UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
April 6, 2000
Abraxas Petroleum Corporation
(Exact name of registrant as specified in its charter)
Nevada
(State of other jurisdiction of incorporation)
0-19118 74-2584033
- -------------------------- ------------------------
(Commission File Number) (I.R.S. Employer
Identification Number)
500 N. Loop 1604 East, Suite 100
San Antonio, Texas 78232
(Address of principal executive offices)
Registrant's telephone number, including area code:
210-490-4788
<PAGE>
Item 2. Acquisition of Disposition of Assets
On March 31, 2000, Abraxas Petroleum Corporation ("Abraxas") sold a
group of non-core assets held by Abraxas Wamustter L.P. a limited patnership of
which a subsidiary of Abraxas in the generaal partner, as well as other
contiguous assets owned by Abraxas to Sampson Resources Company.. The assets
were sold based on a bid prosess. Abraxas received approximately $34 million in
cash for it's interest, subject to certain post closing adjustments. The sale
included interest in 57 natural gas wells and gross leasehold of approximately
15,000 acres.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
7(b) Unaudited Pro Forma Financial Statements
(1) Pro Forma Condensed Balance Sheet as of December 31, 1999.
(2) Pro Forma Statement of Operations for the year ended December
31, 1999.
The following exhibits are filed as part of this report:
NUMBER DOCUMENT
10.1 Purchase and Sale Agreement
99.1 Press release dated March 31, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirement 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.
ABRAXAS PETROLEUM CORPORATION
By: ___________________________________
Chris Williford
Executive Vice President, Chief Financial
Officer and Treasurer
Dated: April 6, 2000
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet as of
December 31, 1999 and the unaudited pro forma consolidated statements of
operations for the year ended December 31, 1999 give effect to the sale of non-
core properties described in Item 2. The unaudited pro forma condensed
consolidated balance sheet is presented as if the transaction had occurred on
December 31, 1999. The unaudited pro forma consolidated statement of operations
is presented as if the transaction had occurred on January 1, 1999. The
unaudited pro forma information is presented for illustrative purposes only and
may not be indicative of the results that would have been obtained had the
transaction actually occurred on the dates assumed, nor is it necessarily
indicative of the future consolidated results of operations.
<PAGE>
<TABLE>
<CAPTION>
ABRAXAS PETROLEUM CORPORATION
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
As of December 31, 1999
Abraxas
Petroleum Pro-forma
Corporation adjustments Pro Forma
--------------- ---------------- -------------
(dollars in thousands)
Assets:
<S> <C> <C> <C>
Cash............................................. $ 3,799 31,232 (1) $ 35,031
Accounts receivable.............................. 14,352 -- 14,352
Other............................................ 878 -- 878
-------------- ------------------ --------------
Total current assets...................... 19,029 31,232 50,261
Property and equipment............................. 514,353 -- 514,353
Less accumulated DD&A.............................. 219,687 -- 219,687
-------------- ------------------ --------------
Net property and equipment....................... 294,666 -- 294,666
Deferred financing fees............................ 7,711 -- 7,711
Restricted cash.................................... -- 3,250 (1) 3,250
Other assets....................................... 878 (499) (2) 379
============== ================== ==============
Total assets.............................. $ 322,284 $ 33,983 $ 356,267
============== ================== ==============
Liabilities and stockholders' equity (deficit):
Total current liabilities................. $ 26,334 $ -- $ 30,696
Long-term debt..................................... 273,421 -- 269,608
Deferred income taxes.............................. 16,935 -- 27,429
Minority interest.................................. 10,496 -- 10,286
Future site restoration............................ 4,603 -- 4,374
Stockholders' equity (deficit):
Common stock..................................... 227 -- 226
Additional paid-in capital....................... 127,562 -- 128,125
Accumulated deficit.............................. (139,825) 33,983 (3) (105,842)
Treasury stock................................... (1,071) -- (1,071)
Accumulated other comprehensive income........... 3,602 -- (2,886)
-------------- ------------------ --------------
Total stockholders' equity (deficit)...... (9,505) 33,983 24,478
============== ================== ==============
Total liabilities and stockholders' equity
(deficit)................................. $ 322,284 $ 33,983 $ 356,267
============== ================== ==============
</TABLE>
See notes to unaudited pro forma financial information.
<PAGE>
<TABLE>
ABRAXAS PETROLEUM CORPORATIOIN
UNAUDITED PRO FORMA
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1999
Abraxas
Petroleum Pro-Forma
Corporation adjustments Pro Forma
--------------- ---------------- ---------------
(dollars in thousands, except per share data)
<S> <C> <C>
Revenue:
Oil and gas production revenues.......... $ 59,025 -- $ 59,025
Gas processing revenues.................. 4,244 -- 4,244
Rig revenues............................. 444 -- 444
Other revenues........................... 3,057 -- 3,057
---------------- ----------------- ----------------
Total revenue..................... 66,770 -- 66,770
Operating costs and expenses:
Lease operating and production taxes..... 17,938 -- 17,938
Depreciation, depletion and amortization. 34,811 -- 34,811
Proved property impairment............... 19,100 -- 19,100
Rig operations........................... 624 -- 624
General and administrative expense....... 5,269 597 (1) 5,866
---------------- ----------------- ----------------
Total operating expenses.......... 77,742 597 78,339
---------------- ----------------- ----------------
Operating income (loss).................... (10,972) (597) (11,569)
Other (income) expense:
Interest income.......................... (666) -- (493)
Amortization of deferred financing fee... 1,915 -- 1,915
Interest expense......................... 36,815 -- 36,815
Other income............................. -- (33,983) (2) (33,983)
---------------- ----------------- ----------------
Total other expenses.............. 38,064 (33,983) 4,081
---------------- ----------------- ----------------
Income (loss) before tax................... (49,036) 33,386 (15,650)
Income tax (expense) benefit:
Current.................................. (491) -- (491)
Deferred................................. 13,116 -- 13,116
Minority interest income (loss)............ 269 -- 269
---------------- ----------------- ----------------
Net (loss) applicable to common stockholders $ (36,680) $ 33,386 $ (3,294)
================ ================= ================
Net (loss) per share....................... $ (5.41) -- $ (0.49)
================ ================= ================
</TABLE>
See notes to unaudited pro forma financial information
<PAGE>
Notes to Unaudited Pro Forma Balance Sheet as of December 31, 1999 assuming that
transaction occurred on December 31, 1999.
(1) Proceeds from sale of assets.
(2) Cost basis of assets sold.
(3) Gain on sale.
Notes to Unaudited Pro Forma Statement of Operations for the year ended December
31, 1999 assuming that transaction occurred on January 1, 1999.
(1) Reversal of overhead reimbursement received from partnership.
(2) Gain on sale of assets.
<PAGE>
Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE www.abraxaspetroleum.com
FOR MORE INFORMATION CONTACT:
CHRIS WILLIFORD, EVP/CFO
ABRAXAS PETROLEUM CORPORATION NETS $34 MILLION
ON SALE OF CERTAIN WYOMING ASSETS
SAN ANTONIO, TX - (March 31, 2000) - Abraxas Petroleum Corporation (OTC Bulletin
Board: AXAS) announced today the sale of a group of non-core properties, the
assets held by Abraxas Wamsutter L.P., as well as certain other contiguous
assets. Abraxas received approximately $34 million in cash for its interests,
subject to certain post closing adjustments, further strengthening Abraxas'
balance sheet. The sale will result in Abraxas booking a gain in the first
quarter 2000 of $33 million with a corresponding increase in book equity.
Proceeds will be used to fund Abraxas' 2000 capital expenditure program which is
focused primarily on horizontal exploitation of existing properties.
The sale validates Abraxas' joint venture approach to non-core properties.
Abraxas owned a 1% interest in Abraxas Wamsutter L.P. which under the terms of
the partnership agreement, increased as certain rate of return requirements of
the L.P. were satisfied. As a result of the sale, the receipt of Abraxas'
back-in value for these properties was greatly accelerated.
The sale included interests in 57 natural gas wells and gross leasehold of
approximately 15,000 acres. The properties are located in Sweetwater and Carbon
Counties, Wyoming. The buyer of the properties is Samson Resources Company, a
private Tulsa, Oklahoma-based oil and gas company. Abraxas originally sold these
properties to Abraxas Wamsutter L.P. in November 1998.
Abraxas Petroleum Corporation is a San Antonio-based crude oil and natural gas
exploration and production company that also processes natural gas. It operates
primarily along the Texas Gulf Coast, in the Permian Basin of western Texas,
western Canada and Wyoming.
Safe Harbor for forward-looking statement: Statements in this release looking
forward in time involve known and unknown risks and uncertainties, which may
cause the Company's actual results in future periods to be materially different
from any future performance suggested in this release. Such factors may include,
but may not be necessarily limited to, changes in the prices received by the
Company for crude oil and natural gas. In addition, the Company's future crude
oil and natural gas production is highly dependent upon the Company's level of
success in acquiring or finding additional reserves. Further, the Company
operates in an industry sector where securities values are highly volatile and
may be influenced by economic and other factors beyond the Company's control. In
the context of forward-looking information provided for in this release,
reference is made to the discussion of risk factors detailed in the Company's
filing with the Securities and Exchange Commission during the past 12 months.
<PAGE>
EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of March
6, 2000 is among Abraxas Wamsutter L.P., a Texas limited partnership
("Wamsutter"), Abraxas Petroleum Corporation, a Nevada corporation ("Abraxas"
and, together with Wamsutter, "Seller"), each with offices at 500 North Loop
1604 East, Suite 100, San Antonio, Texas, 78232, and Samson Resources Company,
an Oklahoma corporation ("Buyer"), with offices at Samson Plaza, Two West Second
Street, Tulsa, Oklahoma, 74103-3103, Seller and Buyer are sometimes hereinafter
collectively called the "Parties" and individually called a "Party."
WHEREAS, Seller desires to sell, and Buyer desires to purchase, upon and subject
to the terms, conditions, reservations and exceptions hereinafter set forth,
Seller's interest in and to certain oil and gas properties and other assets
related thereto as further described hereinafter;
NOW THEREFORE, for and in consideration of the covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Seller and Buyer agree as follows:
ARTICLE 1. PROPERTY DESCRIPTION
1.1 The Interests. Subject to the terms, conditions, reservations and
exceptions set forth in this Agreement, Seller shall sell, transfer,
assign, convey and deliver unto Buyer, and Buyer shall purchase,
receive, pay for and accept, as of 7:00 a.m. local time where the
properties are located, January 1, 2000 (the "Effective Date"), all of
Seller's right, title and interest in and to the following:
1.1.1 the undivided interest set forth in Exhibit A, Schedule I
attached hereto and made a part hereof for all purposes,
together with all of Seller's other right, title and
interest in and to the oil, gas and mineral leases and other
interests in oil and gas described in Exhibit A, Schedule
II, including mineral, royalty and overriding royalty
interests, and all rights, privileges and obligations
appurtenant to those interests and leases INSOFAR AND ONLY
INSOFAR AS those interests and leases cover and include the
lands, depths and rights described in Exhibit A, Schedule II
hereto (the "Leases");
1.1.2 all rights and interests in any unit or pooled area in which
the Leases are included, to the extent that these rights and
interests arise from and are associated with the Leases,
including without limitation all rights derived from any
unitization, pooling, operating, communitization or other
agreement or from any declaration or order of any
governmental authority;
1.1.3 all oil, gas and condensate wells (whether producing, not
producing or abandoned), water source, water injection and
other injection or disposal wells and systems located on the
Leases or lands unitized or pooled with the Leases;
1.1.4 all equipment, facilities, pipelines, pipeline laterals,
gathering systems, platforms, well pads, tank batteries,
improvements, fixtures, inventory, spare parts, tools,
materials and other personal property on the Leases or used
in developing or operating the Leases or producing,
treating, storing, compressing, processing or transporting
hydrocarbons on or from the Leases other than that
specifically designated as retained property in Exhibit B or
excluded from the Interests in Section 1.2 hereof (the
"Equipment");
1.1.5 to the extent assignable or transferable and except to the
extent any of the following are attributable or allocable to
rights and interests retained by Seller, if any, all
easements, rights-of-way, licenses, permits, servitudes,
surface leases, and similar interests applicable to or used
in operating the Leases, the lands unitized or pooled with
the Leases or the Equipment, as set forth in Exhibit A,
Schedule III hereto;
1.1.6 to the extent assignable or transferable, all contracts and
contractual rights, obligations and interests relating to
the Leases or the lands unitized or pooled with the Leases,
or the Equipment, including, without limitation, unit
agreements, farmout agreements, farm-in agreements,
operating agreements, and hydrocarbon sales, purchase,
gathering, transportation, treating, marketing, exchange,
processing and fractionating agreements, surface leases,
operating agreements, whether of record or not, as described
in Exhibit A, Schedule IV hereto (the "Contracts");
1.1.7 Any fee mineral interests described in Exhibit A, Schedule V
(the "Fee Mineral Interests"), including without limitation
all rights and obligations pertaining to the Fee Mineral
Interests under any of the Contracts;
1.1.8 Any fee surface interests described in Exhibit A, Schedule
VI (the "Fee Surface Interests"), including without
limitation all rights and obligations pertaining to the Fee
Surface Interests under any of the Contracts
1.1.9 (a) All of Seller's right, title and interest in and to
those certain Credit Payments representing Section 29 Tax
Credits attributable to the oil and gas leases located in
Carbon and Sweetwater Counties, Wyoming, more particularly
described in Exhibit A, Schedule VII attached hereto and
incorporated herein, insofar as the leases cover the right
to produce certain wells identified in Exhibit A, Schedule
VIII, attached hereto and incorporated herein, from certain
identified tight sands formations, which Credit Payments
were originally agreed to be paid to Dalen Resources Oil &
Gas Co. ("Dalen"), predecessor in interest to Abraxas, by
Tgas Investments, LLC ("Tgas") under the terms of that
certain Purchase and Sale Agreement dated August 1, 1995,
pertaining to the leases and wells identified in Exhibit A,
Schedules VII and VIII hereto; and
(b) All of Seller's right, title and interest, if any, in and to
the oil and gas leases described in Exhibit A, Schedule VII,
insofar only as said leases cover and pertain to the wells
set forth in Exhibit A, Schedule VIII.
and
1.1.10 all other tangibles, miscellaneous interests or other assets
on or used in connection with the Leases, Equipment and/or
Contracts, including, without limitation, all lease files,
land files, well files, production records, division order
files, abstracts, title opinions, and contract files,
insofar as they are directly related to the items described
in Sections 1.1.1 through 1.1.9 hereof.
Seller's interests in the assets described in Sections 1.1.1 through 1.1.10
above are hereinafter collectively called the "Interests".
1.2 Exclusions from the Interests. The Interests to be conveyed and
assigned under this Agreement do not include:
-----------------------------
1.2.1 All of Seller's interest in and to the leases, lands and other
interests described in Exhibit A, Schedule IX;
1.2.2 Seller's intellectual property used in developing or
operating the Interests, computer software, 3-D seismic and
computer software licensed from third parties, patents, trade
secrets, copyrights, names, marks and logos, all of which
Seller will remove before or as soon as possible after
Closing;
1.2.3 Trade credits and rebates from contractors and vendors,
accounts and notes receivable, and adjustments or refunds
attributable to Seller's interest in the Interests that
relate to any period before the Effective Date, including
without limitation transportation tax credits and refunds,
tariff refunds, take-or-pay claims, insurance premium
adjustments, and audit adjustments under the Contracts;
1.2.4 Deposits, cash, checks in process of collection, cash
equivalents and funds attributable to Seller's Interests
pertaining to any periods before the Effective Date;
1.2.5 All test units and all leased vehicles and equipment for
which Buyer does not assume the applicable lease under this
Agreement; and all third party equipment and property located
on the Leases, including without limitation contractor
equipment.
1.3 Ownership of Production from the Interests Prior to the Effective Date.
(i) Seller will own all merchantable oil, gas, condensate and
distillate ("Hydrocarbons") produced from the Interests
before the Effective Date. If, on the Effective Date,
Hydrocarbons produced from the Interests before the Effective
Date are stored in the Leases or unit stock tanks (the "Stock
Tank Oil"), or in Leases or unit gathering lines or
production facilities upstream of the sale or custody
transfer meters of the purchaser or processor of Hydrocarbon
production from the Interests (the Pipeline Inventory"),
Buyer shall purchase from Seller the merchantable Stock Tank
Oil above pipeline connections in the stock tanks and the
Pipeline Inventory at the price of $25.39 per barrel, less
severance taxes and royalties. Buyer shall pay Seller for the
Stock Tank Oil and Pipeline Inventory as an adjustment to the
Sale Price at Closing, as provided in Section 2.2 hereof.
(ii) The Stock Tank Oil and the Pipeline Inventory will be gauged
and measured as of 7:00 a.m. local time where the Interests
are located on the Effective Date. Seller and Buyer will
accept the Lease or unit operator's tank gauge readings,
meter tickets or other inventory records of the Stock Tank
Oil and Pipeline Inventory.
1.4 Ownership of Production from the Interests After the Effective Date.
Buyer will own all Hydrocarbons produced from the Interests on and
after the Effective Date. Seller will sell, on Buyer's behalf, all
Hydrocarbons produced from the Interests between the Effective Date and
the Closing Date (as hereinafter defined), and Seller will credit Buyer
for the proceeds of those sales as an adjustment at Closing, as
provided in Section 2.2 hereof. Subject to any continuing sales
obligations under the Contracts, Buyer may sell Hydrocarbons produced
from the Interests on and after the Closing Date as it deems
appropriate.
ARTICLE 2. CONSIDERATION
2.1 Sale Price.
2.1.1 Amount Due at Closing
(i) At Closing (as hereinafter defined), Buyer shall pay
to Seller the cash sum of $127,385,590.00 for the
Interests (the "Sale Price"), adjusted by the Earnest
Money pursuant to Section 2.1.3 and the Closing
adjustments specified in Section 2.2 hereof and
further adjusted by the post-Closing adjustments
specified in Section 2.3 hereof.
(ii) The Sale Price shall be paid to Seller by wire
transfer to a bank account to be designated by Seller
in accordance with written instructions to be
provided by Seller to Buyer no later than three (3)
business days prior to the Closing.
2.1.2 Allocated Values. As shown on Schedule 2.1.2, Buyer has
allocated the values ("Allocated Values") to the Interests
for the purposes of this Agreement.
2.1.3 Earnest Money. Upon the execution of this Agreement, Buyer
shall pay to Wamsutter an earnest money deposit (the "Earnest
Money") in the amount of $10,000,000.00 to assure Buyer's
performance under this Agreement. If Seller and Buyer close
the transaction contemplated by this Agreement, the Earnest
Money will be applied to the Sale Price. If Buyer and Seller
fail to close the transaction contemplated by this Agreement,
Seller and Buyer will have the respective rights and
obligations with respect to the Earnest Money set forth in
Article 6 hereof.
2.2 Adjustments at Closing
2.2.1 Preliminary Settlement Statement. At Closing, the Sale Price
will be adjusted as set forth in Sections 2.2.2 and 2.2.3. No
later than three (3) business days prior to Closing, Seller
will provide to Buyer a preliminary settlement statement
identifying all adjustments to the Sale Price to be made at
Closing (the "Preliminary Settlement Statement"). Seller and
Buyer acknowledge that some items in the Preliminary
Settlement Statement may be estimates or otherwise subject to
change in the Final Settlement Statement for the Interests to
be prepared pursuant to Section 2.3 hereof.
2.2.2 Upward Adjustments. The Sale Price will be increased by the
following expenses and revenues:
(i) all production expenses, operating expenses, overhead
expenses under applicable operating agreements and
capital expenditures paid or incurred by Seller in
connection with the Interests (including, without
limitation, royalties, minimum royalties, rentals and
prepaid charges), to the extent they are attributable
to operation of the Interests on and after the
Effective Date;
(ii) any proceeds for the sale of Hydrocarbons and other
income from the Interests received by Buyer, to the
extent they are attributable to the operation of the
Interests before the Effective Date;
(iii) the value of the Stock Tank Oil and the Pipeline
Inventory as provided in Section 1.3 hereof; and
(iv) any other increases in the Sale Price specified in
this Agreement.
2.2.3 Downward Adjustments. The Sale Price will be decreased by the
following expenses and revenues:
(i) all actual production expenses, operating expenses,
overhead under applicable operating agreements and
capital expenditures paid or incurred by Buyer in
connection with the Interests (including, without
limitation, royalties, minimum royalties, rentals,
and prepaid charges), to the extent they are
attributable to operation of the Interests before the
Effective Date;
(ii) any proceeds for the sale of Hydrocarbons and other
income received by Seller from the Interests, to the
extent they are attributable to the operation of the
Interests on and after the Effective Date; and
(iii) Any other decreases in the Sale Price specified in
this Agreement.
2.3 Adjustments After Closing.
2.3.1 Final Settlement Statement. Within one hundred twenty (120)
days after Closing, Seller will prepare a final settlement
statement for the interests containing a final reconciliation
of the adjustments to the Sale Price specified in Section 2.1
(the "Final Settlement Statement"). However, the failure of
Seller to complete the Final Settlement Statement within 120
days after Closing will not constitute a waiver of any right
to an adjustment otherwise due. Buyer will have thirty (30)
days after receiving the Final Settlement Statement to
provide Seller with written exceptions to any items in the
Final Settlement Statement that Buyer believes in good faith
to be questionable. All items in the Final Settlement
Statement to which Buyer does not except within the 30 day
review period will be deemed to be correct.
2.3.2 Payment of Post-Closing Adjustments. Any additional
adjustments to the Sale Price (including disputed items) will
be offset against each other so that only one payment is
required. The Party owing payment will pay the other Party
the net post-Closing adjustment to the Sale Price within ten
(10) days after the expiration of Buyer's 30 day review
period for the Final Settlement Statement. However, the
payment of any disputed items will be subject to the further
rights of the Parties under Section 2.3.3.
2.3.3 Resolution of Disputed Items. After the completion and
delivery of the Final Settlement Statement, the Parties agree
to negotiate in good faith to attempt to reach agreement on
the amount due with respect to any disputed items in the
Final Settlement Statement. If the Parties agree on the
amount due with respect to any disputed items, and a payment
adjustment is required, the Party owing payment will pay the
other Party within ten (10) days after the Parties reach
agreement. If the Parties are unable to agree on the amount
due with respect to any disputed items within sixty (60) days
after Seller receives Buyer's written exceptions to the Final
Settlement Statement, then (i) the Parties will attempt to
resolve their disagreement with respect to the disputed items
by mediation, as provided in Section 12.16 hereof, and (ii)
if the Parties are unable to resolve their disagreement over
the disputed items by mediation, such dispute shall be
determined in accordance with Section 2.3.4.
2.3.4 Arbitration. If a dispute relating to the Final Settlement
Statement cannot be resolved pursuant to Section 2.3.3, such
dispute shall be resolved by binding arbitration in
accordance with the then current Commercial Arbitration Rules
of the American Arbitration Association. If the amount in
controversy in the arbitration exceeds Two Hundred Fifty
Thousand ($250,000), exclusive of interest, attorneys' fees
and costs, or if a single neutral arbitrator cannot be agreed
upon within thirty (30) calendar days after a dispute has
arisen which is to be decided by arbitration, the arbitration
shall be conducted by a panel of three (3) neutral
arbitrators. Otherwise, the arbitration shall be conducted by
a single neutral arbitrator. The parties shall endeavor to
select neutral arbitrators by mutual agreement. If such
agreement cannot be reached within thirty (30) calendar days
after a dispute has arisen which is to be decided by
arbitration, each party shall select its own neutral
arbitrator within 15 days of the expiration of such 30-day
period and the two neutral arbitrators so selected shall
select a third neutral arbitrator within 10 days of the
expiration of such 15-day period. The 3 persons thus selected
shall be the arbitrators for such arbitration. If three (3)
arbitrators are selected, the arbitrators shall elect a
chairperson to preside at all meetings and hearings. If a
dispute is to be resolved by a sole arbitrator in accordance
with the terms hereof, or if the dispute is to be resolved by
a panel of three (3) arbitrators as provided herein above,
then such sole arbitrator or the chairperson of such panel,
as the case may be, shall be a member of a state bar engaged
in the practice of law in the United States or a retired
member of a state or the federal judiciary in the United
States. The award of the arbitrator(s) shall require a
majority of the arbitrators in the case of a panel of
arbitrators, shall be in writing and reasoned, shall be based
on the evidence admitted and the substantive law of the State
of Texas and shall contain an award for each issue and
counterclaim. The award shall be made within thirty (30) days
following the close of the final hearing and the filing of
any post hearing briefs authorized by the arbitrator(s). The
award of the arbitrator(s) shall be final and binding on the
parties hereto and the subject matter. Judgment upon the
award rendered by the arbitrator(s) may be entered by any
court having jurisdiction. The place of arbitration shall be
in Dallas, Texas. Each party shall be entitled to inspect and
obtain a copy of relevant documents in the possession or
control of the other party and to take depositions of the
other parties' employees, agents, representatives and
witnesses (including expert witnesses). All such discovery
shall be in accordance with procedures approved by the
arbitrator(s). Unless otherwise provided in the award, each
party shall bear its own costs of discovery. All discovery
shall be expedited, consistent with the nature and complexity
of the claim or dispute and consistent with fairness and
justice. The arbitrator(s) shall have the power to compel any
party to comply with discovery requests of the other parties
and to issue binding orders relating to any discovery dispute
which shall be enforceable in the same manner as awards. The
arbitrator(s) also shall have the power to impose sanctions
for abuse or frustration of the arbitration process,
including without limitation, the refusal to comply with
orders of the arbitrator(s) relating to discovery and
compliance with subpoenas. Each of the parties hereto hereby
irrevocably submits to the jurisdiction of the courts of the
State of Texas for entry of any arbitration decision or to
obtain any preliminary relief which may be necessary and
hereby consents to the enforcement by such courts of any
award rendered in such arbitration.
2.4 Payment Method. Unless the Parties otherwise agree in writing, all
payments under this Agreement shall be made by wire transfer in
immediately available funds to an account designated by the Party
receiving payment.
2.5 Principles of Accounting. The Preliminary Settlement Statement and the
Final Settlement Statement will be prepared in accordance with
generally accepted accounting principles in the petroleum industry and
with reasonable supporting documentation for each item in those
statements.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
3.1 Wamsutter's Representations. Wamsutter represents and warrants to Buyer
that the following statements are true and accurate as of the execution
date of this Agreement, the Effective Date and the Closing Date.
3.1.1 Authority. Wamsutter is a duly organized limited partnership
validly existing under the laws of the State of Texas, is
duly qualified to carry on its business in the state in which
the Interests are located, and has full power and authority
to enter into and perform this Agreement according to its
terms.
3.1.2 Requisite Approvals. Wamsutter's execution, delivery and
performance of this Agreement has been duly authorized by all
necessary partnership action and will not violate or conflict
with any agreement, law, rule, regulation, charter or other
instrument governing Wamsutter or by which Wamsutter is
bound, except where such violation or conflict would not have
a material adverse effect on Wamsutter.
3.1.3 Validity of Obligation. This Agreement and all other
transaction documents executed and delivered on or before the
Closing Date (i) have been duly executed by Wamsutter's
authorized representatives; (ii) constitute the valid and
legally binding obligations of Wamsutter, and (iii) are
enforceable against Wamsutter in accordance with their
respective terms.
3.1.4 No Violation of Contractual Restrictions. The execution,
delivery and performance of this Agreement does not conflict
with or violate any agreement or instrument to which
Wamsutter is a party or by which Wamsutter is bound, except
any provision contained in agreements customary in the oil
and gas industry relating to (i) required consents to
transfer and related provisions; (ii) maintenance of uniform
interest provisions in joint operating agreements; and (iii)
any other third party approvals or consents contemplated in
this Agreement.
3.1.5 No Violation of Other Legal Restrictions. The execution,
delivery and performance of this Agreement by Wamsutter does
not violate any law, rule, regulation, ordinance, judgment,
decree or order to which Wamsutter or the Interests being
sold by Wamsutter is subject.
3.1.6 Bankruptcy. There are no bankruptcy, reorganization or
receivership proceedings pending, being contemplated by or,
to its actual knowledge, threatened against Wamsutter.
3.1.7 Broker's Fees. Wamsutter has not incurred any 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.
3.1.8 Lawsuits and Claims. There is no action, suit, proceeding, or
written claim by any person, entity, administrative agency or
governmental body pending or, to the best of its knowledge,
threatened, or to the best of its knowledge, any
investigation by any person, entity, administrative agency or
governmental body, against Wamsutter before any governmental
authority that impedes or is likely to impede its ability to
consummate the transactions contemplated by this Agreement
(except for any such action, suit, proceeding, claim or
investigation that does not and would not, individually or in
the aggregate, have a material adverse effect on the same).
Except for the actions, suits, or other proceedings that are
set forth on Schedule 3.1.8 attached hereto or that generally
effect the oil and gas industry, there are no pending
actions, suits, or other proceedings to which Wamsutter is a
party and for which Wamsutter has received service of process
which affect the Interests being sold by Wamsutter in any
material respect.
3.1.9 Calls on Production. There exists no contracts that provide
for calls on production or other rights to purchase
production from the Interests, except for those contracts
scheduled on Schedule 3.1.9 attached hereto.
3.1.10 Preferential Rights. To Wamsutter's knowledge, all
preferential rights to purchase that are contained in Joint
Operating Agreements or other contracts to which Wamsutter is
a party and that effect the Interests, are set forth on
Schedule 3.1.10 hereto.
3.1.11 Severance Taxes. The Wyoming state severance taxes applicable
to the incremental production (as defined by the Wyoming tax
authorities) attributable to the Interests set forth on
Schedule 3.1.11 from reworking of the wells thereon have been
reduced from 6% to 2%.
3.1.12 Section 29 Tax Credits. The production from the wells listed
on Exhibit A, Schedules VII and VIII qualifies as production
from a "tight formation" within the meaning of Section
29(c)(1)(B)(i) of the Internal Revenue Code of 1986, as
amended, and any successor statute thereto and have been
certified as gas produced from a tight formation in
accordance with Section 503 of the Natural Gas Policy Act of
1978.
3.2 Abraxas' Representations. Abraxas represents and warrants to Buyer that
the following statements are true and accurate as of the execution date
of this Agreement, the Effective Date and the Closing Date.
3.2.1 Authority. Abraxas is a corporation, duly organized, validly
existing and in good standing under the laws of the State of
Nevada, is duly qualified to carry on its business in the
state in which the Interests are located, and has the
corporate power and authority to enter into and perform this
Agreement according to its terms.
3.2.2 Requisite Approvals. Abraxas' execution, delivery and
performance of this Agreement has been duly authorized by all
necessary corporation action and will not violate or conflict
with any agreement, law, rule, regulation, charter or other
instrument governing Abraxas or by which Abraxas is bound
except where such violation or conflict would not have a
material adverse effect on Abraxas.
3.2.3 Validity of Obligation. This Agreement and all other
transaction documents executed and delivered on or before the
Closing Date (i) have been duly executed by Abraxas'
authorized representatives; (ii) constitute the valid and
legally binding obligations of Abraxas, and (iii) are
enforceable against them in accordance with their terms.
3.2.4 No Violation of Contractual Restrictions. The execution,
delivery and performance of this Agreement does not conflict
with or violate any agreement or instrument to which Abraxas
is a party or by which Abraxas is bound, except any provision
contained in agreements customary in the oil and gas industry
relating to (i) required consents to transfer and related
provisions; (ii) maintenance of uniform interest provisions
in joint operating agreements; and (iii) any other third
party approvals or consents contemplated in this Agreement.
3.2.5 No Violation of Other Legal Restrictions. The execution,
delivery and performance of this Agreement by Abraxas does
not violate any law, rule, regulation, ordinance, judgment,
decree or order to which Abraxas or the Interests being sold
by Abraxas is subject.
3.2.6 Bankruptcy. There are no bankruptcy, reorganization or
receivership proceedings pending, being contemplated by or,
to its actual knowledge, threatened against Abraxas.
3.2.7 Broker's Fees. Abraxas has not incurred any 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.
3.2.8 Lawsuits and Claims. There is no action, suit, proceeding, or
written claim by any person, entity, administrative agency or
governmental body pending or, to the best of its knowledge,
threatened, or to the best of its knowledge, any
investigation by any person, entity, administrative agency or
governmental body, against Abraxas before any governmental
authority that impedes or is likely to impede its ability to
consummate the transactions contemplated by this Agreement
(except for any such action, suit, proceeding, claim or
investigation that does not and would not, individually or in
the aggregate, have a material adverse effect on the same).
Except for the actions, suits, or other proceedings that are
set forth on Schedule 3.2.8 attached hereto or that generally
effect the oil and gas industry, there are no pending
actions, suits, or other proceedings to which Abraxas is a
party and for which Abraxas has received service of process
which affect the Interests being sold by Abraxas in any
material respect.
3.2.9 Calls on Production. There exists no contracts that provide
for calls on production or other rights to purchase
production from the Interests, except for those contracts
scheduled on Schedule 3.2.9 attached hereto.
3.2.10 Preferential Rights. To Abraxas' knowledge, all preferential
rights to purchase that are contained in Joint Operating
Agreements or other contracts to which Abraxas is a party and
that effect the Interests, are set forth on Schedule 3.2.10
hereto.
3.3 Buyer's Representations. Buyer represents and warrants to Seller that
the following statements are true and accurate as of the execution date
of this Agreement, the Effective Date and the Closing Date.
3.3.1 Corporate Authority. Buyer is a duly organized corporation
validly existing and in good standing under the laws of the
state of Oklahoma, is duly qualified to carry on its business
in the state in which the Interests are located, and has full
power and authority to enter into and perform pursuant to
this Agreement according to its terms and this Agreement has
been duly executed and delivered by Buyer.
3.3.2 Requisite Approvals. Buyer's execution, delivery and
performance of this Agreement has been duly authorized by all
necessary corporate action and will not conflict with or
violate any agreement, law, rule, regulation, ordinance,
charter or other instrument governing Buyer or by which Buyer
is bound, except where such violation or conflict would not
have a material adverse effect on Buyer.
3.3.3 Validity of Obligation. This Agreement and all other
transaction documents executed and delivered on or before the
Closing Date (i) have been duly executed by Buyer's
authorized representatives; (ii) constitute the valid and
legally binding obligations of Buyer, and (iii) are
enforceable against it in accordance with their respective
terms.
3.3.4 No Violation of Contractual Restrictions. The execution,
delivery and performance of this Agreement does not conflict
with or violate any agreement or instrument to which Buyer is
a party or by which it is bound ' except any provision
contained in agreements customary in the oil and gas industry
relating to: (i) preferential rights to purchase all or any
portion of an Interest; (ii) required consents to transfer
and related provisions; (iii) maintenance of uniform interest
provisions in joint operating agreements, and (iv) any other
third party approvals or consents contemplated in this
Agreement.
3.3.5 No Violation of Other Legal Restrictions. The execution,
delivery and performance of this Agreement by Buyer does not
violate any law, rule, regulation, ordinance, judgment,
decree or order to which Buyer or the Interests is or, upon
Closing, will be subject.
3.3.6 Bankruptcy. There are no bankruptcy, reorganization or
receivership proceedings pending, being contemplated by, or
to its actual knowledge, threatened against Buyer.
3.3.7 Independent Evaluation. Buyer represents that by reason of
its knowledge and experience in the evaluation, acquisition
and operation of oil and gas properties, Buyer has evaluated
the merits and risks of purchasing the Interests from Seller
and has formed an opinion based solely on Buyer's knowledge
and experience and not on any representations or warranties
by Seller. Buyer represents that in entering into this
Agreement, Buyer has relied solely on the express
representations, warranties and covenants of Seller in this
Agreement, Buyer's 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 Seller or any representatives
of, or consultants or advisors engaged by Seller. Buyer
further represents that it has not relied and will not rely
on any statements by Seller or any of its representatives,
consultants or advisors, including, without limitation,
Randall & Dewey, Inc., in making its decision to enter into
this Agreement or to close this transaction.
3.3.8 Broker's Fees. Buyer has not incurred any 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.
3.3.9 Lawsuits and Claims. There is no action, suit, proceeding,
claim or investigation by any person, entity, administrative
agency or governmental body pending or, to the best of its
knowledge, threatened, against it before any governmental
authority that impedes or is likely to impede its ability to
consummate the transactions contemplated by this Agreement
and to assume the liabilities to be assumed by it under this
Agreement (except for any such action, suit, proceeding,
claim or investigation that does not and would not,
individually or in the aggregate, have a material adverse
effect on the same).
3.3.10 Securities Laws. Buyer has complied with all federal and
state securities laws applicable to the purchase and sale of
the Interests and will comply with such laws if it
subsequently disposes of all or any part of the Interests.
3.3.11 Financing. Buyer has the financial capacity to consummate the
transactions contemplated by this Agreement.
3.4 Notice of Changes. Seller and Buyer will each give the other prompt
written notice of any matter materially affecting any of their
unqualified representations or warranties under this Article 3 or
rendering any such warranty or representation untrue or inaccurate.
3.5 Representations and Warranties Exclusive. All representations and
warranties contained in this Agreement (including, without limitation,
those in Article 3 of this Agreement) are exclusive, and are given in
lieu of all other representations and warranties, express or implied.
ARTICLE 4. TITLE WARRANTY; DISCLAIMER OF WARRANTIES
4.1 Special Warranty of Title; Encumbrances. SELLER CONVEYS THE INTERESTS
TO BUYER SUBJECT TO ALL ROYALTIES, OVERRIDING ROYALTIES, BURDENS,
ENCUMBRANCES, NATIVE ALLOTMENTS AND OTHER RIGHTS OF RECORD, AND WITHOUT
WARRANTY OF TITLE, EXPRESS, STATUTORY, OR IMPLIED, EXCEPT THAT SELLER
SPECIALLY WARRANTS AND AGREES TO DEFEND TITLE TO THE INTERESTS IT
CONVEYS TO BUYER AGAINST THE CLAIMS, ENCUMBRANCES AND DEMANDS OF ALL
PERSONS CLAIMING TITLE TO THE INTERESTS BY, THROUGH, OR UNDER SELLER
BUT NOT OTHERWISE, SUBJECT TO THE LIMITATIONS SET FORTH IN THIS SECTION
4.1. Seller's special warranty of title contained in the preceding
sentence applies to Seller's contractual and record title interest to
be conveyed to Buyer under this Agreement, as that contractual and
record title interest is specifically described in Exhibit A; provided,
however, Seller's special warranty is limited by all of the following
to the extent binding upon Seller: (i) all instruments of record as of
the Effective Date; and (ii) all future changes in the fee mineral
interests, working interests, royalty interests, overriding royalty
interests or net revenue interests stated in Exhibit A that may be
caused by the operation of any provision of the instruments or
contracts specifically noted or described in Exhibit A. With respect to
any claim Seller may be obligated to defend pursuant to this warranty,
Buyer shall have the right, but not the obligation, to participate
fully in the defense of the claim.
4.2 Condition and Fitness of the Interests. Except as set forth in Section
4.1 of this Agreement, SELLER CONVEYS THE INTERESTS TO BUYER WITHOUT
ANY EXPRESS, STATUTORY OR IMPLIED WARRANTY OR REPRESENTATION OF ANY
KIND, INCLUDING WARRANTIES RELATING TO (i) THE CONDITION OR
MERCHANTABILITY OF THE INTERESTS, OR (ii) THE FITNESS OF THE INTERESTS
FOR A PARTICULAR PURPOSE. BUYER HAS INSPECTED, OR BEFORE CLOSING WILL
INSPECT OR WILL HAVE BEEN GIVEN THE OPPORTUNITY TO INSPECT, THE
INTERESTS FOR ALL PURPOSES, INCLUDING WITHOUT LIMITATION FOR THE
PURPOSE OF DETECTING THE PRESENCE OF NATURALLY OCCURRING RADIOACTIVE
MATERIALS ("NORM") AND MAN MADE MATERIAL FIBERS ("MMMF") AND SATISFIED
ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE
AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO CONDITIONS RELATED TO THE
PRESENCE, RELEASE, OR DISPOSAL OF HAZARDOUS SUBSTANCES. BUYER IS
RELYING SOLELY UPON THE RESULTS OF SUCH INSPECTION OF THE INTERESTS AND
SHALL ACCEPT ALL OF THE SAME IN THEIR "AS IS, WHERE IS" CONDITION AND
"WITH ALL FAULTS". SELLER DISCLAIMS ALL LIABILITY ARISING IN CONNECTION
WITH THE PRESENCE OF NORM OR MMMF ON THE INTERESTS AND IF TESTS HAVE
BEEN CONDUCTED BY SELLER FOR THE PRESENCE OF NORM OR MMMF, SELLER
DISCLAIMS ANY WARRANTY RESPECTING THE ACCURACY OF SUCH TESTS OR
RESULTS.
4.3 Information About the Interests. SELLER AND ITS CONSULTANTS, INCLUDING,
WITHOUT LIMITATION, RANDALL & DEWEY, INC., MAKE NO WARRANTY OR
REPRESENTATION, EXPRESS, STATUTORY OR IMPLIED, AS TO (i) THE ACCURACY,
COMPLETENESS, OR MATERIALITY OF ANY DATA, INFORMATION OR RECORDS
FURNISHED TO BUYER IN CONNECTION WITH THE INTERESTS; (ii) THE QUALITY
AND QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE
INTERESTS; (iii) THE ABILITY OF THE INTERESTS TO PRODUCE HYDROCARBONS,
INCLUDING WITHOUT LIMITATION PRODUCTION RATES, DECLINE RATES AND
RECOMPLETION OPPORTUNITIES; (iv) GAS BALANCING INFORMATION, ALLOWABLES
OR OTHER REGULATORY MATTERS; (v) THE PRESENT OR FUTURE VALUE OF THE
ANTICIPATED INCOME, COSTS OR PROFITS, IF ANY, TO BE DERIVED FROM THE
INTERESTS, OR (vi) THE ENVIRONMENTAL CONDITION OF THE INTERESTS. ANY
DATA, INFORMATION OR OTHER RECORDS FURNISHED BY SELLER ARE PROVIDED TO
BUYER AS A CONVENIENCE AND BUYER'S RELIANCE ON OR USE OF THE SAME IS AT
BUYER'S SOLE RISK. BUYER EXPRESSLY WAIVES THE PROVISIONS OF CHAPTER
XVII, SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN
SECTION 17.555, WHICH IS NOT WAIVED), VERNON'S TEXAS CODE ANNOTATED,
BUSINESS AND COMMERCE CODE (THE "DECEPTIVE TRADE PRACTICES ACT");
ACKNOWLEDGES THAT THE EXPRESS WAIVERS CONTAINED IN THIS SECTION 4.3
SHALL BE CONSIDERED A MATERIAL AND INTEGRAL PART OF THIS SALE AND THE
CONSIDERATION THEREOF; AND ACKNOWLEDGES THAT THESE WAIVERS HAVE BEEN
BROUGHT TO THE ATTENTION OF BUYER AND EXPLAINED IN DETAIL AND THAT
BUYER HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO THESE WAIVERS. ALL
INSTRUMENTS OF CONVEYANCE TO BE DELIVERED BY SELLER AT CLOSING SHALL
EXPRESSLY SET FORTH THE DISCLAIMERS OF REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS PARAGRAPH.
4.4 Subrogation of Warranties. To the extent transferable, Seller will give
and grant to Buyer, its successors and assigns full power and right of
substitution and subrogation in and to all covenants' and warranties
(including warranties of title) by preceding owners, vendors, or
others, given or made with respect to the Interests or any part thereof
prior to the Effective Date of this Agreement.
ARTICLE 5. DILIGENCE REVIEW OF THE INTERESTS
5.1 Access to Records. After execution of this Agreement, Seller shall give
Buyer and its authorized representatives, during regular business
hours, at Buyer's sole risk, cost and expense, access, with copying
privileges, to all production, engineering and other technical data and
records, and to all contract, land, title, lease, marketing and
accounting records to the extent such data and records are in Seller's
possession and relate to the Interests, and to such other information
relating to the Interests as Buyer may reasonably request. However,
Seller shall have no obligation to provide Buyer such access to any
data or information which (i) Seller considers proprietary or
confidential or (ii) Seller cannot legally provide Buyer because of
third-party restrictions on Seller. Buyer shall keep all materials and
data obtained confidential until the Closing Date. Any confidentiality
agreement previously executed by Seller and Buyer with respect to the
Interests will continue in force and effect until the Closing Date;
provided, however, that in the event that the transactions contemplated
by this Agreement are not consummated, the confidentiality agreement
shall continue in full force and effect for the period of time set
forth therein.. Buyer shall take all reasonable steps necessary to
ensure that Buyer's authorized representatives comply with the
provisions of this Section 5.1 and any confidentiality agreement in
effect. Upon termination of this Agreement without Closing, and upon
receipt of Seller's written request, Buyer shall return to Seller any
and all materials and data relating to any properties not purchased at
Closing and shall destroy any and all of Buyer's notes and work papers
derived therefrom in accordance with the terms of said confidentiality
agreement.
5.2 Physical and Environmental Inspection. After the execution of this
Agreement, Seller will permit Buyer and its authorized representatives
reasonable physical access to the Leases and Equipment at times
approved by Seller and at Buyer's sole cost, risk and expense for the
purposes of inspecting the same, conducting such tests, examinations,
investigations and assessments as may be reasonable and necessary or
appropriate to evaluate the physical and environmental condition of the
Leases and Equipment. Buyer shall repair any damage to the Interests
resulting from its inspection and shall defend and indemnify Seller and
Seller's affiliates, partners, members, shareholders, directors,
officers, agents, representatives, consultants, advisers, contractors,
successors and assigns (collectively, the "Seller Indemnified Group")
from any and all Claims (as hereinafter defined) arising from Buyer
inspecting and observing the Interests, including, without limitation,
(i) Claims for personal injury to or death of employees of Buyer, its
agents, contractors, subcontractors or invitees and/or damage to the
property of Buyer or others acting on behalf of Buyer, REGARDLESS OF
WHETHER SUCH CLAIMS ARE CAUSED BY THE CONCURRENT NEGLIGENCE OF SELLER
OR THE CONDITION OF THE INTERESTS, and (ii) Claims for personal injury
to or death of employees of Seller or third parties and damage to the
property of Seller or third parties, to the extent caused by the
negligence, gross negligence or willful misconduct of Buyer. As used in
this Agreement, the term "Claims" means any and all losses,
liabilities, damages, obligations, expenses, fines, penalties, costs,
claims, causes of action and judgments, including, without limitation,
reasonable attorneys fees, court costs, and other reasonable costs of
litigation resulting from the defense of any claim or cause of action
within the scope of the indemnities in this Agreement for (i) breaches
of contract; (ii) loss or damage to property, injury to or death of
persons, and other tortious injury; and (iii) violations of applicable
laws, rules, regulations, orders; or (iv) any other legal right or duty
actionable at law or equity.
5.3 Environmental Assessment.
5.3.1 Inspection and Test Results. Buyer agrees to provide to
Seller a copy of any and all environmental inspections and
assessments, including, without limitation, all written
reports, data and conclusions. Buyer and Seller shall keep
any and all data or information acquired by all such
examinations and results of all analysis of such data and
information strictly confidential and not disclose same to
any person or agency without the prior written approval of
the other party, unless required to do so by applicable law
or by the order of a Court or regulatory agency.
Notwithstanding the foregoing, Buyer may disclose the results
of any such environmental inspections and assessments to its
employees, agents and representatives that have a need to
review same in order to conclude the necessary environmental
review and assessment under this Agreement, provided that
Buyer hereby agrees to enter into agreements with such
employees, agents and representatives binding such persons to
the same confidentiality obligations as are contained herein.
The foregoing obligation of confidentiality shall survive for
five (5) years after the Closing and will survive the
termination of this Agreement without closing.
5.3.2 Notice of Environmental Conditions. Prior to Closing, Buyer
will review the inspection and testing results for the
Interests and determine based on those results if any adverse
environmental conditions exist with respect to the Interests.
No later than 5 business days before Closing, Buyer will
notify Seller in writing of any adverse environmental
conditions with respect to the Interests, and the estimated
value of any such environmental condition. The value of an
environmental condition for purposes of Section 5.3.3 will be
the estimated amount of all costs and Claims associated with
the remediation or correction of the environmental condition,
as determined by the agent or representative of Buyer that
conducted the environmental assessment and as agreed upon by
Buyer and Seller.
5.3.3 Rights and Remedies for Environmental Conditions.
(i) With respect to any environmental condition affecting
the Interests, Buyer may (a) request Seller to cure the
environmental condition, but Seller will have no
obligation to cure the environmental condition, or (b)
request an adjustment in the Sale Price equal to the
estimated value of the environmental condition as
mutually agreed by Seller and Buyer; provided, however,
that in the event that the cost to cure the
environmental condition or the amount of the adjustment
to the Sale Price as a result of any environmental
condition is greater than the Allocated Value of the
Interest subject to the environmental condition, then
Seller, in its sole discretion, may elect to retain such
Interest and the Sale Price shall be reduced by the
amount of the Allocated Value for such Interest and if
Seller makes such election, then Buyer, in its sole
discretion, may elect to include such Interest in the
transactions contemplated by this Agreement and the Sale
Price shall only be reduced by the amount of the
Allocated Value for such Interest. If Seller and Buyer
are unable to agree no later than 3 business days before
Closing on curative measures or the amount of an
adjustment to the Sale Price with respect to any such
environmental condition, the Parties will have the
rights and remedies set forth in subpart (ii) of this
Section 5.3.3.
(ii) The rights and remedies of the Parties with respect to
environmental conditions on the Interests on which the
Parties cannot agree on curative measures or a Sale
Price adjustment are as follows:
(a) If the collective value of the environmental
conditions is less than 1% of the Sale
Price, the Parties will be obligated to
proceed with Closing as to all of the
Interests without curative action by Seller
with respect to such environmental
conditions and without an adjustment to the
Sale Price.
(b) If the collective value of the environmental
conditions equals or exceeds 1% of the Sale
Price, the Parties may refer the matter to a
mutually agreed upon third party expert for
determination. The determination of such
expert shall be binding on the Parties, and
the Sale Price will be reduced by the
positive difference, if any, between the
determined value of the environmental
conditions and one percent (1%) of the Sale
Price. The Parties will be obligated to
proceed with Closing, subject to the
termination rights of the Parties under
Article 6 and subpart (d) of this Section
5.3.3.
(c) If the collective value of the environmental
conditions equals or exceeds 1% of the Sale
Price, and the Parties agree with respect to
the existence of such conditions and the
value thereof, the Sale Price will be
reduced by the positive difference, if any,
between the agreed upon value of the
environmental conditions and one percent
(1%) of the Sale Price, and the Parties will
be obligated to proceed with Closing,
subject to the termination rights of the
Parties under Article 6 and subpart (d) of
this Section 5.3.3.
(d) If the collective value of the environmental
conditions equals or exceeds 25% of the Sale
Price, either Party may terminate this
Agreement, and neither party will have any
further obligation to conclude the transfer
of the Interests under this Agreement.
However, the right of termination under this
subpart (d) must be exercised no later than
3 business days before Closing, after which
both Parties will be deemed to have waived
their termination rights under this subpart
(d) in connection with environmental
conditions.
(iii) Subject to any agreement by Buyer and Seller to cure an
environmental condition and notwithstanding any
agreement by Buyer and Seller to reduce the Sale Price
due to an environmental condition with respect to the
Interests, or any other provision of this Agreement,
Buyer at Closing will assume all environmental
obligations with respect to the Interests, as provided
in Section 8.2.
5.4 Government Approvals.
5.4.1 Title Pending Governmental Approvals. Until Seller and Buyer
obtain any necessary federal, state and Indian approvals of
the assignment of Leases or other Interests requiring such
approval, Seller will continue to hold record title to such
Leases or other Interests as nominee for Buyer. If Seller
continues to operate the Interests pending such approval,
Seller and Buyer will have the rights and obligations with
respect to the operation of the Interests set forth in
Section 11.3.
5.4.2 Denial of Required Government Approvals. If any required
approval is finally denied, Seller shall pay Buyer the
Allocated Value of the affected Leases or other affected
Interests, and Buyer shall immediately reassign such Leases
or other Interests to Seller and Seller shall reimburse Buyer
for (i) an amount equal to its operating expenses minus its
revenues related to the affected Interests and (ii) other
expenditures incurred by Buyer on such affected Interests
incurred between the Effective Date and the date of such
reassignment.
5.5 Preferential Rights and Consents to Assign.
5.5.1 Notices to Holders.
(i) If any of the Interests is subject to third party
preferential purchase rights, rights of first
refusal, or similar rights (collectively,
"Preferential Rights"), or third party consents to
assign, lessor's approvals or similar rights
(collectively, "Consents"), Seller shall use
reasonable efforts to (1) notify the holders of the
Preferential Rights and consents that it intends to
transfer the Interests to Buyer, (2) provide them
with any information about the transfer of the
Interests to which they are entitled, and (3) in the
case of Consents, ask the holders of the Consents to
consent to the assignment of the affected Interests
to Buyer.
(ii) Seller shall promptly notify Buyer whether (a) any
Preferential Rights are exercised, waived or deemed
waived, (b) any Consents are denied, or (c) the
requisite time periods have elapsed without any
Preferential Rights being exercised or Consents being
received. Seller will not be liable to Buyer if any
Preferential Rights are exercised, or any Consents
are denied, except as expressly provided in this
Section 5.5.
5.5.2 Remedies Before Closing . If Seller is unable before Closing
to obtain the required Consents (other than Consents
ordinarily obtained after closing and Consents on hydrocarbon
sales, purchase, gathering, transportation, treating,
marketing, exchange, processing and fractionating agreements)
and waivers of all Preferential Rights, then:
(i) Seller and Buyer by agreement may proceed with
Closing as to the Interests affected by the unwaived
Preferential Rights or unobtained Consents, subject
to the further obligations of Seller and Buyer set
forth in Section 5.5.3 in the event that such
Preferential Rights are validly exercised or such
Consents are ultimately denied after Closing;
(ii) Either Seller or Buyer may exclude the affected
portion of the Interests from the transaction under
this Agreement, adjust the Sale Price by the
Allocated Value of the excluded Interests, and
proceed with Closing as to the rest of the Interests;
or
(iii) In addition to the remedies set forth in subparts (i)
and (ii) of this Section 5.5.2, Buyer may exercise
the termination rights set forth in Article 6.
5.5.3 Remedies After Closing.
(i) Preferential Rights. After Closing, if (a) any holder
of Preferential Rights alleges improper notice of
sale, or (b) Seller or Buyer discover, or any third
party alleges, the existence of additional
Preferential Rights, Seller and Buyer will attempt to
obtain waivers of those discovered or alleged
Preferential Rights. If Seller and Buyer are unable
to obtain waivers of such Preferential Rights, or the
third party ultimately establishes and exercises its
rights, and such exercise denies the Interests to
Buyer, then Buyer and Seller will rescind the
assignment of the affected Interests under this
Agreement, after which Seller shall pay Buyer the
Allocated Value of the affected Interests, and Buyer
shall immediately reassign the affected Interests to
the Seller. Rescission of the assignment of the
affected Interests and receipt of the Allocated Value
of the affected Interests shall be Buyer's sole
remedy if undiscovered or alleged Preferential Rights
are exercised or Consents are denied after Closing;
provided, however, that Seller shall reimburse Buyer
for (i) an amount equal to its operating expenses
minus its revenues relating to the affected Interests
and (ii) other expenditures incurred by Buyer on such
affected Interests between the Effective Date and the
date of such rescission.
(ii) onsents. After Closing, if Seller or Buyer discover,
or any third party alleges, the existence of
additional Consents, Seller and Buyer will attempt to
obtain waivers of those discovered or alleged
Consents. If Seller and Buyer are unable to obtain
waivers of such Consents , and such unwaived Consents
deny the affected Interests to Buyer, then Seller and
Buyer will rescind the assignment of the affected
Interests under this Agreement, after which Seller
shall pay Buyer the Allocated Value of the affected
Interests, and Buyer shall immediately reassign the
affected Interests to the Seller. Rescission of the
assignment of the affected Interests and receipt of
the Allocated Value of the affected Interests shall
be Buyer's sole remedy if undiscovered or alleged
Preferential Rights are exercised or Consents are
denied after Closing; provided, however, that Seller
shall reimburse Buyer for (i) an amount equal to its
operating expenses minus its revenues relating to the
affected Interests and (ii) other expenditures
incurred by Buyer on such affected Interests between
the Effective Date and the date of such rescission.
5.6 Title Defects.
5.6.1 Definition of Title Defect. For the purpose of this
Agreement, a "Title Defect" shall mean any material
deficiency other than Permitted Encumbrances (as defined
below) in the Interests or Seller's title to the Interests
which results in:
(i) Seller's title at the Effective Date and at the
Closing Date, as to one or more Interests, being
subject to an outstanding mortgage, deed of trust,
lien or security interest;
(ii) Seller owning less than the net revenue interest
shown on Exhibit A, Schedule I hereto or being
obligated to bear a share of the costs and expenses
of operation greater than the working interest shown
on Exhibit A, Schedule I hereto without a
corresponding increase in net revenue interest; or
(iii) Seller's rights and interests being reduced by virtue
of the exercise by a third party reversionary or
back-in interest, farmout of other than wellbore
rights, or other similar right not reflected on
Exhibit A, Schedule I.
(iv) Permitted Encumbrances shall mean:
A. liens or other security interests for (i) taxes
which are not yet delinquent, (ii) mechanic's or
materialmen's liens (or other similar liens) or a
lien under an operating or similar agreement to
the extent the same relates to expenses incurred
which are not yet delinquent or will be released
prior to Closing; and
B. imperfections in title, which, if asserted, would
otherwise cause a Title Defect and which are
normally waived by persons engaged in the oil and
gas business with knowledge of all the facts when
purchasing producing properties.
Neither the environmental condition of the Interests nor any
failure to obtain Consents to the transfer of Contracts will
be considered a Title Defect under this Section 5.6.
5.6.2 Notice of Title Defects. Upon the discovery of a Title Defect
by Buyer, Buyer shall immediately notify Seller in writing.
Any such notice by Buyer shall include appropriate evidence
and documentation to substantiate its position and shall be
delivered to Seller on or before five (5) days prior to
Closing Date (the "Title Claim Date"). After the Title Claim
Date, the Interests shall be deemed to be free of Title
Defects except for those for which notice has been timely
provided as set forth herein. Any Title Defect which is not
disclosed to Seller on or before the Title Claim Date shall
conclusively be deemed waived by Buyer for all purposes.
5.6.3 Right to Cure Title Defect. If Buyer notifies Seller of a
Title Defect as provided in Section 5.6.2, Seller shall have
the right but not the obligation to cure the Title Defect. If
Seller chooses to cure a Title Defect, Seller must cure the
Title Defect before Closing, unless the Parties otherwise
agree in writing.
5.6.4 Remedies for Uncured Title Defects. If Buyer notifies Seller
of any Title Defect as provided in Section 5.6.2, and Seller
refuses or is unable to cure the Title Defect before Closing,
then Buyer and Seller will have the following rights and
remedies with respect to the uncured Title Defects, unless
the Parties otherwise agree in writing.
(i) Buyer may waive the uncured Title Defect and proceed
with Closing.
(ii) If an uncured, unwaived Title Defect reduces the
value of the Interest affected by an amount less than
one percent (1%) of the Allocated Value of that
Interest, Seller and Buyer will be obligated to
proceed with Closing as to the affected Interest
without adjustment to the Sale Price.
(iii) If an uncured, unwaived Title Defect reduces the
value of the Interest affected by an amount equal to
or more than one percent (1%) of the Allocated Value
of the affected Interest, the Parties will attempt to
agree on the value of the Title Defect. If the
Parties are unable to agree as to whether the Title
Defect exists or the value thereof, Seller and Buyer
may refer the matter to a mutually agreeable third
party expert for determination. The determination of
such expert shall be binding on the Parties. Seller
and Buyer shall reduce the Sale Price by the value
agreed upon by the Parties or determined by the
expert (as applicable) if the determined value
exceeds one percent (1%) of the Allocated Value of
the affected Interest and proceed with Closing.
(iv) If an uncured, unwaived Title Defect reduces the
value of the affected Interest by an amount equal to
or more than fifty percent (50%) of the Allocated
Value of that Interest, Seller or Buyer, in its sole
discretion, may exclude the affected Interest from
the transaction under this Agreement, in which case
Seller and Buyer will adjust the Sale Price by the
Allocated Value of the excluded Interest, and proceed
with Closing as to the balance of the Interests.
5.7 Casualty Losses and Government Takings.
5.7.1 Notice of Casualty Losses and Government Takings. If, prior to
the Closing Date, all or part of the Interests is damaged or
destroyed by fire, flood, storm or other casualty ("Casualty
Loss"), or is taken in condemnation or under the right of
eminent domain, or if proceedings for such purposes shall be
pending or threatened ("Government Taking"), Seller must
promptly notify Buyer in writing of the nature and extent of
the Casualty Loss or Government Taking and Seller's estimate
of the cost required to repair or replace that portion of the
Interests affected by the Casualty Loss or value of the
Interests taken by the Government Taking.
5.7.2 Remedies for Casualty Losses and Government Takings. With
respect to each Casualty Loss to or Government Taking of the
Interests, Seller and Buyer will have the following rights and
remedies.
(i) If the agreed cost to repair or replace the portion
of the Interests affected by the Casualty Loss or the
agreed value of the Interests taken in any Government
Taking is less than twenty-five percent (25%) of the
Allocated Value of the Interests affected, the Sale
Price will be adjusted by the agreed cost of the
Casualty Loss or the agreed value of the Interests
taken by the Government Taking, and the Parties will
proceed with Closing.
(ii) If the agreed cost to repair or replace the portion
of the Interests affected by the Casualty Loss or the
agreed value of the Interests taken in any Government
Taking equals or exceeds twenty-five percent (25%) of
the Allocated Value of the Interests affected, either
Seller or Buyer, in its sole discretion, may exclude
the affected Interest from the transaction under this
Agreement, in which case Seller and Buyer will adjust
the Sale Price by the Allocated Value of the excluded
Interest and proceed with Closing as to the balance
of the Interests, or Buyer may elect to adjust the
Sale Price by the agreed cost of the casualty loss or
the agreed value of the Interests taken by the
government taking, and the parties will proceed with
closing.
(iii) In addition to the remedies set forth in subparts (i)
and (ii) of this Section 5.7.2, Seller and Buyer will
have the termination rights in connection with
Casualty Losses and Government Takings as set forth
in Section 5.8.
5.7.3 Insurance Proceeds and Settlement Payments. If Seller and
Buyer adjust the Sale Price of the Interests due to a
Casualty Loss or Government Taking, and proceed with Closing,
Seller will be entitled to retain (i) all insurance proceeds
payable to Seller with respect to any such Casualty Loss,
(ii) all sums paid to Seller by third parties by reason of
any such Casualty Loss, and (iii) all compensation paid to
Seller with respect to any such Government Taking.
5.7.4 Exclusion of Ordinary Depreciation and Depletion. Buyer will
assume all risk and loss with respect to any change, between
the Effective Date and the Closing Date, in the condition of
the Interests resulting from production of Hydrocarbons
through normal depletion (including the watering-out or sand
infiltration of any well) and the depreciation of personal
property through ordinary wear and tear. None of the events
or conditions set forth in this Section 5.7.4 will be
considered a Casualty Loss with respect to the Interests, nor
will they be cause for any other reduction in the Sale Price,
or give rise to any right to terminate this Agreement.
5.8 Termination Due to Impairments to the Interests.
5.8.1 Right to Terminate.
(i) If, on the Closing Date, the Allocated Value of all
Interests to be excluded from the transaction
contemplated by this Agreement due to unwaived,
uncured Title Defects, unwaived Preferential Rights,
unobtained Consents or environmental conditions on
the Interests exceeds twenty-five percent (25%) of
the total Allocated Value of all of the Interests,
either Buyer or Seller may terminate this Agreement,
and neither Party will have any further obligation to
conclude the transfer of the Interests under this
Agreement.
(ii) If, on or before the Closing Date, a Casualty Loss or
Government Taking has occurred with respect to the
Interests, and (a) Buyer and Seller have been unable
to agree on the cost of the Casualty Loss or the
value of the Interests taken in any Government
Taking, or (b) the agreed cost to repair or replace
the portion of the Interests affected by the Casualty
Loss or the agreed value of the Interests taken in
any Government Taking equals or exceeds 25% of the
total Allocated Value of all of the Interests, then
either Buyer or Seller may terminate this Agreement,
and neither party will have any further obligation to
conclude the transfer of the Interests under this
Agreement.
5.8.2 Notice of Termination. Any Party exercising a right of
termination under this Section 5.8 must notify the other
Party in writing no later than 3 business days before the
Closing Date of its election to terminate this Agreement.
ARTICLE 6. TERMINATION AND EFFECT OF TERMINATION.
6.1 Right to Terminate. If, on the Closing Date, the Sale Price is to be
reduced as a result of uncured Title Defects and/or Casualty Losses or
Government Takings by an aggregate amount equal to or greater than
fifty percent (50%) of the total unadjusted Sale Price, Seller or Buyer
shall have the right, in its sole discretion, to terminate this
Agreement, and thereafter neither Party will have any further rights,
duties or obligations under this Agreement, except for the return of
the Earnest Money to Buyer. Either Seller or Buyer may exercise this
right by notifying the other party of its election to terminate this
Agreement in writing no later than three (3) business days before the
Closing Date.
6.2 Effect of Termination. The following provisions shall apply in the
event this Agreement is terminated prior to the Closing Date.
6.2.1 Termination by Agreement. If this Agreement is terminated by
the mutual agreement of the Seller and the Buyer and not as
the result of the failure of either party to perform its
obligations hereunder, such termination shall be without
liability of any party to this Agreement or any shareholder,
director, officer, employee, agent or representative of such
party, and the Seller shall return the Earnest Money (without
interest) to the Buyer promptly and neither Party will have
any further rights, duties or obligations.
6.2.2 Termination as a Result of Buyer's Breach. If this Agreement
is terminated (i) by Seller pursuant to Section 7.3 hereof or
(ii) as a result of the failure of Buyer to perform its
obligations hereunder, then Seller shall be entitled to
retain the Earnest Money as liquidated damages and as
reimbursement for Seller's out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by
this Agreement. The parties hereby acknowledge that the
extent of damages to Seller occasioned by such breach or
default or failure to proceed by Buyer would be impossible or
extremely impractical to ascertain and that the amount of the
Earnest Money is a fair and reasonable estimate of such
damage.
6.2.3 Termination as a Result of Seller's Breach. If this Agreement
is terminated as a result of the failure of Seller to satisfy
the conditions to closing of Buyer set forth in section 7.1,
then Seller shall return the Earnest Money (with interest at
the prime rate of interest of Chase Bank) promptly, and
neither Seller nor Buyer shall have any further rights,
duties or obligations under this Agreement, except that
Seller shall reimburse Buyer for all necessary and reasonable
out of pocket expenses paid to unaffiliated third parties and
incurred directly in the negotiation of this Agreement and
the conducting of due diligence up to but not in excess of
One Million Dollars ($1,000,000).
6.2.4 Failure of Seller to Close. In the event that (i) all of
Buyer's conditions to closing set forth in Section 7.1 have
been satisfied or waived in writing by Buyer and (ii) all of
Seller's conditions to closing set forth in Section 7.2 have
been satisfied or waived in writing by Seller and (iii)
Seller fails to consummate the transactions contemplated by
this Agreement, then Buyer's sole and exclusive remedy shall
be (x) the return of the Earnest Money (with interest at the
prime rate of interest of Chase Bank) and (y) the payment by
Seller to Buyer of $10,000,000.00 in recognition of the
significant expenditure of executive time and resources
incurred by Buyer in connection with the negotiation of this
Agreement and investigation of the transactions contemplated
hereby and in light of the difficulty in calculating the
value of such executive time and resources.
6.2.5 Termination Pursuant to Sections 5.8 and 6.1. If this
Agreement is terminated by either party pursuant to Section
5.8 or 6.1 hereof, then Seller shall return the Earnest Money
(with interest at the prime rate of interest of Chase Bank)
promptly, and neither Party shall have any further rights,
duties or obligations under this Agreement.
ARTICLE 7. CONDITIONS OF CLOSING AND CLOSING.
7.1 Conditions to Closing of Buyer. The obligation of Buyer to close the
transactions contemplated in this Agreement is subject to the
satisfaction of the following conditions.
7.1.1 Representations, Warranties and Covenants. All
representations and warranties of Seller contained in this
Agreement shall be true, correct, and not misleading in all
material respects, and Seller shall have performed and
satisfied in all material respects all agreements and
covenants required by this Agreement to be performed and
satisfied by Seller.
7.1.2 Consents. Seller shall have obtained and delivered to Buyer
all necessary consents for transfer of the Interests, except
those which by their nature cannot be requested or obtained
until after Closing.
7.1.3 Lawsuits and Claims. No suit or other proceeding shall be
pending or threatened before any court or governmental agency
seeking to restrain or prohibit this transaction, or to
declare the transaction illegal, or to obtain substantial
damages in connection with the transaction contemplated
hereby.
7.1.4 Closing as to Wamsutter. Notwithstanding anything to the
contrary set forth in this Agreement, Buyer shall be
obligated to close on the Interests owned by Wamsutter if the
conditions to closing applicable to Wamsutter and the
Interests owned by Wamsutter have been satisfied; provided,
however, to the extent that Abraxas and Wamsutter each own an
interest in the properties included in the Interests owned by
Wamsutter, Wamsutter and Buyer shall agree upon an allocation
of the values between the interests in the properties owned
by Abraxas and Wamsutter and such allocation will be used to
determine the Sale Price to be paid to Wamsutter.
7.2 Conditions to Closing of Seller. The obligation of Seller to close the
transactions contemplated in this Agreement is subject to the
satisfaction of the following conditions.
7.2.1 Representations, Warranties and Covenants. All
representations and warranties of Buyer contained in this
Agreement shall be true, correct, and not misleading in any
and all material respects, and Buyer shall have performed and
satisfied in all material respects all agreements and
covenants required by this Agreement to be performed and
satisfied by Buyer.
7.2.2 Lawsuits and Claims. No suit or other proceeding shall be
pending or threatened before any court or governmental agency
seeking to restrain or prohibit this transaction, or to
declare this transaction illegal, or to obtain substantial
damages in connection with the transaction contemplated
hereby.
7.2.3 Bonds and Insurance. Seller shall have received evidence that
Buyer has in place, effective on or before the Closing Date
and relating to the ownership of the Interests after the
Closing Date (i) all necessary state, federal and local
bonds, and (ii) insurance as is reasonable and customary in
the industry.
7.3 Closing. The Closing ("Closing") shall occur on or before March 31,
2000 at 10:00 a.m. ("Closing Date"), at the offices of Thompson &
Knight LLP, 1200 Smith Street, Suite 3600, Houston, Texas. If the
transaction fails to close by said date for any reason, Seller shall
have the unilateral right and option to either extend the Closing Date
or to terminate the Purchase and Sale Agreement; provided that if
termination is caused by Seller's breach of a material term of this
Agreement, termination shall occur under Section 6.2.3 and if Seller
terminates this Agreement because the transaction fails to close by
said date or termination of this Agreement is caused by Buyer's breach
of any material term of this Agreement, termination shall occur under
Section 6.2.2.
7.4 Actions to Occur at Closing. At Closing the following actions shall
occur.
7.4.1 Delivery of Assignment. Seller shall execute, acknowledge and
deliver an Assignment and Bill of Sale substantially in the
form and substance of Exhibit D attached hereto and made a
part hereof for all purposes and such other documents and
instruments as may be necessary to effectuate the
transactions contemplated by this Agreement, covering all of
the Interests to be sold pursuant hereto;
7.4.2 Delivery of Sale Price. Buyer shall deliver to Seller by wire
transfer the total Sale Price as adjusted hereunder, subject
to further adjustment after Closing as provided for herein.
7.4.3 Change of Operatorship Forms. Seller and Buyer shall execute
designation of operator forms required by applicable
conservation or regulatory agencies and notices to third
party working interest owners of the change of ownership.
7.4.4 Evidence of Bonds. Buyer shall deliver to Seller evidence of
its appropriate state and federal plugging bond, surety
letter, or letter of credit acceptable to such authority to
authorize Buyer's right to conduct operations.
7.4.5 Possession of the Interests. Seller shall, subject to the
terms of any applicable operating agreements and to the
provisions hereof, deliver to Buyer exclusive possession of
the Interests.
7.5 Post-Closing Obligations. Seller and Buyer shall have the following
post-closing obligations:
7.5.1 Delivery of Records. Seller shall provide Buyer, promptly
after Closing, at Buyer's sole expense, any maps, reports and
other written material relating to the Interests, including
without limitation, lease files, property records, contract
files, operations files, copies of tax and accounting records
and files (other than Seller's income tax returns), well
files, core analyses and hydrocarbon analyses, well logs, mud
logs, core data, field studies, seismic, geological,
geochemical or geophysical data or interpretations thereof
("Records"); however, Seller shall have no obligation to
furnish Buyer (i) Seller's income tax returns, or (ii) any
data or information which Seller considers confidential or
proprietary or which Seller cannot provide Buyer because of
third-party restrictions. Buyer agrees to maintain the
Records and allow Seller reasonable access thereto for a
period of six (6) years after Closing. Buyer shall notify
Seller before destroying any Records prior to the expiration
of the six (6) year period following closing.
7.5.2 Recording and Filing. Buyer, within thirty (30) days after
the Closing Date, shall (i) record all assignments,
conveyances and other instruments that must be recorded to
effectuate the transfer of the Interests, (ii) file for
approval with the applicable governmental and Tribal agencies
all state, federal and Indian transfer and assignment
documents for the Interests, and (iii) file with the
applicable governmental and Tribal agencies all applications
and other documents required for the transfer of permits and
operatorship of the Interests. Buyer shall provide Seller a
recorded copy of each assignment, conveyance and other
recorded instrument, and approved copies of the state and
federal transfer and assignment documents, if any, as soon as
they are available.
7.5.3 Change of Operator Requirements. Buyer shall comply with all
applicable laws, ordinances, rules and regulations, orders,
terms of permits and authorizations of any governmental or
Tribal body which may have jurisdiction with respect to the
Interests to be transferred hereunder (including, without
limitation, the filing with such governmental and Tribal
bodies of any and all compliance reports, notices, or other
compliance documents which are due after the Closing Date
regardless of the period covered by such reports, notices or
documents) and shall promptly obtain and maintain all permits
and bonds required by public authorities in connection with
the Interests.
7.5.4 Further Assurances. Seller and Buyer agree to execute and
deliver from time to time such further instruments and do
such other acts as may be reasonably necessary to effectuate
the purposes of this Agreement.
ARTICLE 8. ASSUMPTION OF OBLIGATIONS.
8.1 Ownership and Operations. Upon and after Closing, Buyer shall assume
and perform all the rights, duties, obligations and liabilities of
ownership and operation of the Interests, including without limitation:
(i) all of Seller's express and implied obligations and covenants after
the Effective Date under the terms of the Leases, the Related Contracts
and all other orders and contracts to which the Interests are subject;
(ii) responsibility for all royalties, overriding royalties, production
payments, net profits obligations, rentals, shut-in payments and other
burdens or encumbrances to which the Interests are subject accruing
after the Effective Date; (iii) responsibility for compliance with all
applicable laws, ordinances, rules and regulations pertaining to the
Interests, and the procurement and maintenance of all permits required
by public authorities in connection with the Interests after the
Effective Date; and (iv) all other obligations assumed by Buyer under
this Agreement. With respect to (i) any part of the Interests for which
Buyer is not duly elected operator, or (ii) any non-operating interests
in the Interests being transferred to Buyer under this Agreement, Buyer
shall assume full responsibility and liability for that portion of the
foregoing rights, duties, obligations and liabilities for which
non-operators are responsible. Seller remains responsible for all
costs, expenses and liabilities incurred by Seller in connection with
the ownership or operation of the Interests before the Effective Date,
except (i) those for which Buyer indemnifies Seller, (ii) those arising
out of specific matters or Claims for which Buyer has received an
adjustment to the Sale Price or (iii) those which Buyer assumes in this
Agreement.
8.2 Plugging and Abandonment Obligations. From and after the Effective
Date, Buyer assumes full responsibility and liability for the following
obligations related to the Interests (the "Plugging and Abandonment
Obligations"): (i) plugging, replugging and abandoning the wells
located on the Interests and any wells drilled after the Effective
Date; (ii) removing and disposing of all structures and equipment
located on or comprising part of the Interests; (iii) the necessary and
proper capping and burying of all associated flow lines located on or
comprising, part of the Interests; (iv) restoring the leasehold
premises of the Interests, both surface and subsurface, to the
condition they were in before commencement of oil and gas operations,
as may be required by applicable laws, regulation or contract; and (v)
any necessary disposal of Interests contaminated by naturally occurring
radioactive material ("NORM"). Buyer's obligations under this Section
8.2 include without limitation obligations arising from contractual
requirements and demands made by authorized regulatory bodies or
parties claiming a vested interest in the Interests. Buyer shall obtain
a performance bond, or increase its existing performance bond, to cover
its obligations under this Section 8.2 in at least the minimum amount
required by state or federal law, rule or regulation. Buyer shall
conduct all plugging, replugging, abandonment, removal, disposal and
restoration operations in a good and workmanlike manner and in
compliance with all applicable laws and regulations. With respect to
any non-operating interests in the Interests being transferred to Buyer
under this Agreement, Buyer shall assume full responsibility and
liability, from and after the Effective Date, for that portion of the
Plugging and Abandonment Obligations for which non-operators are
responsible. Notwithstanding anything to the contrary contained herein,
Seller shall be responsible for all costs of such plugging and other
operations actually incurred prior to the Effective Date.
8.3 Environmental Obligations. From and after the Effective Date, except
for the Excluded Environmental Obligations (defined below), Buyer
assumes full responsibility and liability for the following
occurrences, events and activities on or related to the Interests (the
"Environmental Obligations"), whether arising before or after the
Effective Date: (i) environmental pollution or contamination, including
pollution of the soil, groundwater or air; (ii) underground injection
activities and waste disposal onsite or offsite; (iii) cleanup
responses, and the cost of remediation, control or compliance with
respect to surface and subsurface pollution caused by spills, pits,
ponds or lagoons; (iv) failure to comply with applicable land use,
surface disturbance, licensing or notification requirements; (v)
violation of environmental or land use laws, rules, regulations,
demands or orders of appropriate state or federal regulatory agencies.
With respect to any non-operating interests in the Interests being
transferred to Buyer under this Agreement, Buyer agrees to assume full
responsibility and liability, from and after the Effective Date, for
that portion of the Environmental Obligations for which non-operators
are responsible. The Environmental Obligations assumed by Buyer shall
not include any Environmental Obligations (i) for occurrences, events
and activities on or related to the Interests which arise before the
Effective Date, (ii) the liability for which is asserted by third
parties unaffiliated with Buyer and (iii) the liability for which is
asserted in writing to Seller on or before the date nine (9) months
after the Effective Date (such Environmental Obligations are herein
called the "Excluded Environmental Obligations").
ARTICLE 9. INDEMNITIES AND INSURANCE.
9.1 Application of Indemnities. Unless this Agreement expressly provides to
the contrary, the indemnities set forth in this Agreement apply
regardless of whether: (i) the indemnified party (or its employees,
agents, contractors, successors, or assigns) causes, in whole or part,
an indemnified Claim; (ii) an indemnified Claim arises out of or
results from the indemnified party's (or its employees, agents,
contractors, successors or assigns) sole or concurrent negligence; or
(iii) the indemnified party (or its employees, agents, contractors,
successors or assigns) is deemed to be strictly liable, in whole or
part, for an indemnified Claim. Notwithstanding the previous sentence,
a party's obligation to indemnify and hold the other party harmless
under this Agreement does not apply to the extent such obligation
relates to a loss or liability resulting from the gross negligence or
willful misconduct of the party with the right to be indemnified and
held harmless. All indemnities set forth in this Agreement in favor of
the Seller, shall extend to the Seller Indemnified Group and cover the
acts and omissions of the Seller Indemnified Group, and if in favor of
the Buyer, shall extend to the officers, directors, employees,
affiliates, contractors, successors and assigns of the Buyer (the
"Buyer Indemnified Group"), and cover the acts and omissions of the
Buyer Indemnified Group. With respect to any Claim, the indemnified
party shall have the right, but not the obligation, to participate
fully in the Defense of the Claim.
9.2 Buyer's Indemnity. From and after the Closing Date, Buyer shall
indemnify, defend and hold the Seller Indemnified Group harmless from
and against any and all Claims caused by, resulting from and incident
to: (i) Buyer's ownership or operation of the Interests after the
Effective Date, including, without limitation, the obligations assumed
by Buyer in Section 8.1; (ii) all Plugging and Abandonment Obligations
arising before or after the Effective Date as provided in Section 8.2;
(iii) all Environmental Obligations, other than any Excluded
Environmental Obligations, whether arising before or after the
Effective Date; (iv) Buyer's disbursement of production proceeds from
the Interests accruing after the Effective Date, including suspended
proceeds; (v) any obligations for broker's fees incurred by Buyer in
connection with the purchase of the Interests; (vi) any failure by
Buyer to comply with applicable laws, ordinances, rules and regulations
pertaining to the Interests, and procure and maintain permits required
by public authorities in connection with the Interests; (vii) any
violation by Buyer of state or federal security laws, or Buyer's
dealings with its partners, investors, financial institutions and other
third parties with respect to this Agreement, (viii) any oil and gas
production imbalances associated with the Interests the Buyer assumes
pursuant to Section 12.17, and (ix) Buyer's operation of any Interest
that is reconveyed or reassigned to Seller pursuant to Sections 5.4.2
or 5.5.3(ii) due to failure to obtain Consents or government approvals.
9.3 Seller's Indemnity. Seller shall indemnify, defend and hold the Buyer
Indemnified Group harmless from and against any and all Claims caused
by, resulting from or incidental to: (i) Seller's ownership or
operation of the Interests before the Effective Date, except to the
extent such obligations are assumed by Buyer in Article 8 and Section
9.2 ; (ii) Seller's disbursement of production proceeds from the
Interests accruing before the Effective Date; (iii) any failure by
Seller to comply with applicable laws, ordinances, rules and
regulations pertaining to the Interests (exclusive of Environmental
Obligations), and procure and maintain permits required by public
authorities in connection with the Interests for periods prior to the
Effective Date, and (iv) any Excluded Environmental Obligation. The
indemnity set forth above pursuant to Section 9.3(i), 9.3(iii) and
9.3(iv) shall survive for a period of two (2) years from and after the
Effective Date. The indemnity set forth in Section 9.3(ii) shall
survive for the applicable statute of limitations, if any.
Notwithstanding anything to the contrary set forth in this Agreement,
Seller shall have no liability to Buyer or the Buyer Indemnified Group
or obligation to indemnify Buyer or the Buyer Indemnified Group for any
specific matter or Claim for which Buyer has received an adjustment to
the Sale Price including, without limitation, any adjustment pursuant
to Sections 2.2, 2.3, 5.3.3, 5.4.2, 5.5.2, 5.5.3, 5.6.4, 5.7.2 and
5.8.1. Notwithstanding anything to the contrary set forth in this
Agreement, Seller's and the Seller Indemnified Group's aggregate
liability for any Claims pursuant to this Section 9.3 shall not exceed
$10,000,000.00.
9.4 NORM. BUYER ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT OIL AND GAS
PRODUCING FORMATIONS CAN CONTAIN NATURALLY OCCURRING RADIOACTIVE
MATERIAL (NORM). SCALE INFORMATION OR SLUDGE DEPOSITS CAN CONCENTRATE
LOW LEVELS OF NORM ON EQUIPMENT AND OTHER PROPERTY. SOME OR ALL OF THE
EQUIPMENT, MATERIALS AND OTHER PROPERTY SUBJECT TO THIS AGREEMENT MAY
HAVE LEVELS OF NORM ABOVE BACKGROUND LEVELS. A HEALTH HAZARD MAY EXIST
IN CONNECTION WITH THIS EQUIPMENT, MATERIALS AND OTHER PROPERTY.
THEREFORE, BUYER MAY NEED TO FOLLOW SAFETY PROCEDURES WHEN HANDLING
THIS EQUIPMENT, AND OTHER PROPERTY. Buyer shall indemnify, defend and
hold Seller harmless from and against any and all Claims (including
without limitation cleanup and disposal costs) arising out of the
existence of NORM on any Interests transferred to Buyer under this
Agreement.
9.5 Limitations on Liabilities. 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 (i)
any breach, misrepresentation or noncompliance with respect to any
representation, warranty, covenant or obligation if such breach,
misrepresentation or noncompliance shall have been waived by the other
party, (ii) any misrepresentation or breach of warranty if such other
party had knowledge of the relevant facts at or before Closing or (iii)
any misrepresentation or breach of warranty if such other party should
have known, from the public records of the relevant facts at or before
Closing. Buyer covenants and agrees that it shall notify Seller of any
inaccuracy in any of Seller's representations and warranties set forth
in this Agreement discovered by Buyer during the due diligence process.
ARTICLE 10. TAXES AND EXPENSES.
10.1 Recording and Transfer Expenses. Buyer shall pay all costs of recording
and filing (i) the assignments delivered hereunder for the Interests,
(ii) all state, federal and Indian transfer and assignment documents,
(iii) all applications and other documents required for the transfer of
permits and operatorship of the Interests, and (iv) all other
instruments.
10.2 Ad Valorem, Real Property and Personal Property Taxes. All Ad Valorem
Taxes, Real Property Taxes, Personal Property Taxes, and similar
obligations ("Property Taxes") on the Interests are Seller's obligation
for periods before the Effective Date and Buyer's obligation for
periods on and after the Effective Date. If Property Taxes for the
current year have not been assessed and paid as of the Closing Date,
the Buyer shall file all required reports and returns incident to the
Property Taxes and pay the Property Taxes for the current tax year and
subsequent periods. The Seller will reimburse the Buyer promptly for
the Seller's proportionate share of these taxes, prorated as of the
Effective Date, upon receipt of evidence of the Buyer's payment of the
taxes. If Property Taxes for the current tax year have been assessed
and paid as of the Closing Date, the Buyer will reimburse the Seller
for its proportionate share of these taxes, prorated as of the
Effective Date, as a closing adjustment to the Sale Price, as provided
in Section 2.2 of this Agreement.
10.3 Severance Taxes. Seller shall bear and pay all severance or other taxes
measured by Hydrocarbon production from the Interests, or the receipt
of proceeds therefrom, to the extent attributable to production from
the Interests before the Effective Date. Buyers shall bear and pay all
such taxes on production from the Interests on and after the Effective
Date. Seller shall withhold and pay on behalf of Buyer all such taxes
on production from the Interests between the Effective Date and the
Closing Date, and the amount of any such payment shall be reimbursed to
Seller as a closing adjustment to the Sale Price pursuant to Section
2.2 hereof. If either Party pays taxes owed by the other, upon receipt
of evidence of payment the nonpaying party will reimburse the paying
Party promptly for its proportionate share of such taxes.
10.4 Tax and Financial Reporting.
10.4.1 IRS Form 8594. If the Parties mutually agree that a filing of
Form 8594 is required, the Parties will confer and cooperate
in the preparation and filing of their respective forms to
reflect a consistent reporting of the Allocated Values of the
Interests.
10.4.2 Financial Reporting. Seller and Buyer agree to furnish to
each other at Closing or as soon thereafter as practicable
any and all information and documents reasonably required to
comply with tax and financial reporting requirements and
audits.
10.4.3 Intangible Drilling Cost Recapture. Seller and Buyer agree to
furnish to each other, at Closing or as soon as practicable
thereafter, data relevant to deductions claimed, pursuant to
Section 263(c) of the Internal Revenue Code of 1986, for
intangible drilling costs related to the Interests, and any
other relevant data to allow each Party to calculate the
carryover intangible drilling costs associated with the
Interests that is subject to potential recapture under
Section 1254(a) of the Internal Revenue Code of 1986.
10.5 Sales and Use Taxes. Buyer shall be responsible for all sales, use and
similar taxes applicable to the transfer of the Interests. If Seller is
required to pay such sales, use or similar taxes on behalf of Buyer,
Buyer will reimburse Seller at Closing for all sale and use taxes due
and payable on the transfer of the Interests to Buyer. Buyer shall
indemnify Seller and hold Seller harmless from any liability,
including, without limitation, penalties, interest and attorneys' fees,
arising out of Buyer's failure to pay Seller at Closing the amount
equal to all state and local taxes payable by Seller on the transfer of
ownership of any tangible personal property.
10.6 Income Taxes. Each Party shall be responsible for its own state and
federal income taxes, if any, as may result from this transaction.
10.7 Incidental Expenses. Each Party shall bear its own respective expenses
incurred in connection with the negotiation and Closing of this
transaction, including its own consultants' fees, attorneys' fees,
accountants' fees, and other similar costs and expenses.
ARTICLE 11. OPERATIONS DURING THE TRANSITION PERIOD.
11.1 Operations by Seller. Seller shall continue to operate that portion of
the Interests for which Seller is the operator during the period
between the Effective Date and 7:00 a.m., local time where the
Interests are located, on the first day of the month following the
month in which Closing occurs, or such other date as Seller and Buyer
may agree in writing or may be required by the applicable operating
agreement (the "Interim Period"). However, Seller will have no
obligation to operate any portion of the Interests after the Interim
Period except as provided for in Section 11.4 of this Agreement. Seller
shall continue to operate the Interests during the Interim Period as a
reasonably prudent operator, in a good and workmanlike manner with due
diligence and dispatch, in accordance with good oilfield practice, and
in compliance with , applicable laws and regulations, and all
applicable lease and operating agreements and other applicable
agreements but in no event shall it have any liability for losses
sustained or liabilities incurred except such as may result from gross
negligence or willful misconduct. Transfer of operations for the
Interests is controlled by the applicable operating agreements and
governmental regulatory requirements. Buyer shall have no indemnity
obligations to Seller arising out of Seller's operations during the
Interim Period.
11.2 Buyer's Approval. In conducting operations during the Interim Period
after the Closing Date, Seller shall, except for emergency action taken
in the face of serious risk of life, property or the environment, (i)
obtain Buyer's prior written approval of all expenditures and proposed
contracts and agreements, or amendments to existing contracts and
agreements relating to the Interests that involve individual
commitments of more than $50,000.00; (ii) consult with and advise Buyer
regarding all material matters concerning the operation, management and
administration of the Interests; and (iii) obtain Buyer's written
approval before voting under any operating, unit, joint venture or
similar agreement. Seller shall notify Buyer of any emergency action
taken, and to the extent reasonably practicable, obtain Buyer's prior
approval of such actions. However, except for emergency action that
must be taken in the face of serious risk of life, property or
environment, Seller will have no obligation to undertake any actions
with respect to the Interests that are not required in the course of
the normal operation of the Interests.
11.3 Operation of Certain Interests After Interim Period. Buyer and Seller
recognize that Seller may remain the record title owner of certain
portions of the Interests after the Interim Period, pending receipt of
government transfer approvals, as provided in Section 5.4.1. If Seller
is required to remain the operator of the affected Interests until the
required approvals are obtained, then Seller will operate the affected
Interests during the period prior to receiving such approvals, as
provided in Sections 11.1 and 11.2.
ARTICLE 12. MISCELLANEOUS.
12.1 Notices. All communications required or permitted under this Agreement
shall be in writing and any communications or delivery hereunder shall
be deemed to have been fully made if actually delivered, or if mailed
by registered or certified mail, postage prepaid, to the address set
forth below:
SELLER
Abraxas Petroleum Corporation
500 North Loop 1604, East
Suite 100
San Antonio, Texas 78232
Attention: Robert Carington
Phone: 210-490-4788
Fax: 210-490-8816
Abraxas Wamsutter L.P.
500 North Loop 1604, East
Suite 100
San Antonio, Texas 78232
Attention: Robert Carington
Phone: 210-490-4788
Fax: 210-490-8816
BUYER
Samson Resources Company
Samson Plaza
Two West Second Street
Tulsa, Oklahoma 74103-3103
Attention: Robert C. Bilger
Phone: 918-591-1297
Fax: 918-591-1711
Copy to: Jack A. Canon,
Senior Vice President/General Counsel
Samson Resources Company
Samson Plaza
Two West Second Street
Tulsa, Oklahoma 74103-3103
Phone: 918-591-1009
Fax: 918-591-1718
12.2 Further Assurance. After 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. However, Buyer shall assume all
responsibility for notifying the purchaser of oil and gas production
from the Interests, and such other designated persons who may be
responsible for disbursing payments for the purchase of such
production, of the change of ownership of the Interests. Buyer shall
take all actions necessary to effectuate the transfer of such payments
to Buyer. After final settlement has been made, additional proceeds
received by or expenses paid by either Buyer or Seller on behalf of the
other party shall be settled by invoicing such Party for expenses paid
or remitting to such other Party any proceeds received.
12.3 Removal of Signs. Seller may either remove its name and signs from the
Seller-operated Interests or require Buyer to do so. Buyer grants
Seller a right of access to the Interests to remove Seller's signs and
name from all wells, facilities and Leases, or to confirm that Buyer
has done so. If Seller's name or signs remain on the Interests after
Closing, Buyer will promptly, but no later than required by applicable
rules and regulations or thirty (30) days after Closing, whichever is
earlier, remove all remaining signs and references to Seller and erect
or install signs complying with applicable rules and regulations,
including signs showing the Buyer as Operator of the Interests.
12.4 Securities Laws. The solicitation of offers and the sale of the
Interests by Seller have not been registered under any securities laws.
Buyer represents that at no time has it been presented with or
solicited by or through any public promotion or any form of advertising
in connection with this transaction. Buyer represents that it intends
to acquire the Interests for its own benefit and account and that it is
not acquiring the Interests with the intent of distributing fractional,
undivided interests that would be subject to regulation by federal or
state securities laws, and that if it sells, transfers, or otherwise
disposes of the Interests or fractional, undivided interests, it will
do so in compliance with applicable federal and state securities laws.
12.5 Due Diligence. Buyer represents that it has performed, or will perform
prior to Closing, sufficient review and due diligence with respect to
the Interests, which includes reviewing well-data, title, and other
files, and performing necessary evaluations, assessments, and other
tasks involved in evaluating the Interests, to satisfy its requirements
completely and to enable it to make an informed decision to acquire the
Interests under the terms of this Agreement.
12.6 Material Factor. Buyer acknowledges that Buyer's representations under
Sections 12.4 and 12.5 are a material inducement to Seller to enter
into this Agreement with, and close the sale to, Buyer.
12.7 Press Release. There shall be no press release or public communication
concerning this purchase and sale by either Party, except as required
by law or with the written consent of the Party not originating said
release or communication. The Parties will endeavor to consult each
other in a timely manner on all press releases required by law.
12.8 Entire Agreement. This instrument states the entire agreement between
the Parties and may be supplemented, altered, amended, modified or
revoked by writing only, signed by all Parties. This Agreement
supersedes any prior agreements between the parties concerning sale of
the Interests, except that any confidentiality agreement shall continue
as provided in Section 5.1 hereof. The headings are for guidance only
and shall have no significance in the interpretations of this
Agreement.
12.9 Assignability. This Agreement and the rights and obligations hereunder
shall not be assignable or delegable by either Party hereto without the
prior written consent of the other Party.
12.10 Survival. Unless expressly limited or otherwise provided in this
Agreement, all of the representations, warranties, and agreements of or
by the Parties hereto shall survive the execution and delivery of the
Assignment and Bill of Sale until nine (9) months after the Effective
Date.
12.11 Tax Deferred Exchange Election By Seller. Seller may, at or before the
Closing, designate in writing one or more properties which Buyer will
acquire and trade to Seller for the Interests (herein collectively
called the "Exchange Property"). In the event Seller has not found a
suitable Exchange Property prior to the Closing, Seller may elect, by
notice to Buyer delivered on or before the Closing Date, to have the
Sale Price paid to a qualified intermediary until Seller has designated
the Exchange Property. The Exchange Property shall be designated by
Seller and acquired by the qualified intermediary within the time
periods prescribed in Section 1031(a)(3) of the Internal Revenue Code
of 1986, as amended (the "Code"), and shall thereupon be conveyed to
Seller. In the event Seller fails to designate and the qualified
intermediary fails to acquire the Exchange Property within such time
periods, the agency or trust shall terminate and the proceeds then held
by the qualified intermediary shall be paid immediately to Seller. The
rights and responsibilities of Seller, Buyer and the qualified
intermediary shall be documented with such agreements containing such
terms and provisions as shall be determined by Seller to be necessary
to accomplish a tax free exchange under Section 1031 of the Code
subject, however, to the limitations on costs and liabilities of Buyer
set forth below. If Seller makes a tax deferred exchange election,
Buyer shall not be obligated to pay any additional costs or incur any
additional obligations in the acquisition of the Interests. Seller
shall indemnify, defend and hold Buyer harmless from and against any
and all Claims to the extent same are the result of or are attributable
to (i) any transactions undertaken by Seller pursuant to this Section
12.11 and (ii) any act or omission of Seller relating to any
transaction contemplated by this Section 12.11.
12.12 Tax Deferred Exchange Election by Buyer. Buyer may, at or before the
Closing, acquire the Interests as a like-kind exchange pursuant to
Section 1031 of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder, with respect to any or all of the
Interests. The rights and responsibilities of Seller, Buyer and the
qualified intermediary shall be documented with such agreements
containing such terms and provisions as shall be determined by Buyer to
be necessary to accomplish a tax free exchange under Section 1031 of
the Code subject, however, to the limitations on costs and liabilities
of Seller set forth below. If Buyer makes a tax deferred exchange
election, Seller shall not be obligated to pay any additional costs or
incur any additional obligations in the sale of the Interests. Buyer
shall indemnify, defend and hold Seller harmless from and against any
and all Claims to the extent same are the result of or are attributable
to (i) any transactions undertaken by Buyer pursuant to this Section
12.12 and (ii) any act or omission of Buyer relating to any transaction
contemplated by this Section 12.12.
12.13 Severability. If any provision of this Agreement is found by a court of
competent jurisdiction to be invalid or unenforceable, that provision
will be deemed modified to the extent necessary to make it valid and
enforceable and if it cannot be so modified, it shall be deemed deleted
and the remainder of the Agreement shall continue and remain in full
force and effect.
12.14 Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute an original and all of which shall constitute
one document.
12.15 Governing Law. This Agreement is governed by and must be construed
according to the laws of the State of Texas, excluding any
conflicts-of-law rule or principle that might apply the law of another
jurisdiction.
12.16 Dispute Resolution. If a dispute arises between the Parties under this
Agreement and cannot be resolved by negotiation, the Parties agree to
submit the dispute to mediation before resorting to litigation. Either
Party may request mediation of a dispute by sending a written request
to the other Party. If either Party requests mediation of a dispute,
the Parties agree to choose a mutually acceptable mediator, promptly
begin mediation of the dispute, and share the costs of all mediation
services equally. Each Party agrees to have present at all mediation
conferences at least one individual who has authority to settle the
dispute. Notwithstanding this agreement to mediate disputes, either
Party may file a complaint for statute of limitation or venue reasons,
or seek a preliminary injunction or other provisional judicial relief,
if in its sole judgment such action is necessary to avoid irreparable
damage or to preserve the status quo. Despite any such protective
action, the Parties will continue to try to resolve the dispute by
negotiation or mediation.
12.17 Production Imbalances. Set forth in Exhibit E attached hereto and made
a part hereof for all purposes is a listing of all gas imbalance
volumes measured in MMBTUs and liquid imbalance volumes measured in
gallons and the aggregate net volume of overproduction or
underproduction, as applicable, attributable to the Interests as of the
Effective Date. The Parties acknowledge that the imbalances assumed at
Closing may be incorrect, and Buyer and Seller agree that the Sale
Price will be adjusted, for any differences at $2.00 per mmbtu for gas
imbalances and $.35 per gallon for liquid imbalances. The right to
claim an adjustment under this Section 12.17 will expire 150 days after
closing. Buyer will be solely responsible for any liability and solely
entitled to any benefit from production imbalances relating to the
Interests and arising from and after the Closing Date.
12.18 Exhibits. In the event of a conflict between the provisions of the
Exhibits attached to this Agreement and the foregoing provisions of
this Agreement, the provisions of this Agreement shall take precedence.
The omission of certain provisions of this Agreement from any
conveyance delivered pursuant hereto does not constitute a conflict
between this Agreement and said conveyance document and will not effect
a merger of the omitted provisions.
12.19 Obligations of Seller. Notwithstanding anything to the contrary set
forth in this Agreement, (i) the obligations of Wamsutter under this
Agreement shall be several and not joint and several and shall be the
same as if Wamsutter had entered into a separate agreement covering
only the Interests owned by Wamsutter being sold hereunder and (ii) the
obligations of Abraxas under this Agreement shall be joint and several
with those of Wamsutter.
12.20 Maintenance of Sales Proceeds. Wamsutter covenants and agrees that it
shall maintain $5,000,000.00 of the Sale Price in an account in the
name of Wamsutter until the date which is two (2) years after the
Effective Date and, in the event that Buyer makes a Claim or Claims
prior to the date which is two (2) years after the Effective Date,
until such time as such Claim or Claims are finally determined.
BUYER ACKNOWLEDGES THAT IT HAS READ THIS AGREEMENT IN ITS ENTIRETY, AND THAT IT
UNDERSTANDS ALL THE PROVISIONS SET FORTH THEREIN, INCLUDING, BUT NOT LIMITED TO,
THOSE PROVISIONS LOCATED IN ARTICLE 9 WHEREIN BUYER AGREES TO INDEMNIFY SELLER
IN CERTAIN CIRCUMSTANCES EVEN THOUGH THE LOSSES, COSTS, EXPENSES AND/OR DAMAGES
MAY HAVE BEEN CAUSED BY THE SOLE, CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE OF
THE SELLER, ITS EMPLOYEES , OR ANY THIRD PARTY AND EVEN THOUGH THE SELLER MAY BE
RESPONSIBLE FOR SUCH LOSSES, COSTS, EXPENSES AND/OR DAMAGES UNDER ANY THEORY OF
LAW INCLUDING BUT NOT LIMITED TO STRICT LIABILITY.
<PAGE>
EXECUTED as of the date first above mentioned.
SELLER:
ABRAXAS PETROLEUM CORPORATION
By:
Title:
ABRAXAS WAMSUTTER L.P.
By:Wamsutter Holdings, Inc., General Partner
Name:
Title:
BUYER:
SAMSON RESOURCES COMPANY
By:
Title:
