<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): NOVEMBER 25, 1997
GOTHIC ENERGY CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
OKLAHOMA 0-19753 22-2663839
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(State of incorporation (Commission File Number) (IRS Employer ID No.)
or organization)
5727 SOUTH LEWIS AVENUE - SUITE 700 - TULSA, OKLAHOMA 74105
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(Address of principal executive offices)
(918) 749-5666
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial statements of business acquired.
Not applicable at this time.
(b) Pro form financial information.
Not applicable at this time.
(c) Exhibits.
EXHIBIT NUMBER DESCRIPTION
10.1 Press Release dated November 25, 1997
(previously filed)
10.2 Purchase and Sale Agreement dated November 25, 1997
between Amoco Production Company, as Seller, and
Gothic Energy Corporation, as Buyer (filed herewith)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undesigned hereunto duly authorized.
GOTHIC ENERGY CORPORATION
Dated: January 30, 1998 By: /s/ Michael K. Paulk
------------------------------
Michael K. Paulk, President
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EXHIBIT 10.2
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
AMOCO PRODUCTION COMPANY, SELLER
AND
GOTHIC ENERGY CORPORATION, BUYER
Dated November 24, 1997
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INDEX
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<TABLE>
<CAPTION>
<S> <C> <C>
Article 1. DEFINITIONS................................................. 1
Article 2. SALE AND PURCHASE
2.1 Sale and Purchase........................................... 9
Article 3. PURCHASE PRICE, DEPOSIT AND PREFERENTIAL RIGHTS
3.1 Purchase Price.............................................. 9
3.2 Deposit..................................................... 9
3.3 Preferential Rights To Purchase............................. 10
Article 4. TITLE REVIEW
4.1 Review of Title Records..................................... 10
4.2 Alleged Title Defects....................................... 10
4.3 Waiver...................................................... 11
Article 5. INSPECTION OF PREMISES
5.1 Inspection of Premises...................................... 11
5.2 Alleged Adverse Conditions.................................. 12
5.3 Waiver...................................................... 12
Article 6. ACCOUNTING
6.1 Revenues, Expenses and Capital Expenditures................. 13
6.2 Taxes....................................................... 14
6.3 Obligations and Credits..................................... 14
6.4 Miscellaneous Accounting.................................... 14
6.5 Final Accounting Settlement................................. 15
6.6 Post-Final Accounting Settlement............................ 15
Article 7. LOSS, CASUALTY AND CONDEMNATION
7.1 Notice of Loss.............................................. 15
7.2 Casualty and Condemnation................................... 16
Article 8. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES
8.1 Opportunity for Review...................................... 16
8.2 Seller's Non-Environmental Indemnity Obligation............. 16
8.3 Seller's Environmental Indemnity Obligation................. 17
8.4 Buyer's Non-Environmental Indemnity Obligation.............. 18
8.5 Buyer's Environmental Indemnity Obligation.................. 18
8.6 Asbestos and NORM........................................... 19
8.7 Buyer's Assumption of Obligations........................... 19
8.8 Process Safety Management................................... 20
8.9 Notice of Claims............................................ 20
8.10 Defense of Claims........................................... 20
8.11 Waiver of Certain Damages................................... 21
8.12 Limitation on Indemnities................................... 21
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Article 9. SPECIAL WARRANTY AND DISCLAIMERS
9.1 Special Warranty of Title................................... 21
9.2 Disclaimer - Representations and Warranties................. 22
9.3 Disclaimer - Statements and Information..................... 22
Article 10. SELLER'S REPRESENTATIONS AND WARRANTIES
10.1 Organization and Good Standing.............................. 23
10.2 Corporate Authority; Authorization of Agreement............. 23
10.3 No Violations............................................... 23
10.4 Absence of Certain Changes.................................. 24
10.5 Operating Costs............................................. 24
10.6 Litigation.................................................. 24
10.7 Bankruptcy.................................................. 24
Article 11. BUYER'S REPRESENTATIONS AND WARRANTIES
11.1 Organization and Good Standing.............................. 25
11.2 Corporate Authority; Authorization of Agreement............. 25
11.3 No Violations............................................... 25
11.4 SEC Disclosure.............................................. 26
11.5 Independent Evaluation...................................... 26
11.6 Buyer's Reliance............................................ 26
Article 12. ADDITIONAL COVENANTS AND CONSIDERATIONS
12.1 Subsequent Operations....................................... 26
12.2 (Intentionally Omitted)
12.3 Transition Agreement........................................ 26
12.4 License Agreement(s)........................................ 26
12.5 Sublease Agreement.......................................... 27
12.6 Settlement of Outstanding Litigation........................ 27
12.7 Certain Cooperation......................................... 27
Article 13. PERSONNEL MATTERS
13.1 Employee Lists.............................................. 27
13.2 Offers of Employment........................................ 28
13.3 Savings Plans............................................... 28
13.4 Other Employee Benefits..................................... 28
13.5 Accrued and Unused Vacation................................. 29
13.6 Severance................................................... 29
Article 14. HSR FILINGS
14.1 HSR Filings................................................. 29
Article 15. CONDITIONS PRECEDENT TO CLOSING
15.1 Conditions Precedent to Seller's Obligation to Close........ 30
15.2 Conditions Precedent to Buyer's Obligation to Close......... 30
15.3 Conditions Precedent to Obligation of Each Party
to Close.................................................... 30
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Article 16. THE CLOSING
16.1 Closing..................................................... 31
16.2 Obligations of Seller at Closing............................ 31
16.3 Obligations of Buyer at Closing............................. 33
16.4 Possible Trade of Properties................................ 34
Article 17. TERMINATION
17.1 Grounds for Termination..................................... 34
17.2 Effect of Termination....................................... 35
17.3 Dispute over Right to Terminate............................. 35
17.4 Return of Documents......................................... 35
17.5 Confidentiality............................................. 35
Article 18. ARBITRATION
18.1 Arbitration................................................. 36
Article 19. MISCELLANEOUS
19.1 Notices..................................................... 36
19.2 Conveyance Costs............................................ 37
19.3 Brokers' Fees............................................... 37
19.4 Records..................................................... 38
19.5 Further Assurances.......................................... 38
19.6 Survival of Representations and Warranties.................. 39
19.7 Amendments and Severability................................. 39
19.8 Successors and Assigns...................................... 39
19.9 Headings.................................................... 39
19.10 Governing Law............................................... 39
19.11 No Partnership Created...................................... 39
19.12 Public Announcements........................................ 39
19.13 No Third Party Beneficiaries................................ 40
19.14 Waiver of Consumer Rights................................... 40
19.15 Not to be Construed Against Drafter......................... 40
19.16 Tax Deferred Exchange Election.............................. 40
19.17 Conspicuousness of Provisions............................... 40
19.18 Execution in Counterparts................................... 41
19.19 Entire Agreement............................................ 41
</TABLE>
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PURCHASE AND SALE AGREEMENT
---------------------------
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is dated November 24,
1997, by and between AMOCO PRODUCTION COMPANY, a Delaware corporation, with an
office at 501 WestLake Park Boulevard, Houston, Texas 77079 (hereinafter
referred to as "Seller") and GOTHIC ENERGY CORPORATION, an Oklahoma corporation,
with an office at 5727 South Lewis Avenue, Suite 700, Tulsa, Oklahoma 74105
(hereinafter referred to as "Buyer"), and is based on the following premises:
WHEREAS, Seller desires to sell, assign and convey to Buyer and Buyer
desires to purchase and accept certain oil and gas properties and related
interests; and
WHEREAS, the parties have reached agreement regarding such sale and
purchase,
NOW, THEREFORE, for valuable consideration and the mutual covenants and
agreements herein contained, Seller and Buyer agree as follows:
ARTICLE 1. DEFINITIONS
----------------------
1. Definitions: In this Agreement, capitalized terms have the meanings
-----------
provided in this Article, unless expressly provided otherwise in other Articles.
All defined terms include both the singular and the plural. All references to
Articles refer to Articles in this Agreement, and all references to Exhibits
refer to Exhibits attached to and made a part of this Agreement.
1.1 "Accounting Referee" has the meaning set forth in Article 6.5.
--------------------
1.2 "Affiliate" means any entity that, directly or indirectly, through one
-----------
or more intermediaries, controls or is controlled by or is under common control
with the entity specified. Control means ownership of fifty percent (50%) or
greater of the voting stock of such entity.
1.3 "Alleged Adverse Condition" means an environmental or physical
---------------------------
condition asserted by Buyer in accordance with Article 5.2 that, as of Closing
(as hereinafter defined), is not in compliance with the then existing Laws (as
hereinafter defined), and the costs associated with remediating such individual
---
Alleged Adverse Condition exceeds One Hundred Thousand and No/100 United States
Dollars (US $100,000) net to Seller's interests.
1.4 "Alleged Title Defect" means a Title Defect (as hereinafter defined)
----------------------
which is asserted by Buyer in accordance with Article 4.2, and the costs
---
associated with curing such individual Alleged Title Defect exceeds One Hundred
Thousand and No/100 United States Dollars (US $100,000) net to Seller's
interests.
1
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1.5 [Intentionally left blank.]
1.6 [Intentionally left blank.]
1.7 "Arbitrable Dispute" has the meaning set forth in Article 18.1.
--------------------
1.8 "Assignment and Bill of Sale" means a document in the form of Exhibit
-----------------------------
"I".
1.9 "Business Day" means a Day (as hereinafter defined) excluding
--------------
Saturdays, Sundays and U.S. legal holidays.
1.9.1 "Buyer's Basket" means the cumulative aggregate costs incurred by
----------------
Buyer and the title defect values, as calculated in accordance with the terms of
this Agreement, for Alleged Adverse Conditions, Alleged Title Defects, Non-
Environmental Claims under Article 8.2 and Environmental Claims under Article
8.3 up to a maximum of six (6%) of the unadjusted Purchase Price.
Notwithstanding anything contained in this Agreement to the contrary, Buyer
shall not be entitled to raise or be reimbursed or compensated for any Alleged
Adverse Conditions, Alleged Title Defects, Non-Environmental Claims under
Article 8.2 or Environmental Claims under Article 8.3 unless and until such
cumulative aggregate costs and defect values therefor exceed the maximum Buyer
Basket amount, it being acknowledged and agreed that Buyer shall be solely
responsible for any and all Alleged Adverse Conditions, Alleged Title Defects,
Non-Environmental Claims under Article 8.2 and Environmental Claims under
Article 8.3 and the costs associated therewith up to six (6%) of the unadjusted
Purchase Price.
1.10 [Intentionally left blank.]
1.11 "Buyer Group" has the meaning set forth in Article 8.2.
-------------
1.12 [Intentionally left blank.]
1.13 "Buyer Savings Plan" has the meaning set forth in 13.3.
--------------------
1.14 "Casualty Loss" means any loss, damage or reduction in value of the
---------------
Properties which occurs prior to Closing resulting from mechanical failure or
defects, catastrophic occurrences, acts of God or any other losses which are not
the result of normal wear and tear or of natural reservoir changes.
1.15 "Certificate" means a document in the form of Exhibit "L".
-------------
1.16 "Claim" means any and all claims, demands, suits, causes of action,
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losses, damages, liabilities, fines, penalties and costs (including attorneys'
fees and costs of litigation) which are brought by or owed to a Third Party (as
hereinafter defined).
2
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1.17 "Claimant" has the meaning set forth in Article 18.1.
----------
1.18 "Claim Notice" has the meaning set forth in Article 8.9.
--------------
1.19 "Close" or "Closing" means the consummation of the transfer of title
--------------------
to the Properties (as hereinafter defined) to Buyer, including execution and
delivery of all documents as provided for in this Agreement.
1.20 "Closing Date" means on or before December 15, 1997, subject to the
--------------
terms of this Agreement.
1.21 "Computed Interest" means simple interest of ten percent (10%) per
-------------------
annum using a three hundred sixty-five (365) Day year.
1.22 "Confidentiality Agreement" has the meaning set forth in Article 17.5.
---------------------------
1.23 "Day" means a calendar day consisting of twenty-four (24) hours from
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midnight to midnight.
1.24 "Defensible Title" means, as to the Properties, such title held by
------------------
Seller as of Closing that, except for the Permitted Encumbrances (as hereinafter
defined):
1.24.1 Entitles Seller as of Closing to receive not less than the
"Net Revenue Interests" set forth in Exhibit "A" of all oil, gas and
associated liquid and gaseous hydrocarbons and non-hydrocarbons produced,
saved and marketed from the Properties; and
1.24.2 Obligates Seller as of Closing to bear costs and expenses
relating to the ownership, operation, maintenance and repair of the
Properties in an amount not greater than the "Working Interests" set forth
in Exhibit "A", unless there is a corresponding increase in the Net Revenue
Interests.
1.25 "Deposit" has the meaning set forth in Article 3.2.
---------
1.26 "Effective Time" means December 1, 1997, at 7:00 a.m., local time
----------------
where the Properties are located.
1.27 "Environmental Claims" means all Claims which are based on breach of
---------------------
Environmental Laws (as hereinafter defined). The parties agree that
Environmental Claims against Seller may include without limitation any and all
Claims arising from notices from any federal or state regulatory agency as to
alleged violations of Environmental Laws with respect to the Properties, or any
of them, which are pending as of the Closing Date.
3
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1.28 "Environmental Laws" means any and all Laws that relate to: (a) the
--------------------
prevention of pollution or environmental damage, (b) the remediation of
pollution or environmental damage, and/or (c) the protection of the environment
generally; including without limitation, the Clean Air Act, as amended, the
Clean Water Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Federal Water Pollution
Control Act, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, the Safe Drinking Water Act, as amended, the Toxic Substance and
Control Act, as amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, the Hazardous and the Solid Waste Amendments Act of 1984, as
amended, and the Oil Pollution Act of 1990, as amended.
1.29 "ERISA" has the meaning set forth in Article 134.
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1.30 "Final Accounting Settlement" has the meaning set forth in Article
-----------------------------
6.5.
1.31 "Final Settlement Date" has the meaning set forth in Article 6.5.
-----------------------
1.32 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
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1976, as amended.
1.33 "Laws" means laws, statutes, ordinances, permits, decrees, orders,
------
judgments, rules or regulations (including without limitation Environmental
Laws) which are promulgated, issued or enacted by a governmental entity or
tribal authority having appropriate jurisdiction.
1.34 "Letters-in-Lieu" means a document in the form of Exhibit "M".
-----------------
1.35 "License Agreement - SAMS" means a document in the form of Exhibit
--------------------------
"Q", and "License Agreement - Seismic" means the document referred to in Article
12.4.
1.36 "Mineral Deed" means a document in the form of Exhibit "K".
--------------
1.37 "Non-Environmental Claims" means all Claims, except Environmental
--------------------------
Claims.
1.38 "Non-Foreign Affidavit" means a document in the form of Exhibit "O".
-----------------------
1.39 "NORM" means naturally occurring radioactive materials.
------
1.40 "Opinion of Counsel" means a document in the form of Exhibit "N".
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4
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1.41 "Permitted Encumbrances" means:
------------------------
1.41.1 Royalties, overriding royalties, production payments,
reversionary interests, convertible interests, net profits interests,
division orders and similar burdens encumbering the Properties to the extent
the net cumulative effect of such burdens do not, as of Closing, operate to
reduce the Net Revenue Interests of the Properties to less than the Net
Revenue Interests set forth in Exhibit "A";
1.41.2 Consents to assignment and similar contractual provisions
encumbering the Properties as to which, prior to Closing, waivers or
consents are obtained from the appropriate parties;
1.41.3 Preferential rights to purchase encumbering any one (1) or
more of the Properties as to which, prior to Closing: (a) waivers are
obtained from the appropriate parties, or (b) the time period for exercising
said right has elapsed.
1.41.4 All rights to consent by, required notices to, filings
with or other actions by a governmental entity or tribal authority in
connection with the sale or conveyance of the Properties, if the same are
customarily obtained subsequent to the transfer of title;
1.41.5 Rights reserved to or vested in a governmental entity or
tribal authority having appropriate jurisdiction to control or regulate the
Properties in any manner whatsoever, and all Laws of any such governmental
entity or tribal authority;
1.41.6 Easements, rights-of-way, servitudes, surface leases,
sub-surface leases, grazing rights, logging rights, canals, ditches,
reservoirs, pipelines, utility lines, telephone lines, power lines,
railways, streets, roads, highways and structures on, over and through the
Properties, to the extent such rights, interests or structures do not
materially interfere with the operation of the Properties;
1.41.7 The terms and conditions of all leases, units,
agreements, contracts, instruments, licenses and permits associated with,
attributable to or encumbering the Properties which have been filed with
the appropriate governmental entity or tribal authority, placed of record
in the appropriate County records or otherwise disclosed by Seller to
Buyer;
1.41.8 Liens for taxes or assessments not yet due or not yet
delinquent or, if delinquent, that are being contested by Seller in good
faith in the normal course of business, and if such liens or assessments
are delinquent as of Closing, Seller indemnifies Buyer with respect
thereto;
5
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1.41.9 Liens of operators relating to obligations not yet due or
not yet delinquent or, if delinquent, that are being contested by Seller in
good faith in the normal course of business, and if such liens are
delinquent as of Closing, Seller indemnifies Buyer with respect thereto;
1.41.10 Alleged Title Defect(s) which do not meet the individual
threshold amount set forth in Article 1.4, the Buyer Basket maximum has not
been reached, or which Buyer has waived under Article 4.3;
1.41.11 Alleged Adverse Condition(s) which do not meet the
individual threshold amounts set forth in Article 1.3, the Buyer Basket
maximum has not been reached, or which Buyer has waived under Article 5.3;
1.41.12 Gas imbalances associated with the Properties; and
1.41.13 Suspense funds associated with the Properties.
1.42 [Intentionally left blank.]
1.43 "Process Safety Management" has the meaning set forth in Article 8.8.
---------------------------
1.44 "Property" or "Properties" means Seller's ownership interests in the
--------------------------
properties (real, personal or mixed) and appurtenant rights (contractual or
otherwise) as follows:
1.44.1 All of Seller's right, title and interests in, to and
under, or derived from, the oil and gas leasehold interests, royalty
interests, overriding royalty interests, mineral interests, production
payments, net profits interests and surface interests which are described in
Exhibit "A";
1.44.2 All of Seller's right, title and interests in, to and
under, or derived from, all of the presently existing and valid unitization,
communization and pooling declarations, orders, and agreements (including
all units formed by voluntary agreement and those formed under the rules,
regulations, orders or other official acts of any governmental entity or
tribal authority having appropriate jurisdiction) to the extent they relate
to any of the interests which are described in Exhibit "A", or the
production of oil, gas or other hydrocarbon and non-hydrocarbon substances
attributable thereto;
1.44.3 All of Seller's right, title and interests in, to and
under, or derived from, all of the presently existing and valid oil sales
contracts, casinghead gas sales contracts, gas sales contracts, processing
contracts, gathering contracts, transportation contracts, easements,
6
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rights-of-way, servitudes, surface leases, subsurface leases, permits,
licenses, farm-out contracts, farm-in contracts, balancing contracts
(including but not limited to the gas imbalances described in Exhibit "D"),
suspense funds, operating agreements, areas of mutual interest, and other
contracts, agreements and instruments (including but not limited to the
material contracts described in Exhibit "C") to the extent they relate to
any of the interests which are described in Exhibit "A", or the production
of oil, gas or other hydrocarbon and non-hydrocarbon substances attributable
thereto;
1.44.4 All of Seller's right, title and interests in, to and
under, or derived from, the personal property, improvements, fixtures, wells
(whether producing, plugged and abandoned, shut-in, injection, disposal or
water supply), tanks, boilers, buildings, machinery, equipment, pipelines,
utility lines, power lines, telephone lines, roads and other appurtenances,
to the extent the same are situated upon and used or held for use by Seller
solely in connection with the ownership, operation, maintenance or repair of
the interests which are described in Exhibit "A", or the production of oil,
gas or other hydrocarbon and non-hydrocarbon substances attributable
thereto;
1.44.5 All of Seller's right, title and interests in, to and
under, or derived from, the seismic, geologic or geophysical information and
data to the extent the same relates to any of the interests which are
described in
7
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communications, personnel information, tax information, information covered by a
non-disclosure obligation and information covered by a legal privilege;
(d) The properties (real, personal and mixed) and appurtenant rights
(contractual or otherwise) described in Exhibits "F" and "F-1"; and
(e) A concurrent interest in, to and under, or derived from, the
contracts, agreements, instruments, permits, easements, rights-of-way, surface
leases, subsurface leases and any other rights (contractual or otherwise) to the
extent that they relate to or affect the interests reserved herein.
1.45 "Purchase Price" has the meaning set forth in Article 3.1.
----------------
1.46 "Records" means all of Seller's books, records and files related to
---------
the Properties; provided however, the term Records shall not include (and Seller
shall have no obligation to deliver to Buyer) previous offers and economic
analyses associated with the purchase, sale or exchange of the Properties,
proprietary information, interpretive information, reserve data, internal
communications, personnel information, tax information, information covered by a
non-disclosure obligation and information covered by a legal privilege.
1.47 "Respondent" has the meaning set forth in Article 18.1.
------------
1.48 "Seller Group" has the meaning set forth in Article 8.2.
--------------
1.48.1 "Stock Warrant Agreement" means the agreement to be entered into on
-------------------------
the terms outlined on Exhibit "S".
1.49 "Sublease Agreement" means a document in the form of Exhibit "R".
--------------------
1.50 "Surface Deed" means a document in the form of Exhibit "J".
--------------
1.51 "Third Party" means any person or entity, governmental or otherwise,
-------------
other than Seller and Buyer.
1.52 "Title Defect" means any lien, encumbrance, encroachment or
--------------
defect associated with Seller's title to the Properties (excluding Permitted
Encumbrances) that would cause Seller, as of Closing, not to have Defensible
Title.
1.53 "Transition Agreement" means a document in the form of Exhibit "P".
----------------------
ARTICLE 2. SALE AND PURCHASE
----------------------------
2.1 Sale and Purchase. On the Closing Date, effective as of the
-----------------
Effective Time, and upon the terms and conditions herein set forth, Seller
agrees
8
<PAGE>
to sell and assign the Properties to Buyer and Buyer agrees to buy and
accept the Properties.
ARTICLE 3. PURCHASE PRICE, DEPOSIT AND PREFERENTIAL RIGHTS
----------------------------------------------------------
3.1 Purchase Price. The total purchase price, subject to adjustments as
--------------
set forth in this Agreement, paid to Seller by Buyer for the Properties shall be
Two Hundred Thirty-Seven Million Five Hundred Thousand and No/100 United States
Dollars (US $237,500,000) ("Purchase Price"), payable in full at Closing in
immediately available funds. The Purchase Price shall be increased by the
Computed Interest from the Effective Time through Closing. As partial
consideration for this sale, (a) Buyer and Seller also shall enter into an
agreement(s) to provide to Seller a warrant to purchase One Million Five Hundred
Thousand (1,500,000) shares of common stock of Buyer on the terms provided in
Exhibit "S," and (b) Buyer grants Seller the option provided in Article 16.4.
For the avoidance of doubt, the parties expressly agree that there shall be no
Purchase Price adjustment for Alleged Adverse Conditions, Alleged Title Defects,
Non-Environmental Claims under Article 8.2 or Environmental Claims under Article
8.3, unless and until the aggregate total thereof exceeds the Buyer Basket
maximum, in which event the Purchase Price adjustment (or other type of
compensation to be made pursuant to Article 1.9.1) shall be limited to the
amount by which the total of all such Alleged Adverse Conditions, Alleged Title
Defects, Non-Environmental Claims and Environmental Claims exceeds the Buyer
Basket maximum.
3.2 Deposit. Within twenty-four hours after execution of this Agreement,
-------
Buyer shall pay to Seller a deposit in the amount of ten percent (10%) of the
unadjusted Purchase Price ("Deposit"). In the event of Closing, the Purchase
Price shall be credited by the amount of the Deposit (plus Computed Interest on
the Deposit from the date of receipt by Seller until Closing). If Closing does
not occur, the Deposit (plus Computed Interest on the Deposit from the date of
receipt by Seller until termination) will be refunded to Buyer, unless Closing
failed to occur as a result of Buyer's breach of this Agreement (including
without limitation Buyer's failure to comply with Article 14.1) in which case
Seller shall retain the Deposit plus all interest thereon as liquidated damages
and not as a penalty and as Seller's sole remedy at law or in equity.
3.3 Preferential Rights To Purchase. Buyer's good faith allocation of
-------------------------------
the Purchase Price as set forth in Exhibit "B" shall be used by Seller to
provide any required preferential purchase right notifications. If, prior to
Closing, a holder of a preferential purchase right notifies Seller that it
intends to exercise its rights with respect to a Property to which its
preferential purchase right applies (as determined in accordance with the
agreement in which the preferential purchase right arises), the Property covered
by said preferential purchase right shall be excluded from the Properties to be
conveyed to Buyer, and the Purchase Price shall be reduced by the value
allocated to said Property in Exhibit "B". Buyer acknowledges and agrees that
Seller shall determine (in its sole judgment) the
9
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extent of the preferential purchase rights encumbering the Properties, and said
determination shall be used by Seller to provide the preferential purchase right
notifications. If the holder of the preferential purchase right fails to
consummate the purchase of the Property subject to the preferential purchase
right, Seller shall promptly notify Buyer. Within ten (10) Business Days after
Buyer's receipt of such notice or Closing, whichever is later, Seller shall sell
to Buyer, and Buyer shall purchase from Seller, such Property under the terms of
this Agreement for a price equal to the value allocated to such Property in
Exhibit "B". Notwithstanding the foregoing, Buyer shall have no obligation under
this Agreement or otherwise to purchase the Property if Buyer is not notified of
the preferential purchase right holder's failure to consummate the purchase of
the Property within one hundred twenty (120) Days following Closing.
ARTICLE 4. TITLE REVIEW
-----------------------
4.1 Review of Title Records. Upon execution of this Agreement, Seller
-----------------------
shall make available to Buyer during reasonable business hours Records in
Seller's possession relating to the title to the Properties. Buyer shall be
entitled to review said title Records. Buyer shall have the right to reasonably
request copies of any and all such title Records and upon such request, Seller
shall provide the requested copies to Buyer at Buyer's expense.
4.2 Alleged Title Defects. As soon as reasonably practicable (and on an
---------------------
ongoing basis), but in no event later than one hundred twenty (120) Days after
Closing, Buyer shall notify Seller of any Properties which are subject to
Alleged Title Defect(s). Buyer's notice asserting Alleged Title Defect(s) shall
include a description and full explanation (including any and all supporting
documentation associated therewith) of each Alleged Title Defect being claimed
and a value which Buyer in good faith attributes to curing the same. Seller,
during said one hundred twenty (120) Day period, shall have the right to notify
Buyer of any increases in Net Revenue Interest or decreases in Working Interest
in the Properties and request a corresponding adjustment. Buyer and Seller
shall meet from time to time as necessary in an attempt to mutually agree on a
proposed resolution with respect to the Alleged Title Defect(s) raised by Buyer
and increases in Net Revenue Interest or decreases in Working Interest raised by
Seller. Such agreed amounts shall be netted against one another. The value
allocated to each Property as set forth on Exhibit "B" and the costs to cure
such title defects shall be used by the parties to determine the amount of any
adjustment, if any, due to the existence of an Alleged Title Defect. It is
recognized that good faith differences of opinion may exist between Buyer and
Seller in connection with the Alleged Title Defect(s) raised by Buyer and
adjustments to the Net Revenue Interests or Working Interests raised by Seller,
including without limitation, disputes as to: (a) whether or not the alleged
defect constitutes an Alleged Title Defect within the meaning of this Agreement,
(b) whether or not the magnitude of the alleged defect individually or in the
aggregate exceeds the threshold amounts set forth in Article 1.4 and 1.9.1,
respectively, (c) whether or not the Alleged Title Defect raised by Buyer was
10
<PAGE>
properly and timely asserted by Buyer pursuant to this Article, and/or (d) the
appropriate upward or downward adjustment, if any, on account of a change in the
Net Revenue Interest or Working Interests from those set forth in Exhibit "A".
If any such differences of opinion are not resolved by mutual agreement of Buyer
and Seller, either party shall have the right, exercisable within two hundred
one (210) Days after Closing, to initiate binding arbitration in accordance with
Article 18.1, using arbitrators who are attorneys licensed in the state where
the Property at issue is located and who have at least ten (10) years oil and
gas title experience.
4.3 Waiver. Except for claims Buyer asserts under Seller's special
------
warranty of title contained in Article 9.1, all title objections (including
without limitation Alleged Title Defect(s)) not raised or referred to binding
arbitration, as applicable, by Buyer within the time period provided in Article
4.2 shall be waived by Buyer for all purposes, and Buyer shall have no right to
seek an adjustment to the Purchase Price, make a claim (in accordance with
Article 18.1 or otherwise) against Seller or seek indemnification (in accordance
with Article 8 or otherwise) from Seller associated with the same, and Buyer (on
behalf of itself, its officers, agents, employees, Affiliates, successors and
assigns) irrevocably waives such claims.
ARTICLE 5. INSPECTION OF PREMISES
---------------------------------
5.1 Inspection of Premises. Prior to Closing, Buyer shall have access
----------------------
during reasonable business hours to the Records and to Seller-operated
Properties, and Seller shall use reasonable efforts to obtain permission for
Buyer to gain access to the Third Party-operated Properties, for the purpose of
inspecting the Records and the environmental and physical condition of the
Properties. Such inspection shall be conducted in accordance with the terms of
the Confidentiality Agreement.
5.2 Alleged Adverse Conditions. As soon as reasonably practical (and on
--------------------------
an ongoing basis), but in no event later than one hundred and eighty (180) Days
after Closing, Buyer shall notify Seller of any Properties which are subject to
Alleged Adverse Condition(s). Buyer's notice of Alleged Adverse Condition(s)
shall include a complete description of each individual condition to which Buyer
takes exception (including any and all supporting documentation associated
therewith) and the costs which Buyer in good faith attributes to remediating the
same. Buyer and Seller shall meet from time to time as necessary in an attempt
to mutually agree on a proposed resolution with respect to the Alleged Adverse
Condition(s) raised by Buyer. The value allocated to each Property as set forth
on Exhibit "B" and the costs to cure such adverse condition shall be used by the
parties to determine the amount of any adjustment, if any, due to the existence
of an Alleged Adverse Condition. It is recognized that good faith differences
of opinion may exist between Buyer and Seller in connection with the Alleged
Adverse Condition(s) raised by Buyer, including without limitation, disputes as
to: (a) whether or not the alleged defect constitutes an Alleged Adverse
Condition
11
<PAGE>
within the meaning of this Agreement, (b) whether or not the magnitude of the
alleged defect individually or in the aggregate exceeds the threshold amounts
set forth in Article 1.3 and 1.9.1 respectively, (c) whether or not the Alleged
Adverse Condition raised by Buyer was properly and timely asserted by Buyer
pursuant to this Article, and/or (d) the adjustment, if any, on account of the
Alleged Adverse Condition. If any such difference of opinion regarding an
Alleged Adverse Condition raised by Buyer is not resolved by mutual agreement of
Buyer and Seller, either party shall have the right, exercisable within two
hundred seventy (270) Days after Closing, to initiate binding arbitration in
accordance with Article 18.1. Notwithstanding anything contained in this
Agreement to the contrary (including Article 18.1), if Seller disagrees with the
decision of the arbitration panel, Seller shall have the right (but not the
obligation) to: (i) remediate, at Seller's sole cost, the Property at issue to a
point where it is in compliance with the Laws, or (ii) require the reassignment
of the Property at issue from Buyer to Seller. If Seller elects to require the
reassignment of the Property at issue, Buyer and Seller will take all necessary
action (including without limitation, execution of documentation and conducting
an accounting) required to place the parties back into a position with respect
to the Property at issue just prior to Closing.
5.3 Waiver. All adverse conditions (including without limitation Alleged
------
Adverse Condition(s)) not raised or referred to binding arbitration, as
applicable, by Buyer within the time period provided in Article 5.2 shall be
waived by Buyer for all purposes, and Buyer shall have no right to seek an
adjustment to the Purchase Price, make a claim (in accordance with Article 18.1
or otherwise) against Seller or seek indemnification (in accordance with Article
8 or otherwise), from Seller associated with the same, except as provided in the
following sentence; and Buyer (on behalf of itself, its officers, agents,
employees, Affiliates, successors and assigns) irrevocably waives such claims.
Notwithstanding anything to the contrary in this Article 5.3, Buyer shall be
entitled to seek indemnification under Article 8.3 for any and all Environmental
Claims which are asserted by Third Parties (except Affiliates of Buyer), if
Buyer gives Seller notice thereof in accordance with Article 8.9 within twelve
(12) months after the Closing Date, except for Environmental Claims of which
Buyer had knowledge within the first one hundred eighty (180) Days after Closing
and did not provide the notice required in Article 5.2.
ARTICLE 6. ACCOUNTING
----------------------
6.1 Revenues, Expenses and Capital Expenditures. All merchantable oil,
-------------------------------------------
liquid hydrocarbon and non-hydrocarbon substances stored in tanks and vessels on
the Properties (including any and all line fill owned by Seller or its
Affiliates downstream of the custody transfer point) will be gauged to the
bottom of the flange by Seller or the operator of the Properties, as applicable,
as of the Effective Time, and Seller shall be entitled to the proceeds
associated with such
12
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oil, liquid hydrocarbon and non-hydrocarbon substances so gauged when sold. Oil,
liquid hydrocarbon and non-hydrocarbon substances in treating equipment and
separation equipment below pipeline connections as of the Effective Time shall
not be considered to be merchantable and shall become the property of Buyer.
Seller shall be entitled to all operating revenues and related accounts
receivable arising in the ordinary course of business attributable to the
Properties and shall be responsible for all operating expenses and related
accounts payable (except as provided below) arising in the ordinary course of
business attributable to the Properties, in each case to the extent they relate
to the period of time prior to the Effective Time. Buyer shall be entitled to
all operating revenues and related accounts receivable arising in the ordinary
course of business attributable to the Properties and responsible for the
payment of all operating expenses and related accounts payable arising in the
ordinary course of business attributable to the Properties, in each case to the
extent they relate to time after the Effective Time. Notwithstanding anything
contained in this Agreement to the contrary, Buyer shall assume and be solely
responsible for: (a) any and all suspense funds associated with the Properties,
(b) any and all gas imbalances associated with the Properties, and (c) any and
all capital expenditures associated with the Properties to the extent said
capital expenditures were incurred (or the obligation to incur said costs and
expenses was undertaken) by Seller within the period of time six (6) months
prior to Closing and exceed one percent (1%) of the unadjusted Purchase Price.
The actual amounts or values associated with the above shall be accounted for in
the Final Accounting Settlement.
6.2 Taxes. All taxes and assessments, including without limitation,
-----
excise taxes, ad valorem taxes and any other federal, state, local or tribal
taxes or assessments attributable to the ownership or operation of the
Properties prior to the Effective Time shall remain Seller's responsibility, and
all deductions, credits or refunds pertaining to the aforementioned taxes and
assessments, no matter when received, shall belong to Seller. All taxes and
assessments, including without limitation, excise taxes, ad valorem taxes and
any other federal, state, local or tribal taxes and assessments attributable to
the ownership or operation of the Properties after the Effective Time (excluding
Seller's income taxes from the Effective Time through Closing and any associated
capital gains taxes which shall remain Seller's obligation) shall be Buyer's
responsibility, and all deductions, credits or refunds pertaining to the
aforementioned taxes and assessments, no matter when received, shall belong to
Buyer. The actual amounts or values associated with the above, shall be
accounted for in the Final Accounting Settlement. Buyer shall additionally be
solely responsible for all transfer, sales, use or similar taxes resulting from
or associated with the transaction contemplated under this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, Seller
shall be entitled to retain any and all Section 29 tax credits associated with
the Properties from the Effective Time through Closing.
6.3 Obligations and Credits. All prepaid insurance premiums, utility
-----------------------
13
<PAGE>
charges, taxes, rentals, deposits and any other prepaids applicable to the
period of time after the Effective Time, if any, and attributable to the
Properties shall be reimbursed to Seller by Buyer, and all accrued payables
applicable to the period of time prior to the Effective Time, if any, and
attributable to the Properties shall be the responsibility of Seller. The
actual amounts or values associated with the above shall be accounted for in the
Final Accounting Settlement.
6.4 Miscellaneous Accounting. In addition to the items set forth in
------------------------
Articles 6.1 through 6.3, any other amounts due between Buyer and Seller related
to the ownership or operation of the Properties from the Effective Time through
Closing shall be accounted for in the Final Accounting Settlement.
6.4.1 For purposes of the Purchase Price, the parties have assumed that
Seller's aggregate imbalance attributable to the Properties as of Closing is the
same as the total volume of overproduction specified on Exhibit "D." If, as of
December 1, 1997, there exists field production imbalances attributable to
Seller's interests in the Properties that are either twenty percent (20%)
greater than or twenty percent (20%) less than the total specified on Exhibit
"D," the Final Accounting Settlement shall reflect an adjustment of the amount
owed by Seller to Buyer or Buyer to Seller respectively, using a price of One
Dollar per MMBTU ($1.00/MMBTU) for the difference between the actual total
imbalance volume and the total imbalance volume as stated on Exhibit "D".
6.5 Final Accounting Settlement. As soon as reasonably practicable, but
---------------------------
in no event later than one hundred and eighty (180) Days after Closing, Seller
shall deliver to Buyer a post-Closing statement setting forth a detailed
calculation of all post-Closing adjustments applicable to the period of time
between the Effective Time and Closing ("Final Accounting Settlement"). As soon
as reasonably practicable, but in no event later than thirty (30) Days after
Buyer receives the post-Closing statement, Buyer shall deliver to Seller a
written report containing any changes which Buyer proposes to be made to such
post-Closing statement. If Buyer fails to timely deliver the written report to
Seller containing changes Buyer proposes to be made to the post-Closing
statement, the post-Closing statement delivered by Seller shall be deemed to be
true and correct and the same shall be final and binding on the parties and not
subject to arbitration hereunder. As soon as reasonably practicable, but in no
event later than fifteen (15) Days after Seller receives Buyer's written report,
the parties shall meet and undertake to agree on the final post-Closing
adjustments. If the parties fail to agree on the final post-Closing adjustments
within such fifteen (15) Day period, the disputed items shall be resolved by
submitting the same to Arthur Andersen LLP (the "Accounting Referee"). The
Accounting Referee shall resolve the dispute(s) regarding the post-Closing
adjustments within thirty (30) Days after having the relevant materials
submitted for review. The decision of the Accounting Referee shall be binding on
and non-appealable by the parties. The fees and expenses associated with the
Accounting Referee shall be borne equally by Buyer and Seller. The date upon
which all amounts associated with the Final Accounting Settlement are agreed to
by the parties, whether by decision of the Accounting Referee or otherwise,
shall be herein called the "Final
14
<PAGE>
Settlement Date". Any amounts owed by either party to the other as a result of
such post-Closing adjustments shall be paid within five (5) Business Days after
the Final Settlement Date.
6.6 Post-Final Accounting Settlement. Any revenues received or costs and
--------------------------------
expenses paid by Buyer after the Final Accounting Settlement which are
attributable to the ownership or operation of the Properties prior to the
Effective Time, and not assigned to Buyer, shall be billed or reimbursed, as
appropriate, to Seller within thirty (30) Days after receipt by Buyer. Any
revenues received or costs and expenses paid by Seller after the Final
Accounting Settlement which are attributable to the ownership or operation of
the Properties after the Effective Time, and not reserved by Seller, shall be
billed or reimbursed, as appropriate, to Buyer within thirty (30) Days after
receipt by Seller.
ARTICLE 7. LOSS, CASUALTY AND CONDEMNATION
-------------------------------------------
7.1 Notice of Loss. From the date hereof until Closing, Seller shall
--------------
promptly notify Buyer of any loss or damage to the Properties, or any part
thereof, known to Seller exceeding One Hundred Thousand and No/100 United States
Dollars (US $100,000) net to Seller's interest.
7.2 Casualty and Condemnation. If, prior to Closing, a substantial part
-------------------------
of the Properties shall: (a) be destroyed by a Casualty Loss, or (b) be taken in
condemnation or if proceedings for such purposes shall be pending; then Seller
and Buyer shall attempt to mutually agree on a reduction in the Purchase Price
reflecting the reduction in the value of the Properties affected by the Casualty
Loss or taking. If Seller and Buyer are unable to mutually agree on such
reduction, either party shall have the right, exercisable within ninety (90)
Days after Closing, to initiate binding arbitration in accordance with Article
18.1. Seller shall retain any and all sums paid to Seller, unpaid awards,
insurance proceeds or other payments associated with or attributable to such
Casualty Loss or taking.
ARTICLE 8. ALLOCATION OF RESPONSIBILITIES AND INDEMNITIES
---------------------------------------------------------
8.1 Opportunity for Review. Each party represents that it has had an
----------------------
adequate opportunity to review the following indemnity and release provisions,
including the opportunity to submit the same to legal counsel for review and
comment. Based upon the foregoing representation, the parties agree to the
provisions set forth below.
8.2 Seller's Non-Environmental Indemnity Obligation. Seller shall,
-----------------------------------------------
subject to the limitations set forth below, release Buyer from and shall fully
protect, indemnify and defend Buyer, its officers, agents, employees and
Affiliates ("Buyer Group") and hold them harmless from and against any and all
Non-Environmental Claims, and any and all occurrences and
15
<PAGE>
conditions which would otherwise constitute Non-Environmental Claims but which
are asserted by Seller, its officers, agents, employees and Affiliates ("Seller
Group"), relating to, arising out of, or connected, directly or indirectly, with
the ownership or operation of the Properties, or any part thereof, pertaining to
the period of time prior to Closing, including without limitation, Non-
Environmental Claims relating to: (a) injury or death of any person or persons
whomsoever, (b) damages to or loss of any property or resources, (c) common law
causes of action such as negligence, gross negligence, strict liability,
nuisance or trespass, and/or (d) fault imposed by statute, rule, regulation or
otherwise. The indemnity obligation and release provided herein shall apply
regardless of cause or of any negligent acts or omissions of Buyer Group.
Notwithstanding anything contained in this Agreement to the contrary, Seller
shall have no obligation under this Agreement or otherwise to protect,
indemnify, defend and hold harmless Buyer Group from and against any one or more
of the following:
(i) Non-Environmental Claims for which Buyer has not provided Seller with
written notice of such Non-Environmental Claim in accordance with
Article 8.9 within eighteen (18) months after Closing (it being
acknowledged and agreed that Buyer shall be solely responsible for
any and all Non-Environmental Claims not raised within such eighteen
month period), and/or
------
(ii) Non-Environmental Claims for which Buyer has provided the notice
referred to in (i) immediately above unless the maximum under the
Buyer Basket has been satisfied as provided in Article 1.9.1.
8.3 Seller's Environmental Indemnity Obligation. Seller shall, subject to
-------------------------------------------
the limitations set forth below, release Buyer from and shall fully protect,
indemnify and defend Buyer Group and hold them harmless from and against any and
all Environmental Claims, and any and all occurrences and conditions which would
otherwise constitute Environmental Claims but which are asserted by Seller
Group, relating to, arising out of, or connected, directly or indirectly, with
the ownership or operation of the Properties, or any part thereof, pertaining to
the period of time prior to Closing, including without limitation, Environmental
Claims relating to: (a) injury or death of any person or persons whomsoever, (b)
damages to or loss of any property or resources, (c) pollution, environmental
damage or violation of Environmental Laws, (d) common law causes of action such
as negligence, gross negligence, strict liability, nuisance or trespass, and/or
(e) fault imposed by statute, rule, regulation or otherwise. The indemnity
obligation and release provided herein shall apply regardless of cause or of any
negligent acts or omissions of Buyer Group.
16
<PAGE>
Notwithstanding anything contained in this Agreement to the contrary, Seller
shall have no obligation under this Agreement or otherwise to protect,
indemnify, defend and hold harmless Buyer Group from and against any one or more
of the following:
(i) Environmental Claims of which Buyer has actual knowledge within
one hundred eighty (180) Days after the Closing for which Buyer has not
provided Seller with written notice in accordance with Article 8.9 within
said one hundred eighty (180) period, and for all other Environmental
Claims for which Buyer has not provided Seller with written notice in
accordance with Article 8.9 within twelve (12) months after Closing (it
being acknowledged and agreed that Buyer shall be solely responsible for
any and all Environmental Claims not raised within such one hundred eighty
Day and twelve month period, respectively),
(ii) Environmental Claims for which Buyer has provided the notice
referred to in (i) immediately above was provided, unless the maximum under
the Buyer Basket has been satisfied as provided in Article 1.9.1, and/or
--
(iii) Environmental Claims greater than fifty percent (50%) of the
unadjusted Purchase Price (it being acknowledged and agreed that Buyer
shall be solely responsible for any and all Environmental Claims greater
than fifty (50%) percent of the unadjusted Purchase Price).
8.4 Buyer's Non-Environmental Indemnity Obligation. Buyer shall release
----------------------------------------------
Seller from and shall fully protect, indemnify and defend Seller Group and hold
them harmless from and against any and all Non-Environmental Claims, and any and
all occurrences and conditions which would otherwise constitute Non-
Environmental Claims but which are asserted by Buyer Group, relating to,
arising out of, or connected, directly or indirectly, with the ownership or
operation of the Properties, or any part thereof, pertaining to the period of
time prior to Closing, no matter when asserted, for which Seller's indemnity
obligation has ceased, terminated (in accordance with Article 8.2 or otherwise)
or did not exist, and from and against any and all Non-Environmental Claims
---
relating to, arising out of, or connected, directly or indirectly, with the
ownership or operation of the Properties, or any part thereof, pertaining to the
period of time at and after Closing, no matter when asserted; including without
limitation, Non-Environmental Claims relating to: (a) injury or death of any
person or persons whomsoever, (b) damages to or loss of any property or
resources, (c) common law causes of action such as negligence, gross negligence,
strict liability, nuisance or trespass, and/or (d) fault imposed by statute,
rule, regulation or otherwise. The indemnity obligation and release provided
herein shall apply regardless of cause or of any negligent acts or
17
<PAGE>
omissions of Seller Group.
8.5 Buyer's Environmental Indemnity Obligation. Buyer shall release
------------------------------------------
Seller from and shall fully protect, indemnify and defend Seller Group and hold
them harmless from and against any and all Environmental Claims, and any and all
occurrences and conditions which would otherwise constitute Environmental Claims
but which are asserted by Buyer Group, relating to, arising out of, or
connected, directly or indirectly, with the ownership or operation of the
Properties, or any part thereof, pertaining to the period of time prior to
Closing, no matter when asserted, for which Seller's indemnity obligation has
ceased, terminated (in accordance with Article 8.3 or otherwise) or did not
exist, and from and against any and all Environmental Claims relating to,
---
arising out of, or connected, directly or indirectly, with the ownership or
operation of the Properties, or any part thereof, pertaining to the period of
time at and after Closing, no matter when asserted; including without
limitation, Environmental Claims relating to: (a) injury or death of any person
or persons whomsoever, (b) damage to or loss of any property or resource, (c)
pollution, environmental damage or violation of Environmental Laws, (d) common
law causes of action such as negligence, gross negligence, strict liability,
nuisance or trespass, and/or (e) fault imposed by statute, rule, regulation or
otherwise. The indemnity obligation and release provided herein shall apply
regardless of cause or of any negligent acts or omissions of Seller Group.
8.6 Asbestos and NORM. Buyer acknowledges that the Properties may
-----------------
currently or have in the past contained asbestos or NORM and that special
procedures may be required for the assessment, remediation, removal,
transportation or disposal of such asbestos and NORM. Notwithstanding anything
contained in this Agreement to the contrary (including without limitation
Articles 5.2, 8.2 or 8.3), Buyer agrees to accept full responsibility for and
shall pay all costs and expenses associated with the assessment, remediation,
removal, transportation and disposal of the asbestos or NORM associated with the
Properties, and shall not be entitled to claim the fact the assessment,
remediation, removal, transportation or disposal of the asbestos or NORM is not
complete or that additional cost will be required to complete the assessment,
remediation, removal, transportation or disposal of the asbestos or NORM as an
Alleged Title Defect, Alleged Adverse Condition, breach of Seller's
representations and warranties or breach of Seller's indemnity obligation under
this Agreement, and Buyer (on behalf of itself, its officers, agents, employees,
Affiliates, successors and assigns) irrevocably waives such claims. In
conducting the duties and obligations contained in this Article, Buyer shall
comply with the applicable Laws.
8.7 Buyer's Assumption of Obligations. Buyer agrees to assume and shall
---------------------------------
timely perform and discharge all duties and obligations of Seller associated
with the Properties (including without limitation any contractual obligations)
18
<PAGE>
relating to the period of time at and after Closing, and Seller shall incur no
liability for Buyer's failure to properly perform or discharge any such duties
and obligations. Notwithstanding anything contained in this Agreement to the
contrary (including without limitation Articles 5.2, 8.2 or 8.3), Buyer agrees
to accept full responsibility for and shall pay all costs and expenses
associated with the plugging and abandonment of the wells and facilities
included in the Properties, and shall not be entitled to claim the fact that
plugging and abandonment operations are not complete or that additional cost
will be required to complete the plugging and abandonment operations as an
Alleged Title Defect, Alleged Adverse Condition, breach of Seller's
representations and warranties or breach of Seller's indemnity obligation under
this Agreement, and Buyer (on behalf of itself, its officers, agents, employees,
Affiliates, successors and assigns) irrevocably waives such claims. In
conducting the duties and obligations contained in this Article, Buyer shall
comply with the applicable Laws.
8.8 Process Safety Management. Buyer acknowledges that Process Safety
-------------------------
Management of Highly Hazardous Chemicals; Explosives and Blasting Agents (i.e.,
29 CFR 1910) (collectively "Process Safety Management") associated with the
Properties is an ongoing process. Notwithstanding anything contained in this
Agreement to the contrary (including without limitation Articles 5.2, 8.2 or
8.3), Buyer agrees to accept full responsibility for and shall pay all costs and
expenses associated with the Process Safety Management process (including
without limitation the identification, evaluation and remediation), and shall
not be entitled to claim the fact that Process Safety Management is not complete
or that additional cost will be required to comply with or complete the Process
Safety Management process as an Alleged Title Defect, Alleged Adverse Condition,
breach of Seller's representations and warranties or breach of Seller's
indemnity obligation under this Agreement, and Buyer (on behalf of itself, its
officers, agents, employees, Affiliates, successors and assigns) irrevocably
waives such claims. In conducting the duties and obligations contained in this
Article, Buyer shall not be obligated to carry on Seller's specific Process
Safety Management programs, but Buyer shall comply with the applicable Laws.
8.9 Notice of Claims. If a Claim is asserted against a party for which
----------------
the other party may have an obligation of indemnity, it shall be a condition
precedent to the indemnifying party's obligations under this Article 8 that the
indemnified party give the indemnifying party written notice of such Claim
setting forth full particulars of the Claim (including a copy of the written
Claim, if any) as then known by the indemnified party. The indemnified party
shall make a good faith effort to notify the indemnifying party within one (1)
month of receipt of a Claim and shall in all events effect notice within such
time as will allow the indemnifying party a reasonable period of time in which
to evaluate and timely respond to said Claim. The notice of Claim provided
hereunder is referred to as a "Claim Notice."
19
<PAGE>
8.10 Defense of Claims. Upon receipt of a Claim Notice, the indemnifying
-----------------
party may assume the defense of said Claim with counsel selected by the
indemnifying party and reasonably satisfactory to the indemnified party. The
indemnified party shall cooperate in all reasonable respects in such defense.
If any Claim involves a fact pattern wherein Buyer may have an obligation to
indemnify Seller and Seller may have an obligation to indemnify Buyer, each
party shall have the right to assume the defense of and hire counsel for that
portion of the Claim for which it may have an obligation of indemnity. In all
instances, the indemnified party shall have the right to employ separate counsel
and to participate in the defense of any Claim; provided however, the fees and
expenses of counsel employed by the indemnified party shall be borne solely by
the indemnified party. If the indemnifying party does not notify the
indemnified party within the earlier to occur of: (a) five (5) Days before the
time a response is due in any litigation matter, or (b) sixty (60) Days after
receipt of the Claim Notice, that the indemnifying party elects to undertake the
defense of a Claim, the indemnified party shall have the right to defend, at the
expense of the indemnifying party, the Claim with counsel of the indemnified
party's choosing, subject to the right of the indemnifying party to assume the
defense of the Claim at any time prior to settlement or final determination
thereof. In such event, the indemnified party shall promptly send a written
notice to the indemnifying party of any proposed settlement of a Claim, which
settlement the indemnifying party may accept or reject, in its reasonable
judgment, within thirty (30) days of receipt of such notice, unless the
settlement offer is limited to a shorter period of time in which case the
indemnifying party shall have such shorter period of time in which to accept or
reject the proposed settlement. Failure of the indemnifying party to accept or
reject such settlement within the applicable period of time shall be deemed to
be its rejection of such settlement. Notwithstanding the foregoing, the
indemnified party may settle any matter over the objection of the indemnifying
party, but in so doing the indemnified party shall be deemed to have waived any
right to indemnity therefor as to (and only as to) liabilities with respect to
which the indemnifying party has acknowledged in writing its indemnity
obligation.
8.11 Waiver of Certain Damages. Each of the parties hereby waives and
-------------------------
agrees not to seek indirect, consequential, punitive or exemplary damages of
any kind with respect to any Claim or dispute arising out of or relating to this
Agreement or breach hereof. This provision shall not apply to claims by Third
Parties (excluding Affiliates) and shall not diminish or affect in any way the
parties' rights and obligations under any indemnities provided for in this
Agreement.
8.12 Limitation on Indemnities. In no event shall an indemnifying party
-------------------------
have any obligation of indemnification to the indemnified party, if the Claim
for which indemnity is sought was caused by the gross negligence or willful
misconduct of the indemnified party or its officers, directors, employees,
agents, Affiliates, successors and assigns, nor shall any indemnity provisions
in this Agreement apply to or be deemed to apply to matters affecting
properties (real, personal or mixed) and appurtenant
20
<PAGE>
rights (contractual or otherwise) other than those which are covered by this
Agreement.
ARTICLE 9. SPECIAL WARRANTY AND DISCLAIMERS
--------------------------------------------
9.1 Special Warranty of Title. Seller shall warrant title to and forever
-------------------------
defend title to the Properties conveyed to Buyer against every person whomsoever
lawfully claiming title to the Properties, or any part thereof by, through or
under Seller, but not otherwise.
9.2 Disclaimer - Representations and Warranties. Without in any manner
-------------------------------------------
affecting or diminishing Seller's indemnity obligations under Section 8.2 and
8.3 or Buyer's due diligence rights under Article 5 above, Buyer acknowledges
and agrees that the Properties are being transferred, assigned and conveyed from
Seller to Buyer "AS-IS, WHERE-IS", and with all faults in their present
condition and state of repair, without recourse. Except as expressly set forth
in this Article 10, Seller hereby expressly disclaims any and all
representations and warranties concerning the Properties, express, statutory,
implied or otherwise, including without limitation: (a) any warranty of title
(except for the special warranty of title set forth in Article 9.1), (b) the
existence of any and all prospects, (c) the geographic, geologic or geophysical
characteristics associated with any and all prospects, (d) the existence,
quality, quantity or recoverability of hydrocarbon reserves associated with the
Properties, (e) the costs, expenses, revenues or receipts associated with the
Properties, (f) the contractual, economic or financial data associated with the
Properties, (g) the continued financial viability or productivity of the
Properties, (h) the environmental or physical condition of the Properties, (i)
the federal, state, local or tribal income or other tax consequences associated
with the Properties, or the agreements to which the Properties are subject, (j)
the absence of patent or latent defects, (k) safety, (l) state of repair, (m)
merchantability, and (n) fitness for a particular purpose; and Buyer (on behalf
of itself, its officers, agents, employees, Affiliates, successors and assigns)
irrevocably waives such claims.
9.3 Disclaimer - Statements and Information. Seller has not willfully
---------------------------------------
omitted from the materials furnished to Buyer for review any data or information
which would reasonably be expected to have a material adverse effect upon the
Properties. Except as immediately represented above, Seller expressly disclaims
any and all liability and responsibility for and associated with the quality,
accuracy, completeness or materiality of the data, information and materials
furnished (electronically, orally, by video, in writing or any other medium) at
any time to Buyer, its officers, agents, employees or Affiliates in connection
with the transaction contemplated herein, including without limitation: (a) the
existence of any and all prospects, (b) the geographic, geologic or geophysical
characteristics associated with any and all prospects, (c) the existence,
21
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quality, quantity or recoverability of hydrocarbon reserves associated with the
Properties, (d) the costs, expenses, revenues or receipts associated with the
Properties, (e) the contractual, economic or financial data associated with the
Properties, (f) the continued financial viability or productivity of the
Properties, (g) the environmental or physical condition of the Properties, and
(h) the federal, state, local or tribal income or other tax consequences
associated with the Properties, or the agreements to which the Properties are
subject; and Buyer (on behalf of itself, its officers, agents, employees,
Affiliates, successors and assigns) irrevocably waives such claims.
ARTICLE 10. SELLER'S REPRESENTATIONS AND WARRANTIES
----------------------------------------------------
Seller represents and warrants to Buyer that, to the best of Seller's
knowledge, on the date hereof and as of Closing:
10.1 Organization and Good Standing. Seller is a corporation duly
------------------------------
organized, validly existing and in good standing under the Laws of the State of
Delaware, and has all requisite corporate power and authority to own and lease
the Properties. Seller is duly licensed or qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which the
Properties are located.
10.2 Corporate Authority; Authorization of Agreement. Seller has all
-----------------------------------------------
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated herein and to perform all of the
terms and conditions to be performed by it as provided for in this Agreement.
The execution and delivery of this Agreement by Seller, the performance by
Seller of all of the terms and conditions to be performed by it and the
consummation of the transactions contemplated herein have been duly authorized
and approved by all necessary corporate action. This Agreement has been duly
executed and delivered by Seller and constitutes the valid and binding
obligation of Seller, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency or other
Laws relating to or affecting the enforcement of creditors' rights and general
principles of equity (regardless of whether such enforceability is considered in
a proceeding at law or in equity).
10.3 No Violations. Assuming expiration or termination of the applicable
-------------
waiting period under the HSR Act, if applicable, the execution and delivery of
this Agreement by Seller does not, and the fulfillment and compliance with the
terms and conditions hereof and the consummation of the transactions
contemplated herein, will not:
10.3.1 Conflict with or require the consent of any person or entity
under any of the terms, conditions or provisions of the certificate of
incorporation or bylaws of Seller;
22
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10.3.2 Violate any provision of, or require any filing, consent or
approval under any Law applicable to or binding upon Seller (assuming
receipt of all consents and approvals of governmental entities or tribal
authorities customarily obtained subsequent to the transfers of title);
10.3.3 Conflict with, result in a breach of, constitute a default
under or constitute an event that with notice or lapse of time, or both,
would constitute a default under, accelerate or permit the acceleration of
the performance required by, or require any consent, authorization or
approval under: (i) any mortgage, indenture, loan, credit agreement or other
agreement, evidencing indebtedness for borrowed money to which Seller is a
party or by which Seller is bound, or (ii) any order, judgment or decree of
any governmental entity or tribal authority; or
10.3.4 Result in the creation or imposition of any lien or
encumbrance upon the Properties.
10.4 Absence of Certain Changes. Between the date of execution of this
--------------------------
Agreement and Closing, there has not been without Buyer's prior written consent:
10.4.1 A waiver of any right of material value relating to the
Properties, other than in the ordinary course of business;
10.4.2 A sale, lease or other disposition of the Properties, other
than in the ordinary course of business;
10.4.3 A mortgage, pledge or grant of a lien or security interest in
any of the Properties; or
10.4.4 A contract or commitment to do any of the foregoing.
10.5 Operating Costs. All costs incurred in connection with the operation
---------------
of the Properties have been fully paid and discharged by Seller, except normal
expenses incurred in operating the Properties within the previous sixty (60)
Days or as to which Seller has not yet been billed.
10.6 Litigation. Except as set forth in Exhibit "G" or disclosed prior to
----------
Closing, there is no action, suit or proceeding pending against Seller which
would have a material adverse effect on the value or operation of the Properties
or that would prevent the consummation of the transaction contemplated by this
Agreement. Amoco shall retain sole risk and responsibility of the litigation
matters referenced in Exhibit "G" to the extent their underlying Claims relate
to the period of time prior to Closing. Subject to Article 12.6, Buyer shall
assume risk and responsibility for such litigation matters only to the extent,
if any, that their underlying Claims relate to: (a) the Properties, and (b) the
period of time subsequent to Closing.
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10.7 Bankruptcy. There are no bankruptcy, reorganization or receivership
----------
proceedings pending, being contemplated by or threatened against Seller.
ARTICLE 11. BUYER'S REPRESENTATIONS AND WARRANTIES
--------------------------------------------------
Buyer represents and warrants to Seller that, to the best of Buyer's
knowledge, on the date hereof and as of Closing:
11.1 Organization and Good Standing. Buyer is a corporation duly organized,
------------------------------
validly existing and in good standing under the Laws of the State of Oklahoma
and has all requisite corporate power and authority to own and lease the
Properties. Buyer is duly licensed or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the Properties
are located.
11.2 Corporate Authority; Authorization of Agreement. Buyer has all
-----------------------------------------------
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated herein and to perform all the terms
and conditions to be performed by it as provided for in this Agreement. The
execution and delivery of this Agreement by Buyer, the performance by Buyer of
all the terms and conditions to be performed by it and the consummation of the
transactions contemplated herein have been duly authorized and approved by all
necessary corporate action. This Agreement has been duly executed and delivered
by Buyer and constitutes the valid and binding obligation of Buyer, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other Laws relating to or affecting the
enforcement of creditors' rights and general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
11.3 No Violations. Assuming expiration or termination of the applicable
-------------
waiting period under the HSR Act, if applicable, the execution and delivery of
this Agreement by Buyer does not, and the fulfillment and compliance with the
terms and conditions hereof and the consummation of the transactions
contemplated herein, will not:
11.3.1 Conflict with or require the consent of any person or entity
under any of the terms, conditions or provisions of the certificate of
incorporation or bylaws of Buyer;
11.3.2 Violate any provision of, or require any filing, consent or
approval under any Law applicable to or binding upon Buyer; or
11.3.3 Conflict with, result in a breach of, constitute a default
under or constitute an event that with notice or lapse of time, or both,
would constitute a default under, accelerate or permit the acceleration of
the performance required by, or require any consent, authorization or
approval under: (i) any mortgage, indenture, loan, credit agreement or
other agreement evidencing indebtedness for borrowed money to which
24
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Buyer is a party or by which Buyer is bound, or (ii) any order, judgment or
decree of any governmental entity or tribal authority.
11.4 SEC Disclosure. Buyer is acquiring the Properties for its own account
--------------
for use in its trade or business, and not with a view toward or for sale in
connection with any distribution thereof, nor with any present intention of
making a distribution thereof within the meaning of the Securities Act of 1933,
as amended.
11.5 Independent Evaluation. Buyer represents that it is sophisticated in
----------------------
the evaluation, purchase, ownership and operation of oil and gas properties and
related facilities. In making its decision to enter into this Agreement and to
consummate the transaction contemplated herein, Buyer represents that: (a) it
has relied or shall rely solely on its own independent investigation and
evaluation of the Properties, and (b) it has satisfied or shall satisfy itself
as to the physical and environmental condition of the Properties.
11.6 Buyer's Reliance. Buyer acknowledges and agrees that it is entitled to
----------------
rely only on the express representations and warranties set forth in this
Agreement.
ARTICLE 12. ADDITIONAL COVENANTS AND CONSIDERATIONS
---------------------------------------------------
12.1 Subsequent Operations. Seller makes no representations or warranties
---------------------
to Buyer as to the transferability or assignability of operatorship of the
Properties. Buyer acknowledges that the rights and obligations associated with
operatorship of the Properties are governed by the applicable agreement(s) and
that operatorship of the Properties will be decided in accordance with the terms
of said agreement(s). Within ten (10) Days after Closing, Seller shall send out
notices, where applicable, advising working interest owners of the Properties it
operates that it has transferred its interests in the Properties to Buyer.
Within fifteen (15) Days after Closing, Buyer shall send out ballots, where
applicable, associated with the selection of a successor operator of the
Properties. Seller shall have no obligation under this Agreement or otherwise
to send out notices balloting for the selection of a successor operator.
12.2 [Intentionally omitted.]
12.3 Transition Agreement. At Closing, Buyer and Seller shall execute the
--------------------
Transition Agreement.
12.4 License Agreement(s). At Closing, Buyer and Seller shall execute the
--------------------
License Agreement - SAMS, covering certain proprietary technology of Seller,
including the "SAMS" automation system. If requested by Seller, Buyer shall
execute and deliver to Seller a License Agreement - Seismic in a mutually agreed
form, granting to Seller, at no cost to Seller, a right and license to use the
25
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seismic data, or any portion thereof, conveyed to Buyer under the terms of this
Agreement.
12.5 Sublease Agreement. At Closing, Buyer and Seller shall execute the
------------------
Sublease Agreement covering various compressors, separators and other facilities
located on the Properties which are subject to an existing sublease(s) from
Amoco Equipment Leasing Company to Seller.
12.6 Settlement of Outstanding Litigation. Seller shall not settle any
------------------------------------
claims, litigation or other disputes which involve the Properties, or any
portion thereof, as of the Closing in any manner which would decrease Buyer's
net revenue interest in the Properties or would otherwise materially and
adversely affect Buyer's ownership or operation of the Properties without
Buyer's written consent. If any such claims, litigation or other disputes are
resolved by arbitration, litigation or otherwise (whether or not Buyer approved
any settlement proposal related thereto) which results in a decrease in Buyer's
net revenue interest in the Properties or otherwise materially and adversely
affects Buyer's ownership or operation of the Properties ("Adverse
Consequence"), Buyer is entitled to give notice (in accordance with Article 8.9)
of such Adverse Consequence to Seller within ninety (90) Days after Buyer
receives actual knowledge of the Adverse Consequence, and each such Adverse
Consequence for which notice is so given, shall be considered an Alleged Title
Defect under this Agreement, if it meets the definitional requirements of
Article 1.4, notwithstanding the termination of the one hundred twenty (120) Day
limitation provided in Article 4.2.
12.7 Certain Cooperation. Seller agrees that it shall provide Buyer upon
-------------------
written request of Buyer copies of historical financial data for the Properties
for the years 1995 and 1996 and 1997 year-to-date information up to the date of
Closing (including monthly and calendar quarter summaries within those periods),
including lease operating statements and lease operating costs reports and shall
allow Buyer's employees and representatives reasonable access upon prior written
notice to supporting records, invoices and other source documents insofar as
required to comply with Buyer's legal reporting requirements, provided, however,
that Seller shall provide only such data as it has in its possession and shall
not be obligated to generate such data in any particular form or format.
ARTICLE 13. PERSONNEL MATTERS
-----------------------------
13.1 Employee Lists. Prior to Closing, Seller will make available to Buyer
--------------
a list of employees who are directly engaged in the operation, maintenance,
administration, measurement, automation and similar functions for the Properties
subject to this Agreement, who are available for immediate employment by Buyer
commencing at Closing. Buyer shall not solicit employment of any employees of
Seller other than those on the list provided without obtaining the advance
written permission of Seller. This restriction shall remain in effect for
twenty four (24) months after Closing.
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13.2 Offers of Employment. Buyer may make offers of employment to any of
--------------------
the employees included on the list provided by Seller. Offers of employment
shall be effective upon Closing or, if Seller operates the Properties for a
transition period after Closing, then such offers shall be effective at the
conclusion of the transition period. Any offers of employment made by Buyer to
employees of Seller shall be at substantially similar salaries or wages, with
similar duties and responsibilities at the same location that such employee had
immediately prior to Closing.
13.3 Savings Plan. Buyer shall allow employees to participate in the Buyer
------------
Savings Plan upon each such employee's earliest eligibility date under the terms
and conditions of the Buyer Savings Plan. If such employee terminates service
after participating in the Buyer Savings Plan, but prior to attaining the full
vesting date under such plan, Buyer shall pay to such employee from general
company assets the difference between such employee's unreduced (pre-forfeiture)
account balance and the amount actually paid by the Buyer Savings Plan to such
employee. Buyer shall permit employees at their option to transfer their Amoco
Savings Plan accounts to the Buyer Savings Plan pursuant to a trust to trust
transfer within ninety (90) days of Closing or their date of termination from
Seller, whichever is later, and to transfer any outstanding loan balances to the
Buyer Savings Plan under terms and conditions established by the Buyer Savings
Plan. Employees shall be fully vested in all assets transferred from the Amoco
Savings Plan to the Buyer Savings Plan.
13.4 Other Employee Benefits. Except as provided in Section 13.3, Buyer
-----------------------
shall recognize the prior service with Seller and its Affiliates of employees
for all purposes, including, without limitation, eligibility, vesting, and
benefit determination and accrual, in connection with other employee benefits
and policies such as vacations, bonuses, sickness and disability leave and all
other employee benefits and policies. Except as otherwise provided in this
Agreement, employees and their eligible dependents who are enrolled in medical,
dental, life insurance and long-term disability plans available to such
employees as a result of their employment by Seller immediately prior to Closing
shall be eligible to enroll in any plan or plans established by Buyer which
provide similar benefits to its employees as of Closing. If employees enroll
in such plans, no physical examination or other proof of insurability shall be
required. Also, all coverage exclusions and limitations relating to waiting
periods or pre-existing conditions with respect to such personnel or their
dependents shall be waived. Any expenses incurred by employees or their
dependents incurred prior to and including the end of the transition period
which are used to satisfy deductibles or co-pay amounts for 1997 under Seller's
welfare benefit plans (as defined under Section 3(1) of ERISA) may be used to
satisfy any deductibles and co-pay amounts for Buyer's current plan year under
the corresponding plans of Buyer.
13.5 Accrued and Unused Vacation. Between the end of the transition period
---------------------------
and the end of the same calendar year in which transition occurs, Buyer shall
permit all Personnel to take the same number of days of vacation as they
27
<PAGE>
would have been eligible to take immediately prior to their termination under
the vacation policy of Seller, based upon the original hire date of such
employee by Seller or its Affiliates.
13.6 Severance. Buyer acknowledges that employees would have been eligible
---------
to receive the severance benefits described in the current 1997 Amoco
Corporation and Participating Affiliates Severance Benefits Plan (the "Amoco
Severance Plan"), had they not been offered comparable positions with Buyer.
Therefore, Buyer agrees to provide the severance benefits that described in the
Amoco Severance Plan, including, without limitation, a severance allowance,
medical benefits, life insurance, and educational assistance, to employees whose
employment is terminated by Buyer or who are offered positions with Buyer that
require a geographical relocation or who suffer wage cuts effected by Buyer
during the period of eighteen (18) months after Closing under circumstances that
would make such employees eligible for the severance benefits described in the
Amoco Severance Plan. During this same eighteen (18) month period, Buyer also
agrees to provide an additional sixty (60) Days on the payroll after such
employees are notified of eligibility for severance benefits, which is
consistent with the past practice and policy of Seller, and to provide up to
Five Thousand Dollars ($5,000) in outplacement benefits to each of such
employees, with the level of outplacement benefits actually provided being
commensurate with the level of benefits provided by Seller. For purposes of
calculating the severance allowance described in the Amoco Severance Plan,
"credited service" shall include service with Seller and/or its Affiliates in
addition to service with Buyer and/or its Affiliates for employees. Buyer also
agrees to include Seller and its Affiliates as third party beneficiaries in any
release executed by employees in order to receive the severance benefits
described in the Amoco Severance Plan. Lastly, Buyer agrees not to require
employees to execute a release in order to receive the sixty (60) Days on the
payroll and the outplacement benefits described above.
ARTICLE 14. HSR FILINGS
-----------------------
14.1 HSR Filings. If compliance with the HSR Act is required in connection
-----------
with the transaction contemplated under this Agreement, as promptly as
practicable and in any event not more than fifteen (15) Business Days following
the date on which the parties have executed this Agreement, both parties will
file with the Federal Trade Commission and the Department of Justice, as
applicable, the notification and report forms required for the transactions
contemplated herein and will as promptly as practicable furnish any supplemental
information which may be reasonably requested in connection therewith. Each
party shall request expedited treatment of such filing. If failure by either
party to obtain timely authorization from the Federal Trade Commission or the
Department of Justice results in the inability of the parties to Close on the
Closing Date, the time for Closing shall automatically be extended until such
date as Closing can occur in compliance with the HSR Act.
28
<PAGE>
ARTICLE 15. CONDITIONS PRECEDENT TO CLOSING
-------------------------------------------
15.1 Conditions Precedent to Seller's Obligation to Close. Seller shall be
----------------------------------------------------
obligated to consummate the sale of the Properties as contemplated by this
Agreement on the Closing Date, provided the following conditions precedent have
been satisfied or have been waived by Seller:
15.1.1 All representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at and as of
Closing as though such representations and warranties were made at and as
of such time; and
15.1.2 Buyer shall have complied in all material respects with all
obligations and conditions contained in this Agreement to be performed or
complied with by Buyer on or prior to Closing.
15.2 Conditions Precedent to Buyer's Obligation to Close. Buyer shall be
---------------------------------------------------
obligated to consummate the purchase of the Properties as contemplated by this
Agreement on the Closing Date, provided the following conditions precedent have
been satisfied or have been waived by Buyer:
15.2.1 All representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects at and as of
Closing as though such representations and warranties were made at and as
of such time; and
15.2.2 Seller shall have complied in all material respects with all
obligations and conditions contained in this Agreement to be performed or
complied with by Seller on or prior to Closing.
15.3 Conditions Precedent to Obligation of Each Party to Close. The
---------------------------------------------------------
parties shall be obligated to consummate the sale and purchase of the Properties
as contemplated in this Agreement on the Closing Date, provided the following
conditions precedent have been satisfied or have been waived by the applicable
party:
15.3.1 No suit, action or other proceedings shall be pending before
any court or governmental entity in which it is sought by a person or
entity other than the parties hereto or any of their Affiliates, officers,
directors or employees to restrain, enjoin or otherwise prohibit the
consummation of the transactions contemplated by this Agreement, or to
obtain substantial damages in connection with the transaction contemplated
herein, nor shall there be any investigation by a governmental entity
pending which might result in any such suit, action or other proceedings
seeking to restrain, enjoin or otherwise prohibit the consummation of the
transaction contemplated by this Agreement;
29
<PAGE>
15.3.2 If applicable, consummation of the transaction contemplated
herein shall not have been prevented from occurring by (and the required
waiting period, if any, shall have expired under) the HSR Act and the rules
and regulations of the Federal Trade Commission or the Department of
Justice;
15.3.3 All consents and approvals, if any, whether required
contractually or by applicable federal, state, local or tribal Law, or
otherwise necessary for the execution, delivery and performance of this
Agreement (except for consents and approvals of governmental entities or
tribal authorities customarily obtained subsequent to the transfer of
title) shall have been obtained and delivered to Buyer or Seller, as
applicable, by Closing and shall not have been withdrawn or revoked; and
15.3.4 With respect to Properties which have not been excluded from
this Agreement because of exercise of a preferential purchase right, if
any, the preferential purchase rights applicable to such Properties shall
have been waived, or the time to elect under such preferential purchase
rights shall have elapsed, prior to Closing.
ARTICLE 16. THE CLOSING
-----------------------
16.1 Closing. Three (3) Business Days prior to the Closing Date, Seller
-------
shall provide Buyer with a Closing statement setting forth the Purchase Price
adjusted in accordance with the terms of this Agreement. Seller shall
additionally provide Buyer with wiring instructions designating the account or
accounts to which the Closing funds are to be delivered in accordance with
Article 16.3.5. Closing shall be held in Seller's office at the 4th Floor, 550
WestLake Park Boulevard, Houston, Texas 77079, or such other location as
mutually agreed in writing by Seller and Buyer.
16.2 Obligations of Seller at Closing. At Closing, Seller shall deliver to
--------------------------------
Buyer, unless waived by Buyer, the following:
16.2.1 A document conveying all of Seller's right, title and
interests in and to the Properties substantially in the form of the
Assignment and Bill of Sale attached hereto as Exhibit "I". The Assignment
and Bill of Sale shall be executed and acknowledged in four (4) multiple
originals or such greater number as agreed between the parties;
16.2.2 A document conveying all of Seller's right, title and
interests in and to surface interests which are included in the Properties
substantially in the form of the Surface Deed attached hereto as Exhibit
"J". The Surface Deed shall be executed and acknowledged in four (4)
multiple originals or such greater number as agreed between the parties;
30
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16.2.3 A document conveying all of Seller's right, title and
interests in and to the mineral interests which are included in the
Properties substantially in the form of the Mineral Deed attached hereto as
Exhibit "K". The Mineral Deed shall be executed and acknowledged in four (4)
multiple originals or such greater number as agreed between the parties;
16.2.4 Executed and acknowledged assignments of all of Seller's
right, title and interest in and to federal, state or tribal interests
included in the Properties on approved forms for such purpose;
16.2.5 A Certificate executed by an Attorney-in-Fact of Seller (with
a true and correct copy of the Power-of-Attorney from Seller) certifying as
to the matters specified in Articles 15.2.1 and 15.2.2 above substantially
in the form of Exhibit "L";
16.2.6 Letters-in-Lieu of division orders or transfer orders
executed by an Attorney-in-Fact of Seller substantially in the form of
Exhibit "M";
16.2.7 An Opinion of Counsel executed by an attorney for Seller
substantially in the form of Exhibit "N";
16.2.8 A Non-Foreign Affidavit executed by an Attorney-in-Fact of
Seller substantially in the form of Exhibit "O";
16.2.9 A Transition Agreement executed by an Attorney-in-Fact of
Seller substantially in the form of Exhibit "P";
16.2.10 A License Agreement - SAMS substantially in the form of
Exhibit "Q", and a License Agreement - Seismic in a mutually agreed form, as
provided for in Article 12.4, executed by an Attorney-in-Fact of Seller.
16.2.11 A Sublease Agreement executed by an Attorney-in-Fact of
Seller substantially in the form of Exhibit "R";
16.2.12 A Stock Warrant Agreement executed by an Attorney-in-Fact of
Seller under the terms outlined on Exhibit "S";
16.2.13 Evidence that all consents and approvals prerequisite for the
sale and conveyance of the Properties (except for consents and approvals of
governmental entities or tribal authorities customarily obtained subsequent
to the transfer of title) have been obtained, as well as evidence of waiver
or lapse of any unexercised preferential purchase rights applicable to the
Properties; and
31
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16.2.14 Such other instruments as necessary to carry out Seller's
obligations under this Agreement.
16.3 Obligations of Buyer at Closing. At Closing, Buyer shall deliver to
-------------------------------
Seller, unless waived by Seller, the following:
16.3.1 The adjusted Purchase Price (plus Computed Interest on the
Purchase Price from the Effective Time through Closing), less Deposit (plus
Computed Interest on the Deposit from the date of receipt by Seller until
Closing), by wire transfer in accordance with Article 3.
16.3.2 The Assignment and Bill of Sale, executed and properly
acknowledged, referred to in Article 16.2.1;
16.3.3 The Surface Deed, executed and properly acknowledged,
referred to in Article 16.2.2;
16.3.4 The Mineral Deed, executed and properly acknowledged,
referred to in Article 16.2.3;
16.3.5 The federal, state and tribal assignments, executed and
properly acknowledged, referred to in Article 16.2.4;
16.3.6 A Certificate executed by an authorized officer of Buyer
certifying as to the matters specified in Articles 15.1.1 and 15.1.2
substantially in the form of Exhibit "L";
16.3.7 Letters-in-Lieu of division orders or transfer orders
executed by an authorized officer of Buyer substantially in the form of
Exhibit "M";
16.3.8 An Opinion of Counsel executed by an attorney of or for Buyer
substantially in the form of Exhibit "N";
16.3.9 A Transition Agreement executed by an authorized officer of
Buyer substantially in the form of Exhibit "P";
16.3.10 A License Agreement - SAMS substantially in the form of
Exhibit "Q", and a License Agreement - Seismic in a mutually agreed form, as
provided for in Article 12.4, executed by an authorized officer;
16.3.11 A Sublease Agreement executed by an authorized officer of
Buyer substantially in the form of Exhibit "R";
16.3.12 A Stock Warrant Agreement executed by an authorized officer
of Buyer under the terms outlined on Exhibit "S";
32
<PAGE>
16.3.13 Evidence of compliance with all governmental and tribal
requirements, if any, for the posting of plugging or other applicable bonds
relating to the ownership or operation of the Properties; and
16.3.14 Such other instruments as necessary to carry out Buyer's
obligations under this Agreement.
16.4 Possible Trade of Properties. Prior to Closing, Seller may elect to
----------------------------
review certain properties owned by Buyer for a possible trade; such properties
were specified in a letter from Buyer to Seller dated November 6, 1997. Seller
may elect to acquire the interest of Buyer in all such properties as part of the
consideration hereunder, and if Seller makes such election Seller and Buyer
shall agree on the terms for the transfer of such properties and at the Closing,
Buyer shall deliver to Seller an Assignment and Bill of Sale covering such
properties in substantially the same form as the Assignment and Bill of Sale in
I."
ARTICLE 17. TERMINATION
-----------------------
17.1 Grounds for Termination. This Agreement may be terminated at any time
-----------------------
prior to Closing:
17.1.1 By the mutual written agreement of Seller and Buyer;
17.1.2 By either Seller or Buyer if the consummation of the
transactions contemplated herein would violate any nonappealable final
order, decree or judgment of any court or governmental entity having
appropriate jurisdiction enjoining or awarding substantial damages in
connection with the consummation of the transactions contemplated herein;
17.1.3 Notwithstanding anything contained in this Agreement to the
contrary, Seller may terminate this Agreement if Closing shall not have
occurred by December 31, 1997.
17.2 Effect of Termination. If this Agreement is terminated in accordance
---------------------
with Article 17.1, such termination shall be without liability to any party,
except return of the Deposit (plus Computed Interest on the Deposit from the
date of receipt by Seller until termination of this Agreement) and performance
of the obligations provided in Articles 17.3, 17.4, 17.5, 18.1, 19.3, 19.10,
19.12, 19.14, 19.15 and 19.17 (which provisions shall survive termination of
this Agreement). If this Agreement is terminated as a result of Buyer's failure
or refusal to perform an obligation hereunder (including without limitation
Closing on the Closing Date) for reasons not specifically excused hereunder),
Seller shall be entitled to retain the Deposit as liquidated damages (and not as
a penalty) to reimburse Seller for its out-of-pocket fees and expenses incurred
in connection with the transactions contemplated by this Agreement. The
liquidated damages
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referenced above shall be in lieu of all other remedies which may be available
at law or in equity.
17.3 Dispute over Right to Terminate. If there is a dispute between the
-------------------------------
parties over either party's right to terminate this Agreement under Article 17.1
or otherwise, Closing shall not occur, as scheduled. The party which disputes
the other party's right to terminate the Agreement may initiate binding
arbitration proceedings in accordance with Article 18.1 within thirty (30) Days
of the date on which Closing was scheduled to occur and, if arbitration is so
initiated, the dispute will be resolved through such binding arbitration
proceeding. If the party which disputes the termination right does not initiate
arbitration to resolve the dispute within the time period specified hereinabove,
such party shall be deemed to have waived for all purposes its right to object
to or dispute such termination.
17.4 Return of Documents. If this Agreement is terminated prior to
-------------------
Closing, Buyer shall return Seller all books, records, maps, files, papers and
other property in Buyer's possession relating to the transaction contemplated by
this Agreement.
17.5 Confidentiality. Notwithstanding the termination of this Agreement or
---------------
any other provision of this Agreement to the contrary, the terms of the
Confidentiality Agreement dated July 23, 1997, by and between Seller and Buyer
("Confidentiality Agreement"), shall remain in full force and effect. If
Closing of the transaction contemplated herein occurs, the Confidentiality
Agreement shall terminate (which termination shall be effective as of the
Closing).
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ARTICLE 18. ARBITRATION
-----------------------
18.1 Arbitration. Unless expressly provided otherwise in this Agreement,
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any and all disputes arising under the terms of this Agreement ("Arbitrable
Dispute") shall be referred to and resolved through the use of binding
arbitration using three (3) arbitrators, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and the Federal
Arbitration Act (Title 9 of the United States Code). If there is any
inconsistency between this Article and any statute or rules, the terms of this
Article shall control the rights and obligations of the parties. Arbitration
shall be initiated within the applicable time limits set forth in this Agreement
and not thereafter or if no time limit is given, within the time period allowed
by the applicable statute of limitations. Arbitration shall be initiated by one
(1) party ("Claimant") serving written notice on the other party ("Respondent")
that the Claimant elects to refer the Arbitrable Dispute to binding arbitration,
and that the Claimant has appointed an arbitrator, who shall be identified in
such notice. The Respondent shall respond to the Claimant within thirty (30)
Days after receipt of Claimant's notice, identifying the arbitrator Respondent
has appointed. The two (2) arbitrators so chosen shall select a third arbitrator
(who must have not less than ten (10) years experience as an oil and gas lawyer)
within thirty (30) Days after the second arbitrator has been appointed. Seller
shall pay the compensation and expenses of the arbitrator named by or for it,
and Buyer shall pay the compensation and expenses of the arbitrator named by or
for it. Seller and Buyer shall each pay one-half of the compensation and
expenses of the third arbitrator. Unless expressly provided otherwise in this
Agreement, all arbitrators must be neutral parties who have never been officers,
directors or employees of the parties or any of their Affiliates. Additionally,
unless expressly provided otherwise in this Agreement, the two (2) arbitrators
named by the parties must have not less than ten (10) years experience in the
oil and gas industry, and must have a formal education in the area of dispute
(i.e., accounting for an accounting dispute, etc.). The hearing shall be
commenced within thirty (30) Days after the selection of the third arbitrator.
The parties and the arbitrators shall proceed diligently and in good faith in
order that the award shall be made as promptly as possible. The decision of the
arbitrators shall be binding on and non-appealable by the parties. The
arbitrators shall not have the authority to grant or award indirect,
consequential, punitive or exemplary damages.
ARTICLE 19. MISCELLANEOUS
-------------------------
19.1 Notices. All notices and other communications required, permitted or
-------
desired to be given hereunder must be in writing and sent by: (a) U.S. mail,
properly addressed as shown below, and with all postage and other charges fully
prepaid, (b) hand delivery, or (c) facsimile transmission. Date of service by
mail and hand delivery is the date on which such notice is received by the
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addressee and by facsimile is the date sent (as evidenced by fax machine
confirmation of receipt), or if such date is not on a Business Day, then on the
next date which is a Business Day. Each party may change its address by
notifying the other party in writing.
If to Seller Amoco Production Company
by mail: P.O. Box 3092
Houston, Texas 77253-3092
Attn: General Manager of Business Development
AEGNA Acquisitions and Divestments
If to Seller by Amoco Production Company
hand delivery: 550 WestLake Park Boulevard, 4th floor
Houston, Texas 77079
Attn: General Manager of Business Development
AEGNA Acquisitions and Divestments
If to Seller Amoco Production Company
by facsimile: Number: 281-366-7544
Attn: General Manager of Business Development
AEGNA Acquisitions and Divestments
If to Buyer Gothic Energy Corporation
by mail: 5727 South Lewis Avenue, Suite 700
Tulsa, OK 74105
Attn: Mr. Michael Paulk
If to Buyer by Gothic Energy Corporation
hand delivery: 5727 South Lewis Avenue, Suite 700
Tulsa, OK 74105
Attn: Mr. Michael Paulk
If to Buyer Gothic Energy Corporation
by facsimile: Number: 918-749-5882
Attn: Mr. Michael Paulk
19.2 Conveyance Costs. Buyer shall be solely responsible for filing and
----------------
recording documents related to the transfer of the Properties from Seller to
Buyer and for all costs and fees associated therewith, including, without
limitation, filing the assignment of the Properties with appropriate federal,
state, local and tribal authorities as required by applicable Law. As soon as
practicable after recording or filing, Buyer shall furnish Seller with all
recording data and evidence of all required filings.
19.3 Brokers' Fees. Buyer has not retained any brokers, agents or finders
-------------
and none are affiliated with Buyer or authorized to act on behalf of Buyer in
this matter. Buyer agrees to release, protect, indemnify, defend and hold
Seller Group harmless from and against any and all Claims with respect to
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any commissions, finders' fees or other remuneration due to any such broker,
agent or finder claiming by, through or under Buyer. Seller has not retained any
brokers, agents or finders (except Morgan Stanley) and none are affiliated with
Seller or authorized to act on behalf of Seller in this matter. Seller agrees to
release, protect, indemnify, defend and hold Buyer Group harmless from and
against any and all Claims with respect to any commissions, finders' fees or
other remuneration due to any such broker, agent or finder (including without
limitation Morgan Stanley) claiming by, through or under Seller.
19.4 Records. Within sixty (60) Days after termination of the Transition
-------
Agreement (except as provided below), Seller shall furnish to Buyer all Records
which are maintained by Seller; provided however, Seller shall be entitled to
retain at Seller's sole expense: (a) copies of any or all such Records, (b)
copies (or if reasonably required by Seller, originals) of any Records required
in connection with litigation or other proceedings pending or threatened against
Seller and associated with the Properties, (c) originals of any Records required
in connection with title or environmental due diligence, (d) originals of any
Records required in connection with the Final Accounting Settlement, (e)
originals of any Records required in connection with any transition activities,
and/or (f) originals of any Records associated with any retained properties or
interests. Any and all original Records retained by Seller shall be furnished
to Buyer within thirty (30) Days after Seller's reasonable need for said Records
ceases. Buyer agrees to maintain the Records received from Seller in accordance
herewith for a period of seven (7) years after the Closing and shall afford
Seller full access to the Records as reasonably requested by Seller. If Buyer
desires to destroy the Records, or any portion thereof, it shall notify Seller
prior to such destruction, and provide Seller the opportunity to take possession
of the same.
19.5 Further Assurances. From and after Closing, at the request of Seller
------------------
but without further consideration, Buyer will execute and deliver or use
reasonable efforts to cause to be executed and delivered such other instruments
of conveyance and take such other actions as Seller reasonably may request to
more effectively put Seller in possession of any property which was not intended
by the parties or should not have been conveyed by Buyer (including without
limitation, reassignment from Buyer to Seller of any Properties which were
conveyed in violation of a valid preferential right to purchase or consent to
assignment). From and after Closing, at the request of Buyer but without further
consideration, Seller shall execute and deliver or use reasonable efforts to
cause to be executed and delivered such other instruments of conveyance and take
such other actions as Buyer reasonably may request to more effectively put Buyer
in possession of the Properties. If any of the Properties are incorrectly
described, the description shall be corrected upon proof of the proper
description. From and after Closing, Buyer and Seller shall each execute,
acknowledge and deliver to the other such further instruments and take such
further action as may be reasonably requested in order to more effectively
assure to the other the full beneficial use and enjoyment of the Properties and
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otherwise to accomplish the purposes of the transaction contemplated by this
Agreement.
19.6 Survival of Representations and Warranties. The representations and
------------------------------------------
warranties contained in Article 10 of this Agreement shall terminate one (1)
year after Closing. All other representations, warranties, indemnities,
covenants and agreements contained in this Agreement shall survive the Closing
indefinitely. The parties have made no representations or warranties, except
those expressly set forth in this Agreement.
19.7 Amendments and Severability. No amendments or other changes to this
---------------------------
Agreement shall be effective or binding on either of the parties unless the same
shall be in writing and signed by both Seller and Buyer. The invalidity of any
one or more provisions of this Agreement shall not affect the validity of this
Agreement as a whole, and in case of any such invalidity, this Agreement shall
be construed as if the invalid provision had not been included herein.
19.8 Successors and Assigns. This Agreement shall not be assigned, either
----------------------
in whole or in part, without the express written consent of the non-assigning
party. The terms, covenants and conditions contained in this Agreement shall be
binding upon and shall inure to the benefit of Seller and Buyer and their
respective successors and assigns, and such terms, covenants and conditions
shall be covenants running with the land and with each subsequent transfer or
assignment of the Properties.
19.9 Headings. The titles and headings set forth in this Agreement have
--------
been included solely for ease of reference and shall not be considered in the
interpretation or construction of this Agreement.
19.10 Governing Law. This Agreement (including administration of the
-------------
binding arbitration provision set forth in Article 18.1) shall be governed by
and construed under the Laws of the State of Oklahoma, excluding any choice of
law rules which may direct the application of the Laws of another jurisdiction.
19.11 No Partnership Created. It is not the purpose or intention of this
----------------------
Agreement to create (and it shall not be construed as creating) a joint venture,
partnership or any type of association, and the parties are not authorized to
act as agent or principal for each other with respect to any matter related
hereto.
19.12 Public Announcements. Neither Seller nor Buyer (including any of
--------------------
their Affiliates in either case) shall issue a public statement or press release
with respect to the transaction contemplated herein (including the price and
other terms) without the prior written consent of the other party, except as
required by Law or listing agreement with a national security exchange and then
only after prior consultation with the other party.
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19.13 No Third Party Beneficiaries. Nothing contained in this Agreement
----------------------------
shall entitle anyone other than Seller or Buyer or their authorized successors
and assigns to any claim, cause of action, remedy or right of any kind
whatsoever.
19.14 Waiver of Consumer Rights. As partial consideration for the parties
-------------------------
agreeing to enter into this Agreement, the parties each can and do expressly
waive the provisions of the Texas Deceptive Trade Practices Consumer Protection
Act, Article 17.41 et seq., Texas Business and Commerce Code, a law that gives
consumers special rights and protection, and all other consumer protection Laws
of the State of Texas, or any other state, applicable to this transaction that
may be waived by the parties. It is not the intent of the parties to waive and
the parties shall not waive any applicable Law or provision thereof which is
prohibited by Law from being waived. The parties hereto represent that they have
had an adequate opportunity to review the preceding waiver provision, including
the opportunity to submit the same to legal counsel for review and comment and
after consultation with an attorney of their own selection voluntarily consent
to this waiver, and understand the rights being waived herein.
19.15 Not to be Construed Against Drafter. The parties acknowledge that
-----------------------------------
they have had an adequate opportunity to review each and every provision
contained in this Agreement and to submit the same to legal counsel for review
and comment, including without limitation the waivers and indemnities in
Articles 4.3, 5.3, 8, 9, 19.3, 19.6 and 19.14. Based on said review and
consultation, the parties agree with each and every term contained in this
Agreement. Based on the foregoing, the parties agree that the rule of
construction that a contract be construed against the drafter, if any, shall not
be applied in the interpretation and construction of this Agreement.
19.16 Tax Deferred Exchange Election. Either party may elect to structure
------------------------------
the conveyance of the Properties as part of an exchange under Article 1031 of
the Internal Revenue Code of 1986, as amended. The parties agree to execute all
documents, conveyances or other instruments necessary to effectuate an Article
1031 exchange.
19.17 Conspicuousness of Provisions. The parties acknowledge that the
-----------------------------
provisions contained in this Agreement that are set out in "bold" satisfy the
requirement of the express negligence rule and any other requirement at law or
in equity that provisions contained in a contract be conspicuously marked or
highlighted.
19.18 Execution in Counterparts. This Agreement may be executed in
-------------------------
counterparts, which shall when taken together constitute one (1) valid and
binding agreement.
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19.19 Entire Agreement. This Agreement and the Confidentiality Agreement
----------------
supersede all prior and contemporaneous negotiations, understandings, letters of
intent and agreements (whether oral or written) between the parties relating to
the Properties and constitute the entire understanding and agreement between the
parties with respect to the sale and purchase of the Properties.
The parties have executed this Agreement on the day and year first set forth
above.
AMOCO PRODUCTION COMPANY
By: /s/ Lon O. Buehner
---------------------------------
Name: Lon O. Buehner
-------------------------------
Title: Attorney-in-Fact
GOTHIC ENERGY CORPORATION
By: /s/ Michael Paulk
---------------------------------
Name: Michael Paulk
Title: President
40
