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) October 18, 1995
HUNTER RESOURCES, INC.
(Exact name of Registrant as specified in its Charter)
Commission file number 1-1705
Pennsylvania 87-0205057
(State of Incorporation) (I.R.S. Employer Identification No.)
600 East Las Colinas Blvd., Suite 1200, Irving, Texas 75039
(Address of principal executive offices) (Zip Code)
(214) 401-0752
(Registrant's telephone number, including area code)
<PAGE>
CURRENT REPORT OF EVENTS
Item 2. Recent Developments
- ---------------------------
On October 18, 1995, Magnum Hunter Production, Inc. ("Magnum Hunter"), a
wholly-owned subsidiary of Hunter Resources, Inc., closed on an acquisition of
the remaining seventy-five percent (75%) ownership interest in an affiliated
company (Midland Hunter Petroleum Limited Liability Company or "Midland") from a
joint venture partner. The purchase price of $1,075,287 consisted of i) $300,000
in cash, ii) $300,000 represented by 85,131 shares of restricted common stock of
Magnum Petroleum, Inc. valued at $3.52 per share and iii) the assumption of
existing bank indebtedness of $475,287. As additional consideration, 50,000
warrants to purchase common stock of Magnum Petroleum, Inc. were issued at
exercise prices ranging from $4.00 to $4.50 per share. The effective date of the
acquisition was July 1, 1995. Substantially, all of the properties are located
in Oklahoma and include ownership interests in over 100 wells.
Item 7. Financial Statements and Exhibits.
- ------------------------------------------
<TABLE>
<CAPTION>
Sequentially
Numbered Page
-------------
<S> <C> <C>
(a) Financial Statements of the Business Acquired:
Historical Balance Sheets (unaudited) as of September 30, 1995 and
December 31, 1994
Historical Statements of Operations (unaudited) for the Nine Months
Ending September 30, 1995 and Year Ending December 31, 1994
Notes to Unaudited Historical Financial Statements for the Nine Months
Ending September 30, 1995 and Year Ending December 31, 1994
(b) Pro forma financial information:
Pro Forma Consolidated Financial Information (unaudited)
Pro Forma Consolidated Balance Sheet (unaudited) as of September 30,
1995
Pro Forma Consolidated Statement of Operations (unaudited) For the
Twelve Months Ended December 31, 1994
Pro Forma Consolidated Statement of Operations (unaudited) For the
Nine Months Ended September 30, 1995
Notes to Unaudited Pro Forma Consolidated Financial Statements
(c) Exhibits:
Agreement to Acquire Assets
</TABLE>
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATED: July ___, 1996 HUNTER RESOURCES, INC.
By: /s/ Gary C. Evans
Gary C. Evans President
2
<PAGE>
MIDLAND HUNTER PETROLEUM LIMITED LIABILITY COMPANY
(A Limited Liability Company)
HISTORICAL BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 47,000 $ 43,000
Trade accounts receivable 77,000 96,000
Other current assets 12,000 12,000
------ ------
TOTAL CURRENT ASSETS
136,000 151,000
------- -------
PROPERTY AND EQUIPMENT
Oil and gas properties, full cost method 1,563,000 1,497,000
Accumulated depreciation, depletion, amortization and impairment (476,000) (375,000)
======== ========
PROPERTY AND EQUIPMENT, NET 1,087,000 1,122,000
ORGANIZATION COSTS, NET 2,000 3,000
----- -----
TOTAL ASSETS $ 1,225,000 $ 1,276,000
============= =============
LIABILITIES AND OWNERS' EQUITY
LIABILITIES
ACCOUNTS PAYABLE
Trade $ 170,000 $ 155,000
Affiliate 60,000 68,000
OTHER CURRENT LIABILITIES - 91,000
NOTES PAYABLE - CURRENT 204,000 283,000
------- -------
TOTAL CURRENT LIABILITIES 434,000 597,000
-------
-------
LONG TERM DEBT, LESS CURRENT PORTION 191,000 170,000
------- -------
TOTAL LIABILITIES 625,000 767,000
------- -------
OWNERS' EQUITY
PAID-IN CAPITAL 560,000 562,000
RETAINED EARNINGS (DEFICIT) 40,000 (53,000)
------ -------
TOTAL OWNERS' EQUITY 600,000 509,000
------- -------
TOTAL LIABILITIES AND OWNERS' EQUITY $ 1,225,000 $ 1,276,000
============= =============
</TABLE>
See Notes to Historical Financial Statements
3
<PAGE>
MIDLAND HUNTER PETROLEUM LIMITED LIABILITY COMPANY
(A Limited Liability Company)
HISTORICAL STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended Year Ended
September 30, December 31,
1995 1994
---- ----
REVENUES
Oil and gas revenues $ 563,000 $ 921,000
Other 115,000 -
------- -------
TOTAL REVENUES 678,000 921,000
------- -------
EXPENSES
Lease operations 405,000 693,000
Depreciation, depletion and amortization 102,000 167,000
General and administrative 44,000 25,000
Interest 34,000 32,000
------ ------
TOTAL EXPENSES 585,000 917,000
------- -------
NET INCOME $ 93,000 $ 4,000
RETAINED EARNINGS:
Beginning of year (53,000) (57,000)
------- -------
Ending balance $ 40,000 $ (53,000)
============= =============
See Notes to Historical Financial Statements
4
<PAGE>
MIDLAND HUNTER PETROLEUM LIMITED LIABILITY COMPANY
(A Limited Liability Company)
HISTORICAL STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 93,000 $ 4,000
------- -------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 102,000 167,000
Changes in:
Trade accounts receivable 19,000 20,000
Accounts payable, trade and affiliates 7,000 12,000
Other current liabilities (91,000) -
------- -------
CASH PROVIDED BY OPERATING ACTIVITIES 130,000 203,000
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in oil and gas properties from receipt
of pre-acquisition revenues and property sales - 87,000
Investment in oil and gas properties (66,000) (274,000)
------- --------
CASH USED BY INVESTING ACTIVITIES (66,000) (187,000)
------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 138,000 239,000
Repayment of long-term debt (196,000) (222,000)
Member distributions (2,000) (38,000)
------ -------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (60,000) (21,000)
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,000 (5,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 43,000 48,000
------ ------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 47,000 $ 43,000
============== ============
</TABLE>
5
<PAGE>
MIDLAND HUNTER PETROLEUM LIMITED LIABILITY COMPANY
(A Limited Liability Company)
NOTES TO HISTORICAL FINANCIAL STATEMENTS
(Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
-------
Midland Hunter Petroleum Limited Liability Company, a Limited Liability
Company (The Company) is a Wyoming Limited Liability Company formed January
18, 1993. The Company is a joint venture established to acquire and develop
oil and gas properties. The Company's assets are located in Texas and
Oklahoma.
Oil and Gas Properties
----------------------
The Company follows the full cost method of accounting for oil and gas
properties. Accordingly, all costs associated with acquisition,
exploration, and development of oil and gas reserves, including directly
related overhead costs, are capitalized.
All capitalized costs of oil and gas properties, including the estimated
future costs to develop proved reserves, are amortized on the
unit-of-production method using estimates of proved reserves. Investments
in unproved properties and major development projects are not amortized
until proved reserves associated with the projects can be determined or
until impairment occurs. If the results of an assessment indicate that the
properties are impaired, the amount of the impairment is added to the
capitalized costs to be amortized.
In addition, the capitalized costs are subject to a "ceiling test", which
basically limits such costs to the aggregate of the "estimated present
value", discounted at 10%, of future net revenues from proved reserves,
based on current economic and operating conditions, plus the lower of cost
or fair market value of unproved properties.
Sales of proved and unproved properties are accounted for as adjustments of
capitalized costs with no gain or loss recognized, unless such adjustments
would significantly alter the relationship between capitalized costs and
proved reserves of oil and gas, in which case the gain or loss is
recognized in income. Abandonments of properties are accounted for as
adjustments of capitalized costs with no loss recognized.
Cash Equivalents
----------------
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
Organization Costs
------------------
Costs incurred in connection with formation of the Company have been
capitalized and are being amortized over a period of 60 months on the
straight-line basis.
Federal Income Taxes
--------------------
The Company is a partnership for income tax purposes. Income tax
liabilities and benefits resulting from the Company's activities are
attributed directly to the Company's Members and are not provided for in
the accompanying financial statements.
(2) MEMBERS' EQUITY
The Company is a limited liability company. Member contributions are made
based on opportunities available to the Company and Members are not
obligated to make future contributions. Profit and loss are allocated to
Members based on the initial contributions of Members, as defined.
Distributions to Members are made in accordance with allocated profit and
loss and provisions for preferential return of capital where Members have
made Excess Capital Contributions, as defined.
6
<PAGE>
MIDLAND HUNTER PETROLEUM LIMITED LIABILITY COMPANY
(A Limited Liability Company)
NOTES TO HISTORICAL FINANCIAL STATEMENTS
(Unaudited)
(3) SUPPLEMENTAL INFORMATION TO STATEMENT OF CASH FLOWS
Nine Months Ended Year Ended
Septemer 30, December 31,
1995 1994
---- ----
Cash Paid for Interest $ 34,000 $ 33,000
========== =========
(4) NOTES PAYABLE AND LONG-TERM DEBT
Long tern debt at September 30, 1995 consists of a note payable to
International Bank of Commerce for $395,000 (current portion of $204,000).
This note bears interest at prime rate plus 2% (10.75% at September 30,
1995), is collateralized by property and equipment, assignment of death
value proceeds of life insurance of certain members of management and is
guaranteed by Members and the President of a Member. This note includes
certain covenants, the most restrictive of which is the maintenance of at
least a $200,000 net worth by the Company. The Company is in compliance
with the covenant at September 30, 1995. The note payable balance was paid
in full subsequent to September 30, 1995 by a Member.
At December 31, 1994, the Company also had a note payable to the seller of
an acquired property with a balance of $37,000 bearing interest at 10%, due
January, 1995. Such note was paid in full during 1995.
(5) RELATED PARTY TRANSACTIONS
Operations of the Company are managed by an affiliate of a Member. All oil
and gas properties operated by this affiliate are charged overhead
reimbursements in accordance with published industry guidelines.
Substantially all production revenues and expenses of the Company are
handled by this affiliate and are credited or charged by the affiliate to
the Company.
7
<PAGE>
HUNTER RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
The following unaudited pro forma consolidated balance sheet of the Company is
based on the historical consolidated balance sheet as of September 30, 1995,
adjusted to give effect for the acquisition of the remaining seventy-five
percent (75%) ownership interest in Midland Hunter Petroleum, LLC ("Midland")
acquired October 18, 1995 as if the acquisition had been consummated at the
balance sheet date. The historical consolidated statements of operations of the
Company for the year ended December 31, 1994 and the nine months ended September
30, 1995 have been adjusted to give effect for the acquisition as if the
acquisition had been consummated at the beginning of each respective period
presented. In addition, the Company has also adjusted the consolidated
statements of operations for the acquisition on March 31, 1995 of the Arrington
oil and gas properties as if the acquisition had been consummated at the
beginning of each respective period presented. The Arrington acquisition was
previously reported on an amended Form 8-K filed September 26, 1995.
The pro forma consolidated balance sheet and statements of operations have
been prepared based on estimates and assumptions deemed by management of the
Company to be appropriate and do not purport to be indicative of the results of
operations which would actually have been obtained if the acquisitions had
occurred as presented in such statements, or which may be obtained in the
future. The pro forma consolidated balance sheet and statements of operations
should be read in conjunction with the historical consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1994 and the Company's Quarterly Report
on Form 10-QSB for the nine months ended September 30, 1995, which have been
filed with the Securities and Exchange Commission.
8
<PAGE>
HUNTER RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Hunter Midland Pro Forma Combined
Historical Historical Adjustments Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 87,000 $ 47,000 $ (12,000)(F) $ 122,000
300,000 (A)
(300,000)(A)
Notes and accounts receivable, net:
Trade (less reserve of $84,000) 852,000 77,000 (19,000)(F) 910,000
Affiliates 79,000 79,000
Prepaids 91,000 12,000 (3,000)(F) 100,000
----------- ----------- -------------- ------------
TOTAL CURRENT ASSETS 1,109,000 136,000 (34,000) 1,211,000
----------- ----------- -------------- ------------
PROPERTY AND EQUIPMENT:
Oil and gas properties, full cost method 8,780,000 1,563,000 (177,000)(A) 9,775,000
(391,000)(F)
Pipeline 674,000 674,000
Other property 218,000 218,000
----------- ------------
9,672,000 1,563,000 (568,000) 10,667,000
Accumulated depreciation, depletion,
amortization and impairment (4,934,000) (476,000) 476,000 (A) (4,934,000)
----------- ----------- -------------- ------------
PROPERTY AND EQUIPMENT, NET 4,738,000 1,087,000 (92,000) 5,733,000
----------- ----------- -------------- ------------
Excess of cost of investments in subsidiaries
over net assets acquired, net 963,000 963,000
Accounts and notes receivable, net:
Trade - -
Affiliates 86,000 86,000
Deposits and other assets 4,000 2,000 6,000
----------- ----------- -------------- ------------
TOTAL ASSETS $ 6,900,000 $ 1,225,000 $ (126,000) $ 7,999,000
=========== =========== ============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities:
Trade $ 957,000 $ 170,000 $ (42,000)(F) $ 1,085,000
Affiliates 19,000 60,000 (15,000)(F) 64,000
Suspended revenue interests 733,000 733,000
Notes payable, current 575,000 204,000 (51,000)(F) 728,000
----------- ----------- -------------- ------------
TOTAL CURRENT LIABILITIES 2,284,000 434,000 (108,000) 2,610,000
Deferred income tax 7,000 7,000
Long-term debt, less current portion 1,166,000 191,000 (48,000)(F) 1,309,000
Production Payment Liability (Non-Recourse) 305,000 305,000
Other Liabilities 85,000 - 600,000 (A) 685,000
----------- ----------- -------------- ------------
TOTAL LIABILITIES 3,847,000 625,000 444,000 4,916,000
----------- ----------- -------------- ------------
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred stock, no par value;
1,000,000 shares authorized for each
Class A,B,C;
90,000 shares (Class A, Series 1) issued
and outstanding 90,000 90,000
Common stock, $.10 par value;
100,000,000 shares authorized;
18,354,261 shares issued and outstanding 1,835,000 1,835,000
Capital in excess of par value 1,816,000 560,000 (560,000)(F) 1,816,000
Accumulated deficit (668,000) 40,000 (10,000)(F) (638,000)
----------- ----------- -------------- ------------
3,073,000 600,000 (570,000) 3,103,000
Less 22,000 shares of treasury stock at
cost and Put stock (20,000) - (20,000)
----------- ------------
TOTAL STOCKHOLDERS' EQUITY 3,053,000 600,000 (570,000) 3,083,000
----------- ----------- -------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,900,000 $ 1,225,000 $ (126,000) $ 7,999,000
=========== =========== ============== ============
</TABLE>
See notes to Pro Forma Consolidated Financial Statements
9
<PAGE>
HUNTER RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Twelve Months ended December 31, 1994
Hunter Arrington Midland Pro forma Combined
Historical Historical Historical Adjustments Pro forma
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Gas gathering and marketing $ 443,000 $ $ $ $ 443,000
Oil and gas sales 581,000 563,000 921,000 (230,000)(F) 1,835,000
Oil field services and Commissions 1,122,000 43,000 (B) 1,165,000
Interest 26,000 26,000
Other 184,000 184,000
-------------- ------------- ------------ ----------- -----------
TOTAL REVENUES 2,356,000 563,000 921,000 (187,000) 3,653,000
-------------- ------------- ------------ ----------- -----------
Expenses:
Purchases of natural gas 262,000 262,000
Pipeline operations 76,000 76,000
Lease operating 412,000 153,000 693,000 (173,000)(F) 1,085,000
Cost of services 654,000 654,000
Depreciation, depletion,
amortization and impairment 263,000 167,000 111,000 (C) 541,000
General and administrative 513,000 25,000 - (D) 538,000
Interest 44,000 32,000 112,000 (E) 188,000
Legal settlement expenses 117,000 117,000
-------------- ------------- ------------ ----------- -----------
TOTAL EXPENSES 2,341,000 153,000 917,000 50,000 3,461,000
-------------- ------------- ------------ ----------- -----------
NET INCOME (LOSS) 15,000 410,000 4,000 (237,000) 192,000
PREFERRED DIVIDENDS (9,000) (9,000)
-------------- ------------- ------------ ----------- -----------
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCK $ 6,000 $ 410,000 $ 4,000 $ (237,000) $ 183,000
============== ============= ============ =========== ===========
NET INCOME PER SHARE
(primarily and fully diluted) $ * $ 0.01
============== ===========
</TABLE>
* Less than $.01 per share
See notes to Pro Forma Consolidated Financial Statements
10
<PAGE>
HUNTER RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months ended September 30, 1995
Hunter Arrington Midland Pro forma Combined
Historical Historical Historical Adjustments Pro forma
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Gas gathering and marketing $ 144,000 $ $ $ $ 144,000
Oil and gas sales 708,000 123,000 563,000 (141,000)(F) 1,253,000
Oil field services and commissions 409,000 7,000 (B) 416,000
Interest 20,000 20,000
Other 271,000 115,000 (29,000)(F) 357,000
------------ ------------ --------- ------------ -----------
TOTAL REVENUES 1,552,000 123,000 678,000 (163,000) 2,190,000
------------ ------------ --------- ------------ -----------
Expenses:
Purchases of natural gas 83,000 83,000
Pipeline operations 41,000 41,000
Lease operating 329,000 32,000 405,000 (101,000)(F) 665,000
Cost of services 299,000 299,000
Depreciation, depletion,
amortization and impairment 284,000 102,000 11,000 (C) 397,000
General and administrative 349,000 44,000 (9,500)(D) 383,500
Interest 129,000 34,000 23,000 (E) 186,000
------------ ------------ --------- ------------ -----------
TOTAL EXPENSES 1,514,000 32,000 585,000 (76,500) 2,045,500
------------ ------------ --------- ------------ -----------
NET INCOME (LOSS) $ 38,000 $ 91,000 $ 93,000 $ (86,500) $ 135,500
============ ============ ========= ============ ===========
NET INCOME PER SHARE
(primarily and fully diluted)
* Less than $.01 per share $ * $ 0.01
============ ===========
</TABLE>
11
<PAGE>
HUNTER RESOURCES, INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Consolidated Financial Statements
The following adjustments have been reflected in the accompanying Pro Forma
Consolidated Balance Sheet as of September 30, 1995 and Consolidated Statements
of Operations for the year ended December 31, 1994 and the nine months ended
September 30, 1995 to give effect for the Midland acquisition on October 18,
1995.
A) To reflect the acquisition of the remaining seventy-five percent (75%)
ownership interest in an affiliated company from a joint venture partner.
The purchase price of $1,075,287 consisted of i) $300,000 in cash which was
borrowed from Magnum Petroleum, Inc. ("Magnum"), ii) $300,000 represented
by 85,131 shares of restricted common stock of Magnum valued at $3.52 per
share and iii) the assumption of existing bank indebtedness of $475,287.
B) To reflect overhead fee income charged to outside owners on the acquired
Arrington properties for which operating rights were also acquired. The
overhead fee income generated by the Arrington acquisition was estimated at
$43,000 and $7,000 for the year ended December 31, 1994 and the nine months
ended September 30, 1995, respectively.
C) To reflect additional depreciation and depletion on oil and gas properties
as recalculated using the full cost method.
D) To reflect additional estimated general and administrative costs associated
with the increase in the number of properties and the assumption of
operator's duties on the acquired properties. The estimated additional
general and administrative expense for the Arrington acquisition was $6,000
and $2,000 for the year ended December 31, 1994 and the nine months ended
September 30, 1995, respectively. Also, the expense includes the
elimination of $6,000 and $11,000, respectively, related to the Midland
acquisition as such amounts are included in the Hunter historical amounts.
E) To reflect interest expense associated with the financed portion of the
acquisitions. The estimated interest expense for the Arrington acquisition
amounted to $120,000 and $32,000 for the year ended December 31, 1994 and
the nine months ended September 30, 1995. In addition, the expense
adjustment includes the elimination of $8,000 and $9,000, respectively,
related to the Midland acquisition as such amounts are included in the
Hunter historical amounts.
F) To eliminate amounts related to the Midland acquisition which are recorded
in the Hunter historical amounts.
12
Exhibit "A"
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of this
16th day of October, 1995, is executed by and among Midland Hunter Petroleum
Limited Liability Company or its assigns, hereinafter collectively referred to
as "Seller", Whitestone Industries, Inc., hereinafter referred to as "Seller's
Parent", Magnum Hunter Production, Inc., hereinafter referred to as "Buyer" and
Magnum Petroleum, Inc., hereinafter referred to as "Buyer's Parent".
ARTICLE I
DEFINITION OF TERMS
As used herein, the terms specified below shall have the following
meanings:
SECTION 1.1: Properties
The term "Properties" shall include each kind or character of right, title,
claim or interest which the Seller, has in the oil, gas and/or mineral leases as
more particularly described in Exhibit "A", which is attached hereto and
incorporated herein, as of the Closing date, including all mineral interests and
royalty interests owned by Seller, all ratifications, extensions and renewals
thereof, any unitization, farmout or forced pooling agreements associated
therewith, the interest in or units created by such agreements, and all
easements, permits, servitudes, rights-of-way, licenses, operating agreements,
and oil and/or gas purchase/sale agreements directly related thereto.
Notwithstanding the above, the term Properties shall not, however, include the
following properties, rights, interest or assets:
(a) Any right, title or interest of Seller in or to any accounts
receivable, money held in escrow or suspense accounts, or future
receipts attributable to Seller's interest in the oil and gas and
other hydrocarbons produces and sold from the Properties prior to the
Effective Date.
(b) All claims and causes of action of Seller against others (except
claims or causes of action involving title to any of the Properties)
arising from acts or transactions affecting or relating to any of the
Properties occurring prior to the Effective Date including, but not
limited to, rights and claims against purchasers of production, rights
to rate entitlements arising from regulatory proceedings and other
monetary claims or rights against others.
SECTION 1.2: Personalty
The term "Personalty" shall include the following rights and interests:
(a) All right, title or interest which Seller has in or to any personal
property, and improvements located on the Properties described on
Exhibit "A", which are attached to and made a part hereof and
incorporated herein, as of the Closing Date (including, but not
limited to, wells, tanks, boilers, fixtures, inventories, machinery
and other equipment) for the exploration, development, operation and
maintenance of the Properties and related equipment and inventory.
A-1
<PAGE>
SECTION 1.3: Existing Wells
The term "Existing Wells" shall mean the oil, gas and/or mineral wells
located on the Properties which are currently producing or non-producing and
which are more particularly described in Exhibit "A", which is attached hereto
and incorporated herein.
ARTICLE II
AGREEMENT TO PURCHASE AND SALE
SECTION 2.1: Agreement
On the terms and subject to the conditions herein set forth, Buyer agrees
to purchase Seller's right, title, and interest in the Properties, Existing
Wells and Personalty from Seller and Seller agrees to sell, transfer, assign and
convey to Buyer, Seller's right, title and interest in the Properties, Existing
Wells and Personalty as further described on Exhibit "A".
SECTION 2.2: Purchase Price
The purchase price agreed to be paid by Buyer for Seller's right, title and
interest in the Properties, Existing Wells and Personalty is Six Hundred
Thousand Dollars and No Cents ($600,000) (the "Base Purchase Price"), subject to
any applicable purchase price adjustment as provided for herein. The Purchase
Price shall be payable by Buyer to Seller at the Closing. The total
consideration will be structured as follows:
(a) Three Hundred Thousand Dollars and No Cents ($300,000) cash due
at the time of Closing, subject to any applicable purchase price
adjustment as provided for herein;
(b) Three Hundred Thousand Dollars and No Cents ($300,000) in fully
paid and nonassessable shares of Magnum Petroleum, Inc.
restricted common stock, $0.002 par value, free and clear of all
liens and encumbrances, due at the time of Closing, subject to
any applicable purchase price adjustment as provided for herein;
(c) The assumption of existing bank indebtedness in the principal
amount of Three Hundred Seventy-Eight Thousand One Hundred
Fifty-Five Dollars and Fifty-Three Cents ($378,155.53) plus
interest in the amount of One Thousand Eight Hundred Sixty-Four
Dollars and Sixty-Two Cents ($1,864.62) at International Bank of
Commerce;
(d) Twenty-five thousand (25,000) shares in Magnum Common Stock
Warrants at an exercise price of $4.00 per share with a term of
two years; and
(e) Twenty-five thousand (25,000) shares in Magnum Common Stock
Warrants at an exercise price of $4.50 per share with a term of
two years.
SECTION 2.3: Effective Time, Closing Date and Closing
The "Effective Time" of the sale shall be July 1, 1995, at 7:00 a.m. CDT.
Buyer's purchase of Seller's interest pursuant to this Agreement shall take
place on or before 3 p.m. Central Daylight Time on October 16, 1995, which date
and time shall herein be referred to as the "Closing Date". The place of
"Closing" shall be at the offices of Buyer, located at 600 East Las Colinas
Blvd., Suite 1200, Irving, Texas 75039.
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SECTION 2.4: Accounting for Certain Operating Costs from July 1, 1995 to Closing
Date
(a) Buyer shall be responsible for all operating costs after the Closing
Date.
ARTICLE III
REPRESENTATION OF BUYER
CONCERNING PURCHASE OF PROPERTY
SECTION 3.1: Buyer's Representations
(a) Buyer represents to Seller that Buyer is engaged in the business of
exploring for and producing oil, gas and other minerals as an ongoing
business and thus possesses oil and gas expertise or has in Buyer's
employ qualified Geologists, Engineers, Professional Counsel or
industry knowledgeable personnel to competently evaluate reserves of
oil and gas remaining beneath the Properties represented by this
Agreement, and, based upon Buyer's appraisal of this property, Buyer
has ascertained a market value of $1,075,287 for Seller's ownership
interest in the Properties and Personalty and Existing Wells, as of
the Effective Time.
(b) Buyer acknowledges Seller has made no representations, either
expressed or implied, as to the remaining oil and gas reserves
recoverable beneath the Properties represented in this Agreement.
(c) Buyer acknowledges that Seller has made no representations, either
expressed or implied, in regard to the value of the Properties,
Personalty and Existing Wells.
(d) Buyer is incorporated in the State of Texas.
ARTICLE IV
CLOSING
SECTION 4.1: Actions to be Taken at Closing
At the time of Closing, the following events and actions shall occur:
(a) Seller shall execute and deliver to Buyer Assignments, Bills of Sale
and Conveyances covering Seller's interest in the Personalty and Oil
and Gas Leases, including Seller's ownership interest in the Existing
Wells and Properties described in the attached Exhibit "A", subject to
any depth limitation of record.
Said Assignments, Bills of Sale and Conveyances shall be without
warranties of merchantability or fitness for a particular purpose,
either express or implied except for those in Section 5.1(c). However,
said Assignments, Bills of Sale and Conveyances of Oil and Gas Leases
shall be with special warranty of title as against claims asserted by,
through or under Seller, but not otherwise, and shall also include a
warranty against mortgages, liens, judgments, security interests, and
encumbrances of any kind created by, through or under Seller, but not
otherwise. Said Assignments, Bills of Sale and Conveyances of Oil and
Gas Leases shall be made specifically subject to all of the terms and
provisions of this Agreement, all of which shall survive the Closing.
(b) Buyer shall make payment to Seller for the full remaining purchase
price in cash or immediately available funds and shall issue Seller a
stock certificate representing shares of fully paid and nonassessable
shares of Magnum Petroleum, Inc. restricted common stock, $0.002 per
share par value, free and clear of all liens and encumbrances. The
number of shares of such stock will be based upon the following:
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The Common Stock consideration will be calculated based upon the
average of the closing price of Magnum stock ten (10) business days
prior to Closing as traded on the American Stock Exchange, under the
following formula:
$300,000 = Number of restricted common
Average of Closing Price shares to be issued
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(c) Seller shall deliver to Buyer all well files. Seller shall deliver to
Buyer completed and executed pertinent forms on the wells necessary
for the change of ownership. Buyer and Seller shall each deliver to
the other such other documents, certificates, opinions and materials
as are required under the provisions of this Agreement, including the
accounting and funds in payment thereof as provided for in Section 2.4
herein, if applicable.
(d) The Seller agrees to pay all sales taxes incurred in connection with
the conveyances and assignments made pursuant to this Agreement, if
applicable.
SECTION 4.2: Conditions to Obligations of Buyer
The obligations of Buyer pursuant to this Agreement are subject to the
conditions that on the Closing Date:
(a) All terms, covenants and conditions and warranties made by the Seller
in this Agreement shall be true and correct as of the Closing Date.
(b) No action or proceeding by or before any court or other governmental
body shall have been instituted or threatened to restrain, prohibit or
invalidate the transactions contemplated hereby or which might affect
the right of Buyer to own, control and enjoy the full benefit of the
Personalty, Existing Wells and the Properties after the Closing Date.
SECTION 4.3: Termination Events
This Agreement may, by written notice given at or prior to the Closing in
the manner hereinafter provided, be terminated:
(a) by either Buyer or Seller if a material default or breach shall be
made by the other party hereto with respect to the due and timely
performance of any of its covenants and agreements contained herein,
or with respect to the due compliance with any of its representations,
warranties or covenants, and such default cannot be cured and has not
been waived;
(b) by Buyer if all of the conditions set forth in Section 4.2 shall not
have been satisfied on or before the Closing Date, other than through
failure of Buyer to fully comply with its obligations hereunder, and
shall not have been waived by Buyer on or before such date;
(c) by mutual written consent of Buyer and Seller; or
(d) by either Buyer or Seller if the Closing shall not have occurred,
other than through failure of any such party to fulfill its
obligations hereunder, on or before October 16,1995 or such later date
as may be mutually agreed upon by the parties.
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Each party's right of termination hereunder is in addition to any other
rights it may have hereunder or otherwise and the exercise of a right of
termination shall not be an election of remedies.
SECTION 4.4: Effect of Termination
In the event this Agreement is terminated pursuant to Section 4.3, all
further obligations of the parties hereunder shall terminate; provided that, if
this Agreement is so terminated by a party because one or more of the conditions
to such party's obligations hereunder is not satisfied as a result of the other
party's willful failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies for breach of contract or
otherwise, including, without limitation, damages relating thereto, shall also
survive such termination unimpaired.
SECTION V
REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION 5.1: Representations and Warranties of Seller
Seller hereby represents and warrants to Buyer, that:
(a) This Agreement constitutes the valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
(b) Seller will permit Buyer full access to all records and files at all
reasonable times on or before October 16, 1995, or such other
extension date as may be mutually agreed upon in writing by Buyer and
Seller.
(c) Seller has good and defensible title to the Real Property Interests
and tangible and intangible personal property owned by it that
comprise the Properties, free and clear of Liens, other than liens and
defects of title which do not, individually or in the aggregate,
materially detract from the value of the Assets or the use or
enjoyment thereof in the ordinary course of business.
The equipment associated with the operation of the Properties (i)
is in good operating condition, order and repair, subject to ordinary
wear and tear, and has been maintained in accordance with standard
industry practice; (ii) is capable of being used for the purpose for
which it is intended without present need for repair or replacement
except in the ordinary course of the business; (iii) conforms in all
material respects with all applicable legal requirements known to
Seller; and (iv) in the aggregate provides the capacity to enable
Seller to engage in commercial operation on a continuous basis
(subject to normal maintenance and repair in the ordinary course). All
of the equipment constituting the operating of the Properties is
adequate and sufficient for all operations conducted by Seller in
substantially the same manner as conducted prior to the Closing.
All real and tangible personal properties held by Seller under
lease are held under valid and binding lease agreements that are in
full force and effect. To Seller's knowledge, Seller is not in
default, and no notice of alleged default has been received by Seller,
under any such lease and no lessor is in default or alleged to be in
default thereunder. None of the rights of Seller under any lease will
be impaired by the consummation of the transactions contemplated by
this Agreement.
(d) To Seller's knowledge, all easements, rights-of-way, permits, crossing
agreements and surface rights included with the Properties are in full
force and effect and are valid and subsisting and freely assignable,
and all rentals and other payments due thereunder have been properly
and timely paid and all conditions necessary to keep them in force
have been duly performed.
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(e) Environmental Matters:
(i) To Sellers' knowledge, no written notice, notification, demand,
request for information, citation, summons, complaint or order
has been received, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or has
been threatened by a governmental entity or other party with
respect to any (A) alleged violation by Seller of any
Environmental Laws, (B) alleged failure by Seller to have any
environmental permit, certificate, license, approval,
registration or authorization required in connection with the
conduct of the Business or (C) Regulated Activity conducted by
Seller.
(ii) To Seller's knowledge, Seller has no material Environmental
Liabilities and there has been no release of Hazardous Substances
into the environment by Seller or with respect to any of its
properties which has had, or would reasonably be expected to
have, a material adverse effect on Seller.
(iii)During the period of time Seller has owned the Properties, there
have been no mercury meters on or attached to any part of the
Properties.
(iv) For the purposes of this Agreement, the following terms have the
following meanings:
"Environmental Laws" shall mean all Federal, state and local
statutes, laws, regulations, ordinances, rules, judgements,
orders, decrees, codes, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements, and governmental
restrictions applicable to the Properties now in effect and
relating to human health, the environment or to emissions,
discharges or releases of pollutants, containments, Hazardous
Substances or wastes into the environment or otherwise relating
to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants,
contaminants, Hazardous Substances or wastes or the clean-up or
other remediation thereof.
"Environmental Liabilities" shall mean all liabilities,
whether vested or unvested, contingent or fixed, actual or
potential, which (i) arise under or relate to Environmental Laws
and (ii) relate to actions occurring or conditions existing on or
prior to the Effective Time.
"Hazardous Substances" shall mean any toxic, radioactive,
caustic or otherwise hazardous substance, including glycol and
petroleum, their derivatives, by-products and other hydrocarbons,
or any substance having any constituent elements displaying any
of the foregoing characteristics.
"Regulated Activity" shall mean any generation, treatment,
storage, recycling, transportation, disposal or release of any
Hazardous Substances.
(f) Any and all claims and causes of action against Seller arising from
acts or transactions affecting or relating to any of the Properties
occurring prior to the Effective Date will remain for the account of
Seller and Seller will make every attempt reasonably necessary to
satisfy any such claim and cause of action which might affect any of
the Properties.
(g) Seller possesses all the licenses, permits authorizations, approvals,
registrations and other rights of every kind and character
("Permits"), copies of all which have been delivered to Buyer. Such
Permits constitute all the Permits necessary under law or otherwise
for Seller to construct, own, operate, maintain and use the Assets in
the manner in which they are now being constructed, operated,
maintained and used. Each of such Permits and Seller's rights with
respect thereto (i) is valid and subsisting, in full force and effect,
and enforceable by Seller, and (ii) following consummation of the
transactions contemplated hereby, will continue to be valid and
subsisting in full force and effect, and enforceable by Buyer without
any consent or approval of any court or any federal, state, municipal
or other governmental department, commission, board, bureau, agency
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or instrumentality, domestic or foreign or third party; or in lieu of
such existing Permits, replacement or substitute Permits will be
available to or obtainable by Buyer at little or no cost in the
ordinary course after application by Buyer thereof. To Seller's
knowledge, Seller is in compliance in all material respects with the
terms of such Permits. None of such Permits have been, or to the
knowledge of Seller, is threatened to be, revoked, canceled, suspended
or modified.
(h) No representation, warranty or covenant by Seller contained in this
Agreement or the Exhibits or Schedules hereto, or any agreement,
document or instrument to be delivered at the Closing by Seller,
contains or shall contain any untrue statement of a material fact or
omits or shall omit to state therein a material fact (other than those
facts generally recognized to be industry risks normally associated
with the Properties) necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. Copies of all documents furnished to Buyer in connection
with this Agreement or pursuant hereto are true and complete in all
material respects. Seller knows of no facts (other than those facts
generally recognized to be industry risks normally associated with the
Properties) related to the Properties which have not been disclosed in
writing to Buyer which materially and adversely affect or will
materially and adversely affect such Properties or the ability Seller
to perform this Agreement.
ARTICLE VI
AGREEMENTS AND COVENANTS OF SELLER
SECTION 6.1: Affirmative Covenants
During the period from the Effective Time to the Closing Date, Seller has:
(a) Carried on the business with respect to the Personalty, Properties and
the Existing Wells in a prudent and diligent manner in accordance with
prevailing industry standards;
(b) Promptly notified Buyer of the receipt of any notice or claim, written
or oral, of default, breach by Seller, or of any termination or
cancellation of any material contract, lease or other agreements
relating to the Properties, Personalty or Existing Wells;
(c) Promptly notified Buyer of the loss of or damage to any of the
Personalty or Existing Wells;
(d) Given prompt notice to Buyer of any claims or litigation, threatened
or instituted or any other material event or occurrence involving or
affecting any of the Properties, Personalty or Existing Wells; and
(e) Reasonably cooperated with the Buyer in endeavoring to obtain
additional title and other information with respect to the Properties,
Personalty or Existing Wells.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 7.1: Representations and Warranties of Buyer
Buyer represents and warrants to Seller that:
(a) Buyer is Magnum Hunter Production, Inc.
(b) This Agreement constitutes the valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
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(c) Buyer is acquiring Seller's interest in the Personalty, Properties and
the Existing Wells as outlined on Exhibit "A" based upon its own
physical examination of the Properties, Existing Wells and Personalty
as well as an independent examination and inspection of the
accounting, land, legal and well files of Seller.
(d) The execution and delivery of this Agreement will not violate any
provision of or constitute a default under any statute, or any order,
rule or regulation of any court or governmental agency into which
Buyer is subject.
(e) Upon cessation of production, Buyer will properly plug and abandon all
producing and/or non-producing wells upon said Properties which wells
now exist or which may exist in the future, in accordance with state
and federal regulatory requirements.
(f) Buyer has inspected the oil and gas properties outlined on Exhibit "A"
and satisfied itself as to the current operating condition of the
Properties.
(g) Buyer is qualified to do business in Texas.
ARTICLE VIII
Section 8.1 Securities Laws and Compliance
The parties will arrange for and effect all necessary procedures under the
requirements of applicable federal and state securities laws, including those of
the Securities and Exchange Commission and the state securities boards
promulgated thereunder to the extent that this Agreement is properly consummated
to comply with all federal and state securities registration requirements, or to
take full advantage of any appropriate exemptions therefrom, and otherwise to be
in accord with all federal and state securities law anti-fraud restrictions.
A. KNOWLEDGE RESPECTING ACQUIRING PROCEDURES. Buyer and Seller's Parent
each represent, respectively, and acknowledge that:
1. In the case of Seller's Parent:
(a) Seller's Parent knows, or has had the opportunity to
acquire, all information concerning the business, affairs,
financial condition and prospects of Magnum Petroleum, Inc.
which it deems relevant to make a fully informed decision
regarding the consummation of the transaction contemplated
hereby, and
(b) Seller's Parent has been supplied with, or had the
opportunity to review, copies of all Forms 10-KSB, 10-QSB
and 8-K, and all proxy statements filed by Magnum Petroleum,
Inc. within the two year period immediately preceding the
date of this Agreement. Without limiting the foregoing,
Seller's Parent understands and acknowledges that neither
Magnum Petroleum, Inc. nor anyone acting on its behalf has
made any representations or warranties other than those
contained herein regarding Magnum Petroleum, Inc. or the
future conduct of Magnum's business or of each of its
subsidiary's business, and Seller's Parent has not relied
upon any representations or warranties other than those
contained herein.
2. In the case of Buyer:
(a) Buyer has had the opportunity to acquire all information
concerning the Properties which it deems relevant to make a
fully informed decision regarding the consummation of the
transaction contemplated hereby.
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B. STATUS OF SHARES TO BE ISSUED. Seller's Parent agrees, acknowledges,
and confirms that it has been advised and understands as follows:
1. It is acquiring the securities (shares of Magnum Petroleum, Inc.)
without a view to any distribution or resale, which may be made
without violating the registration provisions of the Securities
Act of 1933, as amended (the "1933 Act") or applicable state law.
The shares of Magnum Petroleum, Inc. are "restricted securities"
within the meaning of Rule 144 under the 1933 Act and have not
been registered under the 1933 Act or the laws of any state:
2. There shall be endorsed on the certificates evidencing the shares
of Magnum Petroleum, Inc. stock delivered at closing legends
substantially similar to the following:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR THE
SECURITIES LAWS OF ANY STATE OR JURISDICTION. THE SHARES MAY NOT
BE SOLD, TRANSFERRED, PLEDGED OR DISTRIBUTED IN THE ABSENCE OF:
(1) AN EFFECTIVE REGISTRATION STATEMENT REGISTERING THE SHARES
UNDER THE SECURITIES ACT OF 1933, ANY APPLICABLE STATE LAW, OR IN
LIEU THEREOF, OR (2) AN OPINION OF COUNSEL, WHICH OPINION IS
SATISFACTORY TO THE ISSUER OF THE SHARES, TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACTS".
"A FULL STATEMENT OF ALL THE DESIGNATIONS, PREFERENCES,
LIMITATIONS, AND RELATIVE RIGHTS OF THE SHARES OF EACH CLASS OF
SHARES WHICH THE CORPORATION IS AUTHORIZED TO ISSUE IS SET FORTH
IN THE ARTICLES OF INCORPORATION AND THE AMENDMENTS THERETO ON
FILE IN THE OFFICE OF THE SECRETARY OF STATE AND THE CORPORATION
WILL FURNISH A COPY OF SAID STATEMENT TO THE RECORD HOLDER OF
THIS CERTIFICATE WITHOUT CHARGE ON WRITTEN REQUEST TO THE
CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS."
3. Except under certain limited circumstances, the restrictions on
the transfer of the securities will also apply to the Property
and any and all shares of capital stock or other securities
issued to or otherwise acquired with respect to such shares
including, without limitation, shares and securities issued or
acquired as a result of any stock dividend, stock split or
exchange or any distribution of shares or securities pursuant to
any corporate reorganization, reclassification or similar event.
C. INDEMNIFICATION BY PARTIES. If at any time in the future Seller's
Parent should offer, sell, assign, pledge, hypothecate, transfer, or
otherwise dispose of any of securities without registration under the
1933 Act, as amended, or such similar federal statute as may then be
in effect, each of the parties hereby agree to indemnify and hold
harmless the other party against any and all claims, liabilities,
penalties, costs and expenses that may be asserted against or suffered
by such party as a result of such disposition.
D. INVESTMENT CERTIFICATE. Seller's Parent will execute an investor
representation letter, substantially in the form set out in Exhibit
"C" hereto, acknowledging the restrictions on the Common Stock issued
pursuant to this Agreement.
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E. REGISTRATION RIGHTS OF SELLER'S PARENT . Magnum, within ninety (90)
days after Closing, will register certain of its common stock or other
securities under the Securities Act of 1933 (for the purposes of this
Section, the "Act") (other than pursuant to a registration statement
for Forms S-4 or S-8 or similar or successor form), and will at such
time promptly give written notice to Seller's Parent of its intention
so to do. Such notice from Magnum shall set forth the types of
securities to be registered, and other information, if applicable,
such as the maximum proposed offering price, commissions and discounts
in connection therewith, and other relevant information. For the
purposes of these registration rights, the common stock issued to
Seller's Parent pursuant to this Agreement, is herein referred to as
"Registrable Shares". Upon the written request from Seller's Parent,
given within fifteen (15) banking days after receipt of any such
notice, to register any Registrable Shares (which request shall
specify the common stock intended to be sold or disposed of by such
stockholders and shall state the intended method of disposition of
such common stock by the prospective Seller's Parent), Magnum shall
use all commercially reasonable efforts to cause all such Registrable
Shares to be registered under the Act and applicable state law so that
such Registrable Shares may be sold at such times and in such manner
as Seller's Parent determine in accordance with the terms of the
applicable prospectus.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1: Notice
Any notice or other communication required or permitted to be given under
this Agreement must be in writing, and may be given by depositing the same in
the United States mail, certified delivery, return receipt requested, properly
addressed as provided below. Notice deposited in the mail in the manner provided
above shall be effective and shall be deemed received upon the expiration of
three business days.
For purposes of notices hereunder, the addresses of the parties shall be as
follows:
Seller: Midland Hunter Petroleum Limited Liability Company
600 East Las Colinas Blvd., Suite 1200
Irving, Texas 75039
Attn: Mr. Gary C. Evans
President
Seller's Parent: Whitestone Industries, Inc.
2255 Glades Road, #324A
Boca Raton, FL 33431
Attn: Mr. Hernan A. Saide
President
Buyer: Magnum Hunter Production, Inc.
600 East Las Colinas Blvd., Suite 1200
Irving, TX 75039
Attn: Mr. Gary C. Evans
President
Buyer's Parent: Magnum Petroleum, Inc.
42-600 Cook Street, Suite 160
Palm Desert, CA 92211
Attn: Mr. Lloyd T. Rochford
Chairman
Any party may change its address for the giving of notice hereunder at any
time by giving notice of change in the manner specified above.
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SECTION 9.2: Survival of Representations, Warranties, Covenants and Agreements
The representation, warranties, covenants and agreements of Buyer, Seller,
Buyer's Parent and Seller's Parent set forth herein shall survive the Closing.
SECTION 9.3: Waiver
No term or condition of this Agreement shall be deemed to have been waived
nor shall there be any estoppel to enforce any provision of this Agreement
except by written instrument of the party charged waiver or estoppel.
SECTION 9.4: Entire Agreement
This Agreement constitutes the entire agreement and understanding between
the parties hereto and may not be modified or amended except in writing signed
by the parties hereto:
SECTION 9.5: Expense
Buyer and Seller shall each pay their respective expenses and costs in
connection with this Agreement and the transactions contemplated thereby.
SECTION 9.6: Heading
Descriptive headings are used for convenience only and shall not control or
affect the meaning or construction of any provision of this Agreement.
SECTION 9.7: Applicable Law
This Agreement shall be governed by and interpreted in accordance with laws
of the State of Texas applicable to contracts made and performed entirely
therein.
SECTION 9.8: Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their successors and assigns; provided, no assignment by
either party shall be made without the express written consent of the other
party and if such consent is granted, no assignment shall relieve such party of
any of its obligations hereunder.
SECTION 9.9: Assignment of Agreements and Covenants
Neither Buyer, Seller, Buyer's Parent nor Seller's Parent shall assign or
delegate this Agreement to a third party without the prior written consent of
the other party hereto.
SECTION 9:10: Indemnification/Risk of Loss
Risk of Loss to the Properties, Existing Wells and Personalty shall be upon
Seller until the time of Closing. At Closing, said risk of loss shall pass to
Buyer. Notwithstanding anything to the contrary herein, Seller and Seller's
Parent shall indemnify and hold Buyer free and harmless from liability for any
and all costs, expenses and causes of action of every kind and character in
connection with the Personalty, Properties and the Existing Wells for events
occurring prior to the Closing Date. Likewise, notwithstanding anything to the
contrary herein, Buyer shall indemnify and hold Seller free and harmless from
liability for any and all costs, expenses and causes of action of every kind and
character in connection with the Personalty, Properties and the Existing Wells
for events occurring after the Closing Date.
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SECTION 9.11: Signature in Counterparts
This Agreement may be signed in multiple counterparts by the Buyer, Seller,
Buyer's Parent and Seller's Parent, each of which, when taken together, shall
constitute the original document.
SECTION 9.12: Brokers
Each party agrees that it will hold the other party harmless from any claim
by any broker or finder asserting it was employed by such party in connection
with the transactions contemplated hereby.
SECTION 9.13: Post Closing Signatures
Each of the parties hereto agree to execute any and all mutually-acceptable
documents so as to vest title to Buyer in the interests and the properties
outlined on the attached Exhibit "A", which is attached hereto and incorporated
herein.
ARTICLE X
SPECIAL PROVISIONS
SECTION 10.1: Distribution of Monies and Stock Among Seller:
Buyer and Seller agree all monies payable to Seller and Seller's Bank
(International Bank of Commerce) shall be paid by wire transfer according to
written instructions received from Seller in the following amounts and to the
following parties as shown below:
Whitestone Industries, Inc. $ 300,000.00
85,131 s/s Magnum Petroleum Inc. Common Stock 300,000.00
International Bank of Commerce
(Principal of $378,155.53 plus interest of $1,864.62) 380,020.15
--------------
TOTAL $ 980,020.15
==============
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"SELLER"
WITNESS: MIDLAND HUNTER PETROLEUM
LIMITED LIABILITY COMPANY
________________________ /s/ Gary C. Evans
Gary C. Evans, President
________________________ /s/ Hernan A. Saide
Hernan A. Saide, Secretary
"SELLER'S PARENT COMPANY"
WITNESS: WHITESTONE INDUSTRIES, INC.
________________________ /s/ Hernan A. Saide
Hernan A. Saide, President
"BUYER"
ATTEST: MAGNUM HUNTER PRODUCTION, INC.
(Corporate Seal)
________________________ /s/ Gary C. Evans
Assistant Secretary Gary C. Evans, President
"BUYER'S PARENT COMPANY"
ATTEST: MAGNUM PETROLEUM, INC.
(Corporate Seal)
_________________________ /s/ Lloyd T. Rochford
Assistant Secretary Lloyd T. Rochford, Chairman
