UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 31, 1999
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Colorado 0-17325 88-0218499
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(State or other jurisdiction (Commission file number) (IRS Employer
of incorporation) Identification No.)
16101 La Grande Drive, Suite 100
Little Rock, AR 72223
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(Address of principal executive offices) (Zip Code)
Copy of Communications to:
Mercedes Travis, Esq.
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
(561) 832-5696
Registrant's telephone number, including area code: (501) 821-2222
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Item 2. Acquisition or Disposition of Assets.
On August 31, 1999, Environmental Remediation Holding Corporation
("ERHC") sold to Mountain Oil, Inc. ("Mountain Oil") pursuant to a purchase and
sale agreement (the "Purchase and Sale Agreement") all of its interest in
certain oil and gas leases and related property and equipment located in Uintah
and Duchesne Counties, Utah (the "Transferred Assets"). The consideration
provided by Mountain Oil under the Purchase and Sale Agreement included the
assumption by Mountain Oil of certain obligations and liabilities relating to
the Transferred Assets. Reference is hereby made to the specific terms and
conditions of the Purchase and Sale Agreement, which is filed herewith as
Exhibit 10.1 and incorporated herein in its entirety. The consideration provided
by Mountain Oil under the terms of the Purchase and Sale Agreement was
determined by arm's length negotiations between ERHC and Mountain Oil.
There are no material relationships between ERHC and Mountain Oil or
between any of their respective affiliates, directors, officers or associates.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
10.1 Purchase and Sale Agreement, dated August 31, 1999, between
Environmental Remediation Holding Corporation and Mountain Oil, Inc.
(The Purchase and Sale Agreement contains a detailed list of the
exhibits thereto. All such exhibits have been intentionally omitted.
ERHC will furnish supplementally a copy of any omitted exhibit to the
Commission upon request.)
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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 thereunto duly authorized.
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
By: /s/ Geoffrey Tirman
Geoffrey Tirman
President and Chief Executive Officer
Date: September 9, 1999
EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT dated this 31st day of August, l999, is between
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION, a Colorado corporation with its
principal office at Little Rock, Arkansas ("Seller"), and MOUNTAIN OIL, INC., a
Utah corporation with its principal office at Provo, Utah ("Buyer").
WHEREAS, Seller desires to sell, and Buyer desires to purchase, upon and
subject to the terms and conditions hereinafter set forth, all of Seller's
right, title, and interest in, to, and under the following assets:
(i) Seller's interest in the oil and gas leases and the lands described
on Exhibit A attached hereto (the "Lands"), including, without limitation, as to
all depths, all oil, gas, casinghead gas, coalbed methane gas, coalbed gas,
methane gas, gob gas, and all other hydrocarbons, naturally occurring oils and
gases and all other substances and minerals produced therewith, both combustible
and noncombustible, associated with any petroleum reservoir and/or coal seam,
helium, carbon dioxide, and all other hydrocarbon and non-hydrocarbon substances
produced in association with any of the foregoing (collectively, the "Oil and
Gas Mineral Estate"); rights of ingress and egress and the right to explore for,
develop and produce the foregoing (including the right to fracture or otherwise
stimulate any subsurface formation including reservoir rock and adjacent rocks,
and coal seams and adjacent rocks); and all agreements, leases, permits,
rights-of-way, easements, licenses, options, orders, and other properties and
interests appurtenant, incident or in any way relating thereto;
(ii) All oil and gas leases (collectively, the "Leases") and any other
oil and gas or other mineral leases covering all or any portion of the Lands,
including without limitation, all working interests, royalty interests,
overriding interests and other interests of every kind and description;
(iii) all well bores, horizontal or vertical ventilation holes, and all
other wells located on the Leases or Lands, including, without limitation,
production and disposal wells;
(iv) All equipment, materials, fixtures, and improvements on the Leases
or Lands, appurtenant thereto, or used in connection with the Leases or Lands or
with the production, treatment, sale, or disposal of hydrocarbons or other
minerals or waste produced therefrom or attributable thereto described on
Exhibit B; and other appurtenances thereunto belonging (all of the foregoing
being referred to collectively as the "Equipment");
(v) All records, files, and data relating to the Leases and the Lands,
including, without limitation, all data and information stored on tapes, disks,
and other electronic storage media; records relating to ad valorem, excise, and
other production-related taxes; lease files, land files, well files,
environmental files, product purchase and sale contracts, division order files,
payout files, revenue and expense files, abstracts, title opinions, engineering
and geological data, geophysical data, maps, logs, production records and well
records (collectively, the "Records");
(vi) Oil, gas, and other hydrocarbon and nonhydrocarbon substances, and
other substances, compounds or elements which are considered a mineral under
applicable law, produced from or attributable to the Interests (as defined
below) after the Effective time, and any royalty or proceeds thereof, and all
oil, gas, and other hydrocarbon and nonhydrocarbon substances, and other
substances, compounds or elements which are considered a mineral under
applicable law currently located in storage tanks upon the Lands as of the
Effective time;
(vii) The building and land described on Exhibit E located in the City
of Ballard, Uintah County, State of Utah (collectively, the "Building"), subject
to the existing indebtedness, and all other liens and encumbrances, plus all
furniture, fixtures and office and other equipment located at the Building and
other personal property related to the operation of the lands and owned by
Seller, including, but not limited to, the property described on Exhibit D;
(viii) The "Rough Neck" computer software and all data related to the
Lands, Leases, and Equipment stored thereon;
(ix) Any and all other lands, interest and properties of Seller located
in Duchesne and Uintah Counties, Utah, whether real, personal or mixed, and of
whatsoever nature, including, without limitation, all surface rights, water
rights, oil and gas rights, coal rights, royalties, overriding royalties, and
other mineral rights; all agreements, leases, permits, rights-of-way, consents
and other contracts relating thereto; and all personal property located thereon.
Seller's interest in these assets, with the exception of the Building, is
herein collectively referred to as the "Interests".
NOW, THEREFORE, in consideration of the above recitals and of the covenants
and agreements herein contained, Seller and Buyer agree as follows:
l. Purchase and Sale. Subject to and upon all of the terms and
conditions herein set forth, at Closing Seller shall sell, transfer, grant,
assign, convey, and deliver the Interests to Buyer, and Buyer shall purchase,
receive, pay for, and accept the Interests from Seller, effective August 27th,
l999, at 12:00 a.m. local time at the Lands (the "Effective Time").
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2. Terms of Purchase and Sale. In consideration for the purchase and
sale of the Interests, the Buyer and the Seller agree to the following terms:
(a) Buyer shall immediately assume the Seller's listed Utah payables
described on Exhibit E (collectively, the "Payables"). The Payables shall be
satisfied between Buyer and the creditors holding the Payables within 30 days of
the Effective time;
(b) Buyer shall hold Seller harmless on the Payables up to the total
amount stated on Exhibit E, plus $7,000.00 (representing the net revenue on the
oil in inventory) and on any creditors of ERHC not listed who are cumulatively
owed obligations of $7,000.00 in total or less;
(c) Seller shall hold Buyer harmless on the Payables for the total
amount owing in excess of the amount stated on Exhibit E plus $7,000.00, and on
creditors not listed who are cumulatively owed obligations exceeding $7,000.00
in total;
(d) Notwithstanding the above, Seller shall deliver to Buyer,
immediately upon closing, Fifteen Thousand Dollars and 00/100ths ($15,000.00) to
be applied toward the MMS obligation. Buyer shall assume the MMS obligation up
to $16,000.00 and any amounts over $31,000.00. Buyer shall satisfy the MMS
obligation immediately after MMS provides a written payoff figure to Buyer. In
the event the MMS obligation is less than $31,000.00, Buyer shall reimburse
Seller dollar-for-dollar the difference between the MMS obligation and
$31,000.00 immediately upon satisfaction of the MMS obligation;
(e) Buyer shall assume and pay the trust deed/mortgage note applicable
to the Building and shall hold Seller harmless and shall defend Seller from any
liability thereon;
(f) Buyer, at Buyer's option, either shall assume Seller's positions on
the bond to the State of Utah on the fee leases and on the bond to the BIA on
the tribal leases, or shall obtain new bonds; and Buyer shall place a BLM bond
on the 11-18 federal lease; however, Buyer shall not be responsible for failure
of the BIA or the Tribe to release the BIA bond for reasons out of the
responsibility or control of Buyer; and,
(g) The Twelve Mile Wash lease located in Uintah County, Utah, shall be
included in the assignment of Interests to Buyer; however, in consideration for
Buyer's assumption of the liabilities associated with the well located thereon
(specifically, the BLM plug and abandonment (the "P and A") order), Seller shall
reimburse the Buyer for 50% of the cost of the P and A or 50% of the cost of
obtaining a new lease on the Twelve Mile Wash property if the Buyer can
negotiate a new lease in lieu of the P and A order; if a new lease cannot be
negotiated by Buyer, Seller shall, upon receipt from Buyer of a contractor's bid
for the P and A services, deliver to Buyer 50% of the bid amount; if the cost to
complete the P and A is less than the bid, Buyer shall reimburse to Seller the
difference between the amount Seller advanced and 50% of the cost to complete.
3. Title.
(a) Seller hereby represents and warrants to Buyer that Seller has, as
of the Effective Time, and will have as of the Closing, Good and Defensible
Title to the Interests. Buyer's exclusive remedy for Seller's breach of this
warranty is set forth in Section 4.
(b) The term "Good and Defensible Title" shall mean that title of
Sellers with respect to the Interests which:
(i) includes l00 percent of the Oil and gas Leasehold Estate
in, under, and that may be produced from the Lands subject only to the
leases described on Exhibit A and Permitted Encumbrances;
(ii) includes l00 percent of the Lessor's interest under the
Leases described on Exhibit A (including all royalty reserved
thereunder), subject only to Permitted Encumbrances; and
(iii) except for Permitted Encumbrances, is free and clear of
any and all encumbrances, charges, burdens, and liens, including,
without limitation, l) any reversionary, back-in, or other similar
rights; 2) any preferential rights to purchase and required third-party
consents to assignments and similar agreements, and 3) any agreement,
contract, covenant, or obligation which restricts, prohibits, or in any
manner impedes or interferes with normal development or operation of
the Interests.
(c) "Permitted Encumbrances" shall mean:
(i) Liens for taxes or assessments not due or not delinquent
on the Closing Date;
(ii) Operator's lien of Buyer, mechanics' and materialmans'
liens that result from operations of Buyer on the Lands, title defects
waived by Buyer, and preferential rights and consents that have been
satisfied,
(iii) Easements, rights-of-way, servitudes, permits, surface
leases, and other rights in respect of surface operations on or over
any of the Interests which do not operate to interfere with normal and
prudent development and operations of the Interests, and;
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(iv) Other minor and inconsequential irregularities and
defects in title which are customarily found acceptable by prudent
operators in the oil and gas industry and which do not operate to
interfere with the normal and prudent development and operation of the
Interests.
(d) The Interests shall be deemed to have a "Title Defect" if Seller
has less than Good and Defensible Title to the Interests.
4. Purchase Price Adjustments for Title Defects.
(a) Seller has delivered to Buyer all abstracts, title opinions, and
other title evidence in Seller's possession or owned by or available to Seller
relating to the Interests.
(b) Buyer may, by delivery of written notice to Seller of the existence
of an alleged Title Defect, request reduction of the purchase price for the
Interest affected. The Title Defect notice by Buyer shall be delivered to Seller
prior to the Closing Date. Seller shall have the right, but not the obligation,
to attempt to cure any alleged Title Defect prior to Closing. In the event
Seller is unable or unwilling to cure an alleged Title Defect, Buyer and Seller
shall meet and use their best efforts to agree on the validity of the claim of
Title Defect and the amount of any required purchase price adjustment. In the
event the parties cannot mutually agree on a purchase price adjustment for an
alleged Title Defect, (i) Buyer shall have the right to waive such title defects
and proceed to Closing and accept the Interest with the alleged Title Defect
with no purchase price adjustment, or (ii) if Buyer does not elect to proceed
under (i), either party shall have the right to terminate this Agreement upon
written notice to the other.
5. Conditions of Closing by Seller. The obligation of Seller to close
is subject to the satisfaction of the following conditions unless waived by
Seller:
(a) The representations of Buyer contained in Section 8 hereof are true
on and as of the Closing date;
6. Conditions of Closing by Buyer. The obligation of Buyer to close is
subject to the satisfaction of the following conditions unless waived by Buyer:
(a) The representations of Seller contained in Section 7 shall be true
on the date hereof and on and as of the Closing Date as if made at and as of
Closing;
(b) Buyer and Seller shall have adjusted the Base Purchase Price for
Title Defects and Environmental Defects in accordance with the provisions of
Sections 4 and ll hereof; and
(c) Seller shall have performed and satisfied all agreements and
covenants and shall have delivered all certificates and other documents required
to be performed or delivered under this Agreement at or prior to Closing.
(d) To the best of each party's knowledge, both Seller and Buyer shall
have obtained any consents, permits, licenses, franchises, or approvals required
or advisable in connection with the Interests or the consummation of the
transactions contemplated by this Agreement.
7. Representations of Seller. Seller represents and warrants to Buyer
that:
(a) Seller is a corporation validly existing and in good standing under
the laws of the State of Colorado and is duly qualified to own its properties
and assets and to carry on its business as now being conducted;
(b) Seller has the requisite power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Seller and the consummation of the
transactions contemplated hereby have been duly authorized;
(c) This Agreement has been duly executed and delivered by Seller and
constitutes the valid and binding obligation of Seller, enforceable against it
in accordance with the terms hereof. No other act, approval, or proceeding on
the part of Seller or any other party is required to authorize the execution and
delivery of this Agreement by Seller or the consummation of the transactions
contemplated hereby;
(d) This Agreement, and the execution and delivery hereof by Seller,
does not and the consummation of the transactions contemplated hereby will not
(i) conflict with or result in a breach of the charter or bylaws of Seller or
any other governing documents of Seller, (ii) violate, or constitute a default
under, or result in the creation or imposition of any encumbrance upon any
property or assets of Seller which violation or default might adversely affect
the Interests or the ability of Seller to perform its obligation under this
Agreement, (iii) violate any statute or law or any judgment, decree, order,
writ, injunction, regulation, or rule of any court or governmental authority,
which violation might adversely affect the Interests or the ability of Seller to
perform its obligations under this Agreement;
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(e) Except as specifically disclosed to Buyer by Seller prior of
execution of this agreement, Seller has incurred no liability, contingent or
otherwise, for brokers' or finders' fees relating to the transactions
contemplated by this Agreement for which Buyer shall have any responsibility
whatsoever;
8. Representations of Buyer. Buyer represents and warrants to Seller
that:
(a) Buyer is a corporation validly existing and in good standing under
the laws of the State of Utah and is duly qualified to own its properties and
assets and to carry on its business as now being conducted;
(b) Buyer has the requisite power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Buyer and the consummation of the
transactions contemplated hereby have been duly authorized;
(c) This Agreement has been duly executed and delivered by Buyer and
constitutes the valid and binding obligation of Buyer, enforceable against it in
accordance with the terms hereof. No other act, approval, or proceeding on the
part of Buyer or any other party is required to authorize the execution and
delivery of this Agreement by Buyer or the consummation of the transactions
contemplated hereby;
(d) This Agreement, and the execution and delivery hereof by Buyer,
does not and the consummation of the transactions contemplated hereby will not
(i) conflict with or result in a breach of the charter or bylaws of Buyer or any
other governing documents of Buyer, (ii) violate any statute or law or any
judgment, decree, order, writ, injunction, regulation, or rule of any court or
governmental authority, which violation might materially and adversely affect
the ability of Buyer to perform its obligations under this Agreement;
(e) Buyer has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which Seller shall have any responsibility whatsoever;
9. Indemnities.
(a) "Claims" shall mean any and all claims, losses, damages, costs,
expenses, diminutions in value, suits, causes of action or judgments of any kind
or character with respect to any and all liabilities and obligations or alleged
or threatened liabilities and obligations, including, but not limited to, any
interest, penalty, and attorneys' fees and other costs and expenses incurred in
connection with investigating or defending any claims or actions, whether or not
resulting in any liability.
(b) Seller shall, to the fullest extent permitted by law, protect,
defend, indemnify, and hold Buyer and its affiliates and any assignee of this
Agreement as permitted hereunder, including the directors, officers, employees,
agents, and representatives of each of them, harmless from and against any and
all Claims attributable to or arising out of (i) the breach by Seller of any of
the agreements and covenants contained herein; and (ii) the breach by Seller of
any representation or warranty contained in Section 7 hereof that survives the
closing. Nothing herein shall be deemed to require Seller to indemnify Buyer
against any Claims attributable to or arising from acts or omissions of Buyer.
(c) Buyer shall, to the fullest extent permitted by law, protect,
defend, indemnify, and hold Seller and its directors, officers, employees,
agents, and representatives of each of them (the "Seller" Parties"), harmless
from and against any and all Claims attributable to or arising out of (i)
Buyer's and its successor's ownership or operation of the Interests subsequent
to the Effective Time, (ii) the breach by Buyer of any representations or
warranty contained in Section 8 hereof; and (iii) the breach by Buyer of any of
the agreements and covenants contained in this Agreement.
(d) If the Closing occurs, the sole and exclusive remedy of each of the
indemnified parties with respect to the purchase and sale of the Interests shall
be pursuant to the express provisions of this Agreement. THE INDEMNIFICATION,
RELEASE AND ASSUMPTION PROVISIONS PROVIDED FOR IN THIS AGREEMENT SHALL BE
APPLICABLE WHETHER OR NOT THE LOSSES, COSTS, EXPENSES AND DAMAGES IN QUESTION
AROSE SOLELY OR IN PART FROM THE ACTIVE, PASSIVE, CONCURRENT, SIMPLE OR SOLE
NEGLIGENCE, OR STRICT LIABILITY OR OTHER FAULT OF ANY INDEMNIFIED PARTY OR ANY
OTHER THEORY OF LIABILITY OR FAULT, WHETHER IN LAW (WHETHER COMMON OR STATUTORY)
OR EQUITY. BUYER AND SELLER ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE
EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.
l0. Due Diligence Review.
(a) Immediately upon execution of this Agreement and through Closing,
Seller, in Seller's offices, will make available to Buyer and Buyer's authorized
representatives for examination as Buyer may reasonably request, all land files,
well files, product purchase and sale contracts, division order files,
abstracts, title opinions, engineering, geophysical, and geological data,
reports, maps, logs, well records, and other Records contained in Seller's files
relating to the Interests. Prior to Closing, Buyer, at Buyer's sole cost, may
copy any portion of the Records as Buyer may reasonably request.
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(b) Seller shall permit Buyer and Buyer's authorized representatives to
consult with Seller's employees during reasonable business hours and to conduct,
at Buyer's sole risk and expense, inspections and inventories of the Interests
and physical access to the Lands. During such inspections, Buyer shall have the
right to review the Interests to determine the environmental condition of the
Lands.
(c) Neither Seller nor Buyer shall have any obligation or liability
under this Agreement or in connection with or with respect to the transactions
contemplated in this Agreement for any breach or noncompliance with respect to
any representation, warranty, covenant or obligation, if such breach,
misrepresentation, noncompliance shall have been within the actual knowledge of
executive officers of the other party at or before the Closing.
11. Purchase Price Adjustments for Environmental Defects.
(a) "Environmental Defect" shall mean a violation of any Environmental
Laws for which remedial or corrective action either is required or would be
undertaken by a prudent owner. Notwithstanding the foregoing, "Environmental
Defect" shall not include any violation of Environmental Laws which is the
result of Buyer's or an affiliated party's operations on the Lands.
(b) Buyer may, by delivery of written notice to Seller of the existence
of an alleged Environmental Defect prior to closing, request reduction of the
purchase price for the Interest affected. The Environmental Defect notice shall
reasonably indicate the nature and description of the Environmental Defect, the
Interest to which it relates, and the dollar amount which Buyer believes it
would take to rectify or remediate the Environmental Defect through closure with
the local, state or federal authority having jurisdiction.
(c) Seller shall have the right, but not the obligation, to attempt to
cure any alleged Environmental Defect prior to Closing. If Seller is unable or
unwilling to cure an alleged Environmental Defect, Buyer and Seller shall meet
and use their best efforts to agree on the validity of the claim of the
Environmental Defect and the amount of any required purchase price adjustment.
If the parties cannot mutually agree on the purchase price adjustment for an
alleged Environmental Defect, (i) Buyer shall have the right to waive such
environmental defects and proceed to Closing and accept the Interest with the
alleged Environmental Defect with no purchase price adjustment, or (ii) either
party may terminate this Agreement.
l2. Confidentiality. All Records and all other confidential data
provided to Buyer, whether before or after the date of this Agreement, shall be
treated by Buyer as strictly confidential.
l3. DISCLAIMER. THE TRANSACTION CONTEMPLATED HEREBY SHALL BE WITHOUT
ANY WARRANTY OR REPRESENTATION OF TITLE, EITHER EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE; WITHOUT ANY EXPRESS, IMPLIED, STATUTORY OR OTHER WARRANTY OR
REPRESENTATION AS TO THE CONDITION, QUANTITY, QUALITY, FITNESS FOR A PARTICULAR
PURPOSE, FREEDOM FROM REDHIBITORY VICES OR DEFECTS, CONFORMITY TO MODELS OR
SAMPLES OF MATERIALS OR MERCHANTABILITY OF ANY OF THE EQUIPMENT OR ITS FITNESS
FOR ANY PURPOSE AND WITHOUT ANY OTHER EXPRESS, IMPLIED, STATUTORY OR OTHER
WARRANTY OR REPRESENTATION WHATSOEVER. BUYER SHALL HAVE INSPECTED OR WAIVED ITS
RIGHT TO INSPECT THE INTERESTS FOR ALL PURPOSES AND SATISFIED ITSELF AS TO THEIR
PHYSICAL CONDITION, BOTH SURFACE AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO
CONDITIONS SPECIFICALLY RELATED TO THE CONDITION OR ANY WELL CASE, TUBING OR
DOWNHOLE EQUIPMENT. BUYER IS RELYING SOLELY UPON ITS OWN INSPECTION OF THE
INTERESTS, AND BUYER 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 BUYER IN CONNECTION WITH THIS AGREEMENT
INCLUDING, WITHOUT LIMITATION, ANY DESCRIPTION OF THE INTERESTS, PRICING
ASSUMPTIONS, OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY)
ATTRIBUTABLE TO THE INTERESTS OR THE ABILITY OR POTENTIAL OF THE INTERESTS TO
PRODUCE HYDROCARBONS OR ANY OTHER MATTERS CONTAINED IN THE PROPRIETARY DATA OR
ANY OTHER MATERIALS FURNISHED OR MADE AVAILABLE TO BUYER 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 OTHERWISE
MADE AVAILABLE TO BUYER ARE PROVIDED BUYER AS A CONVENIENCE AND SHALL NOT CREATE
OR GIVE RISE TO ANY LIABILITY OF OR AGAINST SELLER. ANY RELIANCE ON OR USE OF
THE SAME SHALL BE AT BUYER'S SOLE RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW.
THE ASSIGNMENT AND BILLS OF SALE, LEASES, DEEDS OR OTHER CONVEYANCES TO BE
DELIVERED BY SELLER AT CLOSING SHALL EXPRESSLY SET FORTH THE DISCLAIMS OF
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE l3.
l4. Agreements Pending Closing. From the date hereof until Closing,
Seller shall not dispose of any material portion of the Interests; and shall
notify Buyer of any adverse change with regard to the Interests or the
occurrence of any event which renders or may render any representation or
warranty of Seller untrue at Closing.
l5. Transactions at Closing. The Closing shall be held on or before
August 31, l999 (the "Closing" or the "Closing Date"). At the Closing, transfer
documents shall be signed by Seller at the offices of Seller at Little Rock,
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Arkansas, and shall be immediately delivered to Buyer via overnight mail. Buyer
shall have the right, at Buyer's election, to extend the Closing Date for a
period of not more than 20 days for the purpose of completing title examination
or other due diligence. However, the parties represent that this agreement
constitutes the mere formal memorialization of the agreement in principal
between the parties and that Buyer's due diligence review is essentially
complete as of the Effective time of this agreement. Therefore, execution and
delivery of the transfer documents by Seller to Buyer shall complete the Closing
which the parties agree may occur immediately following the Effective time of
this agreement unless an extension is otherwise requested by the Buyer prior
thereto. In any event, the Closing shall ultimately be completed within twenty
(20) days of the Effective time of this agreement.
l6. Transactions at Closing.
(a) Seller shall execute, acknowledge, and deliver to Buyer the
instruments of conveyance and assignments in the forms as set forth in Exhibit F
hereto conveying the Interests, and shall execute and delivery all other
documents necessary to effect the transfer of the Interests in accordance with
the terms set forth in this agreement as may be required by governmental
agencies, including the State of Utah, the Bureau of Land Management (the
"BLM"), the Bureau of Indian Affairs (the "BIA"), and the Ute Indian Tribe (the
"Tribe");
(b) Seller shall deliver to Buyer originals of the Records;
(c) If necessary, Seller and Buyer shall execute, acknowledge, and
deliver mutually agreeable transfer orders or letters-in-lieu prepared by the
Buyer, directing all purchasers of production to make future payments of
proceeds attributable to production from the Interests to Buyer;
(d) Seller shall deliver to Buyer exclusive possession of the
Interests; and
(e) Buyer shall fully assume as of the Closing date the listed Utah
payables itemized on Exhibit E and the trust deed note on the Building.
l7. Further Assurance. Incidental and subsequent to Closing, each of
the parties shall execute, acknowledge, and deliver to the other such further
instruments, and take such other actions as may be reasonably necessary to carry
out the provisions of this Agreement.
l8. Proceeds.
(a) All proceeds attributable to the Interests and accruing to the
period prior to the Effective time shall belong to Seller. "Proceeds" does not
include oil in storage tanks as of the date of closing.
(b) All proceeds attributable to the Interests and accruing to the
period on and after the Effective time shall belong to Buyer.
19. Post-Closing Obligations.
(a) Seller shall have reasonable access to and the right to reproduce
the Records at Seller's expense and Buyer's location for a period of twelve (12)
months after Closing.
(b) Buyer shall have the right, for a period of twelve (12) months
following the closing, to audit Seller's records (including accounting records)
with regard to its operation and ownership of the Interests for the two (2)
years prior to Closing. Seller agrees to give Buyer or Buyer's accountants
access to its financial records during normal business hours for the purpose of
conducting such audit.
(c) After Closing, Seller shall assist Buyer to the reasonable extent
necessary in obtaining all required governmental licenses, permits, orders, and
authorizations necessary to own the Interests;
20. Notices. All notices hereunder shall be sufficiently given for all
purposes hereunder if in writing and delivered personally, or to the extent
receipt is confirmed by the party charged with notice, sent by documented
overnight delivery service, by United States Mail, telecopy, telefax, or other
electronic transmission service to the appropriate address or number as set
forth below. Notices to Seller or Buyer shall be addressed to:
<TABLE>
<S> <C>
Seller Buyer
Evironmental Remediation Holding Corporation Mountain Oil, Inc.
P.O. Box 241100 c/o Daniel S. Sam, P.C., Attorney at Law
16101 La Grande Drive, Suite 100 319 West 100 South, Suite A
Little Rock, Arkansas 72223 Vernal, Utah 84078
Attn: Geoffrey Tirman Attn: Daniel S. Sam
Fax: (501) 920 6712 Fax: (435) 789-1344
</TABLE>
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<PAGE>
21. Entire Agreement. This instrument and the instruments of
conveyance, certificates and other documents delivered in connection herewith
states the entire agreement and supersedes all prior agreements between the
parties concerning the subject matter hereof. This Agreement may be
supplemented, altered, amended, modified, or revoked by writing only, signed by
both parties.
22. Counterpart. This Agreement may be executed by Buyer and Seller in
any number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute one and the same
instrument.
23. Announcements. Seller and Buyer shall consult with each other prior
to the release of any press releases and other announcements concerning this
Agreement or the transactions contemplated hereby.
24. Waiver. Any of the terms, provisions, covenants, representations,
warranties, or conditions hereof may be waived only by a written instrument
executed by the party waiving compliance. The failure of any party at any time
or times to require performance of any provisions hereof shall in no manner
affect such party's right to enforce the same.
25. Governing Law. This Agreement and the rights and obligations of the
parties hereto shall be governed, construed, and enforced in accordance with the
laws of the State of Utah.
26. Legal Fees. The prevailing party in any legal proceeding brought
under or to enforce this Agreement shall be additionally entitled to recover
court costs and reasonable attorneys' fees from the non-prevailing party.
27. Agreement for the Parties' Benefit Only. This Agreement is not
intended to confer upon any person not a party hereto any rights or remedies
hereunder, and no person other than the parties hereto is entitled to rely on
any representation, covenant, or agreement contained herein.
28. Severability. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any rule of law or public
policy, 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 any adverse manner to
any party.
29. Binding Effect; Assignment. All the terms, provisions, covenants,
representations, and conditions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors.
30. Enforcement. Should Buyer or Seller default in the performance of
this Agreement, the non-defaulting party shall be entitled to enforce specific
performance of this Agreement, or exercise any other right or remedy it may have
at law or in equity by reason of such default.
31. Physical Condition of the Interests. THE INTERESTS HAVE BEEN USED
FOR OIL AND GAS DRILLING AND PRODUCING OPERATIONS RELATED OIL FIELD OPERATIONS.
PHYSICAL CHANGES IN THE LAND MAY HAVE OCCURRED AS A RESULT OF SUCH USES. THE
INTERESTS ALSO MAY CONTAIN BURIED PIPELINES AND OTHER EQUIPMENT, WHETHER OR NOT
OF A SIMILAR NATURE THE LOCATIONS OF WHICH MAY NOT NOW BE KNOWN BY SELLER OR BE
READILY APPARENT BY A PHYSICAL INSPECTION OF THE PROPERTY. BUYER UNDERSTANDS
THAT SELLER DOES NOT HAVE THE REQUISITE INFORMATION WITH WHICH TO DETERMINE THE
EXACT NATURE OR CONDITION OF THE INTERESTS OR THE EFFECT ANY SUCH USE HAS HAD ON
THE PHYSICAL CONDITION OF THE INTERESTS. BUYER ACKNOWLEDGES THAT (i) IT IS
KNOWLEDGEABLE IN THE OIL AND GAS BUSINESS, (ii) IT HAS BEEN AFFORDED AN
OPPORTUNITY TO (A) EXAMINE THE PROPERTIES AND SUCH MATERIALS AS IT HAS REQUESTED
TO BE PROVIDED TO IT BY SELLER, (B) DISCUSS WITH REPRESENTATIVES OF SELLER SUCH
MATERIALS AND THE NATURE AND OPERATION OF THE INTERESTS AND (C) INVESTIGATE THE
CONDITION, INCLUDING SUBSURFACE CONDITION, OF THE REAL PROPERTY AND THE
CONDITION OF THE EQUIPMENT, (iii) IT HAS ENTERED INTO THIS AGREEMENT ON THE
BASIS OF ITS OWN INVESTIGATION OF THE PHYSICAL CONDITION OF THE INTERESTS
INCLUDING SUBSURFACE CONDITION AND (iv) THE INTERESTS HAVE BEEN USED IN THE
MANNER AND FOR THE PURPOSES SET FORTH ABOVE AND THAT PHYSICAL CHANGES TO THE
INTEREST MAY HAVE OCCURRED AS A RESULT OF SUCH USE AND (v) IN ENTERING INTO THIS
AGREEMENT, BUYER HAS RELIED SOLELY ON THE EXPRESS REPRESENTATIONS AND COVENANTS
OF SELLER IN THIS AGREEMENT, ITS INDEPENDENT INVESTIGATION OF, AND JUDGMENT WITH
RESPECT TO, THE EQUIPMENT AND THE OTHER INTERESTS AND THE ADVICE OF ITS OWN
LEGAL, TAX, ECONOMIC, ENVIRONMENTAL, ENGINEERING, GEOLOGICAL AND GEOPHYSICAL
ADVISORS AND NOT ON ANY COMMENTS OR STATEMENTS OF ANY REPRESENTATIVES OF, OR
CONSULTANTS OR ADVISORS ENGAGED BY SELLER.
EXECUTED as of the date first above mentioned.
SELLER: BUYER:
ENVIRONMENTAL REMEDIATION HOLDING MOUNTAIN OIL, INC.
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<PAGE>
CORPORATION
/s/ Geoffrey Tirman /s/ Richard Garbrick
----------------------- --------------------------
By: GEOFFREY TIRMAN By: RICHARD GARBRICK
Its: Its: PRESIDENT
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<PAGE>
EXHIBITS
Exhibit A The Lands
Exhibit B The Equipment
Exhibit C The Building
Exhibit D Other Personal Property
Exhibit E The Payables
Exhibit F The Transfer Documents
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