<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 17, 1999
QUICKSILVER RESOURCES INC.
(Exact name of registrant as specified in its charter)
Delaware 001-14837 75-2756163
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1619 Pennsylvania Avenue, Fort Worth, Texas 76104
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 877-3151
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 17, 1999, Quicksilver Resources Inc. ("Registrant") and Unocal
Corporation's Spirit Energy 76 unit ("Unocal") completed the previously
announced purchase by Registrant from Unocal of substantially all of Unocal's
natural gas and crude oil assets in Michigan. The assets purchased,
consisting of ownership interests in the Garfield unit and the Beaver Creek
unit, include approximately 20,000 net leasehold acres.
The purchase price for the Unocal acquisition was $30 million,
consisting of $27 million in cash and 404,381 unregistered shares of the
Registrant's common stock. The stock component of the purchase price was
placed in escrow and will be distributed to Unocal over a three year period,
subject to downward adjustment in correlation to certain costs, expenses, and
liabilities incurred during this period. The purchase price was determined
in an arms length negotiation with Unocal following a competitive bid
process. The Registrant financed the cash portion of the purchase price with
$27 million of borrowings under a bank credit facility, which permits the
Registrant to obtain revolving credit loans and to issue letters of credit
from time to time in an aggregate amount not to exceed the lesser of a
borrowing base limitation or $200 million. Lenders under the bank credit
facility include NationsBank, N.A., Frost National Bank, and Paribas.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
As of the date of filing of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the financial statements required
by this Item 7(a). In accordance with Item 7(a)(4) of Form 8-K, such
financial statements shall be filed by amendment to this Form 8-K no later
than 60 days after June 1, 1999.
(b) Pro Forma Financial Information.
As of the date of filing of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the pro forma financial
information required by this Item 7(b). In accordance with Item 7(b) of Form
8-K, such financial statements shall be filed by amendment to this Form 8-K
no later than 60 days after June 1, 1999.
(c) Exhibits.
2.1 Purchase and Sale Agreement, dated March 31, 1999, between Union
Oil Company of California and Registrant.
2.2 Amendment to Purchase and Sale Agreement, dated May 17, 1999,
between Union Oil Company of California and Registrant.
99.1 Press Release, dated May 18, 1999.
2
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
QUICKSILVER RESOURCES INC.
By: /s/ Glenn M. Darden
-----------------------------------------
Glenn M. Darden
President and Chief Operating Officer
Date: May 28, 1999
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
2.1 Purchase and Sale Agreement, dated March 31, 1999, between
Union Oil Company of California and Registrant.
2.2 Amendment to Purchase and Sale Agreement, dated May 17, 1999,
between Union Oil Company of California and Registrant.
99.1 Press Release, dated May 18, 1999.
</TABLE>
4
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EXHIBIT 2.1
UNION OIL COMPANY OF CALIFORNIA
AND
QUICKSILVER RESOURCES INC.
PURCHASE AND SALE AGREEMENT
March 31, 1999
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Schedule of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 1 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . 9
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2 - Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . 16
2.1 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . 18
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 19
2.4 Payment Procedures . . . . . . . . . . . . . . . . . . . . . 19
2.5 Adjusted Purchase Price . . . . . . . . . . . . . . . . . . . 20
2.6 Cash Settlement . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3 - Title Examination . . . . . . . . . . . . . . . . . . . . . . 21
3.1 Access to Title Information . . . . . . . . . . . . . . . . . 21
3.2 Title Defects . . . . . . . . . . . . . . . . . . . . . . . . 21
3.3 Notice of Title Defect . . . . . . . . . . . . . . . . . . . 22
3.4 Claim Value . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.5 Defect Value . . . . . . . . . . . . . . . . . . . . . . . . 22
3.6 Remedies for Title Defects . . . . . . . . . . . . . . . . . 22
3.7 Purchase Price Adjustments Threshold . . . . . . . . . . . . 23
3.8 Preferential Purchase Rights . . . . . . . . . . . . . . . . 23
3.9 Preferential Purchase Right Disputes . . . . . . . . . . . . 23
Section 4 - Environmental Matters . . . . . . . . . . . . . . . . . . . . 24
4.1 No Admission against Interest . . . . . . . . . . . . . . . . 24
4.2 Physical Condition of the Assets . . . . . . . . . . . . . . 24
4.3 Endangered Species, Critical Habitat, Wetlands,
Geologic Hazards and Flooding . . . . . . . . . . . . . . . 25
4.4 Environmental Assessments and Completion
of Environmental Due Diligence . . . . . . . . . . . . . . . 25
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4.5 Buyer's Access to Assets; Indemnification;
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.6 Assumption of Environmental Liabilities . . . . . . . . . . . 28
4.7 Qualified Claim Cost Sharing . . . . . . . . . . . . . . . . 28
4.8 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.9 Termination Due to Material Environmental
Deficiencies . . . . . . . . . . . . . . . . . . . . . . . . 29
4.10 Determination of Value . . . . . . . . . . . . . . . . . . . 29
Section 5 - Operations and Casualty Loss . . . . . . . . . . . . . . . . 31
5.1 Operations . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.2 Casualty Loss . . . . . . . . . . . . . . . . . . . . . . . . 31
5.3 Successor Operator . . . . . . . . . . . . . . . . . . . . . 32
5.4 Restrictions on Operations . . . . . . . . . . . . . . . . . 32
Section 6 - Representation and Warranties of Unocal . . . . . . . . . . . 32
6.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . 32
6.2 Authority to do Business . . . . . . . . . . . . . . . . . . 32
6.3 Binding Obligation . . . . . . . . . . . . . . . . . . . . . 33
6.4 Litigation, Suits or Claims . . . . . . . . . . . . . . . . 33
6.5 Relation to Assumed Liabilities . . . . . . . . . . . . . . . 33
6.6 Disclaimer of Warranties . . . . . . . . . . . . . . . . . . 33
6.7 Gas Entitlements . . . . . . . . . . . . . . . . . . . . . . 34
6.8 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.9 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.10 Environmental Condition of Assets . . . . . . . . . . . . . . 34
6.11 Compliance with Laws and Agreements . . . . . . . . . . . . . 35
6.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.13 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.14 Tax Partnership . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7 - Representations and Warranties of Buyer . . . . . . . . . . . 35
7.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . 35
7.2 Authority; Enforceability . . . . . . . . . . . . . . . . . . 36
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7.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.4 Litigation, Suits or Claims . . . . . . . . . . . . . . . . . 36
7.5 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.6 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.7 Investigations of Assets . . . . . . . . . . . . . . . . . . 37
7.8 No Distribution . . . . . . . . . . . . . . . . . . . . . . . 37
7.9 Resale Registration . . . . . . . . . . . . . . . . . . . . . 37
7.10 Oil and Gas Experience . . . . . . . . . . . . . . . . . . . 37
7.11 Federal Leases . . . . . . . . . . . . . . . . . . . . . . . 37
7.12 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8 - Conditions Precedent to the Obligations of Unocal . . . . . . 38
8.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 38
8.2 Buyer's Representations and Warranties True . . . . . . . . . 38
8.3 Officer's Certificate . . . . . . . . . . . . . . . . . . . . 38
8.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . 38
8.5 Pre-Closing Performance . . . . . . . . . . . . . . . . . . . 39
8.6 Authorization . . . . . . . . . . . . . . . . . . . . . . . . 39
8.7 Absence of Litigation . . . . . . . . . . . . . . . . . . . . 40
8.8 Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.9 Preferential Purchase Rights . . . . . . . . . . . . . . . . 40
8.10 Hart-Scott-Rodino Act . . . . . . . . . . . . . . . . . . . . 40
8.11 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . 40
Section 9 - Conditions Precedent to the Obligations of Buyer. . . . . . . 40
9.1 Delivery of Instruments of Transfer . . . . . . . . . . . . . 40
9.2 Unocal's Representations and Warranties True . . . . . . . . 40
9.3 Officer's Certificate . . . . . . . . . . . . . . . . . . . . 41
9.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . 41
9.5 Pre-Closing Performance . . . . . . . . . . . . . . . . . . . 41
9.6 Authorization . . . . . . . . . . . . . . . . . . . . . . . . 42
9.7 Absence of Litigation . . . . . . . . . . . . . . . . . . . . 42
9.8 Hart-Scott-Rodino Act . . . . . . . . . . . . . . . . . . . . 42
9.9 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . 42
-4-
<PAGE>
Section 10 - Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.1 Investigation and Decision . . . . . . . . . . . . . . . . . 42
10.2 Access to Information. . . . . . . . . . . . . . . . . . . . 43
10.3 Assumed Liabilities Assumed. . . . . . . . . . . . . . . . . 43
10.4 [Intentionally omitted]. . . . . . . . . . . . . . . . . . . 43
10.5 Gas Imbalance. . . . . . . . . . . . . . . . . . . . . . . . 43
10.6 Hart-Scott-Rodino Act. . . . . . . . . . . . . . . . . . . . 44
10.7 Third-Party Consents . . . . . . . . . . . . . . . . . . . . 44
10.8 Completion of Due Diligence. . . . . . . . . . . . . . . . . 45
10.9 Additional Agreements. . . . . . . . . . . . . . . . . . . . 45
10.10 Payment of Certain Expenses Due and Payable
After the Effective Date . . . . . . . . . . . . . . . . . . 45
10.11 Notification of Certain Matters. . . . . . . . . . . . . . . 45
10.12 Announcements. . . . . . . . . . . . . . . . . . . . . . . . 45
10.13 Termination of Guarantees and Other
Commitments. . . . . . . . . . . . . . . . . . . . . . . . . 46
10.14 Like Kind Exchange . . . . . . . . . . . . . . . . . . . . . 46
10.15 Access to Geologic and Geophysical Information . . . . . . . 47
Section 11 - Employee Matters . . . . . . . . . . . . . . . . . . . . . . 47
11.1 Employee List . . . . . . . . . . . . . . . . . . . . . . . 47
11.2 Job Classification . . . . . . . . . . . . . . . . . . . . . 47
11.3 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 47
11.4 Resumes . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.5 Hired Employee List . . . . . . . . . . . . . . . . . . . . 47
11.6 Terminated Employees . . . . . . . . . . . . . . . . . . . . 47
Section 12 - Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.1 Apportionment of Ad Valorem and
Property Taxes . . . . . . . . . . . . . . . . . . . . . . . 48
12.2 Sales Taxes, Filing Fees, Etc. . . . . . . . . . . . . . . . 48
12.3 Other Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 48
-5-
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Section 13 - Termination . . . . . . . . . . . . . . . . . . . . . . . . 49
13.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . 49
13.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . 49
13.3 Specific Performance . . . . . . . . . . . . . . . . . . . . 50
Section 14 - Survival and Indemnification . . . . . . . . . . . . . . . . 50
14.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 50
14.2 Indemnification. . . . . . . . . . . . . . . . . . . . . . . 50
14.3. Third Party Claims . . . . . . . . . . . . . . . . . . . . . 51
14.4 Method of Asserting Claims . . . . . . . . . . . . . . . . . 52
14.5 Right to Cure. . . . . . . . . . . . . . . . . . . . . . . . 54
Section 15 - Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 55
15.1 Actions at Closing . . . . . . . . . . . . . . . . . . . . . 55
15.2 Place and Date . . . . . . . . . . . . . . . . . . . . . . 55
15.3 Unocal's Actions at Closing . . . . . . . . . . . . . . . . 55
15.4 Buyer's Actions at Closing . . . . . . . . . . . . . . . . 56
15.5 Closing Statement . . . . . . . . . . . . . . . . . . . . . 57
15.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 16 - Actions After Closing . . . . . . . . . . . . . . . . . . . 57
16.1 Final Accounting . . . . . . . . . . . . . . . . . . . . . 57
16.2 Receipts and Credits . . . . . . . . . . . . . . . . . . . . 57
16.3 Suspended Funds . . . . . . . . . . . . . . . . . . . . . . 58
16.4 Further Assurances . . . . . . . . . . . . . . . . . . . . 58
16.5 Post-Closing Accounting Assistance . . . . . . . . . . . . . 58
16.6 Recording . . . . . . . . . . . . . . . . . . . . . . . . . 58
16.7 Books and Records . . . . . . . . . . . . . . . . . . . . . 59
16.8 Access to Properties and Records by Buyer. . . . . . . . . . 59
16.9 Access to Properties and Records by Unocal . . . . . . . . . 59
16.10 Call on Production . . . . . . . . . . . . . . . . . . . . 60
16.11 Royalty Reimbursement . . . . . . . . . . . . . . . . . . . 61
Section 17 - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 61
-6-
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17.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 61
17.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 61
17.3 Written Notice . . . . . . . . . . . . . . . . . . . . . . . 62
17.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 63
17.5 Waiver of Compliance with Bulk Transfer Laws . . . . . . . . 63
17.6 Waiver of Consumer Rights . . . . . . . . . . . . . . . . . 63
17.7 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . 63
17.8 Limitation of Liability. . . . . . . . . . . . . . . . . . . 63
17.9 No Admission . . . . . . . . . . . . . . . . . . . . . . . 64
17.10 Use of Unocal's Name . . . . . . . . . . . . . . . . . . . . 64
17.11 Entire Agreement, Etc . . . . . . . . . . . . . . . . . . . 64
17.12 Parties in Interest . . . . . . . . . . . . . . . . . . . . 64
17.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . 65
17.14 Consents . . . . . . . . . . . . . . . . . . . . . . . . . 65
</TABLE>
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SCHEDULE OF EXHIBITS
Exhibit "A" - LEASEHOLD INTERESTS
Exhibit "B" - PERSONAL PROPERTY, WAREHOUSE STOCK AND IDLE EQUIPMENT
Exhibit "C" - CLAIM VALUE FORMULA AND ALLOCATED VALUES SCHEDULE
Exhibit "D" - ARBITRATION PROCEDURES
Exhibit "E" - ENVIRONMENTAL ASSESSMENT FIELDS
Exhibit "F" - GAS BALANCING SCHEDULE
Exhibit "G" - ENVIRONMENTAL DISCLOSURE SCHEDULE
Exhibit "H" - DISCLOSURE SCHEDULE
Exhibit "I" - GEOPHYSICAL DATA LICENSING AGREEMENT
Exhibit "I-1"- GEOPHYSICAL DATA
Exhibit "J" - SATISFACTORY COMPLETION OF DUE DILIGENCE
Exhibit "K" - ASSIGNMENT
Exhibit "L" - ASSUMPTION AGREEMENT
Exhibit "M" - ESCROW AGREEMENT
Exhibit "N" - INVESTMENT LETTER
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<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is entered into as of the 31st day of March,
1999, by and between Union Oil Company of California, a California corporation,
with an office at 14141 Southwest Freeway, Sugar Land, Texas 77478 (hereinafter
referred to as "Unocal"), and Quicksilver Resources Inc., a Delaware
corporation, whose address is 1619 Pennsylvania Avenue, Fort Worth, Texas 76104
(referred to herein as "Buyer").
RECITALS
WHEREAS, Unocal is the holder of certain assets which include oil and gas
interests and properties in the state of Michigan; and
WHEREAS, Unocal desires to sell such oil and gas interests, properties and
related rights, as hereinafter described, to Buyer and Buyer desires to purchase
such interests, properties and rights from Unocal, upon the terms and subject to
the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, Unocal and Buyer agree as follows:
SECTION 1
DEFINITIONS
1.1 DEFINED TERMS: The following terms, when capitalized in this Agreement,
shall have the meanings defined either in this Section or elsewhere in this
Agreement.
"ADJUSTED PURCHASE PRICE" shall have the meaning specified in Section 2.5.
"ACCRUING" or "ACCRUED" means, with respect to any obligation, duty, loss,
liability, claim, fine, expense, damage, cost or penalty, the occurring or
happening of any event which causes such obligation, duty, loss, liability,
claim, fine, expense, damage, cost or penalty to become demandable, requirable,
assertible, enforceable, due and owing, or being incurred or occurring, as the
case may be.
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"AFFILIATE" means, with respect to any specified Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person. For purposes of this definition, "control" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.
"AGREEMENT" means this Purchase and Sale Agreement, including all Exhibits.
"ALLOCATED VALUE(s)" means the value of the Assets based on the discounted
future net pre-tax proved reserves as determined by Buyer, and as set forth in
EXHIBIT "C".
"ASSETS" shall have the meaning specified in Section 2.1.
"ASSUMED LIABILITIES" means all Environmental Liabilities, General Liabilities,
Plugging and Abandonment Obligations and other liabilities assumed by Buyer
under the terms of this Agreement.
"CASH SETTLEMENT" shall have the meaning specified in Section 2.6.
"CASUALTY LOSS" means a loss of personalty, excluding oil, gas and other
minerals in place, that is caused by a sudden, unexpected and unusual event.
"CLAIM NOTICE" means notification by an Indemnified Party to an Indemnifying
Party of any claim or demand for which the Indemnifying Party would be liable
hereunder, and providing information which specifies the nature and basis of the
claim or demand and the amount or the estimated amount of the claim or demand.
"CLAIM VALUE" shall have the meaning specified in Section 3.4.
"CLAIM VALUE FORMULA" shall have the meaning specified in EXHIBIT "C", or if
none is provided therein, the claim value formula mutually agreed to by the
parties in writing.
"CLOSING" means the consummation of the transactions contemplated in this
Agreement other than any transactions specifically scheduled for a time after
Closing by the terms hereof.
"CLOSING DATE" means the date specified in Section 15.2, or such other date as
the parties may mutually agree upon in writing.
"CONFIDENTIALITY AGREEMENT" means any Confidentiality Agreement between the
Parties, and any amendments thereto, executed prior to and in conjunction with
and for the purposes of this Agreement.
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"CONTRACT RIGHTS" means the Assets described in Section 2.1(v).
"DEFECT VALUE" shall have the meaning specified in Section 3.5.
"DEFENSIBLE TITLE" means title which is determinable of record, and is free of
liens, claims, defects, encumbrances or deficiencies other than Permitted
Encumbrances.
"DELETERIOUS SUBSTANCE" means (i) any substance, product, waste or other
material of any nature whatsoever which is or becomes listed as a hazardous
substance, hazardous waste, hazardous material or pollutant under any
Environmental Laws; (ii) any substance, product, waste or other material of any
nature whatsoever which may give rise to liability under any Environmental Laws;
(iii) petroleum and its fractions, crude oil and other petroleum products; and
(iv) radioactive materials including but not limited to naturally occurring
radioactive materials.
"DISCLOSURE SCHEDULE" means EXHIBIT "H" to this Agreement.
"DUE DILIGENCE PERIOD" means the sooner of (i) forty five (45) calendar days
following the date of this Agreement, or (ii) the Closing Date.
"EARNEST MONEY DEPOSIT" shall have the meaning specified in Section 2.4(i).
"EFFECTIVE DATE" means 8:00 a.m. local time in Houston, Texas, on January 1,
1999.
"ENVIRONMENTAL ASSESSMENTS" shall have the meaning specified in Section 4.4.
"ENVIRONMENTAL DISCLOSURE SCHEDULE" means EXHIBIT "G" to this Agreement.
"ENVIRONMENTAL LAWS" means any applicable laws, orders, rules, regulations,
judgments or decrees of any federal, state, tribal, county or municipal
governing authority having jurisdiction over any Asset or Party which relate to
pollution, the protection or cleanup of the environment, or the release or
disposal of Deleterious Substances into the environment, including but not
limited to ambient air, surface water, groundwater, land surface or subsurface
strata; including all such laws, orders, rules, regulations, judgments or
decrees as they may be amended, varied or modified in the future.
"ENVIRONMENTAL LIABILITIES" means all obligations, duties, losses, liabilities,
claims, fines, expenses, damages, costs (including attorney's fees and expenses)
or penalties created by, related to, or arising out of any Environmental Law,
whether Accruing before or after the Effective Date; excluding all Plugging and
Abandonment Obligations.
"ESCROW AGENT" means the escrow agent identified in the Escrow Agreement.
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"ESCROW AGREEMENT" means the Escrow Agreement in substantially the form attached
hereto as EXHIBIT "M".
"EXCLUDED ASSETS" shall have the meaning specified in Section 2.2.
"EXECUTION DATE" means the date on which this Agreement has been fully executed
by Unocal and Buyer.
"FACILITIES" means the Assets described in Section 2.1(ii).
"FINAL ACCOUNTING" shall have the meaning specified in Section 16.1.
"GAS IMBALANCE" means the difference between the volume of produced gas that
Unocal took from an Asset(s) and the volume of Unocal's gas entitlement for such
Asset(s), the current estimates of which are described on EXHIBIT "F" attached
hereto (as of the date(s) set forth therein).
"GENERAL LIABILITIES" means all obligations, duties, losses, liabilities,
claims, fines, expenses, damages, costs (including attorneys fees and expenses)
or penalties created by, related to, or arising out of ownership or operation of
the Assets, any contractual relationship, or any applicable law, order, rule,
regulation, judgment or decree of any federal, state, tribal, county or
municipal governing authority having jurisdiction over the Assets or the
Parties, whether Accruing before or after the Effective Date; excluding,
however, Plugging and Abandonment Obligations (which are addressed elsewhere
herein), Environmental Liabilities (which are addressed elsewhere herein), and
all obligations, duties or liabilities for the payment of royalties and taxes
which Accrued prior to the Effective Date.
"GEOPHYSICAL DATA LICENSING AGREEMENT" means the agreement attached hereto and
designated as EXHIBIT "I".
"GEOPHYSICAL SEISMIC LICENSING PRICE" means the initial fee of $1.00, together
with all other fees and charges described in the Geophysical Data License
Agreement, which the Buyer will pay to Unocal to license the Geophysical Data
described in the Geophysical Data Licensing Agreement.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the meaning specified in
Section 14.4.
"INTEREST RATE" means an interest rate of 7.0% per annum.
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"INVESTMENT LETTER" means the Investment Letter in substantially the form
attached hereto as EXHIBIT "N".
"KNOWLEDGE" means the actual knowledge of the applicable Party's officers and
salaried employees directly, immediately and materially involved in the
transactions which are the subject matter of this Agreement and, as to Unocal,
that are equal to or above the level of asset manager in Unocal's management
structure.
"LEASEHOLD INTERESTS" means the Assets described in Section 2.1(i).
"LIENS" means any and all liens, mortgages, charges, pledges, security
interests, or other similar type encumbrances, including, but not limited to,
such as may arise under any contracts or judgments.
"MATERIAL ENVIRONMENTAL DEFICIENCY" means a deficiency or deficiencies in the
Assets arising out of the Environmental Liabilities for which the cumulative
estimated Remediation Cost will create a liability for which Buyer will be
responsible in an amount in excess of 10% of the Purchase Price, insofar and
only insofar as such Remediation Costs are the subject of a current specific
written or regulatory requirement(s) made and asserted by a governmental entity
or a third party prior to the Closing.
"MINIMAL ENVIRONMENTAL LIABILITIES" shall have the meaning specified in Section
4.7(a)(i).
"NORM" means naturally occurring radioactive material.
"PARTY" or "PARTIES" means Unocal or Buyer, or Unocal and Buyer respectively.
"PARTY ADVERSE EFFECT" shall mean an event, taking into account all facts and
circumstances, on the business, properties, condition (financial or otherwise)
or operations of a Party, which has had or could reasonably be expected to have
a material adverse effect on the ability of such Party to perform its
obligations under this Agreement.
"PERMITS" means any and all permits, including temporary permits to construct or
operate, authorizations, approvals, registrations, rights of way, orders,
waivers, variances or other licenses issued or granted by any federal, state,
tribal or local administrative or governmental authority, bureau or agency.
"PERMITTED ENCUMBRANCES" means (i) liens for taxes, assessments or other
governmental charges or levies not yet delinquent; (ii) liens in connection with
workers' compensation, unemployment insurance or other social security, old-age
pension or public liability obligations which are not yet due or delinquent;
(iii) liens in favor of vendors, carriers, warehousemen, repairmen, mechanics,
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workmen, materialmen, construction or similar liens arising by operation of law
in the ordinary course of business as to obligations which are not yet
delinquent or which have not been filed pursuant to law; (iv) rights to consent
by, required notices to, filing with, or other actions by governmental entities
in connection with the sale or conveyance of the applicable property if the same
are customarily obtained subsequent to such sale or conveyance; (v) easements,
rights of way, restrictions, encroachments and other similar encumbrances, and
minor defects in the chain of title which do not interfere with the continued
current use of the applicable property or materially detract from the value of
such property; (vi) rights of utility companies to lay, maintain and repair
pipelines, conduits, cable boxes and other installations on, under, and across
the applicable property; (vii) rights reserved to or vested in any municipality
or governmental, statutory or public authority to control or regulate any
interest in any manner, and all applicable laws, rules and orders of such
authority; (viii) any lien or encumbrance in the form of a judgment secured by a
supersedeas bond or other security approved by a court of competent
jurisdiction; and (ix) all matters disclosed in the Disclosure Schedule or
Environmental Disclosure Schedule which affect the quality or quantity of title.
"PERSON" means any individual, partnership, joint venture, firm, corporation,
association, trust, limited liability company, joint stock company, estate,
unincorporated organization or other entity, and their successors and assigns;
or any governmental or political subdivision, including any agency, department
or instrumentality thereof.
"PLUGGING AND ABANDONMENT OBLIGATIONS" means all usual and normal prudent
operations for the plugging, abandonment, surface restoration, site clearance,
and disposal of related waste materials, including NORM and asbestos, of all
oil, gas, injection, water or other wells, sumps, pits, ponds, tanks,
impoundments, foundations, pipelines, structures and equipment of any kind or
description on the Assets, in compliance with all applicable contractual
obligations and applicable rules and regulations of governmental bodies having
jurisdiction over the Assets. Plugging and Abandonment Obligations do not
include cleanup of polluted lands, air or water other than routine cleanup
normally associated with plugging and abandonment, such cleanup obligations
which are other than routine being included within the definition of
Environmental Liabilities.
"PRE-CLOSING INTEREST" means the interest described in Section 2.4(iii).
"PURCHASE PRICE" shall have the meaning specified in Section 2.3.
"QRI STOCK" means the Delivery Number (as defined below) of shares of newly and
validly issued (in the name of the Escrow Agent for the benefit of Unocal),
fully paid, non-assessable shares of common stock of Buyer, par value $.01 per
share, free and clear of any claims, liens or encumbrances of any kind
whatsoever; and in order to preserve the benefits and potential benefits and the
percentage ownership intended to be transferred to Unocal, the number of shares
stated above to be issued and delivered to Unocal at the Closing shall be
upwardly adjusted in connection with stock dividend, extraordinary cash
dividend, creation of new class of securities, stock split,
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recapitalization, reorganization, merger, consolidation, spin-off,
combination, exchange of shares, warrants or rights offering to purchase
common stock at a price below fair market value, and other similar
transactions affecting the common stock of Buyer. The actual number of
shares of QRI Stock to be delivered to Unocal may be reduced in accordance
with the provisions of the Escrow Agreement. For purposes hereof, the term
"Delivery Number" means the number equal to the following: (i) $3,000,000,
divided by (ii) the average closing price of Buyer's common stock on the
American Stock Exchange for the thirty (30) days following March 4, 1999 and
rounding it to the nearest whole share.
"QUALIFIED CLAIM" means an unknown Environmental Liability which Accrued prior
to the Effective Date, and which is the subject of a specific written claim
asserting Unocal's or Buyer's responsibility made and asserted during the six
(6) month period between the Closing Date and six (6) months following the
Closing Date either by a governmental entity or by a third party that is not an
Affiliate or a successor in interest of Buyer, with a Claim Notice provided by
Buyer to Unocal at once but in no case later than thirty (30) days after Buyer's
receipt of such claim; and Unocal shall provide Buyer with any Claim Notice
received by Unocal not later than thirty (30) days after Unocal's receipt
thereof, (but failure of Unocal to provide Buyer with such notice within this
time period shall not relieve or release Buyer from any liability or obligation
therefor, except and only to the extent such delay in Unocal's notice to Buyer
directly results in an increase of Buyer's liability therefor), provided,
however, Environmental Law for purposes of determining Environmental Liabilities
that can be Qualified Claims shall not include Environmental Laws as they may be
amended, varied or modified in the future, but shall be limited to Environmental
Laws in effect and applicable to the Assets as of the Effective Date.
"QUALIFIED CLAIM COST SHARING ALLOCATION" shall have the meaning specified in
Section 4.7.
"REMEDIATION COST" means the cost to remedy any Environmental Liability using
the most cost effective methods and manner that satisfy applicable Environmental
Laws, and which are consistent with the continued use of the affected Assets in
the same capacity and for the same purposes as they were being used on the
Effective Date.
"SURFACE ACCESS AGREEMENTS" means the Assets described in Section 2.1(vi).
"TITLE DEFECT" shall have the meaning specified in Section 3.2.
1.2 UNDEFINED FINANCIAL ACCOUNTING TERMS: Undefined financial accounting terms
used in this Agreement shall be defined according to generally accepted
accounting principles.
1.3 REFERENCES: References in this Agreement to Sections or Exhibits shall be
to the entirety of the Sections or Exhibits of this Agreement which are
referred to unless expressly limited to a sub-Section in the reference.
References, if any, in this Agreement to "hereby",
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"herein", "hereinabove", "hereinafter", "hereinbelow", "hereof",
"hereunder", and words of similar import shall be to this Agreement in
its entirety and not only to the particular Section or Exhibit in which
such reference appears unless expressly stated to the contrary.
1.4 CONSTRUCTION: Unless the context otherwise requires: (i) "or" is not
exclusive; (ii) words used in the singular include the plural and words
used in the plural include the singular; (iii) words used in the masculine
include the feminine and words used in the feminine include the masculine;
(iv) any date specified for any action that is not a business day as such
term is generally defined in the United States of America shall be deemed
to mean the first business day after such date; (v) neither the captions to
Sections or paragraphs hereof nor the Table of Contents shall be deemed to
be a part of the Agreement; (vi) the Exhibits form a part of the Agreement
and shall have the same force and effect as if set out in the body of the
Agreement; and (vii) references herein to any other agreement or instrument
shall, unless the context otherwise requires or specifies, be deemed
references to that agreement or instrument as it may from time to time be
changed, amended or extended, but shall not be an incorporation by
reference unless specifically so provided.
SECTION 2
PURCHASE AND SALE
2.1 ASSETS: Subject to the terms and conditions of this Agreement, Unocal
shall sell and Buyer shall purchase on the Closing Date, effective as of
the Effective Date, without warranty of title, either express or implied,
all of Unocal's right, title and interest in the following assets
("Assets"):
(i) Unocal's leasehold interest in the oil, gas and other mineral
leases described in Exhibit "A" insofar as same cover and affect
the lands described in Exhibit "A" or any lands unitized or
pooled therewith, as well as certain fee interests, or surface
interests specifically described in Exhibit "A" attached hereto
(collectively "Leasehold Interests");
(ii) the wells, equipment and facilities permanently located on or
attributable to the Leasehold Interests, including, but not
limited to, pumps, surface and subsurface well equipment, gas
plants, saltwater disposal wells, lines and facilities, sulfur
recovery facilities, compressors, compressor stations,
dehydration facilities, treating facilities, gathering lines,
flow lines, valves, meters, separators, tanks, tank batteries,
and other fixtures ("Facilities");
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(iii) The Garfield 12/Beaver Creek PdC Pipeline, being the gas
transmission pipeline that is the subject of Michigan Public
Service Commission Case No. U-9637 which pipeline begins in
Section 10, T25N, R5W, Kalkaska County, Michigan at its
intersection with the Great Lakes/Consumers Energy pipeline
corridor and extends easterly and southerly approximately 4.75
miles to its point of termination at the Dow Beaver Creek Station
in Section 20, T25N, R4W, Crawford County, Michigan, together
with all equipment, facilities, fixtures and other improvements
which are used in connection with or attributable to such
pipeline, and all easements and rights of way pertaining to the
same (collectively, the "Garfield/Beaver Creek Pipeline");
(iv) the oil, condensate and natural gas liquids produced after the
Effective Date, including line fill below the pipeline
connections as of the Effective Date attributable to the
leasehold interests described in EXHIBIT "A";
(v) all personal property, warehouse stock and idle equipment
described in EXHIBIT "B";
(vi) all contracts and agreements concerning the properties described
in EXHIBITS "A" and "B" and the Garfield/Beaver Creek Pipeline,
including, but not limited to, unit agreements, pooling
agreements, areas of mutual interest agreements, farmout
agreements, farmin agreements, saltwater disposal agreements,
water injection agreements, line well injection agreements, road
use agreements, drilling contracts, operating agreements, well
service contracts, production sales contracts, gas contracts, gas
balancing agreements, storage or warehouse agreements, supplier
contracts, service contracts, construction agreements, division
orders and transfer orders, insofar as and only insofar as they
relate to the interests and properties described in EXHIBITS "A"
and "B" and the Garfield/Beaver Creek Pipeline ("Contract
Rights");
(vii) all surface use agreements, easements, rights of way, licenses,
authorizations, Permits, and similar rights and interests
applicable to, or used in connection with, any or all of the
interests and properties described in EXHIBITS "A" and "B" and
the Garfield/Beaver Creek Pipeline ("Surface Access Agreements");
and
(viii) certain records relating to the Assets to be delivered to Buyer
under Section 15.3(iv) below, but excluding any geophysical ,
geological or seismic data or any other records, files or data
excluded therein or elsewhere in this Agreement from disclosure
delivery (including but not limited to any corporate records of
Unocal).
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2.2 EXCLUDED ASSETS: It is specifically agreed that Unocal is not selling and
Buyer is not purchasing the following assets ("Excluded Assets"):
(i) all rights and interests of any kind in the leases and lands
described in EXHIBIT "A" other than the leasehold interests
specifically described in Section 2.1(i);
(ii) in conjunction with any interests retained by Unocal in the
leases, lands and wells described in EXHIBIT "A", a like interest
in all applicable Facilities, Contract Rights and Surface Access
Agreements;
(iii) any and all interests in the Assets Unocal is legally or
contractually restricted from selling;
(iv) all materials and equipment leased or temporarily located on the
Leasehold Interests, and any materials, equipment, pipelines,
facilities or interests in the land owned by a purchaser and/or
transporter of oil and/or gas therefrom, a lessor, or a third
Person;
(v) all interests in pipelines, Facilities, Contract Rights and
Surface Access Agreements owned by Unocal that are not used in
connection with the Assets or which cover lands described in the
Leasehold Interests, but which are used in connection with
properties that are not being sold under the terms of this
Agreement;
(vi) items sold, transferred, disposed of or consumed and contracts
terminated prior to the Closing Date in the ordinary course of
business;
(vii) any right to use the "Unocal" name, marks, trade dress or
insignia, or to use the name of any other subsidiary of Unocal
Corporation; and all of Unocal's intellectual property,
including, but not limited to patents, trade secrets, and
copyrights;
(viii) all amounts due or payable to Unocal as adjustments or refunds
under any contracts affecting the Assets for all periods of time
prior to the Effective Date, specifically including, without
limitation, amounts recoverable from audits under operating
agreements;
(ix) all rights, titles, claims and interests of Unocal or its
Affiliates to or under any policy or agreement of insurance or
indemnity, any bond, or to any insurance proceeds or awards; and
any employment, consulting, office lease or accounting service
contracts;
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(x) all claims and choses in action of Unocal arising from acts,
omissions or events, or damages to or destruction of property,
occurring prior to the Effective Date;
(xi) all proceeds, benefits, income or revenue accruing to the Assets
prior to the Effective Date, and any claims of Unocal for refunds
of or losses carried forwards with respect to taxes attributable
to the Assets for any period prior to the Effective Date; and
(xii) all geophysical, geological and seismic data, surveys, analysis
and similar data or information, which is not specifically
licensed under the Geophysical Data Licensing Agreement.
2.3 PURCHASE PRICE: The Purchase Price for the Assets shall be (a) Twenty
Seven Million Dollars ($27,000,000) ("Cash Purchase Price") in United
States currency; and (b) the QRI Stock (the Cash Purchase Price and the QRI
Stock are collectively referred to as "Purchase Price").
2.4 PAYMENT PROCEDURES: Payment shall be made as follows:
(i) contemporaneous with the execution of this Agreement, Buyer shall
pay and deliver to Unocal either by cashier's check or wire
transfer of immediately available funds, as specified by Unocal,
an Earnest Money Deposit of 10% of the Cash Purchase Price,
being $2,700,000 ("Earnest Money Deposit");
(ii) at Closing, Buyer shall pay to Unocal the remainder of the
Adjusted Purchase Price, plus or minus any Cash Settlement by
cashier's check or wire transfer of immediately available funds
as specified by Unocal;
(iii) at Closing, Buyer shall pay interest to Unocal, calculated at the
Interest Rate, on the Adjusted Purchase Price less the Earnest
Money Deposit for the period of time from the Effective Date to
the Closing Date ("Pre-Closing Interest"); and
(iv) at Closing, Buyer shall issue and deliver the QRI Stock to the
Escrow Agent under the terms of the Escrow Agreement in
substantially the form attached hereto as EXHIBIT "M".
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2.5 ADJUSTED PURCHASE PRICE: The net price which Buyer shall pay for the
Assets ("Adjusted Purchase Price") shall be:
(i) the Purchase Price; plus or minus
(ii) any adjustments for Title Defects; minus
(iii) the Allocated Value or Claim Value of any part of the Assets sold
to a third Person pursuant to the exercise of a preferential
purchase right; plus
(iv) the Geophysical Seismic License Price; plus or minus;
(v) the value of the Gas Imbalance shown on EXHIBIT "F", as
calculated pursuant to Section 10.5 hereof; minus
(vi) any adjustments for Casualty Losses provided for under Section
5.2 hereof.
2.6 CASH SETTLEMENT: The sum ("Cash Settlement") due to settle accounts until
the Final Accounting shall be determined by Unocal for Closing purposes by
adding or subtracting from the Adjusted Purchase Price as follows (and to
the extent that such adjustments involve estimates or unliquidated amounts,
then such estimates and unliquidated amounts shall be mutually agreed to by
the parties not less than three (3) days prior to the Closing):
(i) subtract the Earnest Money Deposit;
(ii) add the amount of estimated expenditures made by Unocal that are
attributable to the Assets for the period between the Effective
Date and Closing Date including, without limitation, royalties,
taxes, rentals and similar charges and expenses, including those
billed under applicable operating agreements, and all prepaid
expenses;
(iii) subtract the amount of estimated revenues received by Unocal in
connection with sales of hydrocarbons and associated products
from the Assets, together with any other income from the Assets,
Accruing after the Effective Date, excluding estimated revenues
from the sale of liquid hydrocarbons in storage tanks above the
pipeline connection on the Effective Date valued at market or
contract prices in effect as of the Effective Date after
deducting royalty and tax obligations;
(iv) add the sum of $15,000 per month for each month or portion
thereof from the Effective Date to the Closing Date as
compensation to Unocal for issuing
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royalty and rental checks and continuing to perform
accounting obligations for the Assets; and
(v) add the sum of $20,000 per month for each month or portion
thereof from the Effective Date to the Closing Date as
compensation to Unocal for assuming the risk of Casualty Loss
until the Closing Date.
SECTION 3
TITLE EXAMINATION
3.1 ACCESS TO TITLE INFORMATION: After the date of this Agreement and until
the end of the Due Diligence Period, Unocal shall make all of its land
records that are not privileged or confidential available to Buyer at
Unocal's offices located at 14141 Southwest Freeway, Sugar Land, Texas
77478, or such other place as deemed appropriate by Unocal, during normal
business hours for examination by Buyer. Unocal shall not be obligated to
perform any title work, and no abstracts or title opinions will be made
current by Unocal. NO WARRANTY OF ANY KIND IS MADE BY UNOCAL AS TO THE
INFORMATION SO SUPPLIED, AND BUYER AGREES THAT ANY CONCLUSIONS DRAWN
THEREFROM SHALL BE THE RESULT OF ITS OWN INDEPENDENT REVIEW AND JUDGMENT.
SUBJECT TO THE OTHER PROVISIONS OF THIS AGREEMENT, BUYER ASSUMES THE RISK
OF ANY TITLE DEFECTS AND/OR CONFLICTING ADVERSE RIGHT(S), TITLE(S) AND/OR
INTEREST(S) WHICH A RECORD TITLE CHECK AND/OR PHYSICAL INSPECTION REVEALS
OR WOULD HAVE REVEALED.
3.2 TITLE DEFECTS: For purposes of this Agreement, a defect in title ("Title
Defect") shall mean a defect in one or more of the following respects only:
(i) Unocal's interest in any one or more of the properties comprising
the Assets described in EXHIBIT "A" is more or less than the
interest for such property(ies) reflected in EXHIBIT "A"
(including, but not limited to having less of a net revenue
interest than described in EXHIBIT "A" or have more of an
economic burden than reflected in the EXHIBIT "A", unless the
increased economic burden corresponds to a proportionately
increased net revenue interest);
(ii) Unocal's rights and interests in one or more of the properties
comprising the Assets described in EXHIBIT "A" are subject to
being reduced by virtue of the exercise by a third party of a
reversionary, back-in or similar right not reflected in EXHIBIT
"A" nor disclosed to Buyer in the Disclosure Schedule; or
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(iii) Unocal's title to one or more of the properties comprising the
Assets described in EXHIBIT "A" is subject to any lien, claim,
defect, encumbrance or deficiency which causes Unocal to not have
Defensible Title to such property(ies).
3.3 NOTICE OF TITLE DEFECT: Upon discovery of a Title Defect, the Party
discovering same shall as soon as reasonably possible thereafter notify the
other Party of the Title Defect. The notice shall include with reasonable
specificity the property or properties described in EXHIBIT "A" which are
affected, the particular Title Defect claimed, and the notifying Party's
good faith estimate of the Claim Value or Defect Value. Any Title Defect
which is not asserted by Unocal or Buyer prior to the end of the Due
Diligence Period shall conclusively be deemed waived by both parties for
all purposes.
3.4 CLAIM VALUE: If a claim of Title Defect is made pursuant to Section 3.2
(i) or (ii), the value of the claim ("Claim Value") shall be calculated
using the Claim Value Formula and Allocated Values set out in EXHIBIT "C".
3.5 DEFECT VALUE: If a claim of Title Defect is made pursuant to Section 3.2
(iii) for a matter not covered by Sections 3.2(i) or (ii), the value of
the defect ("Defect Value") for a defect that is a liquidated or certain
amount shall be such liquidated or certain amount, and as to unliquidated
or uncertain amounts it shall be an amount necessary to compensate Buyer
for the adverse economic effect of such Title Defect on the value of the
property(ies) affected, taking into consideration all relevant factors,
including the practical and legal effect of the Title Defect. In no
instance shall a Defect Value be an amount in excess of the Claim Value of
an affected property.
3.6 REMEDIES FOR TITLE DEFECTS:
(i) Unocal may elect to cure any or all Title Defects; provided,
however, if Unocal elects to cure a Title Defect, but has not
been able to do so by the Closing Date, the Parties shall proceed
with the Closing, with the Claim Value or Defect Value, as
applicable, being an adjustment to the Purchase Price. Unocal
shall retain the right to cure any such Title Defect for a period
of time not to exceed one year after the Closing Date. Within
thirty (30) days of Buyer's receipt of curative documents which
eliminate the Title Defect, Buyer shall tender to Unocal the
applicable Claim Value or Defect Value withheld at Closing.
Unocal's option to cure Sections 3.2(i) or (ii) Title Defects
shall include the option to partially cure any such Title Defect
or Title Defects so as to reduce the Claim Value of the Title
Defect or Title Defects to an amount Unocal shall in its sole
discretion determine.
(ii) If the Claim Value or Defect Value of a Title Defect is equal to
twenty-five percent (25%) or more of the Allocated Value of a
property described in
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EXHIBIT "A", Unocal may in its sole discretion elect to
retain the affected property and delete it from the Assets.
In such instance, the Purchase Price shall be adjusted in an
amount equal to the Claim Value of the deleted property(ies).
(iii) If a Title Defect is a Section 3.2(i) or (ii) Title Defect which
increases or decreases Unocal's interest in the Assets, and
Unocal does not elect to cure the Title Defect, the Purchase
Price shall be adjusted up or down by the Claim Value of the
Title Defect.
(iv) If Unocal contests the existence of a Title Defect or Buyer's
good faith estimate of the Claim Value or Defect Value of the
Title Defect, the Parties shall meet and use their best efforts
to agree on the validity and/or value of the Title Defect. If
the Parties cannot agree on the validity and/or value of a Title
Defect, and neither Party elects to waive its claim, the dispute
shall be submitted to arbitration in accordance with the
arbitration procedures set forth in EXHIBIT "D".
3.7 PURCHASE PRICE ADJUSTMENTS THRESHOLD: No other provision herein
withstanding, the Purchase Price shall not be adjusted due to or for a
Title Defect, and neither Party shall notify the other Party of a Title
Defect unless or until the Claim Value or Defect Value of the Title Defect
exceeds $10,000.00. This $10,000.00 Title Defect threshold shall be
applied separately to each property described in EXHIBIT "A" that has been
assigned a separate Allocated Value, but shall be calculated on a
cumulative basis if a separate property is subject to more than one Title
Defect.
3.8 PREFERENTIAL PURCHASE RIGHTS: Preferential purchase rights shall not be
considered Title Defects hereunder regardless of whether or not they are
reflected in the Disclosure Schedule. As to any and all preferential
purchase rights affecting Unocal's interest in all or part of the Assets,
in accordance with the provisions of the agreement which created the
rights, Unocal shall send to the owner or owners of such rights a notice
offering to sell to such owner or owners, those Assets covered by such
rights for the Allocated Value assigned to the affected Assets. If the
owner or owners of the rights exercise same, the affected portion of the
Assets shall be deleted from the transaction, and the Purchase Price shall
be reduced in an amount equal to the Allocated Value of the deleted Assets.
If the specific Assets affected do not have a separate Allocated Value, the
value shall be the Claim Value of the deleted Assets.
3.9 PREFERENTIAL PURCHASE RIGHT DISPUTES:
(i) If an owner of a preferential purchase right obtains judicial
relief which permanently enjoins the consummation of the
transactions contemplated under
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this Agreement, such enjoinder shall be deemed a termination
of this Agreement by mutual consent of the Parties.
(ii) If an owner of a preferential purchase right seeks judicial
relief, other than injunctive relief, Buyer shall indemnify,
defend and hold Unocal harmless from any and all claims, causes
of action, costs and expenses arising out of or relating to such
dispute.
SECTION 4
ENVIRONMENTAL MATTERS
4.1 NO ADMISSION AGAINST INTEREST: Nothing contained in this Section 4, or
elsewhere in this Agreement, shall be construed to be an admission against
interest as to Unocal or Buyer. Unocal and Buyer have not included
Environmental Liability related provisions herein due to any perceived
liability and specifically disclaim the existence of any such liability to
third parties (including governmental entities) based on contract, tort,
statute or otherwise.
4.2 PHYSICAL CONDITION OF THE ASSETS: Buyer acknowledges that the Assets have
been used for oil and gas drilling and production operations, related oil
field operations and possibly for the storage and disposal of Deleterious
Substances, and the Assets may be contaminated with such materials.
Physical changes in or under the Leasehold Interests or adjacent lands may
have occurred as a result of such uses. The Assets may contain wells,
sumps, landfills, pits, ponds, tanks, impoundments, foundations, pipelines
and other equipment, whether or not of a similar nature, any of which may
be buried and contain Deleteterious Substances, and the locations of which
may not be known to Unocal or be readily apparent by a physical inspection
of the property. Further, spills, leaks, blowouts and routine operations
may have led to contamination of the Assets with Deleterious Substances,
the locations of which may not be known to Unocal or be readily apparent by
a physical inspection of the property. Buyer understands that Unocal does
not have the requisite information with which to determine the exact nature
or condition of the Assets nor the effect any use has had on the physical
condition of the Assets. In addition Buyer acknowledges that some oil
field production equipment may contain asbestos and/or 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,
and that wells, materials and equipment located on the Assets described
herein may contain asbestos and NORM, and that NORM in the form of scale or
in other forms may have become dislodged from the inside of wells,
materials and equipment and be located on the Property and that asbestos
and NORM containing materials may be buried or have been otherwise disposed
of on the Property. Buyer also expressly understands that special
procedures may
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be required for the removal and disposal of asbestos, NORM, and other
Deleterious Substances from the Property where they may be found.
4.3 ENDANGERED SPECIES, CRITICAL HABITAT, WETLANDS, GEOLOGIC HAZARDS AND
FLOODING: "Endangered Species" as used herein shall have the same meaning
as "endangered species" is defined pursuant to 16 U.S.C. 1532(6) or the
laws of the state in which the Leasehold Interest is located; as
"threatened species" is defined pursuant to 16 U.S.C. 1533(30) or the laws
of the state in which the Leasehold Interest is located; and/or, as a
candidate species for such listing under federal or state law. "Critical
Habitat" as used herein shall have the meaning as defined pursuant to 16
U.S.C. 1532(5). "Wetland" as used herein shall have the meaning as defined
in 40 Code of Federal Regulations Section 230.3(a), or under the laws of
the state in which the Leasehold Interest is located. "Geologic Hazards" as
used herein shall include seismic hazard and any earth slides or other
earth movement. "Flooding" as used herein shall include the risks
associated with a flood plain, flood way or restriction zone and/or any
diminution in the value of the Property or restriction of its use by reason
of the risk of water entering or remaining thereon. WITHOUT IN ANY WAY
LIMITING ANY OTHER DISCLAIMERS OF WARRANTY HEREIN AND NOTWITHSTANDING ANY
DISCLOSURES MADE BY UNOCAL TO BUYER, UNOCAL DISCLAIMS ANY EXPRESS OR
IMPLIED WARRANTY OR REPRESENTATION AS OF THE DATE OF THIS AGREEMENT AND/OR
AS OF THE CLOSING OF THE COMPLETENESS OF ANY SUCH DISCLOSURE OR THAT THE
PROPERTY IS FREE FROM ANY ENDANGERED SPECIES OR THAT ALL OR ANY PART OF THE
PROPERTY IS NOT A CRITICAL HABITAT OR A WETLAND, OR THAT ANY PART OF THE
ASSETS DOES NOT INCLUDE A GEOLOGIC HAZARD, OR THAT ANY PART OF THE PROPERTY
IS NOT SUBJECT TO FLOODING. Notwithstanding any knowledge that could be
imputed to Unocal, Buyer has the obligation to ascertain the presence of
and extent of any Endangered Species, Critical Habitat, Wetland, Geologic
Hazards and the risk of Flooding on the Property.
4.4 ENVIRONMENTAL ASSESSMENTS AND COMPLETION OF ENVIRONMENTAL DUE DILIGENCE:
From the date of this Agreement, Unocal will provide Buyer (or its
contractor) with reasonable access to the Assets operated by Unocal for the
Due Diligence Period, during which Buyer will, as part of Buyer's due
diligence, conduct, at its sole risk and expense, Phase I environmental
site assessments as provided below and such additional environmental site
assessments as Buyer determines is appropriate (collectively, the
"Environmental Assessments"). Buyer agrees to conduct a Phase I
environmental site assessment (pursuant to American Society for Testing and
Materials standards) on each of the fields operated by Unocal set forth in
EXHIBIT "E" to be conducted by an unrelated third party qualified to
conduct such Phase I environmental site assessments. Buyer agrees to
immediately provide to Unocal a copy of the Environmental Assessments,
including all reports, data and conclusions, and, in any event, Buyer shall
provide Unocal a copy of all of the foregoing no later than 15 days prior
to Closing. Buyer shall keep any data or information
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acquired by all such examinations and the results of all analyses of
such data and information strictly confidential and, unless required
by law, will not disclose same to any person or agency without the
prior written approval of Unocal except to the extent such disclosure
is to financial institutions, environmental consultants, legal counsel
or other parties to whom disclosure is appropriate and desirable to
consummate this transaction, but subject to the prior agreement of any
such party to maintain the confidentiality of the information. Buyer
shall complete its environmental due diligence within the Due Diligence
Period.
4.5 BUYER'S ACCESS TO ASSETS; INDEMNIFICATION; INSURANCE:
(i) Buyer shall have reasonable access to the Assets to conduct its
environmental due diligence including but not limited to the
Environmental Assessments. Buyer shall not perform any act or
permit the performance of any act that would injure the Assets or
disrupt Unocal's activities thereon or the surface owner's or the
surface tenant's activities thereon. If the consent of the
surface owner or the surface tenant or any other third party is
required in connection with Buyer's access to the Assets, Buyer
agrees to obtain such consent before entering onto the Assets
affected thereby.
(ii) Buyer RELEASES AND AGREES TO INDEMNIFY, DEFEND AND HOLD HARMLESS
Unocal, its directors, officers, employees, agents and Affiliates
against all claims for injury to, or death of, persons or damage
to property arising in any way from the exercise of access rights
granted to Buyer for environmental due diligence or due diligence
for any other purpose, or from the activities of Buyer or its
employees, agents or contractors on the Assets. Buyer shall
indemnify Unocal, its directors, officers, employees, agents and
Affiliates against and hold each and all of said indemnitees
harmless from any and all loss, cost, damage, expense or
liability, including attorney's fees, arising out of (i) any and
all third party statutory or common-law Liens or other
encumbrances for labor or materials furnished in connection with
such tests, samplings, studies or surveys as Buyer may conduct
with respect to the Assets; and (ii) any injury to or death of
persons or damage to property occurring in, on or about the
Assets as the result of Buyer's due diligence activities
REGARDLESS OF THE SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT
LIABILITY, PREMISES LIABILITY, BREACH OF CONTRACT, OR OTHER FAULT
OR RESPONSIBILITY OF UNOCAL OR ANY PARTY OR PERSON (except for
any such injuries or damages caused solely by the gross
negligence or willful misconduct of any said indemnitees). The
foregoing obligation of indemnity shall survive Closing or
termination of this Agreement without Closing.
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(iii) Buyer shall obtain and maintain insurance acceptable to Unocal
which is primary as to any insurance or self-insurance available
to Unocal and which names Unocal as an additional insured with
respect to liability arising out of Buyer's or its agents'
activities on the Assets, including a severability of interest
clause (cross liability), which additional insured endorsement
shall not exclude coverage based upon the alleged or actual
negligence of the additional insured. Such insurance shall
include:
(a) commercial general liability insurance occurrence form
or the equivalent with the amendment-aggregate limits
of insurance covering contractual liability,
subcontractor's liability, blanket contractual
liability, and, unless waived in writing by Unocal,
liability arising from explosion, collapse, or
underground property damage, all with a minimum
combined single limit of $1,000,000.00 each occurrence,
$2,000,000.00 aggregate, for bodily injury, death,
property damage, business interruption and personal
injury;
(b) comprehensive automobile liability insurance or
business auto policy on an occurrence basis covering
all owned, hired or otherwise operated non-owned
vehicles with a minimum combined single limit of
$1,000,000.00 each occurrence for bodily injury, death
and property damage;
(c) workers' compensation insurance as required by law; and
(d) employers' liability insurance with a minimum limit of
$1,000,000.00 each occurrence.
Such insurance shall be written by a carrier with a Best's rating of A IX or
above. Before the entry by Buyer upon the Assets, Buyer shall provide Unocal
with policies or certificates of the aforesaid insurance acceptable in form and
substance to Unocal which shall provide that coverage shall not be canceled or
materially changed prior to thirty (30) days' written notice to Unocal.
Subrogation against Unocal shall be waived with respect to all of the insurance
policies set forth above (including without limitation, policies of any
consultant). An alternate employer endorsement may be substituted for the
additional insured endorsement with respect to worker's compensation insurance
and employer's liability insurance only. The insurance required by this
provision in no way limits Buyer's obligations under any other Section of this
Agreement. Further, the insurance to be carried shall in no way be limited by
any limitation expressed elsewhere in this Agreement, or any limitation placed
on the indemnity herein given or as a matter of law.
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4.6 ASSUMPTION OF ENVIRONMENTAL LIABILITIES: Buyer shall assume and discharge
any and all Environmental Liabilities relating to or arising from the
Assets, whether relating to or arising from ownership or operations before
or after the Effective Date, except as follows:
(i) Buyer assumes no Environmental Liabilities unless and until
Closing occurs; and
(ii) Based on the Qualified Claim Cost Sharing Allocation, Unocal
shall be responsible only for a portion of the Remediation Costs
for Qualified Claims.
4.7 QUALIFIED CLAIM COST SHARING:
(a)Any Remediation Costs incurred by Buyer or Unocal in satisfying a
Qualified Claim shall be allocated and satisfied by the Parties as follows
("Qualified Claim Cost Sharing Allocation"):
(i) each separate and distinct Qualified Claim for which the
Remediation Cost is $10,000 or less ("Minimal Environmental
Liabilities") shall be allocated to and satisfied by Buyer;
(ii) Subject to Section 4.7(i) above, cumulative Remediation Costs
for all Qualified Claims, except Minimal Environmental
Liabilities, up to an aggregate amount equal to $50,000 are
allocated to and shall be satisfied by Unocal and Buyer as
follows: Buyer shall satisfy the first $10,000 of each separate
and distinct Qualified Claim for which the Remediation Cost is
greater than $10,000 and Unocal satisfying the balance of the
claim up to an aggregate amount for all Qualified Claims of
$50,000;
(iii) Subject to Sections 4.7(i) and (ii) above, cumulative
Remediation Costs for all Qualified Claims, except Minimal
Environmental Liabilities, which exceed an aggregate amount equal
to $50,000 (with such aggregate $50,000 for all Qualified claims
being allocated and satisfied in the manner described in Section
4.7(ii) above) and up to an aggregate amount equal to one
hundred percent (100%) of the Adjusted Purchase Price are
allocated to and shall be satisfied one-half by Buyer and
one-half by Unocal.
(iv) Subject to Sections 4.7(i) - (iii) above, cumulative Remediation
Costs for all Qualified Claims, except Minimal Environmental
Liabilities, which exceed an aggregate amount equal to one
hundred percent (100%) of the Adjusted Purchase Price are
allocated to and shall be satisfied solely by Buyer.
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(b) NOTWITHSTANDING ANYTHING STATED HEREIN TO THE CONTRARY, THE
LIMITATIONS ON UNOCAL'S LIABILITY, AND THE ASSUMPTION OF ALL LIABILITIES
ABOVE SUCH LIMITATIONS BY BUYER, UNDER THIS SECTION 4 AND ELSEWHERE IN THIS
AGREEMENT SHALL APPLY REGARDLESS OF WHETHER SUCH LIABILITIES ARE KNOWN OR
UNKNOWN, RELATE TO ACTIONS, EVENTS OR CONDITIONS EXISTING OR OCCURING PRIOR
TO THE EFFECTIVE DATE, WHETHER ATTRIBUTABLE (IN WHOLE OR IN PART) TO THE
ACTIONS, SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, BREACH OF
CONTRACT, PRODUCTS LIABILITY, ENVIRONMENTAL LIABILITY, OR OTHER FAULT,
LIABILITY OR RESPONSIBILITY OF UNOCAL OR ANY OTHER PERSON OR PARTY, AND
REGARDLESS OF WHETHER ASSERTED UNDER ANY THEORY OF LIABILITY.
4.8 LIMITATION: No obligations allocated to or assumed by Unocal under this
Agreement shall include any obligation to remediate any Environmental
Liability in or upon land or any water course or body of water including
ground water beyond the lawful requirements of the government agency or
agencies with jurisdiction over the Assets or a court of competent
jurisdiction, nor shall such obligations include any action, cost or
expense other than actions, costs, or expenses required by law. Between
the Parties, Unocal shall have the right but not the obligation to direct
and control any work required to remedy Environmental Liabilities if it may
be responsible for more than fifty percent (50%) of the costs and expenses
of such work attributable to the interest of the Parties; provided,
however, if the Parties have control, regardless of which Party directs and
controls any required work to remedy Environmental Liabilities, all such
actions shall be the most cost efficient possible to comply with applicable
Environmental Laws and which are consistent with continued use of the
Assets for the same purposes they were being used on the Effective Date,
and shall be based on mutually acceptable actions after consultation with
the other Party.
4.9 TERMINATION DUE TO MATERIAL ENVIRONMENTAL DEFICIENCIES: If it is
determined during the Due Diligence Period that a Material Environmental
Deficiency exists, either Buyer or Unocal may elect to terminate this
Agreement, unless Buyer and Unocal mutually agree in writing to delete all
or part of the affected Assets from this Agreement such that the total
Environmental Liabilities remaining do not constitute a Material
Environmental Deficiency.
4.10 DETERMINATION OF VALUE:
(i) Upon delivery of notice by Buyer to Unocal of a Material
Environmental Deficiency, Buyer and Unocal shall meet and use
their best efforts to agree on
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whether such a Material Environmental Deficiency exists.
The value of Environmental Liabilities shall be based on the
estimated Remediation Cost.
(ii) If, during the Due Diligence Period, Buyer determines there is a
Material Environmental Deficiency and desires to terminate this
Agreement, it shall immediately so notify Unocal. Unocal shall
respond on the earlier of the Date of Closing or seven (7) days
from the date of notice whether it concurs in Buyer's
determination that the estimated Remediation Cost of the
applicable Environmental Liabilities is sufficient to constitute
a Material Environmental Deficiency. In the event Unocal concurs
in Buyer's determination, the termination of this Agreement shall
be treated as a termination by mutual consent of the Parties.
(iii) If Unocal timely notifies Buyer that it does not concur with the
Buyer's determination of the estimated Remediation Costs, Buyer
may still elect to terminate this Agreement and request a
determination of the value of the Environmental Liabilities by
the following procedure: the Parties will submit the issue of
the existence of a Material Environmental Deficiency to
arbitration in accordance with the arbitration procedures set
forth in EXHIBIT "D". If the arbitrators determine that a
Material Environmental Deficiency does not exist, Buyer will pay
the arbitration costs and shall not be entitled to the return of
the Earnest Money Deposit. If the arbitrators find that a
Material Environmental Deficiency does exist, Unocal will pay the
arbitration costs and shall return Buyer's Earnest Money Deposit
with interest at the Interest Rate within fifteen (15) business
days. If Buyer does not elect to terminate this Agreement prior
to the commencement of arbitration in connection with this
Section, then Buyer shall be deemed to have waived its right to
terminate this Agreement under this Section unless and until the
arbitrators determined that a Material Environmental Deficiency
exists, and if such arbitrators determine that no Material
Environmental Deficiency exists, then Buyer shall pay all
arbitration costs and proceed to Closing, subject to the other
terms and conditions of this Agreement.
(iv) Any and all disagreements between Buyer and Unocal regarding the
value of Environmental Liabilities shall be submitted to
arbitration in accordance with the arbitration procedures set
forth in EXHIBIT "D".
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SECTION 5
OPERATIONS AND CASUALTY LOSS
5.1 OPERATIONS: Between the Effective Date and Closing, as to the portion of
the Assets to be conveyed which Unocal now operates, it shall operate the
same in a good and workmanlike manner. At Closing such operations shall be
turned over to and become the responsibility of Buyer, unless an applicable
unit, pooling, communitization or operating agreement requires otherwise,
in which case (unless Buyer and Unocal otherwise agree) Unocal shall
continue the physical operation of such portion of the Assets, pursuant to
and under the terms of such applicable agreement, until such time after
Closing as such applicable agreement may require. However, Unocal shall
have no liability as operator to Buyer, for any operations by Unocal, for
loss or damages sustained, or liabilities incurred, REGARDLESS OF THE SOLE,
JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, BREACH OF CONTRACT OR
OTHER FAULT OR RESPONSIBILITY OF UNOCAL OR ANY OTHER PERSON OR PARTY,
except as may result directly from Unocal's gross negligence or willful
misconduct. Such operations from and after the Closing shall be conducted
by Unocal for and on behalf of Buyer, and Unocal shall make appropriate
charges to Buyer pursuant to any applicable operating agreement. In the
absence of any applicable operating agreement, for any such services
performed by Unocal as operator of the Assets (or portions thereof) from
and after the Effective Date, Buyer shall pay to Unocal the applicable
Asset's working interest percentage of an overhead operating charge of $500
per month per active well operated by Unocal; plus Buyer shall reimburse
all reasonable and necessary expenses incurred by Unocal in such operation,
protection or maintenance of the Assets as are not normally included within
the operating charge in standard form accounting procedures but are paid as
direct charges thereunder. Any such charges and expenses shall be
recovered by Unocal as part of the Closing or Final Accounting adjustments
as appropriate.
5.2 CASUALTY LOSS: Upon the Closing, the risk of Casualty Loss relating to the
Assets shall pass from Unocal to Buyer, effective as of the Effective Date.
To the extent that there is a Casualty Loss relating to the personalty
comprising part of the Assets between the Execution Date and the Closing
Date then, at Unocal's election, either (i) Unocal shall pay and deliver
any insurance proceeds actually received therefor by Unocal, or (ii) repair
or replace the personalty damaged or destroyed, but (iii) if either (1)
there are no insurance proceeds received therefor or Unocal refuses to
provide the insurance proceeds or (2) Unocal refuses or is unable to repair
or replace such personalty, then the Purchase Price shall be adjusted
downward by an amount equal to the cost to repair or replace such
personalty (but in no event shall any downward adjustment exceed the
greater of the insurance proceeds actually received therefor by Unocal or
the aggregate amount to be paid by Buyer under Section 2.6(v) above
(unless and only to the extent that the greater of
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these two amounts do not exceed the Allocated Value for the Assets to
which such Casualty Loss is attributed)), and any disputes regarding the
costs (or estimated costs) to repair or replace (with a preference to
repairing the personalty damaged or destroyed where commercially
reasonable) shall be resolved in accordance with the arbitration
procedures set forth in EXHIBIT "D". Notwithstanding anything stated
herein to the contrary, if the aggregate value (measured by the
aggregate insurance proceeds actually received therefor, or, if such
Casualty Loss was not insured, by the estimated cost of the repair or
replacement of the personalty affected with any disputes being settled
through the arbitration procedures set forth in EXHIBIT "D") of all
Casualty Losses between the Execution Date and the Closing Date, exceed
10% of the Purchase Price, then Buyer shall have the right to terminate
this Agreement upon written notice to Unocal on or before the Closing
Date.
5.3 SUCCESSOR OPERATOR: Buyer acknowledges and agrees that Unocal cannot and
does not covenant or warrant that Buyer shall become successor operator of
all or any portion of the Assets, since the Assets or portions thereof may
be subject to unit, pooling, communitization, operating or other agreements
which control the appointment of a successor operator.
5.4 RESTRICTIONS ON OPERATIONS: Between the Execution Date and Closing, except
as necessary in Unocal's opinion in emergency situations, Unocal shall not,
without Buyer's consent, voluntarily incur any liability or enter into any
commitment with respect to the Assets which will cost in excess of $25,000
net to Unocal with respect to an individual project; cancel any contract
associated with the Assets except in the ordinary course of business; or
enter into any hedging, forward sales or similar agreements with respect to
production from the Assets.
SECTION 6
REPRESENTATIONS AND WARRANTIES OF UNOCAL
Unocal hereby represents and warrants to Buyer as follows:
6.1 ORGANIZATION: Unocal is a corporation duly organized, validly existing and
in good standing under the laws of the state of California, and is
qualified to do business and is in good standing as a foreign corporation
in every other jurisdiction where the failure to so qualify would have a
Party Adverse Effect on Unocal.
6.2 AUTHORITY TO DO BUSINESS: Unocal has all requisite power and authority to
own, lease or operate the Assets and to carry on the business as now
conducted.
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6.3 BINDING OBLIGATION:
(i) Unocal has all requisite corporate power and authority to enter
into and perform its obligations under this Agreement and to
carry out the transactions contemplated hereby.
(ii) All corporate acts and other proceedings required to be taken by
Unocal to authorize the execution, delivery and performance by
Unocal of this Agreement, have been duly and properly taken.
(iii) This Agreement has been duly executed and delivered by Unocal and
constitutes the valid and binding obligation of Unocal,
enforceable against Unocal in accordance with its terms.
(iv) The execution, delivery and performance by Unocal of this
Agreement does not and will not conflict with, or result in any
violation of or default under any provision of the Articles of
Incorporation or By-laws of Unocal or any law, ordinance, rule,
regulation, order, decree, agreement, instrument or license;
applicable to Unocal or to the Assets.
6.4 LITIGATION, SUITS OR CLAIMS: To Unocal's Knowledge, except as disclosed in
the Disclosure Schedule, there are no actions, suits or proceedings pending
or threatened in writing against Unocal which if decided unfavorably to
Unocal could have a Party Adverse Effect on Unocal, or a material adverse
effect on the value of the Assets (provided, however, that notwithstanding
anything stated herein to the contrary, Unocal shall have no liability for
any breach of any representation warranty under this Section 6.4 with
respect to any actions, suits, proceedings, asserted or threatened,
relating to Title Defects (which must be asserted by Buyer, if at all,
under the provisions of Section 3) or Environmental Liabilities (which
Unocal's only liability therefor after Closing shall be with respect to a
portion of the Qualified Claims as set forth in Section 4 above) or
disclosure thereof.
6.5 RELATION TO ASSUMED LIABILITIES: No representation or warranty contained
herein shall be deemed a representation or warranty by Unocal which
abrogates the obligations of Buyer to investigate the Assets, and make an
independent decision to purchase the Assets; and Buyer's obligations herein
with respect to the investigation of, and independent decision to purchase
the Assets, are not diminished by any representations or warranties herein.
6.6 DISCLAIMER OF WARRANTIES: THE ASSETS ARE SOLD "AS IS," "WHERE IS" AND
"WITH ALL FAULTS AS TO ALL MATTERS," AND UNOCAL EXPRESSLY DISCLAIMS AND
NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY
STATUTE, OR OTHERWISE
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RELATING TO (a) THE CONDITIONS OF THE ASSETS (INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, OF
FITNESS FOR A PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS OR SAMPLES
OF MATERIALS), (b) ANY INFRINGEMENT BY UNOCAL OF ANY PATENT OR
PROPRIETARY RIGHT OF ANY THIRD PARTY, (c) ANY INFORMATION, DATA OR OTHER
MATERIALS (WRITTEN OR ORAL) FURNISHED TO BUYER BY OR ON BEHALF OF UNOCAL
(INCLUDING WITHOUT LIMITATION, IN RESPECT OF GEOLOGICAL AND ENGINEERING
DATA, THE EXISTENCE OR EXTENT OF OIL, GAS OR OTHER MINERAL RESERVES, THE
RECOVERABILITY OF OR THE COST OF RECOVERING ANY SUCH RESERVES, THE VALUE
OF SUCH RESERVES, ANY PRODUCT PRICING ASSUMPTIONS, AND THE ABILITY TO
SELL OIL OR GAS PRODUCTION AFTER CLOSING), (d) THE ENVIRONMENTAL
CONDITION AND OTHER CONDITION OF THE ASSETS AND ANY POTENTIAL LIABILITY
ARISING FROM OR RELATED TO THE ASSETS, AND (e) THE FAILURE OF ANY
COMPUTER, ELECTRONICS, SOFTWARE, OR COMPONENTS TO BE FREE OF ANY BUGS OR
ERRORS, INCLUDING, BUT NOT LIMITED TO, ANY DEFICIENCIES RELATING TO THE
INABILITY TO PROPERLY FUNCTION BEYOND DECEMBER 31, 1999.
6.7 GAS ENTITLEMENTS: To Unocal's Knowledge, except as described in EXHIBIT
"F" or in any other part of this Agreement, Unocal is not obligated by
virtue of any prepayment made under any production sales contract or any
other contract containing a take-or-pay clause, or under any similar
arrangement, to deliver oil, gas or other minerals produced from or
allocated to any of the Assets at any time after the Effective Date without
receiving payment therefor.
6.8 DISCLOSURE: To Unocal's Knowledge, neither this Agreement nor any
certificate to be furnished by Unocal contains or, upon delivery thereof,
will contain any untrue statement of a material fact or omission, or upon
delivery thereof, will omit to state a material fact necessary to make the
statements herein or therein, in light of the circumstances under which
they were or are made, not misleading.
6.9 NO BREACH: To Unocal's Knowledge, except as otherwise disclosed in this
Agreement, Unocal is not party to, or subject to, or bound by any provision
of any judgment, order, writ, injunction or decree of any court, or
governmental body, or any statute, rule or regulation applicable to Unocal
which prohibits or would be violated by, or which allows for the
termination or modification of this Agreement due to Unocal entering into,
executing, delivering or consummating same.
6.10 ENVIRONMENTAL CONDITION OF ASSETS: To Unocal's Knowledge, all
environmental problems affecting the Assets are referred to in documents
which have been, or prior to
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Closing, will be provided or made available to Buyer, or referred to in
the Disclosure Schedule, in the Environmental Disclosure Schedule or
elsewhere in this Agreement.
6.11 COMPLIANCE WITH LAWS AND AGREEMENTS: To Unocal's Knowledge, Unocal is in
substantial compliance with all permits, contracts and agreements relating
to the Assets, and in substantial compliance with all laws, rules and
regulations of federal, state or local entities which have jurisdiction
over Unocal or the Assets such that any failure of compliance will not have
a material adverse effect on the value of the Assets.
6.12 TAXES: To Unocal's Knowledge, all ad valorem, property, production,
severance and similar taxes and assessments based on or measured by the
ownership of property or the production or removal of hydrocarbons or the
receipt of proceeds therefrom and relating to the Assets, to the extent
such taxes and assessments have become due and payable, have been timely
paid.
6.13 BROKERS: Unocal has not incurred any obligation or liability, contingent
or otherwise, for any fee payable to a broker or finder with respect to the
matters provided for in this Agreement which could be attributable to or
charged to Buyer.
6.14 TAX PARTNERSHIP: No part of the Assets is treated for Federal income tax
purposes as being owned by a partnership except as disclosed in the
Disclosure Schedule.
SECTION 7
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Unocal as follows:
7.1 ORGANIZATION:
(i) Buyer is a corporation duly organized, validly existing and
in good standing under the Laws of the state wherein it was
incorporated or organized, and is qualified to do business
and is in good standing as a foreign corporation in every
other jurisdiction where the failure to so qualify would
have a Party Adverse Effect on Buyer.
(ii) Buyer is authorized to do business in the State of
Michigan.
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(iii) Prior to the date of this Agreement, Buyer has delivered to
Unocal true, correct and complete copies of Buyer's
Certificates or Articles of Incorporation and Bylaws and
Certificates of Good-Standing, as currently in effect.
(iv) The respective headquarters and principal offices of Buyer
is located in the State of Texas.
7.2 AUTHORITY; ENFORCEABILITY:
(i) Buyer has all requisite corporate power and authority to
enter into and perform its obligations under this Agreement
and to carry out the transactions contemplated hereby.
(ii) All corporate acts and other proceedings required to be
taken by Buyer to authorize the execution, delivery and
performance by Buyer of this Agreement, have been duly and
properly taken.
(iii) This Agreement has been duly executed and delivered by Buyer
and constitutes the legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with its
terms.
(iv) The execution, delivery and performance of this Agreement by
Buyer and the consummation by Buyer of the transactions
contemplated by this Agreement does not and will not
conflict with, or result in any violation of or default
under any provision of the Articles of Incorporation or
By-laws of Buyer, or any law, ordinance, rule, regulation,
judgment, order, decree, agreement, instrument or license
applicable to Buyer or to its properties or assets.
7.3 CONSENTS: Except for the consents of governmental agencies regarding the
transfer of leases, licenses and Permits which apply to the Assets, no
consent, approval, authorization, notice, filing, registration or
qualification is required to be obtained or effected by Buyer for the
execution, delivery or performance by Buyer of this Agreement.
7.4 LITIGATION, SUITS OR CLAIMS: To Buyer's Knowledge, there are no actions,
suits or proceedings pending or threatened in writing against Buyer which
if decided unfavorably to Buyer could have a Party Adverse Effect on Buyer,
or a material adverse effect on the value of the Assets.
7.5 DISCLOSURE: To Buyer's Knowledge, neither this Agreement nor any
certificate to be furnished to Unocal contains or, upon delivery thereof,
will contain any untrue statement of a material fact or omission, or upon
delivery thereof, will omit to state a material fact
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necessary to make the statements herein or therein, in light of the
circumstances under which they were or are made, not misleading.
7.6 NO BREACH: To Buyer's Knowledge, Buyer is not party to, or subject to, or
bound by any provision of any judgment, order, writ, injunction or decree
of any court, or governmental body, or any statute, rule or regulation
applicable to Buyer which prohibits or would be violated by, or which
allows for the termination or modification of this Agreement due to Buyer
entering into, executing, delivering or consummating same.
7.7 INVESTIGATIONS OF ASSETS: In accordance with the provisions of this
Agreement, Buyer has made, or will make or arrange for others to make, such
inspection of the Assets as it deems appropriate, and, except as otherwise
provided herein, Buyer will accept the Assets "AS IS," "WHERE IS" AND "WITH
ALL FAULTS AS TO ALL MATTERS."
7.8 NO DISTRIBUTION: Buyer is acquiring the Assets for its own account for
investment purposes and not with a view to or for sale in connection with
any distribution thereof within the meaning of the Securities Act of 1933,
as amended, and the rules and regulations thereunder and any applicable
state securities laws.
7.9 RESALE REGISTRATION: Buyer will not sell, transfer, lease or otherwise
convey in any manner, in whole or in part, the Assets without the necessary
registrations, or exemptions therefrom, under applicable federal and state
securities laws.
7.10 OIL AND GAS EXPERIENCE: Buyer, itself or as successor to MSR Exploration
Ltd., is and has been during the preceding two years primarily engaged in
the business of exploring for, drilling for, producing or refining oil or
gas and derives at least 80%, or $5,000,000 of its annual gross income,
from exploring for, drilling for, producing or refining oil or gas.
7.11 FEDERAL LEASES: If the Assets include any federal leases, Buyer is
qualified to own such federal leases or will be so qualified at Closing.
7.12 BROKERS: Buyer has not incurred any obligation or liability, contingent or
otherwise, for any fee payable to a broker or finder with respect to the
matters provided for in this Agreement which could be attributable to
Unocal.
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SECTION 8
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF UNOCAL
The obligation of Unocal to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment at Closing of each of the
following conditions, each of which may be waived by Unocal except as otherwise
required by law:
8.1 PURCHASE PRICE: At Closing, Buyer shall deliver:
(i) the Adjusted Purchase Price less the Earnest Money Deposit;
(ii) plus or minus as applicable the Cash Settlement; and
(iii) Pre-Closing Interest; and
(iv) the QRI Stock to the Escrow Agent.
8.2 BUYER'S REPRESENTATIONS AND WARRANTIES TRUE: The representations and
warranties of Buyer contained herein on the date hereof shall have been
correct in all material respects, and shall be correct in all material
respects on and as of the Closing with the same force and effect as though
made at and as of such time, except for the representations and warranties
specifically relating to a time or times other than the Closing, or as may
be affected by transactions contemplated hereby.
8.3 OFFICER'S CERTIFICATE: Buyer shall have furnished Unocal a certificate of
an officer of Buyer certifying that:
(i) the representations and warranties of Buyer contained in this
Agreement are true and correct in all material respects on and as
of the Closing Date with the same force and effect as though made
at and as of such time, except for representations and warranties
specifically relating to a time or times other than the Closing
Date, or except as may be affected by the transactions
contemplated hereby; and
(ii) Buyer has performed all of its obligations contained in this
Agreement required to be performed by it prior to Closing.
8.4 OPINIONS OF COUNSEL: (a) Buyer shall have furnished Unocal an opinion
rendered by legal counsel of Buyer, dated as of the Closing, to the effect
that:
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(i) Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the state wherein it was
incorporated or organized and is authorized to do business in the
State of Michigan;
(ii) Buyer has full power to carry out the transactions provided for
in this Agreement; this Agreement has been duly executed and
delivered by Buyer; and this Agreement is the legal and binding
obligation of Buyer, enforceable in accordance with its terms
except as enforceability may be limited or denied by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time
to time in effect that affect the rights of creditors generally
and except as enforcement or remedies may be limited or denied by
general equitable principles; and
(iv) the execution, delivery and performance of this Agreement by
Buyer and the consummation by Buyer of the transactions
contemplated by this Agreement will not constitute a breach,
violation, or default under the Certificate or Articles of
Incorporation or By-laws of Buyer.
(b) Buyer shall have furnished Unocal an opinion rendered by legal counsel
of Buyer dated as of the Closing, to the effect that:
(i) all regulatory, governmental, corporate, shareholder or other
approvals or consents necessary to validly issue and deliver the
QRI Stock have been obtained;
(ii) all applicable laws, regulations, and rules have been fully
complied with in connection with the issuance and delivery of the
QRI Stock to the Escrow Agent on behalf of Unocal; and
(iii) upon Closing, the QRI Stock will be, and is, validly issued,
outstanding, fully paid, non-accessible common stock of Buyer,
$.01 par value, per share free and clear of all liens,
restrictions or encumbrances of any kind whatsoever.
8.5 PRE-CLOSING PERFORMANCE: Buyer shall have performed, observed or complied
in all material respects with all its obligations and conditions required
by this Agreement to be performed, observed or complied with by it at or
prior to Closing.
8.6 AUTHORIZATION: All corporate actions necessary to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by
Buyer.
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8.7 ABSENCE OF LITIGATION: No litigation or administrative proceeding shall be
pending (or threatened), and no investigation shall have been commenced
(and be pending), by Buyer or any third party seeking to restrain or
prohibit (or questioning the validity or legality of) the consummation of
the transactions contemplated by this Agreement or seeking damages in
connection therewith which makes it unreasonable to proceed with the
consummation of the transactions contemplated hereby.
8.8 BONDS: Buyer shall have delivered to Unocal either copies of such bonds,
in form and substance and issued by corporate sureties satisfactory to
Unocal, covering the Assets as may be required under any laws, rules or
regulations of any federal, Indian tribe, state or local government
agencies having jurisdiction over the Assets, or a commitment by a surety
company, satisfactory to Unocal, to issue such bonds upon Closing.
8.9 PREFERENTIAL PURCHASE RIGHTS: All preferential purchase rights affecting
the Assets shall have been exercised, waived or assumed, or the election
time shall have expired.
8.10 HART-SCOTT-RODINO ACT: All obligations under the Hart-Scott-Rodino Act
shall have been satisfied.
8.11 ESCROW AGREEMENT: Buyer shall have executed and delivered a copy of the
Escrow Agreement.
SECTION 9
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to Closing, of each
of the following conditions, each of which may be waived by Buyer except as
otherwise required by law:
9.1 DELIVERY OF INSTRUMENTS OF TRANSFER: At Closing, Unocal shall deliver to
Buyer executed, and where appropriate recordable, bills of sale, lease
assignments, and other instruments of conveyance as required herein and
other instruments of conveyance as may be necessary and mutually agreed to
convey all of the Assets.
9.2 UNOCAL'S REPRESENTATIONS AND WARRANTIES TRUE: The representations and
warranties of Unocal contained herein on the date hereof shall have been
correct in all material respects, and shall be correct in all material
respects on and as of the Closing with the same force and effect as though
made at and as of such time, except for the representations and
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warranties specifically relating to a time or times other than the
Closing, or as may be affected by transactions contemplated hereby.
9.3 OFFICER'S CERTIFICATE: Unocal shall have furnished Buyer a certificate of
an officer of Unocal certifying that:
(i) the representations and warranties of Unocal contained in this
Agreement are true and correct in all material respects on and as
of the Closing Date with the same force and effect as though made
at and as of such time, except for representations and warranties
specifically relating to a time or times other than the Closing
Date, or except as may be affected by the transactions
contemplated hereby; and
(ii) Unocal has performed all of its obligations contained in this
Agreement required to be performed by it prior to Closing.
9.4 OPINION OF COUNSEL: Unocal shall have furnished Buyer an opinion rendered
by legal counsel for Unocal, dated as of the Closing, to the effect that:
(i) Unocal is a Corporation duly organized, validly existing, and in
good standing under the laws of the state of California and is
authorized to do business in the State of Michigan; and
(ii) Unocal has full power to carry out the transactions provided for
in this Agreement; this Agreement has been duly executed and
delivered by Unocal; and this Agreement is the legal and binding
obligation of Unocal, enforceable in accordance with its terms
except as enforceability may be limited or denied by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time
to time in effect that affect the rights of creditors generally
and except as enforcement or remedies may be limited or denied by
general equitable principles; and
(iii) the execution, delivery and performance of this Agreement by
Unocal and the consummation by Unocal of the transactions
contemplated by this Agreement will not constitute a breach,
violation, or default under the Articles of Incorporation or
By-laws of Unocal.
9.5 PRE-CLOSING PERFORMANCES: Unocal shall have performed, observed or
complied in all material respects with all its obligations and conditions
required by this Agreement to be performed, observed or complied with by it
at or prior to Closing.
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9.6 AUTHORIZATION: All corporate actions necessary to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by
Unocal.
9.7 ABSENCE OF LITIGATION: No litigation or administrative proceeding shall be
pending (or threatened), and no investigation shall have been commenced
(and be pending), by Unocal or by a third party against Unocal seeking to
restrain or prohibit (or questioning the validity or legality of) the
consummation of the transactions contemplated by this Agreement or seeking
damages in connection therewith which makes it unreasonable to proceed with
the consummation of the transactions contemplated hereby.
9.8 HART-SCOTT-RODINO ACT: all obligations under the Hart-Scott-Rodino Act
shall have been satisfied.
9.9 ESCROW AGREEMENT: Unocal shall have executed and delivered a counterpart
copy of the Escrow Agreement.
SECTION 10
COVENANTS
10.1 INVESTIGATION AND DECISION: The Parties further covenant as follows:
(i) INVESTIGATION OF ASSETS: During the Due Diligence Period Buyer
shall: (i) make, or arrange for others to make, such inspection
and investigation of the Assets and Assumed Liabilities as it
deems appropriate; (ii) investigate and have knowledge of
operative or proposed laws to which the Assets are or may be
subject; (iii) accept the Assets and Assumed Liabilities upon the
basis of its review and determination of the applicability and
effect of such laws; (iv) have reviewed and evaluated any data
room materials or other materials to which access has been
provided to Buyer by Unocal under this Agreement; and (v) have
made such investigations of the title, condition, status under
Environmental Laws, oil and gas laws and any other aspects of the
Assets and Assumed Liabilities as may be necessary or
appropriate. Buyer agrees that such inspections shall not
unreasonably interfere with the business and operations of
Unocal, and that such inspections and all such documents shall be
subject to the Confidentiality Agreement.
(ii) INDEPENDENT DECISION: Buyer has made its own independent
judgment of the commercial potential, condition and usefulness of
the Assets, taking into consideration all current Environmental
Laws and other laws and the likelihood
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that such Environmental Laws and other laws will change in the
future. Buyer has such knowledge and experience in business
and financial affairs in general, securities and investments,
and of the oil and gas business as conducted and regulated in
the State of Michigan in particular, as to be capable of
evaluating the merits and risks of purchasing the Assets.
10.2 ACCESS TO INFORMATION:
Unocal has afforded to Buyer and to Buyer's representatives, reasonable
access during the period prior to the execution of this Agreement and will
continue to afford to Buyer reasonable access until Closing to all of
Unocal's properties, books, contracts, documents and non-interpretative
records relating to the Assets, and, during such period, Unocal has used
and will continue to use reasonable efforts to furnish promptly to Buyer
all material information concerning the business and properties relating to
the ownership and operations of the Assets (subject to existing
confidentiality agreements with third parties and subject also to the
attorney-client privilege), including, to the extent prepared in the
ordinary course, such data and operating reports as may reasonably be
necessary or appropriate for any relevant purposes of investigation and
analysis related to this Agreement. Upon Buyer's reasonable request,
Unocal shall attempt to secure waivers of any such confidentiality
agreements. Unocal shall, to the best of its ability, arrange for Buyer
and its representatives to discuss with appropriate officers, employees,
consultants, contractors and representatives of Unocal such matters related
to the transactions provided for herein as Buyer may reasonably request.
Buyer will hold such information in confidence in accordance with the
Confidentiality Agreement.
10.3 ASSUMED LIABILITIES ASSUMED: If Closing occurs, then Buyer assumes hereby
any and all Assumed Liabilities; provided, however, that Unocal shall
continue to have responsibility for certain portions of the Qualified
Claims as described in Section 4 above.
10.4 [INTENTIONALLY OMITTED:]
10.5 GAS IMBALANCE: As to any Gas Imbalances which exist, the Parties agree
that:
(i) Unocal will furnish Buyer with a statement, in the form of
EXHIBIT "F", showing the most current estimate of the over or
under production between the owners as of the most recent
available date.
(ii) From and after the Effective Date, any and all benefits,
obligations and liabilities associated with Gas Imbalances shall
accrue to and be the responsibility of Buyer. Buyer shall assume
Unocal's overproduced or underproduced position in the wells
located on the Leasehold Properties as of the Effective Date,
including but not limited to the responsibility for the payment
of royalties on the volume of such gas
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which Unocal took in excess of its entitlement and any
obligation to balance whether in cash or in kind. The Final
Accounting shall include an adjustment for any Gas Imbalance
differences between the volume shown on EXHIBIT "F" and the
actual Gas Imbalances as of the Effective Date. Notwithstanding
the actual amounts or proceeds that Buyer may receive from the
Gas Imbalances due to underproduced positions, or the actual
amounts that Buyer must pay with respect to Gas Imbalances due
to overbalanced positions, the parties shall settle such Gas
Imbalances as between themselves, and the adjustments to the
Purchase Price and/or at the Final Accounting will be
calculated using a settlement price of $1.50 per Mcf (thousand
cubic feet).
10.6 HART-SCOTT-RODINO ACT: Each Party shall prepare and submit, within
fifteen (15) days of the execution of this Agreement, any necessary
filings in connection with the transactions contemplated by this
Agreement under the Hart-Scott-Rodino Act, but Buyer shall be
responsible for all filing costs and expenses. The Parties shall
request expedited treatment of such filing by the Federal Trade
Commission, shall promptly make any appropriate or necessary
subsequent or supplemental filings, and shall furnish to each other
copies of all filings made under the Hart-Scott-Rodino Act at the
same time they are filed with the government.
10.7 THIRD-PARTY CONSENTS: Certain of the transfers contemplated by this
Agreement are subject to various forms of third-party consents,
including compliance with the provisions of the Hart-Scott-Rodino
Act. Unocal and Buyer shall cooperate and shall promptly take such
action as may be required to obtain all necessary consents prior to
Closing. Unocal and Buyer agree that to the extent any contract,
Permit or other Assets that would otherwise be assigned under this
Agreement is not capable of being assigned, transferred, subleased
or sublicensed without the consent of, or waiver by any other party
thereto, or any other Person, or if such assignment, transfer,
sublease or sublicense or attempted assignment, transfer, sublease
or sublicense would constitute a breach thereof, or a violation of
any law, this Agreement shall not constitute an assignment,
transfer, sublease or sublicense, or an attempted assignment,
transfer, sublease or sublicense of any such contract, Permit or
Asset. With respect to each contract that, but for the reasons set
forth in the first sentence of this Section, would be assigned,
Unocal agrees to provide Buyer with the benefits (including the
right to terminate any such contract or Permit in accordance with
the terms thereof) of such contract, Permit or Asset, to the extent
related to transactions or periods that occur at or after Closing,
and to the extent it is possible to do so; and, if and to the
extent such benefits are provided to Buyer, Buyer agrees to observe
and perform such contract or Permit. Unocal shall continue to use
its reasonable efforts to obtain an assignment to Buyer of each
contract, Permit or Asset that, but for the reasons set forth in
the first sentence of this Section, would be assigned; provided,
however, that
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Unocal shall not be required to pay any consideration or suffer any
financial disadvantage to obtain such assignment.
10.8 COMPLETION OF DUE DILIGENCE: Within three (3) days of the end of the
Due Diligence Period Buyer shall give Unocal a letter of
satisfactory completion of due diligence substantially in the form
attached hereto as EXHIBIT "J".
10.9 ADDITIONAL AGREEMENTS: Unocal and Buyer shall execute such further
documents and instruments, requested by either Party, as may be
necessary or reasonably desirable to consummate the transactions
contemplated by this Agreement or any part thereof. Subject to the
other terms and conditions of this Agreement, each of the Parties,
hereto agrees to use its best efforts at its own expense to take,
or cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws to
consummate and make effective the transactions contemplated by this
Agreement.
10.10 PAYMENT OF CERTAIN EXPENSES DUE AND PAYABLE AFTER THE EFFECTIVE DATE:
Buyer shall pay, as and when due, all fees and bills due and payable
after the Closing Date, and Unocal shall reimburse Buyer within thirty
(30) days after invoice for any amounts under such bills attributable
to any period prior to the Effective Date for which it is responsible
hereunder; provided, however that if after Closing Unocal is obligated
to continue as operator under an existing agreement Unocal shall make
payments for Buyer's account and at Buyer's expense.
10.11 NOTIFICATION OF CERTAIN MATTERS: Between the Effective Date and
Closing, Unocal and Buyer will each give prompt notice to the other of
(i) any information that indicates that any representation or warranty
contained herein was not true and correct as of the date hereof or
will not be true and correct as of the Closing Date; (ii) the
occurrence of any event which will result, or has a reasonable
prospect of resulting, in the failure to consummate the transactions
contemplated hereunder on or before the Closing Date or to satisfy a
condition to Closing herein as the case may be; (iii) any notice or
other communication from any third party alleging that the consent or
waiver of such third party is required in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement; and (iv) any notice of,
or other communication relating to any default or event which, with
notice or lapse of time or both, would become a default under any
contract to be assigned at Closing.
10.12 ANNOUNCEMENTS: At all times prior to Closing or termination of this
Agreement, Unocal and Buyer, including their respective Affiliates,
shall use their best efforts to cooperate in the development and
distribution of all news releases and other public disclosures
relating to the proposed transactions described in this Agreement, and
agree that no such releases or disclosures will be made without prior
notice to the other Party; provided, however, that from the date of
this Agreement and continuing for twelve (12) months after the Closing
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reserve volumes cannot be disclosed in a news release, and no news
release or public disclosure whatsoever by Buyer may disclose the
identity of Unocal or a specific description of the Assets unless both
Parties agree to the form and content of such disclosure, each being
under no obligation to agree and having the right to withhold
agreement for any reason; provided, also that either Party may make
all disclosures which are required or prudent under applicable laws,
including, but not limited to, rules, regulations and guidelines of
the Securities and Exchange Commission and applicable stock exchanges.
10.13 TERMINATION OF GUARANTEES AND OTHER COMMITMENTS:
(i) Subject to applicable laws, as of the Closing Date, all of
the following shall be canceled or terminated as to Buyer:
(i) undertakings, comfort letters or guarantees by Unocal or
any of its Affiliates to third parties in connection with the
Assets; (ii) letters of credit, surety bonds, and related
indemnity agreements arranged and maintained by Unocal or any
of its Affiliates with respect to the Assets; and (iii) any
credit card accounts issued by Unocal or any of its
Affiliates to any employees in connection with the Assets.
(ii) Buyer understands and agrees that all insurance policies,
provided to or for the Assets through Unocal, any Affiliate
of Unocal, or a self-insurance program of Unocal will be
terminated as to the Assets as of the Closing Date.
(iii) Unocal and Unocal's Affiliates shall have no responsibility
or liability under this Agreement to provide for insurance
coverage or any such security for the Assets in any manner
whatsoever after the Effective Date.
10.14 LIKE KIND EXCHANGE: Without affecting its obligations hereunder, with
appropriate prior notice to the other Party, either Party shall have
the option, at or before Closing, to structure the Closing of this
transaction in such a manner so as to qualify as a like kind exchange
pursuant to Section 1031 of the Internal Revenue Code of 1986, as
amended, provided that such a structure shall not delay the Closing in
any way. The other Party will cooperate with the electing Party to
facilitate a like kind exchange but will in no event be required to
take title to any replacement properties. In the event either Party
desires such exchange, it shall timely notify the other Party, in
writing, of its intent and the electing Party shall be responsible for
arranging the structure of the exchange, compliance with time limits
for like kind exchanges, the preparation of appropriate documents to
complete the transaction, and all additional costs directly related
thereto. The electing Party shall indemnify the other Party against
all losses, costs, expenses, taxes, fines, penalties or assessments
arising out of any like kind exchange structure.
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10.15 ACCESS TO GEOLOGIC AND GEOPHYSICAL INFORMATION: As long as the same
remains in Buyer's possession or control, Unocal retains the right to
copy any and all geologic and geophysical information transferred or
licensed to Buyer hereunder, and Buyer agrees to co-operate with
Unocal in granting access to such information.
SECTION 11
EMPLOYEE MATTERS
11.1 EMPLOYEE LIST: To the extent requested by Buyer in writing, within
ten days after execution of this Agreement, Unocal shall provide Buyer
a list of field employees at each work location for the Assets,
indicating name, job classification and years of service with Unocal.
11.2 JOB CLASSIFICATION: Within ten days after the execution of this
Agreement Buyer shall provide Unocal a summary of Buyer's job
classifications for the Assets together with minimum and maximum
pay scales.
11.3 DISCLOSURE: Buyer authorizes Unocal to disclose the summary to
Unocal field employees working on the Assets or their representatives.
11.4 RESUMES: Unocal shall advise field employees at each work location
for the Assets that they may submit their resumes and work history
to Buyer for Buyer's consideration regarding employment.
11.5 HIRED EMPLOYEE LIST: Within thirty days after Closing, Buyer shall
provide Unocal with a list of all Unocal field employees hired by
Buyer and their base pay rate. Within thirty days after Closing
(or, after Closing, within thirty (30) days of hiring such employee
at any time within 18 months following the Closing), Buyer shall
provide Unocal with a list of all Unocal field employees hired by
Buyer and their base pay rate.
11.6 TERMINATED EMPLOYEES: For any Unocal field employee hired by Buyer
and terminated without cause by Buyer within 180 days of Closing,
Buyer shall pay one-half and Unocal shall pay one-half of such
employee severance benefits in accordance with Unocal's Termination
Allowance Plan on the same terms and conditions as if such employee
had been terminated by Unocal on the Closing Date and not employed
by Buyer. Unocal's share of such payment will be reduced by any
termination allowance already paid by Unocal.
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SECTION 12
TAXES
12.1 APPORTIONMENT OF AD VALOREM AND PROPERTY TAXES: All ad valorem taxes, real
property taxes, personal property taxes and similar obligations shall be
apportioned as of the Effective Date between Buyer and Unocal. All such
taxes allocable to the periods before the Effective Date shall be paid by
Unocal, and all such taxes allocable to the Effective Date and after shall
be paid by Buyer. Any refunds of taxes allocable to periods prior to the
Effective Date shall be the property of Unocal. Buyer shall file or cause
to be filed all required reports and returns incident to such taxes which
are due on or after the Closing Date, and shall pay or cause to be paid to
the taxing authorities all such taxes reflected on such reports and
returns.
12.2 SALES TAXES, FILING FEES, ETC.: The Purchase Price provided for hereunder
is net of any sales taxes or other transfer taxes. Buyer shall be liable
for any sales tax or other transfer tax as well as any applicable
conveyance, transfer and recording fees, and real estate transfer stamp or
taxes imposed upon the sale pursuant to this Agreement, and Buyer shall
defend any action by a governmental agency to collect such taxes or fees,
and will hold Unocal harmless from any cost or liability for taxes, fees,
penalty, interest or costs, including reasonable attorney's fees, assessed
as a result of this transaction.
12.3 OTHER TAXES: All production, severance or excise taxes, conservation fees
and other similar such taxes or fees (other than income taxes) relating to
oil and gas produced and sold from the Assets prior to the Effective Date
shall be paid by Unocal, and all such taxes and fees relating to such oil
and gas produced and sold on the Effective Date and after shall be paid or
reimbursed by Buyer (or if attributable to periods after the Effective Date
and Unocal pays such taxes, then Buyer shall reimburse Unocal therefore).
Any rebates, refunds or similar credits attributable to such taxes and fees
for periods prior to the Effective Date shall be, and remain, the property
of Unocal (and Buyer is hereby notified that Unocal is seeking certain
rebates, refunds or similar credits from the applicable taxing
authorities). In the event such taxes attributable to the Assets are not
assessed on a current year basis, it is agreed that when such taxes are
assessed, insofar as they Accrued to the Assets on or before the Effective
Date, they shall be paid by Unocal upon receipt of a statement and
supporting documentation.
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SECTION 13
TERMINATION
13.1 TERMINATION: This Agreement and the transactions contemplated herein may
be terminated at any time prior to Closing:
(i) by mutual consent of the Parties; or
(ii) by either Party, without impairing any other rights hereunder, if
there has been a material breach of covenant or agreement
contained in this Agreement on the part of the other Party, or a
failure of a condition and such breach of a covenant or agreement
or failure of a condition has not been promptly cured; or
(iii) by either Party, upon written notice to the other Party, pursuant
to Section 4.9, or by Buyer under Section 5.2 hereof.
13.2 EFFECT OF TERMINATION:
(i) In the event of termination of this Agreement by mutual consent
of the Parties or pursuant to Section 13.1(iii) above, this
Agreement shall forthwith become void and there shall be no
liability or obligation on the part of either Party or their
respective officers or directors or shareholders except as
otherwise set forth herein. Unocal shall in such event return
the earnest money deposit within fifteen (15) business days of
such termination plus interest calculated at the Interest Rate.
(ii) In the event this Agreement is terminated under Section 13.1(ii)
by Buyer:
(a) If Unocal concurs with Buyer that a material breach of
covenant or agreement or failure of a condition has
occurred and was not promptly cured, Unocal shall
return the Earnest Money Deposit within fifteen (15)
business days of such termination, plus interest
calculated at the Interest Rate;
(b) If Unocal does not concur with Buyer that a material
breach of covenant or agreement or failure of a
condition has occurred and was not promptly cured, then
such dispute regarding the Earnest Money Deposit shall
be resolved through the arbitration provisions set
forth in EXHIBIT "D" hereto.
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(iii) If Unocal prevails in the arbitration proceeding regarding the
value of Material Environmental Deficiencies pursuant to Section
4.10(iii), or if Unocal terminates under Section 13.1(ii) for
good cause, then Unocal shall, in consideration of holding the
Assets off the market and refraining from dealing with others
concerning the Assets and as liquidated damages in lieu of all
other damages, retain the Earnest Money Deposit made by Buyer.
The Parties hereby acknowledge that the extent of damages to
Unocal occasioned by such breach or default or failure to proceed
by Buyer would be impossible or extremely impractical to
ascertain and that the Earnest Money Deposit is a fair and
reasonable estimate of such damages under the circumstances.
Provided, also, if Buyer does not contest Unocal's termination
under Section 13.1(ii) by written notification within ten (10)
days, or if Buyer terminates under Section 4.9 and the existence
of a Material Environmental Deficiency is being arbitrated
hereunder, Unocal shall be free to enjoy all rights of ownership
of the Assets and to sell, transfer, encumber or otherwise
dispose of the Assets to any party without any restriction under
this Agreement.
13.3 SPECIFIC PERFORMANCE: If Closing does not occur as contemplated herein by
reason of Unocal's determination that Buyer has breached this Agreement or
failed to satisfy a condition, Buyer may contest Unocal's termination of
this Agreement and seek specific performance of the Agreement, provided it
notifies Unocal in writing of its election to seek specific performance
within ten (10) days of Unocal's notice of termination under
Section 13.1(ii). The losing Party shall pay the prevailing Party's
costs and reasonable attorney's fees together with any actual damages
suffered or incurred.
SECTION 14
SURVIVAL AND INDEMNIFICATION
14.1 SURVIVAL: Notwithstanding any investigation conducted by any Party hereto
and any information which any Party may receive, a claim for a breach of
any of the representations, warranties or covenants contained in this
Agreement, or in any Exhibit, certificate, document or statement delivered
pursuant hereto, or pursuant to any indemnification, or of any third party
claims under Section 14.3(i) must be made within one (1) year following
Closing; provided, however, that nothing in this Section shall be construed
to limit the time for making a claim by Unocal against, or for seeking
indemnification from, Buyer with regard to Assumed Liabilities.
14.2 INDEMNIFICATION:
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(i) Except as otherwise set forth herein and except for Assumed
Liabilities of Buyer, Unocal shall indemnify and hold harmless
Buyer, and its successors and assigns, against, and in respect
of, any and all damages, claims, losses, liabilities and
expenses, including, without limitation, reasonable legal,
accounting and other expenses, which may arise out of: (i) any
breach or violation of this Agreement by Unocal; (ii) any breach
of any of the representations, warranties or covenants made in
this Agreement by Unocal; or (iii) liabilities expressly retained
by Unocal in this Agreement; PROVIDED, HOWEVER, THAT
NOTWITHSTANDING ANYTHING STATED HEREIN TO THE CONTRARY, UNOCAL'S
AGGREGATE LIABILITY AND OBLIGATION UNDER THIS AGREEMENT
(INCLUDING, BUT NOT LIMITED TO, UNDER THIS SECTION), SHALL NOT
EXCEED (AND BUYER RELEASES UNOCAL FROM ALL LIABILITY IN EXCESS
OF) THE MAXIMUM AMOUNT OF LIABILITY OF UNOCAL SPECIFIED IN
SECTION 4.7 HEREOF, REGARDLESS OF THE SOLE, JOINT OR CONCURRENT
NEGLIGENCE, STRICT LIABILITY, BREACH OF CONTRACT OR OTHER FAULT
OR RESPONSIBILITY OF UNOCAL OR ANY OTHER PERSON OR PARTY.
(ii) Buyer shall indemnify and hold harmless Unocal, and its
successors and assigns, against, and in respect of, any and all
damages, claims, losses, liabilities and expenses, including,
without limitation, reasonable legal, accounting and other
expenses, which may arise out of: (i) any breach or violation of
this Agreement by Buyer; (ii) any breach of any of the
representations, warranties or covenants made in this Agreement
by Buyer; or (iii) Assumed Liabilities of Buyer.
14.3 THIRD PARTY CLAIMS:
(i) Except as otherwise set forth herein and except for Assumed
Liabilities of Buyer, Unocal shall indemnify and hold Buyer and
its successors and assigns harmless against any and all damages,
claims, losses, liabilities and expenses, including, without
limitation, reasonable legal, accounting and other expenses,
arising out of any third party claim, legal suit or proceeding
against Buyer, which claim, legal suit or proceeding arises from
the conduct of the business of Unocal or the ownership of the
properties owned or leased by Unocal prior to the Closing Date;
provided, however, that Unocal's indemnity obligation hereunder
shall be limited to the Adjusted Purchase Price.
(ii) Buyer shall indemnify and hold Unocal and its successors and
assigns harmless against any and all damages, claims, losses,
liabilities and expenses, including,
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without limitation, reasonable legal, accounting and other
expenses, arising out of any third party legal suit or proceeding
against Unocal, which legal suit or proceeding arises out of
Assumed Liabilities, or from the conduct of the business of Buyer
or the ownership of the properties owned or leased by Buyer after
the Closing Date.
14.4 METHOD OF ASSERTING CLAIMS: The Party making a claim under this Section,
or any other indemnity provision herein, is hereinafter referred to as the
"Indemnified Party" and the Party against whom such claims are asserted is
hereinafter referred to as the "Indemnifying Party". All claims by an
Indemnified Party shall be asserted and resolved as follows:
(i) If any claim or demand for which an Indemnifying Party would be
liable to an Indemnified Party hereunder is asserted against or
sought to be collected from such Indemnified Party by a third
party, such Indemnified Party shall as promptly as is practicable
after its receipt of such claim or demand, deliver a Claim Notice
to the Indemnifying Party; provided, however, that any failure to
give such notice will not waive any rights of the Indemnified
Party except to the extent that either the rights of the
Indemnifying Party are actually prejudiced or such notice is not
given within the applicable time periods set forth in this
Agreement.
The Indemnifying Party may, and upon request of the Indemnified
Party shall, retain counsel of its choice to represent the
Indemnified Party and any others the Indemnifying Party may
reasonably designate in connection with such claim or demand and
shall pay the fees and disbursements of such counsel with regard
thereto; provided, however, that any Indemnified Party is hereby
authorized prior to the date on which it receives written notice
from the Indemnifying Party designating such counsel to retain
counsel whose reasonable fees and expenses shall be at the
expense of the Indemnifying Party to file any action, answer or
other pleading and take such other action which it shall
reasonably deem necessary to protect its interests or those of
the Indemnifying Party until the date on which the Indemnified
Party receives such notice from the Indemnifying Party.
In the event that the Indemnifying Party shall retain such
counsel, the Indemnified Party shall have the right to retain its
own counsel but the fees and expenses of such counsel shall be at
the expense of the Indemnified Party unless:
(a) the Indemnifying Party and the Indemnified Party shall
have mutually agreed to the retention of such counsel;
or
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(b) the named parties to any such proceeding (including,
but not limited to, any impleaded parties) include both
the Indemnifying Party and the Indemnified Party and
representation of both Parties by the same counsel
would involve such counsel in an actual or potential
conflict of interest in violation of applicable
principles of professional ethics.
(ii) If requested by the Indemnifying Party, the Indemnified Party
agrees to cooperate with the Indemnifying Party and its counsel
in contesting any claim or demand that the Indemnifying Party
defends, or, if appropriate and related to the claim in question,
in making any counterclaim against the Person asserting the third
party claim or demand, or any cross- complaint against any
Person. If the Indemnifying Party has accepted responsibility in
writing, no claim or demand that would result in an Indemnifying
Party being liable hereunder may be settled without the consent
of the Indemnifying Party which consent shall not be unreasonably
withheld. Unless the Indemnifying Party shall have agreed in
writing that any and all damages to the Indemnified Party related
to a claim or demand are fully covered by the indemnities
provided herein, no such claim or demand may be settled without
the consent of the Indemnified Party, which consent will not be
unreasonably withheld. Except with respect to settlements
entered into without the Indemnified Party's consent pursuant to
the immediately preceding sentence, to the extent it shall be
determined that the Indemnified Party shall have no right
pursuant to this Section to be indemnified by the Indemnifying
Party, the Indemnified Party shall promptly pay to the
Indemnifying Party:
(a) any amounts previously paid or advanced by the
Indemnifying Party to the Indemnified Party with
respect to such matters pursuant to this Section; plus
(b) interest thereon until paid by the Indemnified Party at
the Interest Rate for the period commencing on the date
on which such amount was paid or advanced and ending
sixty (60) days after the date on which such amount was
paid or advanced and ending sixty (60) days after the
date on which it was finally determined that the
Indemnified Party had no such right to be indemnified.
(iii) In the event the Indemnified Party should have a claim against
the Indemnifying Party hereunder which does not involve a claim
or demand being asserted against or sought to be collected from
it by a third party, the Indemnified Party shall as promptly as
is practical send a Claim Notice with respect to such claim to
the Indemnifying Party; provided, however, that any failure to
give such notice will not waive any rights of the Indemnified
Party except to the extent
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that either the rights of the Indemnifying Party are actually
prejudiced or such notice is not given within the applicable time
periods set forth in this Agreement. If the Indemnifying Party
notifies in writing the Indemnified Party that it does not
dispute such claim, the amount of such claim shall be
conclusively deemed a liability of the Indemnifying Party
hereunder and shall be paid to the Indemnified Party immediately.
If the Indemnifying Party disputes such claim, such dispute shall
be resolved by good faith negotiations between the Parties.
(iv) From and after the delivery of a Claim Notice hereunder, at the
reasonable request of the Indemnifying Party, the Indemnified
Party shall grant the Indemnifying Party and its representatives
full and complete access to the books, records and properties of
the Indemnified Party to the extent reasonably related to the
matters with which the Claim Notice is concerned. The
Indemnifying Party will not, and shall require that its
representatives do not, use (except in connection with such Claim
Notice) or disclose to any third Person other than the
Indemnifying Party's representatives (except as may be required
by law) any information obtained that is designated as
confidential by the Indemnified Party, unless such information
is:
(a) generally available to the public other than as the
result of a wrongful act or omission by the
Indemnifying Party;
(b) already within the knowledge of the Indemnifying Party;
(c) available to the Indemnifying Party through other
Sections herein, or
(d) provided to the Indemnifying Party in writing by a
third party who is under no obligation to the
Indemnified Party to protect the confidentiality
thereof.
All such access shall be granted during normal business hours, shall be
subject to the normal safety regulations of the Indemnified Party, and
shall be granted under conditions that will not interfere with the business
and operations of the Indemnified Party. Nothing contained in this Section
shall be construed to expand or reduce the rights or obligations of the
Indemnifying Party with respect to any information previously provided to
the Indemnifying Party pursuant to any other confidentiality agreement.
14.5 RIGHT TO CURE: Any Party that is obligated to indemnify, defend and/or
hold harmless any other Party pursuant to any provision of this Agreement
shall have the right to cure, within a reasonable time and in a manner
reasonably satisfactory to such Indemnified Party, any matter giving rise
to such obligation; provided, however, that any such cure shall not
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relieve or reduce any such obligation to the extent that such cure is
inadequate. The Indemnified Party may, if there is no attempt to cure or
if the cure is inadequate, expend reasonable sums to cure, which sums shall
be reimbursed together with interest at the Interest Rate.
SECTION 15
CLOSING
15.1 TIME OF ESSENCE: Time is expressly declared to be of the essence under
this Agreement.
15.2 PLACE AND DATE: Closing shall occur at Unocal's offices at 14141 Southwest
Freeway, Sugar Land, Texas 77478 on or before May 17, 1999 ("Closing
Date"), unless extended by agreement of the parties.
15.3 UNOCAL'S ACTIONS AT CLOSING: At Closing, Unocal shall perform the
following actions:
(i) Unocal shall deliver to Buyer herein-required opinions of counsel
and certificates;
(ii) Unocal shall execute and deliver to Buyer all required
instruments of conveyance and sale, including an Assignment in
the form attached hereto as EXHIBIT "K";
(iii) Unocal shall (subject to the terms of applicable operating
agreements and other provisions hereof) deliver to Buyer
exclusive possession of the Assets;
(iv) Unocal shall, at or as promptly as reasonably possible and within
15 days after Closing, provide or make available to Buyer, at
Buyer's cost and expense, the following records relating to the
Assets to the extent they are in Unocal's possession and subject
to the attorney-client privilege,: lease files; unit files; lease
contract files; well files; and all non-interpretative geologic
information, but specifically excluding any information or data
that Unocal is restricted from disclosing, information which is
trade secret or proprietary to Unocal and is not part of the
Assets and all other records, including, but not limited to,
corporate records, computer programs and general tax records. To
the extent possible, Unocal shall deliver to Buyer originals of
such files, documents and records; provided, however, that Unocal
may, at Buyer's cost and expense, retain copies of all such
original documents. Unocal shall also provide copies of all
seismic data covering the Assets described in EXHIBIT "I-1",
subject to Buyer's execution of a Geophysical Data Licensing
Agreement in the form of EXHIBIT "I" covering such seismic data,
that Unocal is not contractually or otherwise
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legally restricted from disclosing. As to any seismic data
Unocal is contractually or otherwise legally restricted from
disclosing, Buyer may prepare and provide Unocal with documents
requesting waivers of the applicable restrictions, and Unocal
shall forward such requests as well as provide Buyer such other
assistance in obtaining waivers of the applicable restrictions as
is reasonable under the circumstances. If Buyer obtains any or
all seismic data described in EXHIBIT "I-1", the Purchase Price
shall be increased by the "Geophysical Seismic License Price".
Any data, documents or information provided or made available
hereunder or in connection with the transactions contemplated
herein is provided WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY
KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, AS TO
THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED
THEREIN, and shall be at Buyer's sole risk and expense. Any
other provision of this Agreement to the contrary
notwithstanding, Unocal shall not provide Buyer with copies of
any records or data or access to any records or data which Unocal
cannot legally provide to Buyer because of third party
restrictions on Unocal; and
(v) Unocal shall deliver to Buyer a certificate of a corporate
officer to the effect that, as of the Closing Date, it is not a
foreign person as defined in the Internal Revenue Code of 1986,
as amended, and Income Tax Regulations, such certificate to be
substantially in the form described in Treasury Regulation
Section 1.1445-2(b)(2)(iii)(B) or otherwise within the
requirements of Section 1.1445-2(b)(2) of that regulation;
(vi) Unocal shall execute and deliver to Buyer the Investment Letter
and a counterpart of the Escrow Agreement.
15.4 BUYER'S ACTIONS AT CLOSING: At Closing, Buyer shall perform the following
actions:
(i) Buyer shall execute and deliver to Unocal an Assumption Agreement
in the form attached hereto as EXHIBIT "L";
(ii) Buyer shall pay and deliver the Purchase Price;
(iii) Buyer shall deliver the QRI Stock to the Escrow Agent;
(iv) Buyer shall execute and deliver to Unocal a counterpart of the
Escrow Agreement;
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(v) Buyer shall execute and deliver to Unocal all herein required
opinions of counsel and certificates;
(vi) Buyer shall pay Unocal the balance remaining due of the
Adjusted Purchase Price, plus or minus the Cash Settlement; and
(vii) Buyer shall pay Unocal the Pre-Closing Interest.
15.5 CLOSING STATEMENT: Unocal and Buyer shall execute a joint closing
statement acknowledging the payment of the Adjusted Purchase Price,
the Cash Settlement, the transfer of the Assets, and the assumption of
liabilities.
15.6 NOTICES: Immediately after Closing, Buyer shall notify all operators,
non-operators, oil or gas purchasers, government agencies and royalty
owners that it has purchased the Assets.
SECTION 16
ACTIONS AFTER CLOSING
16.1 FINAL ACCOUNTING: Within 120 days after Closing Unocal shall provide
Buyer with a statement of accounting ("Final Accounting"). Buyer
shall have the right to cause its accountant, in consultation with
Unocal's accountant, to review the Final Accounting within an
additional thirty (30) days following Unocal's delivery of such
notice. If Buyer's accountant and Unocal's accountant are unable to
agree upon the Final Accounting within an additional thirty (30)
days following completion of Buyer's review of the Final Accounting
described above, then any disputes shall be resolved through the
arbitration procedures set forth in EXHIBIT "D", except that the
arbiters shall be certified public accountants with joint interest
billing experience.
16.2 RECEIPTS AND CREDITS: The Final Accounting notwithstanding, all
monies, proceeds, receipts, credits and income attributable to the
Assets for all periods of time subsequent to the Effective Date
except as otherwise provided herein, shall be the sole property and
entitlement of Buyer, and to the extent received by Unocal, Unocal
shall account for and reflect the same to Buyer in the Final
Accounting after Closing. All monies, proceeds, receipts and income
attributable to the Assets except as otherwise provided in this
Agreement for all periods of time prior to the Effective Date shall
be the sole property and entitlement of Unocal and, to the extent
received by Buyer, Buyer shall fully disclose, account for and
transmit same to Unocal promptly. All costs, expenses and
disbursements attributable to the Assets for periods of time prior
to the Effective Date except as otherwise provided herein,
regardless of when due or payable, shall be the sole obligation of
Unocal and Unocal shall promptly pay, or if paid by Buyer, promptly
reimburse Buyer for and
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hold Buyer harmless from and against same. All costs, expenses and
disbursements attributable to the Assets for periods of time
subsequent to the Effective Date regardless of when due or payable,
shall be the sole obligation of Buyer and Buyer shall promptly pay,
or if paid by Unocal, promptly reimburse Unocal for and hold Unocal
harmless from and against same. Unocal shall be entitled to a
credit for and reimbursement in an amount equal to any amount
received by Buyer after Closing for any delivery or performance by
Unocal prior to the Effective Date, and Buyer shall be entitled to a
credit for and reimbursement in an amount equal to any amount
received by Unocal after Closing for any delivery or performance by
Buyer after the Effective Date.
16.3 SUSPENDED FUNDS: After the Closing, Unocal will provide to Buyer a
listing showing all proceeds from production attributable to the
Leasehold Interests which are currently held in suspense and shall
transfer to Buyer all of those suspended proceeds. Buyer shall be
responsible for proper distribution of all the suspended proceeds,
to the extent turned over to it by Unocal, to the parties lawfully
entitled to them, and hereby agrees to indemnify, defend and hold
harmless Unocal from and against any and all claims, liabilities,
losses, costs and expenses, arising out of or relating to those
suspended proceeds to the extent turned over to it by Unocal.
16.4 FURTHER ASSURANCES: After Closing, Unocal and Buyer agree to take
such further actions and to execute, acknowledge and deliver all
such further documents that are necessary or useful in carrying out
the purposes of this Agreement or of any document delivered pursuant
hereto.
16.5 POST-CLOSING ACCOUNTING ASSISTANCE: Subsequent to Closing, at Buyer's
request, Unocal shall have the option to continue performing
accounting obligations for the Assets for a period of time not to
exceed six (6) months. Unocal shall be compensated the sum of
$15,000 per month for each month or portion thereof during which
Buyer requests such assistance. Unocal shall have no obligation to
provide accounting assistance post-Closing for any portion of the
Assets, except as is reasonable in good faith in a transaction of
this type to transfer files and necessary information to Buyer.
16.6 RECORDING: Buyer shall, at its own cost, immediately record all
instruments of conveyance and sale in the appropriate office of the
state and county in which the lands covered thereby are located.
Buyer shall immediately file for and obtain the necessary approval
of all federal, Indian tribal or state government agencies to the
assignment of the Assets. The assignment of any state, federal or
Indian tribal oil and gas leases shall be filed in the appropriate
governmental offices on a form required and in compliance with the
applicable rules of the applicable government agencies. Buyer shall
supply Unocal, at Unocal's cost, with a true and accurate photocopy
of all the recorded and filed assignments within a reasonable period
of time after their recording and filing.
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16.7 BOOKS AND RECORDS: Notwithstanding any other provision herein
contained, Buyer shall retain all original documents, if any,
delivered to Buyer hereunder which pertain to the Assets for as long
as it so desires and make the same available after the Closing for
inspection and copying by Unocal during normal business hours, upon
reasonable request and upon reasonable notice; provided, however,
that during the first ten (10) years after Closing, such books,
records or documents shall not be disposed of or destroyed by Buyer
without first advising Unocal in writing and giving Unocal
reasonable opportunity to obtain possession thereof.
16.8 ACCESS TO PROPERTIES AND RECORDS BY BUYER: From and after the Closing
Date, Unocal will afford to Buyer and its authorized representatives
reasonable access during normal business hours to the then current
officers and employees of Unocal retained by Unocal who were
employed in connection with the Assets and will cooperate with Buyer
in making available to Buyer at Buyer's expense, unless the action
is an action by Buyer against Unocal, as a witness or deponent such
employees of Unocal in each case only so long as such persons are
then employees of Unocal or an Affiliate of Unocal, as Buyer may
request for financial reporting, tax or similar purposes, purposes
of investigating claims, or conducting litigation or administrative
proceedings with third parties or government agencies. Unocal will
also afford to Buyer and its authorized representatives, for
appropriate purposes, such reasonable access during normal business
hours to the properties and relevant books and records of Unocal
associated with the Assets prior to the Closing Date but not
transferred to Buyer.
16.9 ACCESS TO PROPERTIES AND RECORDS BY UNOCAL: From and after the Closing
Date, Buyer will afford to Unocal and its authorized representatives
reasonable access, during normal business hours, to the transferred
employees, as shall at such time be employees of Buyer and who were
prior to the Closing Date associated with the Assets, and to such
properties, books and records relating to the Assets transferred to
Buyer hereunder without charge, and will furnish to Unocal such
additional information, and will cooperate with Unocal in such other
respects, including the making available to Unocal at Unocal's
expense, unless the action is an action by Unocal against Buyer, as
a witness or deponent such former employees of Unocal as shall be at
the time employees of Buyer, as Unocal may request for financial
reporting, tax or similar purposes, purposes of investigating
claims, or conducting litigation or administrative proceedings with
third parties or government agencies. Buyer will also provide to
Unocal's authorized representatives such reasonable access without
charge during normal business hours to the officers, employees,
properties, books and records transferred to Buyer in connection
with this Agreement. In addition, Buyer will provide access to
Assets, and Buyer will cooperate with other reasonable request of
Unocal, in connection with any investigation of, or procurement of,
insurance by Unocal relating to the Assets, including, without
limitation, requests by Unocal (or its insurer) of financial,
operational, environmental compliance and other information of or
relating to Buyer.
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16.10 CALL ON PRODUCTION: (a) On Oil - If not already reserved by another
party, Unocal hereby reserves, at its option, exercisable at any
time and from time to time for twenty (20) years after the date
hereof, the option to buy any and all oil and other liquid
hydrocarbons produced from or attributable to the Assets. If Unocal
elects to exercise this option, it shall so notify Buyer in writing
at least thirty (30) days before its purchases are to begin. Such
purchases shall continue until terminated by Unocal with at least
thirty (30) days written notice thereof to Buyer. Notwithstanding
the foregoing, (i) when Unocal has exercised its option for a call
on crude oil, condensate or liquid hydrocarbons, and a bona fide
written offer is received by Buyer from an unaffiliated third party
for a price higher than the posted market price by Unocal for crude
oil and condensate, Unocal shall elect whether or not to meet this
higher offer, (ii) if Unocal elects not to meet this higher offer,
Unocal shall temporarily waive its call rights for the period of
such price differential and (iii) Unocal shall be deemed to
permanently waive the rights reserved under this Section 16.10(a)
if Unocal has not exercised any of such rights within any
consecutive two-year period following the Closing.
(b) Applicable Price - At any time Unocal exercises its option to
purchase, the price to be paid shall be:
(i) Unocal's posted market price at the wells for oil or
condensate, or if Unocal has no posted price, then the average
posted price at the well then prevailing in the field where
produced for substances of like grade and gravity. If there are
no such posted prices, the price to be paid by Unocal will be the
average price being paid by purchasing companies in the field or
locality where the Assets are located for substances of like
grade and gravity.
(ii) Unocal shall never be required to pay a price higher than
the price allowed by State or Federal statutes or regulations in
effect at the time of purchase.
(d) Binding on Successors - Unocal's call on production as herein
provided shall be a covenant running with the land and shall be
binding on Buyer's successors and assigns. All subsequent acts of
transfer of the Assets shall expressly require Buyer's transferees to
assume Buyer's obligations to Unocal, including this call on
production.
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16.11 ROYALTY REIMBURSEMENT: Unocal is pursuing certain claims against the
State of Michigan and certain other lessors for alleged overpayment
of certain royalties during periods prior to the Effective Date. In
the event that the State of Michigan, or such other lessors, agrees
that Unocal has, in fact, overpaid such royalties and permits a
settlement which includes a reduction or waiver of all or portion of
the royalties from future oil, gas or mineral production produced
and saved from any of the Assets, then Buyer shall pay and remit the
amount of the future royalties reduced or waived to Unocal at the
same time that Buyer remits (or should have remitted) the royalties
to said State of Michigan or other lessors; and Unocal shall hold
Buyer harmless to the extent that Buyer makes such payments to
Unocal as directed by Unocal.
SECTION 17
MISCELLANEOUS
17.1 GOVERNING LAW: THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (BUT AS TO THE ACTUAL
CONVEYANCE OF REAL PROPERTY INTERESTS LOCATED IN MICHIGAN, MICHIGAN LAW
SHALL GOVERN AND CONTROL), REGARDLESS OF CONFLICTS OF LAWS PROVISIONS.
All assignments and instruments executed in accordance with this
Agreement shall be governed by and interpreted in accordance with the
laws of the state where the Assets conveyed thereby are located.
17.2 ASSIGNMENT:
(i) This Agreement and the rights and obligations hereunder shall not
be assignable by either Party hereto without the prior written
consent of the other; provided, however, that Unocal and Buyer
shall have the right without the other Party's consent to assign
this Agreement, but not the right to assign any duties or
obligations hereunder, to an Affiliate(s) or a subsidiary
company.
(ii) Any Party hereto may assign or delegate any of its rights,
benefits, duties or obligations hereunder: (i) to any Person, if
it has received the prior written consent of the other Party;
(ii) to its legal successor, if it merges (whether or not it is
the surviving corporation); or (iii) to any Person to whom it has
made any sale, lease, transfer or other disposition of all or
substantially all of its assets; provided, however, that no Party
may make an assignment or delegation described in clauses (ii)
and (iii), above, unless such Party delivers to the other Party
hereto such written assumptions, affirmations and/or legal
opinions as
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such other Party may reasonably request to preserve their rights
and remedies hereunder.
(iii) In the event of an approved assignment, the rights, benefits,
duties and obligations of each Party hereto shall inure to the
benefit of, and be binding upon, each Party's successors, assigns
or delegates.
17.3 WRITTEN NOTICES: Any notices required to be given hereunder shall be
in writing and transmitted by telex or telecopier, delivered by air
courier, or deposited in the mail, postage prepaid and certified,
and addressed as follows or as otherwise specified by Unocal and
Buyer by notice hereunder:
To Unocal:
Union Oil Company of California
14141 Southwest Freeway
Sugar Land, Texas 77478
Fax No. (281) 287-5170
Attention: Kevin D. Neeley, Manager, Business Development
with a copy to:
Union Oil Company of California
dba Spirit Energy 76
14141 Southwest Freeway
Sugar Land, Texas 77478
Fax No. (287)287-7376
Attention: Vice President and General Counsel
To Buyer:
Quicksilver Resources Inc.
1619 Pennsylvania Avenue
Fort Worth, Texas 76104
Fax No.: 817-332-1883
Attention: Houston Kauffman, Vice President
Manager of Acquisitions, Divestments and Trades
Notices shall be effective upon receipt.
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17.4 EXPENSES: Except as otherwise provided herein, each Party shall be
solely responsible for all expenses incurred by it in connection
with this transaction (including without limitation, fees and
expenses of its own counsel and accountants).
17.5 WAIVER OF COMPLIANCE WITH BULK TRANSFER LAWS: Buyer waives compliance
with any applicable bulk transfer law relating to the transactions
contemplated by this Agreement, and agrees to assume all risk and
liability in connection with the failure to so comply.
17.6 WAIVER OF CONSUMER RIGHTS: BUYER HEREBY WAIVES ITS RIGHTS UNDER THE
DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41
ET SEQ., BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS
SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY
OF ITS OWN SELECTION, BUYER VOLUNTARILY CONSENTS TO THIS WAIVER. IN
ADDITION, TO THE EXTENT APPLICABLE TO THE ASSETS OR ANY PORTION
THEREOF, BUYER HEREBY WAIVES THE PROVISIONS OF THE TEXAS CONSUMER
PROTECTION LAWS REGARDING FALSE, MISLEADING AND DECEPTIVE BUSINESS
PRACTICES, UNCONSCIONABLE ACTIONS AND BREACHES OF WARRANTY;
PROVIDED, HOWEVER, THAT NOTHING HEREIN CONTAINED SHALL BE DEEMED A
WAIVER BY BUYER WHERE SUCH WAIVER IS PROHIBITED BY LAW. IN ORDER TO
EVIDENCE ITS ABILITY TO GRANT SUCH WAIVER, BUYER HEREBY REPRESENTS
AND WARRANTS TO UNOCAL THAT BUYER (i) IS IN THE BUSINESS OF SEEKING
OR ACQUIRING, BY PURCHASE OR LEASE, GOODS, OR SERVICES FOR
COMMERCIAL OR BUSINESS USE, (ii) HAS ASSETS OF FIVE MILLION DOLLARS
OR MORE ACCORDING TO IT MOST RECENT FINANCIAL STATEMENT PREPARED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, (iii) HAS
KNOWLEDGE AND EXPERIENCE IN FINANCIAL MATTERS THAT ENABLE IT TO
EVALUATE THE MERITS AND RISKS OF THE TRANSACTION CONTEMPLATED
HEREBY, AND (iv) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING
POSITION. Nothing in this Section shall be interpreted as a waiver
of the express representations and warranties in this Agreement.
17.7 WAIVER OF JURY TRIAL: UNOCAL AND BUYER DO HEREBY IRREVOCABLY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO A TRIAL
BY JURY IN ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING BASED UPON,
ARISING OUT OF, OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
17.8 LIMITATION OF LIABILITY: Notwithstanding anything herein provided to
the contrary, Unocal and Buyer do hereby covenant and agree that,
after Closing, the recovery by either Party hereto of any damages
suffered or incurred by it as a result of any breach by the other
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Party of any of its covenants, agreements, representations,
guaranties, warranties, disclaimers, waivers or continuing
obligations under this agreement shall be limited to the actual
damages suffered or incurred by the non- breaching Party as a result
of the breach by the breaching Party of its covenants, agreements,
representations, guaranties, warranties, disclaimers, waivers, or
continuing obligations hereunder plus costs and reasonable
attorney's fees and in no event shall the breaching Party be liable
to the non-breaching Party for consequential damages as a result of
the breach by the breaching Party of any of its covenants,
agreements, representations, guaranties, warranties, disclaimers,
waivers or continuing obligations hereunder; provided, however that
nothing herein contained shall be deemed a limitation on either
Party's other indemnity obligations contained in this Agreement.
17.9 NO ADMISSIONS: Buyer and Unocal agree that neither this Agreement,
nor any part hereof, nor any performance under this Agreement, nor
any payment of any amount pursuant to any provision of this
Agreement shall constitute or be construed as a finding, evidence
of, or an admission or acknowledgment of any liability, fault, or
past or present wrongdoing, or violation of any law, rule,
regulation, or policy, by either Unocal or Buyer or by their
respective officers, directors, employees, or agents.
17.10 USE OF UNOCAL'S NAME: As soon as practicable after Closing, and in
any event no later than 180 calendar days after Closing, Buyer shall
remove or cause to be removed the names and marks used by Unocal and
all variations and derivations thereof and logos relating thereto from
the Assets and shall not make any use whatsoever of those names, marks
and logos.
17.11 ENTIRE AGREEMENT, ETC.: This Agreement, including the Exhibits
referred to herein or delivered pursuant to this Agreement and the
Confidentiality Agreement, which is incorporated herein by this
reference as though fully set forth hereby, constitutes the entire
agreement between Unocal and Buyer with respect to the subject matter
hereof, and supersedes all prior oral or written agreements,
commitments or understandings with respect thereto. No amendment of
this Agreement shall be binding on the Parties unless in writing and
signed by the authorized representatives of both Parties hereto. Any
waiver of any breach of any term or condition of this Agreement shall
not operate as a waiver of any other breach of such term or condition
or of any other term or condition of this Agreement.
17.12 PARTIES IN INTEREST: Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any Persons other than the Parties to it
and their permitted respective successors and assigns, nor is anything
in this Agreement intended to relieve or discharge the obligation or
liability of any third Persons to any Party to this Agreement, nor
shall any provision give any third Persons any right of subrogation or
action over and against any Party to this Agreement.
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17.13 SEVERABILITY: If any provision of this Agreement shall be held to be
invalid or unenforceable under present or future law in whole or in
part by any court of any jurisdiction, such provision shall, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such
provisions in any other jurisdiction.
17.14 CONSENTS: When a consent is required of either Party hereto, such
consent shall not be unreasonably withheld.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
Union Oil Company of California
By: /s/ Robert C. Gnagy
----------------------------
Name: Robert C. Gnagy
--------------------------
Title: Attorney-in-Fact
-------------------------
Quicksilver Resources Inc.
By: /s/ Houston Kauffman
----------------------------
Name: Houston Kauffman
--------------------------
Title: Vice President
-------------------------
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EXHIBIT 2.2
AMENDMENT TO PURCHASE AND SALE AGREEMENT
This AMENDMENT TO PURCHASE AND SALE AGREEMENT (hereinafter "Amendment")
is executed this 17th day of May, 1999, but is effective for all purposes as
of March 31, 1999, by and between UNION OIL COMPANY OF CALIFORNIA, at 14141
Southwest Freeway, Sugar Land, Texas 77478 (hereinafter referred to as
"Unocal"), and QUICKSILVER RESOURCES INC., a Delaware corporation, whose
address is 1619 Pennsylvania Avenue, Fort Worth, Texas 76104 (herein referred
to as "Buyer").
WHEREAS, reference is herein made to that certain PURCHASE AND SALE
AGREEMENT dated as of March 31, 1999, by and between Unocal and Buyer
(hereinafter "Purchase Agreement"). All capitalized terms used herein but
not otherwise defined shall have the meanings attributed to them in the
Purchase Agreement;
WHEREAS, Unocal and Buyer desire to make certain changes and amendments
to the Purchase Agreement, as set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby amend the
Purchase Agreement and agree as follows:
1. EXHIBIT A. Exhibit "A" attached to the Purchase Agreement is hereby
deleted and replaced for all purposes with FIRST AMENDED Exhibit "A" attached
hereto as ATTACHMENT 1.
2. SNOWPLOW. The leased snowplow described on Exhibit "B" to the Purchase
Agreement cannot be transferred without the lessor's consent and the lessor
has not yet agreed to provide such consent. The lessor of the snowplow has
quoted a price at which Unocal could terminate the existing lease and
purchase the snowplow. Buyer desires Unocal to purchase the snowplow on its
behalf. Therefore, the leased snowplow is hereby deleted from Exhibit "B" to
the Purchase Agreement, and the parties agree that as soon as reasonably
practicable after the closing, Unocal shall purchase the snowplow and
transfer the same to Buyer, and Buyer shall pay and reimburse Unocal, the
price Unocal pays therefor, not to exceed $60,000.00 (plus any applicable
sales and transfer taxes and registrations fees, to the extent not otherwise
included in this amount).
3. RATIFICATION. Except as expressly amended by this Amendment, the
Purchase Agreement, as amended by this Amendment, continues in full force and
effect on all of the terms and conditions provided therein.
4. ENTIRE AGREEMENT; AMENDMENTS: This Amendment, constitutes the entire
agreement between Unocal and Buyer with respect to the subject matter hereof,
and supersedes all prior oral or written agreements, commitments or
understandings with respect thereto. No amendment of this
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Amendment shall be binding on the Parties unless in writing and signed by the
authorized representatives of both Parties hereto. Any waiver of any breach
of any term or condition of this Amendment shall not operate as a waiver of
any other breach of such term or condition or of any other term or condition
of this Amendment.
5. COUNTERPARTS: This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
Union Oil Company of California
By: /s/ Robert C. Gnagy
-------------------------------
Name: Robert C. Gnagy
-------------------------------
Title: Attorney-in-Fact
-------------------------------
QUICKSILVER RESOURCES INC.
By: /s/ Houston Kauffman
-------------------------------
Name: Houston Kauffman
-------------------------------
Title: Vice President
-------------------------------
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EXHIBIT 99.1
QUICKSILVER RESOURCES COMPLETES
ACQUISITION OF MICHIGAN PROPERTIES
FROM SPIRIT ENERGY 76
FORT WORTH, TEXAS (May 18, 1999) - Quicksilver Resources Inc. (AMEX:KWK)
announced today the closing of the acquisition of substantially all of Unocal
Corporations' Spirit Energy 76 unit's natural gas and crude oil assets in
Michigan. Total consideration was $27 million in cash and 404,381 shares of
Quicksilver common stock. The effective date of the transaction is January
1, 1999.
The properties include Spirit Energy 76's ownership in the Garfield Unit and
the Beaver Creek Richfield Unit. Quicksilver's working interest ownership in
Garfield will increase to 99% from 54%. The sale includes approximately
20,000 net leasehold acres producing about 13,000 Mcf equivalent (Mcfe) net
per day. Estimated reserves were not disclosed.
The stock component of the purchase was placed in escrow and will be
distributed over a three-year period. The number of shares of stock to be
transferred will be subject to downward adjustment in correlation to certain
costs, expenses, and liabilities incurred during this period.
Houston Kauffman, Quicksilver's Vice President of Acquisitions, Divestments &
Trades, stated: "These properties fit perfectly with our Michigan operations,
give us greater ownership in fields we already control, and increase our
total production substantially. This adds additional Prairie du Chien
production, with its higher cash flow, to our long-lived Antrim shale gas."
The acquisition will be accretive to Quicksilver's 1999 revenues, EBITDA, and
net income, and is expected to boost Quicksilver's average daily production
by 25%, to 68 million cubic feet equivalent (MMcfe) per day.
Quicksilver, headquartered in Fort Worth, is a natural gas and crude oil
production company with offices in Gaylord, Michigan, Cut Bank, Montana, and
Casper, Wyoming.
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The statements in this press release regarding projections of revenues or
income or reserves or similar items, such as statements pertaining to future
revenues, future capital expenditures, future cash flows, future operations
or results, and other statements, which are not historical facts, are forward
looking statements. Such statements involve risks of declining oil and gas
prices, competition for prospects, possible increases in lifting costs and
other factors detailed in the Company's filings with the Securities and
Exchange Commission. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual
outcomes may vary materially from those indicated.
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FOR MORE INFORMATION, PLEASE CONTACT:
Porter Farrell - 817-339-1140 - [email protected]
Quicksilver Resources Inc.
1619 Pennsylvania Avenue - Fort Worth, TX 76104
TEL 817-877-3151 - FAX 817-332-1883
OR VISIT THE COMPANY'S WEBSITE www.qrinc.com
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