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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) July 13, 1995
LOMAK PETROLEUM, INC.
(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER 0-9592
DELAWARE 34-1312571
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
500 THROCKMORTON STREET 76102
FORT WORTH, TEXAS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (817) 870-2601
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 30, 1995, Lomak Petroleum, Inc. ("Lomak") executed a purchase
and sale agreement with a subsidiary of Parker & Parsley Petroleum Company
("Parker & Parsley") to acquire properties in Pennsylvania and West Virginia
for $20.2 million. The acquisition includes approximately 825 producing gas
wells, 300 miles of gas gathering lines, 16,400 net acres of undeveloped leases
and associated real estate and equipment. Over 90% of the reserves are located
in proximity to Lomak's existing Pennsylvania operations. The properties are
also estimated to contain over 50 proven drilling locations.
The source of funds to be used for the acquisition will consist of
long-term debt utilizing Lomak's existing bank credit facility and its working
capital.
The foregoing description of the above described transaction is
qualified in its entirety by reference to the Agreement, which is being filed
herewith as Exhibit 1 and is fully incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS
1. Purchase and Sale Agreement dated June 30, 1995 by and
between Parker & Parsley Development L.P. and Lomak
Petroleum, Inc., Lomak Operating Company and Lomak
Resources Company.
2. Press Release issued by Lomak Petroleum, Inc. on July 5,
1995.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LOMAK PETROLEUM, INC.
By /s/Thomas W. Stoelk
------------------------------------
Thomas W. Stoelk
Chief Financial Officer
July 13, 1995
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Exhibit 1
PURCHASE AND SALE AGREEMENT
by and between
PARKER & PARSLEY DEVELOPMENT L.P.
as Seller
and
LOMAK PETROLEUM, INC.,
LOMAK OPERATING COMPANY
and
LOMAK RESOURCES COMPANY
as Purchaser
June 30, 1995
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<TABLE>
TABLE OF CONTENTS
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ARTICLE 1. SALE AND PURCHASE ...................................................... 1
1.1 Effective Time ..................................................... 1
1.2 Sale and Purchase .................................................. 1
1.3 Excluded Assets .................................................... 2
ARTICLE 2. CONSIDERATION .......................................................... 2
2.1 Consideration ...................................................... 2
2.2 Manner of Payment .................................................. 2
2.3 Like Kind Exchange Option .......................................... 3
2.4 Deposit ............................................................ 3
ARTICLE 3. DEFECTS ................................................................ 3
3.1 Definition of Acceptable Title ..................................... 3
3.2 Definition of Permitted Encumbrances ............................... 4
3.3 Environmental and Physical Assessment .............................. 5
3.4 Identified Claims .................................................. 6
3.5 Notice of Defects .................................................. 6
3.6 Remedy for Defects ................................................. 6
3.7 Preferential Purchase Rights and Consents to Assign ................ 7
ARTICLE 4. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS ...................... 8
4.1 Existence .......................................................... 8
4.2 Power .............................................................. 8
4.3 Authorization ...................................................... 8
4.4 Brokers ............................................................ 8
4.5 Foreign Person ..................................................... 8
4.6 No Liens ........................................................... 8
4.7 Valid Agreements ................................................... 8
4.8 No Reservations .................................................... 9
4.9 Permits ............................................................ 9
4.10 Compliance with Law ................................................ 9
4.11 Taxes .............................................................. 9
4.12 Access to Records .................................................. 9
4.13 No Call ............................................................ 9
4.14 Litigation ......................................................... 9
LIMITATION AND DISCLAIMER OF REPRESENTATIONS AND WARRANTIES ................ 9
4.15 Maintenance of Assets .............................................. 10
4.16 No Encumbrances .................................................... 10
4.17 Operations ......................................................... 10
ARTICLE 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER ................. 12
5.1 Existence .......................................................... 12
5.2 Power .............................................................. 12
5.3 Authorization ...................................................... 12
5.4 Brokers ............................................................ 12
5.5 Investment Intent .................................................. 12
ARTICLE 6. SELLER'S CONDITIONS OF CLOSING ......................................... 12
6.1 Representations .................................................... 12
6.2 Performance ........................................................ 13
6.3 Officer's Certificate .............................................. 13
6.4 Pending Matters .................................................... 13
6.5 HSR Act ............................................................ 13
</TABLE>
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<TABLE>
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ARTICLE 7. PURCHASER'S CONDITIONS OF CLOSING ........................................ 13
7.1 Representations ...................................................... 13
7.2 Performance .......................................................... 13
7.3 Officer's Certificate ................................................ 13
7.4 Pending Matters ...................................................... 13
7.5 HSR Act .............................................................. 13
ARTICLE 8. CLOSING .................................................................. 13
8.1 Time and Place of Closing ............................................ 13
8.2 Closing Obligations .................................................. 13
ARTICLE 9. POST-CLOSING OBLIGATIONS ................................................. 14
9.1 Receipts and Credits; Suspense Funds ................................. 14
9.2 Costs and Liabilities; Indemnity ..................................... 14
9.3 Further Assurances ................................................... 16
9.4 Delivery of Records .................................................. 16
9.5 Accounting for Subject Properties .................................... 17
9.6 Access to Data ....................................................... 17
ARTICLE 10. TERMINATION ............................................................. 17
10.1 Right of Termination ................................................. 17
10.2 Effect of Termination ................................................ 17
ARTICLE 11. TAXES ................................................................... 18
11.1 Apportionment of Ad Valorem and Property Taxes ....................... 18
11.2 Sales Taxes .......................................................... 18
11.3 Other Taxes .......................................................... 18
11.4 Cooperation .......................................................... 18
ARTICLE 12. PHYSICAL CONDITION OF THE ASSETS ........................................ 18
12.1 Prior Use of Assets .................................................. 18
12.2 Assumption of Assets in Present Condition ............................ 19
12.3 Casualty Loss ........................................................ 19
ARTICLE 13. MISCELLANEOUS .......................................................... 19
13.1 Governing Law ........................................................ 19
13.2 Entire Agreement ..................................................... 19
13.3 Waiver ............................................................... 19
13.4 Captions ............................................................. 20
13.5 Assignability ........................................................ 20
13.6 Notices .............................................................. 20
13.7 DTPA Waiver .......................................................... 21
13.8 Expenses ............................................................. 21
13.9 Severability ......................................................... 21
13.10 Damages .............................................................. 21
13.11 No Third Party Beneficiary ........................................... 21
13.12 Survival ............................................................. 21
13.13 Counterparts ......................................................... 21
13.14 Certain Definitions .................................................. 21
13.15 Construction of Ambiguity ............................................ 22
13.16 Waiver of Jury Trial ................................................. 22
13.17 Publicity ............................................................ 22
13.18 Accounting ........................................................... 22
13.19 Operatorship ......................................................... 23
13.20 HSR Act .............................................................. 23
</TABLE>
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<TABLE>
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Exhibit "A-1" - Wells
Exhibit "A-2" - (Intentionally Omitted)
Exhibit "A-3" - (Intentionally Omitted)
Exhibit "A-4" - Leasehold Interests in Allegheny County, Pennsylvania
Exhibit "A-5" - Leasehold Interests in Armstrong County, Pennsylvania
Exhibit "A-6" - Leasehold Interests in Butler County, Pennsylvania
Exhibit "A-7" - Leasehold Interests in Clearfield County, Pennsylvania
Exhibit "A-8" - Leasehold Interests in Fayette County, Pennsylvania
Exhibit "A-9" - Leasehold Interests in Indiana County, Pennsylvania
Exhibit "A-10" - Leasehold Interests in Sumerset County, Pennsylvania
Exhibit "A-11" - Leasehold Interests in Westmoreland County, Pennsylvania
Exhibit "A-12" - Leasehold Interests in Barbaur County, West Virginia
Exhibit "A-13" - Leasehold Interests in Braxton County, West Virginia
Exhibit "A-14" - Leasehold Interests in Clay County, West Virginia
Exhibit "A-15" - Leasehold Interests in Nicholas County, West Virginia
Exhibit "A-16" - Allocation of Values
Exhibit "B" - Rights of Way (PA)
Exhibit "C" - Description of Real Estate
Exhibit "D" - Description of Vehicles and Equipment
</TABLE>
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is made as of June
30, 1995, by and between PARKER & PARSLEY DEVELOPMENT L.P., a Texas limited
partnership ("PPDLP" or "SELLER"), and LOMAK PETROLEUM, INC., a Delaware
corporation, LOMAK OPERATING COMPANY, an Ohio corporation, and LOMAK RESOURCES
COMPANY, a Delaware corporation (collectively, "PURCHASER").
RECITALS:
WHEREAS, on the terms and conditions provided in this Agreement,
Seller desires to sell and Purchaser desires to purchase Seller's interests in
certain oil and gas leases, agreements, contracts, real property, personal
property, equipment and related rights.
NOW, THEREFORE, for good and valuable consideration and for the mutual
covenants contained herein, Seller and Purchaser hereby agree as follows:
ARTICLE 1. SALE AND PURCHASE
1.1 EFFECTIVE TIME. The effective time and date of the
purchase and sale contemplated hereby shall be 7:00 a.m., July 1, 1995, at the
site of the respective Subject Properties (the "EFFECTIVE TIME").
1.2 SALE AND PURCHASE. Subject to the terms and conditions herein
contained, at Closing and as of the Effective Time, Seller shall sell, assign,
transfer and convey to Purchaser, and Purchaser shall purchase and receive,
the following described assets, less and except the Excluded Assets (the
"ASSETS"):
(a) all interest of Seller as of the Effective Time (the "SALE
INTEREST") in and to (i) the wells, leases and/or units
described on Exhibits "A-1 through A-15" attached hereto and
incorporated herein, (ii) the oil, gas and mineral leasehold
estates and fee estates appurtenant to wells, leases and/or
units described on Exhibits "A-1 through A-15" attached
hereto, upon which such wells are located or with respect to
which such wells are associated, and (iii) all other interests
in oil, gas and other minerals of whatever nature appurtenant
to wells, leases and/or units described on Exhibits "A-1
through A-15" attached hereto, including, without limitation,
all fee estates, fee mineral and royalty interests, working
interests, farmout rights and overriding royalty interests
(reference being hereby made to Seller's records and files
located at 303 W. Wall, Suite 101, Midland, Texas, and
Seller's records and files located at 2030 William Pitt Way,
Pittsburgh, Pennsylvania 15238, for a more complete
description of said leases, leasehold and fee estates and
interests), together with all of Seller's right, title and
interest in respect of and in any pooled, communitized or
unitized acreage of which any such leasehold, fee or other
interest is a part and all of the rights incident thereto (the
"SUBJECT PROPERTIES");
(b) to the extent attributable or allocable to the Subject
Properties, all interest of Seller (including, without
limitation, leasehold) as of the Effective Time in and to: (i)
all wells (including but not limited to the wells described on
Exhibit "A- 1" and all other oil, gas, injection and water
wells), equipment, lease equipment, signage, gathering
pipelines, inclusive of but not limited to the gathering
pipelines located on the rights-of-way described on Exhibit
"B" attached hereto and incorporated herein, gas facilities,
gathering systems, gathering, storage, distribution, treating,
processing and disposal facilities and tanks, vehicles,
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tools, buildings, inventory and all other real or tangible
personal property and fixtures which are located on or
directly and solely related to the Subject Properties; (ii)
all oil, gas, mineral and other hydrocarbon substances
produced on or after the Effective Time; (iii) to the extent
the same are assignable or transferable by Seller, all orders,
contracts, title opinions and documents, abstracts of title,
leases, deeds, unitization agreements, pooling agreements,
operating agreements, division of interest statements,
participation agreements, and all other agreements and
instruments; (iv) all surface leasehold and fee estates,
easements, rights-of-way, inclusive of but not limited to the
rights-of-way described on Exhibit "B", licenses,
authorizations, permits and similar rights and interests,
subject to the rights of third parties; (v) except as
expressly provided otherwise herein, all warranties,
covenants, indemnities and representations from third
parties, and all claims, rights and causes of action against
third parties, asserted and unasserted, known and unknown;
(vi) to the extent assignable and subject to the rights of
third parties, lease files, land files, operating files, well
files, oil and gas sales contract files, gas processing files,
logs, test data, production histories, geologic maps, division
order files, abstracts, title files and materials, and all
other books, files and records (the "RECORDS"), and all rights
thereto, subject to the rights of third parties; and (vii) all
other rights, privileges, benefits and powers conferred upon
the owner and holder of interests in the Subject Properties;
and
(c) all interest of Seller as of the Effective Time in and to (i)
the real estate described on Exhibit "C" attached hereto and
incorporated herein, inclusive of all buildings, inventory and
other real or tangible personal property and fixtures which
are located on or directly related to the real estate, and
(ii) the vehicles and equipment described on Exhibit "D"
attached hereto and incorporated herein, inclusive of all
appurtenances thereto.
1.3 EXCLUDED ASSETS. Notwithstanding anything in this Agreement
to the contrary, the Assets do not include and Purchaser agrees and
acknowledges that Seller has reserved from the Assets and hereby reserves unto
itself any and all rights, titles and interests in and to (a) (1) fee, fee
mineral and royalty interests which were conveyed to Parker & Parsley Producing
L.P. by all or any of Santa Fe Energy Resources, Inc. ("SFER"), Santa Fe Energy
Operating Partners, L.P. ("SFEOP") or SFER Properties-A, Inc. ("SFERP-A") or
any of their respective Affiliates, and (2) or arising under that certain
Exploration Agreement dated April 8, 1994, between SFEOP and PPPLP and all
property rights, grants, and interests created, made or evidenced by such
Exploration Agreement (collectively, the "SF INTERESTS"), (b) the right of
ingress and egress for the purpose of mining, drilling, exploring, operating,
holding, producing and developing the SF Interests for oil, gas, minerals and
other hydrocarbon substances, and (c) seismic, geologic and geophysical records
and data not expressly described in Section 1.2(b)(vi) above ((a) through (c),
collectively, the "EXCLUDED ASSETS").
ARTICLE 2. CONSIDERATION
2.1 CONSIDERATION. As consideration for this Agreement and
the transfer of the Assets, at Closing, Purchaser shall pay to Seller
$20,200,000 (the "PURCHASE PRICE"), as may be adjusted pursuant hereto (the
"ADJUSTED PURCHASE PRICE"). The Purchase Price has been allocated by Purchaser
as provided on Exhibit "A-16" attached hereto and incorporated herein.
2.2 MANNER OF PAYMENT. At Closing, except as provided in the
following Section 2.3, Purchaser shall pay Seller or Seller's designee the
Adjusted Purchase Price by wire transfer of immediately available funds as
follows:
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Account: Parker & Parsley Development L.P.
Account No: 1290288845
NationsBank of Texas, N.A.
ABA Routing No: 111000025
Attention: Frank Stowers
NationsBank of Texas-Midland
(915) 685-2179
2.3 LIKE KIND EXCHANGE OPTION. Seller and Purchaser hereby agree
that Seller, in lieu of the sale of the Assets to Purchaser for the cash
consideration provided herein, shall have the right at any time prior to
Closing to assign all or a portion of its rights under this Agreement to a
qualified intermediary in order to accomplish the transactions contemplated
hereby in a manner that will comply, either in whole or in part, with the
requirements of a like kind exchange pursuant to Section 1031 of the Internal
Revenue Code of 1986, as amended ("CODE"). In the event Seller assigns its
rights under this Agreement pursuant to this Section 2.3, Seller agrees to
notify Purchaser in writing of such assignment before Closing. If Seller
assigns its rights under this Agreement, Purchaser agrees to (i) consent to
Seller's assignment of its rights in this Agreement, (ii) deposit the Adjusted
Purchase Price with the qualified escrow or qualified trust account designated
by Seller at Closing, and (iii) take such further actions, at Seller's cost, as
are reasonably required to effectuate the transactions contemplated hereby
pursuant to Code Section 1031, but, in so acting, Purchaser shall have no
liability to any party in connection with such actions. All risks associated
with any like kind exchange and compliance thereof with applicable laws, rules
and regulations shall be the sole responsibility of Seller, and Seller agrees
to indemnify and hold Purchaser harmless from and against all costs, expenses,
liabilities and obligations which arise as a result of Purchaser's agreement
contained in this Section 2.3.
2.4 DEPOSIT. Contemporaneously with the execution of this
Agreement, Purchaser will pay to Seller $1,000,000 (the "DEPOSIT"), which shall
be wired in accordance with the instructions contained in Section 2.2 above.
If Closing occurs, the Deposit shall be applied to reduce the Adjusted Purchase
Price. If Closing does not occur, the Deposit shall be applied as provided in
Section 10.2.
ARTICLE 3. DEFECTS
3.1 DEFINITION OF ACCEPTABLE TITLE. As used herein, the term
"ACCEPTABLE TITLE" shall mean, as to the Assets, such right, title and
interest that (a) entitles Seller to receive not less than the net revenue
interest set forth on Exhibit "A-1" of all oil, gas and associated liquid and
gaseous hydrocarbons produced, saved and marketed from the respective Subject
Properties, (b) obligates Seller to bear costs and expenses relating to the
maintenance, development, and operation of all wells located on the respective
Subject Properties in an amount not greater than the working interest set forth
on Exhibit "A-1", unless there is a corresponding increase in the applicable
net revenue interest, and (c) except for Permitted Encumbrances, is free and
clear of all liens, claims and encumbrances; PROVIDED, however that (i) the
presence of a preferential right to purchase provision shall not be considered
to be a Defect (as defined in Section 3.5 below); and (ii) if Purchaser
demonstrates before or after Closing, subject to Section 13.12 below, that
Seller does not have or cannot convey Acceptable Title to a well described on
Exhibit "A-1" and, if so demonstrated after Closing, that Purchaser did not
receive at Closing an adjustment to the Purchase Price or other consideration
on account of such matter, and if Seller owns fee mineral interests or other
interests underlying the applicable proration or spacing unit on which such
well is located, Seller shall resolve such matter by, at Seller's option,
either (1) granting a lease (on mutually acceptable terms) on all or part of
such interests, or (2) conveying (which conveyance may be limited in term,
similar to an oil and gas lease) all or part of such interests to Purchaser
and, if so resolved, such matter shall not be considered a Defect for any
purpose hereunder if the interest so conveyed, or leased, will (after
considering, in the case of a lease, the royalty reserved to Seller under the
lease) be sufficient so that, after giving effect
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thereto, such matter will no longer exist (a "FURTHER CONVEYANCE"); PROVIDED,
however, that such Further Conveyance shall be limited to depths from the
surface of the ground down to the deepest producing zone from which production
is being obtained (from the subject well) at the Effective Time insofar as such
depths underlie the proration or spacing unit attributable to such well.
Purchaser acknowledges and agrees that any net revenue interests and working
interests reflected on Exhibit "A-1" are for the convenience of Seller and
Purchaser and included solely for the purpose of determining Acceptable Title
prior to Closing. Seller does not and shall not represent or warrant that the
Sale Interest is equal to any such interests in any respect, but agrees that
(i) for purposes of determining Defects prior to Closing, with respect to those
Subject Properties listed on Exhibit "A-1" with "0.0000" "APO" interests, the
"APO" interests shall be deemed to be the same as the corresponding "BPO"
interests, and (ii) Purchaser may assert as a Title Defect (as defined in and
pursuant to Section 3.5 below) any matter reasonably expected to reduce the net
revenue interest assigned to such Subject Property or any matter reasonably
expected to increase the working interest assigned to such Subject Property
unless there is a corresponding increase in the applicable net revenue
interest.
3.2 DEFINITION OF PERMITTED ENCUMBRANCES. As used herein, the term
"PERMITTED ENCUMBRANCES" shall mean the following items relating to the Assets,
provided none of the following items shall operate to increase the working
interest of Seller as set forth on Exhibit "A-1" for any of the Subject
Properties, without a corresponding increase in the applicable net revenue
interest, or decrease the net revenue interest of Seller set forth on Exhibit
"A-1" for any of the Subject Properties:
(a) lessors' royalties, overriding royalties, production payments,
reversionary interests and similar burdens;
(b) division orders and sales contracts;
(c) preferential rights to purchase not identified in writing to
Seller pursuant to Section 3.7 below, or, if so identified,
with respect to which (i) waivers are obtained from the
appropriate parties, (ii) the appropriate time period for
asserting such rights has expired without an exercise of such
rights, or (iii) appropriate parties have exercised such
rights and the Purchase Price has been adjusted where
appropriate with reference to the value allocated on Exhibit
"A16" to the affected Asset ("PREFERENTIAL RIGHTS");
(d) rights to consent to assignments required by this Agreement
held by Persons other than governmental entities and not
identified in writing to Seller pursuant to Section 3.7 below,
or, if so identified, with respect to which (i) waivers or
consents are obtained from the appropriate parties, or (ii)
the prescribed time period for denying such consent has
expired;
(e) materialman's, mechanic's, repairman's, employee's,
contractor's, operator's, tax, and other similar liens or
charges arising in the ordinary course of business for
obligations that are not delinquent and that will be paid and
discharged in the ordinary course of business;
(f) rights to consent by, required notices to, filings with, or
other actions by governmental entities in connection with the
sale or conveyance of oil and gas leasehold and fee estates or
interests therein, which consents, notices, filings and/or
other actions are customarily obtained after closing;
(g) easements, rights-of-way, servitudes, permits, surface leases
and other rights in respect of surface operations affecting
the Assets which in the aggregate are not such as to interfere
materially with the operation or use of any of the Subject
Properties or materially reduce the value thereof;
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(h) rights reserved to or vested in any governmental, statutory or
public authority to control or regulate any of the Assets in
any manner, and all applicable laws, rules and orders of any
governmental authority affecting the Assets which in the
aggregate are not such as to interfere materially with the
operation or use of any of the Subject Properties or
materially reduce the value thereof;
(i) operating agreements, unit agreements, unit operating
agreements, pooling agreements and pooling designations
affecting the Subject Properties which are of public record or
contained in the Records or otherwise available to Purchaser
and all actions taken or operations occurring in the normal
course of business pursuant to such instruments;
(j) Title Defects that Purchaser may have expressly waived in
writing or which are deemed to have been waived pursuant to
Section 3.6;
(k) all conveyances, reservations and exceptions of public record
or contained in the Records affecting the Assets which in the
aggregate are not such as to interfere materially with the
operation or use of any of the Subject Properties or
materially reduce the value thereof; and
(l) all other liens, charges, encumbrances, contracts, agreements,
instruments, obligations, defects and irregularities affecting
the Assets which in the aggregate are not such as to interfere
materially with the operation or use of the affected Subject
Properties or materially reduce the value thereof.
3.3 ENVIRONMENTAL AND PHYSICAL ASSESSMENT. Purchaser shall have
the right to make an environmental and other physical assessment of the Assets
during the period ("EXAMINATION PERIOD") beginning on the date of execution of
this Agreement and ending on August 10, 1995 (or August 23, 1995, upon
Purchaser's Extension). During Seller's normal business hours, Purchaser and
its Representatives shall have the right to enter upon the Assets and all
buildings and improvements thereon, inspect the same, conduct soil and water
tests and borings, and generally conduct such tests, examinations,
investigations and studies as may be reasonably necessary or appropriate for
the preparation of appropriate environmental and other reports relating to the
Assets, their condition, and the presence of wastes or contaminants. Seller
shall be provided 48 hours prior written notice of such proposed activities
and shall have the right to witness all such tests and investigations and to
deny Purchaser's request to conduct any test or take any action which Seller
determines in good faith could reasonably be expected to materially and
adversely affect any or all of the Assets or Seller's business or employees.
Purchaser shall keep any data or information acquired by all such examinations
and the results of all analyses of such data and information strictly
confidential and not disclose any of the same to any Person unless otherwise
required by law or regulation and then only after written notice to Seller of
the need for disclosure and the identity of all intended recipients. Seller
hereby grants Purchaser access to the Assets to conduct its environmental and
other physical assessment upon the condition that, in accordance with Section
9.2, Purchaser hereby indemnifies and holds Seller and its Affiliates and their
respective Representatives harmless from and against any and all claims for or
related to personal injury or property damage arising out of or as a result of
the activities of Purchaser or its Representatives on the Assets in conducting
such environmental and physical assessments. If during the Examination Period,
Purchaser determines in good faith that (i) there is a condition or
circumstance which constitutes a violation of applicable law or regulation, or
(ii) there is a claim, demand, filing, investigation, action, suit or other
legal or administrative proceeding asserted or otherwise initiated by a
governmental authority and arising from or related to the Subject Properties or
the ownership or operation of any thereof, or (iii) Seller pursuant to this
Section 3.3 has denied a request to conduct a test or take other action with
respect to a particular Asset (a "PROPERTY DEFECT"), Purchaser may include
notice of such Defect in any Notice
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of Defects delivered hereunder, and the value of such Defect asserted by
Purchaser shall not be required to be limited to the value of the Subject
Properties so affected; PROVIDED, that any such matter not included in a Notice
of Defects shall be waived by Purchaser.
3.4 IDENTIFIED CLAIMS. During the Examination Period and in
accordance with Section 4.12, Seller shall make available to Purchaser for
examination and copying (at Purchaser's cost) any of the Records and Seller's
accounting records relating to the Assets as Purchaser may reasonably request.
Seller shall also permit Purchaser's Representatives to consult with Seller's
employees and Seller's independent contractors who have knowledge concerning
the Assets during normal business hours regarding such records; PROVIDED, that
such consultation shall not unreasonably disrupt the performance by such
employee or independent contractor of his or its duties with Seller. If during
the Examination Period, Purchaser determines in good faith that (i) royalties,
rentals or other payments due in respect of the Assets prior to the Effective
Time have not been paid (except for those amounts in suspense), or (ii) there
are unsatisfied claims, demands, liabilities or obligations in respect of the
Assets based upon omissions, events or occurrences prior to the Effective Time
(collectively, "IDENTIFIED CLAIMS"), Purchaser may include notice of such
Identified Claims in any Notice of Defects delivered hereunder; PROVIDED, that
any such matter not included in a Notice of Defects shall be waived by
Purchaser.
3.5 NOTICE OF DEFECTS. If any matter is discovered by Purchaser
that, in Purchaser's reasonable, good faith opinion, would (a) cause any of
the Sale Interest not to be Acceptable Title (a "TITLE DEFECT"); (b)
constitute a breach of Seller's representations, warranties and agreements
contained herein (a "CONTRACT DEFECT"); (c) constitute a Property Defect;
or (d) constitute an Identified Claim ((a) through (d) individually, a
"DEFECT", and collectively, the "DEFECTS"), then Purchaser may provide written
notice (a "NOTICE OF DEFECTS") thereof actually delivered to Seller not later
than 3:00 p.m., Central Time, August 10, 1995 (or August 24, 1995, upon
Purchaser's Extension); PROVIDED, however, that any notice concerning a
Contract Defect not discoverable from an examination of the Records, public
records, Purchaser's records, the records of any purchaser of production
attributable to the Subject Properties or a physical inspection of the Assets
may be delivered to Seller on or before noon of the business day immediately
before the Closing Date, and that, if so delivered, Purchaser's sole remedy
therefor shall be as provided in Section 3.6, with the procedure therein
provided applicable thereto the same as if such Contract Defect had been
included in any Notice of Defects delivered not later than 3:00 p.m., Central
Time, August 10, 1995 (or August 24, 1995, upon Purchaser's Extension) (i.e.,
the value of any such Contract Defect shall be included in the value of any
other Defects included in a Notice of Defects, or, if no Notice of Defects has
been provided, then such Contract Defect only may be included in a Notice of
Defects then given to Seller). A Notice of Defects shall specifically identify
the Defect and include (i) the Purchaser's purported value of each specific
Defect, (ii) an identification of each affected Asset, (iii) Purchaser's basis
for determining the existence and value of such Defect, together with all
associated reports, opinions, data, valuations, assessments, conclusions and
supporting calculations, and (iv) Purchaser's statement of steps necessary to
cure each such Defect to its satisfaction, all of which shall be kept strictly
confidential by Seller, except to the extent required by law, regulation or
order of any court or other governmental authority or as may be necessary to
address Defects identified in a Notice of Defects.
3.6 REMEDY FOR DEFECTS. In Seller's sole discretion, but without
obligation, it may, at its sole cost, take such steps as are reasonably
necessary to cure Defects identified in a Notice of Defects. In the event
Seller is unable or elects not to cure any or all Defects, Seller and
Purchaser may, at Seller's option, meet and use their best efforts to agree
in good faith on the validity of each Defect claim and the need for and amount
of any mutually acceptable Purchase Price adjustment. Purchaser's asserted
Title Defect adjustments shall be made with reference (as a maximum) to the
allocated value for each affected Asset as set forth on Exhibit "A-16". If
the parties cannot agree on the need for or the amount of a claimed Purchase
Price adjustment, Purchaser shall accept and purchase the Assets, including
any Asset subject to a Defect, as
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provided herein; PROVIDED, however, that (i) if the aggregate net amount of
Purchase Price adjustments for Defects asserted by Purchaser pursuant to
Section 3.5, PLUS the amount of any uninsured Casualty Losses and Casualty
Losses not fully covered by insurance (to the extent of such deficiency only)
equals or exceeds $1,000,000, or (ii) if the aggregate value of Preferential
Rights to be exercised at Closing, PLUS the value of any of the Assets (with
reference as a maximum to the allocated value thereof on Exhibit "A-16") taken
in condemnation or under the right of eminent domain prior to the end of the
Examination Period, or with respect to which proceedings for such purposes
shall be pending or threatened in writing at such time, equals or exceeds 25%
of the Purchase Price, then Seller or Purchaser may, upon written notice to the
other, terminate this Agreement, without liability or further obligation to the
other party, subject to Section 10.2. Seller shall have no obligation hereunder
to any Person to sell, convey, deliver or otherwise transfer all or any part of
the Assets if Purchaser or Seller terminates this Agreement pursuant to the
foregoing clause (ii). Purchaser agrees and acknowledges that Seller has no
obligation to adjust the Purchase Price with respect to Defects. If Closing
occurs, Purchaser shall be deemed to have waived or assumed any and all claims,
known and unknown, arising from or related to any and all Defects or title to
or other condition of the Assets, including, without limitation, whether or not
identified in a Notice of Defects, and notwithstanding the fact that Seller may
not have cured any such Defect(s) to Purchaser's satisfaction, and Seller shall
have no obligation with respect thereto. As used in this Agreement, the
"AGGREGATE NET AMOUNT" of Purchase Price adjustments shall be determined by
subtracting from the value of all Defects asserted by Purchaser (i) the value
of all interests by which Seller's actual interests in the Subject Properties
exceeds the net revenue interests set forth on Exhibit "A-1" hereto, and (ii)
the value of Defects asserted by Purchaser which are cured or otherwise
resolved to Purchaser's reasonable satisfaction. If Purchaser provides Seller
with a Notice of Defects, Purchaser shall provide Seller copies of all
pertinent portions of applicable title opinions, data and curative information
available to it to enable the parties to make such determination.
3.7 PREFERENTIAL PURCHASE RIGHTS AND CONSENTS TO ASSIGN. Upon
written notification to Seller by Purchaser identifying Persons (and their
addresses) holding preferential rights to purchase affecting the Subject
Properties or the right to consent with respect to any assignments required
hereby, other than such consents of governmental authorities which are usually
obtained in the normal course of business after Closing, actually received by
Seller not later than the earlier of (i) twenty (20) days prior to the Closing
Date, or (ii) five (5) business days prior to the latest date prior to Closing
permitted by the subject agreement for such notice to be provided, Seller
shall send notice of this Agreement to all such Persons (y) offering to sell
to each such Person the Subject Properties for which a preferential right is
held on and subject to the terms hereof and for the same allocated value for
such Subject Properties reflected on Exhibit "A-16", or (z) requesting, where
appropriate, consent to any assignment required in connection herewith.
Purchaser shall be entitled to review and approve the form of all such
notices; PROVIDED, that such approval shall not be unreasonably withheld or
delayed. If, prior to Closing, any of such Persons asserting a preferential
purchase right notifies Seller that it intends to consummate the purchase of
the Subject Properties to which it holds a preferential purchase right
pursuant to the terms and conditions hereof, then, subject to clause (ii) of
Section 3.6 above, such Subject Properties shall be excluded from the Assets
to be conveyed to Purchaser under this Agreement and the Purchase Price shall
be reduced by the allocated value of such Assets reflected on Exhibit "A-16";
PROVIDED, however, that if the holder of such preferential right fails to
consummate the purchase of such Subject Properties on the Closing Date, then
Seller shall promptly so notify Purchaser, and Seller shall sell immediately to
Purchaser, and Purchaser shall purchase from Seller, for a price equal to the
allocated value of such Subject Properties and upon the other terms of this
Agreement, the Subject Properties to which the preferential purchase right was
asserted. All Subject Properties for which a preferential purchase right has
not been asserted prior to Closing by the holder of such right, or with respect
to which Closing does not occur on the Closing Date following the assertion of
a preferential purchase right, shall be sold to Purchaser at Closing pursuant
and subject to the
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provisions of this Agreement. If one (1) or more of the holders of any
preferential purchase rights notifies Seller subsequent to Closing that it
intends to assert its preferential purchase right, Seller shall give notice
thereof to Purchaser, whereupon Purchaser shall satisfy all such preferential
purchase right obligations of Seller to such holders and shall indemnify and
hold Seller harmless from and against any and all claims, liabilities, losses,
costs and expenses (including, without limitation, court costs and reasonable
attorneys' fees) in connection therewith, and Purchaser shall be entitled to
receive (and Seller hereby assigns to Purchaser all of Seller's rights to) all
proceeds received from such holders in connection with such preferential
purchase rights; Purchaser shall indemnify and hold harmless Seller from and
against any and all claims, liabilities, losses, costs and expenses (including,
without limitation, court costs and reasonable attorneys' fees) asserted or
incurred at any time (whether before or after Closing) with respect to or
arising directly or indirectly from the claims of any Person to a preferential
purchase right affecting any of the Assets transferred to Purchaser hereunder.
ARTICLE 4. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Seller represents, warrants to and covenants with Purchaser that:
4.1 EXISTENCE. PPDLP is a limited partnership, duly formed,
validly existing and in good standing under the laws of the State of Texas.
4.2 POWER. Seller has the requisite power and authority to
enter into and perform this Agreement and the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by Seller, and the
transactions contemplated hereby, will not (a) violate any provision of
Seller's articles or agreement of limited partnership or other governing
documents, (b) conflict with, result in a breach of, constitute a default (or
an event that with the lapse of time or notice, or both would constitute a
default) under any agreement or instrument to which Seller is a party or by
which Seller is bound, (c) to the best knowledge and belief of Seller, violate
any judgment, order, ruling, or decree applicable to Seller and entered or
delivered in a proceeding in which Seller was or is a named party, or (d) to
the best knowledge and belief of Seller, violate any applicable law, rule or
regulation.
4.3 AUTHORIZATION. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all requisite action on the part of Seller. This
Agreement has been duly executed and delivered on behalf of Seller, and at the
Closing all documents and instruments required hereunder to be executed and
delivered by Seller shall be duly executed and delivered. This Agreement and
such documents and instruments shall constitute legal, valid and binding
obligations of Seller enforceable in accordance with their terms subject,
however, to the effect of bankruptcy, insolvency, reorganization, moratorium
and similar laws from time to time in effect relating to the rights and
remedies of creditors, as well as to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
4.4 BROKERS. Seller has incurred no obligation or liability,
contingent or otherwise, for brokers' or finders' fees in respect of the
matters provided for in this Agreement which will be the responsibility of
Purchaser, and any such obligation or liability that might exist shall be the
sole obligation of Seller.
4.5 FOREIGN PERSON. Seller is not a "FOREIGN PERSON" within the
meaning of the Code.
4.6 NO LIENS. The Assets are not subject to any valid and
enforceable security interests, liens or mortgages.
4.7 VALID AGREEMENTS. Material oil and gas leases and other
material contracts and agreements constituting a part of the Assets are valid
and in full force and effect, and Seller is
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not, or with the lapse of time or giving of notice or both will not be, in
material breach or material default, with respect to any of its obligations
thereunder and no party has given or threatened to give Seller notice of any
material default thereunder.
4.8 NO RESERVATIONS. There are no reservations which affect the
Assets other than those currently of public record.
4.9 PERMITS. Seller possesses all material licenses, permits,
certificates, orders, approvals and authorizations necessary to own the Assets
and to carry on its business as now being conducted.
4.10 COMPLIANCE WITH LAW. Seller is in material compliance with
all laws, ordinances, rules, regulations and orders applicable to the Assets,
including, without limitation, all environmental laws, ordinances, rules,
regulations and orders, except to the extent of any non-compliance that is not
reasonably expected to result in a material adverse affect on the Assets;
however, Seller has not received any notice of any claimed noncompliance
therewith. Seller is not aware of any facts, conditions or circumstances in
connection with, related to or associated with the Assets that could reasonably
be expected to give rise to any claim or assertion that Seller, the Assets or
the ownership or operation of any thereof is not in material compliance with
any applicable law, rule, regulation, ordinance, or order of any governmental
authority or with any term or conditions of any applicable permit, license,
approval, consent, certificate or other authorization.
4.11 TAXES. All ad valorem, property, production, severance,
excise, and similar taxes and assessments based on or measured by the ownership
of property or the production of hydrocarbons or the receipt of proceeds
therefrom attributable to the Assets that have become due and payable have been
properly and timely paid, except to the extent of any failure that is not
reasonably expected to result in a material adverse effect on the Assets.
4.12 ACCESS TO RECORDS. Seller will provide Purchaser through
Closing access to the Records during normal business hours at their place of
storage, and, at Purchaser's cost, will assist Purchaser in obtaining access to
and the right to review and copy Records pertaining to the Assets not in
Seller's possession or control. From and after the date of the execution of
this Agreement through the Closing Date, Seller shall not add to or remove from
the Records any contracts, instruments, documents or other materials except for
such additions and removals as are done in the ordinary course of business with
respect to ongoing operations.
4.13 NO CALL. No Person has any option to purchase or similar
right under any agreement with respect to production attributable to the Assets
which could reasonably be expected to materially and adversely affect the value
of the Assets, taken as a whole.
4.14 LITIGATION. No pending litigation or other proceeding in
which Seller (or its direct predecessor in title) is a named party affects any
of the Assets, and no litigation or other proceeding has been threatened in
writing with respect to any of the Assets.
LIMITATION AND DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
THE EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN THIS
AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, AND, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTIONS 4.1 THROUGH 4.5 (WHICH
SHALL SURVIVE CLOSING) THE REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN
SHALL TERMINATE IN ALL RESPECTS UPON CLOSING. ANY ASSIGNMENT AND BILL OF SALE
OR OTHER CONVEYANCE EXECUTED AND DELIVERED PURSUANT HERETO SHALL BE: (A)
WITHOUT ANY WARRANTY OR REPRESENTATION OF TITLE, EITHER EXPRESS, IMPLIED,
STATUTORY OR OTHERWISE; (B) WITHOUT ANY EXPRESS, IMPLIED, STATUTORY OR OTHER
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WARRANTY OR REPRESENTATION AS TO THE CONDITION, QUANTITY, QUALITY, FITNESS FOR
A PARTICULAR PURPOSE, CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OR
MERCHANTABILITY OF ANY OF THE ASSETS OR THEIR FITNESS FOR ANY PURPOSE; AND (C)
WITHOUT ANY OTHER EXPRESS, IMPLIED, STATUTORY OR OTHER WARRANTY OR
REPRESENTATION WHATSOEVER. AT CLOSING, PURCHASER SHALL HAVE INSPECTED OR
WAIVED ITS RIGHT TO INSPECT THE RECORDS AND THE ASSETS FOR ALL PURPOSES AND
SATISFIED ITSELF AS TO THE PHYSICAL AND ENVIRONMENTAL CONDITION OF THE ASSETS,
BOTH SURFACE AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO CONDITIONS
SPECIFICALLY RELATED TO THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS
SUBSTANCES. PURCHASER IS RELYING SOLELY UPON ITS OWN INSPECTION OF THE ASSETS,
AND, PURCHASER SHALL ACCEPT ALL OF THE SAME IN THEIR "AS IS, WHERE IS"
CONDITION. IN ADDITION, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF ANY
DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW, HERETOFORE
OR HEREAFTER FURNISHED OR MADE AVAILABLE TO PURCHASER IN CONNECTION WITH THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY DESCRIPTION OF THE ASSETS,
PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY)
ATTRIBUTABLE TO THE ASSETS OR THE ABILITY OR POTENTIAL OF THE ASSETS TO PRODUCE
HYDROCARBONS OR THE ENVIRONMENTAL CONDITION OF THE ASSETS OR ANY OTHER MATTERS
CONTAINED IN CONFIDENTIAL INFORMATION OR ANY OTHER MATERIALS FURNISHED OR MADE
AVAILABLE TO PURCHASER BY SELLER OR BY SELLER'S AGENTS OR REPRESENTATIVES. ANY
AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION AND OTHER
MATERIALS FURNISHED BY SELLER OR BY SELLER'S AGENTS OR REPRESENTATIVES OR
OTHERWISE MADE AVAILABLE TO PURCHASER ARE PROVIDED TO PURCHASER AS A
CONVENIENCE, AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST
SELLER OR SELLER'S AGENTS OR REPRESENTATIVES. ANY RELIANCE ON OR USE OF THE
SAME SHALL BE AT PURCHASER'S SOLE RISK. THE ASSIGNMENTS AND BILLS OF SALE OR
OTHER CONVEYANCES TO BE DELIVERED BY SELLER AT CLOSING SHALL EXPRESSLY SET
FORTH THE LIMITATIONS AND DISCLAIMERS OF REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS PARAGRAPH.
Seller covenants and agrees that from and after the execution of this
Agreement and until the Closing Date:
4.15 MAINTENANCE OF ASSETS. Seller will not sell, transfer, assign,
convey or otherwise dispose of any of the Assets subject to Seller's direct
control, other than (a) oil, gas and other hydrocarbons produced, saved and
sold in the ordinary course of business, (b) personal property and equipment
which is replaced with property and equipment of comparable or better value and
utility in the ordinary and routine maintenance and operation of the Subject
Properties, and (c) as required in connection with any exercise of preferential
rights or as otherwise required to satisfy obligations to third parties under
contracts presently existing.
4.16 NO ENCUMBRANCES. Seller will not create any lien, security
interest or encumbrance on the Sale Interest, the oil or gas attributable to
the Assets, or the proceeds thereof, other than Permitted Encumbrances.
4.17 OPERATIONS. With respect to any of the Assets operated by
Seller or a third party, Seller will, subject to the rights of affected parties
under applicable agreements:
(a) cause the Assets to be developed, maintained and
operated in compliance with applicable laws,
ordinances, rules, regulations and orders and in a
prudent, good and workmanlike manner, maintain
insurance now in force with respect to the Assets,
and pay or cause to be paid all costs and expenses in
connection therewith;
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(b) not participate in the drilling of any new well on
the Subject Properties or fail to participate in
operations on the Subject Properties proposed by
other parties, without the advance written consent of
Purchaser, which consent or non-consent must be
given by Purchaser within three (3) days of the
notice from Seller;
(c) not take any action or fail to take any action which
is reasonably expected to result in any termination
of the leases forming a part of the Subject
Properties;
(d) perform and comply with all of its obligations under
agreements relating to or affecting the Assets;
(e) carry on its business with respect to the Assets in
substantially the same manner as it has heretofore,
not introducing any new method of management,
operation or accounting with respect to the Assets
except as may be required by applicable statutes,
rules or regulations or by applicable presently
existing contractual obligations;
(f) not enter into or assume any contract, agreement or
commitment which is not in the ordinary course of
business as heretofore conducted or which involves
payments, receipts or potential liabilities with
respect to the Subject Properties of more than
$25,000, excluding emergency expenditures; and
(g) not resign or otherwise voluntarily relinquish its
rights as operator of any Subject Property for which
it serves as operator on the date hereof.
(h) not grant any preferential right to purchase or
similar right or agree to require the consent of any
party to the transfer and assignment of the Assets to
Purchaser, subject to existing contractual
obligations;
(i) not enter into any gas sales contract or crude oil
sales or supply contract with respect to the Subject
Properties which is not terminable without penalty
upon notice of thirty (30) days or less;
(j) not enter into any transaction the effect of which,
considered as a whole, would be to cause Seller's
ownership interest in any of the Assets to be altered
from its ownership interest as of the date hereof;
(k) not enter into any settlement of or relinquish any
outstanding receivables which are a part of the
Assets (including, without limitations, the right to
receive any retroactive price adjustments,
take-or-pay monies, FERC mandated refunds, accounting
adjustments, tax adjustments, and Minerals Management
Service refunds);
(l) if any approval or consent by any federal, state or
local governmental authority is required to vest
Acceptable Title to any of the Sale Interest in
Purchaser at Closing, exercise its best efforts, as
reasonably requested in writing by Purchaser, to
obtain all such required approvals or consents at
Purchaser's expense; and
(m) through Closing, give prompt written notice to
Purchaser of any notice of default (or written threat
of default, whether disputed or denied) received or
given by Seller under any instrument or agreement
affecting the
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Subject Properties to which Seller is a party or by
which it or any of the Subject Properties is bound.
ARTICLE 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
Purchaser represents and warrants to and covenants with Seller that:
5.1 EXISTENCE. Each Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation.
5.2 POWER. Purchaser has the requisite power and authority to
enter into and perform this Agreement and the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by Purchaser, and the
transactions contemplated hereby, will not (a) violate any provision of any
Purchaser's respective certificate or articles of incorporation or
organization, as the case may be, bylaws, regulations or other governing
documents; (b) to the best knowledge and belief of Purchaser, conflict with,
result in a breach of, constitute a default (or an event that with the lapse of
time or notice, or both would constitute a default) under any agreement or
instrument to which any Purchaser is a party or by which any Purchaser is
bound, (c) to the best knowledge and belief of each Purchaser, violate any
judgment, order, ruling, or decree applicable to any Purchaser and entered or
delivered in a proceeding in which Purchaser was or is a named party; or (d)
to the best knowledge and belief of each Purchaser, violate any applicable law,
rule or regulation.
5.3 AUTHORIZATION. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly and validly
authorized by all requisite action on the part of each Purchaser. This
Agreement has been duly executed and delivered on behalf of each Purchaser, and
at Closing all documents and instruments required hereunder to be executed and
delivered by each Purchaser shall have been duly executed and delivered. This
Agreement and such documents and instruments shall constitute legal, valid and
binding obligations of each Purchaser enforceable in accordance with their
terms, subject, however, to the effect of bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect
relating to the rights and remedies of creditors, as well as to general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
5.4 BROKERS. Purchaser has not incurred any obligation or
liability, contingent or otherwise, for brokers' or finders' fees in respect of
the matters provided for in this Agreement which will be the responsibility of
Seller, and any such obligation or liability that might exist shall be the sole
obligation of Purchaser.
5.5 INVESTMENT INTENT. Purchaser is acquiring the Assets for
Purchaser's own account for investment, and not with a view to, or for resale
in connection with, any distribution thereof within the meaning of the
Securities Act of 1933, and shall not resell any or all of the Assets except in
compliance with all applicable securities laws.
ARTICLE 6. SELLER'S CONDITIONS OF CLOSING
Seller's obligation to consummate the transactions provided for herein
is subject only to the satisfaction or waiver by Seller on or before the
Closing Date of the following conditions:
6.1 REPRESENTATIONS. The representations and warranties of
Purchaser contained in Article 5 shall be true and correct in all material
respects on the Closing Date as though made on and as of that date.
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6.2 PERFORMANCE. Purchaser shall have performed in all material
respects the obligations, covenants and agreements hereunder to be performed by
it at or prior to the Closing.
6.3 OFFICER'S CERTIFICATE. Each Purchaser shall have delivered to
Seller a certificate of an executive officer dated the Closing Date, certifying
on behalf of such Purchaser that the conditions set forth in Sections 6.1 and
6.2 have been fulfilled.
6.4 PENDING MATTERS. No suit, action or other proceeding by a
third party or a governmental authority shall be pending or threatened which
seeks substantial damages from Seller in connection with, or seeks to restrain,
enjoin or otherwise prohibit, the consummation of the transactions contemplated
by this Agreement.
6.5 HSR ACT. The waiting period required by the HSR Act (as
defined in Section 13.20 below) shall have expired or been terminated.
ARTICLE 7. PURCHASER'S CONDITIONS OF CLOSING
Purchaser's obligation to consummate the transactions provided for
herein is subject only to the satisfaction or waiver by Purchaser on or before
the Closing Date of the following conditions:
7.1 REPRESENTATIONS. The representations and warranties of Seller
contained in Article 4 shall be true and correct in all material respects on
the Closing Date as though made on and as of that date.
7.2 PERFORMANCE. Seller shall have performed in all material
respects the obligations, covenants and agreements hereunder to be performed by
it at or prior to the Closing.
7.3 OFFICER'S CERTIFICATE. Seller shall have delivered to
Purchaser certificates of executive officers of Seller's respective general
partners, dated the Closing Date, certifying on behalf of such Seller that the
conditions set forth in Sections 7.1 and 7.2 have been fulfilled.
7.4 PENDING MATTERS. No suit, action or other proceeding by a
third party or a governmental authority shall be pending or threatened which
seeks substantial damages from Purchaser in connection with or, seeks to
restrain, enjoin or otherwise prohibit, the consummation of the transactions
contemplated by this Agreement.
7.5 HSR ACT. The waiting period required by the HSR Act (as
defined in Section 13.20 below) shall have expired or been terminated.
ARTICLE 8. CLOSING
8.1 TIME AND PLACE OF CLOSING. If the conditions to Closing have
been satisfied or expressly waived by the party entitled to the benefits
thereof, the consummation of the transactions contemplated hereby ("CLOSING")
shall take place at Seller's offices in Midland, Texas, on August 15, 1995 (or
August 31, 1995, if Purchaser elects to extend Closing by delivery to Seller of
its written election to such effect and $15,000 on or before August 8, 1995
("PURCHASER'S EXTENSION"), at 8:30 a.m, or at such other place and time or in
such other manner agreed upon by Seller and Purchaser ("CLOSING DATE");
PROVIDED, that Seller shall have the right to extend Closing for up to thirty
(30) days to respond to any Notice of Defects provided by Purchaser and that
any extension by Seller shall not serve to provide Purchaser rights not
otherwise expressly provided herein, nor to extend any rights of Purchaser
contained herein, including, without limitation, those contained in Section
3.5.
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8.2 CLOSING OBLIGATIONS. At the Closing,
(a) Seller shall convey and deliver the Assets to Purchaser as
provided hereby by executing, acknowledging and delivering
conveyancing documents in mutually acceptable form
(collectively, the "ASSIGNMENT AND BILL OF SALE");
(b) Seller and Purchaser shall execute, acknowledge and deliver
transfer orders or letters in lieu thereof directing all
purchasers of production to make payment to Purchaser of
proceeds attributable to the Sale Interest;
(c) Purchaser shall deliver the Adjusted Purchase Price as
provided in Article 2;
(d) Purchaser and Seller shall execute and deliver a settlement
statement (the "PRELIMINARY SETTLEMENT STATEMENT") prepared by
Seller and setting forth the Purchase Price and all
adjustments thereto agreed upon by the parties, using the best
information available, subject to Section 13.18;
(e) Seller and Purchaser shall execute a licensing agreement in
mutually acceptable form and substance concerning all seismic,
geologic and geophysical data covering the Subject Properties
and owned by Seller as of the date hereof; and
(f) Purchaser and Seller shall execute such other instruments and
take such other action as may be necessary to carry out their
respective obligations under this Agreement.
ARTICLE 9. POST-CLOSING OBLIGATIONS
9.1 RECEIPTS AND CREDITS; SUSPENSE FUNDS. Subject to the terms
hereof, all monies, refunds, proceeds, receipts, credits and income
attributable to the purchased Assets (a) for all periods of time from and after
the Effective Time shall be the sole property and entitlement of the Purchaser,
and, to the extent received by Seller, Seller shall fully disclose and account
therefor to Purchaser promptly, and (b) for all periods of time prior to the
Effective Time shall be the sole property and entitlement of Seller to the
extent received by Purchaser or Seller prior to the Final Accounting Date or
allocated to Seller in the Final Accounting, and if received by Purchaser,
Purchaser shall fully disclose and account therefore to Seller promptly.
Purchaser shall pay Seller for Seller's share of hydrocarbons attributable to
the purchased Assets in storage above the pipeline connection or in transit on
the Effective Time at the purchaser's then posted field price for hydrocarbons
of like grade and gravity in the relevant field, net of all applicable taxes.
Seller and Purchaser recognize that as of the Effective Time there may be over
or under imbalances with respect to gas production, gathering, transportation
or processing attributable to the Subject Properties ("IMBALANCES") and hereby
agree that (i) Imbalances shall not be included in any Identified Claims
asserted hereunder, and (ii) the Subject Properties will be conveyed
specifically subject to Imbalances which exist as of the Effective Time, with
Purchaser, as of Closing, bearing and assuming all obligations with respect to
any overproduction account or liability and receiving the benefit of and being
credited with any underproduction account or credit. At Closing, Seller shall
deliver to Purchaser all amounts in Seller's possession due third party owners
of interests in the Subject Properties, and Purchaser agrees that it shall be
solely responsible for the disposition of such funds, the payment thereof to
the rightful owners and the payment, if any, of royalty thereon (the "SUSPENSE
FUNDS").
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9.2 COSTS AND LIABILITIES; INDEMNITY
(a) As used in this Agreement, "CLAIMS" shall includ costs,
expenses, obligations, claims, demands, causes
of action, liabilities, damages, fines, penalties and
judgments of any kind or character, whether matured
or unmatured, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, known or
unknown, and all costs and fees (including, without
limitation, interest, attorneys' fees, costs of
experts, court costs and costs of investigation)
incurred in connection therewith, including, but not
limited to claims arising from or directly or
indirectly related to royalty, operating, suspense
and capital obligations attributable to the purchased
Assets. As used in this Section 9.2, "ASSETS" shall
include the Suspense Funds.
(b) Notwithstanding anything in this Agreement to the
contrary, it is the express intent and agreement of
Seller and Purchaser that, if Closing occurs,
Purchaser shall accept the purchased Assets in their
"AS IS, WHERE IS" condition, subject to any and all
defects, deficiencies, irregularities and claims
related or attributable in any manner thereto,
including, without limitation, Title Defects,
Contract Defects, Property Defects, Identified Claims
or any other matter affecting in any respect the
title or physical condition of, or the right to own,
use, operate, develop or enjoy, the purchased Assets,
whether known or unknown, liquidated or unliquidated,
fixed or contingent, direct or indirect.
(c) At Closing and without further action or
documentation, Purchaser (i) shall assume, be
responsible for and comply with all duties and
obligations, express or implied, arising at any time
with respect to the purchased Assets, including,
without limitation (1) those arising under or by
virtue of any lease, contract, agreement, document,
permit, law, statute, rule, regulation or order of
any governmental authority or court (specifically
including, without limitation, any governmental
request or other requirement to plug, re-plug or
abandon any well of whatsoever type, status or
classification, or take any clean-up, remedial or
other action with respect to the purchased Assets),
(2) preferential rights to purchase and (3) third
party consents; (ii) shall assume, be responsible for
and pay all claims affecting or arising, directly or
indirectly, at any time in connection with the purchased
Assets, including, without limitation, claims for personal or
property injury or damage, environmental cleanup, remediation,
or compliance, or for any other relief, arising directly or
indirectly from or incident to, the use, occupation,
operation, maintenance or abandonment of or production from
the purchased Assets, or condition of the purchased Assets,
whether latent or patent, including, without limitation,
contamination of property or premises with Naturally
Occurring Radioactive Materials ("NORM"), and whether or not
arising solely from or contributed to by the negligence in
any form, whether active or passive, or of any kind or nature,
of Seller or its predecessors in title or their respective
agents, employees or contractors; and (iii) shall defend,
indemnify and hold Seller harmless from any and all claims
arising, asserted or due at any time in connection with the
foregoing.
(d) after Closing, any claim for indemnity
hereunder shall be made by written notice, together
with a written description of any claims asserted
stating the nature and basis of such claim and, if
ascertainable, the amount thereof. Purchaser shall
have a period of twenty (20) days
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after receipt of such notice within which to respond
thereto or, in the case of a claim which requires a
shorter time for response, then within such shorter
period as specified by Seller in such notice (the
"NOTICE PERIOD"). If Purchaser denies liability
hereunder or fails to provide the defense for any
claim, Seller may defend or compromise the claim as
it deems appropriate without prejudice to any of
Seller's rights hereunder, with no right of Purchaser
to approve or disapprove any actions taken in
connection therewith by Seller. If Purchaser accepts
liability and responsibility for the defense of any
claim, it shall so notify Seller as soon as is
practicable prior to the expiration of the Notice
Period and undertake the defense or compromise of
such claim with counsel selected by Purchaser and
reasonably acceptable to Seller. If Purchaser
undertakes the defense or compromise of such claim,
Seller shall be entitled, at its own expense, to
participate in such defense. No compromise or
settlement of any claim shall be made without
reasonable notice to Seller, and without the prior
written approval of Seller, which approval shall not
be unreasonably withheld or delayed, unless such
compromise or settlement includes a general and
complete release of Seller, its Affiliates and their
respective Representatives in respect of the matter,
with prejudice, and with no express or written
admission of liability on the part of Seller, its
Affiliates and their respective Representatives, and
no constraints on the future conduct of its or their
respective businesses.
(e) Seller shall have the right at all times to
participate, at its sole cost, in the preparation for
any hearing or trial related to the indemnities set
forth in this Agreement, as well as the right to
appear on its own behalf or to retain separate
counsel to represent it at any such hearing or trial.
(f) THE INDEMNITIES PROVIDED IN THIS AGREEMENT SHALL
EXTEND TO SELLER AND ITS AFFILIATES AND ANY PERSON
WHO AT ANY TIME HAS SERVED OR IS SERVING AS A
DIRECTOR, OFFICER, EMPLOYEE, CONSULTANT, INVITEE OR
AGENT THEREOF (EACH A "REPRESENTATIVE"), AND EACH OF
THEIR RESPECTIVE HEIRS, EXECUTORS, SUCCESSORS AND
ASSIGNS, AND SHALL APPLY TO ALL CLAIMS SUBJECT TO
INDEMNITY HEREUNDER, INCLUDING THOSE BASED ON
NEGLIGENCE OF ANY NATURE, INCLUDING SOLE NEGLIGENCE,
SIMPLE NEGLIGENCE, CONCURRENT NEGLIGENCE, ACTIVE
NEGLIGENCE, PASSIVE NEGLIGENCE, STRICT LIABILITY OR
FAULT OF SELLER (OR ANY OTHER INDEMNIFIED PARTY) OR
ANY OTHER THEORY OF LIABILITY OR FAULT, WHETHER OF
LAW (WHETHER COMMON OR STATUTORY) OR IN
EQUITY; PROVIDED, HOWEVER, PURCHASER SHALL NOT BE
LIABLE FOR OR INDEMNIFY SELLER FOR ANY CLAIM ASSERTED
BY PURCHASER AND ARISING FROM A BREACH BY SELLER OF
THIS AGREEMENT. THE INDEMNIFICATION PROVISIONS OF
THIS SECTION 9.2 SHALL BE IN ADDITION TO ANY OTHER
INDEMNITY PROVISIONS CONTAINED IN THIS AGREEMENT, AND
IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT THE TERMS
OF THIS SECTION 9.2 SHALL CONTROL OVER ANY
CONFLICTING OR CONTRADICTING TERMS OR PROVISIONS
CONTAINED IN THIS AGREEMENT, AND SHALL SURVIVE
CLOSING.
9.3 FURTHER ASSURANCES. After Closing, Seller and Purchaser
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.
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9.4 DELIVERY OF RECORDS. As soon as reasonably possible but no
later than thirty (30) days after the Closing Date, Seller shall deliver
originals (or copies where originals are not available) of the Records to
Purchaser; PROVIDED, that Seller (i) shall exercise its best efforts to provide
Purchaser at Closing or as soon thereafter as is practicable with all Records
necessary to assume and conduct operations of the Assets, and (ii) shall have
the right to retain, as its own, original Records that pertain to the Excluded
Assets and copies of all other Records.
9.5 ACCOUNTING FOR SUBJECT PROPERTIES. At the request of
Purchaser, Seller shall continue to account for all Subject Properties
presently operated by it through the last day of the month in which Closing
occurs, in accordance with its customary procedures; PROVIDED, however, that
such accounting shall be for Purchaser's sole benefit and at Purchaser's sole
risk and that Purchaser shall indemnify Seller for such activities in
accordance with Section 9.2.
9.6 ACCESS TO DATA. Subject to the rights of third parties and
to the extent attributable to the purchased Subject Properties, Seller shall
provide Purchaser reasonable access at their place of storage to all seismic,
geologic and geophysical records and data not obtained from SFER, SFEOP,
SFERP-A or any of their respective Affiliates and in Seller's possession as of
the Effective Time. Subject to the rights of third parties and Seller's
proprietary rights, Seller shall provide Purchaser with reasonable access to
Seller's books and records after Closing as necessary for Purchaser to prepare
its financial statements.
ARTICLE 10. TERMINATION
10.1 RIGHT OF TERMINATION. This Agreement and the transactions
contemplated hereby may be terminated at any time at or prior to the Closing:
(a) By Seller if Closing does not occur on or before
September 15, 1995 (or September 30, 1995, upon
Purchaser's Extension);
(b) By mutual consent of the parties;
(c) By Purchaser or Seller in accordance with Section 3.6;
(d) By Purchaser by notice delivered to Seller on the
Closing Date if all conditions described in Article 7
shall not have been met and such noncompliance shall
not have been caused or waived by the actions or
inactions of Purchaser; or
(e) By Seller by notice delivered to Purchaser on the
Closing Date if all conditions described in Article 6
shall not have been met and such noncompliance shall
not have been caused or waived by the actions or
inactions of Seller.
10.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 10.1, this Agreement shall become void and of no further
force or effect (except for the provisions of Sections 4.4, 5.4, 13.1 through
13.11 and 13.14 through 13.17, each of which shall survive such termination and
continue in full force and effect); PROVIDED, however, (i) that if either party
is in material default of its obligations under this Agreement at the time this
Agreement is so terminated, such defaulting party shall continue to be liable
to the other party for damages and other remedies available at law or in equity
(including, without limitation, for specific performance) in respect of such
default and such liability shall not be affected by such termination; and (ii)
if this Agreement is so terminated by Purchaser, in the absence of a default
hereunder by Purchaser, the Deposit shall be returned to Purchaser, or if so
terminated by Seller, as the result of a default hereunder by Purchaser, the
Seller may, in its sole discretion,
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elect to retain the Deposit as liquidated damages (it being agreed by the
parties that damages in said event would be extremely difficult to determine,
and that the Deposit represents a fair and reasonable estimate of such damages
under the circumstances, and does not constitute a penalty). Notwithstanding
anything to the contrary contained in this Agreement, upon any termination of
this Agreement pursuant to Section 10.1 by Seller, in the absence of a material
default hereunder by Seller, Seller shall be free immediately to enjoy all
rights of ownership of the Assets and may sell, transfer, encumber or otherwise
dispose of the Assets to any party without any restriction under this Agreement
and without any impairment of its rights hereunder to recover damages from
Purchaser arising from any default hereunder by Purchaser; PROVIDED, that
Seller's right to seek specific performance of Purchaser's obligations
hereunder shall be waived upon any such disposition of the Assets and that its
right to seek or recover any other damages shall be waived upon its election to
retain the Deposit.
ARTICLE 11. TAXES
11.1 APPORTIONMENT OF AD VALOREM AND PROPERTY TAXES. All ad
valorem taxes, real property taxes, personal property taxes, and similar
obligations concerning the Assets with respect to the tax period in which the
Effective Time occurs ("PROPERTY TAXES") shall be apportioned as of the
Effective Time between Seller and Purchaser. Purchaser shall file or cause to
be filed all required reports and returns incident to the Property Taxes and
shall pay or cause to be paid to the taxing authorities all Property Taxes
relating to the tax period in which the Effective Time occurs. Seller shall
pay to Purchaser its pro rata portion of Property Taxes within thirty (30) days
after receipt of Purchaser's invoice therefor, unless the Purchase Price has
previously been adjusted for such liability.
11.2 SALES TAXES. The Purchase Price excludes any sales taxes or
other taxes required to be paid in connection with the sale of property
pursuant to this Agreement. Purchaser shall be liable for all sales, use and
other taxes, conveyance, transfer and recording fees and real estate transfer
stamps or taxes that may be imposed on any transfer of property pursuant to
this Agreement. These taxes shall be collected and remitted under applicable
law. Purchaser shall indemnify and hold Seller harmless with respect to the
payment of any of these taxes including any interest or penalties assessed
thereon.
11.3 OTHER TAXES. All taxes (other than income taxes) which are
imposed on or with respect to the production of oil, natural gas or other
hydrocarbons or minerals or the receipt of proceeds therefrom (including but
not limited to severance, production, and excise taxes) shall be apportioned
between the parties based upon the respective shares of production taken by
the parties. From and after Closing, Purchaser shall be responsible for paying
or withholding or causing to be paid or withheld all such taxes and for filing
all statements, returns, and documents incident thereto.
11.4 COOPERATION. Each party to this Agreement shall provide the
other party with reasonable access to all relevant documents, data and other
information which may be required by the other party for the purpose of
preparing tax returns and responding to any audit by any taxing jurisdiction.
Each party to this Agreement shall cooperate with all reasonable requests of
the other party made in connection with contesting the imposition of taxes.
Notwithstanding anything to the contrary in this Agreement, neither party to
this Agreement shall be required at any time to disclose to the other party any
tax return or other confidential tax information.
ARTICLE 12. PHYSICAL CONDITION OF THE ASSETS
12.1 PRIOR USE OF ASSETS. THE ASSETS HAVE BEEN USED FOR OIL AND
GAS DRILLING AND PRODUCING OPERATIONS AND RELATED OIL FIELD OPERATIONS.
PHYSICAL
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CHANGES IN THE LAND MAY HAVE OCCURRED AS A RESULT OF SUCH USES. THE ASSETS
ALSO MAY INCLUDE BURIED PIPELINES AND OTHER EQUIPMENT, WHETHER OR NOT OF A
SIMILAR NATURE, THE LOCATIONS OF WHICH MAY NOT NOW BE KNOWN BY SELLER OR
READILY APPARENT BY A PHYSICAL INSPECTION OF THE PROPERTY. PURCHASER
UNDERSTANDS THAT SELLER DOES NOT HAVE THE REQUISITE INFORMATION WITH WHICH TO
DETERMINE THE EXACT NATURE OR CONDITION OF THE ASSETS OR THE AFFECT ANY SUCH
USE HAS HAD ON THE PHYSICAL CONDITION OF THE LANDS BURDENED BY THE ASSETS.
12.2 ASSUMPTION OF ASSETS IN PRESENT CONDITION. PURCHASER
ACKNOWLEDGES THAT (i) THE CONSUMMATION OF THIS AGREEMENT BY PURCHASER SHALL BE
ON THE BASIS OF ITS OWN INVESTIGATION OF THE PHYSICAL CONDITION OF THE ASSETS,
INCLUDING, WITHOUT LIMITATIONS, SUBSURFACE CONDITION; (ii) THE ASSETS HAVE BEEN
USED IN THE MANNER AND FOR THE PURPOSES SET FORTH ABOVE AND THAT PHYSICAL
CHANGES TO THE ASSETS AND THE LANDS BURDENED THEREBY MAY HAVE OCCURRED AS A
RESULT OF SUCH USE; AND (iii) NORM AND MAN-MADE MATERIAL FIBERS ("MMMF") MAY BE
PRESENT AT SOME LOCATIONS. PURCHASER ACKNOWLEDGES THAT NORM IS A NATURAL
PHENOMENON ASSOCIATED WITH MANY OIL FIELDS IN THE UNITED STATES AND THROUGHOUT
THE WORLD. PURCHASER SHALL MAKE ITS OWN DETERMINATION OF THIS PHENOMENON AND
OTHER CONDITIONS. SELLER DISCLAIMS ANY LIABILITY ARISING OUT OF OR IN
CONNECTION WITH ANY PRESENCE OF NORM OR MMMF ON OR AFFECTING THE ASSETS. IN
ACCORDANCE WITH SECTION 9.2 AND AT CLOSING, PURCHASER SHALL ASSUME THE RISK
THAT THE PURCHASED ASSETS MAY CONTAIN WASTES OR CONTAMINANTS AND ADVERSE
PHYSICAL CONDITIONS, INCLUDING THE PRESENCE OF PIPELINES, EQUIPMENT AND OTHER
ITEMS OF PERSONAL PROPERTY, AND WASTES OR CONTAMINANTS WHICH MAY NOT HAVE BEEN
REVEALED BY PURCHASER'S INVESTIGATION. IN ACCORDANCE WITH SECTION 9.2 AND AT
CLOSING, ALL RESPONSIBILITY AND LIABILITY RELATED TO DISPOSALS, SPILLS, WASTES,
OR CONTAMINATION, OR OTHER ADVERSE PHYSICAL CONDITIONS ON, BELOW, OR RELATED TO
OR AFFECTING THE PURCHASED ASSETS SHALL BE ASSUMED BY PURCHASER AND PURCHASER
SHALL, NOTWITHSTANDING WHEN THE BASIS FOR ANY CLAIM, ACTION, SUIT, JUDGMENT
(INCLUDING, WITHOUT LIMITATION, THOSE FOR DEATH, PERSONAL INJURY OR PROPERTY
DAMAGE) SHALL HAVE OCCURRED, INDEMNIFY, DEFEND AND HOLD SELLER HARMLESS
THEREFROM PURSUANT TO SECTION 9.2.
12.3 CASUALTY LOSS. In the event of any material damage by fire
or other casualty to any of the Assets prior to the Closing ("CASUALTY LOSS"),
this Agreement shall remain in full force and effect, and as to each affected
Asset, Seller shall at its election either collect (and when collected pay over
to Purchaser) or assign to Purchaser any and all insurance claims related to
such damage, and Purchaser shall take title to the affected Asset without
reduction in the Purchase Price.
ARTICLE 13. MISCELLANEOUS
13.1 GOVERNING LAW. This Agreement and all instruments executed
in accordance herewith shall be governed by and interpreted in accordance with
the laws of the State of Texas, without regard to conflict of law rules that
would direct application of the laws of another jurisdiction, except to the
extent that it is mandatory that the law of the jurisdiction wherein the Assets
are located shall apply. In the event of any litigation or other proceeding in
connection with this Agreement, the venue for any such proceeding shall be in a
court of competent jurisdiction located in Midland County, Texas, and the
prevailing party shall be entitled to recover its reasonable attorney's fees
and costs incurred therein from the other party, in addition to any damages
awarded.
13.2 ENTIRE AGREEMENT. This Agreement, the Assignment and Bill of
Sale, the Site Access Agreement dated June 9, 1995, between Purchaser and
Seller, and the Confidentiality
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Agreement of even date between Purchaser and Parker & Parsley Petroleum Company
(the "CONFIDENTIALITY AGREEMENT") constitute the entire agreement between the
parties and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties. No supplement,
amendment, alteration, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the parties hereto.
13.3 WAIVER. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
13.4 CAPTIONS. The captions in this Agreement are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
13.5 ASSIGNABILITY. Except pursuant to a like kind exchange
pursuant to Section 2.3, neither party hereto shall assign (whether before, at
or after Closing) this Agreement or any of its rights or obligations hereunder
without the prior written consent of the other party, which may be withheld for
any or no reason. Any assignment made without such consent shall be void.
Except as otherwise provided herein, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
13.6 NOTICES. Any notice provided or permitted to be given under
this Agreement shall be in writing, and may be served by personal delivery or
by registered or certified U.S. mail, addressed to the party to be notified,
postage prepaid, return receipt requested. Notice deposited in the mail in the
manner hereinabove described shall be deemed to have been given and received on
the date of the delivery as shown on the return receipt. Notice served in any
other manner (including by facsimile delivery) shall be deemed to have been
given and received only if and when actually received by the addressee. For
purposes of notice, the addresses of the parties shall be as follows:
SELLER:
Parker & Parsley Development L.P.
Attn: Tim Leach and W.T. Howard
303 W. Wall, Suite 101
Midland, Texas 79701
Telephone: (915) 683-4768
Fax: (915) 571-5208
with copy to: David W. Copeland
303 W. Wall, Suite 101
Midland, Texas 79701
Telephone: (915) 683-4768
Fax: (915) 571-5815
PURCHASER:
Lomak Petroleum, Inc.
Attn: C.R. Michaels
1160 Sunnyside Street, S.W.
P. O. Box 550
Hartville, Ohio 44632-0550
Telephone: (216) 877-6747
Fax: (216) 877-6129
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Each party shall have the right, upon giving three (3) days prior notice to the
other in the manner hereinabove provided, to change its address for purposes of
notice to any other appropriate street address.
13.7 DTPA WAIVER. TO THE EXTENT APPLICABLE TO THE ASSETS OR ANY
PORTION THEREOF, EACH PURCHASER HEREBY WAIVES THE PROVISIONS OF THE TEXAS
DECEPTIVE TRADE PRACTICES ACT, CHAPTER 17, SUBCHAPTER E, SECTIONS 17.41 THROUGH
17.63, INCLUSIVE (OTHER THAN SECTION 17.555, WHICH IS NOT WAIVED), TEX. BUS. &
COM. CODE. IN ORDER TO EVIDENCE ITS ABILITY TO GRANT SUCH WAIVER, PURCHASER
HEREBY REPRESENTS AND WARRANTS TO SELLER THAT IT (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 $5,000,000 OR MORE ACCORDING TO ITS MOST
RECENT FINANCIAL STATEMENT PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES; (iii) HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL,
BUSINESS AND OIL AND GAS MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND
RISKS OF THE TRANSACTIONS CONTEMPLATED HEREBY; (iv) IS NOT IN A SIGNIFICANTLY
DISPARATE BARGAINING POSITION; AND (v) THAT THIS WAIVER IS A MATERIAL AND
INTEGRAL PART OF THIS AGREEMENT AND THE CONSIDERATION THEREOF.
13.8 EXPENSES. 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 legal counsel and
accountants).
13.9 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced under any rule of
law, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in a materially adverse
manner with respect to either party.
13.10 DAMAGES. The parties waive any rights to punitive and
incidental or consequential damages resulting from a breach of this Agreement.
13.11 NO THIRD PARTY BENEFICIARY. This Agreement is not intended
to create, nor shall it be construed to create, any rights in any third party
under doctrines concerning third party beneficiaries.
13.12 SURVIVAL. The representations and warranties of the parties
under this Agreement shall not survive, but shall terminate upon and be
extinguished by, Closing; PROVIDED, however, that (i) all representations,
waivers, covenants, agreements and indemnities contained entirely within
Sections 1.2, 3.1, 3.6, 4.1 through 4.5 and 5.1 through 5.6, and Articles 9,
11, 12 or 13 of this Agreement shall survive the Closing, and (ii) Seller's
obligation with respect to Further Conveyances (as defined in Section 3.1
above) shall expire on the first anniversary of the Closing Date with respect
to matters not asserted prior to such anniversary date with the specificity
required of Notice of Defects given hereunder; FURTHER PROVIDED, that,
notwithstanding anything herein to the contrary, Purchaser expressly agrees and
acknowledges that it shall have no remedy or recourse against Seller or its
Affiliates or any of their respective Representatives with respect to the
condition of the Assets or any representation or warranty made in connection
with this Agreement, except as expressly provided by Section 3.6.
13.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.14 CERTAIN DEFINITIONS. As used in this Agreement, (a) the term
"AFFILIATE" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person; (b) the
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term "PERSON" means an individual, corporation, partnership, association, joint
stock company, trust or trustee thereof, estate or executor thereof,
unincorporated organization or joint venture, court or other governmental unit
or any agency or subdivision thereof, or any other legally recognizable entity;
and (c) the terms "TO [SELLER'S OR PURCHASER'S, AS THE CASE MAY BE] KNOWLEDGE"
or "KNOWN TO" and other terms of similar import shall mean, with respect to
the referenced party, only the then existing actual non-privileged knowledge of
any president or vice president of such party or of such party's general or
managing partner or agent, as the case may be, and are not intended to imply
that such party in fact has actual knowledge of the subject matter to which
such terms apply.
13.15 CONSTRUCTION OF AMBIGUITY. In the event of any ambiguity in
any of the terms or conditions of this Agreement, including any exhibits hereto
and whether or not placed of record, such ambiguity shall not be construed for
or against any party hereto on the basis that such party did or did not author
the same.
13.16 WAIVER OF JURY TRIAL. SELLER AND PURCHASER 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.
13.17 PUBLICITY. Seller and Purchaser shall consult with each other
with regard to all publicity and other releases and disclosures to be made
prior to, at or after Closing concerning this Agreement and the transactions
contemplated hereby, which are not otherwise expressly permitted by the
Confidentiality Agreement, and, except as required by applicable law or the
applicable rules or regulations of any governmental body or stock exchange,
neither party shall make any disclosure or issue any publicity or other release
without the prior written consent of the other party, which consent shall not
be unreasonably withheld or delayed.
13.18 ACCOUNTING.
A. Seller shall deliver to Purchaser on or before the fourth
business day prior to Closing the Preliminary Settlement
Statement setting forth any adjustments to the Purchase Price
provided for in or required by this Agreement, using estimates
where actual amounts are not known at the Closing. The
Preliminary Settlement Statement shall be prepared in
accordance with this Agreement and with standard industry and
accounting practices. In connection with the preparation of
the Preliminary Settlement Statement, the Purchase Price shall
be (1) increased by (a) the costs and expenses that are
attributable to the Subject Properties for the period from the
Effective Time to the Closing Date that are incurred by
Seller, and (b) other amounts due Seller and contemplated
hereby; PROVIDED, that Seller should not be entitled to any
reimbursement from Purchaser for administrative overhead
charges allocated to the Subject Properties, and (2) reduced
by (a) proceeds received by Seller for hydrocarbons
attributable to the Subject Properties produced after the
Effective Time, and (b) other amounts due Purchaser and
contemplated hereby.
B. As soon as reasonably practicable after the Closing, but not
later than ninety (90) days thereafter Seller shall prepare,
in accordance with this Agreement and with standard industry
and accounting practices, and deliver to Purchaser, a final
accounting statement showing the proration and calculation of
credits and payment obligations of Purchaser and Seller
hereunder. As soon as reasonably practicable thereafter,
Purchaser shall deliver to Seller a written report containing
any changes that Purchaser proposes to be made to such
statement. The parties shall use their best efforts to reach
agreement (the "FINAL ACCOUNTING") on the final accounting
statement on or before the 120th day after the Closing Date
(such date the "FINAL ACCOUNTING DATE", whether or not Seller
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and Purchaser have agreed on the Final Accounting). Once the
Final Accounting has been agreed to by Purchaser and Seller,
there shall be no further adjustments to the Purchase Price. At
Closing, Purchaser shall assume and acquire all rights,
obligations and liabilities relating to the purchased Assets
whether arising before or after the Effective Time, as provided
in Article 9.
13.19 OPERATORSHIP. Seller does not represent to Purchaser that
Purchaser will automatically succeed to the operatorship of any given Subject
Property as to which Seller is currently the operator. Purchaser recognizes
and agrees that Purchaser will be required to comply with applicable operating
agreements, unit operating agreements or other similar contracts relating to
any elections or other selection procedures in order to succeed Seller as
operator.
13.20 HSR ACT. The parties shall exercise their best efforts to file
(or will cause their ultimate parent entities to file) with the United States
Federal Trade Commission and the United States Department of Justice all
notifications and reports required for the transaction contemplated hereby
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR ACT"), and
shall request early termination of the prescribed waiting period. Both parties
shall use their best efforts to promptly supply any supplemental or additional
information which may be requested in connection therewith pursuant to the HSR
Act and shall comply in all material respects with the requirements of the HSR
Act. Closing of the transaction contemplated hereby shall not occur unless and
until all necessary filings and notifications under the HSR Act have been made,
including the provision of any required additional information or documents,
and the waiting period referred to in such Act shall have expired or
terminated.
EXECUTED as of the date first set forth above.
SELLER:
PARKER & PARSLEY DEVELOPMENT L.P.,
by Parker & Parsley Petroleum USA, Inc.,
General Partner
By: /s/ W. T. Howard
____________________________________
W. T. Howard, Senior Vice President
PURCHASER:
LOMAK PETROLEUM, INC.
By: /s/ Jeffery A. Brynum
_____________________________________
Its: Vice President - Land
_____________________________________
LOMAK OPERATING COMPANY
By: /s/ Jeffery A. Brynum
_____________________________________
Its: Vice President - Land
_____________________________________
23
<PAGE> 28
LOMAK RESOURCES COMPANY
By: /s/ Jeffery A. Brynum
_____________________________________
Its: Vice President - Land
_____________________________________
lglgrp/lhc/acq-divest/lomak/p&sa5.95
24
<PAGE> 1
Exhibit 2
[LOMAK
PETROLEUM, INC.
LOGO]
NEWS RELEASE
------------
LOMAK SIGNS $20 MILLION ACQUISITION
FORT WORTH, TEXAS, JULY 5, 1995. . . LOMAK PETROLEUM, INC. (NASDAQ: LOMK)
announced today that it has executed a purchase and sale agreement with a
subsidiary of Parker & Parsley Petroleum Company to acquire properties in
Pennsylvania and West Virginia for $20.2 million. The acquisition includes
approximately 825 producing gas wells, 300 miles of gas gathering lines, 16,400
net acres of undeveloped leases and associated real estate and equipment. Over
90% of the reserves are located in proximity to Lomak's existing Pennsylvania
operations. The properties are also estimated to contain over 50 drilling
locations. With the addition of these properties, Lomak's gas production will
increase by 30% to over 34 million cubic feet per day.
The acquisition compliments Lomak's ongoing strategy of building concentrated
long lived reserves in its existing core operating areas. Upon completion,
Lomak will own nearly 100 Bcf of gas in its Pennsylvania operating area close
to attractive northeastern gas markets. John H. Pinkerton, Lomak's President,
said "Lomak is fortunate these properties not only fit so well into our
property base, but that they will be immediately additive to cash flow and
earnings per share."
The acquisition is scheduled to close in 45 days and Lomak will fund the
transaction from working capital and borrowings under its existing credit
facility.
LOMAK PETROLEUM INC. is engaged in the acquisition, production and development
of oil and gas properties in Texas, Oklahoma and Appalachia.
________________________________________________________________________________
95-7
CONTACT: C. R. MICHAELS, VICE CHAIRMAN (216) 877-6747
