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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report October 28, 1996
Commission File Number 0-26662
PANACO, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction or incorporation)
43 - 1593374
(IRS Employer Identification No.)
1050 West Blue Ridge Boulevard, PANACO Building,
Kansas City, MO 64145-1216
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (816) 942 - 6300
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<PAGE>
Item 2. Acquisition or Disposition of Assets.
On August 26, 1996 PANACO entered into a Purchase and Sale Agreement
with Amoco Production Company to acquire Amoco's interest in 13 offshore blocks
comprising six fields in the Gulf of Mexico ("Amoco Properties").
PANACO acquired a 33.3% working interest in the East Breaks 160 Field
(2 blocks) and a 33.3% interest in the High Island 302 Field (1 block), both
operated by Unocal. It acquired a 50% interest in the High Island 309 Field (2
blocks), a 12% interest in the High Island 330 Field (3 blocks) and a 12%
interest in the High Island 474 Field (4 blocks), all operated by Phillips. It
also acquired a 12.5% interest in the West Cameron 180 Field (1 block) operated
by Texaco. Current production, net to the interests acquired, is 680 BOPD and 12
MMCFD of natural gas.
The transaction was closed on October 8, 1996. Proved reserves at
September 1, 1996 attributable to the properties were, net to PANACO's interest,
1,952,100 barrels of oil and condensate and 28.5 Bcf of natural gas, based upon
internal reserve reports prepared by PANACO. Management has identified
significant probable and possible reserves attributable to these properties,
much of which is associated with the West Cameron Field. Set forth elsewhere
herein is reserve information with respect to the properties acquired.
In addition to the mineral interest acquired, PANACO purchased a 33.3%
interest in a 12.67 mile 12" pipeline connecting East Breaks 160 platform to the
High Island Offshore System, a natural gas pipeline system in the Gulf of Mexico
and a 33.3% interest in a 17.47 mile 10" pipeline connecting the East Breaks 160
platform to the High Island Pipeline System, a crude oil pipeline system in the
Gulf of Mexico. HIOS and HIPS are the primary natural gas and crude oil pipeline
systems in that part of the Gulf of Mexico.
The East Breaks 160 platform also serves sub-sea completions belonging
to Mobil in East Breaks Block 117. Under agreements with Mobil the owners of the
East Breaks 160 platform share in certain fees derived by virtue of that
facility's sharing agreement.
The purchase price for the assets acquired in this transaction was
$40.4 million, paid by the issuance of 2,000,000 shares of Common Stock of
PANACO at $4.20 per share and by payment to Amoco of $32,011,994 in cash.
Concurrently with this transaction PANACO entered into a new Primary
Credit Facility with First Union National Bank of North Carolina and Banque
Paribas under which it's reducing revolver was increased to $40 million with an
initial borrowing base of $35 million. In addition to that facility PANACO
borrowed $17 million under a subordinate facility provided by lenders investing
through Kayne Anderson Investment Management, Inc.
1
<PAGE>
AMOCO PROPERTIES
Working Net Revenue Number
Field/Block Interest Interest Of Wells
East Breaks 160 Field
EB 160 (OCS 2647) 0.3333 0.2778 13
EB 161 (OCS 2648) 0.3333 0.2778 10
High Island A-302 Field
HI A-302 (OCS 2732) 0.3333 0.2778 5
High Island A-309 Field
HI A-309 (OCS 2735) 0.4500 0.3750 9
HI A-310 (OCS 3378) 0.5500 0.4583 8
High Island A-330 Field
HI A-330 (OCS 2421) 0.1200 0.1000 25
HI A-349 (OCS 2743) 0.1200 0.1000 9
WC 613 (OCS 3286) 0.1200 0.1000 3
High Island A-474 Field
HI A-474 (OCS 2366) 0.1200 0.1000 18
HI A-489 (OCS 2372) 0.1200 0.1000 22
HI A-499 (OCS 3118) 0.1310 0.1092 6
HI A-475 (OCS 2367) 0.1200 0.1000 0
West Cameron 180 Field
WC 144 (OCS 1953) 0.1250 0.1042 7
2
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of business acquired.
An Audited Schedule of Revenues and Selected Direct Operating
Expenses for the three years ended December 31, 1995 is included herewith
beginning on page F-1.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Financial Information for the three years ended
December 31, 1995, and the six months ended June 30, 1996 is included herein
beginning on page P-1.
(c) Exhibits.
10.14 Purchase and Sale Agreement, dated August 26, 1996, between Amoco
Production Company and PANACO, Inc..
SIGNATURES
Pursuant to the requirements of the securities exchange of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
PANACO, Inc.
/s/ H. James Maxwell
H. James Maxwell, President
October 28, 1996
3
<PAGE>
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The unaudited pro forma schedules of revenues and direct operating
expenses for the six months ended June 30, 1996 and the years ended December 31,
1995, 1994 and 1993, and give effect to the acquisition of the Amoco Properties
by PANACO, Inc., as if the purchase had occurred on January 1, 1993.
The pro forma information is based on historical financial information
of PANACO, Inc., the Zapata Properties, acquired on July 26, 1995, the Bayou
Sorrel Field, acquired on December 27, 1995 and the Amoco Properties acquired on
October 8, 1996. These pro forma statements may not be indicative of the results
that actually would have occurred if the combination had been in effect on the
dates indicated or which may be obtained in the future. The pro forma financial
statements should be read in conjunction with the historical financial
statements of PANACO, Inc., and the historical schedule of revenues and direct
operating expenses of the Amoco Properties.
The historical financial information for the Amoco Properties does not
include insurance expense. The pro forma adjustment reflects management's
estimates of insurance costs equal to $72,000 for the six months ended June 30,
1996, and $144,000 for each year ended December 31, 1995, 1994 and 1993.
Depreciation, depletion and amortization, and general, administrative,
and overhead charges are not shown since sufficient historical data is not
available for the Amoco Properties.
4
<PAGE>
<TABLE>
PRO FORMA COMBINED STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1996
<CAPTION>
AMOCO PRO-FORMA PRO-FORMA
PANACO, INC. PROPERTIES ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
Oil and Gas Revenues $ 10,808,000 $ 7,905,000 $ - $ 18,713,000
Direct Operating
Expenses 4,184,000 1,756,000 72,000 6,012,000
--------- --------- ------ ---------
Revenues in excess of
direct operating expenses $ 6,624,000 $ 6,149,000 $ (72,000) $ 12,701,000
============ =========== =========== =============
YEAR-ENDED DECEMBER 31, 1995
AMOCO PRO-FORMA PRO-FORMA
PANACO, INC. PROPERTIES ADJUSTMENTS COMBINED
Oil and Gas Revenues $ 25,396,000 $ 12,528,000 $ - $ 37,924,000
Direct Operating
Expenses 10,662,000 2,991,000 144,000 13,797,000
---------- --------- ------- ----------
Revenues in excess of
direct operating expenses $ 14,734,000 $ 9,537,000 $ (144,000) $ 24,127,000
============ ============= =========== ============
YEAR-ENDED DECEMBER 31, 1994
AMOCO PRO-FORMA PRO-FORMA
PANACO, INC. PROPERTIES ADJUSTMENTS COMBINED
Oil and Gas Revenues $ 27,766,000 $ 11,135,000 $ - $ 38,901,000
Direct Operating
Expenses 10,970,000 3,158,000 144,000 14,272,000
---------- --------- ------- ----------
Revenues in excess of
direct operating expenses $ 16,796,000 $ 7,977,000 $ (144,000) $ 24,629,000
============ ============ ============ ============
YEAR-ENDED DECEMBER 31, 1993
AMOCO PRO-FORMA PRO-FORMA
PANACO, INC. PROPERTIES ADJUSTMENTS COMBINED
Oil and Gas Revenues $ 27,336,000 $ 12,079,000 $ - $ 34,415,000
Direct Operating
Expenses 11,279,000 2,798,000 144,000 14,221,000
---------- --------- ------- ----------
Revenues in excess of
direct operating expenses $ 16,057,000 $ 9,281,000 $ (144,000) $ 25,194,000
============ ============= =========== ============
</TABLE>
5
<PAGE>
Report of Independent Public Accountants
To the Board of Directors
PANACO, Inc.
We have audited the accompanying Statement of Revenues and Direct Operating
Expenses of the Amoco Properties (to be acquired by PANACO, Inc.,) for each of
the three years in the period ended December 31, 1995. This statement and the
notes thereto are the responsibility of PANACO, Inc.'s management. Our
responsibility is to express an opinion on the statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Statement of Revenues and Direct Operating Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the Statement of Revenues and Direct Operating Expenses referred
to above presents fairly, in all material respects, the revenues and direct
operating expenses of the Amoco Properties for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
Kansas City, Missouri
September 6, 1996
F-6
<PAGE>
<TABLE>
AMOCO PROPERTIES
STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
<CAPTION>
Year Ended December 31 Six Months Ended June 30
(Unaudited)
1995 1994 1993 1996 1995
Revenues:
<S> <C> <C> <C> <C> <C>
Gas $ 8,769,000 $ 7,346,000 $ 8,459,000 $ 5,684,000 $ 4,379,000
Oil & Condensate 3,759,000 3,789,000 3,620,000 2,221,000 1,979,000
--------- --------- --------- --------- ---------
Total Revenues $12,528,000 $11,135,000 $12,079,000 $ 7,905,000 $ 6,358,000
=========== =========== =========== =========== ===========
Direct Operating Expenses $ 2,991,000 $ 3,158,000 $ 2,798,000 $ 1,756,000 $ 1,275,000
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to this statement.
F-7
<PAGE>
AMOCO PROPERTIES
NOTES TO THE STATEMENT OF REVENUES AND
DIRECT OPERATING EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements require the use of estimates, and when applicable,
specific information regarding significant estimates embodied in the financial
statements have been disclosed. The Statement of Revenues and Direct Operating
Expenses was prepared for purposes of complying with the rules and regulations
of the Securities and Exchange Commission and is not intended to be a complete
presentation of the financial position or results of operations of the Amoco
Properties.
Acquisition
The Amoco Properties are to be acquired by PANACO, Inc. on October 8, 1996 from
Amoco Production Company (seller) pursuant to the purchase and sale agreement
dated August 26, 1996. The properties to be acquired are Amoco Production
Company's existing interests in the following offshore blocks: East Breaks 160,
East Breaks 161, High Island (HI) 302, HI 309, HI 310, HI 330, HI 349, HI 474,
HI 489, HI 499, a portion of the HI 475 block, West Cameron (WC) 613, and WC
144.
Revenue Recognition
Revenues are recorded on an accrual basis, with volumes and prices being
estimated for properties during periods when actual production information is
not available. Revenues are recognized based on volumes of production taken and
sold by Amoco which is not materially different from the entitlement method for
the three year period ending December 31, 1995. For each of the periods
presented, Amoco sold substantially all of their production to a related party
at market based prices.
Direct Operating Expenses
Direct operating expenses include necessary and ordinary expenses to maintain
production. Insurance expense is not included since sufficient information is
not available from the Seller. Depreciation, depletion and amortization is not
included. No severance tax expense is included for the Amoco Properties, since
the production from federal offshore waters are not subject to state severance
taxes.
General, Administrative, and Overhead Expenses
General, administrative, and overhead expenses are not presented as sufficient
information is not available from the Seller.
F-8
<PAGE>
Note 2 - SUPPLEMENTAL INFORMATION RELATED TO OIL AND GAS PRODUCING
ACTIVITIES (UNAUDITED)
Quantities of Oil and Gas Reserves
The estimates of proved developed and proved undeveloped reserve quantities of
the Amoco Properties at December 31, 1995 are based upon PANACO's computation at
September 1, 1996 from a report of independent petroleum engineers, retained by
Amoco, and do not purport to reflect realizable values or fair market values of
the properties' reserves. It should be emphasized that reserve estimates are
inherently imprecise and accordingly, these estimates are expected to change as
future information becomes available. These are estimates only and should not be
construed as exact amounts. All reserves are located in the United States.
Reserve quantities for the Amoco Properties were not available at December 31,
1992, 1993, 1994, and 1995, and the balances at those dates were derived from
production activity during 1993, 1994, 1995 and 1996.
Proved reserves are estimated reserves of natural gas and crude oil that
geological and engineering data demonstrate with reasonable certainty to be
recoverable in future years from known reservoirs under existing economic and
operating conditions. Proved developed reserves are those expected to be
recovered through existing wells, equipment, and operating methods.
Proved developed and OIL (BBLS) GAS (MCF)
undeveloped reserves
Estimated reserves as of
December 31, 1992 2,772,000 45,227,000
Production (216,000) (3,874,000)
-------- ----------
Estimated reserves as of
December 31, 1993 2,556,000 41,353,000
Production (236,000) (4,057,000)
-------- ----------
Estimated reserves as of
December 31, 1994 2,320,000 37,296,000
Production (216,000) (5,704,000)
-------- ----------
Estimated reserves as of
December 31,1995 2,104,000 31,592,000
========= ==========
F-9
<PAGE>
Proved developed reserves:
OIL (BBLS) GAS (MCF)
December 31, 1993 2,185,000 35,202,000
December 31, 1994 1,949,000 31,145,000
December 31, 1995 1,733,000 25,441,000
Standardized Measure of Discounted Future Net Cash Flows
Future cash inflows are computed by applying September, 1996 prices of oil and
gas (with consideration of price changes only to the extent provided by
contractual arrangements) to the estimated future production of proved oil and
gas reserves. Estimates of future development and production costs are based on
September, 1996 costs and assume continuation of existing economic conditions.
The estimated future net cash flows are then discounted using a rate of 10
percent per year to reflect the estimated timing of the future cash flows. The
standardized measure of discounted cash flows is the future net cash flows less
the discount at September 1, 1996.
The accompanying table reflects the standardized measure of discounted future
cash flows relating to the proved oil and gas reserves of the Amoco properties
as of the three years ended December 31:
1995 1994 1993
Future cash inflows $108,399,000 $120,927,000 $132,062,000
Future development
and production costs 31,112,000 34,103,000 37,261,000
---------- ---------- ----------
Future net cash flows 77,287,000 86,824,000 94,801,000
10% annual discount
to reflect timing of
cash flows 23,045,000 23,045,000 23,045,000
---------- ---------- ----------
Standardized measure
before income taxes $ 54,242,000 $ 63,779,000 $ 71,756,000
============ ============ =============
Changes Relating to the Standardized Measure of Discounted Future Net Cash Flows
The accompanying table reflects the changes in the standardized measure of
discounted future net cash flows from the sales of oil and gas, net of
production costs attributable to proved oil and gas reserves of the Amoco
properties for each of the three years ended December 31:
1995 1994 1993
Beginning balance $ 63,779,000 $ 71,756,000 $ 81,037,000
Sales of oil and gas,
net of production
costs 9,537,000 7,977,000 9,281,000
--------- --------- ---------
Ending balance $ 54,242,000 $ 63,779,000 $ 71,756,000
============= ============ ============
<PAGE>
Exhibit 10.14
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
AMOCO PRODUCTION COMPANY, SELLER
AND
PANACO, Inc., BUYER
<PAGE>
INDEX
Article I. Definitions..................................................1
Article II. Transfer of the Properties...................................6
2.1 Sale and Purchase............................................6
Article III. Purchase Price...............................................7
3.1 Purchase Price...............................................7
3.2 Earnest Money................................................7
3.3 Allocation...................................................7
Article IV. Due Diligence Review.........................................7
4.1 Due Diligence................................................7
4.2 Alleged Title Defect.........................................7
4.3 Waiver.......................................................8
Article V. Inspection of Premises.......................................8
5.1 Environmental Inspection.....................................8
5.2 Alleged Environmental Condition..............................8
Article VI. Accounting...................................................9
6.1 Accounting Services..........................................9
6.2 Revenues.....................................................9
6.3 Costs and Expenses...........................................9
6.4 Taxes........................................................9
6.5 Prepaids....................................................10
6.6 Miscellaneous Accounting....................................10
6.7 Final Accounting Settlement.................................10
6.8 Post-Final Accounting Settlement............................11
6.9 Audit Rights................................................11
Article VII. Casualty and Condemnation...................................11
7.1 Casualty and Condemnation...................................11
Article VIII. Indemnities.................................................11
8.1 Indemnities.................................................11
Article IX. Warranty and Disclaimer.....................................13
9.1 Warranty of Title...........................................13
9.2 Disclaimer - Representations and Warranties.................13
9.3 Disclaimer - Statements and Information.....................14
9.4 Express Representations.....................................14
Article X. Seller's Representations and Warranties.....................14
10.1 Organization and Good Standing..............................14
10.2 Corporate Authority; Authorization of Agreement.............14
10.3 No Violations...............................................15
10.4 No Default..................................................15
10.5 Absence of Certain Changes..................................15
10.6 Status of Operations........................................16
10.7 Litigation..................................................16
10.8 Compliance with Laws........................................16
10.9 Environmental Claims........................................16
10.1 Bankruptcy..................................................16
Article XI. Buyer's Representations and Warranties......................16
11.1 Organization and Good Standing..............................17
11.2 Corporate Authority; Authorization of Agreement.............17
11.3 No Violations:..............................................17
11.4 SEC Disclosure..............................................18
11.5 Capitalization..............................................18
11.6 Consideration Shares........................................18
11.7 Reports.....................................................18
11.8 MMS Approval................................................18
11.9 Independent Evaluation......................................19
<PAGE>
Article XII. Additional Agreements.......................................19
12.1 Covenants of Seller.........................................19
12.2 Subsequent Operations.......................................19
12.3 Records.....................................................20
12.4 Like Kind Exchange..........................................20
12.5 Buyer's Assumption of Obligations...........................20
12.6 Insurance...................................................20
12.7 Call on Liquids.............................................21
Article XIII. Antitrust Notification......................................21
13.1 Antitrust Notification......................................21
Article XIV. Conditions Precedent to Closing.............................21
14.1 Conditions Precedent to Seller's Obligation to Close........21
14.2 Conditions Precedent to Buyer's Obligation to Close.........22
14.3 Conditions Precedent to Obligation of Each Party............22
14.4 No Waiver...................................................23
Article XV. Termination.................................................23
15.1 Grounds for Termination.....................................23
15.2 Effect of Termination.......................................23
15.3 Return of Documents.........................................24
Article XVI. The Closing.................................................24
16.1 Closing.....................................................24
16.2 Obligations of Seller at Closing............................24
16.3 Obligations to Buyer at Closing.............................25
Article XVII. Miscellaneous...............................................26
17.1 Notices.....................................................26
17.2 Conveyance Costs............................................28
17.3 Broker's Fees...............................................28
17.4 Further Assurances..........................................28
17.5 Survival of Representations and Warranties..................29
17.6 Amendments and Severability.................................29
17.7 Successors and Assigns......................................29
17.8 Headings....................................................29
17.9 Governing Law...............................................29
17.10 No Partnership Created......................................29
17.11 Media Releases..............................................30
17.12 No Third Party Beneficiaries................................30
17.13 Texas Deception Trade Practices Act.........................30
17.14 Entire Agreement............................................30
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is dated the 26th
day of August, 1996, by and between Amoco Production Company, a Delaware
corporation, with a mailing address of P.O. Box 50879, New Orleans, Louisiana
70150-0879 (hereinafter referred to as "Seller") and PANACO, Inc., a Delaware
corporation, with a mailing address of 1050 West Blue Ridge Boulevard, Kansas
City, Missouri 64145-1216 (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 I. DEFINITIONS
1.1 "Accounting Referee" shall have the meaning set forth in Section 6.7
hereto.
--------------------
1.2 "Alleged Title Defect" shall have the meaning set forth in Section
4.2 hereto; provided however, Buyer shall not be entitled to raise an Alleged
Title Defect unless the individual condition would cause a diminution in value,
or the costs to cure such condition, would exceed Fifty Thousand and No/100
Dollars ($50,000) net to Seller's interest in the affected Property (as
hereinafter defined).
1.3 "Alleged Environmental Condition" shall mean any environmental
condition, as of the Effective Time (as hereinafter defined), that is not in
compliance with the then existing Laws (as hereinafter defined); provided
however, Buyer shall not be entitled to raise an Alleged Environmental Condition
unless the individual condition would cause a diminution in value, or the costs
to cure such condition, would exceed Fifty Thousand and No/100 Dollars ($50,000)
net to Seller's interest in the affected Property.
1.4 "Assignment and Bill of Sale" shall have the meaning set forth in
Section 16.2(a) hereto.
-----------------------------
<PAGE>
1.5 "Assignment of Operating Rights" shall have the meaning set forth in
Section 16.2(c) hereto.
-------------------------------
1.6 "Assignment of Record Title Interest" shall have the meaning set forth
in Section 16.2(b) hereto.
------------------------------------
1.7 "Business Day" shall mean a calendar day excluding Saturdays, Sundays
and legal holidays.
1.8 "Casualty Loss" shall mean any and all loss, damage, or reduction in
value resulting from mechanical failure or defects, catastrophic occurrences,
acts of God, and any other losses which are not the result of normal wear and
tear or of natural reservoir changes.
1.9 "Certificate" shall have the meaning set forth in Sections 16.2(e) and
16.3(e) hereto.
-------------
1.10 "Claim" or "Claims" shall mean any and all claims, losses, damages,
demands, suits, causes of action, liabilities and costs (including attorneys'
fees and costs of litigation) brought by a Third Party (as hereinafter defined).
1.11 "Close" or "Closing" shall mean the consummation of the transfer of
title to the Properties to Buyer, including execution and delivery of all
documents provided herein.
1.12 "Closing Date" shall be on or before September 30, 1996, or such
other date as may be mutually agreed upon by the parties.
1.13 "Computed Interest" shall mean simple interest of ten percent (10%)
per annum using a three hundred sixty-five (365) Day (as hereinafter defined)
year.
1.14 "Confidentiality Agreement" shall mean that certain Confidentiality
Agreement dated the 10th day of June, 1996, by and between Seller and Buyer.
1.15 "Consideration Shares" shall have the meaning set forth in Section 3.1
hereto.
----------------------
1.16 "Day" or "Days" shall mean a calendar day consisting of twenty four
(24) hours from midnight to midnight.
---------------
1.17 "Defensible Title" shall mean, as to the Properties, such title
held by Seller that, subject to and except for the Permitted Encumbrances (as
hereinafter defined):
(a) entitles Seller to receive not less than the "Net Revenue
Interest" set forth in Exhibit "A" and "A-1" of all oil, gas
and associated liquid and gaseous hydrocarbons produced, saved
and marketed from the Properties;
(b) obligates Seller to bear costs and expenses relating to the
ownership, operation, maintenance and repair of wells and
facilities located on or attributable to the Properties in an
amount not greater than the "Working Interest" set forth in
Exhibits "A" and "A-1", unless there is a corresponding
increase in the Net Revenue Interest; and
(c) is free and clear of encumbrances and liens.
<PAGE>
1.18 "Earnest Money" shall have the meaning set forth in Section 3.2
hereto.
---------------
1.19 "Effective Time" shall be September 1, 1996, at 7:00 a.m., local time
where the Properties are located.
----------------
1.20 "Escrow Agreement" shall have the meaning set forth in Section 16.2(i)
hereto.
------------------
. 1.21 "Final Accounting Settlement" shall mean an accounting prepared by Seller
and delivered to Buyer as soon as complete records are available, but not later
than ninety (90) days after Closing. Such accounting shall include all
post-closing matters described in Article VI hereto.
1.22 "Final Settlement Date" shall have the meaning set forth in Section
6.7 hereto.
-----------------------
1.23 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
1.24 "Law" or "Laws" shall mean any and all laws, statutes, ordinances
decrees, orders, judgments, rules, regulations, licenses or permits which are
promulgated, issued, or enacted by a governmental entity having appropriate
jurisdiction.
1.25 "Letters-in-Lieu" shall have the meaning set forth in Section 16.2(f)
hereto.
-----------------
1.26 "Non-Foreign Affidavit" shall have the meaning set forth in Section
16.2(j) hereto.
-----------------------
1.27 "NORM" shall have the meaning set forth in Section 8.1(d) hereto.
------
1.28 "Opinion of Counsel" shall have the meaning set forth in Sections
16.2(g) and 16.3(g) hereto.
--------------------
1.29 "Permitted Encumbrance" shall mean:
(a) Lessors' royalties, overriding royalties, division orders,
reversionary interests and similar burdens, if the net
cumulative effect of such burdens does not operate to reduce
the Net Revenue Interest of any Property to less than the Net
Revenue Interest set forth in Exhibits "A" and "A-1";
(b) Preferential rights to purchase and required third party
consents to assignments and similar agreements with respect to
which, prior to Closing, (i) waivers or consents are obtained
from the appropriate parties, or (ii) the appropriate time
period for asserting such rights has expired without an
exercise of such rights;
(c) Preferential rights to purchase which are exercised by a
Third Party. If, prior to Closing, any holder of a preferential
purchase right notifies Seller that it intends to exercise its
rights with respect to any of the Properties to which its
preferential purchase right applies, then the asset(s) covered
by the preferential right to purchase shall be excluded from
the Properties to be conveyed to Buyer, and the Purchase Price
(as hereinafter defined) shall be reduced by an amount equal to
the value allocated to such asset(s) in accordance with Section
3.3 hereto; provided however, if the holder of the preferential
purchase right fails to consummate the purchase of the
asset(s), then Seller shall so notify Buyer. Within fifteen
(15) Business Days after Buyer's receipt of such notice or
September 30, 1996, whichever is later, Seller shall sell to
Buyer, and Buyer shall purchase from Seller, such asset(s)
under the terms of this Agreement for a price equal to the
value allocated to such asset(s) subject to adjustments under
this Agreement. Provided however, Buyer shall have no
obligation to purchase the asset(s) if Buyer is not notified of
the preferential purchase right holder's failure to close
within forty five (45) Days following Closing. Buyer or Seller
shall have the right to terminate this Agreement if the
preferential rights to purchase which are exercised by Third
Parties affects more than fifteen percent (15%) of the Purchase
Price.
<PAGE>
(d) Liens for taxes or assessments not yet due or not yet delinquent or, if
delinquent, that are being contested in good faith in the normal course of
business;
(e) All rights to consent by, required notices to, filings
with, or other actions by governmental entities in connection
with the sale or conveyance of the Properties, or portion
thereof, if the same are customarily obtained subsequent to
such sale or conveyance;
(f) Easements, rights-of-way, servitude, permits, surface
leases, pipelines, and other easements and rights-of-way, on,
over and through the Properties, to the extent such rights or
interest do not materially interfere with operations on the
Properties;
(g) Liens of operators relating to obligations not yet due or pursuant to
which Seller is not in default;
(h) Title Defects (as hereinafter defined) which Buyer has waived under the
terms of this Agreement;
(i) The terms and conditions of all leases, agreements, contracts,
instruments and documents associated with or attributable to the Properties;
(j) Rights reserved to or vested in any governmental, statutory
or public entity to control or regulate any of the Properties
in any manner, and all applicable Laws of any such authority;
and
(k) Such defects or irregularities in the title to the
Properties that are not such as to interfere with the
operation, value or use of the Properties affected thereby and
that would be considered not material in accordance with
industry standards. For the purpose of this Section 1.26(k),
"material" shall be defined as Fifty Thousand and No/100
Dollars ($50,000) net to Seller's interest in the affected
Property.
1.30 "Property" or "Properties" shall mean all of the following
properties (real, personal or mixed) and rights (contractual or otherwise):
(a) All of Seller's undivided oil and gas leasehold interests
described in Exhibit "A" attached hereto and made a part hereof
by reference;
(b) All of Seller's right, title and interests in, to and
under, or derived from, all of the presently existing and valid
unitization and pooling agreements and the units created
thereby (including all units formed by voluntary agreements and
those formed under orders, regulations, rules or other official
acts of any federal, state or other governmental agency having
jurisdiction), to the extent they relate to any of the
interests described in Exhibit "A";
(c) All of Seller's right, title and interests in, to and
under, or derived from, all of the presently existing and valid
oil sales agreements, casinghead gas sales agreements, gas
sales agreements, processing agreements, gathering agreements,
transportation agreements, and all other agreements to the
extent they relate to any of the interests described in Exhibit
"A"; and
(d) All of Seller's right, title and interests in and to all
personal property, improvements, easements, permits, licenses,
servitude's and rights of way, including but not limited to,
the wells listed in Exhibit "A-1" attached hereto and made a
part hereof by reference (whether producing, plugged and
abandoned, shut-in, injection, or water supply wells), jackets,
platforms, quarters, compressors, flowlines, pipelines,
buildings, communication equipment, tanks, facilities and other
equipment, to the extent the same are owned by Seller and
situated upon, associated with, appurtenant to, or used or held
for future use in connection with the ownership, operation,
maintenance and repair of the interests described in Exhibit
"A".
<PAGE>
1.31 "Purchase Price" shall have the meaning set forth in Section 3.1
hereto.
----------------
1.32 "Registration Rights Agreement" shall have the meaning set forth in
Section 16.2(h) hereto.
-------------------------------
1.33 "Title Defect" shall mean any encumbrance, lien, encroachment or
defect associated with Seller's title to the Properties (excluding Permitted
Encumbrances) that would cause Seller not to have Defensible Title.
1.34 "Third Party" shall mean any person or entity, governmental or
otherwise, other than Seller and Buyer.
-------------
ARTICLE II. TRANSFER OF THE PROPERTIES
2.1 Sale and Purchase. Upon the terms and conditions hereinafter set
forth, Seller agrees to sell, assign, and convey to Buyer on the Closing Date,
all of Seller's right, title, and interests in and to the Properties, effective
as of the Effective Time, and Buyer agrees to buy and accept the Properties from
Seller on the Closing Date, effective as of the Effective Time.
ARTICLE III. PURCHASE PRICE
3.1 Purchase Price. The total purchase price, subject to adjustments as
set forth herein, to be paid to Seller for the Properties by Buyer shall be (a)
Forty-Two Million Two Hundred Seventy Thousand Seventy-Six and No/100 Dollars
($42,270,076), plus (b) Two Million (2,000,000) shares of Buyer's common stock
("Consideration Shares") (collectively the "Purchase Price"). Seller
acknowledges and agrees that the Consideration Shares are restricted securities
within the meaning of the Securities Act of 1933 and the rules and regulations
of the Securities and Exchange Commission promulgated thereunder, and may not be
offered or sold absent an effective registration statement covering such shares
or an opinion of Seller's counsel, acceptable to Buyer, that such registration
is not required. Consistent herewith, Seller and Buyer agree at Closing to
execute the Registration Rights Agreement referenced in Section 16.2(h) hereto,
and Seller's right to dispose of the Consideration Shares shall be controlled by
the Registration Rights Agreement. If Closing occurs after the Effective Time,
then the Purchase Price shall be increased by the Computed Interest from the
Effective Time to Closing.
3.2 Earnest Money. Upon execution of this Agreement, Buyer shall pay to
Seller an earnest money deposit ("Earnest Money") in the amount of Five Million
Ten Thousand and No/100 Dollars ($5,010,000). In the event of Closing, the
Purchase Price shall be credited by the amount of the Earnest Money.
3.3 Allocation. Buyer's good faith allocation of the Purchase Price for
each of the individual fields being conveyed under this Agreement is set forth
in Exhibit "B" attached hereto. Buyer shall provided Seller with an allocation
of the value to each of the individual blocks on or before August 27, 1996. Said
allocation shall be used where appropriate for Seller to provide any required
preferential right to purchase notifications. Seller shall provide any and all
required notifications of preferential right to purchase by August 30, 1996.
ARTICLE IV. DUE DILIGENCE REVIEW
4.1 Due Diligence. Seller shall make available to Buyer, in Seller's
office at 1340 Poydras Street, New Orleans, Louisiana 70112, information in
Seller's possession relating to the title to the Properties, and Buyer shall be
entitled to review said information. Buyer shall have the right to request
copies of any and all title information provided. Seller shall have the copies
requested made and invoice Buyer for the expense associated with copying the
same. Buyer shall pay Seller any and all amounts due within fifteen (15) Days
after receipt of the invoice.
4.2 Alleged Title Defect. As soon as is reasonably practicable
thereafter, but in no event later than five (5) Days prior to Closing, Buyer
shall notify Seller of any Alleged Title Defect(s). Seller may undertake to
satisfy some, all or none of Buyer's Alleged Title Defect(s) at Seller's sole
costs and expense. Buyer and Seller shall meet at least four (4) Days prior to
Closing in an attempt to mutually agree on a proposed remedy with respect to any
Alleged Title Defect which remains uncured. In evaluating the existence or
magnitude of an Alleged Title Defect, due consideration shall be given to the
length of time the Alleged Title Defect has been in existence and whether such
fact, circumstance or condition is of the type expected to be encountered in the
area involved, and whether the Alleged Title Defect is customarily acceptable to
reasonable persons engaged in the business of ownership and operation of oil and
gas properties. Closing shall not be delayed or postponed due to the fact that
an Alleged Title Defect is raised which is not cured by Seller prior to Closing.
Buyer or Seller shall have the right to terminate this Agreement if the Alleged
Title Defect(s) which remain uncured prior to Closing affect more than fifteen
percent (15%) of the Purchase Price.
<PAGE>
4.3 Waiver. All title objections not made by Buyer to Seller within the
time period provided in Section 4.2 above shall be conclusively deemed to have
been waived for all purposes by Buyer, and Buyer shall have no right to seek an
adjustment to the Purchase Price, make a claim against Seller or seek
indemnification from Seller associated with the same.
ARTICLE V. INSPECTION OF PREMISES
5.1 Environmental Inspection. Seller shall use reasonable efforts to
work with the operators to allow Buyer reasonable access to the Properties for
the purpose of examining the environmental conditions of the same. Buyer and
Seller agree that the terms contained in Paragraph eight (8) of the
Confidentiality Agreement shall apply to any and all inspections of the
Properties conducted in accordance with this Section 5.1.
5.2 Alleged Environmental Condition. As soon as is reasonably practical
thereafter, but in no event later than five (5) Days prior to Closing, Buyer
shall notify Seller of any Alleged Environmental Condition(s). Buyer's notice of
Alleged Environmental Condition(s) shall include a complete description of each
individual condition being claimed and the costs associated with remediating the
same which Buyer in good faith attributes thereto. Seller may undertake to
satisfy some, all or none of Buyer's Alleged Environmental Condition(s) at
Seller's sole costs and expense. Buyer and Seller shall meet at least four (4)
Days prior to Closing in an attempt to mutually agree on a proposed remedy with
respect to any Alleged Environmental Condition which remains uncured. In
evaluating the existence or magnitude of an Alleged Environmental Condition, due
consideration shall be given to the length of time the Alleged Environmental
Condition has been in existence and whether such fact, circumstance or condition
is of the type expected to be encountered in the area involved, and whether the
Alleged Environmental Condition is customarily acceptable to reasonable persons
engaged in the business of ownership and operation of oil and gas properties.
Closing shall not be delayed or postponed due to the fact that an Alleged
Environmental Condition is raised which is not cured by Seller prior to Closing.
Buyer or Seller shall have the right to terminate this Agreement if the Alleged
Environmental Condition(s) which remains uncured prior to Closing affect more
than fifteen percent (15%) of the Purchase Price.
ARTICLE VI. ACCOUNTING
6.1 Accounting Services. Seller agrees to perform all record keeping and
accounting services of the nature and quality normally performed by Seller for
the production period from the Effective Time until the end of the month in
which Closing occurs.
6.2 Revenues. All merchantable oil and other liquid hydrocarbons stored
in tanks on the Properties will be gauged to the bottom of the flange as of the
Effective Time, and all oil and other liquid hydrocarbons so gauged shall be for
the account of Seller. Oil and other liquid hydrocarbons in treating, separation
equipment, and tanks below pipeline connections shall not be considered to be
merchantable and shall become the property of Buyer. All revenues associated
with the ownership and operation of the Properties that accrue after the
Effective Time shall be for the account of the Buyer. Revenues from the
Effective Time through the Closing shall be estimated by the parties and
deducted from the Purchase Price. The actual amounts or values associated with
the above (to the extent they vary from the estimates) shall be accounted for in
the Final Accounting Settlement.
6.3 Costs and Expenses. All costs and expenses associated with the
ownership or operation of the Properties prior to the Effective Time shall be
borne by Seller. All costs and expenses associated with the ownership or
operation of the Properties after the Effective Time shall be borne by Buyer.
Costs and expenses from the Effective Time through the Closing shall be
estimated by the parties and added to the Purchase Price. The actual amount of
such costs and expenses (to the extent they vary from the estimates) shall be
accounted for in the Final Accounting Settlement.
<PAGE>
6.4 Taxes. All taxes, including but not limited to, excise taxes, ad
valorem taxes, and any other local, state or federal taxes or assessments
attributable to the Properties prior to the Effective Time shall remain Seller's
responsibility, and all deductions, credits, and refunds pertaining to the
aforementioned taxes or assessments attributable to the Properties prior to the
Effective Time, no matter when received, shall belong to Seller. All taxes,
including but not limited to, excise taxes, ad valorem taxes and any other
local, state or federal taxes or assessments (excluding income taxes from the
Effective Time through Closing) attributable to the Properties after the
Effective Time, shall be Buyer's responsibility, and all deductions, credits,
and refunds pertaining to the aforementioned taxes or assessments attributable
to the Properties after the Effective Time, no matter when received, shall
belong to Buyer. The parties agree that this sale is an occasional sale of
assets by Seller in which Seller does not trade in the ordinary course of
business. The parties will take commercially reasonable actions to establish the
occasional sale exemption from sales tax associated with the contemplated
transaction. Notwithstanding the foregoing, Buyer shall be solely responsible
for all transfer, sales, use or similar taxes resulting from or associated with
the transaction contemplated under this Agreement. Seller shall be responsible
for any and all capital gains taxes or any similar taxes associated with the
transaction contemplated under this Agreement.
6.5 Prepaids. Prepaid insurance premiums, utility charges, rentals and any
other prepaid or accrued payables applicable to periods following the Effective
Time, if any, and attributable to the Properties shall be prorated as of the
Effective Time. The amounts owing from such proration shall be settled in the
Final Accounting Settlement.
6.6 Miscellaneous Accounting. In addition to the items set forth in
Sections 6.2 through 6.5 hereto, any other amounts due between Buyer and Seller
related to the Properties shall be settled in the Final Accounting Settlement.
6.7 Final Accounting Settlement. As soon as reasonably practicable, but
no later than ninety (90) Days after Closing, Seller shall deliver to Buyer a
statement setting forth a detailed final calculation of all post-closing
adjustments as set forth in this Agreement. As soon as reasonably practicable,
but no later than thirty (30) Days after receipt of the statement, Buyer shall
deliver to Seller a written report containing any changes that Buyer proposes be
made to the statement. The parties shall thereafter undertake to agree with
respect to such post-closing adjustments within fifteen (15) Days. If the
parties fail to agree within such fifteen (15) Day period, then the disputed
items shall be resolved by submitting the same to a firm of independent
nationally recognized accountants mutually acceptable to the parties (the
"Accounting Referee"). The Accounting Referee shall resolve the dispute within
thirty (30) Days after having the relevant materials submitted for review. The
decision of the Accounting Referee shall be binding on the parties and
non-appealable. 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 Settlement Date." Any amounts owed by either party to the
other as a result of such adjustments shall be paid within five (5) Business
Days of the Final Settlement Date.
6.8 Post-Final Accounting Settlement: Any revenues received or expenses
paid by Buyer after the Final Accounting Settlement which are applicable to
operations prior to the Effective Time and not expressly conveyed to Buyer shall
be billed or reimbursed to Seller, as appropriate. Any revenues received or
expenses paid by Seller after the Final Accounting Settlement which are
applicable to operations after the Effective Time and not expressly reserved by
Seller shall be billed or reimbursed to Buyer, as appropriate.
6.9 Audit Rights. In order to verify the information provided by the
parties under this Article VI, Buyer and Seller shall each have the right to
conduct an audit of the other party's records relating thereto for a period of
one (1) year after the Closing Date. Any objections not raised within the one
(1) year period shall be conclusively deemed to be waived for all purposes by
the parties.
<PAGE>
ARTICLE VII. CASUALTY AND CONDEMNATION
7.1 Casualty and Condemnation. If a substantial part of the Properties
shall be destroyed prior to Closing by any Casualty Loss or if a substantial
part of the Properties shall be taken in condemnation or if proceedings for such
purposes shall be pending or threatened, either Buyer or Seller may elect to
terminate this Agreement. For the purpose of this Section 7.1, the term
"substantial" shall be defined as fifteen percent (15%) of the Purchase Price.
If either party so elects, neither party shall have any further obligation to
the other hereunder. If not so terminated, this Agreement shall remain in full
force and effect, notwithstanding any Casualty Loss or taking, and all sums paid
to Seller by reason of such Casualty Loss or taking shall be paid by Seller to
Buyer at Closing. In addition, Seller shall assign, transfer and set over unto
Buyer all of the right, title and interests of Seller in and to any unpaid
awards, insurance proceeds or other payments arising out of such Casualty Loss
or taking.
ARTICLE VIII. INDEMNITIES
8.1 Indemnities. Each party hereto represents that it has had an
adequate opportunity to review the following indemnity provisions, including the
opportunity to submit the same to legal counsel for review and comment. Based
upon the foregoing representation, the parties agree as follows:
(a) Subject to the limitations set forth in Sections 8.1(c) and 8.1(d)
below, Seller shall release Buyer from and shall fully protect,
indemnify, and defend Buyer, its officers, agents and employees and hold
them harmless from and against any and all 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 prior to the Effective Time, including but not limited
to, any Claims relating to, injury or death of any person or persons
whomsoever, or damage to or loss of any property or resource, or any
pollution or environmental damage of any kind. The indemnity obligation
provided herein shall apply regardless of cause or of any negligent acts
or omissions of Buyer, its officers, agents, and employees.
(b) Buyer shall release Seller from and shall fully protect, indemnify,
and defend Seller, its officers, agents and employees and hold them
harmless from and against any and all 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 on and after the Effective Time, and from any and all
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 prior to the Effective
Time wherein Sellers indemnity obligation set forth in Section 8.1(a)
has expired or is limited, including but not limited to, any Claims
relating to injury or death of any person or persons whomsoever, or
damage to or loss of any property or resource, or any pollution or
environmental damage of any kind. The indemnity obligation provided
herein shall apply regardless of cause or of any negligent acts or
omissions of Seller, its officers, agents, and employees or whether
occasioned by, incident to or emanate from the unseaworthiness of
vessels or alleged defects in lease equipment, facilities or pipelines.
<PAGE>
(c) Notwithstanding anything contained in Section 8.1(a) to the
contrary, Seller shall have no obligation whatsoever under this
Agreement or otherwise to indemnify Buyer, its officers, agents and
employees from and against any Claim for which Seller has not received a
formal request for indemnification from Buyer under Section 8.1(e)
within one (1) year after the Effective Time and for which Buyer is not
immediately prepared to address said Claim. Seller and Buyer
additionally agree that Seller's indemnity obligation to Buyer, its
officers, agents, and employees associated with Claims attributable to
periods of time prior to the Effective Time shall be expressly limited
to violations of the Law that were in effect as of the Effective Time.
(d) The equipment and sites included in the Properties may contain
asbestos or naturally occurring radioactive materials ("NORM"). Special
procedures may be required for the assessment, remediation, removal,
transportation, or disposal of asbestos and NORM from the Properties.
Buyer agrees to assume any and all liability , no matter whether
attributable to periods of time prior to or subsequent to the Effective
Time, associated with the assessment, remediation, removal,
transportation, and disposal of asbestos or Norm from the Properties and
will conduct these activities in accordance with all applicable Laws.
Notwithstanding anything contained in Section 8.1(a) to the contrary,
Seller shall have no obligation whatsoever under this agreement or
otherwise to indemnify Buyer, its officers, agents, and employees from
and against any Claim associated with or attributable to the presence of
asbestos or NORM on or in connection with the Properties. Additionally,
Buyer agrees to accept full responsibility for Seller's proportionate
share of the cost for maintenance, repair, removal or plugging and
abandonment of all wells, facilities, and equipment included in this
transaction and shall indemnify, defend and hold Seller, its officers,
agents and employees harmless from each and every Claim resulting from
Buyer's failure to comply with the terms and conditions of this Section
8.1(d). Buyer further agrees it will perform such plugging and
abandonment in accordance with the rules and regulations of the Minerals
Management Service, as well as any other applicable Laws.
(e) Each indemnified party hereunder agrees that upon its discovery of
facts giving rise to a claim for indemnity under the provisions of this
Agreement, including without limitation, receipt of notice of any
demand, assertion, action or proceeding, judicial or otherwise, with
respect to any matter to which it believes itself to be entitled to
indemnity under the provisions of this Agreement, it shall give prompt
notice thereof in writing to the indemnifying party, together with a
statement of such information regarding any of the foregoing as it shall
then have. Such notice shall include a formal demand for indemnification
under this Agreement. The indemnified party shall afford the
indemnifying party a reasonable opportunity to pay, settle or contest
the claim and/or remediate the condition at the indemnifying party's
expense.
ARTICLE IX. WARRANTY AND DISCLAIMER
9.1 Warranty of Title. This Agreement and the conveyance of the
Properties from Seller to Buyer shall be without warranty of title of any kind,
express or implied, except by, through and under the Seller, but not otherwise.
9.2 Disclaimer - Representations and Warranties. 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 Agreement, Seller hereby disclaims any and all representations and
warranties concerning the Properties, express or implied, at civil Law, at
common Law, by statute or otherwise, including without limitation, any warranty
of quality, condition (including the physical condition and the environmental
condition), compliance with applicable Laws, absence of latent defects, safety,
state of repair, merchantability or fitness for a particular purpose.
9.3 Disclaimer - Statements and Information. Except as
expressly set forth in this Agreement, Seller hereby disclaims any and all
liability and responsibility for any statement or information relating to the
Properties made or communicated (orally or in writing) to Buyer, including but
not limited to, any opinion, information or advice that may have been provided
to Buyer from Seller or by any of Seller's officers, agents or employees. Seller
expressly disclaims any and all liability and responsibility associated with the
accuracy or completeness of the data, information and materials furnished at any
time to Buyer in connection with the transaction contemplated hereunder,
including but not limited to, the quality or quantity of hydrocarbon reserves,
the revenues, the operating costs, the financial data, the contract data, the
physical condition, the environmental condition or the continued financial or
physical viability of the Properties .
9.4 Express Representations. Buyer acknowledges and agrees that it is only
entitled to rely on the express representations and warranties set forth in this
Agreement.
<PAGE>
ARTICLE X. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer that to the best of Seller's
knowledge:
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.
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. The execution and delivery of this
Agreement by Seller, the performance by Seller of all of the terms and
conditions hereto to be performed by it and the consummation of the transactions
contemplated herein have been duly authorized and approved by all necessary
corporate actions. 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 in equity or at Law).
10.3 No Violations. Assuming expiration or termination of the applicable
waiting period under the HSR Act, if applicable, this Agreement and the
execution and delivery hereof 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:
(a) 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;
(b) Violate any provision of, or require any filing, consent,
authorization or approval under any Law applicable to or binding upon
Seller (assuming receipt of all routine governmental consents typically
received after consummation of transactions of the nature contemplated
by this Agreement);
(c) 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 or instrument evidencing indebtedness for borrowed money
to which Seller is a party or by which Seller is bound or to which any
of the Properties are subject, or (ii) any order, judgment or decree of
any governmental authority; or
(d) Results in the creation or imposition of any lien or encumbrance upon
the Properties.
10.4 No Default. Seller is not in default under and Seller is not aware
of any event that with notice or lapse of time, or both, would constitute a
default under, 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 to which any of the Properties are subject.
10.5 Absence of Certain Changes. There has not been:
(a) Any material sale, lease or other disposition of the Properties;
(b) Any mortgage, pledge or grant of a lien or security interest in any of
the Properties; or
(c) Any contract or commitment to do any of the foregoing.
<PAGE>
10.6 Status and Operations.
(a) For the purpose of this Agreement, the parties have assumed that
Seller is underproduced by 85,038 MMBtu. Except as set forth above,
Seller has not taken or received any material amount of gas, oil, liquid
hydrocarbons or products refined therefrom so that any person may
thereafter be entitled to receive any portion of the interest of Seller
to "balance" any disproportionate allocation. If, as of Closing, the
imbalance is greater or less than the assumed 85,038 MMBtu, then the
parties shall adjust the accounts using a price of Two and No/100
Dollars ($2.00) per MMBtu.
(b) All costs incurred in connection with the operation of the
Properties have been fully paid and discharged, except normal expenses
incurred in operating the Properties within the previous sixty (60)
Days and as to which Seller has not yet been billed.
10.7 Litigation. There are no actions or suits, pending or threatened,
against Seller which could result in a loss or damages or any other relief
which, if granted, 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.
10.8 Compliance with Laws. Seller is in compliance with all Laws
applicable to the Properties noncompliance with which might reasonably be
expected to have a materially adverse effect on the value or operations of the
Properties.
10.9 Environmental Claims. Seller has received no notice of, nor is Seller
aware of any pending or threatened, environmental related Claim.
10.10 Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by, or threatened against Seller.
ARTICLE XI. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller that to the best of Buyer's
knowledge:
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 Delaware
and has all requisite corporate power and authority to own and lease the
Properties
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. The execution and delivery of this
Agreement by Buyer, the performance by Buyer of all the terms and conditions
hereof to be performed by it and the consummation of the transactions
contemplated herein have been duly authorized and approved by all necessary
corporate actions. 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 in equity or at Law).
<PAGE>
11.3 No Violations. Assuming expiration or termination of the applicable
waiting period under the HSR Act, if applicable, this Agreement and the
execution and delivery hereof 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:
(a) 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;
(b) Violate any provision of, or require any filing, consent,
authorization or approval under any Law applicable to or binding upon
Buyer (assuming receipt of all routine governmental consents typically
received after consummation of transactions of the nature contemplated
by this Agreement); or
(c) As of Closing, 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 or instrument evidencing
indebtedness for borrowed money to which Buyer is a party or by which
Buyer is bound or, (ii) any order, judgment or decree of any
governmental authority to which Buyer is subject.
11.4 SEC Disclosure. Buyer is acquiring the Properties for its own
account for use in its trade or business or for investment, 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 Capitalization. The authorized capital stock of Buyer consists of
20,000,000 shares of common stock, $0.01 par value per share and 1,000,000
shares of preferred stock, without par value. As of July 3, 1996, 12,345,361
shares of common stock and no preferred shares were issued and outstanding.
There were also outstanding warrants and options to purchase 289,365 additional
shares of common stock for consideration ranging from $2.00 to $2.38 per share.
11.6 Consideration Shares. The Consideration Shares have been duly
authorized and, when issued in accordance with this Agreement, will be validly
issued, fully paid and nonassessable, will be owned beneficially and of record
by Seller, and will be free and clear of all liens, encumbrances or restrictions
of any nature whatsoever except as set forth in the Registrations Rights
Agreement or as required by applicable securities Laws.
11.7 Reports. Buyer has made available to Seller, and will promptly
furnish to Seller after the date hereof upon Seller's written request, true and
complete copies of (a) all annual, quarterly and other reports (the "Reports")
filed with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934 since December 31, 1993, (b) all definitive proxy
solicitation materials filed with the Securities and Exchange Commission since
December 31, 1993, and (c) any registration statements (other than those
relating to employee benefit plans and Buyer's warrants and options) declared
effective by the Securities and Exchange Commission since December 31, 1993. As
of the respective dates of the Reports, the Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since December 31,
1993, the Buyer has filed with the Securities and Exchange Commission all
material reports, registration statements and other material filings required to
be filed with the Securities and Exchange Commission under the rules and
regulations of the Securities and Exchange Commission.
11.8 MMS Approval. Buyer shall pursue in a diligent manner approval from
the MMS of all instruments confirming the conveyance of the Properties from
Seller to Buyer, including without limitation, Assignment of Record Title
Interest, Assignment of Operating Rights, and similar conveyance documents.
11.9 Independent Evaluation. In making the decision to enter into this
Agreement and to consummate the transaction contemplated herein, Buyer
represents that it has relied solely on its own independent investigation and
evaluation of the Properties and on the express representations contained in
this Agreement and that Buyer has satisfied itself as to the condition of the
Properties. Buyer further acknowledges that it is sophisticated in the purchase,
operation and ownership of oil and gas properties.
<PAGE>
ARTICLE XII. ADDITIONAL AGREEMENTS
12.1 Covenants of Seller. Seller and Buyer agree as follows:
(a) From the date hereof until Closing, without first obtaining the
consent of Buyer, Seller will not:
(i) waive any right of material value relating to any of the Properties;
(ii) convey, encumber, mortgage, pledge or dispose of any of the material
Properties;
(iii) enter into, modify or terminate any material contracts affecting the
Properties; or
(iv) commit itself to do any of the foregoing.
For the purpose of this Section 12.1, "material" shall be defined as
One Hundred Thousand and No/100 Dollars ($100,000).
(b) Seller shall, from the date hereof until Closing, promptly notify
Buyer of any loss or damage to the Properties, or any portion thereof,
known to Seller and exceeding One Hundred Thousand and No/100 Dollars
($100,000).
(c) Seller shall not solicit from any person any proposals or offers, or
enter into any negotiations, relating to the disposition of the
Properties.
12.2 Subsequent Operations. Seller makes no representations or
warranties to Buyer as to the transferability or assignability of operatorship
associated with the Properties. Buyer acknowledges that the rights and
obligations associated with operatorship of the Properties is governed by the
applicable agreement(s) and that operatorship of the properties will be decided
in accordance with the terms of said agreement(s).
12.3 Records. Within forty-five (45) Days after Closing, Seller shall
furnish to Buyer the originals of the Records relating to the Properties which
are maintained by Seller. The costs associated with transferring the records to
Buyer shall be borne by Buyer. Buyer agrees to maintain the Records received
from Seller in accordance herewith for a period of six (6) years from the
Closing. Buyer additionally agrees to afford Seller full access to the Records
as reasonably requested by Seller. Notwithstanding the foregoing, Seller shall
allow Buyer reasonable access to the Records after the Closing in order to allow
Buyer to transact day to day business.
12.4 Like Kind Exchanges. Seller reserves the right to structure the
conveyance of the Properties or any portion(s) thereof as an exchange in
accordance with the provisions of Section 1031 of the Internal Revenue Code. The
parties agree that in order to so structure this transaction, where required,
the parties will allocate the Purchase Price between real property and personal
property.
12.5 Buyer's Assumption of Obligations. Except as otherwise provided in
this Agreement, Buyer assumes and shall timely perform and discharge all duties
and obligations of the owner of the Properties relating to the period after the
Closing Date, and Seller shall incur no liability for Buyer's failure to
properly perform and discharge such duties and obligations. Buyer agrees to
accept full responsibility for Amoco's proportionate share of the costs
associated with the maintenance, repair, removal or plugging, abandonment and
restoration of all wells, facilities, equipment and structures included in this
transaction, which responsibility shall be secured as provided for in the Escrow
Agreement referenced in Section 16.2(i) below. Buyer shall release Seller from
and shall fully protect, indemnify and defend Seller, its officers, agents and
employees and hold them harmless from and against any and all Claims resulting
from Buyer's failure to comply with the terms and conditions of this Section
12.5.
<PAGE>
12.6 Insurance. Buyer shall purchase and maintain in force and effect
until abandonment of the Properties is completed at least Ten Million and No/100
Dollars ($10,000,000) Comprehensive and General Liability Insurance with
contractual coverage to cover defense, indemnity and obligations in this
Agreement and Operators Extra Expense Insurance including Well Control Coverage,
Pollution, Extra Expense and Care, Custody and Control Coverage with minimum
limits of Twenty Million and No/100 Dollars ($20,000,000), or that minimum
insurance coverage required by statute or regulation, whichever is the greater
amount; and Buyer shall furnish proof of insurance at least ten (10) Days prior
to the Closing Date; provided however, such insurance shall not limit, restrict,
diminish or otherwise modify the indemnity provisions, whether by limitation of
the extent of the protection afforded Seller or otherwise. Buyer warrants that a
copy of this provision has been provide to its insurer.
12.7 Call on Liquids. Seller, at all times and from time to
time, shall have the option and exclusive right to purchase all or any portion
of the oil, distillate, condensate and other liquid hydrocarbons produced and
saved from the Properties. Payment for any oil, distillate, condensate and other
liquid hydrocarbons purchased hereunder shall be made at the prevailing market
price for production of similar kind and quality prevailing in the area where
produced on the date of delivery. Seller's posted price shall be used as the
prevailing market price unless Buyer provides Seller with a copy of a bona fide
written offer to purchase said production at a higher price. Seller shall then
have ten (10) days in which to either meet the bona fide written offer and
exercise its right of first refusal or suspend (commensurate with the term of
the applicable bona fide written offer) its purchase rights.
ARTICLE XIII. ANTITRUST NOTIFICATION
13.1 Antitrust Notification. 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 hereto shall have executed this
Agreement, both parties will file with the Federal Trade Commission and the
Department of Justice the notification and report forms required for the
transactions contemplated hereby 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 Department of Justice results in inability for 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.
ARTICLE XIV. CONDITIONS PRECEDENT TO CLOSING
14.1 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:
(a) 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
(b) Buyer shall have complied in all material respects with all
agreements and conditions contained in this Agreement to be performed or
complied with by Buyer on or prior to the Closing.
14.2 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 that the following conditions precedent
have been satisfied or have been waived by Buyer:
(a) 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
(b) Seller shall have complied in all material respects with all
agreements and conditions contained in this Agreement to be performed or
complied with by Seller on or prior to the Closing.
<PAGE>
14.3 Conditions Precedent to Obligation of Each Party. The parties shall
be obligated to consummate the sale and 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:
(a) No suit, action or other proceedings shall be pending or threatened
before any court or governmental commission, board or agency in which it
is sought by a person or entity other than the parties hereto or any of
their affiliates, officers or directors, to restrain, enjoin or
otherwise prohibit the consummation of the transactions contemplated by
this Agreement, or to obtain substantial damages in connection with this
Agreement or the transactions contemplated herein, nor shall there be
any investigation by any governmental agency pending or threatened which
might result in any such suit, action, order or other proceedings
seeking to restrain or prohibit consummation of this Agreement or the
transaction contemplated herein;
(b) If applicable, consummation of this purchase and sale transaction
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 and the Department
of Justice;
(c) All consents and approvals, if any, whether required contractually
or by applicable federal, state, or local Law, or otherwise necessary
for the execution, delivery, and performance of this Agreement by Seller
(except for approvals of governmental agencies or authorities
customarily obtained subsequent to transfer of title), shall have been
obtained and delivered to Buyer by the Closing Date and shall not have
been withdrawn or revoked;
(d) With respect to assets which have not been excluded from the
Agreement because of an exercise of a preferential right to purchase,
the preferential rights of purchase applicable to the Properties shall
have been waived, or the time to elect under said preferential rights to
purchase shall have elapsed, prior to the time of Closing; and
(e) Buyer and Seller shall execute the Registration Rights Agreement and
Escrow Agreement.
14.4 No Waiver. Except where expressly provided otherwise, consummation
of Closing shall not be deemed to be a waiver by either party of any of its
rights or remedies hereunder for breach of warranty, covenant, or agreement
herein by the other party.
. ARTICLE XV. TERMINATION
15.1 Grounds for Termination. This Agreement may be terminated at any time
prior to Closing:
(a) By the mutual written agreement of Seller and Buyer;
(b) By either Seller or Buyer if the consummation of the transactions
contemplated herein would violate any nonappealable final order, decree
or judgment of any governmental authority having jurisdiction enjoining,
or awarding substantial damages in connection with, the consummation of
this Agreement or the transactions contemplated herein;
(c) By either Buyer or Seller pursuant to Sections 4.2, 5.2 or 7.1 hereto;
or
(d) By Seller (provided Seller is not then in breach of the provisions
of this Agreement), if Closing shall not have occurred on or before
December 1, 1996.
<PAGE>
15.2 Effect of Termination. The following provisions shall apply in the
event of a termination of this Agreement:
----------------------
(a) If this Agreement is terminated in accordance with Section 15.1
hereto, such termination shall be without liability of any party to this
Agreement, and the Seller shall return the Earnest Money to the Buyer
promptly upon such termination.
(b) If this Agreement is terminated as a result of the failure of Buyer
to perform a material obligation hereunder, then Seller shall be
entitled to retain the Earnest Money as a liquidated damage to reimburse
Seller for it's out-of-pocket fees and expenses incurred in connection
with the transactions contemplated by this Agreement. The liquidated
damage shall be in addition to and not exclusive of other damages which
may be appropriate in law or equity.
(c) Notwithstanding the termination of this Agreement, the terms of the
Confidentiality Agreement shall remain in full force and effect.
15.3 Return of Documents. In the event of termination of this Agreement
prior to Closing, Buyer shall return all information provided (or any copies
thereof which may have been made to assist in the evaluation), including but not
limited to, all books, records, maps, files, papers, CD-ROM, seismic tapes, and
other property in such party's possession relating to the Properties, to the
party entitled thereto. Additionally, Buyer will destroy all materials prepared
by the Buyer, its affiliates and their representatives (including any copies of
the information which may have been made). In addition, Buyer will certify that
it has complied with the terms and conditions of the Confidentiality Agreement
or this Section 15.3 by letter along with the requested information.
ARTICLE XVI. THE CLOSING
16.1 Closing. Prior to Closing, Seller shall provide Buyer with a
Closing statement setting forth the Purchase Price, as adjusted, and wiring
instructions designating an account or accounts to which the Closing funds are
to be delivered in accordance with Section 16.3(d) hereto. The Closing of this
transaction shall be in Amoco's office at 550 WestLake Park Boulevard, Houston,
Texas 77079.
16.2 Obligation of Seller at Closing. At the Closing, Seller shall deliver
to Buyer, unless waived by Buyer, the following:
(a) An Assignment and Bill of Sale conveying all of Seller's right,
title and interests in and to the Properties substantially in the form
attached hereto as Exhibit "C". Such instrument shall be acknowledged
and executed in at least four (4) multiple originals;
(b) An Assignment of Record Title Interest substantially in the form
attached hereto as Exhibit "D". Such instrument shall be acknowledged and
executed in at least four (4) multiple originals;
(c) An Assignment of Operating Rights substantially in the form attached
hereto as Exhibit "E". Such instrument shall be acknowledged and executed in at
least four (4) multiple originals;
(d) Evidence that all consents, approvals, and authorizations
prerequisite to the sale and conveyance of the Properties, as well as
evidence of waiver or lapse of any preferential purchase rights
applicable to the Properties, have been obtained;
(e) A Certificate executed by an Attorney-in-Fact of Seller certifying
as to the matters specified in Sections 14.1(a) and 14.1(b) hereto
substantially in the form attached hereto as Exhibit "F";
(f) Letters-in-Lieu of division orders or transfer orders substantially in
the form attached hereto as Exhibit "G";
(g) An Opinion of Counsel substantially in the form attached hereto as
Exhibit "H";
(h) A Registration Rights Agreement substantially in the form attached
hereto as Exhibit "I";
(i) An Escrow Agreement substantially in the form attached hereto as
Exhibit "J";
<PAGE>
(j) A Non-Foreign Affidavit executed by an Attorney-in-Fact of Seller
substantially in the form attached hereto as Exhibit "K"; and
(k) Such other instruments and take such other actions as may be
necessary to carry out Seller's obligations under this Agreement.
16.3 Obligations of Buyer at Closing. At the Closing, Buyer shall deliver
to Seller, unless waived by Seller, the following:
(a) The Assignment and Bill of Sale, executed and properly acknowledged,
referred to in Section 16.2(a) hereto;
(b) The Assignment of Record Title Interest, executed and properly
acknowledged, referred to in Section 16.2(b) hereto;
(c) The Assignment of Operating Rights, executed and properly acknowledged,
referred to in Section 16.2(c) hereto;
(d) The adjusted Purchase Price by wire transfer;
(e) A Certificate executed by an authorized officer of Buyer certifying
as to the matters specified in Sections 14.2(a) and 14.2(b) hereto
substantially in the form attached hereto as Exhibit "F";
(f) Letters-in-Lieu of division orders or transfer orders referred to in
Section 16.2(f) hereto;
(g) An Opinion of Counsel substantially in the form attached hereto as
Exhibit "H-1";
(h) The Registration Rights Agreement referred to in Section 16.2(h)
hereto;
(i) The Escrow Agreement referred to in Section 16.2(i) hereto;
(j) One or more stock certificates representing the Consideration Shares
issued in the name of Seller, and any other documents necessary to
transfer such shares to Seller; and
(k) Such other instruments and take such other action as may be
necessary to carry out Buyer's obligations under this Agreement.
<PAGE>
ARTICLE XVII. MISCELLANEOUS
17.1 Notices. All notices and other communications required, permitted,
or desired to be given hereunder must be in writing and sent by U.S. mail,
properly addressed as shown hereinbelow, and with all postage or charges fully
prepaid or by hand delivery or by facsimile transmission. Date of service by
mail or hand delivery is the date on which such notice is received by the
addressee, by facsimile is the date the notice is sent, or if such date is on a
weekend or federal or state holiday, then on the next date which is not a
weekend or federal or state holiday. 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: Manager, Acquisitions and Divestments
and
Amoco Production Company
P.O. Box 50879
New Orleans, Louisiana 70150-0879
Attn: Manager, Land
If to Seller by Amoco Production Company
hand delivery: 550 WestLake Park Boulevard
Houston, Texas 77079
Attn: Manager, Acquisitions and Divestments
and
Amoco Production Company
1340 Poydras Street
New Orleans, Louisiana 70112
Attn: Manager, Land
If to Seller Amoco Production Company
by facsimile: Number: (713) 366-7544
Attn: Manager, Acquisitions and Divestments
and
Amoco Production Company
Number: (504) 586-6710
Attn: Manager, Land
If to Buyer PANACO, Inc.
by mail: 1050 West Blue Ridge Boulevard
Kansas City, Missouri 64145-1216
Attn: H. James Maxwell
President and C.E.O.
and
PANACO, Inc.
1100 Louisiana, Suite 5110
Houston, Texas 77002-5220
Attn: Larry M. Wright
Executive Vice President
If to Buyer by PANACO, Inc.
hand delivery: 1050 West Blue Ridge Boulevard
Kansas City, Missouri 64145-1216
Attn: H. James Maxwell
President and C.E.O.
and
PANACO, Inc.
1100 Louisiana, Suite 5110
Houston, Texas 77002-5220
Attn: Larry M. Wright
Executive Vice President
If to Buyer by PANACO, Inc.
facsimile: Number: (816) 942-6305
Attn: H. James Maxwell,
President and C.E.O.
and
PANACO, Inc.
Number: (713) 651-0928
Attn: Larry M. Wright,
Executive Vice President
<PAGE>
17.2 Conveyance Costs. Buyer shall be solely responsible for the filing
and recording of documents related to the transfer of the Properties from Seller
to Buyer and for all fees connected therewith. Within thirty (30) Days after
Closing, Buyer shall furnish Seller and the operator of any unit which include
any portion of the Properties, a certified copy of all assignments as recorded
in the appropriate County records. Buyer shall file assignments of the
Properties with appropriate state, federal, and local authorities as required by
applicable statutes, rules or regulations and shall pay all costs and fees
connected therewith. Buyer shall furnish Seller with all pertinent recording
data and evidence of all such required filings.
17.3 Broker's Fees. Neither party has retained any brokers, agents or
finders and none are affiliated with either party or authorized to act on behalf
of either party in this matter. Each party agrees to indemnify and hold the
other harmless from and against any Claims or with respect to any commissions,
finders' fees, or other remuneration due to any broker, agent, or finder
claiming by, through, or under such party.
17.4 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 instruments of
conveyance and take such action as Seller reasonably may require to more
effectively vest in or put Seller in possession of any property, documents, or
information of any kind which was not intended by the parties to be conveyed to
Buyer. 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 instruments of conveyance and take such
actions as Buyer reasonably may require to more effectively vest in or put Buyer
in possession of the Property. If any of the Property is incorrectly described,
the description shall be corrected upon proof of the proper description.
17.5 Survival of Representations and Warranties. The representations and
warranties contained in Articles X and XI of this Agreement shall terminate two
(2) years after Closing. All other representations, warranties, covenants, and
agreements contained in this Agreement shall survive the Closing. The parties
hereto have made no representations or warranties except those expressly set
forth in this Agreement.
17.6 Amendments and Severability. No alterations, modifications,
amendments, or changes in this Agreement shall be effective or binding unless
the same shall be in writing and signed by Seller and Buyer. The invalidity of
any one or more covenants or provisions of this Agreement shall not affect the
validity of the Agreement as a whole, and in case of any such invalidity, this
Agreement shall be construed as if such invalid provision had not been included
herein.
17.7 Successor and Assigns. This Agreement shall not be assignable,
whether in whole or in part, without the express written consent of the
non-assigning party. The terms, covenants and conditions hereof 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.
17.8 Headings. The titles and headings in this Agreement have been
included solely for ease of reference and shall not be considered in the
interpretation or construction of this Agreement.
17.9 Governing Law. This Agreement shall be governed by and construed under
the Laws of the State of Texas, excluding any choice of Law rules which may
direct the application of the Laws of another jurisdiction.
<PAGE>
17.10 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 hereto are not
authorized to act as agent or principal for each other with respect to any
matter related hereto.
17.11 Media Releases. Neither party, unless required to do so by law,
shall release any information to the press or other media regarding the
contemplated transaction. If required by law to release information, a party may
do so after having obtained the other party's approval of the content of the
information contained in the release.
17.12 No Third Party Beneficiary. Nothing in this Agreement shall
entitle any persons other than Seller or Buyer or their successors and assigns
to any claim, cause of action, remedy or right of any kind.
17.13 Texas Deceptive Trade Practices Act. Seller and Buyer certify that
they are not "Consumers" within the meaning of the Texas Deceptive Trade
Practices-Consumer Protection act, Subchapter E of Chapter 17, Sections 17.41,
et seq., of the Texas Business and Commerce Code, as amended (the "DTPA"). The
parties covenant, for themselves and on behalf of any successor or assign, that,
if the DTPA is applicable, (i) the parties are "business consumers" thereunder
each with assets of more than $5,000,000.00, (ii) each party hereby waives and
releases all of its rights and remedies thereunder (other than Section 17.555,
Texas Business and Commerce Code) as applicable to the other party and its
successors, and (iii) each party shall defend and indemnify the other from and
against any and all Claims, of or by that party or any successors or assigns
based in whole or in part on the DTPA, arising out of or in connection with the
transaction set forth in this Agreement.
17.14 Entire Agreement. This Agreement supersedes all prior
negotiations, understandings, letters of intent, and agreements between the
parties relating to the Properties and constitutes the entire understanding and
agreement between the parties with respect to the sale and purchase of the
Properties.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first set forth above, but effective as of the Effective Time.
AMOCO PRODUCTION COMPANY
By: ____________________________
Name: John D. Spence
Title: Attorney-in-Fact
PANACO, Inc.
By: ____________________________
Name: H. James Maxwell
Title: President and C.E.O.
