY CIVIL FINES, PENALTIES, COSTS OF ASSESSMENT,
CLEAN-UP, REMOVAL AND REMEDIATION OF POLLUTION OR CONTAMINATION, AND EXPENSES
FOR THE MODIFICATION, REPAIR OR REPLACEMENT OF FACILITIES ON THE LANDS) BROUGHT
BY ANY AND ALL PERSONS AND ANY AGENCY OR OTHER BODY OF FEDERAL, STATE OR LOCAL
GOVERNMENT, ON ACCOUNT OF ANY PERSONAL INJURY, ILLNESS OR DEATH, ANY DAMAGE TO,
DESTRUCTION OR LOSS OF PROPERTY, AND ANY CONTAMINATION OR POLLUTION OF NATURAL
RESOURCES (INCLUDING SOIL, AIR, SURFACE WATER OR GROUNDWATER) TO THE EXTENT ANY
OF THE FOREGOING DIRECTLY OR INDIRECTLY IS CAUSED BY OR OTHERWISE INVOLVES ANY
ENVIRONMENTAL CONDITION OF THE ASSETS OR
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LANDS, REGARDLESS OF WHEN CREATED OR ARISING, INCLUDING, BUT NOT LIMITED TO,
THE PRESENCE, DISPOSAL OR RELEASE OF ANY MATERIAL (WHETHER HAZARDOUS, EXTREMELY
HAZARDOUS, TOXIC OR OTHERWISE) OF ANY KIND IN, ON OR UNDER THE ASSETS OR THE
LANDS.
(b) BUYER'S INDEMNIFICATION OBLIGATIONS SHALL EXTEND TO
AND INCLUDE, BUT NOT BE LIMITED TO (I) THE NEGLIGENCE OR OTHER FAULT OF BUYER
AND THIRD PARTIES, WHETHER SUCH NEGLIGENCE IS ACTIVE OR PASSIVE, GROSS, JOINT,
SOLE OR CONCURRENT, (II) BUYER'S STRICT LIABILITY, AND (III) BUYER'S
LIABILITIES OR OBLIGATIONS UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED (42 U.S.C. Sections 9601 ET.
SEQ.), THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976 (42 U.S.C. Section
6901 ET. SEQ.), THE CLEAN WATER ACT (33 U.S.C. Sections 466 ET. SEQ.), THE
SAFE DRINKING WATER ACT (14 U.S.C. Sections 1401-1450), THE HAZARDOUS MATERIALS
TRANSPORTATION ACT (49 U.S.C. Sections 1801 ET. SEQ.), THE TOXIC SUBSTANCES
CONTROL ACT (15 U.S.C. Sections 2601-2629), THE CLEAN AIR ACT (42 U.S.C.
Section 7401 ET. SEQ.) AS AMENDED, THE CLEAN AIR ACT AMENDMENTS OF 1990 AND ALL
STATE AND LOCAL LAWS AND ANY REPLACEMENT OR SUCCESSOR LEGISLATION OR REGULATION
THERETO. THIS INDEMNIFICATION SHALL BE IN ADDITION TO ANY OTHER INDEMNITY
PROVISIONS CONTAINED IN THIS AGREEMENT, AND IT IS EXPRESSLY UNDERSTOOD AND
AGREED THAT ANY TERMS OF THIS ARTICLE SHALL CONTROL OVER ANY CONFLICTING OR
CONTRADICTING TERMS OR PROVISIONS CONTAINED IN THIS AGREEMENT.
14.7 SELLER'S INDEMNITY: (a) SUBJECT TO THE TERMS AND PROVISIONS
OF SECTION 17.8 OF THIS AGREEMENT, SELLER SHALL INDEMNIFY, HOLD HARMLESS,
RELEASE AND DEFEND BUYER FROM AND AGAINST ALL DAMAGES, LOSSES, CLAIMS, DEMANDS,
CAUSES OF ACTION, JUDGMENTS AND OTHER COSTS (INCLUDING BUT NOT LIMITED TO ANY
CIVIL FINES, PENALTIES, COSTS OF ASSESSMENT, CLEAN-UP, REMOVAL AND REMEDIATION
OF POLLUTION OR CONTAMINATION, AND EXPENSES FOR THE MODIFICATION, REPAIR OR
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REPLACEMENT OF FACILITIES ON THE LANDS) BROUGHT BY ANY AND ALL PERSONS AND ANY
AGENCY OR OTHER BODY OF FEDERAL, STATE OR LOCAL GOVERNMENT, ON ACCOUNT OF ANY
PERSONAL INJURY, ILLNESS OR DEATH, ANY DAMAGE TO, DESTRUCTION OR LOSS OF
PROPERTY, AND ANY CONTAMINATION OR POLLUTION OF NATURAL RESOURCES (INCLUDING
SOIL, AIR, SURFACE WATER OR GROUNDWATER) TO THE EXTENT ANY OF THE FOREGOING
DIRECTLY OR INDIRECTLY IS CAUSED BY OR OTHERWISE INVOLVES ANY ENVIRONMENTAL
CONDITION OF THE ASSETS OR LANDS, CREATED OR EXISTING BEFORE THE EFFECTIVE
TIME, AND WHICH CONSTITUTES A VIOLATION OF APPLICABLE ENVIRONMENTAL LAWS IN
EFFECT AS OF THE EFFECTIVE TIME, INCLUDING, BUT NOT LIMITED TO, THE PRESENCE,
DISPOSAL OR RELEASE OF ANY MATERIAL (WHETHER HAZARDOUS, EXTREMELY HAZARDOUS,
TOXIC OR OTHERWISE) OF ANY KIND IN, ON OR UNDER THE ASSETS OR THE LANDS.
(b) SELLER'S INDEMNIFICATION OBLIGATIONS SHALL EXTEND TO
AND INCLUDE, BUT NOT BE LIMITED TO (I) THE NEGLIGENCE OR OTHER FAULT OF SELLER
(WHERE SELLER IS THE OPERATOR OF THE ASSET) AND THIRD PARTIES, WHETHER SUCH
NEGLIGENCE IS ACTIVE OR PASSIVE, GROSS, JOINT, SOLE OR CONCURRENT, (II)
SELLER'S STRICT LIABILITY, AND (III) SELLER'S LIABILITIES OR OBLIGATIONS UNDER
THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF
1980, AS AMENDED (42 U.S.C. Sections 9601 ET. SEQ.), THE RESOURCE CONSERVATION
AND RECOVERY ACT OF 1976 (42 U.S.C. Section 6901 ET. SEQ.), THE CLEAN WATER ACT
(33 U.S.C. Sections 466 ET. SEQ.), THE SAFE DRINKING WATER ACT (14 U.S.C.
Sections 1401- 1450), THE HAZARDOUS MATERIALS TRANSPORTATION ACT (49 U.S.C.
Sections 1801 ET. SEQ.), THE TOXIC SUBSTANCES CONTROL ACT (15 U.S.C. Sections
2601-2629), THE CLEAN AIR ACT (42 U.S.C. Section 7401 ET. SEQ.) AS AMENDED, THE
CLEAN AIR ACT AMENDMENTS OF 1990 AND ALL STATE AND LOCAL LAWS, AS IN EFFECT AS
OF THE DATE OF THIS AGREEMENT. THIS INDEMNIFICATION SHALL BE IN ADDITION TO
ANY OTHER INDEMNITY PROVISIONS CONTAINED IN THIS AGREEMENT, AND IT IS EXPRESSLY
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UNDERSTOOD AND AGREED THAT ANY TERMS OF THIS ARTICLE SHALL CONTROL OVER ANY
CONFLICTING OR CONTRADICTING TERMS OR PROVISIONS CONTAINED IN THIS AGREEMENT.
ARTICLE XV.
CASUALTY LOSS AND CONDEMNATION
15.1 No Termination. (a) Buyer shall assume all risk of loss with
respect to, and any change in the condition of, the Assets from the Effective
Time until Closing for production of oil, gas and/or other hydrocarbons through
normal depletion (including the watering-out of any well, collapsed casing or
sand infiltration of any well) and the depreciation of personal property due to
ordinary wear and tear.
(b) Subject to the provisions of Section 15.2 hereof, if
after the Effective Time and prior to the Closing any part of the Assets shall
be destroyed by fire or other casualty or if any part of the Assets shall be
taken in condemnation or under the right of eminent domain or if proceedings
for such purposes shall be pending or threatened, this Agreement shall remain
in full force and effect notwithstanding any such destruction, taking or
proceeding or the threat thereof.
15.2 Proceeds and Awards. In the event of any loss described in
Section 15.1(b), Seller shall either (i) at the Closing pay to Buyer all sums
paid to Seller by reason of such destruction less any costs and expenses
incurred by Seller in collecting same, or (ii) commit, use, or apply such sums
(less any costs and expenses incurred by Seller in collecting same) to repair,
restore or replace such damaged or taken Assets. To the extent the insurance
proceeds, condemnation awards or other payments are not committed, used or
applied by Seller prior to the Closing Date to repair, restore or replace such
damaged or taken Assets, Seller shall at the Closing pay to Buyer all sums paid
to Seller by reason of such destruction or taking, less any costs and expenses
incurred by Seller in collecting same. In addition and to the extent such
proceeds,
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awards or payments have not been committed, used or applied by Seller in
repair, restoration or replacement as aforesaid, Seller shall assign, transfer
and set over unto Buyer, without recourse against Seller, all of the right,
title and interest of Seller in and to any claims against third parties with
respect to the event or circumstance causing such loss and any unpaid insurance
proceeds, condemnation awards or other payments arising out of such destruction
or taking, less any costs and expenses incurred by Seller in collecting same.
Any such funds which have been committed by Seller for repair, restoration or
replacement as aforesaid shall be paid by Seller for such purposes or, at
Seller's option, delivered to Buyer upon Seller's receipt from Buyer of
adequate assurance and indemnity from Buyer that Seller shall incur no
liability or expense as a result of such commitment. Notwithstanding anything
to the contrary in this Section 15.2, Seller shall not be obligated to carry or
maintain, and shall have no obligation or liability to Buyer for its failure to
carry or maintain, any insurance coverage with respect to any of the Assets,
except as required by Section 9.1(b).
ARTICLE XVI.
DEFAULT AND REMEDIES
16.1 Seller's Remedies. Upon failure of Buyer to comply herewith
by the Closing Date, as it may be extended in accordance herewith, Seller, at
its sole option, may (i) enforce specific performance or (ii) terminate this
Agreement and retain the Deposit together with any interest earned thereon, all
other remedies (except as expressly retained in Section 16.3) being expressly
waived by Seller.
16.2 Buyer's Remedies. Upon failure of Seller to comply herewith
by the Closing Date, as it may be extended in accordance herewith, Buyer, at
its sole option, may (i) enforce specific performance or (ii) terminate this
Agreement and receive back the Deposit together with any interest earned
thereon, all other remedies (except as expressly retained in Section 16.3)
being expressly waived by Buyer.
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16.3 Other Remedies. Notwithstanding the foregoing, termination of
this Agreement shall not prejudice or impair Buyer's obligations under Sections
6.3 (and the Confidentiality Agreement referenced therein), 6.4 and 9.2(b) and
such other portions of this Agreement as are necessary to the enforcement and
construction of Sections 6.3, 6.4 and 9.2(b). The prevailing party in any
legal proceeding brought under or to enforce this Agreement shall be
additionally entitled to recover court costs and reasonable attorney's fees
from the non-prevailing party.
ARTICLE XVII.
MISCELLANEOUS
17.1 Certain Governmental Consents. At the Closing, Seller shall
execute and deliver to Buyer such assignments of Federal and State leases as
require consent to assignment, on the forms required by the governmental agency
having jurisdiction thereof. Seller and Buyer will use reasonable efforts
after Closing to obtain approval of such assignments.
17.2 Antitrust Laws. This Agreement is subject in all respects to
and conditioned upon compliance by the parties with Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "Hart-Scott-Rodino
Act"), and rules and regulations promulgated pursuant thereto, to the extent
that said act, rules and regulations are applicable to the transaction or
transactions contemplated by this Agreement. Buyer and Seller agree to make
such filings with and provide such information to the Federal Trade Commission
and the Department of Justice with respect to the transactions contemplated by
this Agreement as are required in connection with the Hart-Scott-Rodino Act
sufficiently in advance of the Closing Date to permit the lapse of the normal
waiting periods prescribed in connection with the Hart-Scott-Rodino Act prior
to the Closing Date.
17.3 Public Announcements. The parties hereto agree that prior to
making any public announcement or statement with respect to the transaction
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other party
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hereto and exercise reasonable efforts to (i) agree upon the text of a joint
public announcement or statement to be made by both of such parties or (ii)
obtain approval of the other party hereto to the text of a public announcement
or statement to be made solely by Seller or Buyer, as the case may be. Nothing
contained in this paragraph shall be construed to require either party to
obtain approval of the other party hereto to disclose information with respect
to the transaction contemplated by this Agreement to any state or federal
governmental authority or agency to the extent required by applicable law or by
any applicable rules, regulations or orders of any governmental authority or
agency having jurisdiction or necessary to comply with disclosure requirements
of the New York Stock Exchange and applicable securities laws.
17.4 Filing and Recording of Assignments, etc. Buyer shall be
solely responsible for all filings and recording of assignments and other
documents related to the Assets and for all fees connected therewith, and upon
request Buyer shall advise Seller of the pertinent recording data. Seller
shall not be responsible for any loss to Buyer because of Buyer's failure to
file or record documents correctly or promptly. Buyer shall promptly file all
appropriate forms, declarations or bonds with Federal, State and Indian
agencies relative to its assumption of operations and Seller shall cooperate
with Buyer in connection with such filings.
17.5 Assumption and Indemnity. Except with respect to that certain
litigation styled, Agnes Agor and Jerry Wade Ralston, Trustees of the Revocable
Inter Vivos Trust of Agnes Agor dated 11/5/90; Arlene Gore and Wayne Gore, wife
and husband; and Marjorie Deaton, Plaintiffs vs. Amerada Hess Corporation, a
Delaware corporation, Defendant, Case No. CJ96-32, In the District Court of
Dewey County, State of Oklahoma (hereafter referred to as the "Agor
Litigation"), Buyer shall assume all risk of loss with respect to any change in
the condition of the Assets from the Effective Time until Closing (EVEN THOUGH
DUE IN WHOLE OR IN PART TO SELLER'S NEGLIGENCE, except with respect to Seller's
gross negligence and willful misconduct). Buyer agrees to assume and pay,
perform, fulfill and discharge all Assumed Obligations, and agrees to
indemnify, defend and hold Seller harmless from and against any and all claims,
losses, damages, costs, expenses, causes of action or judgments of any kind or
character with respect to all liabilities and obligations or alleged or
threatened liabilities and obligations attributable to or arising out of the
Assumed Obligations,
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including, without limitation, any interest, penalty, reasonable attorney's
fees and other costs and expenses incurred in connection therewith or the
defense thereof. To the extent not included in Assumed Obligations, Seller
agrees to pay, perform, fulfill and discharge all costs, expenses and
liabilities incurred by Seller with respect to the ownership or operation of
Seller's interest in the Assets and accruing prior to the Effective Time,
including, without limitation, the Agor Litigation and Seller's failure to
properly account for and pay lawfully owing royalties attributable to the
Assets, and agrees to indemnify, defend and hold Buyer harmless from and
against any and all claims, losses, damages, costs, expenses, causes of action
or judgments of any kind or character with respect to all liabilities and
obligations or alleged or threatened liabilities and obligations attributable
to or arising out of such obligations of Seller, including, without limitation,
any interest, penalty, reasonable attorney's fees and other costs and expenses
incurred in connection therewith or the defense thereof. For example, with
respect to operations committed to by Seller and commenced prior to the
Effective Time, but not completed until after the Effective Time, the costs
accruing with respect thereto prior to the Effective Time shall be the
obligation of Seller and the costs accruing with respect thereto after the
Effective Time shall be the obligation of Buyer. Without limiting the parties'
respective representations in Sections 4.1(f) and 5.1(f) hereof, each party
hereby agrees to indemnify and hold the other harmless from and against any
claim for a brokerage or finder's fee or commission in connection with this
Agreement or the transactions contemplated by this Agreement to the extent such
claim arises from or is attributable to the actions of such indemnifying party,
including, without limitation, any and all losses, damages, attorney's fees,
costs and expenses of any kind or character arising out of or incurred in
connection with any such claim or defending against the same.
17.6 Further Assurances and Records.
(a) After the Closing, each of the parties will execute,
acknowledge and deliver to the other such further instruments, and take such
other action, as may be reasonably requested in order to more effectively
assure to said party all of the respective properties, rights, titles,
interests, estates, and privileges intended to be assigned, delivered or
inuring to the benefit of such party in consummation of the transactions
contemplated hereby.
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(b) Prior to Closing, Seller may, at Seller's expense
make and retain copies of any or all files or Basic Documents, the originals of
which are to be delivered to Buyer.
(c) Buyer agrees that, as soon as practicable after the
Closing, it will remove or cause to be removed the names and marks used by
Seller and all variations and derivatives thereof and logos relating thereto
from the Assets and will not thereafter make any use whatsoever of such names,
marks and logos.
(d) To the extent not obtained or satisfied as of
Closing, Seller agrees to continue to use reasonable efforts, but without any
obligation to incur any cost or expense in connection therewith, and to
cooperate with Buyer's efforts to obtain for Buyer (i) access to files, records
and data relating to the Assets in the possession of third parties; (ii) access
to wells constituting a part of the Assets operated by third parties for
purposes of inspecting same; and (iii) the waiver of confidentiality or other
restrictions on the review by and/or transfer to Buyer of seismic, geophysical,
engineering or other data pertaining to the Subject Interests.
17.7 Limitations. The express representations and warranties of
Seller contained in this Agreement are exclusive and are in lieu of all other
representations and warranties, express, implied or statutory, including
without limitation any representation or warranty with respect to title to the
Assets or the quality, quantity or volume of the reserves of oil, gas or other
Hydrocarbons in or under the Subject Interests and unless specifically provided
otherwise in this Agreement, such express representations and warranties of
Seller shall terminate at Closing and be of no further force and effect. The
items of personal property, equipment, fixtures and appurtenances conveyed as
part of the Assets are sold hereunder "AS IS, WHERE IS" and no warranties or
representations of any kind or character, express or implied, including any
warranty of quality, merchantability, fitness for a particular purpose or
condition, are given by or on behalf of Seller. THE WARRANTIES OF SELLER
CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, AND BUYER HEREBY WAIVES ALL WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE OR CONDITION.
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BUYER ACKNOWLEDGES THAT SELLER HAS NOT MADE, AND SELLER HEREBY EXPRESSLY
DISCLAIMS AND NEGATES, AND BUYER HEREBY EXPRESSLY WAIVES, ANY REPRESENTATION OR
WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE RELATING TO
(a) PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE RATES, GAS BALANCING
INFORMATION OR THE QUALITY, QUANTITY OR VOLUME OF THE RESERVES OF HYDROCARBONS,
IF ANY, ATTRIBUTABLE TO THE ASSETS, (b) THE ACCURACY, COMPLETENESS OR
MATERIALITY OF ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL) NOW,
HERETOFORE OR HEREAFTER FURNISHED TO BUYER BY OR ON BEHALF OF SELLER, AND (c)
EXCEPT AS SET FORTH IN SECTION 4.1(l) HEREOF, THE ENVIRONMENTAL CONDITION OF
THE ASSETS. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, SELLER
EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER HEREBY WAIVES, AS TO PERSONAL,
MOVABLE AND IMMOVABLE PROPERTY, EQUIPMENT AND FIXTURES CONSTITUTING A PART OF
THE ASSETS (i) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (ii) ANY
IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (iii) ANY
IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS,
(iv) ANY RIGHTS OF PURCHASERS UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF
CONSIDERATION OR RETURN OF THE PURCHASE PRICE, (v) ANY IMPLIED OR EXPRESS
WARRANTY OF FREEDOM FROM VICES OR DEFECTS, WHETHER KNOWN OR UNKNOWN, AND (vi)
ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER APPLICABLE LAW, AND (vii) ANY
IMPLIED OR, EXCEPT AS SET FORTH IN SECTION 4.1(l) HEREOF, EXPRESS WARRANTY,
REGARDING ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR
PROTECTION OF THE ENVIRONMENT OR HEALTH, IT BEING THE EXPRESS INTENTION OF
BUYER AND SELLER THAT (EXCEPT TO THE EXTENT EXPRESSLY PROVIDED IN ARTICLE IV)
THE REAL PROPERTY, IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY, FIXTURES AND PERSONAL PROPERTY SHALL BE CONVEYED TO BUYER AS IS AND
IN THEIR PRESENT CONDITION AND STATE OF REPAIR, AND BUYER REPRESENTS TO SELLER
THAT BUYER HAS MADE
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OR CAUSED TO BE MADE SUCH INSPECTIONS WITH RESPECT TO THE REAL PROPERTY,
IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY, MACHINERY, FIXTURES
AND PERSONAL PROPERTY AS BUYER DEEMS APPROPRIATE AND BUYER WILL ACCEPT THE REAL
PROPERTY, IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY, FIXTURES AND PERSONAL PROPERTY AS IS, IN THEIR PRESENT CONDITION AND
STATE OF REPAIR, IT BEING THE EXPRESS INTENTION OF BOTH BUYER AND SELLER THAT
THE PERSONAL PROPERTY, EQUIPMENT AND FIXTURES INCLUDED WITHIN THE ASSETS ARE
HEREBY CONVEYED TO BUYER IN THEIR PRESENT CONDITION AND STATE OF REPAIR, "AS
IS" AND "WHERE IS" WITH ALL FAULTS, AND THAT BUYER HAS MADE OR CAUSED TO BE
MADE SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE. SELLER AND BUYER AGREE THAT,
TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE DISCLAIMERS OF
CERTAIN WARRANTIES CONTAINED IN THIS SECTION ARE "CONSPICUOUS" DISCLAIMERS FOR
THE PURPOSES OF ANY APPLICABLE LAW, RULE OR ORDER.
17.8 Survival. No representation, warranty, covenant or agreement
made herein shall survive the Closing except as provided in this Section 17.8.
It is expressly agreed that the terms and provisions of Articles I, III, V,
VIII, XII, XIII, XV, XVI, and XVII and Sections 4.1(a) through 4.1(f),
inclusive, 4.1(j), 6.3, 6.4, 7.1, 14.1, 14.2, 14.3, 14.4, 14.5 and 14.6 shall
survive the Closing. The representations of Seller in Section 4.1(l) shall
survive Closing but will expire on the second anniversary date after Closing.
The terms and provisions of Section 14.7 shall survive Closing but will expire
(and upon expiration Seller shall have no obligation thereunder) on the second
anniversary date of the Closing Date, except with respect to claims in regard
to which Buyer is entitled to indemnity under Section 14.7, and of which Seller
has received written notice from Buyer prior to the second anniversary date of
the Closing Date.
17.9 Gas Imbalance: Buyer acknowledges and agrees to the following
regarding gas imbalances as of the Effective Time on any of the Assets to be
transferred pursuant to this Agreement:
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(a) Gas Underproduction: In the event Seller is
underproduced as to any wells located on the Lands or if any amounts are owed
Seller with respect to any pipeline, transportation or processing imbalances,
Buyer agrees not to hold Seller liable for such underproduction or such
amounts. Seller, however, agrees to assign to Buyer all of its contractual
rights to make up such underproduction, and to recover all amounts owed.
(b) Gas Overproduction: In the event Seller is
overproduced as to any wells located on the Lands or if any amounts are due
from Seller with respect to any pipeline, transportation or processing
imbalances, Buyer acknowledges and agrees that its share of gas from any such
overproduced wells may at some point be curtailed by underproduced working
interest owners and it may be required to satisfy, in kind or in value, such
third party transporters and processors for such imbalances. Seller shall not
be liable to Buyer in the event such curtailment occurs or satisfaction is
required.
(c) Gas Balancing Statements: Seller has furnished Buyer
with statements in its possession showing the most current status of the
beforementioned imbalances and these statements are summarized in Exhibit "H".
(d) Future Liability: From and after the Effective Time,
any and all benefits, obligations and liabilities associated with such
imbalance accounts shall accrue to and be the responsibility of Buyer. Buyer
shall assume Seller's overproduced or underproduced position in the Assets as
of the Effective Time, including but not limited to Buyer's responsibility for
payment of royalties on the volume of such gas which Seller took in excess of
its entitlement and any obligation to balance whether in cash or in kind.
Except as provided in Section 17.9(e), there shall be no adjustment to the
Purchase Price as a result of the imbalance accounts attributable to the
Assets.
(e) Adjustment to Purchase Price: In the event either
Seller or Buyer determines no later than sixty (60) days after the Closing Date
that a "material" error was made with the imbalance account set forth in
Exhibit "H" or that a material change (either increase or decrease) exists
between the imbalance represented in Exhibit "H" and the imbalance as of
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the Effective Time in such an account, the Purchase Price shall be adjusted to
compensate for the economic impact of the error or change. Such an error or
change is material only if the total difference in the value of the imbalance
accounts as set forth in Exhibit "H" and the correct or changed imbalance
accounts exceeds ten percent (10%) of the value of the imbalance accounts as
set forth in Exhibit "H", but in no event less than $200,000.00. For the
purposes of this Section only, the value of such an imbalance account
adjustment shall be calculated by multiplying the applicable volume of gas by
$1.029 per Mcf (thousand cubic feet) and then making appropriate adjustments
for royalties and severance taxes and similar taxes, if any, actually paid on
such amount or which will be required to be paid. The Purchase Price shall be
reduced or increased by the adjustments for such gas imbalance changes on the
Closing Date for material errors discovered prior to the Closing Date.
Adjustments for material errors discovered after the Closing Date shall be
included in a final settlement statement as provided herein.
17.10 Notices. All notices authorized or required by any of the
provisions of this Agreement, unless otherwise specifically provided, shall be
in writing and delivered in person or by United States mail, courier service,
telegram, telex, telecopier, or any other form of facsimile, postage or charges
prepaid, and addressed to the parties at the addresses set forth below:
If to Seller: Amerada Hess Corporation
One Allen Center, 500 Dallas
Houston, Texas 77002
Attention: D. G. Stevenson
Fax Number: (713) 609-4463
If to Buyer: DLB Oil & Gas, Inc.
1601 N.W. Expressway
Suite 700
Oklahoma City, Oklahoma 73118-1401
Attention: Mark Liddell
Fax Number: (405) 848-9449
Any party may, by written notice so delivered to the other, change the address
to which delivery shall thereafter be made.
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17.11 Incidental Expenses. Buyer shall bear and pay (i) any and all
Federal, State or local Transfer Taxes as defined in Section 12.2(b) hereof
incident to the transfer, assignment or other conveyance of the Assets to
Buyer, and (ii) all costs or fees required to obtain consent to assign any
Federal, State or Indian leases included in the Assets. Each party shall bear
its own respective expenses incurred in connection with the Closing of this
transaction, including its own consultants' fees, attorneys' fees, accountants'
fees, and other similar costs and expenses.
17.12 Entire Agreement. Except for the Confidentiality Agreement
referenced in Section 6.3, this Agreement embodies the entire agreement between
the parties (superseding all prior agreements, arrangements and understandings
related to the subject matter hereof), and may be supplemented, altered,
amended, modified or revoked by writing only, signed by all of the parties
hereto. No supplement, amendment, modification, waiver or termination of this
Agreement shall be binding unless in writing and executed by both parties
hereto. The headings herein are for convenience only and shall have no
significance in the interpretation hereof.
17.13 Governing Law. THIS AGREEMENT AND OTHER DOCUMENTS DELIVERED
PURSUANT TO THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE
GOVERNED AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
OKLAHOMA, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICT OF LAWS.
17.14 Exhibits. All Exhibits and Schedules hereto which are
referred to herein are hereby made a part hereof and incorporated herein by
reference.
17.15 Prime Rate: References to "prime rate" shall mean a rate per
annum equal to the lesser of (a) a varying rate per annum that is equal to the
interest rate publicly quoted by CitiBank, N.A. from time to time as its prime
commercial or similar reference interest rate, with adjustments in that varying
rate to be made on the same date as any change in that rate, and (b) the
maximum rate permitted by applicable law.
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17.16 Certain Terms. As used in this Agreement, the term
"knowledge" means actual knowledge of any fact, circumstance or condition by
the officers or management employees of the party involved at a supervisory or
higher level, but does not include (i) knowledge imputed to the party involved
by reason of knowledge of or notice to any person, firm or corporation other
than its officers or employees at a supervisory or higher level or (ii)
knowledge deemed to have been constructively given by reason of any filing,
registration or recording of any document or instrument in any public record or
with any governmental entity. As used in this Agreement, the term "day" means
any calendar day, and the term "business day" means any day exclusive of
Saturdays, Sundays and national holidays.
17.17 Counterparts. This Agreement may be executed in any number of
counterparts, and each and every counterpart shall be deemed for all purposes
one (1) agreement.
17.18 Waiver. Any of the terms, provisions, covenants,
representations, warranties or conditions hereof may be waived, only by a
written instrument executed by the party waiving compliance. Except as
otherwise expressly provided in this Agreement, the failure of any party at any
time or times to require performance of any provision hereof shall in no manner
affect such party's right to enforce the same. No waiver by any party of any
condition, or of the breach of any term, provision, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach or a waiver of any other
condition or of the breach of any other term, provision, covenant,
representation or warranty.
17.19 Binding Effect; Assignment. All the terms, provisions,
covenants, representations, warranties and conditions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors; but this Agreement and the rights and
obligations hereunder shall not be assignable or delegable by any party without
the express written consent of the non-assigning or non-delegating parties.
Any assignment or delegation without such consent will be void.
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17.20 No Recordation. Without limiting any party's right to file
suit to enforce its rights under this Agreement and except as to those portions
of this Agreement set forth in the Assignment, Bill of Sale and Conveyance,
Exhibit "F", Buyer and Seller expressly covenant and agree not to record or
place of record this Agreement or any copy or memorandum hereof.
17.21 Independent Investigation. Buyer represents and acknowledges
that it is knowledgeable of the oil and gas business and of the usual and
customary practices of producers such as Seller and that it has had access to
the Assets, the offices and employees of Seller, and the books, records and
files of Seller relating to the Assets and in making the decision to enter into
this Agreement and consummate the transactions contemplated hereby, Buyer has
relied solely on the basis of its own independent due diligence investigation
of the Assets and upon the representations and warranties made in Article IV.
Accordingly, Buyer acknowledges that Seller has not made, and Seller hereby
expressly disclaims and negates any representation or warranty (other than
those express representations and warranties made in Article IV), express,
implied, at common law, by statute or otherwise, relating to the Assets.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
AMERADA HESS CORPORATION
By: /s/ J. BARCLAY COLLINS
-------------------------------------
Name: J. Barclay Collins
Title: Executive Vice President &
General Counsel
"SELLER"
DLB OIL & GAS, INC.
By: /s/ MARK LIDDELL
----------------------------------
Name: Mark Liddell
Title: President
"BUYER"
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LIST OF EXHIBITS AND SCHEDULES
TO
AGREEMENT FOR PURCHASE AND SALE
(omitted from Form 8-K report)
EXH. NO. EXHIBIT NAME
- -------- ------------
A Net Revenue and Working Interests in Subject Interests
A-1 Seller's Subject Interests
A-2 Equipment Inventory
B Purchase Price Allocation
C Preferential Rights and Consents
D Production Payments and Certain Agreements
E Litigation and Other Liabilities
F Assignment, Bill of Sale and Conveyance
G Advance Payments and Prepayments
H Overproduction and Underproduction
I Excluded Assets
J Oil and Gas Purchase and Processing Agreements