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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 June 16, 1998
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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Item 2. Acquisition or Disposition of Assets
On May 14, 1998 PANACO entered into a definitive agreement with BP
Exploration ("BP") to acquire BP's 100% interest in East Breaks Blocks 165 and
209 and 75% interest in High Island Block 587. The acquisition closed on May 28,
1998 and will be accounted for using the purchase method. PANACO acquired the
properties for $19.5 million in cash. Current production from these properties
is approximately 2,300 barrels of oil per day and 4,000 Mcf of gas per day.
Included with the properties is 3-D seismic data covering twenty offshore
blocks. PANACO became the operator of all three blocks effective June 1, 1998.
Highlights of the Acquisition include:
1. The production platform in Block 165 is named "Snapper". This mammoth
structure, located in 863 feet of water, is among the tallest bottom supported
structures in the Gulf of Mexico. The two wells in High Island Block 587 are
completed subsea and tied back to the East Breaks 165 production platform. The
remaining 25% of High Island Block 587 is owned by Burlington Resources.
2. PANACO acquired 31.72 miles of 12" pipeline, with capacity of over
20,000 barrels of oil per day, which ties the production platform back to the
High Island Pipeline System, the major oil transportation system in the area.
3. PANACO will benefit from oil net back agreements which are in place for
up to 4,000 barrels per day of oil production from other operators in the area,
some of which is scheduled to commence in June.
4. PANACO also acquired 9.3 miles of 12 3/4" pipeline, which ties the
production platform back to the High Island Offshore System, the major gas
transportation system in the area.
5. Additional capacity is present for both processing and transportation,
which PANACO is currently marketing to several operators in the area.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of business acquired.
The required audited financial information is not currently
available but management expects to file the information
within 60 days.
(b) Pro Forma Financial Information.
The required pro forma financial information is not currently
available but management expects to file the information
within 60 days.
(c) Exhibits
10.22 Asset Sale and Purchase Agreement dated May 14, 1998 between PANACO,
Inc. and BP Exploration & Oil Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PANACO, Inc.
Date: June 16, 1998 /s/H.James Maxwell
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H. James Maxwell
Chief Executive Officer
<PAGE>
ASSET SALE AND PURCHASE AGREEMENT
THIS ASSET SALE AND PURCHASE AGREEMENT ("Agreement") is made and entered
into May 14, 1998, but shall be effective as of June 1, 1998, at 12:01 a.m.
C.S.T. (the "Effective Time") by and between BP EXPLORATION & OIL INC., an Ohio
corporation ("Seller") and PANACO, INC. a Delaware corporation ("Buyer"). Seller
and Buyer are sometimes individually referred to as a "Party" and collectively
as the "Parties."
WHEREAS, subject to the terms and conditions set forth in this Agreement,
Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, all
of Seller's right, title and interest in certain properties located on the Outer
Continental Shelf ("OCS") of the Gulf of Mexico known as the Snapper Field, as
further described in Exhibit "A", which is attached hereto and made a part
hereof for all purposes.
NOW THEREFORE, in consideration of the mutual promises contained herein,
the benefits to be derived by each Party hereunder, and other good and valuable
consideration, Seller and Buyer agree as follows:
ARTICLE 1
Purchase And Sale
1.1 Seller agrees to sell and Buyer agrees to purchase, for the
consideration recited and upon the terms and conditions contained in this
Agreement, the Assets (as hereinafter defined). For purposes of this Agreement,
the term "Assets" shall mean all of Seller's right, title and interest in and
to:
(a) the oil, gas and mineral leases described in Exhibit "A" and the
leasehold estates created thereby (the "Leases");
(b) all rights incident to the Leases including, without limitation,
(i) all rights with respect to use and occupation of the surface thereof
and subsurface depths thereunder as described on Exhibit "A",
(ii) all rights with respect to any pooled, communitized or unitized
acreage by virtue of any Lease being a part thereof, including all
production from such pool or unit allocated to such Lease, and
(iii)all tenements, hereditaments and appurtenances pertaining to such
Leases;
(c) to the extent assignable, all easements, rights-of-way,
servitudes, permits, licenses and other estates or similar rights or
privileges related to or used in connection with the Leases, including
without limitation the following pipeline rights-of-way (the "Easements"):
(i) OCS Right-of Way No. OCS-G 012297 covering 5.94 miles from Block
A-587, High Island Area, South Addition to Block 165, East Breaks
Area;
(ii) OCS Right-of Way No. OCS-G 012298 covering 5.94 miles from Block
A-587, High Island Area, South Addition to Block 165, East Breaks
Area;
(iii)OCS Right-of Way No. OCS-G 012299 covering 5.94 miles from Block
165, East Breaks Area, to Block A-587, High Island Area, South
Addition;
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(d) all wells, personal property, equipment, structures, facilities,
gathering systems, fixtures, inventory, spare parts, tools and improvements
located on or used in connection with the Leases and the Easements;
(e) that certain 12 inch diameter oil pipeline known as Segment
IV-High Island Pipeline System ("Segment IV-HIPS"), together with all
necessary accessories and rights-of-way, approximately 31.72 miles in
length extending from the Snapper platform located on Block 165, East
Breaks Area to a junction with Segment I-High Island Pipeline System
located on Block A-474, High Island Area, South Addition;
(f) that certain 12-3/4 inch diameter gas pipeline, together with all
necessary accessories and rights-of-way, approximately 9.3 miles in length
extending from the Snapper platform located on Block 165, East Breaks Area
to a junction with the-High Island Offshore System ("HIOS") located on
Block A-582, High Island Area, South Addition;
(g) a license from Seller to Buyer, which is freely assignable by
Buyer without payment to Seller, to use approximately 180 square miles of
Seller's proprietary 3D seismic surveys acquired by Geco in 1986 and 1987
and reprocessed by Seller in 1989 covering approximately 20 OCS Blocks in
the High Island Area South Addition and the East Breaks Area centered
roughly around Block 163, East Breaks Area. Seller shall retain ownership
and title to such 3D seismic data;
(h) to the extent assignable, all contracts, agreements, leases and
other assignments used in connection with the Leases and the Easements
including without limitation that certain Operating Agreement attached as
Exhibit "C" to that certain Joint Bidding Agreement by and between Sohio
Petroleum Company, predecessor in interest to Seller, and Union Texas
Petroleum Corporation, predecessor in interest to Burlington Resources
Offshore Inc., effective July 5, 1984, as amended, covering the lease
described in paragraph 1.(c) of Exhibit "A" hereto ("Operating Agreement");
(i) all oil, gas, distillate, condensate, casinghead gas and other
liquid or gaseous hydrocarbons and other minerals (collectively,
"Hydrocarbons") produced from or attributable to the Leases, and proceeds
attributable thereto, to the extent attributable to the period of time
after the Effective Time (with imbalances, if any, to be settled by
Seller); and
(j) originals of all non-confidential books, records, and files that
relate to the foregoing interests.
1.2 Notwithstanding the above, Seller expressly retains and reserves all
rights in and to the following (collectively, the "Excluded Assets"):
(a) all corporate, financial, tax and legal records of Seller;
(b) all geophysical, geological or geochemical interpretations, and
all geophysical, geological or geochemical data owned by or licensed from
third parties which is not transferable or is subject to a confidentiality
obligation in favor of a third party, or any of Seller's intellectual
property, trade secrets, software, patents, trademarks, logos or service
marks used in developing or operating the Leases;
(c) any accounts receivable or refunds, income or revenue, deposits,
insurance, or awards attributable to ownership of the Assets prior to the
Effective Time; and
(d) any leased equipment for which Buyer does not specifically assume
the lease or third party owned equipment and property located on the Leases
(including without limitation, contractor equipment and oil spill response
equipment).
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1.3 Seller and Buyer agree that the purchase price for all the Assets
shall be Nineteen Million Five Hundred Thousand Dollars ($19,500,000.00)
("Purchase Price"). Nine Million Seven Hundred Fifty Thousand Dollars
($9,750,000.00) of the Purchase Price amount shall be payable by Buyer to Seller
upon execution of this Agreement by electronic transfer of immediately available
funds to the National City Bank, Cleveland, Ohio, ABA #041000124, Account of
First American Title Insurance Company Escrow Account, Account #2249491,
Reference "BP Exchange/PANACO Inc.". The remaining Nine Million Seven Hundred
Fifty Thousand Dollars ($9,750,000.00) of the Purchase Price amount shall be
payable by Buyer to Seller at Closing (as hereinafter defined) and shall be made
by electronic transfer of immediately available funds as above provided with
respect to the first payment, unless otherwise designated by Seller or its
assignee in writing prior to Closing. In the event that Closing shall not occur,
Seller shall refund to Buyer the Nine Million Seven Hundred Fifty Thousand
Dollars ($9,750,000.00) portion of the Purchase Price amount paid by Buyer to
Seller on May 14, 1998, as hereinabove provided.
ARTICLE 2
Permitted Encumbrances and Assumed Liabilities
2.1 Seller and Buyer agree that the Assets will be subject to (and
Buyer accepts the Assets subject to) all items of record, the terms, provisions
and conditions contained in the Leases, servitudes and/or other instruments or
agreements through which Seller received its interest in the Assets and all
agreements, documents or other instruments burdening or applicable to the
Assets, or any of them, to the extent same are valid and subsisting and affect
the Assets ("Permitted Encumbrances"). Nothing herein shall create or constitute
a recognition of any rights in third parties, or constitute any ratification or
revival of rights or agreements that are no longer enforceable.
2.2 AS OF THE EFFECTIVE TIME, BUYER HEREBY ASSUMES ALL LIABILITIES,
DUTIES AND OBLIGATIONS OF EVERY KIND WHATSOEVER OF SELLER RELATIVE TO THE
OWNERSHIP AND OPERATION OF THE ASSETS, INCLUDING, WITHOUT LIMITATION, THE
OBLIGATION TO (i) PROPERLY PLUG, ABANDON AND RESTORE ALL WELLS NOW OR HEREAFTER
LOCATED ON THE LEASES AND (ii) PROPERLY SALVAGE, ABANDON AND RESTORE ALL
FACILITIES, STRUCTURES AND EQUIPMENT NOW OR HEREAFTER LOCATED ON OR ATTRIBUTABLE
TO THE ASSETS; PROVIDED, HOWEVER, THAT BUYER SHALL NOT ASSUME AND SHALL HAVE NO
LIABILITY WHATSOEVER WITH RESPECT TO THE EXCLUDED ASSETS.
ARTICLE 3
Preferential Rights
3.1 Seller shall use reasonable efforts, but without any obligation to
incur any cost or expense in connection therewith, to comply with all
preferential right provisions relative to the Assets prior to Closing. Seller
shall promptly notify Buyer if any preferential rights are exercised or if the
requisite period has elapsed without said rights having been exercised. If the
holder of any preferential right validly elects to purchase all or a part of the
Assets, this Agreement shall be null and void and no Party shall have any rights
or obligations under this Agreement, except that nothing herein shall relieve
any Party from any liability for any breach hereof.
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ARTICLE 4
Representations and Warranties
4.1 Buyer and Seller each represent and warrant to the other, that as of
the Effective Time:
(a) The Party making the representation is a corporation validly
existing and in good standing under the laws of that
corporation's state of incorporation, with the corporate power
and authority to own property and assets such as the Assets
and to carry on its business as now being conducted.
(b) The Party making the representation has the corporate power
and authority to execute and deliver this Agreement and to
consummate the transaction contemplated in this Agreement.
This Agreement constitutes a valid and binding obligation of
the Party making the representation, enforceable against it in
accordance with the terms hereof, and no other corporate act,
approval or proceeding on its part is required to authorize
the execution and delivery of this Agreement or the
consummation of the transaction contemplated hereunder. This
Agreement (and all closing documents) are executed by
appropriate officials having full corporate authority to
execute and deliver such documents on behalf of the Party
making the representation.
(c) This Agreement, and the execution and delivery hereof by the
representing and warranting Party, do not, and the
consummation of the transaction contemplated hereunder will
not, violate any provision of, or constitute a default under,
the charter or by-laws of such Party or any law or regulation
to which it is subject, or any provision of any assignment,
indenture, mortgage, lien, lease, instrument, order,
arbitration award, judgment or decree to which it is a Party
or by which it or any of its assets or properties is bound.
(d) There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated or threatened against
the Party making the representation.
(e) There are no suits, actions or other proceedings pending or
threatened that seek to restrain, enjoin or otherwise prohibit
the consummation of the transactions contemplated by this
Agreement.
4.2 Seller represents and warrants to Buyer, that as of the Effective Time:
(a) To Seller's knowledge, all material leases, contracts and
permits affecting the Assets have been disclosed to Buyer and,
to the extent assignable, are to be transferred to Buyer
pursuant to this Agreement.
(b) To Seller's knowledge, the Assets have been operated by Seller
in accordance will all applicable rules and regulations of all
governmental authorities having or asserting jurisdiction
relating to the ownership, operation and production of the
Assets.
(c) To Seller's knowledge, all Leases and leaseholds to be
transferred to Buyer hereunder and which are listed in Exhibit
"A" are in full force and effect, according to their
respective terms, and Seller has complied with the terms of
all governmental orders or directives directly applicable to
the Assets.
(d) To Seller's knowledge, Seller is not in material breach as to
the Assets and any wells thereon as to any laws, regulations,
rules, decrees or orders, and Seller has fulfilled the
material obligations of material agreements affecting the
Assets.
(e) Except as otherwise provided in this Agreement or as relates
to amounts disputed by Seller, Seller will pay and to Seller's
knowledge, Seller has paid, all bills, debts, expenses or
charges relating to the ownership and operation of the Assets
prior to the Effective Time in the normal course of its
business operations.
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(f) To Seller's knowledge, all proceeds of production attributable
to the Assets are currently being paid directly to Seller or
its authorized agents without the furnishing of indemnity,
other than the customary warranty contained in the division
orders, transfer orders or gas sale contracts that have been
furnished to Buyer, and no portion of such proceeds are being
held in suspense.
(g) To Seller's knowledge, Seller has obtained all permits,
licenses and other authorizations which are presently required
under federal, state and local laws with respect to pollution
or protection of the environment relating to the Assets.
(h) To Seller's knowledge, (i) none of the operations of Seller
relating to the Assets are the subject of a pending federal or
state investigation evaluating whether any remedial action
involving a material expenditure is needed to respond to a
release or discharge of any toxic or hazardous waste or
substance into the environment, and (ii) Seller has no
material contingent liability in connection with any release
or discharge of any toxic or hazardous waste or substance into
the environment from the Assets.
(i) To Seller's knowledge, Seller has made available for
examination applicable written agreements, correspondence,
reports, required safety plans, compliance statement or other
documents of which Seller is aware that materially affect the
Assets including, but not limited to, applicable operating
agreements, joint venture agreements, tax partnership
agreements, farmout agreements and area of mutual interest
agreements.
(j) For purposes of the special warranty provided for in Article
5.1, Seller represents that its Working Interest and Net
Revenue Interest (as those terms are defined in Exhibit "A")
in each of the Leases are as reflected in Exhibit "A".
4.3 Buyer represents and warrants to Seller, that as of the Effective Time:
(a) Buyer has currently available all funds necessary to pay the
Purchase Price due Seller under the terms of this Agreement.
(b) All information requested by Buyer from Seller has been made
available to Buyer. Buyer has performed due diligence to Buyer's complete
satisfaction on the Assets, which includes, without limitation, physical
inspection(s), environmental assessment(s), reviewing well data and other
files and performing all necessary tasks involved in evaluating the Assets.
(c) Buyer is knowledgeable of the oil and gas business and of the
usual and customary practices of producers such as Seller and that it has
had access to the Assets, the officers and employees of Seller, and the
books, records and files of Seller relating to the Assets in making the
decision to enter into this Agreement and consummate the transactions
contemplated hereby, and that Buyer has relied solely on the basis of its
own independent due diligence investigation of the Assets and has satisfied
itself of the condition of the Assets, including without limitation, the
environmental condition of and the title to the Assets.
(d) Buyer is acquiring the Assets for its own benefit and account and
is not acquiring the Assets with the intent of distributing fractional
undivided interests in the Assets that would be subject to regulation by
federal or state securities law, and that if, in the future, Buyer should
sell or otherwise dispose of the Assets in any manner that would be subject
to securities regulation, Buyer will fully comply with all federal and
state securities laws.
(e) Buyer (i) is qualified with the Minerals Management Service
("MMS") and all governmental agencies having jurisdiction to hold and
operate the Leases and Assets, (ii) has complied with all bonding
requirements imposed by applicable federal, state and local regulations and
(iii) has obtained, or will obtain, or has applied, or will apply, for the
transfer of permits to operate the Assets.
<PAGE>
ARTICLE 5
Limitations on Warranties
5.1 SELLER AGREES TO CONVEY THE ASSETS TO BUYER SUBJECT TO ALL
ROYALTIES, PERMITTED ENCUMBRANCES, AND SURFACE RIGHTS AND WITHOUT WARRANTY OF
TITLE, EXPRESS, STATUTORY OR IMPLIED, except that Seller specially warrants and
agrees to defend title to the Assets as set forth in Exhibit "A" against the
lawful claims and demands of all persons claiming title to the Assets by,
through and under Seller, but not otherwise.
5.2 BUYER ACKNOWLEDGES THAT SELLER HAS NOT MADE, AND SELLER HEREBY
EXPRESSLY DISCLAIMS AND NEGATES, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, RELATING TO THE CONDITION OF ANY IMMOVABLE PROPERTY, MOVABLE PROPERTY,
EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY CONSTITUTING
PART OF THE ASSETS (INCLUDING, WITHOUT LIMITATION, (a) ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR
A PARTICULAR PURPOSE, (c) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS, (d) ANY RIGHTS OF BUYER UNDER APPROPRIATE
STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, (e) ANY IMPLIED OR EXPRESS
WARRANTY OF FREEDOM FROM REDHIBITORY VICES OR DEFECTS OR OTHER VICES OR DEFECTS,
WHETHER KNOWN OR UNKNOWN, (f) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM
PATENT OR TRADEMARK INFRINGEMENT, (g) ANY AND ALL IMPLIED WARRANTIES EXISTING
UNDER APPLICABLE LAW NOW OR HEREAFTER IN EFFECT, (h) ANY IMPLIED OR EXPRESS
WARRANTY REGARDING ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS INTO THE
ENVIRONMENT OR PROTECTION OF THE ENVIRONMENT OR HEALTH AND (i) THE PRESENCE OF
OR DISPOSAL OF NORM [AS HEREINAFTER DEFINED] OR HAZARDOUS SUBSTANCES), IT BEING
THE EXPRESS INTENTION OF BUYER AND SELLER THAT THE IMMOVABLE PROPERTY, MOVABLE
PROPERTY, EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY
CONSTITUTING PART OF THE ASSETS SHALL BE CONVEYED TO BUYER AS IS AND IN THEIR
PRESENT CONDITION AND STATE OF REPAIR AND BUYER REPRESENTS TO SELLER THAT BUYER
HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS WITH RESPECT TO THE IMMOVABLE
PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND
PERSONAL PROPERTY CONSTITUTING PART OF THE ASSETS AS BUYER DEEMS APPROPRIATE AND
BUYER WILL ACCEPT THE IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT,
INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY AS IS, IN THEIR PRESENT
CONDITION AND STATE OF REPAIR.
5.3 SELLER HEREBY EXPRESSLY NEGATES AND DISCLAIMS, AND BUYER HEREBY
WAIVES AND ACKNOWLEDGES THAT SELLER HAS NOT MADE, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, RELATING TO (a) THE ACCURACY, COMPLETENESS OR
MATERIALITY OF ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR VERBAL) NOW,
HERETOFORE, OR HEREAFTER FURNISHED TO BUYER BY OR ON BEHALF OF SELLER OR (b)
PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE RATES, GEOLOGICAL OR
GEOPHYSICAL DATA OR INTERPRETATIONS, THE QUALITY, QUANTITY, RECOVERABILITY OR
COST OF RECOVERY OF ANY HYDROCARBON RESERVES, ANY PRODUCT PRICING ASSUMPTIONS,
OR THE ABILITY TO SELL OR MARKET ANY HYDROCARBONS AFTER CLOSING.
5.4 SELLER HEREBY EXPRESSLY NEGATES AND DISCLAIMS, AND BUYER HEREBY
WAIVES AND ACKNOWLEDGES THAT SELLER HAS NOT MADE, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED RELATING TO THE ENVIRONMENTAL CONDITION OF THE
ASSETS. BUYER RELEASES SELLER FROM ANY LIABILITY WITH RESPECT TO THE ASSETS
WHETHER OR NOT CAUSED BY OR ATTRIBUTABLE TO SELLER'S NEGLIGENCE AND WHETHER OR
NOT ARISING DURING THE PERIOD OF, OR FROM, OR IN CONNECTION WITH SELLER'S
OWNERSHIP OF THE ASSETS OR USE OF THE ASSETS. WITHOUT LIMITING THE ABOVE, BUYER
WAIVES ITS RIGHT TO RECOVER FROM SELLER AND FOREVER RELEASES AND DISCHARGES
SELLER AND AGREES TO RELEASE, INDEMNIFY, DEFEND AND HOLD SELLER HARMLESS FROM
ANY AND ALL DAMAGES, CLAIMS, LOSSES, LIABILITIES, PENALTIES, FINES, LIENS,
JUDGMENTS, COSTS AND EXPENSES WHATSOEVER (INCLUDING WITHOUT LIMITATION,
ATTORNEYS' FEES AND COSTS), WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN,
FORESEEN OR UNFORESEEN, THAT MAY ARISE ON ACCOUNT OF OR IN ANY WAY BE CONNECTED
WITH THE PHYSICAL CONDITION OF THE ASSETS OR ANY LAW OR REGULATION APPLICABLE
THERETO, INCLUDING WITHOUT LIMITATION, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED (42 U.S.C. ss. 9601 et seq.),
THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976 (42 U.S.C. ss. 6901 et seq.),
THE CLEAN WATER ACT (33 U.S.C. ss. 466 et seq.), THE SAFE DRINKING WATER ACT (14
U.S.C. ss. 1401-1450), THE HAZARDOUS MATERIALS TRANSPORTATION ACT (49 U.S.C. ss.
7401 et seq.) AS AMENDED, THE CLEAN AIR ACT AMENDMENTS OF 1990, AND ANY OTHER
APPLICABLE FEDERAL, STATE OR LOCAL LAWS, WHETHER OR NOT ARISING DURING THE
PERIOD OF, OR FROM, OR IN CONNECTION WITH, SELLER'S OWNERSHIP OF THE ASSETS OR
USE OF THE ASSETS, AND WHETHER OR NOT ATTRIBUTABLE TO THE STRICT LIABILITY OF
SELLER OR TO THE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE, NEGLIGENCE OF
SELLER, EVEN IF CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLER.
<PAGE>
5.5 It is the intention of the Parties that Buyer's rights and remedies
with respect to this transaction and with respect to all acts or practices of
Seller, past, present or future, in connection with this transaction shall be
governed by legal principles other than the Texas Deceptive Trade
Practices--Consumer Protection Act, Tex. Bus. & Com. Code Ann. ss. 17.41 et seq.
(the "DTPA"). As such, Buyer hereby waives the applicability of the DTPA to this
transaction and any and all duties, rights or remedies that might be imposed by
the DTPA, whether such duties, rights and remedies are applied directly by the
DTPA itself or indirectly in connection with other statutes; provided, however,
Buyer does not waive Section 17.555 of the DTPA. Buyer acknowledges, represents
and warrants that it is purchasing the goods and/or services covered by this
Agreement for commercial or business use; that it has assets of $5 million or
more according to its most recent financial statement prepared in accordance
with generally accepted accounting principles; that it has knowledge and
experience in financial and business matters that enable it to evaluate the
merits and risks of a transaction such as this; and that it is not in a
significantly disparate bargaining position with Seller.
ARTICLE 6
Environmental Matters
6.1 Buyer acknowledges that the Assets have been used by Seller for oil
and gas drilling and production operations, related oilfield operations and
possibly for the storage and disposal of "hazardous substances" (as those
substances are so classified by state and federal laws and regulations) and
physical changes in the Assets (or adjacent lands) may have occurred as a result
of such uses. In this regard, the Assets may also contain unplugged (or
improperly plugged) wellbores or equipment, whether or not of a similar nature,
the locations of which may not now be known or readily apparent by a physical
inspection of the Assets. Buyer understands and acknowledges that Seller does
not have the requisite information with which to determine the exact condition
of the Assets nor the effect any such use has had on the physical condition of
the Assets.
6.2 Seller acknowledges that some oilfield production equipment forming
part of the Assets may contain asbestos and/or naturally occurring radioactive
material ("NORM"). In this regard, Buyer specifically acknowledges that NORM may
affix or attach itself to the inside of wellbores, materials and equipment as
scale or in other forms, and that wells, materials and equipment forming part of
the Assets and being located on a Lease may contain NORM and that
NORM-containing materials may have been disposed of on or off the Leases. Buyer
expressly understands that special procedures may be required for the removal
and disposal of asbestos and NORM from the Assets if and where they may be
found, and that Buyer assumes all liability for or in connection with
assessment, remediation, removal, transportation or disposal of any such
materials located on or disposed of on or off the Leases whether before or after
the Effective Time.
6.3 Buyer hereby releases and discharges any and all claims at law or
in equity, known or unknown, whether now existing or arising in the future,
contingent or otherwise, which it has or may have against Seller with respect to
any matter or circumstances of the Assets relating to environmental laws, the
release of materials in or to the environment, protection of the environment or
health, or the presence of or disposal of NORM or hazardous substances. Buyer
acknowledges that Seller has not made and will make no representation or
warranty regarding any matter or circumstance relating to such matter and that
nothing in this Agreement shall be construed as such a representation or
warranty.
<PAGE>
ARTICLE 7
Indemnification
7.1 As of the Effective Time, Buyer agrees to indemnify, defend and
hold harmless Seller from and against any and all claims, liabilities, losses,
costs and expenses (including without limitation court costs and reasonable
attorney's fees) caused by, arising from or attributable to (i) the ownership or
operation of the Assets after the Effective Time, (ii) any breach by Buyer of
any representation, warranty, assignment or covenant of Buyer hereunder, (iii)
the plugging and abandonment of all wells now or hereafter located on the Leases
and the salvaging and abandonment of all structures and facilities now or
hereafter located on the Leases and (iv) any matter or circumstance relating to
liabilities assumed by Buyer hereunder including, without limitation, any matter
or circumstance relating to environmental laws, the release of materials into
the environment, protection of the environment or health or the presence of or
disposal of NORM either on or off the Leases, regardless of whether known or
unknown, whether attributable to periods of time before or after the Effective
Time and whether Seller was wholly or partially negligent or otherwise at fault,
even if caused by the gross negligence or willful misconduct of Seller.
7.2 As of the Effective Time, Seller agrees to indemnify, defend and
hold harmless Buyer from and against any and all claims, liabilities, losses,
costs and expenses (including without limitation court costs and reasonable
attorney's fees) caused by, arising from or attributable to (i) the ownership or
operation of the Assets prior to the Effective Time, but specifically excluding
any such claims, liabilities, losses, costs and expenses with respect to which
Buyer has agreed to indemnify Seller pursuant to Article 7.1 above, (ii) any
breach by Seller of any representation, warranty, agreement or covenant of
Seller hereunder, and (iii) the Excluded Assets.
ARTICLE 8
Accounting Matters and Taxes
8.1 All (i) Hydrocarbon revenues and expenses (including without
limitation, Lease rental or maintenance expenses, overhead under operating
agreements, capital expenditures or prepaid charges and royalties and other
payments out of production, but excluding all non-cash charges attributable to
depletion, depreciation, bad debt losses, lease abandonment, etc.) and (ii)
taxes pertaining to the Assets or Hydrocarbon production from the Assets and
similar obligations, all of which are attributable to the Assets and relating to
the period prior to the Effective Time shall be owned by and borne by Seller.
All similar Hydrocarbon revenues and expenses and taxes attributable to the
Assets and relating to the period after the Effective Time shall be owned by and
borne by Buyer.
8.2 Within ninety (90) days of the Closing, Seller shall prepare an
accounting statement setting forth any revenues received and/or payments made by
each Party on behalf of the other Party, as described in Article 8.1 above. To
the extent reasonably required by Seller, Buyer shall assist in the preparation
of the accounting statement. The accounting statement shall become final and
binding on the Parties within thirty (30) days of Buyer's receipt thereof unless
Buyer notifies Seller in writing of any disputes regarding the accounting
statement. If there are no disputes, the appropriate Party shall make payment to
the other Party in accordance with the accounting statement. Any disputes shall
be resolved in writing by the Parties within fifteen (15) days of receipt of
Buyer's notice. Within fifteen (15) days after resolution of any disputes, the
appropriate Party shall make payment to the other Party in accordance with the
Parties' written agreement.
8.3 After final payment is made hereunder, in the event either Party
(i) receives payments which are owed to the other Party pursuant to this
Agreement, such receiving Party shall remit any amount received within thirty
(30) days of receipt, or (ii) receives invoices which are the responsibility of
the other Party pursuant to this Agreement, such receiving Party shall
immediately forward such invoice to the other Party.
8.4 Any applicable (i) transfer taxes, (ii) documentary taxes and (iii)
sales taxes relating to the conveyance of the Assets pursuant to this Agreement
shall be paid by Buyer.
<PAGE>
ARTICLE 9
Escrow Agreement
9.1 Buyer and Seller agree to execute at Closing an Escrow Agreement
substantially in the form attached hereto as Exhibit "C", which is attached
hereto and made a part hereof for all purposes, to secure the performance of the
obligations assumed by Buyer under Article 2.2 to (i) properly plug, abandon and
restore all wells now or hereafter located on the Leases and (ii) properly
salvage, abandon and restore all facilities, structures and equipment now or
hereafter located on or attributable to the Assets.
ARTICLE 10
Closing Matters
10.1 The closing of the transactions contemplated in this Agreement
("Closing") shall take place at the offices of Seller on May 26, 1998, or on
such earlier date as may be mutually agreed upon in writing by Buyer and Seller.
10.2 The obligations of Seller to consummate the transactions
contemplated by this Agreement are subject, at the option of Seller, to the
following conditions:
(a) The representations and warranties of Buyer herein contained
shall be made again at Closing and shall be true and correct
in all material respects.
(b) Buyer shall have performed all obligations, covenants and
agreements contained in this Agreement to be performed or
complied with by it at or prior to Closing.
(c) Buyer shall have delivered to Seller:
(i) An executed original or counterpart of the Escrow Agreement
substantially in the form attached hereto as Exhibit "C", as
provided in Article 9.1.
(ii) Other appropriate instruments necessary to effect or support the
transaction contemplated in this Agreement, including without
limitation, any ratification or joinder documents required to
transfer any contract rights and any lease assignment forms,
Designations of Operator or other forms required by governmental
agencies to transfer ownership and operatorship of the Assets to
Buyer.
(iv) Funds in the amount of the balance of the Purchase Price amount
as provided for in Article 1.3.
10.3 The obligations of Buyer to consummate the transactions
contemplated by this Agreement are subject, at the option of Buyer, to the
following conditions:
(a) The representations and warranties of Seller herein contained
shall be made again at Closing and shall be true and correct
in all material respects.
(b) Seller shall have performed all obligations, covenants and
agreements contained in this Agreement to be performed or
complied with by it at or prior to Closing.
(c) Seller shall have delivered to Buyer:
(i) Assignments of the Leases in the forms attached hereto as
Exhibits "B-1", "B-2" and "B-3", which are attached hereto and
made a part hereof for all purposes; and
(ii) Other appropriate instruments necessary to effect or support the
transaction contemplated in this Agreement, including without
limitation, any ratification or joinder documents required to
transfer any contract rights and any lease assignment forms,
Designations of Operator or other forms required by governmental
agencies to transfer ownership and operatorship of the Assets to
Buyer.
(d) The inspection and due diligence undertaken by Buyer, if any,
with respect to the Assets shall not have disclosed any
material defect which has not been cured by Seller (or waived
by Buyer) following written notice thereof having been given
to Seller by Buyer at least five (5) days prior to Closing
Upon Buyer's completion of its Closing obligations, Seller shall
deliver to Buyer exclusive possession of the Assets as of the Closing (subject
to the terms of any applicable joint operating agreement).
<PAGE>
10.4 Buyer and Seller agree to perform the following post-Closing
obligations:
(a) Within ten (10) days following Closing, Buyer and Seller shall
execute and file all forms (and Buyer shall perform all acts)
required by the MMS and other appropriate governmental
agencies to transfer title to the Assets from Seller to Buyer.
The conveyances involved in this transaction are subject to
approval by the MMS and other governmental agencies.
(b) Buyer shall provide Seller a copy of Buyer's MMS bond and any
other bonds required by governmental agencies, as described in
Article 4.3(e) of this Agreement within thirty (30) days of
approval by the MMS.
(c) Buyer shall promptly file all appropriate forms, declarations
or bonds with federal and state governmental agencies relative
to Buyer's assumption of operations from Seller. Buyer shall
also take all actions necessary, with Seller's assistance as
appropriate, to qualify as a successor operator under any
applicable joint operating agreement subject to the terms of
such operating agreement.
(d) Within thirty (30) days following Closing, Buyer and Seller
shall notify all purchasers of Hydrocarbons and governmental
agencies that Buyer has purchased the Assets and has assumed
liability for their continued operation. Buyer and Seller
shall execute all transfer orders and division orders
necessary to transfer payment of the proceeds from the sale of
Hydrocarbons from the Assets as of the Effective Time to
Buyer.
(e) Within thirty (30) days following Closing, Seller shall
deliver to Buyer originals of non-confidential books, records
and files relating to the Assets. Seller retains the right to
access (and copy at Seller's expense) such books, records and
files delivered to Buyer.
10.6 Within thirty (30) days after Closing, Buyer shall remove, or
cause to be removed, from the platforms and facilities pertaining to the Assets,
the name, logo and service mark of Seller and all variations a derivations
thereof, and will not thereafter make use thereof.
<PAGE>
ARTICLE 11
Miscellaneous
11.1 Except as otherwise specifically provided herein, each Party to
this Agreement shall pay its own expenses with respect to the negotiation,
execution and the delivery of this Agreement and the consummation of the
transactions under this Agreement.
11.2 Notwithstanding any other provision of this Agreement, this
Agreement shall not create benefits on behalf of any person who is not a Party
to this Agreement (including without limitation, any broker or finder, creditor
or other person), and this Agreement shall be effective only as between the
Parties hereto, their successors and permitted assigns.
11.3 Buyer and Seller further agree that each will, from time to time
and upon reasonable request, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such instruments, and take such other
action as may be necessary, or advisable, to carry out their obligations under
this Agreement. In addition, in the event of any future discrepancies in
billings received by Buyer or accounting issues that may arise attributable to
the period prior to the Effective Time, Seller shall reasonably assist Buyer in
resolving such issues.
11.4 Prior to the Closing, neither Party shall assign this Agreement or
any of its rights or obligations under this Agreement without obtaining the
prior written consent of the other Party, and any purported assignment by any
Party without the prior written consent of the other Party shall be void.
(a) Notwithstanding the foregoing, the Parties hereby agree that
Seller, in lieu of the sale of Assets to Buyer for the cash consideration
provided herein, shall have the right at any time prior to the Closing to
assign all or a portion of its rights under this Agreement to a qualified
intermediary in order to facilitate, either in whole or in part, a "like
kind exchange" pursuant to Section 1031 of the Internal Revenue Code of
1986, as amended (the "Code"). In the event Seller assigns its rights under
this Agreement pursuant to this provision, Seller agrees to notify Buyer in
writing of such assignment and Buyer hereby consents to such assignment.
Under no circumstances shall Seller be released from this Agreement or the
obligations provided for hereunder, and Buyer shall be entitled to look to
Seller alone for satisfaction of and compliance with all such obligations,
including the obligations set forth in Article 9 of this Agreement. Buyer
shall not be liable for any damages, losses or expenses incurred by Seller
or its intermediary and Seller shall not be entitled to a rescission of
this transaction if: (i) Seller fails to take any steps to locate,
negotiate for or designate exchange property, or (ii) any exchange property
fails to qualify as "like-kind" property, or (iii) the like-kind exchange
transaction otherwise fails for any reason to afford Seller some or all of
the benefits of Section 1031 of the Code.
(b) Seller shall defend, indemnify and hold harmless Buyer, its
officers, directors, related shareholders, and the heirs, successors and
assigns of each of them, from any and all cost, expense (including
intermediary expenses) or liability, arising by reason of any exchange
property acquisition or transfer or Buyer's dealings with its intermediary.
11.5 Any notice provided or permitted to be given under this Agreement
shall be in writing, and may be sent by personal delivery, facsimile machine or
by depositing same in the United States Mail, addressed to the Party to be
notified, postage prepaid, and registered or certified with a return receipt
requested. Notices deposited in the mail in the manner hereinabove described
shall be deemed to have been given and received upon the date of delivery as
shown on the return receipt (or upon the date of attempted delivery where
delivery is refused). Notice served in any other manner shall be deemed to have
been given and received only if and when actually received by the addressee
(confirmation of such receipt by confirmed facsimile transmission being deemed
receipt of communications sent by telecopy or other facsimile means), and when
delivered and receipted for, if hand-delivered, sent by express courier or
delivery service. For purposes of notice, the designated representatives and
addresses of the Parties shall be as set forth in Exhibit "A" or at such other
address and number as either Party shall have previously designated by written
notice to the other Party in the manner hereinabove set forth.
<PAGE>
11.6 The Parties agree that prior to making any public announcement or
statement with respect to the transaction contemplated by this Agreement, the
Party desiring to make such public announcement or statement shall obtain the
approval of the other Party to the text of such announcement or statement. Such
approval shall not be unreasonably withheld. Nothing contained in this Article
11.6 shall be construed to require either Party to obtain approval of the other
Party to disclose information with respect to the transaction contemplated by
this Agreement to any state or federal governmental authority or agency, to the
extent required by applicable law or by any applicable rules, regulations or
orders of any governmental authority or agency having jurisdiction, or necessary
to comply with disclosure requirements of applicable securities laws.
11.7 Time is of the essence in this Agreement and all time limits shall
be strictly construed and enforced. The failure or delay of any Party in the
enforcement of the rights granted under this Agreement shall not constitute a
waiver of said rights nor shall it be considered as a basis for estoppel. Except
as otherwise limited by the time limits contained in this Agreement, such Party
may exercise its rights under this Agreement despite any delay or failure to
enforce the rights when the right or obligation arose.
11.8 This Agreement, and all operations conducted by the Parties
pursuant to this Agreement, are expressly subject to and shall comply with all
laws, orders, rules and regulations of any federal, state or local governmental
authority having jurisdiction. No Party shall suffer a forfeiture or be liable
in damages for failure to comply with any of the provisions of this Agreement if
such compliance is prevented or if such failure results from compliance with any
applicable law, order, rule or regulation.
11.9 THE PROVISIONS OF THIS AGREEMENT AND THE RELATIONSHIP OF THE
PARTIES SHALL BE GOVERNED AND INTERPRETED ACCORDING TO THE LAWS OF THE STATE OF
TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS.
11.10 In case of a conflict between the provisions of this Agreement
and the provisions of any applicable laws or regulations, the provisions of the
laws or regulations shall govern over the provisions of this Agreement. If, for
any reason and for so long as, any clause or provision of this Agreement is held
by a court of competent jurisdiction to be illegal, invalid, unenforceable or
unconscionable under any present or future law (or interpretation thereof), the
remainder of this Agreement shall not be affected by such illegality or
invalidity. Any such invalid provision shall be deemed severed from this
Agreement as if this Agreement had been executed with the invalid provision
eliminated. The surviving provisions of this Agreement shall remain in full
force and effect unless the removal of the invalid provision destroys the
legitimate purposes of this Agreement; in which event this Agreement shall be
null and void. The Parties shall negotiate in good faith for any required
modifications to this Agreement.
11.11 The interpretation and construction of the terms of this Agreement
will be governed by the following conventions:
(a) All headings, captions, numbering sequences, paragraph
headings and punctuation used in this Agreement are inserted
for convenience only and shall in no way define, limit or
describe the scope or intent of this Agreement or any part
thereof, nor have any legal effect other than to aid a
reasonable interpretation of this Agreement.
(b) Each Party has had the benefit of independent representation
with respect to the subject matter of this Agreement. This
Agreement, though drawn by one Party, shall be construed
fairly and reasonably and not more strictly against one Party
than another.
<PAGE>
11.12 This Agreement, and the Exhibits attached and incorporated
herein, contains the final and entire agreement of the Parties with respect to
the subject matter of this contract. There are no representations, warranties or
promises, oral or written, between the Parties other than those included in this
Agreement. Upon execution of this Agreement by all Parties, this Agreement shall
supersede and replace all previous negotiations, agreements, understandings or
promises, whether written or oral, relative to the subject of this Agreement.
Each of the Parties acknowledges that no other Party has made any promise,
representation or warranty that is not expressly stated in this Agreement. This
Agreement shall not be modified or changed except by a written amendment signed
by all the Parties. This Agreement is entire as to all the performances to be
rendered under it, and breach of any provision shall constitute a breach of the
entire Agreement. A waiver of any breach or failure to enforce any of the terms
or conditions of this Agreement shall not in any way affect, limit or waive a
Party's rights under this Agreement at any time to enforce strict compliance
thereafter with every term or condition of this Agreement.
11.13 This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and assigns.
11.14 This Agreement may be executed by signing the original or a
counterpart thereof. If this Agreement is executed in multiple counterparts,
each counterpart shall be deemed an original, and all of which when taken
together shall constitute but one and the same Agreement with the same effect as
if all Parties had signed the same instrument.
11.15 BUYER'S ATTENTION IS DIRECTED TO CERTAIN PROVISIONS OF THIS
AGREEMENT WHICH REQUIRE BUYER TO DEFEND, INDEMNIFY AND HOLD SELLER HARMLESS
IRRESPECTIVE OF THE STRICT LIABILITY OF SELLER OR THE SOLE, JOINT OR CONCURRENT,
ACTIVE OR PASSIVE, NEGLIGENCE OF SELLER, AND IN SOME CASES THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF SELLER.
IN WITNESS WHEREOF, the Parties have executed the Agreement on the date first
written above.
BP EXPLORATION & OIL INC. PANACO, INC.
By: S. M.. Bennett By: H. James Maxwell
Title: Agent and Attorney-in-Fact Title: Chairman & C.E.O.
<PAGE>
EXHIBIT "A"
Attached to and made a part of that certain
Sale and Purchase Agreement dated effective June 1, 1998, between
BP Exploration & Oil Inc. and PANACO, Inc. ("Agreement")
DESCRIPTION OF LEASES; OPERATOR OF LEASES; AND
REPRESENTATIVES AND ADDRESSES OF THE PARTIES
Except as otherwise provided, terms and phrases defined in the
Agreement to which this Exhibit is attached and made a part shall have the same
meaning when used herein. "E. T." as used herein, shall have the same meaning as
Effective Time.
As used in this Exhibit, "Net Revenue Interest" or "NRI" shall mean the
percentage ownership of Seller, immediately prior to the Effective Time, of the
right to receive Hydrocarbon production (either in-kind or the share of proceeds
from sales of Hydrocarbon production) from the applicable Lease, after the
deduction of all burdens upon a Lease such as lessor's royalty on production
(other than taxes) as that share is set out in this Exhibit.
As used in this Exhibit, "Working Interest" or "WI" shall mean the
percentage record title interest and operating rights of Seller in and to each
Lease as that share is set out in this Exhibit.
1. Description of Leases
(a) Federal Lease No. OCS-G 6280 effective October 1, 1983,
covering all of Block 165, East Breaks Area, OCS Official
Protraction Diagram No. NG 15-1, containing approximately 5760
acres, subject to a 16.67% royalty.
WI % NRI %
Before E. T. Before E. T.
-----------------------------------------
BP Exploration & Oil Inc. 100.00 83.33
(b) Federal Lease No. OCS-G 7397 effective September 1, 1984,
covering all of Block 209, East Breaks Area, OCS Official
Protraction Diagram No. NG 15-1, containing approximately 5760
acres, subject to a 16.67% royalty.
WI % NRI %
Before E. T. Before E. T.
-----------------------------------------
BP Exploration & Oil Inc. 100.00 83.33
(c) Federal Lease No. OCS-G 7349 effective September 1, 1984 covering
all of Block A-587, High Island Area South Addition, OCS Leasing Map, Texas
Map No. 7B, containing approximately 5760 acres, subject to a 16.67%
royalty.
WI % NRI %
Before E. T. Before E. T.
------------------------------------------
BP Exploration & Oil Inc. 75.00 62.50
<PAGE>
2. Operator of Leases
(a) Before Effective Time: BP Exploration & Oil Inc.
(b) After Effective Time: PANACO, Inc.
3. Representatives and Addresses of the Parties
(a) Seller:
BP Exploration & Oil Inc.
200 WestLake Park Blvd. (77079)
P.O. Box 4587
Houston, TX 77210
S. M. Bennett
Manager, Land Department
Telephone: (281) 560-5676
Facsimile: (281) 560-3371
(b) Buyer: With a copy to:
PANACO, Inc. PANACO, Inc.
1050 West Blue Ridge Boulevard 1100 Louisiana, Suite 5100
Kansas City, MO 64145-1216 Houston, TX 77002-5220
H. James Maxwell Larry M. Wright
Chairman & C.E.O. President
Telephone: (816) 942-6300 (713) 970-3100
Facsimile: (816) 942-6305 (713) 209-0698
<PAGE>
EXHIBIT "B-1"
Attached to and made a part of
that certain Asset Sale and Purchase Agreement
dated effective June 1, 1998, between
BP Exploration & Oil Inc. and PANACO, Inc.
ASSIGNMENT OF RECORD TITLE INTEREST
BP EXPLORATION & OIL INC., an Ohio Corporation ("BPX"), the address for
which is 200 WestLake Park Blvd. (77079), P.O. Box 4587, Houston, Texas 77210,
for good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, does hereby, assign, transfer, convey and deliver to PANACO, Inc.
a Delaware corporation ("PANACO"), the address for which is 1050 West Blue Ridge
Boulevard, Kansas City, Missouri 64145-1216, all of BPX's right, title and
interest in and to the following described oil and gas lease and associated
interests located in the Outer Continental Shelf of the Gulf of Mexico (the
"Lease"):
Federal Lease No. OCS-G 6280 effective October 1, 1983,
covering all of Block 165, East Breaks Area, OCS Official
Protraction Diagram No. NG 15-1, containing approximately 5760
acres.
The interests conveyed herein are subject to and bound by the terms and
conditions of the Lease and all agreements and permits relating to the Lease
insofar and only insofar as each such agreement or permit may affect the Lease
or operations conducted on the Lease. BPX hereby assigns certain rights, title
and interests in and to those agreements or permits insofar as BPX has the right
to assign such agreements or permits and only insofar as such agreements affect
operations on or production from the Lease or PANACO's ownership interests in
the Lease. This Assignment is further made subject to that certain Asset Sale
and Purchase Agreement executed between BPX and PANACO effective June 1, 1998,
as well as any agreements referenced therein and all exhibits and conveyances
delivered subject thereto (the "Asset Sale and Purchase Agreement").
This Assignment is made and accepted subject to all royalties,
Permitted Encumbrances (as such term is defined in the Asset Sale and Purchase
Agreement) and surface rights and without warranty of title, express, statutory
or implied, except that BPX specially warrants and agrees to defend title to the
Lease in the Net Revenue Interest and Working Interest percentages set forth in
Exhibit "A" to the Asset Sale and Purchase Agreement against the lawful claims
and demands of all persons claiming title to the Lease by, through and under
BPX, but not otherwise, SAVE AND EXCEPT as against obligations assumed by
PANACO. This Assignment shall inure to the benefit of, and shall be binding
upon, the successors and assigns of the Parties hereto.
TO HAVE AND HOLD the Lease unto PANACO, its successors and assigns, in
accordance with all the terms and provisions of the Lease and subject to all
terms and conditions of the agreements, permits and the Asset Sale and Purchase
Agreement. All of the representations, warranties, indemnities and agreements of
or by BPX and PANACO contained in the Asset Sale and Purchase Agreement shall
survive the Closing of this transaction as described in the Asset Sale and
Purchase Agreement and shall not merge into the conveyancing documents. The
Asset Sale and Purchase Agreement and its respective covenants shall be
referenced in any subsequent assignment affecting the Lease and shall constitute
covenants running with the land for the benefit of BPX and PANACO.
IN WITNESS WHEREOF, this Assignment is executed by BPX and PANACO on
the dates set forth in their respective acknowledgments hereto, but shall be
effective as of June 1, 1998.
WITNESSES: ASSIGNOR:
BP Exploration & Oil Inc.
By: S. M. Bennett
Title: Agent and Attorney-In-Fact
ASSIGNEE:
PANACO, Inc.
By: H. James Maxwell
Title: Chairman & C.E.O
<PAGE>
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned Notary Public, on this day personally
appeared S. M. Bennett known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he, being fully authorized
to do so, executed and delivered the same as Agent and Attorney-in-Fact for BP
Exploration & Oil Inc., an Ohio corporation, on the day and year therein
mentioned and as the act and deed of said corporation, for the purpose and
consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _____ day of ______, 1998.
Notary Public
My Commission Expires:
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned Notary Public, on this day personally
appeared H. James Maxwell known to me to be the person whose name is subscribed
to the foregoing instrument and acknowledged to me that she, being fully
authorized to do so, executed and delivered the same as Chairman & C.E.O. for
PANACO, Inc. a Delaware corporation, on the day and year therein mentioned and
as the act and deed of said corporation, for the purpose and consideration
therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of _______, 1998.
Notary Public
My Commission Expires:
<PAGE>
EXHIBIT "B-2"
Attached to and made a part of
that certain Asset Sale and Purchase Agreement
dated effective June 1, 1998, between
BP Exploration & Oil Inc. and PANACO, Inc.
ASSIGNMENT OF RECORD TITLE INTEREST
BP EXPLORATION & OIL INC., an Ohio Corporation ("BPX"), the address for
which is 200 WestLake Park Blvd. (77079), P.O. Box 4587, Houston, Texas 77210,
for good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, does hereby, assign, transfer, convey and deliver to PANACO, Inc.
a Delaware corporation ("PANACO"), the address for which is 1050 West Blue Ridge
Boulevard, Kansas City, Missouri 64145-1216, all of BPX's right, title and
interest in and to the following described oil and gas lease and associated
interests located in the Outer Continental Shelf of the Gulf of Mexico (the
"Lease"):
Federal Lease No. OCS-G 7397 effective September 1, 1984,
covering all of Block 209, East Breaks Area, OCS Official
Protraction Diagram No. NG 15-1, containing approximately 5760
acres.
The interests conveyed herein are subject to and bound by the terms and
conditions of the Lease and all agreements and permits relating to the Lease
insofar and only insofar as each such agreement or permit may affect the Lease
or operations conducted on the Lease. BPX hereby assigns certain rights, title
and interests in and to those agreements or permits insofar as BPX has the right
to assign such agreements or permits and only insofar as such agreements affect
operations on or production from the Lease or PANACO's ownership interests in
the Lease. This Assignment is further made subject to that certain Asset Sale
and Purchase Agreement executed between BPX and PANACO effective June 1, 1998,
as well as any agreements referenced therein and all exhibits and conveyances
delivered subject thereto (the "Asset Sale and Purchase Agreement").
This Assignment is made and accepted subject to all royalties,
Permitted Encumbrances (as such term is defined in the Asset Sale and Purchase
Agreement) and surface rights and without warranty of title, express, statutory
or implied, except that BPX specially warrants and agrees to defend title to the
Lease in the Net Revenue Interest and Working Interest percentages set forth in
Exhibit "A" to the Asset Sale and Purchase Agreement against the lawful claims
and demands of all persons claiming title to the Lease by, through and under
BPX, but not otherwise, SAVE AND EXCEPT as against obligations assumed by
PANACO. This Assignment shall inure to the benefit of, and shall be binding
upon, the successors and assigns of the Parties hereto.
TO HAVE AND HOLD the Lease unto PANACO, its successors and assigns, in
accordance with all the terms and provisions of the Lease and subject to all
terms and conditions of the agreements, permits and the Asset Sale and Purchase
Agreement. All of the representations, warranties, indemnities and agreements of
or by BPX and PANACO contained in the Asset Sale and Purchase Agreement shall
survive the Closing of this transaction as described in the Asset Sale and
Purchase Agreement and shall not merge into the conveyancing documents. The
Asset Sale and Purchase Agreement and its respective covenants shall be
referenced in any subsequent assignment affecting the Lease and shall constitute
covenants running with the land for the benefit of BPX and PANACO.
IN WITNESS WHEREOF, this Assignment is executed by BPX and PANACO on
the dates set forth in their respective acknowledgments hereto, but shall be
effective as of June 1, 1998.
WITNESSES: ASSIGNOR:
BP Exploration & Oil Inc.
By: S. M. Bennett
Title: Agent and Attorney-In-Fact
ASSIGNEE:
PANACO, Inc.
By: H. James Maxwell
Title: Chairman & C.E.O
<PAGE>
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned Notary Public, on this day personally
appeared S. M. Bennett known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he, being fully authorized
to do so, executed and delivered the same as Agent and Attorney-in-Fact for BP
Exploration & Oil Inc., an Ohio corporation, on the day and year therein
mentioned and as the act and deed of said corporation, for the purpose and
consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _____ day of ______, 1998.
Notary Public
My Commission Expires:
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned Notary Public, on this day personally
appeared H. James Maxwell known to me to be the person whose name is subscribed
to the foregoing instrument and acknowledged to me that she, being fully
authorized to do so, executed and delivered the same as Chairman & C.E.O. for
PANACO, Inc. a Delaware corporation, on the day and year therein mentioned and
as the act and deed of said corporation, for the purpose and consideration
therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of _______, 1998.
Notary Public
My Commission Expires:
<PAGE>
EXHIBIT "B-3"
Attached to and made a part of
that certain Asset Sale and Purchase Agreement
dated effective June 1, 1998, between
BP Exploration & Oil Inc. and PANACO, Inc.
ASSIGNMENT OF RECORD TITLE INTEREST
BP EXPLORATION & OIL INC., an Ohio Corporation ("BPX"), the address for
which is 200 WestLake Park Blvd. (77079), P.O. Box 4587, Houston, Texas 77210,
for good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, does hereby, assign, transfer, convey and deliver to PANACO, Inc.
a Delaware corporation ("PANACO"), the address for which is 1050 West Blue Ridge
Boulevard, Kansas City, Missouri 64145-1216, all of BPX's right, title and
interest in and to the following described oil and gas lease and associated
interests located in the Outer Continental Shelf of the Gulf of Mexico (the
"Lease"):
Federal Lease No. OCS-G 7349 effective September 1, 1984 covering
all of Block A-587, High Island Area South Addition, OCS Leasing Map,
Texas Map No. 7B, containing approximately 5760 acres.
The interests conveyed herein are subject to and bound by the terms and
conditions of the Lease and all agreements and permits relating to the Lease
insofar and only insofar as each such agreement or permit may affect the Lease
or operations conducted on the Lease. BPX hereby assigns certain rights, title
and interests in and to those agreements or permits insofar as BPX has the right
to assign such agreements or permits and only insofar as such agreements affect
operations on or production from the Lease or PANACO's ownership interests in
the Lease. This Assignment is further made subject to that certain Asset Sale
and Purchase Agreement executed between BPX and PANACO effective June 1, 1998,
as well as any agreements referenced therein and all exhibits and conveyances
delivered subject thereto (the "Asset Sale and Purchase Agreement").
This Assignment is made and accepted subject to all royalties,
Permitted Encumbrances (as such term is defined in the Asset Sale and Purchase
Agreement) and surface rights and without warranty of title, express, statutory
or implied, except that BPX specially warrants and agrees to defend title to the
Lease in the Net Revenue Interest and Working Interest percentages set forth in
Exhibit "A" to the Asset Sale and Purchase Agreement against the lawful claims
and demands of all persons claiming title to the Lease by, through and under
BPX, but not otherwise, SAVE AND EXCEPT as against obligations assumed by
PANACO. This Assignment shall inure to the benefit of, and shall be binding
upon, the successors and assigns of the Parties hereto.
TO HAVE AND HOLD the Lease unto PANACO, its successors and assigns, in
accordance with all the terms and provisions of the Lease and subject to all
terms and conditions of the agreements, permits and the Asset Sale and Purchase
Agreement. All of the representations, warranties, indemnities and agreements of
or by BPX and PANACO contained in the Asset Sale and Purchase Agreement shall
survive the Closing of this transaction as described in the Asset Sale and
Purchase Agreement and shall not merge into the conveyancing documents. The
Asset Sale and Purchase Agreement and its respective covenants shall be
referenced in any subsequent assignment affecting the Lease and shall constitute
covenants running with the land for the benefit of BPX and PANACO.
IN WITNESS WHEREOF, this Assignment is executed by BPX and PANACO on
the dates set forth in their respective acknowledgments hereto, but shall be
effective as of June 1, 1998.
WITNESSES: ASSIGNOR:
BP Exploration & Oil Inc.
By: S. M. Bennett
Title: Agent and Attorney-In-Fact
ASSIGNEE:
PANACO, Inc.
By: H. James Maxwell
Title: Chairman & C.E.O
<PAGE>
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned Notary Public, on this day personally
appeared S. M. Bennett known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he, being fully authorized
to do so, executed and delivered the same as Agent and Attorney-in-Fact for BP
Exploration & Oil Inc., an Ohio corporation, on the day and year therein
mentioned and as the act and deed of said corporation, for the purpose and
consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _____ day of ______, 1998.
Notary Public
My Commission Expires:
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned Notary Public, on this day personally
appeared H. James Maxwell known to me to be the person whose name is subscribed
to the foregoing instrument and acknowledged to me that she, being fully
authorized to do so, executed and delivered the same as Chairman & C.E.O. for
PANACO, Inc. a Delaware corporation, on the day and year therein mentioned and
as the act and deed of said corporation, for the purpose and consideration
therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of _______, 1998.
Notary Public
My Commission Expires:
<PAGE>
EXHIBIT "C"
Attached to and made a part of that certain
Sale and Purchase Agreement dated effective June 1, 1998, between
BP Exploration & Oil Inc. and PANACO, Inc. ("Agreement")
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is entered into this 26th day of
May, 1998, but shall be effective as of June 1, 1998 ("Effective Time") by and
between BP Exploration & Oil Inc. ("BP"), PANACO, Inc. ("PANACO"), First Union
National Bank of North Carolina ("First Union"), and Bank One, Texas,
N.A.("Escrow Agent").
WITNESSETH:
WHEREAS, on May 14, 1998, BP and PANACO entered into a Purchase and
Sale Agreement effective June 1, 1998 ("Purchase and Sale Agreement") wherein BP
agreed to sell and PANACO agreed to purchase certain oil and gas properties,
which are described and defined in the Purchase and Sale Agreement as "Assets";
WHEREAS, in Article 2.2 of the Purchase and Sale Agreement, PANACO
agreed to assume full responsibility for BP's share of the costs and obligations
to (i) properly plug, abandon and restore all wells now or hereafter located on
the Leases (as defined in the Purchase and Sale Agreement) and (ii) properly
salvage, abandon and restore all facilities, structures and equipment now or
hereafter located on or attributable to the Assets;
WHEREAS, BP and PANACO desire that certain otherwise unencumbered funds
be pledged and deposited, in a separate account in accordance with the terms of
this Agreement, to secure the costs and expenses associated with or attributable
to future compliance with the aforesaid contractual obligations; provided
however, nothing contained herein shall limit PANACO's contractual obligations
to BP to only that which may be satisfied by the proceeds pledged and deposited
hereunder.
NOW, THEREFORE, for valuable consideration and the mutual covenants and
agreements herein contained, the parties agree as follows:
1. PANACO does, in order to secure the faithful compliance with
its contractual obligations contained in Article 2.2 of the Purchase
and Sale Agreement, pledge unto and in favor of BP the funds deposited
in the PANACO Offshore Abandonment Escrow Fund ("Escrow Fund"),
including any accrued interest thereon. Such funds, including the
accrued interest thereon, shall comprise the "Escrow Funds".
2. Upon execution of this Agreement by the parties hereto, the
Escrow Agent shall set up the Escrow Fund for the periodic pledge and
deposit by PANACO of funds into the Escrow Fund. The parties further
agree to execute any such further documents provided by the Escrow
Agent reasonably required to establish the Escrow Fund.
3. PANACO represents and warrants that the funds to be deposited
into the Escrow Fund shall be unencumbered and free and clear of
liens, encumbrances, security interest or other burdens. The parties
further agree to execute any such further documents as may be
reasonably required to have the funds which are pledged to BP paid and
delivered to the Escrow Agent.
4. First Union, by and through the execution of this Agreement,
agree that BP's secured interest in and to the Escrow Funds shall be
first in priority and that the interest of First Union in and to the
Escrow Funds, if any, shall be subordinate to the secured interest of
BP. First Union agrees not to, and herein expressly waives any right,
to claim (whether affirmatively or defensively) that its interest in
and to the Escrow Funds is superior to the secured interest of BP.
<PAGE>
5. Subsequent to the establishment of the Escrow Fund, PANACO, on
or before July 1, 1998, shall deposit One Million Dollars
($1,000,000.00) with the Escrow Agent in the Escrow Fund. Thereafter,
PANACO shall deposit Two Hundred Fifty Thousand Dollars ($250,000.00)
with the Escrow Agent in the Escrow Fund on or before the first day of
each calendar quarter (that is, January 1, April 1, July 1 and October
1 each year) commencing October 1, 1998. PANACO shall not be required
to make further deposits to the Escrow Fund once PANACO has deposited
a total of Six Million Five Hundred Thousand Dollars ($6,500,000.00)
to the Escrow Fund.
6. The C.E.O. of PANACO is authorized to direct the Escrow Agent
regarding the investment direction of the Escrow Funds.
7. The Escrow Agent shall invest and re-invest any cash held in
the Escrow Fund in such investments as directed in writing by the
individual referenced in Section 6 above, which shall be limited to
U.S. Treasury obligations, U.S. government securities, insured AAA
rated corporate or municipal securities, and cash equivalent funds
comprised of tax exempt securities.
8. All funds deposited in the Escrow Fund, including interest
accrued thereon, shall be received by the Escrow Agent, and held in
pledge to secure PANACO's contractual obligations to BP under the
Purchase and Sale Agreement.
9. In accordance with all federal, state and local laws and
regulations, PANACO will commence and diligently pursue to completion
the proper and prudent plugging, abandonment and restoration of any
and all wells, equipment, facilities and structures associated with or
attributable to the Assets when (a) required by such federal, state
and local laws and regulations, (b) by the terms contained in the
specific oil and gas lease(s), (c) applicable operating agreements, or
(d) as PANACO deems prudent, whichever first applies.
10. Thirty (30) days prior to seeking governmental approval to
conduct a plugging, abandonment or restoration operation, PANACO shall
provide written notice of said proposed operation to BP and the Escrow
Agent. Prior to conducting a particular plugging, abandonment or
restoration operation, PANACO will submit complete details of the
proposed operation to the governmental agency or agencies having
appropriate jurisdiction over such matters ("Agency") for approval
and/or an application for a work permit. Upon receipt of approval
and/or a work permit from the Agency, PANACO shall provide prompt
notice of the same to BP and the Escrow Agent. Upon submittal by
PANACO to the Escrow Agent of an AFE or invoice if PANACO is not the
operator, or a plugging and/or work permit if PANACO is the operator,
PANACO will be entitled to a disbursement from the Escrow Funds equal
to fifty percent (50%) of the AFE, invoice or costs associated with
the plugging, abandonment or restoration operation, as applicable.
Upon completion of the operation, PANACO will provide BP and the
Escrow Agent a certificate executed by an officer of PANACO verifying
that the operation was conducted in compliance with (a) applicable
federal, state and local laws and regulations, (b) the specific oil
and gas lease(s), and (c) the applicable operating agreement(s).
Thereafter, PANACO will be entitled to a disbursement of the remaining
balance due associated with the applicable operation, which shall
thereby be released from the Escrow Fund to PANACO. Within ninety (90)
days after completion of the plugging, abandonment or restoration
operation, PANACO will submit to BP proof that all costs and expenses
associated with the plugging, abandonment or restoration operation
have been fully paid and discharged.
<PAGE>
11. PANACO will promptly notify BP and the Escrow Agent in
writing when all wells, equipment, facilities and structures
associated with or attributable to the Assets have been properly and
prudently plugged, abandoned and restored in compliance with (a)
applicable federal, state and local laws and regulations, (b) the
specific oil and gas lease(s), and (c) the applicable operating
agreement(s). PANACO shall additionally furnish BP and the Escrow
Agent with a certificate executed by an officer of PANACO that all
invoices associated with such work have been fully paid and
discharged. Upon BP's written concurrence to release of the escrow
(which will be promptly give if PANACO has complied with the terms of
this Agreement and Article 2.2 of the Purchase and Sale Agreement),
the Escrow Agent shall be authorized to immediately release to PANACO
all funds, including principal and interest, remaining in the Escrow
Fund. BP will furnish its written concurrence (if PANACO has complied
wit the terms of this Agreement and Article 2.2 of the Purchase and
Sale Agreement) within ninety (90) days after BP's receipt of the
notice referenced above.
12. PANACO will be deemed to have failed to comply with its
plugging, abandonment, and restoration obligations under this
Agreement and Article 2.2 of the Purchase and Sale Agreement, if BP
has not received a true copy of the documentation submitted by PANACO
which demonstrates that PANACO has satisfied the aforementioned
plugging, abandonment, and restoration obligations no later than one
hundred eighty (180) days after the obligation accrues in accordance
with MMS rules and regulations with respect to each of the Assets.
PANACO agrees that if the obligations contained in Article 2.2 of the
Purchase and Sale Agreement are not complied with by PANACO in a
timely and faithful manner, or in the event of PANACO's failure,
insolvency, application for adjudication in bankruptcy, application by
or against PANACO for assignment, composition, extension or
receivership, or in the event of PANACO's failure to comply with any
material obligation or condition herein undertaken, then it shall be
lawful for, and PANACO does hereby authorize the Escrow Agent to
immediately assign, transfer and deliver the whole of any of the
amounts herein pledged and deposited, without recourse to judicial
proceedings and without demand, appraisal, advertisement or notice of
any kind, all of which are hereby expressly waived, to BP.
13. If PANACO fails to comply with a material term of this
Agreement or Article 2.2 of the Purchase and Sale Agreement, BP shall
notify PANACO of such noncompliance. Sixty (60) days after such
notification, if PANACO has not made the necessary corrections to
comply with this Agreement or Article 2.2 of the Purchase and Sale
Agreement, BP may remedy such noncompliance, without prejudice to BP's
rights against PANACO, and direct the Escrow Agent to distribute to BP
funds from the Escrow Fund to pay or reimburse BP for the expenses
incurred or to be incurred in remedying the noncompliance. The Escrow
Agent shall within ten (10) days of its receipt of notice and
documentation of the expense incurred or to be incurred by BP,
distribute funds to BP to pay or reimburse to BP for expenses incurred
or to be incurred to remedy the noncompliance.
14. BP shall have the right, at its own costs and expense, to
audit PANACO's records relating to the plugging, abandonment and
restoration of the wells, equipment, facilities and structures
associated with or attributable to the Assets in order to satisfy
itself that PANACO has complied with all of its obligations under this
Agreement and Article 2.2 of the Purchase and Sale Agreement.
15. The duties and responsibilities of the Escrow Agent shall be
limited to those expressly set forth herein. It is agreed that the
duties of the Escrow Agent are only such as are herein specifically
provided, being purely administrative in nature, and that it shall
incur no liability whatever except for willful misconduct or gross
negligence.
<PAGE>
16. The Escrow Agent shall not be personally liable for any act
taken or omitted hereunder if taken or omitted by it in good faith and
in the exercise of its own best judgment. The Escrow Agent shall be
entitled to rely upon any written notice, demand, certificate or
document provided by BP or PANACO which it believes in good faith to
be genuine.
17. The Escrow Agent shall be under no responsibility with
respect to the monies deposited with it, the obligations of the
parties herein, or the sufficiency of the Escrow Fund, other than to
faithfully follow the instructions contained herein. The Escrow Agent
may confer with counsel and shall be fully protected in any action
taken in good faith, in accordance with such advice. The Escrow Agent
shall have no responsibility for the genuineness or validity of any
document or other item deposited with it, and it shall be fully
protected in acting in accordance with written instructions given to
it hereunder and believed by it to have been signed by the proper
parties.
18. PANACO represents and warrants to the Escrow Agent that there
are no federal, state or local tax liabilities or filing requirements
whatsoever concerning the Escrow Agent's actions contemplated
hereunder and that the Escrow Agent shall have no duty to withhold or
file any report or any tax liability under any federal or state income
tax, local or state property tax, local or state sales or use tax, or
any other tax by any taxing authority. PANACO agrees to indemnify the
Escrow Agent fully from any tax liability, penalties or interest
incurred by the Escrow Agent arising hereunder and agrees to pay in
full any such tax liability together with penalty and interest, if
any, that is ultimately assessed against the Escrow Agent for any
reason as a result of its action hereunder (except for the Escrow
Agent's individual income tax liability).
19. PANACO hereby agrees to protect, defend, indemnify and hold
harmless the Escrow Agent and/or any of its shareholders, directors,
agents, officers and employees ("Indemnified Party") against any and
all costs, losses, damages, liabilities, claims, expenses (including
counsel fees and expenses) and claims incurred by it without gross
negligence or willful malfeasance on the Indemnified Party's part
("Claims") arising out of or in connection with (a) the Indemnified
Party entering into this Agreement, (b) Claims arising out of or in
connection with the Indemnified Party's performance of its obligations
under the Agreement, and (c) Claims arising out of or in connection
with PANACO's performance of its obligations under this Agreement. BP
hereby agrees to protect, defend, indemnify and hold harmless the
Indemnified Party against any and all Claims arising out of or in
connection with BP's performance of its obligations under this
Agreement. In no event shall the Indemnified Party be liable for
special, indirect, general, or consequential damages, or lost profits
or loss of business, arising under or in connection with this
Agreement.
20. The Escrow Agent's fee shall be charged in accordance with
its published Schedule of Fees. The Escrow Agent shall be reimbursed
for its fees from income earned on the investments and is authorized
to collect said fees by direct debit.
21. The obligations of the Escrow Agent are contained in this
Agreement, and the Escrow Agent is not expected to be or required to
be familiar with the provisions of any other instrument or agreement
and shall not be charged with any responsibility or liability in
connection with the observance or non-observance by any one of the
provisions of any such instrument or agreement even though it is
incorporated by reference herein.
<PAGE>
22. The Escrow Agent shall render to PANACO and BP monthly
statements of account with respect to the Escrow Fund which shall
contain the following: (a) a schedule of receipt and disbursements
during the accounting period; (b) a statement of income and unrealized
gains or losses, and (c) a schedule of all assets held by the Escrow
Agent in the Escrow Fund.
23. Pursuant to the regulations of the Office of the Comptroller
of the Currency [12 C.F.R 12.5(a)], the parties (other than the Escrow
Agent) have the right to receive, at no additional cost and within
five (5) business days of the transaction, a written notification
disclosing certain information relating to securities purchase and
sale transactions in the Escrow Fund. The Escrow Agent has the option
of furnishing to the parties (other than the Escrow Agent), (a) a copy
of the broker-dealer confirmation relating to the transaction, or (b)
a written notification disclosing the following: the Escrow Agent's
name, the account name, the Escrow Agent's capacity in the
transaction, the identity, price and number of shares involved, the
remuneration to the broker-dealer and its identity, the total
remuneration to be received by the Escrow Agent, and, if no
broker-dealer was involved, in the identity of the person from whom
the security was purchased or to whom it was sold. In lieu of the
foregoing time and form of notification, the parties agree that the
Escrow Agent's periodic statements, provided under the terms of this
Agreement, will suffice.
24. The Escrow Agent hereby accepts the appointment hereunder and
acknowledges establishment of the Escrow Fund and agrees to pledge and
hold in pledge all funds deposited into the Escrow Fund in accordance
with the terms of this Agreement.
25. The Escrow Agent may resign for any reason, upon thirty (30)
days prior written notice to PANACO and BP. Upon expiration of such
thirty (30 day notice period, the Escrow Agent may deliver all cash
and other property in its possession, after the payment of all fees
and expenses of the Escrow Agent under this Agreement, to any
successor escrow agent appointed by PANACO and BP, or if no successor
escrow agent has been so appoint, to any court of competent
jurisdiction in Harris County, Texas. The Escrow Agent shall have the
right to deduct from the cash and other property to be transferred to
the successor escrow agent any unpaid fees and expenses.
26. This Agreement shall terminate and the Escrow Agent shall be
discharged of all responsibility hereunder at such time as the Escrow
Agent shall have completed its duties hereunder, provided however, the
Escrow Agent's right to indemnity, and the right to receive payment of
its fees and expenses shall survive the termination of this Agreement.
27. All notices and other communications hereunder shall be
deemed to be duly given if sent by first class mail, postage prepaid
to the address set forth below. Any party to this Agreement may from
time to time, change its address for notices by giving written notice
of such change to the other parties hereto. The Escrow Agent shall not
be charged with knowledge of any fact, including but not limited to,
performance or non-performance of any condition, unless it has
actually received written notice thereof clearly referring to this
Agreement.
If to BP BP Exploration & Oil Inc.
by mail: P. O. Box 4587
Houston, Texas 77210
Attn: S. M. Bennett
Manager, Land Department
If to PANACO
by mail: PANACO, Inc.
1050 West Blue Ridge Boulevard
Kansas City, Missouri 64145-1215
Attn: H. James Maxwell
C.E.O.
with a copy to:
PANACO, Inc.
1100 Louisiana, Suite 5110
Houston, Texas 77002-5220
If to Escrow Attn: Larry M. Wright
Agent by mail: President
Bank One, Texas, N.A.
910 Travis, Suite 600
Houston, Texas 77002
Attn: Corporate Trust
<PAGE>
27. If any provision of this Agreement is declared by a court of
competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and
effect without being impaired or invalidated in any way.
28. No amendment, modification or waiver of any provision of this
Agreement nor consent to any departure by any person from the
provisions hereof shall be effective in any event unless the same
shall be in writing and signed by each of the parties hereto, and then
any such waiver or consent shall be effective only in the specific
instance and purpose for which given.
29. This Agreement shall not be assignable, whether in whole or
in part, without the express written consent of the non-assigning
parties (which consent shall not be unreasonably withheld). The terms,
covenants and conditions hereof shall be binding upon and shall inure
to the benefit of the parties hereof 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 Assets.
30. 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.
31. 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.
32. Nothing contained in this Agreement shall entitle any persons
other than the parties hereto or their authorized successors and
assigns to any claim, cause of action, remedy or right of any kind.
33. This Agreement may be executed in several counterparts, which
taken together shall constitute a single document.
34. This Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the transactions
described herein and supersedes all prior agreements or
understandings, written or oral, between the parties with respect
thereto. There are no implied duties under this Agreement.
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.
BP EXPLORATION & OIL INC. PANACO, INC.
By: S. M.. Bennett By: H. James Maxwell
Title: Agent and Attorney-in-Fact Title: Chairman & C.E.O.
FIRST UNION NATIONAL BANK BANK ONE, TEXAS, N.A.
OF NORTH CAROLINA
By: By:
Title: Title:
